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WWW.EXFILE.COM, INC. -- 14909 -- NETWORK-1 SECURITY SOLUTIONS, INC. -- FORM S-8
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    <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: red; FONT-FAMILY: Times New Roman"><a name="FIS_FORM"><strong>As
      filed with the Securities and Exchange Commission on
      February 12, 2007 </strong></a></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="right"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>REGISTRATION
      NO. 333-_______ </strong></font></div>
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      <hr style="MARGIN-TOP: -5px; COLOR: #000000" noshade size="4">
      <hr style="MARGIN-TOP: -10px; COLOR: #000000" noshade size="1">
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    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 18pt; FONT-FAMILY: Times New Roman"><strong>SECURITIES
      AND EXCHANGE </strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 18pt; FONT-FAMILY: Times New Roman"><strong>COMMISSION
      </strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman">WASHINGTON,
      D.C. 20549 </font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
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      <hr style="COLOR: black" align="center" noshade size="2" width="20%">
    </div>
    <div>&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 18pt; FONT-FAMILY: Times New Roman"><strong>FORM
      S-8 </strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>REGISTRATION
      STATEMENT </strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>UNDER
      </strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>THE
      SECURITIES ACT OF 1933 </strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left">
      <hr style="COLOR: black" align="center" noshade size="2" width="20%">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><a name="FIS_UNIDENTIFIED_TABLE"><font style="DISPLAY: inline; FONT-SIZE: 18pt; FONT-FAMILY: Times New Roman"><strong>NETWORK-1
      SECURITY SOLUTIONS, INC. </strong></font></a></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">(Exact
      name of registrant as specified in its charter) </font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center">
      <div align="center">
        <table bgcolor="white" cellpadding="0" cellspacing="0" width="100%">

            <tr bgcolor="white">
              <td width="33%">
                <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font size="2"><strong>DELAWARE</strong></font></div>
              </td>
              <td width="34%">&#160;</td>
              <td width="33%">
                <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>11-3027591</strong></font></div>
              </td>
            </tr>
            <tr bgcolor="white">
              <td width="33%">
                <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">(State
                  or other jurisdiction</font></div>
              </td>
              <td width="34%">&#160;</td>
              <td width="33%">
                <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">&#160;(I.R.S.
                  employer</font></div>
              </td>
            </tr>
            <tr bgcolor="white">
              <td width="33%">
                <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">of
                  incorporation)</font></div>
              </td>
              <td width="34%">
                <div>&#160;</div>
              </td>
              <td width="33%">
                <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">identification
                  number)</font></div>
              </td>
            </tr>

        </table>
      </div>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>445
      PARK AVENUE, SUITE 1028 </strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>NEW
      YORK, NEW YORK 10022</strong></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>&#160;</strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">(212)
      829-5770 </font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">(Address,
      including zip code, and telephone number, including area code, </font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">of
      Registrant<font style="DISPLAY: inline; FONT-FAMILY: Times New Roman">&#8217;</font>s
      principal executive offices) </font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">
      <hr style="COLOR: black" align="center" noshade size="2" width="20%">
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>NETWORK-1
      SECURITY SOLUTIONS, INC. </strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>AMENDED
      AND RESTATED 1996 STOCK OPTION PLAN</strong></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>&#160;</strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>10
      INDIVIDUAL OPTION AGREEMENTS</strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">(Full
      title of the plan) </font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left">
      <hr style="COLOR: black" align="center" noshade size="2" width="20%">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>COREY
      M. HOROWITZ</strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>CHAIRMAN
      AND CHIEF EXECUTIVE OFFICER</strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>NETWORK-1
      SECURITY SOLUTIONS, INC. </strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>445
      PARK AVENUE, SUITE 1028</strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>NEW
      YORK, NEW YORK 10022 </strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">(212)
      829-5770 </font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">(Address,
      including zip code, and telephone number, </font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">including
      area code, of agent for service) </font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left">
      <hr style="COLOR: black" align="center" noshade size="2" width="20%">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><a name="FIS_UNIDENTIFIED_TABLE_2"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>COPIES
      TO: </strong></font></a></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>SAM
      SCHWARTZ, ESQ. </strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>EISEMAN
      LEVINE LEHRHAUPT &amp; KAKOYIANNIS, PC </strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>805
      THIRD AVENUE, 10</strong></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><sup><strong>TH</strong></sup></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>
      FLOOR, NEW YORK, NEW YORK 10022 </strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">(212)
      752-1000 </font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center">&#160;</div>
    <div>
      <hr style="MARGIN-TOP: -5px; COLOR: #000000" noshade size="1">
      <hr style="MARGIN-TOP: -13px; COLOR: #000000" noshade size="4">
    </div>
    <div id="PGBRK" style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">
      <div id="FTR">
        <div id="GLFTR" style="WIDTH: 100%" align="left">
        </div>
      </div>
      <div id="PN" style="PAGE-BREAK-AFTER: always">
        <div style="WIDTH: 100%; TEXT-ALIGN: center">
        </div>
      </div>
      <div id="HDR">&#160;</div>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div>
      <table border="1" bordercolor="black" cellpadding="0" cellspacing="0" width="100%">

          <tr>
            <td colspan="5" valign="top" width="82%" style="border-bottom: black thin solid;">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>CALCULATION
                OF REGISTRATION FEE</strong></font></div>
            </td>
          </tr>
          <tr>
            <td align="left" colspan="5" valign="top" width="82%" style="border-bottom: black thin solid;">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
            </td>
          </tr>
          <tr>
            <td valign="bottom" width="30%" style="border-bottom: black thin solid;">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">TITLE
                OF EACH CLASS OF SECURITIES </font></div>
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">TO
                BE REGISTERED</font></div>
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">----------------------------------------</font></div>
            </td>
            <td valign="bottom" width="15%" style="border-bottom: black thin solid;">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">AMOUNT
                TO BE REGISTERED (1) (2)</font></div>
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">------------------</font></div>
            </td>
            <td valign="bottom" width="12%" style="border-bottom: black thin solid;">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">PROPOSED
                </font></div>
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">MAXIMUM
                </font></div>
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">OFFERING
                PRICE</font></div>
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">PER
                SHARE (3)</font></div>
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">--------------</font></div>
            </td>
            <td valign="bottom" width="15%" style="border-bottom: black thin solid;">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">PROPOSED
                MAXIMUM AGGREGATE OFFERING</font></div>
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">PRICE
                (3)</font></div>
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">------------------</font></div>
            </td>
            <td valign="bottom" width="10%" style="border-bottom: black thin solid;">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">AMOUNT
                </font></div>
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">REGISTRATION
                FEE</font></div>
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">------------</font></div>
            </td>
          </tr>
          <tr>
            <td align="left" valign="top" width="30%" style="border-bottom: black thin solid;">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Common
                Stock, par value $.01 per share....</font></div>
            </td>
            <td valign="top" width="15%" style="border-bottom: black thin solid;">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">4,132,731</font></div>
            </td>
            <td valign="top" width="12%" style="border-bottom: black thin solid;">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">$1.40</font></div>
            </td>
            <td valign="top" width="15%" style="border-bottom: black thin solid;">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">$5,785,823</font></div>
            </td>
            <td valign="top" width="10%" style="border-bottom: black thin solid;">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">$619.08</font></div>
            </td>
          </tr>
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    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">(1)
      Represents 1,457,370 shares of common stock, par value $.01 per share (the
<font style="DISPLAY: inline; FONT-FAMILY: Times New Roman">&#8220;</font>Common
      Stock<font style="DISPLAY: inline; FONT-FAMILY: Times New Roman">&#8221;</font>), of Network-1
      Security Solutions, Inc. (the &#8220;Company&#8221;) issuable upon exercise of stock options
      granted by the Company under its Amended and Restated 1996 Stock Option Plan
      (the &#8220;Stock Option Plan&#8221;) and 2,675,361 shares of Common Stock of the Company
      that may be offered or sold pursuant to 10 individual option agreements in
      favor
      of certain employees, officers, directors and consultants of the Company (the
      &#8220;Option Agreements&#8221;), for which no registration statement has previously been
      filed. Pursuant to Rule 429 under the Securities Act, the combined prospectus
      included in this Registration Statement includes 1,800,000 unsold shares
      included in and carried forward from the Company&#8217;s Registration Statement (No.
      333-117064) filed on December&#160;30, 1999 and 735,000 unsold shares included
      in and carried forward from the Company&#8217;s Registration Statement (No. 333-64066)
      filed on June&#160;28, 2001, in addition to the 4,132,731 shares initially
      registered hereunder.</font></div>
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    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">(2)
      Pursuant to Rule 416, this registration statement also covers such indeterminate
      additional shares of Common Stock as may become issuable as a result of any
      future anti-dilution adjustment in accordance with the terms of the Stock Option
      Plan and the Option Agreements. </font></div>
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    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">(3)
      Pursuant to Rule 457 (c) and (h) promulgated under the Securities Act, includes
      (i) an aggregate of 1,457,370 shares with respect to which options have been
      granted under the Stock Option Plan and (ii) an aggregate of 2,675,361 shares
      with respect to the Option Agreements, based on the average of the high and
      low
      sales prices for the shares of Common Stock as reported on The OTC Bulletin
      Board on February 6, 2007 of $1.40. </font></div>
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    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>Pursuant
      to Rule 429 under the Securities Act, this Registration Statement contains
      a
      combined prospectus that covers 1,800,000 unsold shares of common stock being
      carried forward from the Company&#8217;s Registration Statement No. 333-93895 and
      735,000 unsold shares of Common Stock being carried forward from the Company&#8217;s
      Registration Statement No. 333-64066 in addition to the 4,132,731 shares
      registered hereunder. This Registration Statement also constitutes a
      Post-Effective Amendment No. 1 to Registration Statement No. 333-93895 and
      Registration Statement No. 333-64066.</strong></font></div>
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    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div id="PGBRK" style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">
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        <div style="WIDTH: 100%; TEXT-ALIGN: center">
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        <div style="WIDTH: 100%; TEXT-ALIGN: center">
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    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>EXPLANATORY
      NOTES</strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">On
      December&#160;30,&#160;1999, Network-1 Security Solutions, Inc. (the &#8220;Company&#8221;)
      filed a Registration Statement on Form S-8 (Registration No. 333-93895)
      registering 1,800,000 shares of our Common Stock, par value $.01 per share
      (the
&#8220;Common Stock&#8221;), issuable upon exercise of stock options granted under our Stock
      Option Plan. On November 9, 2000, our shareholders approved an increase of
      735,000 shares of Common Stock under the Stock Option Plan to a total of
      2,535,000 shares. On June 28, 2001, we filed a registration statement on Form
      S-8 (Registration No. 333-64066) registering an additional 735,000 shares of
      our
      Common Stock, par value $.01 per share (the &#8220;Common Stock&#8221;), issuable upon
      exercise of stock options granted by us under the Stock Option Plan. On
      November&#160;27, 2001, our shareholders approved an increase of 1,465,000
      shares of our Common Stock under the Stock Option Plan to a total of 4,000,000
      shares. We have prepared this Registration Statement in accordance with the
      requirements of Form S-8 under the Securities Act of 1933, as amended (the
      &#8220;Securities Act&#8221;), to register an aggregate of 4,132,731 shares of our Common
      Stock including 1,457,370 additional shares of Common Stock issuable upon
      exercise of stock options granted under our Stock Option Plan and 2,675,361
      additional shares of our Common Stock issuable pursuant to 10 individual option
      agreements.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">This
      Form
      S-8 includes a Reoffer Prospectus and is a combined prospectus pursuant to
      Rule
      429 of the Securities Act, relating also to Registration Statement No. 333-93895
      and Registration Statement No. 333-64066, and contains the Form S-3 information
      required by General Instruction C.1 for Form S-8. The Reoffer Prospectus may
      be
      utilized for reofferings and resales of shares of Common Stock acquired pursuant
      to the Stock Option Plan and the 10 individual option agreements by selling
      stockholders who may be deemed &#8220;affiliates&#8221; (as such term is defined in Rule 405
      under the Securities Act) of the Company. </font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The
      amount of securities to be offered or resold under the re-offer prospectus
      by
      each shareholder and any other person with whom he or she is acting in concert
      for the purpose of selling our securities, may not exceed, during any three
      (3)
      month period, the amount specified in Rule 144(e) as promulgated under the
      Securities Act of 1933, as amended.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><a name="FIS_PART_I"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>PART
      I </strong></font></a></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>INFORMATION
      REQUIRED IN THE SECTION 10(A) PROSPECTUS </strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The
      Company will provide documents containing the information specified in Part
      1 of
      Form S-8 to employees as specified by Rule 428(b)(1) under the Securities Act.
      Pursuant to the instructions to Form S-8, the Company is not required to file
      these documents either as part of this Registration Statement or as prospectuses
      or prospectus supplements pursuant to Rule 424 under the Securities Act.
</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div id="PGBRK" style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">
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        </div>
      </div>
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        <div style="WIDTH: 100%; TEXT-ALIGN: center">
        </div>
        <div style="WIDTH: 100%; TEXT-ALIGN: center">
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    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>PROSPECTUS</strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>6,667,731
      SHARES </strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>NETWORK-1
      SECURITY SOLUTIONS, INC. </strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>COMMON
      STOCK ($.01 PAR VALUE) </strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">This
      prospectus relates to the reoffer and resale by certain selling stockholders
      of
      shares of our Common Stock that may be issued by us to the selling stockholders
      upon the exercise of stock options granted under our Amended and Restated 1996
      Stock Option Plan and upon exercise options issued to directors, employees
      and
      consultants, pursuant to 10 individual option agreements. The shares are being
      reoffered and resold for the account of the selling stockholders and we will
      not
      receive any of the proceeds from the resale of the shares. </font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The
      selling stockholders have advised us that the resale of their shares may be
      effected from time to time in one or more transactions on the OTC Bulletin
      Board, in negotiated transactions or otherwise, at market prices prevailing
      at
      the time of the sale or at prices otherwise negotiated. See &#8220;Plan of
      Distribution.&#8221; We will bear all expenses in connection with the preparation of
      this prospectus. </font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Our
      Common Stock is traded on the OTC Bulletin Board. On February&#160;6, 2007, the
      closing price for our Common Stock, as reported by the OTC Bulletin Board,
      was
      $1.37. </font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">THE
      SECURITIES OFFERED IN THIS PROSPECTUS INVOLVE A HIGH DEGREE OF RISK. YOU SHOULD
      CAREFULLY CONSIDER THE FACTORS DESCRIBED UNDER THE HEADING &#8220;RISK FACTORS&#8221;
BEGINNING ON PAGE 4 OF THIS PROSPECTUS. </font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left">
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    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">NEITHER
      THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES COMMISSION
      HAS
      APPROVED OR DISAPPROVED OF THESE SECURITIES OR PASSED UPON THE ADEQUACY OR
      ACCURACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL
      OFFENSE. </font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;

      <div>
        <hr style="COLOR: black" align="center" noshade size="2" width="100%">
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    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>THE
      DATE OF THIS PROSPECTUS IS FEBRUARY 12, 2007. </strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div id="PGBRK" style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">
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        </div>
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        </div>
        <div style="WIDTH: 100%; TEXT-ALIGN: center">
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    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><br></div><br><br><br>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><a name="eolPage5"/><a name="FIS_TABLE_OF_CONTENTS"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>TABLE
      OF CONTENTS</strong></font></a></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="right"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong><u>PAGE
      </u></strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br>
      <div align="left">
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            <tr>
              <td align="left" valign="top" width="70%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">ABOUT
                  THIS PROSPECTUS</font></div>
              </td>
              <td align="left" valign="top" width="30%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="right"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">3</font></div>
              </td>
            </tr>
            <tr>
              <td align="left" valign="top" width="70%">&#160;</td>
              <td align="left" valign="top" width="30%">&#160;</td>
            </tr>
            <tr>
              <td align="left" valign="top" width="70%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">THE
                  COMPANY</font></div>
              </td>
              <td align="left" valign="top" width="30%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="right"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">3</font></div>
              </td>
            </tr>
            <tr>
              <td align="left" valign="top" width="70%">&#160;</td>
              <td align="left" valign="top" width="30%">&#160;</td>
            </tr>
            <tr>
              <td align="left" valign="top" width="70%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">RISK
                  FACTORS</font></div>
              </td>
              <td align="left" valign="top" width="30%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="right"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">4</font></div>
              </td>
            </tr>
            <tr>
              <td align="left" valign="top" width="70%">&#160;</td>
              <td align="left" valign="top" width="30%">&#160;</td>
            </tr>
            <tr>
              <td align="left" valign="top" width="70%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">WHERE
                  YOU CAN FIND MORE INFORMATION</font></div>
              </td>
              <td align="left" valign="top" width="30%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="right"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">9</font></div>
              </td>
            </tr>
            <tr>
              <td align="left" valign="top" width="70%">&#160;</td>
              <td align="left" valign="top" width="30%">&#160;</td>
            </tr>
            <tr>
              <td align="left" valign="top" width="70%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">INCORPORATION
                  OF CERTAIN DOCUMENTS BY REFERENCE</font></div>
              </td>
              <td align="left" valign="top" width="30%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="right"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">9</font></div>
              </td>
            </tr>
            <tr>
              <td align="left" valign="top" width="70%">&#160;</td>
              <td align="left" valign="top" width="30%">&#160;</td>
            </tr>
            <tr>
              <td align="left" valign="top" width="70%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">NOTE
                  REGARDING FORWARD-LOOKING STATEMENTS</font></div>
              </td>
              <td align="left" valign="top" width="30%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="right"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">10</font></div>
              </td>
            </tr>
            <tr>
              <td align="left" valign="top" width="70%">&#160;</td>
              <td align="left" valign="top" width="30%">&#160;</td>
            </tr>
            <tr>
              <td align="left" valign="top" width="70%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">USE
                  OF PROCEEDS</font></div>
              </td>
              <td align="left" valign="top" width="30%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="right"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">11</font></div>
              </td>
            </tr>
            <tr>
              <td align="left" valign="top" width="70%">&#160;</td>
              <td align="left" valign="top" width="30%">&#160;</td>
            </tr>
            <tr>
              <td align="left" valign="top" width="70%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">SELLING
                  STOCKHOLDERS</font></div>
              </td>
              <td align="left" valign="top" width="30%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="right"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">11</font></div>
              </td>
            </tr>
            <tr>
              <td align="left" valign="top" width="70%">&#160;</td>
              <td align="left" valign="top" width="30%">&#160;</td>
            </tr>
            <tr>
              <td align="left" valign="top" width="70%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">PLAN
                  OF DISTRIBUTION</font></div>
              </td>
              <td align="left" valign="top" width="30%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="right"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">16</font></div>
              </td>
            </tr>
            <tr>
              <td align="left" valign="top" width="70%">&#160;</td>
              <td align="left" valign="top" width="30%">&#160;</td>
            </tr>
            <tr>
              <td align="left" valign="top" width="70%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">LEGAL
                  MATTERS</font></div>
              </td>
              <td align="left" valign="top" width="30%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="right"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">18</font></div>
              </td>
            </tr>
            <tr>
              <td align="left" valign="top" width="70%">&#160;</td>
              <td align="left" valign="top" width="30%">&#160;</td>
            </tr>
            <tr>
              <td align="left" valign="top" width="70%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">EXPERTS</font></div>
              </td>
              <td align="left" valign="top" width="30%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="right"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">18</font></div>
              </td>
            </tr>
            <tr>
              <td align="left" valign="top" width="70%">&#160;</td>
              <td align="left" valign="top" width="30%">&#160;</td>
            </tr>
            <tr>
              <td align="left" valign="top" width="70%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">DISCLOSURE
                  OF COMMISSION POSITION ON INDEMNIFICATION</font></div>
              </td>
              <td align="left" valign="top" width="30%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="right"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">18</font></div>
              </td>
            </tr>

        </table>
      </div>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><br></div>
    <div>&#160;</div>
    <div>&#160;</div>
    <div>&#160;</div>
    <div>&#160;</div>
    <div>&#160;</div>
    <div>&#160;</div>
    <div>&#160;</div>
    <div>&#160;</div>
    <div>&#160;</div>
    <div>&#160;</div>
    <div>&#160;</div>
    <div>&#160;</div>
    <div><br><br><br>&#160;</div>
    <div id="PGBRK" style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">
      <div id="FTR">
        <div id="GLFTR" style="WIDTH: 100%" align="left">
        </div>
      </div>
      <div id="PN" style="PAGE-BREAK-AFTER: always">
        <div style="WIDTH: 100%; TEXT-ALIGN: center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: ">2</font></div>
        <div style="WIDTH: 100%; TEXT-ALIGN: center">
          <hr style="COLOR: black" noshade size="2">
        </div>
      </div>
      <div id="HDR">
        <div id="GLHDR" style="WIDTH: 100%" align="right">
        </div>
      </div>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><a name="eolPage6"/><a name="FIS_PROSPECTUS_SUMMARY"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>ABOUT
      THIS PROSPECTUS</strong></font></a></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">This
      prospectus is part of a registration statement we filed with the Securities
      and
      Exchange Commission (the &#8220;SEC&#8221;) and therefore omits certain information in such
      registration statement. We have also filed exhibits with the registration
      statement that are not included in this prospectus, and you should refer to
      the
      applicable exhibit for a complete description of any statement referring to
      any
      document. You can inspect a copy of the registration statement and its exhibits,
      without charge, at the SEC&#8217;s public reference room, and can copy such material
      upon paying the SEC&#8217;s prescribed rates. </font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">You
      should rely only on the information and representations provided or incorporated
      by reference in this prospectus or any related supplement. We have not
      authorized anyone else to provide you with different information. The Selling
      Stockholders will not make an offer of these shares in any state where the
      offer
      is not permitted. You should not assume that the information in this prospectus
      or any supplement is accurate as of any date other than the date on the front
      of
      those documents. </font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div>
      <table cellpadding="0" cellspacing="0" width="100%">

          <tr>
            <td align="left" valign="top" width="80%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>THE
                COMPANY</strong></font></div>
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Our
                principal business is the acquisition, development, licensing and
                protection of our intellectual property. We presently own six patents
                covering various telecommunications and data networking technologies.
                Our
                strategy is to pursue licensing and strategic business alliances
                with
                companies in industries that manufacture and sell products that make
                use
                of the technologies underlying our patents as well as with other
                users of
                the technologies who benefit directly from the technologies including
                corporate, educational and governmental entities.</font></div>
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">In
                February 2004, we initiated licensing efforts relating to one of
                our
                patents (U.S. Patent No. 6,218,930) covering the remote delivery
                of power
                over Ethernet cables (the &#8220;Remote Power Patent&#8221;). We have focused, and
                will continue to focus, our efforts on licensing our Remote Power
                Patent.
                As of the date of this prospectus, we have not entered into any license
                agreements with respect to our Remote Power Patent. During the next
                12
                months, our management does not anticipate licensing efforts for
                our other
                patents besides the Remote Power Patent. Our Remote Power Patent
                relates
                to, among other things, several key technologies underlying the IEEE
                803.3af Power Over Ethernet standard that was approved on June 13,
                2003 by
                the Institute of Electrical and Electronic Engineers. This standard
                governs the delivery of power over Ethernet cables in order to remotely
                power network connected devices, including wireless switches, wireless
                access points, RFID card readers, VOIP telephones, enterprise LAN
                switches
                and network cameras.</font></div>
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Our
                future success is largely dependent upon our proprietary technologies,
                our
                ability to protect our intellectual property rights and to enter
                into
                license agreements for our technology. In addition to our patent
                litigation against D-Link Corporation and D-Link Systems, Incorporated
                for
                infringement of our Remote Power Patent as described below, it may
                be
                necessary for us to commence patent litigation against additional
                third
                parties whom we believe require a license to our patents. We also
                may be
                subject to third party claims seeking to invalidate our patents.
                </font></div>
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font id="TAB1" style="MARGIN-LEFT: 36pt"></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">On
                August 10, 2005, we commenced patent litigation against D-Link Corporation
                and D-Link Systems, Incorporated in the United States District Court
                for
                the Eastern District of Texas, Tyler division (Civil Action No. 6:05W291),
                for infringement of our Remote Power Patent. Our complaint seeks,
                among
                other things, a judgment that our Remote Power Patent is enforceable
                and
                has been infringed by the defendants. We are also seeking a permanent
                injunction restraining the defendants from continued infringement,
                or
                active inducement of infringement by others, of our Remote Power
                Patent.
                In the event the Court determines that our Remote Power Patent was
                not
                valid or enforceable and/or that the defendants did not infringe,
                any such
                determination would have a material adverse effect on our
                company.</font></div>
            </td>
          </tr>
          <tr>
            <td align="justify" valign="top" width="80%">&#160;</td>
          </tr>
          <tr>
            <td align="justify" valign="top" width="80%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">We
                were incorporated under the laws of the State of Delaware in July
                1990.
                Our executive offices are located at 445 Park Avenue, Suite 1028,
                New
                York, New York 10022 and our telephone number at that address is
                (212)
                829-5700. Our web site can be found </font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">at
                </font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">http://www.network-1.com</font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">.</font></div>
            </td>
          </tr>

      </table>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center">&#160;</div>
    <div id="PGBRK" style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">
      <div id="FTR">
        <div id="GLFTR" style="WIDTH: 100%" align="left">
        </div>
      </div>
      <div id="PN" style="PAGE-BREAK-AFTER: always">
        <div style="WIDTH: 100%; TEXT-ALIGN: center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: ">3</font></div>
        <div style="WIDTH: 100%; TEXT-ALIGN: center">
          <hr style="COLOR: black" noshade size="2">
        </div>
      </div>
      <div id="HDR">
        <div id="GLHDR" style="WIDTH: 100%" align="right">
        </div>
      </div>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><a name="FIS_DOCUMENTS_BY_REFERENCE"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>RISK
      FACTORS</strong></font></a></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font id="TAB1" style="MARGIN-LEFT: 36pt"></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>An
      investment in our Common Stock involves a high degree of risk. The risk factors
      listed below are those that we consider to be material to an investment in
      our
      Common Stock and those which, if realized, could have material adverse effects
      on our business, financial condition or results of operations as specifically
      discussed below. In such an event, the trading price of our Common Stock could
      decline, and you could lose all or part of your investment. Before you invest
      in
      our Common Stock, you should be aware of various risks, including those
      described below. You should carefully consider these risk factors, together
      with
      all of the other information included or incorporated by reference in this
      prospectus, before you decide whether to purchase our Common Stock. This section
      includes or refers to certain forward-looking statements. You should refer
      to
      the explanation of the qualifications and limitations on such forward-looking
      statements discussed on page 10.</strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: -18pt; TEXT-INDENT: 54pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>We
      have a history of losses and no revenue from current
      operations.</strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: -18pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">We
      have
      incurred substantial operating losses since our inception, which has resulted
      in
      an accumulated deficit of $(45,377,000) as of September 30, 2006. For the years
      ended December 31, 2005 and 2004, we incurred net losses of $(1,332,000) and
      $(1,953,000), respectively. For the nine months ended September 30, 2006, we
      incurred a net loss of $(1,056,000). We have financed our operations primarily
      by sales of equity securities. Since December 2002, when we discontinued our
      security software products and following the commencement of our patent
      technology licensing business in November 2003, we have had no material revenue
      from operations for the years ended December 31, 2004, December 31, 2005 and
      for
      the nine months ended September&#160;30, 2006. Our ability to achieve revenue
      and generate positive cash flow from operations is dependent upon consummating
      licensing agreements with respect to our patented technologies. We may not
      be
      successful in achieving licensing agreements with third parties and our failure
      to do so would have a material adverse effect on our business, financial
      condition and results of operations. We may not be able to achieve revenue
      or
      generate positive cash flow from operations from our licensing
      business.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: -18pt; TEXT-INDENT: 54pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>We
      could be required to stop operations if we are unable to develop our technology
      licensing business or raise capital when needed.</strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: -18pt; TEXT-INDENT: 18pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">We
      anticipate, based on our currently proposed plans and assumptions relating
      to
      our operations (including the timetable of, costs and expenses associated with
      our continued operations), that our cash position of $2,129,000 at September
      30,
      2006 will more likely than not be sufficient to satisfy our operations and
      capital requirements until December 2007. However, we may expend our funds
      prior
      thereto. In the event our plans change, or our assumptions change or prove
      to be
      inaccurate (due to unanticipated expenses, difficulties, delays or otherwise),
      we could have insufficient funds to support our operations prior to December
      2007. Our inability to obtain additional financing when needed</font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">,
      absent
      generating sufficient cash from licensing arrangements,</font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">
      would
      have a material adverse effect on the Company, requiring us to curtail or
      possibly cease our operations. In addition, any additional equity financing
      may
      involve substantial dilution to the interests of our then existing stockholders.
      </font></div>
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        <div style="WIDTH: 100%; TEXT-ALIGN: center">
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        </div>
      </div>
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    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>Our
      licensing business may not be successful.</strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">In
      November 2003, we entered the technology licensing business following our
      acquisition of six patents relating to various telecommunications and data
      networking technologies including, among others, patents covering the delivery
      of remote power over Ethernet and the transmission of audio, video and data
      over
      computer and telephony networks. Accordingly, we have a limited history in
      the
      technology licensing business upon which an evaluation of our prospects and
      future performance can be made. Our prospects must be considered in light of
      the
      risks, expenses and difficulties frequently encountered in the development,
      operation and expansion of a new business based on patented technologies in
      a
      highly specialized and competitive market. We may not be able to achieve revenue
      or profitable operations from our licensing business.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>Our
      future source of licensing revenue is uncertain.</strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">In
      February 2004, we initiated our first licensing efforts relating to the
      technologies in our remote power patent (U.S. Patent No. 6,218,930) (the &#8220;Remote
      Power Patent&#8221;). To date, we have not entered into any licensing agreements with
      third parties with respect to our Remote Power Patent or our other patented
      technologies. Our inability to consummate licensing agreements and achieve
      revenue from our patented technologies would have a material adverse effect
      on
      our operations and our ability to continue our business. In addition, in the
      event we consummate license arrangements with third parties, such arrangements
      are not likely to produce a stable or predictable stream of revenue in the
      foreseeable future. Furthermore, the success of our licensing efforts
</font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">depends</font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">
      upon the
      strength of our intellectual property rights. </font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>We
      are currently relying upon the efforts of ThinkFire to consummate licensing
      agreements for our Remote Power Patent with certain select potential
      licensees.</strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">On
      November 30, 2004, we entered into a Master Services Agreement (the &#8220;Agreement&#8221;)
      with ThinkFire Services USA, Ltd. (&#8220;ThinkFire&#8221;) pursuant to which we granted
      ThinkFire the exclusive (except for us and related companies) worldwide rights
      to negotiate license agreements for our Remote Power Patent with respect to
      certain potential licensees agreed to between the parties. Either we or
      ThinkFire can terminate the Agreement upon 60 days notice for any reason or
      upon
      30 days notice in the event of a material breach. We have agreed to pay
      ThinkFire a fee not to exceed 20% of the royalty payments received from license
      agreements consummated by ThinkFire on our behalf. ThinkFire may not be
      successful in consummating license agreements on our behalf and even if such
      agreements are consummated they may not result in significant royalty payments
      to us.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>Our
      success is dependent upon our ability to protect our proprietary
      technologies.</strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Our
      success is substantially dependent upon our proprietary technologies and our
      ability to protect our intellectual property rights. We currently hold 6 patents
      issued by the U.S. Patent Office that relate to various telecommunications
      and
      data 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 PoE networks. We rely upon our patents and trade
      secret laws, non-disclosure agreements with our employees, consultants and
      third
      parties to protect our intellectual property rights. The complexity of patent
      and common law, combined with our limited resources, create risk that our
      efforts to protect our proprietary technologies may not be successful. We cannot
      assure you that our patents will be upheld or that third parties will not
      invalidate our patent rights. In the event our intellectual property rights
      are
      not upheld, such an event would have a material adverse effect on
      us.</font></div>
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    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>We
      are currently relying upon our contingency fee agreement with Blank
      Rome.</strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">In
      August
      2005, we entered into an agreement with Blank Rome, LLP (&#8220;Blank Rome&#8221;), a
      national law firm, pursuant to which Blank Rome has been engaged to represent
      us
      in connection with all litigation involving our Remote Power Patent. Blank
      Rome
      has agreed to represent us with respect to each litigation pertaining to the
      Remote Power Patent on a full contingency basis (except for any proceeding
      before the International Trade Commission). As compensation for its services
      on
      a full contingency basis, Blank Rome will receive from us percentages of Net
      Consideration (as defined in the Agreement) ranging from 12.5% to 35% received
      by us by way of settlement or judgment in connection with each litigation
      matter. We have also agreed to compensate Blank Rome in an amount equal to
      10%
      of the Net Consideration received by us from certain designated parties mutually
      agreed upon by us and Blank Rome (the &#8220;Designated Parties&#8221;) in the event that
      prior to commencement of litigation such Designated Parties enter into license
      agreements or similar agreements with us during the period of Blank Rome&#8217;s
      engagement.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The
      Agreement may be terminated by either Blank Rome or us upon 30 days notice.
      If
      we elect to terminate the Agreement, we will compensate Blank Rome in an amount
      equal to 5% of the Net Consideration received by us from the Designated Parties
      with whom Blank Rome has not commenced litigation on our behalf, provided that
      such parties had substantive licensing or settlement discussions related to
      our
      Remote Power Patent during the term of the Agreement and entered into a license
      agreement or similar agreement with us providing for Net Consideration within
      the 12 month period following termination. In addition, in the event of
      termination, Blank Rome will receive its pro-rata share of Net Consideration
      based upon its hourly time charges with respect to parties against whom Blank
      Rome commenced litigation (or defended) on our behalf. In the event our
      agreement with Blank Rome is terminated, depending upon our financial resources
      at the time, we may need to enter into a contingent fee agreement with a new
      law
      firm in order to enforce and/or defend our Remote Power Patent and our inability
      to secure such an arrangement on satisfactory terms and on a timely basis may
      have a material adverse effect on us.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>Any
      litigation to protect our intellectual property or any third party claims to
      invalidate our patents could have a material adverse effect on our
      business.</strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Our
      success depends on our ability to protect our intellectual property rights.
      In
      August 2005, we commenced patent litigation against D-Link Corporation and
      D-Link Systems, Incorporated for infringement of our Remote Power Patent (see
      below Risk Factors - &#8220;We face uncertainty of outcome of litigation with
      D-Link&#8221;). In the future, it may be necessary for us to commence patent
      litigation against additional third parties whom we believe require a license
      to
      our patents. In addition, we may be subject to claims seeking to invalidate
      our
      patents, as has been asserted by D-Link as a defense in the pending litigation.
      These types of claims, with or without merit, may subject us to costly
      litigation and diversion of management&#8217;s focus. If we are unsuccessful in
      enforcing and validating our patents and/or if third parties making claims
      against us seeking to invalidate our patents are successful, they may be able
      to
      obtain injunctive or other equitable relief, which effectively could block
      our
      ability to license or otherwise capitalize on our proprietary technologies.
      Successful litigation against us resulting in a determination that our patents
      are invalid would have a material adverse effect on us. </font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>We
      face uncertainty as to the outcome of litigation with
      D-Link.</strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">On
      August
      10, 2005, we commenced litigation against D-Link Corporation and D-Link Systems,
      Incorporated in the United States District Court for the Eastern District of
      Texas, Tyler division (Civil Action No. 6:05W291), for infringement of our
      Remote Power Patent. Our complaint seeks, among other things, a judgment that
      our Remote Power Patent is duly enforceable and has been infringed by the
      defendants. We also seek a permanent injunction restraining defendants from
      continued infringement, or active inducement of infringement by others, of
      our
      Remote Power Patent. On February 27, 2006, the D-Link defendants filed answers
      and asserted counterclaims. In their answers, the D-Link defendants asserted
      that they did not infringe any valid claim of our Remote Power Patent, and
      further asserted that our asserted patent claims are invalid and/or
      unenforceable. In addition to these defenses, the D-Link defendants also
      asserted counterclaims for, among other things, non-infringement, invalidity
      and
      unenforceability of the Remote Power Patent. </font></div>
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    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>Material
      licensing revenues from our Remote Power Patent may be dependent upon the
      applicability of the IEEE Standard.</strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The
      Institute of Electrical and Electronic Engineers (IEEE) is a non-profit,
      technical professional association of more than 360,000 individual members
      in
      approximately 175 countries. The Standards Association of the IEEE is
      responsible for the creation of global industry standards for a broad range
      of
      technology industries. In 1999, the IEEE formed a task force to facilitate
      the
      adoption of a standardized methodology for the delivery of remote power over
      Ethernet networks which would insure interoperability among vendors of switches
      and terminal devices. In June 2003, the IEEE Standards Association approved
      the
      802.3af Power Over Ethernet standard (the &#8220;Standard&#8221;), which covers technologies
      deployed in delivering power over Ethernet cables including whether deployed
      in
      switches or as standalone midspan hubs both of which provide power to remote
      devices including wireless access points, IP phones and network based cameras.
      The technology is commonly referred to as Power Over Ethernet (&#8220;PoE&#8221;). We
      believe our Remote Power Patent covers several of the key technologies covered
      by the Standard. However, there is a risk that as a result of litigation a
      court
      may determine otherwise and such a determination would have a material adverse
      effect on our ability to enter into license agreements and achieve revenue
      and
      profits from our Remote Power Patent. </font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>We
      face intense competition and we may not be able to successfully
      compete.</strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The
      telecommunications and data networking market is characterized by intense
      competition and rapidly changing business conditions, customer requirements
      and
      technologies. Our current and potential competitors have longer operating
      histories, greater name recognition and possess substantially greater financial,
      technical, marketing and other competitive resources than us. Although we
      believe that we have rights to enforceable patents relating to
      telecommunications and data networking, there can be no assurance that third
      parties will not invalidate any or all of our patents. In addition, the
      telecommunications and data networking industries may develop technologies
      that
      may be more effective than our proprietary technologies or that render our
      technologies less marketable or obsolete. </font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>Our
      markets are subject to rapid technological change and our technologies face
      potential technology obsolescence. </strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: -18pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The
      telecommunications and data networking technology market including, transmission
      of audio, video and data over computer and telephony networks and the delivery
      of remote power over Ethernet markets, are characterized by rapid technological
      changes, changing customer requirements, frequent new product introductions
      and
      enhancements, and evolving industry standards. The introduction of products
      embodying new technologies and the emergence of new industry standards may
      render our technologies obsolete or less marketable. To the extent we are able
      to achieve revenue in the future, such revenue will be derived from licensing
      our technologies based on existing and evolving industry standards.
</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>Dependence
      upon CEO and Chairman</strong></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Our
      success is largely dependent upon the personal efforts of Corey M. Horowitz,
      our
      Chairman and Chief Executive Officer and Chairman of the Board of Directors.
      The
      loss of the services of Mr. Horowitz would have a material adverse effect on
      our
      business and prospects. We are currently negotiating with Mr.&#160;Horowitz the
      terms of a new employment agreement as his employment agreement expired in
      November 2006. We do not maintain key-man life insurance on the life of Mr.
      Horowitz.</font></div>
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    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>Risks
      related to</strong></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>
      low</strong></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>&#160;</strong></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>priced
      stocks.</strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Our
      common stock currently trades on the </font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">OTC
      Bulletin Board under the symbol NSSI. Since</font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">
      the
      trading price of our common stock is below $5.00 per share, our common stock
      is
      considered a penny stock. SEC regulations generally define a penny stock to
      be
      an equity security that is not listed on Nasdaq or a national securities
      exchange and that has a market value of less than $5.00 per share, subject
      to
      certain exceptions. SEC regulations require broker-dealers to deliver to a
      purchaser of our common stock a disclosure schedule explaining the penny stock
      market and the risks associated with it. Various sales practice requirements
      are
      also imposed on broker-dealers who sell penny stocks to persons other than
      established customers and accredited investors (generally institutions).
      Broker-dealers must also provide the customer with current bid and offer
      quotations for the penny stock, the compensation of the broker-dealer and
      monthly account statements disclosing recent price information for the penny
      stock held in the customer&#8217;s account.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
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      significant number of options and warrants outstanding may adversely effect
      the
      market price for our common stock. </strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 9pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">As
      of
      February&#160;1, 2007, there are outstanding options and warrants to purchase an
      aggregate of 9,281,481 shares of our common stock at exercise prices ranging
      from $.12 to $10.00. To the extent that outstanding options and warrants are
      exercised, stockholder percentage ownership will be diluted and any sales in
      the
      public market of the common stock underlying such options may adversely affect
      prevailing market prices for our common stock.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>We
      have a significant amount of authorized but unissued preferred stock, which
      may
      affect the likelihood of a change of control in our
      company.</strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Our
      Board
      of Directors has the authority, without further action by the stockholders,
      to
      issue 10,000,000 shares of preferred stock on such terms and with such rights,
      preferences and designations as our Board of Directors may determine. Such
      terms
      may include restricting dividends on our common stock, dilution of the voting
      power of our common stock or impairing the liquidation rights of the holders
      of
      our common stock. Issuance of such preferred stock, depending on the rights,
      preferences and designations thereof, may have the effect of delaying, deterring
      or preventing a change in control. In addition, certain &#8220;anti-takeover&#8221;
provisions in Delaware law may restrict the ability of our stockholders to
      authorize a merger, business combination or change of control.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">In
      the
      event that the Court determines that our Remote Power Patent was not valid
      or
      enforceable and/or that the defendants did not infringe, any such determination
      would have a material adverse effect on us.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>Our
      stock price may be volatile.</strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The
      market price of our common stock is likely to be highly volatile and could
      fluctuate widely in price in response to various factors, many of which are
      beyond our control, including the following:</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div>
      <table align="center" border="0" cellpadding="0" cellspacing="0" id="hangingindent" width="100%" style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">

          <tr valign="top" style="line-height: 1.25;">
            <td align="left" style="width: 63pt;"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Symbol, serif">&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;
              &#183;</font></td>
            <td align="left">
              <div align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">our
                ability to successfully enforce and/or defend our Remote Power
                Patent;</font></div>
            </td>
          </tr>

      </table>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div>
      <table cellpadding="0" cellspacing="0" id="list" width="100%">

          <tr valign="top" style="line-height: 1.25;">
            <td align="right" style="width: 63pt;"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Symbol, serif">&#183;&#160;&#160;&#160;&#160;&#160;&#160;&#160;
              &#160;&#160;</font></td>
            <td>
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">our
                ability to enter into favorable license agreements with third parties
                with
                respect to our Remote Power Patent;</font></div>
            </td>
          </tr>

      </table>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div>
      <table cellpadding="0" cellspacing="0" id="list" width="100%">

          <tr valign="top" style="line-height: 1.25;">
            <td align="right" style="width: 63pt;"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Symbol, serif">&#183;&#160;&#160;&#160;&#160;&#160;&#160;&#160;
              &#160;&#160;</font></td>
            <td>
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">our
                ability to achieve revenues and
                profits;</font></div>
            </td>
          </tr>

      </table>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div>
      <table cellpadding="0" cellspacing="0" id="list" width="100%">

          <tr valign="top" style="line-height: 1.25;">
            <td align="right" style="width: 63pt;"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Symbol, serif">&#183;&#160;&#160;&#160;&#160;&#160;&#160;&#160;
              &#160;&#160;</font></td>
            <td>
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">our
                ability to raise capital when
                needed;</font></div>
            </td>
          </tr>

      </table>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div id="PGBRK" style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">
      <div id="FTR">
        <div id="GLFTR" style="WIDTH: 100%" align="left">
        </div>
      </div>
      <div id="PN" style="PAGE-BREAK-AFTER: always">
        <div style="WIDTH: 100%; TEXT-ALIGN: center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: ">8</font></div>
        <div style="WIDTH: 100%; TEXT-ALIGN: center">
          <hr style="COLOR: black" noshade size="2">
        </div>
      </div>
      <div id="HDR">
        <div id="GLHDR" style="WIDTH: 100%" align="right">
        </div>
      </div>
    </div>
    <div>
      <table cellpadding="0" cellspacing="0" id="list" width="100%">

          <tr valign="top" style="line-height: 1.25;">
            <td align="right" style="width: 63pt;"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Symbol, serif">&#183;&#160;&#160;&#160;&#160;&#160;&#160;&#160;
              &#160;&#160;</font></td>
            <td>
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">sales
                of our common stock;</font></div>
            </td>
          </tr>

      </table>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div>
      <table cellpadding="0" cellspacing="0" id="list" width="100%">

          <tr valign="top" style="line-height: 1.25;">
            <td align="right" style="width: 63pt;"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Symbol, serif">&#183;&#160;&#160;&#160;&#160;&#160;&#160;&#160;
              &#160;&#160;</font></td>
            <td>
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">our
                ability to execute our business
                plan;</font></div>
            </td>
          </tr>

      </table>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div>
      <table cellpadding="0" cellspacing="0" id="list" width="100%">

          <tr valign="top" style="line-height: 1.25;">
            <td align="right" style="width: 63pt;"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Symbol, serif">&#183;&#160;&#160;&#160;&#160;&#160;&#160;&#160;
              &#160;&#160;</font></td>
            <td>
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">technology
                changes;</font></div>
            </td>
          </tr>

      </table>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div>
      <table cellpadding="0" cellspacing="0" id="list" width="100%">

          <tr valign="top" style="line-height: 1.25;">
            <td align="right" style="width: 63pt;"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Symbol, serif">&#183;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;</font></td>
            <td>
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">legislative,
                regulatory and competitive developments;
                and</font></div>
            </td>
          </tr>

      </table>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div>
      <table cellpadding="0" cellspacing="0" id="list" width="100%">

          <tr valign="top" style="line-height: 1.25;">
            <td align="right" style="width: 63pt;"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Symbol, serif">&#183;&#160;&#160;&#160;&#160;&#160;&#160;&#160;
              &#160;&#160;</font></td>
            <td>
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">economic
                and other external factors.</font></div>
            </td>
          </tr>

      </table>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">In
      addition, the securities markets have from time to time experienced significant
      price and volume fluctuations that are unrelated to the operating performance
      of
      particular companies. These market fluctuations may also materially and
      adversely affect the market price of our common stock.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>Sales
      of a substantial number of shares of our common stock may cause the price of
      our
      common stock to decline.</strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">We
      have
      registered for resale 22,453,987 shares of common stock, including shares
      issuable upon exercise of outstanding options and warrants that are not
      currently freely tradable. If our stockholders sell substantial amounts of
      our
      common stock in the public market, including shares issued upon the exercise
      of
      outstanding options and warrants, the market price of our common stock could
      fall. These sales also may make it more difficult for us to sell equity or
      equity-related securities in the future at a time and price that we deem
      reasonable or appropriate.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>Additional
      stock offerings may dilute current stockholders.</strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">We
      may
      need to issue additional shares of our capital stock or securities convertible
      or exercisable for shares of our capital stock, including preferred stock,
      options or warrants. The issuance of additional capital stock may dilute the
      ownership of our current stockholders.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>WHERE
      YOU CAN FIND MORE INFORMATION</strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">We
      file
      annual, quarterly and current reports, and other information with the SEC.
      You
      may read and copy any document we file at the SEC&#8217;s public reference room
      located at Judiciary Plaza, 450 Fifth Street, N.W., Washington, D.C. 20549.
      The
      SEC has prescribed rates for copying. You may obtain further information on
      the
      operation of the public reference room by calling the SEC at 1-800-SEC-0330.
      Our
      SEC filings are also available to the public over the Internet at the SEC&#8217;s web
      site at </font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><u>http://www.sec.gov</u></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>INCORPORATION
      OF CERTAIN DOCUMENTS BY REFERENCE </strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The
      SEC
      allows us to &#8220;incorporate by reference&#8221; the information we file with them, which
      means that we can disclose important information to you by referring you to
      those documents. The information we incorporate by reference is considered
      to be
      a part of this prospectus and information that we file later with the SEC will
      automatically update and replace the information in this prospectus.
      Accordingly, we incorporate by reference the documents listed below and any
      future filings we make with the SEC under Sections 13(a), 13(c), 14 or 15(d)
      of
      the Securities Exchange Act of 1934, as amended: </font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div>
      <table cellpadding="0" cellspacing="0" id="list" width="100%">

          <tr valign="top" style="line-height: 1.25;">
            <td align="right" style="width: 18pt;"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">1.&#160;&#160;
              &#160;</font></td>
            <td>
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Our
                Annual Report on Form 10-KSB for the year ended December 31, 2005
                (filed
                April 12, 2006);</font></div>
            </td>
          </tr>

      </table>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div id="PGBRK" style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">
      <div id="FTR">
        <div id="GLFTR" style="WIDTH: 100%" align="left">
        </div>
      </div>
      <div id="PN" style="PAGE-BREAK-AFTER: always">
        <div style="WIDTH: 100%; TEXT-ALIGN: center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: ">9</font></div>
        <div style="WIDTH: 100%; TEXT-ALIGN: center">
          <hr style="COLOR: black" noshade size="2">
        </div>
      </div>
      <div id="HDR">
        <div id="GLHDR" style="WIDTH: 100%" align="right">
        </div>
      </div>
    </div>
    <div>
      <table cellpadding="0" cellspacing="0" id="list" width="100%">

          <tr valign="top" style="line-height: 1.25;">
            <td align="right" style="width: 18pt;"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">2.&#160;&#160;
              &#160;</font></td>
            <td>
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Our
                current reports on Form 8-K and Form 8-K/A filed on February&#160;8, 2006,
                February&#160;9, 2006, February&#160;15, 2006, March&#160;31, 2006,
                April&#160;17, 2006, May&#160;16, 2006, August&#160;7, 2006,
                September&#160;14, 2006, November</font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">&#160;</font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">15,
                2006, November&#160;28, 2006 and December&#160;22, 2006</font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">;</font></div>
            </td>
          </tr>

      </table>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div>
      <table cellpadding="0" cellspacing="0" id="list" width="100%">

          <tr valign="top" style="line-height: 1.25;">
            <td align="right" style="width: 18pt;"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">3.&#160;&#160;
              &#160;</font></td>
            <td>
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Our
                Quarterly Report on Form 10-QSB for the period ended March&#160;31, 2006,
                June&#160;30, 2006 and September&#160;30, 2006 (filed May&#160;15, 2006,
                August&#160;3, 2006 and November&#160;14, 2006);
                and</font></div>
            </td>
          </tr>

      </table>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div>
      <table cellpadding="0" cellspacing="0" id="list" width="100%">

          <tr valign="top" style="line-height: 1.25;">
            <td align="right" style="width: 18pt;"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">4.&#160;&#160;
              &#160;</font></td>
            <td>
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The
                description of our Common Stock incorporated by reference in our
                Registration Statement on Form 8-A (filed October 9, 1998), as amended
                on
                November 3, 1998. </font></div>
            </td>
          </tr>

      </table>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font id="TAB1" style="MARGIN-LEFT: 36pt"></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">All
      documents subsequently filed by the Company pursuant to Section 13(a), 13(c)
      or
      15(d) of the Securities Exchange Act of 1934, as amended, prior to the filing
      of
      a post-effective amendment to the Registration Statement which indicates that
      all shares of Common Stock offered hereunder have been sold or which deregisters
      all shares then remaining unsold, shall be deemed to be incorporated herein
      by
      reference and to be part hereof from the date of filing of such documents.
      Any
      statement contained in a document incorporated or deemed to be incorporated
      by
      reference herein shall be deemed to be modified or superseded for purposes
      of
      this Registration Statement to the extent that a statement contained herein
      or
      in any other subsequently filed document which is also or is deemed to be
      incorporated by reference herein modifies or supersedes such statement. Any
      such
      statement so modified or superseded shall not be deemed, except as so modified
      or superseded, to constitute a part of this Registration Statement.</font></div>
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    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">We
      will
      provide at no cost to each person to whom this prospectus is delivered, upon
      written or oral request, a copy of any of these filings, excluding the exhibits
      to such filings that we have not specifically incorporated by reference in
      such
      filings. You should direct such requests to us at 445 Park Avenue, Suite 1028,
      New York, New York 10021, Attention: Corey M. Horowitz, Chairman and Chief
      Executive Officer, telephone number (212) 829-5770. </font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><a name="eolPage7"/><a name="FIS_FORWARD_LOOK"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>NOTE
      REGARDING FORWARD-LOOKING STATEMENTS</strong></font></a></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">This
      prospectus contains certain forward-looking statements that are statements
      that
      include information based upon beliefs of our management, as well as assumptions
      made by and information available to our management. Statements containing
      terms
      such as &#8220;believes,&#8221; &#8220;expects,&#8221; &#8220;anticipates,&#8221; &#8220;intends&#8221; or similar words are
      intended to identify forward-looking statements. </font></div>
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    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Our
      management, based upon assumptions they consider reasonable, has compiled these
      forward-looking statements. Such statements reflect our current views with
      respect to future events. These statements involve known and unknown risks
      and
      uncertainties that may cause our actual results in future periods to differ
      materially from what is currently anticipated. We make cautionary statements
      in
      certain sections of this prospectus, including under &#8220;Risk Factors.&#8221; You should
      read these cautionary statements as being applicable to all related
      forward-looking statements wherever they appear in this prospectus, the
      materials referred to in this prospectus or the materials incorporated by
      reference into this prospectus. </font></div>
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      are
      cautioned that no forward-looking statement is a guarantee of future performance
      and you should not place undue reliance on any forward-looking statement. Such
      statements speak only as of the date of this prospectus and we are not
      undertaking any obligation to publicly release any revisions to these
      forward-looking statements to reflect events or circumstances after the date
      of
      this prospectus or to reflect the occurrence of unanticipated events.
</font></div>
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        <div style="WIDTH: 100%; TEXT-ALIGN: center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: ">10</font></div>
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    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The
      shares of common stock offered by this prospectus are being registered for
      the
      account of the selling stockholders identified in this prospectus. See &#8220;Selling
      Shareholders.&#8221; All net proceeds from the sale of common shares will go to the
      shareholders who offer and sell their shares. We will not receive any part
      of
      the proceeds from such sales. We will, however, receive the exercise price
      of
      the options at the time of their exercise (exclusive of options to purchase
      4,295,361 shares which may be exercised on a &#8220;cashless&#8221; basis). If all of the
      options are exercised (assuming no exercise on a &#8220;cashless&#8221; basis), we will
      realize proceeds in the amount of $4,933,656. Such proceeds will be contributed
      to working capital and will be used for general corporate purposes.
</font></div>
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    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><a name="eolPage14"/><a name="FIS_SELLING_SHAREHOLDERS"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>SELLING
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    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">This
      prospectus relates to the reoffer and resale of shares of common stock (&#8220;Common
      Stock&#8221;) issued or that may be issued to the selling stockholders under our Stock
      Option Plan and other options issued to officers, directors, employees and
      consultants pursuant to 10 individual option agreements. The following table
      sets forth (i) the number of shares of Common Stock beneficially owned by each
      selling stockholder as of the date of this prospectus, (ii) the number of shares
      to be offered for resale by each selling stockholder (i.e., the total number
      of
      shares underlying options held by each selling stockholder irrespective of
      whether such options are presently exercisable or exercisable within sixty
      days
      of the date of this prospectus), and (iii) the number and percentage of shares
      of our Common Stock to be held by each selling stockholder after completion
      of
      the offering. </font></div>
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            <td width="4%">&#160;</td>
            <td valign="bottom" width="15%" style="border-bottom: black thin solid;">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>PERCENTAGE
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            </td>
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            <td width="4%">&#160;</td>
            <td align="left" valign="top" width="16%">&#160;</td>
            <td width="4%">&#160;</td>
            <td align="left" valign="top" width="18%">&#160;</td>
            <td width="4%">&#160;</td>
            <td align="left" valign="top" width="16%">&#160;</td>
            <td width="4%">&#160;</td>
            <td valign="top" width="15%">&#160;</td>
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          <tr>
            <td align="left" valign="top" width="19%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Corey
                M. Horowitz</font></div>
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            </td>
            <td width="4%">&#160;</td>
            <td valign="top" width="16%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">8,684,226(5)</font></div>
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
            </td>
            <td width="4%">&#160;</td>
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              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">4,348,486(6)</font></div>
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
            </td>
            <td width="4%">&#160;</td>
            <td valign="top" width="16%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">4,335,740</font></div>
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
            </td>
            <td width="4%">&#160;</td>
            <td valign="top" width="15%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">21.2%</font></div>
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
            </td>
          </tr>
          <tr>
            <td align="left" valign="top" width="19%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Barry
                Rubenstein</font></div>
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
            </td>
            <td width="4%">&#160;</td>
            <td valign="top" width="16%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">3,743,251(7)</font></div>
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
            </td>
            <td width="4%">&#160;</td>
            <td valign="top" width="18%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">&#160;&#160;&#160;&#160;59,375(8)</font></div>
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
            </td>
            <td width="4%">&#160;</td>
            <td valign="top" width="16%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">3,683,876</font></div>
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
            </td>
            <td width="4%">&#160;</td>
            <td valign="top" width="15%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">19.3%</font></div>
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
            </td>
          </tr>
          <tr>
            <td align="left" valign="top" width="19%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Irwin
                Lieber</font></div>
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
            </td>
            <td width="4%">&#160;</td>
            <td valign="top" width="16%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">2,048,338(9)</font></div>
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
            </td>
            <td width="4%">&#160;</td>
            <td valign="top" width="18%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">&#160;&#160;&#160;&#160;&#160;&#160;59,375(10)</font></div>
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
            </td>
            <td width="4%">&#160;</td>
            <td valign="top" width="16%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">1,988,963</font></div>
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
            </td>
            <td width="4%">&#160;</td>
            <td valign="top" width="15%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">10.4%</font></div>
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
            </td>
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            <td width="4%">&#160;</td>
            <td valign="top" width="16%">&#160;</td>
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                offering in this prospectus but actually will depend on the number
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                offering.</font></div>
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    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div>
      <table cellpadding="0" cellspacing="0" id="list" width="100%">

          <tr valign="top" style="line-height: 1.25;">
            <td align="right" style="width: 27pt;"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">(4)&#160;&#160;&#160;&#160;
              &#160;&#160;</font></td>
            <td>
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Assumes
                a base of 19,764,724 shares of Common Stock
                outstanding.</font></div>
            </td>
          </tr>

      </table>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div>
      <table cellpadding="0" cellspacing="0" id="list" width="100%">

          <tr valign="top" style="line-height: 1.25;">
            <td align="right" style="width: 27pt;"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">(5)&#160;&#160;&#160;&#160;
              &#160;&#160;</font></td>
            <td>
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Includes
                (i) 381,303 shares of Common Stock held by Mr. Horowitz, (ii) 4,337,861
                shares of Common Stock subject to currently exercisable stock options
                held
                by Mr. Horowitz, (iii) 2,467,800 shares of Common Stock held by CMH
                Capital Management Corp. (&#8220;CMH&#8221;), an entity solely owned by Mr. Horowitz,
                (iv) 550,000 shares of Common Stock subject to currently exercisable
                warrants held by CMH, (v) 750,000 shares of Common Stock subject
                to
                currently exercisable options held by CMH, (vi) 67,471 shares of
                Common
                Stock owned by Donna Slavitt, the wife of Mr. Horowitz, (vii) 127,500
                shares of Common Stock held by two trusts and a custodian account
                for the
                benefit of Mr. Horowitz&#8217;s three children and (viii) 2,291 shares of Common
                Stock held by Horowitz Partners, a general partnership of which Mr.
                Horowitz is a partner. Does not include options to purchase 10,625
                shares
                of Common Stock which are not currently exercisable. The address
                of CMH
                Capital Management Corp. is 445 Park Avenue, New York, New York
                10022.</font></div>
            </td>
          </tr>

      </table>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div>
      <table cellpadding="0" cellspacing="0" id="list" width="100%">

          <tr valign="top" style="line-height: 1.25;">
            <td align="right" style="width: 27pt;"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">(6)&#160;&#160;&#160;&#160;
              &#160;&#160;</font></td>
            <td>
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Includes
                4,337,861 shares of Common Stock subject to currently exercisable
                stock
                options held by Mr.&#160;Horowitz and 10,625 shares of Common Stock
                subject to stock options not currently
                exercisable.</font></div>
            </td>
          </tr>

      </table>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div>
      <table cellpadding="0" cellspacing="0" id="list" width="100%">

          <tr valign="top" style="line-height: 1.25;">
            <td align="right" style="width: 27pt;"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">(7)&#160;&#160;&#160;&#160;
              &#160;&#160;</font></td>
            <td>
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Includes
                (i) 1,280,207 shares of Common Stock held by Wheatley Partners II,
                L.P.,
                (ii) 194,280 shares of Common Stock held by Wheatley Partners, L.P.,
                (iii)
                16,868 shares of Common Stock held by Wheatley Foreign Partners,
                L.P.,
                (iv) 150,012 shares of Common Stock held by Mr. Rubenstein, (v) 47,500
                shares of Common Stock subject to currently exercisable stock options
                held
                by Mr. Rubenstein, and (vi) 829,226, 619,983, 309,316, 294,810 and
                1,049
                shares of Common Stock held by Woodland Venture Fund, Seneca Ventures,
                Woodland Partners, Brookwood Partners, L.P. and Marilyn Rubenstein,
                respectively. Does not include options to purchase 11,875 shares
                of Common
                Stock held by Mr. Rubenstein which are not currently exercisable.
                The
                aforementioned beneficial ownership by Mr. Rubenstein is based upon
                Amendment No. 6 to Schedule 13D jointly filed by Mr. Rubenstein and
                related parties with the Securities and Exchange Commission on January
                3,
                2005 and Form 4s filed by Mr. Rubenstein with the Securities and
                Exchange
                Commission on December 21, 2004 and February 17, 2005. Barry Rubenstein
                is
                a general partner of Wheatley Partners II, L.P. and a member of the
                general partner of each of Wheatley Partners, L.P. and Wheatley Foreign
                Partners, L.P. Barry Rubenstein and Woodland Services Corp. are the
                general partners of Woodland Venture Fund and Seneca Ventures. Barry
                Rubenstein is the President and sole director of Woodland Services
                Corp.
                Marilyn Rubenstein is the wife of Barry Rubenstein. Mr. Rubenstein
                disclaims beneficial ownership of the shares of Common Stock held
                by
                Wheatley Partners II, L.P., Wheatley Partners, L.P. and Wheatley
                Foreign
                Partners, L.P., except to the extent of his equity interest therein.
                The
                address of Barry Rubenstein is 68 Wheatley Road, Brookville, New
                York
                11545. The address of Wheatley Partners II, L.P. and Wheatley Partners,
                L.P. is 60 Cuttermill Road, Great Neck, New York 11021. The address
                of
                Wheatley Foreign Partners, L.P. is c/o Fiduciary Trust, One Capital
                Place,
                Snedden Road, P.O. Box 162, Grand Cayman, British West Indies. The
                address
                for Woodland Venture Fund, Seneca Ventures, Brookwood Partners, L.P.
                and
                Woodland Partners is c/o Barry Rubenstein, 68 Wheatley Road, Brookville,
                New York 11545.</font></div>
            </td>
          </tr>

      </table>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div>
      <table cellpadding="0" cellspacing="0" id="list" width="100%">

          <tr valign="top" style="line-height: 1.25;">
            <td align="right" style="width: 27pt;"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">(8)&#160;&#160;&#160;&#160;&#160;
              &#160;</font></td>
            <td>
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Includes
                47,500 shares of Common Stock to currently exercisable stock options
                and
                11,875 shares of Common Stock subject to stock options not currently
                exercisable.</font></div>
            </td>
          </tr>

      </table>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div id="PGBRK" style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">
      <div id="FTR">
        <div id="GLFTR" style="WIDTH: 100%" align="left">
        </div>
      </div>
      <div id="PN" style="PAGE-BREAK-AFTER: always">
        <div style="WIDTH: 100%; TEXT-ALIGN: center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: ">13</font></div>
        <div style="WIDTH: 100%; TEXT-ALIGN: center">
          <hr style="COLOR: black" noshade size="2">
        </div>
      </div>
      <div id="HDR">
        <div id="GLHDR" style="WIDTH: 100%" align="right">
        </div>
      </div>
    </div>
    <div>
      <table cellpadding="0" cellspacing="0" id="list" width="100%">

          <tr valign="top" style="line-height: 1.25;">
            <td align="right" style="width: 27pt;"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">(9)&#160;&#160;&#160;&#160;
              &#160;&#160;</font></td>
            <td>
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Includes
                (i) 1,280,207 shares of Common Stock held by Wheatley Partners II,
                L.P.,
                (ii)&#160;194,280 shares of Common Stock held by Wheatley Partners, L.P.,
                (iii) 16,868 shares of Common Stock held by Wheatley Foreign Partners,
                L.P., (iv) 509,483 shares of Common Stock owned by Mr. Lieber, and
                (v)
                47,500 shares of Common Stock subject to currently exercisable stock
                options owned by Mr. Lieber. Does not include options to purchase
                11,875
                shares of Common Stock owned by Mr. Lieber which are not currently
                exercisable. The aforementioned beneficial ownership by Mr. Lieber
                is
                based upon Amendment No. 6 to Schedule 13D jointly filed by Mr. Lieber
                and
                related parties with Securities and Exchange Commission on January
                3, 2005
                and Form 4s filed with the Securities and Exchange Commission on
                December
                21, 2004 and February 17, 2005. Mr. Lieber disclaims beneficial ownership
                of the shares of Common Stock held by Wheatley Partners II, L.P.,
                Wheatley
                Partners, L.P. and Wheatley Foreign Partners, L.P., except to the
                extent
                of his equity interest therein. The address of Irwin Lieber is c/o
                Wheatley Partners, II, L.P., 80 Cuttermill Road, Great Neck, New
                York
                11021.</font></div>
            </td>
          </tr>

      </table>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div>
      <table cellpadding="0" cellspacing="0" id="list" width="100%">

          <tr valign="top" style="line-height: 1.25;">
            <td align="right" style="width: 27pt;"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">(10)&#160;&#160;&#160;&#160;&#160;</font></td>
            <td>
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Includes
                47,500 shares of Common Stock subject to currently exercisable stock
                options and 11,875 shares of Common Stock subject to stock options
                not
                currently exercisable.</font></div>
            </td>
          </tr>

      </table>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div>
      <table cellpadding="0" cellspacing="0" id="list" width="100%">

          <tr valign="top" style="line-height: 1.25;">
            <td align="right" style="width: 27pt;"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">(11)&#160;&#160;
              &#160;&#160;</font></td>
            <td>
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Includes
                (i) 154,777 shares of Common Stock, (ii) 75,000 shares subject to
                currently exercisable warrants and (iii) 111,250 shares subject to
                currently exercisable stock options issued to Mr. Graifman. Does
                not
                include options to purchase 3,750 shares of Common Stock which are
                not
                currently exercisable. </font></div>
            </td>
          </tr>

      </table>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div>
      <table cellpadding="0" cellspacing="0" id="list" width="100%">

          <tr valign="top" style="line-height: 1.25;">
            <td align="right" style="width: 27pt;"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">(12)&#160;&#160;
              &#160;&#160;</font></td>
            <td>
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Includes
                111,250 shares subject to currently exercisable stock options issued
                to
                Mr.&#160;Graifman and 3,750 shares of Common Stock subject to stock
                options not currently exercisable.</font></div>
            </td>
          </tr>

      </table>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div>
      <table cellpadding="0" cellspacing="0" id="list" width="100%">

          <tr valign="top" style="line-height: 1.25;">
            <td align="right" style="width: 27pt;"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">(13)&#160;&#160;
              &#160;&#160;</font></td>
            <td>
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Includes
                132,500 shares of Common Stock subject to currently exercisable stock
                options issued to Mr. Schessel. Does not include options to purchase
                7,500
                shares of Common Stock which are not currently
                exercisable.</font></div>
            </td>
          </tr>

      </table>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div>
      <table cellpadding="0" cellspacing="0" id="list" width="100%">

          <tr valign="top" style="line-height: 1.25;">
            <td align="right" style="width: 27pt;"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">(14)&#160;&#160;
              &#160;&#160;</font></td>
            <td>
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Includes
                132,500 shares subject to currently exercisable stock options issued
                to
                Mr.&#160;Schessel and 7,500 shares of Common Stock subject to options
                which are not currently
                exercisable.</font></div>
            </td>
          </tr>

      </table>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div>
      <table cellpadding="0" cellspacing="0" id="list" width="100%">

          <tr valign="top" style="line-height: 1.25;">
            <td align="right" style="width: 27pt;"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">(15)&#160;&#160;
              &#160;&#160;</font></td>
            <td>
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Includes
                117,500 shares of Common Stock subject to currently exercisable options.
                Does not include options to purchase 50,000 shares of Common Stock
                which
                are not currently exercisable.</font></div>
            </td>
          </tr>

      </table>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div>
      <table cellpadding="0" cellspacing="0" id="list" width="100%">

          <tr valign="top" style="line-height: 1.25;">
            <td align="right" style="width: 27pt;"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">(16)&#160;&#160;
              &#160;&#160;</font></td>
            <td>
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Includes
                117,500 shares of Common Stock subject to currently exercisable options
                issued to Mr.&#160;Greene and 50,000 shares of Common Stock subject to
                options which are not currently
                exercisable.</font></div>
            </td>
          </tr>

      </table>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div>
      <table cellpadding="0" cellspacing="0" id="list" width="100%">

          <tr valign="top" style="line-height: 1.25;">
            <td align="right" style="width: 27pt;"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">(17)&#160;&#160;&#160;
              &#160;</font></td>
            <td>
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Includes
                160,625 shares of Common Stock subject to currently exercisable stock
                options issued to Mr. Kahn. Does not include options to purchase
                39,375
                shares of Common Stock which are not currently
                exercisable.</font></div>
            </td>
          </tr>

      </table>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div>
      <table cellpadding="0" cellspacing="0" id="list" width="100%">

          <tr valign="top" style="line-height: 1.25;">
            <td align="right" style="width: 27pt;"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">(18)&#160;&#160;
              &#160;&#160;</font></td>
            <td>
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Includes
                160,625 shares of Common Stock subject to currently exercisable options
                and 39,375 shares of Common Stock subject to options which are not
                currently exercisable.</font></div>
            </td>
          </tr>

      </table>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div>
      <table cellpadding="0" cellspacing="0" id="list" width="100%">

          <tr valign="top" style="line-height: 1.25;">
            <td align="right" style="width: 27pt;"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">(19)&#160;&#160;
              &#160;&#160;</font></td>
            <td>
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Includes
                100,000 shares of Common Stock subject to currently exercisable
                options.</font></div>
            </td>
          </tr>

      </table>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div>
      <table cellpadding="0" cellspacing="0" id="list" width="100%">

          <tr valign="top" style="line-height: 1.25;">
            <td align="right" style="width: 27pt;"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">(20)&#160;&#160;
              &#160;&#160;</font></td>
            <td>
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Includes
                150,000 shares of Common Stock subject to currently exercisable options
                and warrants issued to Mr.&#160;Ohana.
</font></div>
            </td>
          </tr>

      </table>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div>
      <table cellpadding="0" cellspacing="0" id="list" width="100%">

          <tr valign="top" style="line-height: 1.25;">
            <td align="right" style="width: 27pt;"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">(21)&#160;&#160;
              &#160;&#160;</font></td>
            <td>
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Includes
                100,000 shares of Common Stock subject to currently exercisable options
                issued to Mr.&#160;Ohana.</font></div>
            </td>
          </tr>

      </table>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div>
      <table cellpadding="0" cellspacing="0" id="list" width="100%">

          <tr valign="top" style="line-height: 1.25;">
            <td align="right" style="width: 27pt;"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">(22)&#160;&#160;
              &#160;&#160;</font></td>
            <td>
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Includes
                75,000 shares of Common Stock subject to currently exercisable
                options.</font></div>
            </td>
          </tr>

      </table>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div id="PGBRK" style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">
      <div id="FTR">
        <div id="GLFTR" style="WIDTH: 100%" align="left">
        </div>
      </div>
      <div id="PN" style="PAGE-BREAK-AFTER: always">
        <div style="WIDTH: 100%; TEXT-ALIGN: center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: ">14</font></div>
        <div style="WIDTH: 100%; TEXT-ALIGN: center">
          <hr style="COLOR: black" noshade size="2">
        </div>
      </div>
      <div id="HDR">
        <div id="GLHDR" style="WIDTH: 100%" align="right">
        </div>
      </div>
    </div>
    <div>
      <table cellpadding="0" cellspacing="0" id="list" width="100%">

          <tr valign="top" style="line-height: 1.25;">
            <td align="right" style="width: 27pt;"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">(23)&#160;&#160;
              &#160;&#160;</font></td>
            <td>
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Includes
                66,250 shares of Common Stock subject to currently exercisable
                options.</font></div>
            </td>
          </tr>

      </table>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div>
      <table cellpadding="0" cellspacing="0" id="list" width="100%">

          <tr valign="top" style="line-height: 1.25;">
            <td align="right" style="width: 27pt;"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">(24)&#160;&#160;
              &#160;&#160;</font></td>
            <td>
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Includes
                60,000 shares of Common Stock subject to currently exercisable
                options.</font></div>
            </td>
          </tr>

      </table>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div>
      <table cellpadding="0" cellspacing="0" id="list" width="100%">

          <tr valign="top" style="line-height: 1.25;">
            <td align="right" style="width: 27pt;"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">(25)&#160;&#160;
              &#160;&#160;</font></td>
            <td>
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Includes
                60,000 shares of Common Stock subject to currently exercisable
                options.</font></div>
            </td>
          </tr>

      </table>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div>
      <table cellpadding="0" cellspacing="0" id="list" width="100%">

          <tr valign="top" style="line-height: 1.25;">
            <td align="right" style="width: 27pt;"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">(26)&#160;&#160;
              &#160;&#160;</font></td>
            <td>
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Includes
                100,000 shares of Common Stock subject to currently exercisable
                options.</font></div>
            </td>
          </tr>

      </table>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div>
      <table cellpadding="0" cellspacing="0" id="list" width="100%">

          <tr valign="top" style="line-height: 1.25;">
            <td align="right" style="width: 27pt;"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">(27)&#160;&#160;
              &#160;&#160;</font></td>
            <td>
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Includes
                20,000 shares of Common Stock subject to currently exercisable
                options.</font></div>
            </td>
          </tr>

      </table>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div>
      <table cellpadding="0" cellspacing="0" id="list" width="100%">

          <tr valign="top" style="line-height: 1.25;">
            <td align="right" style="width: 27pt;"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">(28)&#160;&#160;
              &#160;&#160;</font></td>
            <td>
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Includes
                50,000 shares of Common Stock subject to currently exercisable
                options.</font></div>
            </td>
          </tr>

      </table>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div>
      <table cellpadding="0" cellspacing="0" id="list" width="100%">

          <tr valign="top" style="line-height: 1.25;">
            <td align="right" style="width: 27pt;"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">(29)&#160;&#160;
              &#160;&#160;</font></td>
            <td>
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Includes
                17,500 shares of Common Stock subject to currently exercisable
                options.</font></div>
            </td>
          </tr>

      </table>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div>
      <table cellpadding="0" cellspacing="0" id="list" width="100%">

          <tr valign="top" style="line-height: 1.25;">
            <td align="right" style="width: 27pt;"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">(30)&#160;&#160;
              &#160;&#160;</font></td>
            <td>
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Includes
                17,500 shares of Common Stock subject to currently exercisable
                options.</font></div>
            </td>
          </tr>

      </table>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div>
      <table cellpadding="0" cellspacing="0" id="list" width="100%">

          <tr valign="top" style="line-height: 1.25;">
            <td align="right" style="width: 27pt;"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">(31)&#160;&#160;
              &#160;&#160;</font></td>
            <td>
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Includes
                17,500 shares of Common Stock subject to currently exercisable
                options.</font></div>
            </td>
          </tr>

      </table>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div>
      <table cellpadding="0" cellspacing="0" id="list" width="100%">

          <tr valign="top" style="line-height: 1.25;">
            <td align="right" style="width: 27pt;"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">(32)&#160;&#160;
              &#160;&#160;</font></td>
            <td>
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Includes
                16,800 shares of Common Stock subject to currently exercisable
                options.</font></div>
            </td>
          </tr>

      </table>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div>
      <table cellpadding="0" cellspacing="0" id="list" width="100%">

          <tr valign="top" style="line-height: 1.25;">
            <td align="right" style="width: 27pt;"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">(33)&#160;&#160;
              &#160;&#160;</font></td>
            <td>
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Includes
                15,000 shares of Common Stock subject to currently exercisable
                options.</font></div>
            </td>
          </tr>

      </table>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div>
      <table cellpadding="0" cellspacing="0" id="list" width="100%">

          <tr valign="top" style="line-height: 1.25;">
            <td align="right" style="width: 27pt;"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">(34)&#160;&#160;
              &#160;&#160;</font></td>
            <td>
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Includes
                15,000 shares of Common Stock subject to currently exercisable
                options.</font></div>
            </td>
          </tr>

      </table>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div>
      <table cellpadding="0" cellspacing="0" id="list" width="100%">

          <tr valign="top" style="line-height: 1.25;">
            <td align="right" style="width: 27pt;"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">(35)&#160;&#160;
              &#160;&#160;</font></td>
            <td>
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Includes
                12,500 shares of Common Stock subject to currently exercisable
                options.</font></div>
            </td>
          </tr>

      </table>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div>
      <table cellpadding="0" cellspacing="0" id="list" width="100%">

          <tr valign="top" style="line-height: 1.25;">
            <td align="right" style="width: 27pt;"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">(36)&#160;&#160;
              &#160;&#160;</font></td>
            <td>
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Includes
                11,594 shares of Common Stock subject to currently exercisable
                options.</font></div>
            </td>
          </tr>

      </table>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div>
      <table cellpadding="0" cellspacing="0" id="list" width="100%">

          <tr valign="top" style="line-height: 1.25;">
            <td align="right" style="width: 27pt;"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">(37)&#160;&#160;
              &#160;&#160;</font></td>
            <td>
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Includes
                10,937 shares of Common Stock subject to currently exercisable
                options.</font></div>
            </td>
          </tr>

      </table>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div>
      <table cellpadding="0" cellspacing="0" id="list" width="100%">

          <tr valign="top" style="line-height: 1.25;">
            <td align="right" style="width: 27pt;"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">(38)&#160;&#160;
              &#160;&#160;</font></td>
            <td>
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Includes
                10,000 shares of Common Stock subject to currently exercisable
                options.</font></div>
            </td>
          </tr>

      </table>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div>
      <table cellpadding="0" cellspacing="0" id="list" width="100%">

          <tr valign="top" style="line-height: 1.25;">
            <td align="right" style="width: 27pt;"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">(39)&#160;&#160;
              &#160;&#160;</font></td>
            <td>
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Includes
                8,575 shares of Common Stock subject to currently exercisable
                options.</font></div>
            </td>
          </tr>

      </table>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div>
      <table cellpadding="0" cellspacing="0" id="list" width="100%">

          <tr valign="top" style="line-height: 1.25;">
            <td align="right" style="width: 27pt;"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">(40)&#160;&#160;
              &#160;&#160;</font></td>
            <td>
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Includes
                7,812 shares of Common Stock subject to currently exercisable
                options.</font></div>
            </td>
          </tr>

      </table>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div>
      <table cellpadding="0" cellspacing="0" id="list" width="100%">

          <tr valign="top" style="line-height: 1.25;">
            <td align="right" style="width: 27pt;"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">(41)&#160;&#160;
              &#160;&#160;</font></td>
            <td>
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Includes
                7,600 shares of Common Stock subject to currently exercisable
                options.</font></div>
            </td>
          </tr>

      </table>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div>
      <table cellpadding="0" cellspacing="0" id="list" width="100%">

          <tr valign="top" style="line-height: 1.25;">
            <td align="right" style="width: 27pt;"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">(42)&#160;&#160;
              &#160;&#160;</font></td>
            <td>
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Includes
                7,500 shares of Common Stock subject to currently exercisable
                options.</font></div>
            </td>
          </tr>

      </table>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div>
      <table cellpadding="0" cellspacing="0" id="list" width="100%">

          <tr valign="top" style="line-height: 1.25;">
            <td align="right" style="width: 27pt;"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">(43)&#160;&#160;
              &#160;&#160;</font></td>
            <td>
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Includes
                6,500 shares of Common Stock subject to currently exercisable
                options.</font></div>
            </td>
          </tr>

      </table>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div>
      <table cellpadding="0" cellspacing="0" id="list" width="100%">

          <tr valign="top" style="line-height: 1.25;">
            <td align="right" style="width: 27pt;"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">(44)&#160;&#160;
              &#160;&#160;</font></td>
            <td>
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Includes
                4,375 shares of Common Stock subject to currently exercisable
                options.</font></div>
            </td>
          </tr>

      </table>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div>
      <table cellpadding="0" cellspacing="0" id="list" width="100%">

          <tr valign="top" style="line-height: 1.25;">
            <td align="right" style="width: 27pt;"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">(45)&#160;&#160;
              &#160;&#160;</font></td>
            <td>
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Includes
                4,000 shares of Common Stock subject to currently exercisable
                options.</font></div>
            </td>
          </tr>

      </table>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div>
      <table cellpadding="0" cellspacing="0" id="list" width="100%">

          <tr valign="top" style="line-height: 1.25;">
            <td align="right" style="width: 27pt;"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">(46)&#160;&#160;
              &#160;&#160;</font></td>
            <td>
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Includes
                2,500 shares of Common Stock subject to currently exercisable
                options.</font></div>
            </td>
          </tr>

      </table>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div>
      <table cellpadding="0" cellspacing="0" id="list" width="100%">

          <tr valign="top" style="line-height: 1.25;">
            <td align="right" style="width: 27pt;"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">(47)&#160;&#160;
              &#160;&#160;</font></td>
            <td>
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Includes
                1,552 shares of Common Stock subject to currently exercisable
                options.</font></div>
            </td>
          </tr>

      </table>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div>
      <table cellpadding="0" cellspacing="0" id="list" width="100%">

          <tr valign="top" style="line-height: 1.25;">
            <td align="right" style="width: 27pt;"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">(48)&#160;&#160;
              &#160;&#160;</font></td>
            <td>
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Includes
                2,000 shares of Common Stock subject to currently exercisable
                options.</font></div>
            </td>
          </tr>

      </table>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div id="PGBRK" style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">
      <div id="FTR">
        <div id="GLFTR" style="WIDTH: 100%" align="left">
        </div>
      </div>
      <div id="PN" style="PAGE-BREAK-AFTER: always">
        <div style="WIDTH: 100%; TEXT-ALIGN: center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: ">15</font></div>
        <div style="WIDTH: 100%; TEXT-ALIGN: center">
          <hr style="COLOR: black" noshade size="2">
        </div>
      </div>
      <div id="HDR">
        <div id="GLHDR" style="WIDTH: 100%" align="right">
        </div>
      </div>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>PLAN
      OF DISTRIBUTION</strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font id="TAB1" style="MARGIN-LEFT: 36pt"></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">This
      offering is self-underwritten. Neither we nor the selling stockholders have
      employed an underwriter for the sale of Common Stock by the selling
      stockholders. We will bear all expenses in connection with the preparation
      of
      this prospectus. The selling stockholders will bear all expenses associated
      with
      the sale of their Common Stock. There can be no assurance that the selling
      stockholders will sell any or all of the shares of Common Stock offered by
      them
      under this prospectus or otherwise.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font id="TAB1" style="MARGIN-LEFT: 36pt"></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">At
      the
      time a selling stockholder makes an offer to sell shares, to the extent required
      by the Securities Act of 1933, as amended, a prospectus will be delivered.
      If a
      supplemental prospectus is required, one will be delivered setting forth the
      number of shares being offered and the terms of the offering.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The
      selling stockholders may offer their shares of Common Stock directly or through
      pledgees, donees, transferees or other successors in interest in one or more
      of
      the following transactions:</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div>
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          <tr valign="top" style="line-height: 1.25;">
            <td align="right" style="width: 72pt;"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Symbol, serif">&#183;&#160;&#160;</font></td>
            <td>
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">ordinary
                brokerage transactions in which the broker-dealer solicits
                purchasers;</font></div>
            </td>
          </tr>

      </table>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div>
      <table cellpadding="0" cellspacing="0" id="list" width="100%">

          <tr valign="top" style="line-height: 1.25;">
            <td align="right" style="width: 72pt;"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Symbol, serif">&#183;&#160;&#160;</font></td>
            <td>
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">block
                trades in which the broker-dealer will attempt to sell the shares
                as agent
                but may position and resell a portion of the block as principal to
                facilitate the transaction;</font></div>
            </td>
          </tr>

      </table>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div>
      <table cellpadding="0" cellspacing="0" id="list" width="100%">

          <tr valign="top" style="line-height: 1.25;">
            <td align="right" style="width: 72pt;"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Symbol, serif">&#183;&#160;&#160;</font></td>
            <td>
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">purchases
                by a broker-dealer as principal and resale by the broker-dealer for
                its
                account;</font></div>
            </td>
          </tr>

      </table>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div>
      <table cellpadding="0" cellspacing="0" id="list" width="100%">

          <tr valign="top" style="line-height: 1.25;">
            <td align="right" style="width: 72pt;"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Symbol, serif">&#183;&#160;&#160;</font></td>
            <td>
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">an
                exchange distribution in accordance with the rules of the applicable
                exchange;</font></div>
            </td>
          </tr>

      </table>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div>
      <table cellpadding="0" cellspacing="0" id="list" width="100%">

          <tr valign="top" style="line-height: 1.25;">
            <td align="right" style="width: 72pt;"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Symbol, serif">&#183;&#160;&#160;</font></td>
            <td>
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">privately
                negotiated transactions;</font></div>
            </td>
          </tr>

      </table>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div>
      <table cellpadding="0" cellspacing="0" id="list" width="100%">

          <tr valign="top" style="line-height: 1.25;">
            <td align="right" style="width: 72pt;"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Symbol, serif">&#183;&#160;&#160;</font></td>
            <td>
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">broker-dealers
                may agree with the selling stockholders to sell a specified number
                of such
                shares at a stipulated price per
                share;</font></div>
            </td>
          </tr>

      </table>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div>
      <table cellpadding="0" cellspacing="0" id="list" width="100%">

          <tr valign="top" style="line-height: 1.25;">
            <td align="right" style="width: 72pt;"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Symbol, serif">&#183;&#160;&#160;</font></td>
            <td>
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">a
                combination of any such methods of sale;
                and</font></div>
            </td>
          </tr>

      </table>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div>
      <table cellpadding="0" cellspacing="0" id="list" width="100%">

          <tr valign="top" style="line-height: 1.25;">
            <td align="right" style="width: 72pt;"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Symbol, serif">&#183;&#160;&#160;</font></td>
            <td>
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">any
                other method permitted pursuant to applicable
                law.</font></div>
            </td>
          </tr>

      </table>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The
      selling stockholders may offer their shares of Common Stock at any of the
      following prices:</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div>
      <table cellpadding="0" cellspacing="0" id="list" width="100%">

          <tr valign="top" style="line-height: 1.25;">
            <td align="right" style="width: 72pt;"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Symbol, serif">&#183;&#160;&#160;</font></td>
            <td>
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">fixed
                prices that may be changed;</font></div>
            </td>
          </tr>

      </table>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div>
      <table cellpadding="0" cellspacing="0" id="list" width="100%">

          <tr valign="top" style="line-height: 1.25;">
            <td align="right" style="width: 72pt;"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Symbol, serif">&#183;&#160;&#160;</font></td>
            <td>
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">market
                prices prevailing at the time of
                sale;</font></div>
            </td>
          </tr>

      </table>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div>
      <table cellpadding="0" cellspacing="0" id="list" width="100%">

          <tr valign="top" style="line-height: 1.25;">
            <td align="right" style="width: 72pt;"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Symbol, serif">&#183;&#160;&#160;</font></td>
            <td>
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">prices
                related to such prevailing market prices;
                and</font></div>
            </td>
          </tr>

      </table>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div>
      <table cellpadding="0" cellspacing="0" id="list" width="100%">

          <tr valign="top" style="line-height: 1.25;">
            <td align="right" style="width: 72pt;"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Symbol, serif">&#183;&#160;&#160;</font></td>
            <td>
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">at
                negotiated prices.</font></div>
            </td>
          </tr>

      </table>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The
      selling stockholders may effect transactions by selling shares to or through
      broker-dealers, and all such broker-dealers may receive compensation in the
      form
      of discounts, concessions, or commissions from the selling stockholders and/or
      the purchasers of shares of Common Stock for whom such broker-dealers may act
      as
      agents or to whom they sell as principals, or both (which compensation as to
      a
      particular broker-dealer might be in excess of customary
      commissions).</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div id="PGBRK" style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">
      <div id="FTR">
        <div id="GLFTR" style="WIDTH: 100%" align="left">
        </div>
      </div>
      <div id="PN" style="PAGE-BREAK-AFTER: always">
        <div style="WIDTH: 100%; TEXT-ALIGN: center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: ">16</font></div>
        <div style="WIDTH: 100%; TEXT-ALIGN: center">
          <hr style="COLOR: black" noshade size="2">
        </div>
      </div>
      <div id="HDR">
        <div id="GLHDR" style="WIDTH: 100%" align="right">
        </div>
      </div>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Any
      broker-dealer acquiring Common Stock from the selling stockholders may sell
      the
      shares either directly, in its normal market-making activities, through or
      to
      other brokers on a principal or agency basis or to its customers. Any such
      sales
      may be at prices then prevailing on the OTC Bulletin Board or at prices related
      to such prevailing market prices or at negotiated prices to its customers or
      a
      combination of such methods. The selling stockholders and any broker-dealers
      that act in connection with the sale of the Common Stock hereunder might be
      deemed to be &#8220;underwriters&#8221; within the meaning of Section 2(11) of the
      Securities Act; any commission received by them and any profit on the resale
      of
      shares as principal might be deemed to be underwriting discounts and commissions
      under the Securities Act. Any such commissions, as well as other expenses
      incurred by the selling stockholders and applicable transfer taxes, are payable
      by the selling stockholders.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The
      selling stockholders reserve the right to accept, and together with any agent
      of
      the selling stockholder, to reject in whole or in part any proposed purchase
      of
      the shares of Common Stock. The selling stockholders will pay any sales
      commissions or other seller&#8217;s compensation applicable to such
      transactions.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Since
      we
      do not satisfy the registrant requirements for use of Form S-3 at the time
      of
      filing this prospectus, the Rule 144(e) volume limitations shall be applicable
      to the amount of securities to be reoffered or resold by means of this reoffer
      prospectus by each person, and any other person with whom he or she is acting
      in
      concert for purposes of selling securities of the Company. The volume
      limitations in Rule 144(e) provide for the sale within any three-month period
      a
      number of shares that does not exceed the greater of: (i) 1% of the number
      of
      shares of Common Stock then outstanding (which currently equals 197,765 as
      of
      the date of this prospectus) or (ii) the average weekly trading volume during
      the four prior calendar weeks.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">We
      have
      not registered or qualified offers and sales of shares of the Common Stock
      under
      the laws of any country other than the United States. To comply with certain
      states&#8217; securities laws, if applicable, the selling stockholders will offer and
      sell their shares of Common Stock in such jurisdictions only through registered
      or licensed brokers or dealers. In addition, in certain states the selling
      stockholders may not offer or sell shares of Common Stock unless we have
      registered or qualified such shares for sale in such states or we have complied
      with an available exemption from registration or qualification.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The
      selling stockholders with respect to any purchase or sale of shares of Common
      Stock are required to comply with Regulation M promulgated under the Securities
      Exchange Act of 1934, as amended. In general, Rule 102 under Regulation M
      prohibits any person connected with a distribution of securities (the
&#8220;Distribution&#8221;) from directly or indirectly bidding for, or purchasing for any
      account in which he or she has a beneficial interest, any of such securities
      or
      any right to purchase such securities, for a period of one business day before
      and after completion of his or her participation in the Distribution (we refer
      to that time period as the &#8220;Distribution Period&#8221;).</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">During
      the Distribution Period, Rule 104 under Regulation M prohibits the selling
      stockholders and any other persons engaged in the Distribution from engaging
      in
      any stabilizing bid or purchasing of our Common Stock except for the purpose
      of
      preventing or retarding a decline in the open market price of our Common Stock.
      No such person may effect any stabilizing transaction to facilitate any offering
      at the market. Inasmuch as the selling shareholders will be reoffering and
      reselling our Common Stock at the market, Rule 104 prohibits them from effecting
      any stabilizing transaction in contravention of Rule 104 with respect of our
      Common Stock.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">There
      can
      be no assurance that the selling stockholders will sell any or all of the shares
      offered by them hereunder or otherwise.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div id="PGBRK" style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">
      <div id="FTR">
        <div id="GLFTR" style="WIDTH: 100%" align="left">
        </div>
      </div>
      <div id="PN" style="PAGE-BREAK-AFTER: always">
        <div style="WIDTH: 100%; TEXT-ALIGN: center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: ">17</font></div>
        <div style="WIDTH: 100%; TEXT-ALIGN: center">
          <hr style="COLOR: black" noshade size="2">
        </div>
      </div>
      <div id="HDR">
        <div id="GLHDR" style="WIDTH: 100%" align="right">
        </div>
      </div>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>LEGAL
      MATTERS</strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The
      validity of the shares of Common Stock offered hereby have been passed upon
      for
      us by Eiseman Levine Lehrhaupt &amp; Kakoyiannis, P.C., 805 Third Avenue, New
      York, New York 10022. Sam Schwartz, a partner of that firm, owns 23,584 shares
      of our Common Stock and options to purchase 12,500 shares of our Common Stock
      as
      of the date of this prospectus. </font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><a name="FIS_EXPERTS"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>EXPERTS
      </strong></font></a></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The
      financial statements for the year ended December&#160;31, 2005 incorporated in
      this prospectus by reference to the Annual Report on Form 10-KSB for the year
      ended December 31, 2005 have been so incorporated in reliance on the report
      of
      Radin, Glass &amp; Co., LLP, independent accountants, given on the authority of
      said firm as experts in auditing and accounting. The financial statements for
      the year ended December&#160;31, 2004 incorporated in this prospectus by
      reference to the Annual Report on Form 10-KSB for the year ended
      December&#160;31, 2005 have been so incorporated in reliance on the report of
      Eisner LLP, an independent registered accounting firm, given on the authority
      of
      said firm as experts in auditing and accounting.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>DISCLOSURE
      OF COMMISSION POSITION ON INDEMNIFICATION </strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>FOR
      SECURITIES ACT LIABILITIES </strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Our
      Certificate of Incorporation and Bylaws provide our directors with protection
      for breaches of their fiduciary duties to us </font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">and</font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">
      our
      shareholders. Insofar as indemnification for liabilities arising under the
      Securities Act may be permitted to our directors, officers or persons
      controlling us, we have been advised that it is the SEC&#8217;s opinion that such
      indemnification is against public policy as expressed in the Securities Act
      and
      is, therefore, unenforceable.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">In
      the
      event that a claim for indemnification against such liabilities (other than
      the
      payment by us of expenses incurred or </font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">paid</font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">
      by a
      director, officer or controlling person in the successful defense of any action,
      suit or proceeding) is asserted by such director, officer or controlling person
      in connection with the securities being registered, we will, unless in the
      opinion of our counsel the matter has been settled by controlling precedent,
      submit to a court of appropriate jurisdiction the question whether such
      indemnification by it is against public policy as expressed in the Securities
      Act and will be governed by the final adjudication of such issue.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div id="PGBRK" style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">
      <div id="FTR">
        <div id="GLFTR" style="WIDTH: 100%" align="left">
        </div>
      </div>
      <div id="PN" style="PAGE-BREAK-AFTER: always">
        <div style="WIDTH: 100%; TEXT-ALIGN: center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: ">18</font></div>
        <div style="WIDTH: 100%; TEXT-ALIGN: center">
          <hr style="COLOR: black" noshade size="2">
        </div>
      </div>
      <div id="HDR">
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        </div>
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    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><a name="FIS_PART_II"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>PART
      II </strong></font></a></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>INFORMATION
      REQUIRED IN THE REGISTRATION STATEMENT </strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>ITEM
      3.&#160; INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE </strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The
      following documents filed by Network-1 Security Solutions, Inc. (the &#8220;Company&#8221;)
      with the Securities and Exchange Commission (the &#8220;Commission&#8221;) pursuant to the
      Securities Exchange Act of 1934, as amended (the &#8220;Exchange Act&#8221;), and the
      Securities Act of 1933, as amended (the &#8220;Securities Act&#8221;), are incorporated by
      reference in, and made a part of, this Registration Statement: </font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div>
      <table cellpadding="0" cellspacing="0" id="list" width="100%">

          <tr valign="top" style="line-height: 1.25;">
            <td align="right" style="width: 18pt;"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">1.&#160;&#160;&#160;&#160;</font></td>
            <td>
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Our
                Annual Report on Form 10-KSB for the year ended December 31, 2005
                (filed
                April 12, 2006);</font></div>
            </td>
          </tr>

      </table>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div>
      <table cellpadding="0" cellspacing="0" id="list" width="100%">

          <tr valign="top" style="line-height: 1.25;">
            <td align="right" style="width: 18pt;"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">2.&#160;&#160;
              &#160;</font></td>
            <td>
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Our
                current reports on Form 8-K and Form 8-K/A filed on February&#160;8, 2006,
                February&#160;9, 2006, February&#160;15, 2006, March&#160;31, 2006,
                April&#160;17, 2006, May&#160;16, 2006, August&#160;7, 2006,
                September&#160;14, 2006, November</font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">&#160;</font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">15,
                2006, November&#160;28, 2006 and December&#160;22, 2006</font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">;</font></div>
            </td>
          </tr>

      </table>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div>
      <table cellpadding="0" cellspacing="0" id="list" width="100%">

          <tr valign="top" style="line-height: 1.25;">
            <td align="right" style="width: 18pt;"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">3.&#160;&#160;
              &#160;</font></td>
            <td>
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Our
                Quarterly Report on Form 10-QSB for the period ended March&#160;31, 2006,
                June&#160;30, 2006 and September&#160;30, 2006 (filed May&#160;15, 2006,
                August&#160;3, 2006 and November&#160;14, 2006);
                and</font></div>
            </td>
          </tr>

      </table>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div>
      <table cellpadding="0" cellspacing="0" id="list" width="100%">

          <tr valign="top" style="line-height: 1.25;">
            <td align="right" style="width: 18pt;"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">4.&#160;&#160;
              &#160;</font></td>
            <td>
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The
                description of our Common Stock incorporated by reference in our
                Registration Statement on Form 8-A (filed October 9, 1998), as amended
                on
                November 3, 1998.</font></div>
            </td>
          </tr>

      </table>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">All
      reports and other documents subsequently filed by the Company pursuant to
      Sections 13(a), 13(c), 14 and 15(d) of the Exchange Act, prior to the filing
      of
      a post-effective amendment that indicates that all shares of Common Stock
      offered hereby have been sold or which deregisters all shares then remaining
      unsold, shall be deemed to be incorporated by reference in this Registration
      Statement and to be a part hereof from the date of filing of such reports and
      other documents. Any statement contained in a document incorporated or deemed
      to
      be incorporated by reference herein shall be deemed to be modified or superseded
      for purposes of this Registration Statement to the extent that a statement
      contained herein or in any other subsequently filed document which also is
      incorporated or deemed to be incorporated by reference herein modifies or
      supersedes such statement. Any statement so modified or superseded shall not
      be
      deemed, except as so modified or superseded, to constitute a part of this
      Registration Statement. </font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">We
      will
      provide at no cost to each person to whom this prospectus is delivered, upon
      written or oral request, a copy of any of these filings, excluding the exhibits
      to such filings that we have not specifically incorporated by reference in
      such
      filings. You should direct such requests to us at 445 Park Avenue, Suite 1028,
      New York, New York 10021, Attention: Corey M. Horowitz, Chairman and Chief
      Executive Officer, telephone number (212) 829-5770.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><a name="FIS_SECURITIES_DESCRIPTION"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>ITEM
      4.&#160; DESCRIPTION OF SECURITIES </strong></font></a></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Not
      applicable. </font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>ITEM
      5.&#160; INTERESTS OF NAMED EXPERTS AND COUNSEL </strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The
      validity of the Common Stock offered hereby has been passed upon by the Company
      by Eiseman Levine Lehrhaupt &amp; Kakoyiannis, P.C. (&#8220;ELLK&#8221;), 805 Third Avenue,
      New York, New York 10022, Sam Schwartz, a partner of ELLK, currently owns 23,584
      shares of our Common Stock and options to purchase 12,500 shares of our Common
      Stock.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div id="PGBRK" style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">
      <div id="FTR">
        <div id="GLFTR" style="WIDTH: 100%" align="left">
        </div>
      </div>
      <div id="PN" style="PAGE-BREAK-AFTER: always">
        <div style="WIDTH: 100%; TEXT-ALIGN: center">
        </div>
        <div style="WIDTH: 100%; TEXT-ALIGN: center">
          <hr style="COLOR: black" noshade size="2">
        </div>
      </div>
      <div id="HDR">
        <div id="GLHDR" style="WIDTH: 100%" align="right">
        </div>
      </div>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><a name="FIS_INDEMNIFICATION"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>ITEM
      6.&#160; INDEMNIFICATION OF DIRECTORS AND OFFICERS </strong></font></a></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Section
      145 of the Delaware General Corporations Law (the &#8220;DGCL&#8221;) contains provisions
      entitling the Company&#8217;s directors and officers to indemnification from
      judgments, fines, amounts paid in settlement, and reasonable expenses (including
      attorneys&#8217; fees) as the result of an action or proceeding in which they may be
      involved by reason of having been a director or officer of the Company. In
      its
      Certificate of Incorporation, the Company has included a provision that limits,
      to the fullest extent now or hereafter permitted by the DGCL, the personal
      liability of its directors to the Company or its stockholders for monetary
      damages arising from a breach of their fiduciary duties as directors. Under
      the
      DGCL as currently in effect, this provision limits a director&#8217;s liability except
      where such director (i) breaches his duty of loyalty to the Company or its
      stockholders, (ii) fails to act in good faith or engages in intentional
      misconduct or a knowing violation of law, (iii) authorizes payment of an
      unlawful dividend or stock purchase or redemption as provided in Section 174
      of
      the DGCL, or (iv) obtains an improper personal benefit. This provision does
      not
      prevent the Company or its stockholders from seeking equitable remedies, such
      as
      injunctive relief or rescission. If equitable remedies are found not to be
      available to stockholders in any particular case, stockholders may not have
      any
      effective remedy against actions taken by directors that constitute negligence
      or gross negligence.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The
      Certificate of Incorporation also includes provisions to the effect that
      (subject to certain exceptions) the Company shall, to the maximum extent
      permitted from time to time under the law of the State of Delaware, indemnify,
      and upon request shall advance expenses to, any director or officer to the
      extent that such indemnification and advancement of expenses is permitted under
      such law, as it may from time to time be in effect. In addition, the Bylaws
      require the Company to indemnify, to the full extent permitted by law, any
      director, office, employee or agent of the Company for acts which such person
      reasonably believes are not in violation of the Company&#8217;s corporate purposes as
      set forth in the Certificate of Incorporation. At present, the DGCL provides
      that, in order to be entitled to indemnification, an individual must have acted
      in good faith and in a manner he or she reasonably believed to be in or not
      opposed to the Company&#8217;s best interests.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Insofar
      as indemnification for liabilities arising under the Securities Act may be
      permitted to directors, officers and controlling persons of the Company pursuant
      to any charter, provision, by-law, contract, arrangement, statute or otherwise,
      the Company has been advised that in the opinion of the Securities and Exchange
      Commission such indemnification is against public policy as expressed in the
      Securities Act and is, therefore, unenforceable.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><a name="eolPage21"/><a name="FIS_EXEMPTION_FROM_REGISTRATION"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>ITEM
      7.&#160; EXEMPTION FROM REGISTRATION CLAIMED </strong></font></a></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Not
      applicable. </font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><a name="FIS_EXHIBITS"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>ITEM
      8.&#160; EXHIBITS </strong></font></a></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div>
      <div>
        <table cellpadding="0" cellspacing="0" width="100%">

            <tr>
              <td align="left" valign="top" width="11%"><u><strong>No.</strong></u></td>
              <td align="left" valign="top" width="62%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong><u>Description</u></strong></font></td>
            </tr>
            <tr>
              <td align="left" valign="top" width="11%">&#160;</td>
              <td align="left" valign="top" width="62%">&#160;</td>
            </tr>
            <tr>
              <td align="left" valign="top" width="11%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">4.1</font></div>
              </td>
              <td align="left" valign="top" width="62%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The
                  Company&#8217;s Amended and Restated 1996 Stock Option Plan. &#160;Previously
                  filed as an attachment to the Company&#8217;s Proxy Statement filed on October
                  6, 2000, and incorporated herein by reference.</font></div>
              </td>
            </tr>
            <tr>
              <td align="left" valign="top" width="11%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
              </td>
              <td align="left" valign="top" width="62%">&#160;</td>
            </tr>
            <tr>
              <td align="left" valign="top" width="11%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">4.2*</font></div>
              </td>
              <td align="left" valign="top" width="62%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Form
                  of Stock Option Agreement.</font></div>
              </td>
            </tr>
            <tr>
              <td align="left" valign="top" width="11%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
              </td>
              <td align="left" valign="top" width="62%">&#160;</td>
            </tr>
            <tr>
              <td align="left" valign="top" width="11%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">5.1*</font></div>
              </td>
              <td align="left" valign="top" width="62%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Opinion
                  of Eiseman Levine Lehrhaupt &amp; Kakoyiannis, P.C. regarding legality of
                  securities being registered.</font></div>
              </td>
            </tr>
            <tr>
              <td align="left" valign="top" width="11%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
              </td>
              <td align="left" valign="top" width="62%">&#160;</td>
            </tr>

        </table>
      </div>
      <div>&#160;</div>
      <div>&#160;</div>
      <div id="PGBRK" style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">
        <div id="FTR">
          <div id="GLFTR" style="WIDTH: 100%" align="left">
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          <div style="WIDTH: 100%; TEXT-ALIGN: center">
          </div>
          <div style="WIDTH: 100%; TEXT-ALIGN: center">
            <hr style="COLOR: black" noshade size="2">
          </div>
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        <div id="HDR">
          <div id="GLHDR" style="WIDTH: 100%" align="right">
          </div>
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      <div>&#160;</div>
      <div>
        <table cellpadding="0" cellspacing="0" width="100%">

            <tr>
              <td align="left" valign="top" width="11%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">23.1*</font></div>
              </td>
              <td align="left" valign="top" width="62%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Consent
                  of Radin Glass &amp; Co., LLP independent registered public accounting
                  firm.</font></div>
              </td>
            </tr>
            <tr>
              <td align="left" valign="top" width="11%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
              </td>
              <td align="left" valign="top" width="62%">&#160;</td>
            </tr>
            <tr>
              <td align="left" valign="top" width="11%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">23.2*</font></div>
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                  of Eisner LLP, former independent registered public accounting
                  firm.</font></div>
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            <tr>
              <td align="left" valign="top" width="11%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
              </td>
              <td align="left" valign="top" width="62%">&#160;</td>
            </tr>
            <tr>
              <td align="left" valign="top" width="11%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">23.3*</font></div>
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                  of Eiseman Levine Lehrhaupt &amp; Kakoyiannis, P.C. &#160;(contained in
                  Exhibit 5.1).</font></div>
              </td>
            </tr>
            <tr>
              <td align="left" valign="top" width="11%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
              </td>
              <td align="left" valign="top" width="62%">&#160;</td>
            </tr>
            <tr>
              <td align="left" valign="top" width="11%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">24.1*</font></div>
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              <td align="left" valign="top" width="62%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">No
                  person has signed this Registration Statement under a power of
                  attorney. A
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                  is
                  incorporated in the signature page
                  hereof.</font></div>
              </td>
            </tr>

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    </div>
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      Filed
      herewith </font></div>
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    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><a name="FIS_UNDERTAKINGS"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>ITEM
      9.&#160; UNDERTAKINGS. </strong></font></a></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font id="TAB1" style="MARGIN-LEFT: 36pt"></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">(1)
      The
      undersigned Registrant hereby undertakes:</font></div>
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      To
      file, during any period in which offers or sales are being made, a
      post-effective amendment to this Registration Statement to:</font></div>
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    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: -9pt" align="justify"><font id="TAB1" style="MARGIN-LEFT: 36pt"></font><font id="TAB1" style="MARGIN-LEFT: 36pt"></font><font id="TAB1" style="MARGIN-LEFT: 36pt"></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">(i)</font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">&#160;&#160;</font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Include
      any prospectus required by Section 10(a)(3) of the Securities Act;</font></div>
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    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font id="TAB1" style="MARGIN-LEFT: 36pt"></font><font id="TAB1" style="MARGIN-LEFT: 36pt"></font><font id="TAB1" style="MARGIN-LEFT: 36pt"></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">(ii)&#160;&#160;Reflect
      in the prospectus any facts or events which, individually or together, represent
      a fundamental change in the information in the registration statement.
      Notwithstanding the foregoing, any increase or decrease in volume of securities
      offered (if the total dollar value of securities offered would not exceed that
      which was registered) and any deviation from the low or high end of the
      estimated maximum offering range may be reflected in the form of prospectus
      filed with the Commission pursuant to Rule 424(b) if, in the aggregate, the
      changes in volume and price represent no more than a 20 percent change in the
      maximum aggregate offering price set forth in the &#8220;Calculation of Registration
      Fee&#8221; table in the effective registration statement;</font></div>
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    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font id="TAB1" style="MARGIN-LEFT: 36pt"></font><font id="TAB1" style="MARGIN-LEFT: 36pt"></font><font id="TAB1" style="MARGIN-LEFT: 36pt"></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">(iii)&#160;Include
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      distribution.</font></div>
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    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">provided,
      however, that the undertakings set forth in paragraphs (a)(1)(i) and (a)(1)(ii)
      above do not apply if the information required to be included in a
      post-effective amendment by those paragraphs is contained in reports filed
      with
      or furnished to the SEC by the Registrant pursuant to section 13 or section
      15(d) of the Securities Exchange Act of 1934 that are incorporated by reference
      in this Registration Statement.</font></div>
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    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font id="TAB1" style="MARGIN-LEFT: 36pt"></font><font id="TAB1" style="MARGIN-LEFT: 36pt"></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">(b)
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      determining liability under the Securities Act, treat each post-effective
      amendment as a new Registration Statement of the securities offered, and the
      offering of securities at that time to be the initial </font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><em>bona
      fide</em></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">
      offering.</font></div>
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    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font id="TAB1" style="MARGIN-LEFT: 36pt"></font><font id="TAB1" style="MARGIN-LEFT: 36pt"></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">(c)
      File
      a post-effective amendment to remove from registration any of the securities
      that remain unsold at the end of this offering.</font></div>
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      <div id="FTR">
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        </div>
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    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font id="TAB1" style="MARGIN-LEFT: 36pt"></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">(2)</font><font id="TAB2" style="COLOR: black; LETTER-SPACING: 27pt">&#160;</font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The
      undersigned Registrant hereby undertakes that, for purposes of determining
      any
      liability under the Securities Act of 1933, each filing of the registrant&#8217;s
      annual report pursuant to Section&#160;13(a) or 15(d) of the Securities Exchange
      Act of 1934(and, where applicable, each filing of an employee benefit plan&#8217;s
      annual report pursuant to Section 15(d) of the Securities Exchange Act of 1934)
      that is incorporated by reference in the registration statement shall be deemed
      to be a new registration statement relating to the securities offered therein,
      and the offering of such securities at that time shall be deemed to be the
      initial </font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><em>bona
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      offering
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    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font id="TAB1" style="MARGIN-LEFT: 36pt"></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">(2)
      Insofar as indemnification for liabilities arising under the Securities Act
      may
      be permitted to directors, officers and controlling persons of the Registrant,
      pursuant to the foregoing provisions, or otherwise, the Registrant has been
      advised that in the opinion of the Securities and Exchange Commission such
      indemnification is against public policy as expressed in the Securities Act
      and
      is, therefore, unenforceable. </font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">In
      the
      event that a claim for indemnification against such liabilities (other than
      the
      payment by the Registrant of expenses incurred or paid by a director, officer
      or
      controlling person of the registrant in the successful defense of any action,
      suit or proceeding) is asserted by such director, officer or controlling person
      in connection with the securities being registered, the Registrant will, unless
      in the opinion of its counsel the matter has been settled by controlling
      precedent, submit to a court of appropriate jurisdiction the question whether
      such indemnification by it is against public policy as expressed in the
      Securities Act and will be governed by the final adjudication of such
      issue.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div><br>&#160;</div>
    <div>&#160;</div>
    <div>&#160;</div>
    <div>&#160;</div>
    <div>&#160;</div>
    <div>&#160;</div>
    <div>&#160;</div>
    <div>&#160;</div>
    <div>&#160;</div>
    <div>&#160;</div>
    <div>&#160;</div>
    <div>&#160;</div>
    <div>&#160;</div>
    <div>&#160;</div>
    <div>&#160;</div>
    <div>&#160;</div>
    <div>&#160;</div>
    <div>&#160;</div>
    <div>&#160;</div>
    <div>&#160;</div>
    <div>&#160;</div>
    <div>&#160;</div>
    <div>&#160;</div>
    <div>&#160;</div>
    <div><br>&#160;</div>
    <div id="PGBRK" style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">
      <div id="FTR">
        <div id="GLFTR" style="WIDTH: 100%" align="left">
        </div>
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      <div id="PN" style="PAGE-BREAK-AFTER: always">
        <div style="WIDTH: 100%; TEXT-ALIGN: center">
        </div>
        <div style="WIDTH: 100%; TEXT-ALIGN: center">
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        </div>
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    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><a name="eolPage23"/><a name="FIS_SIGNATURES"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><u><strong>SIGNATURES</strong></u></font></a></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font id="TAB1" style="MARGIN-LEFT: 36pt"></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Pursuant
      to the requirements of the Securities Act of 1933, the Registrant certifies
      that
      it has reasonable grounds to believe that it meets all of the requirements
      for
      filing on Form S-8 and has duly caused this Registration Statement to be signed
      on its behalf by the undersigned, thereunto duly authorized, in the City of
      New
      York, State of New York.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Dated:&#160;&#160;&#160;&#160;
      February&#160;12, 2007</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">
      <table align="center" bgcolor="#ffffff" border="0" cellpadding="0" cellspacing="0" width="100%">

          <tr valign="top" bgcolor="#ffffff">
            <td width="50%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: ">&#160;</font></td>
            <td width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: ">&#160;</font></td>
            <td width="49%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: ">&#160;</font></td>
          </tr>
          <tr valign="top" bgcolor="#ffffff">
            <td><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: ">&#160;</font></td>
            <td colspan="2"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: "><strong>NETWORK-1
              SECURITY SOLUTIONS, INC.</strong></font></td>
          </tr>
          <tr valign="top" bgcolor="#ffffff">
            <td><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: ">&#160;<br>&#160;</font></td>
            <td><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: ">&#160;<br>&#160;</font></td>
            <td><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: ">&#160;<br>&#160;</font></td>
          </tr>
          <tr valign="top" bgcolor="#ffffff">
            <td>
            </td>
            <td><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: ">By:&#160;&#160;</font></td>
            <td><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: ">/s/&#160;Corey
              M.
              Horowitz</font></td>
          </tr>
          <tr valign="top" bgcolor="#ffffff">
            <td colspan="2"><font style="FONT-FAMILY: " size="1">&#160;</font></td>
            <td align="left">
              <hr style="COLOR: black" align="left" noshade size="2" width="80%">
              Corey M. Horowitz</td>
          </tr>
          <tr valign="top" bgcolor="#ffffff">
            <td colspan="2"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: ">&#160;</font></td>
            <td><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Chairman
              and Chief Executive Officer</font></td>
          </tr>

      </table>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font id="TAB1" style="MARGIN-LEFT: 36pt"></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">KNOW
      ALL
      MEN BY THESE PRESENTS, that each director and officer whose signature appears
      below constitutes and appoints Corey M. Horowitz his true and lawful
      attorney-in-fact and agent, with full power and substitution and
      re-substitution, to sign in any and all capacities any and all amendments or
      post-effective amendments to this Registration Statement on Form S-8 and to
      file
      the same with all exhibits thereto and other documents in connection therewith
      with the Securities and Exchange Commission, granting to such attorney-in-fact
      and agent, full power and authority to do all such other acts and execute all
      such other documents as he may deem necessary or desirable in connection with
      the foregoing, as fully as the undersigned might or could do in person, hereby
      ratifying and confirming all that such attorney-in-fact and agent may lawfully
      do or cause to be done by virtue hereof.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font id="TAB1" style="MARGIN-LEFT: 36pt"></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Pursuant
      to the requirements of the Securities Act of 1933, this Registration Statement
      has been signed by the following persons in the capacities and on the dates
      indicated:</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br>
      <div align="left">
        <table border="0" cellpadding="0" cellspacing="0" width="100%">

            <tr>
              <td align="justify" valign="top" width="30%" style="border-bottom: black thin solid;"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>Signature</strong></font></td>
              <td align="justify" valign="top" width="10%" style="border-bottom: #ffffff solid;">&#160;</td>
              <td align="justify" valign="top" width="30%" style="border-bottom: black thin solid;">
                <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>Title</strong></font></div>
              </td>
              <td align="justify" valign="top" width="10%" style="border-bottom: #ffffff solid;">&#160;</td>
              <td align="justify" valign="top" width="20%" style="border-bottom: black thin solid;">
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            <tr>
              <td align="justify" valign="top" width="30%">&#160;</td>
              <td align="justify" valign="top" width="10%">&#160;</td>
              <td align="justify" valign="top" width="30%">&#160;</td>
              <td align="justify" valign="top" width="10%">&#160;</td>
              <td align="justify" valign="top" width="20%">&#160;</td>
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            <tr>
              <td align="justify" valign="top" width="30%">&#160;</td>
              <td align="justify" valign="top" width="10%">&#160;</td>
              <td align="justify" valign="top" width="30%">&#160;</td>
              <td align="justify" valign="top" width="10%">&#160;</td>
              <td align="justify" valign="top" width="20%">&#160;</td>
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            <tr>
              <td align="justify" valign="top" width="30%" style="border-bottom: black thin solid;">
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                  Corey M.
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              </td>
              <td align="justify" valign="top" width="10%" style="border-bottom: #ffffff solid;">&#160;</td>
              <td align="justify" valign="top" width="30%" style="border-bottom: #ffffff solid;">
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              <td align="justify" valign="top" width="10%" style="border-bottom: #ffffff solid;">&#160;</td>
              <td align="justify" valign="top" width="20%" style="border-bottom: #ffffff solid;">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">February
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              </td>
            </tr>
            <tr>
              <td align="justify" valign="top" width="30%" style="border-bottom: medium none;">
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              </td>
              <td align="justify" valign="top" width="10%" style="border-bottom: medium none;">&#160;</td>
              <td align="justify" valign="top" width="30%" style="border-bottom: medium none;">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">(principal
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              <td align="justify" valign="top" width="10%" style="border-bottom: medium none;">&#160;</td>
              <td align="justify" valign="top" width="20%" style="border-bottom: medium none;">&#160;</td>
            </tr>
            <tr>
              <td align="justify" valign="top" width="30%" style="border-bottom: medium none;">&#160;</td>
              <td align="justify" valign="top" width="10%" style="border-bottom: medium none;">&#160;</td>
              <td align="justify" valign="top" width="30%" style="border-bottom: medium none;">&#160;</td>
              <td align="justify" valign="top" width="10%" style="border-bottom: medium none;">&#160;</td>
              <td align="justify" valign="top" width="20%" style="border-bottom: medium none;">&#160;</td>
            </tr>
            <tr>
              <td align="justify" valign="top" width="30%">&#160;</td>
              <td align="justify" valign="top" width="10%">&#160;</td>
              <td align="justify" valign="top" width="30%">&#160;</td>
              <td align="justify" valign="top" width="10%">&#160;</td>
              <td align="justify" valign="top" width="20%">&#160;</td>
            </tr>
            <tr>
              <td align="justify" valign="top" width="30%" style="border-bottom: black thin solid;">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">/s/
                  David C.
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              </td>
              <td align="justify" valign="top" width="10%" style="border-bottom: #ffffff solid;">&#160;</td>
              <td align="justify" valign="bottom" width="30%" style="border-bottom: #ffffff solid;">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Chief
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              <td align="justify" valign="top" width="10%" style="border-bottom: #ffffff solid;">&#160;</td>
              <td align="justify" valign="top" width="20%" style="border-bottom: #ffffff solid;">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">February
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              </td>
            </tr>
            <tr>
              <td align="left" valign="top" width="30%" style="border-bottom: medium none;">
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              <td align="left" valign="top" width="30%" style="border-bottom: medium none;">
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              <td align="left" valign="top" width="10%" style="border-bottom: medium none;">&#160;</td>
              <td align="left" valign="top" width="20%" style="border-bottom: medium none;">&#160;</td>
            </tr>
            <tr>
              <td align="left" valign="top" width="30%">&#160;</td>
              <td align="left" valign="top" width="10%">&#160;</td>
              <td align="left" valign="top" width="30%">&#160;</td>
              <td align="left" valign="top" width="10%">&#160;</td>
              <td align="left" valign="top" width="20%">&#160;</td>
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            <tr>
              <td align="left" valign="top" width="30%">
                <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">&#160;</div>
              </td>
              <td align="left" valign="top" width="10%">&#160;</td>
              <td align="left" valign="top" width="30%">&#160;</td>
              <td align="left" valign="top" width="10%">&#160;</td>
              <td align="left" valign="top" width="20%">&#160;</td>
            </tr>
            <tr>
              <td align="justify" valign="top" width="30%" style="border-bottom: black thin solid;">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">/s/
                  Robert
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              </td>
              <td align="justify" valign="top" width="10%" style="border-bottom: #ffffff solid;">&#160;</td>
              <td align="justify" valign="top" width="30%" style="border-bottom: #ffffff solid;">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Director</font></div>
              </td>
              <td align="justify" valign="top" width="10%" style="border-bottom: #ffffff solid;">&#160;</td>
              <td align="justify" valign="top" width="20%" style="border-bottom: #ffffff solid;">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">February
                  12, 2007</font></div>
              </td>
            </tr>
            <tr>
              <td align="justify" valign="top" width="30%" style="border-bottom: medium none;">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Robert
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              </td>
              <td align="justify" valign="top" width="10%" style="border-bottom: medium none;">&#160;</td>
              <td align="justify" valign="top" width="30%" style="border-bottom: medium none;">&#160;</td>
              <td align="justify" valign="top" width="10%" style="border-bottom: medium none;">&#160;</td>
              <td align="justify" valign="top" width="20%" style="border-bottom: medium none;">&#160;</td>
            </tr>
            <tr>
              <td align="justify" valign="top" width="30%" style="border-bottom: medium none;">&#160;</td>
              <td align="justify" valign="top" width="10%" style="border-bottom: medium none;">&#160;</td>
              <td align="justify" valign="top" width="30%" style="border-bottom: medium none;">&#160;</td>
              <td align="justify" valign="top" width="10%" style="border-bottom: medium none;">&#160;</td>
              <td align="justify" valign="top" width="20%" style="border-bottom: medium none;">&#160;</td>
            </tr>
            <tr>
              <td align="justify" valign="top" width="30%">&#160;</td>
              <td align="justify" valign="top" width="10%">&#160;</td>
              <td align="justify" valign="top" width="30%">&#160;</td>
              <td align="justify" valign="top" width="10%">&#160;</td>
              <td align="justify" valign="top" width="20%">&#160;</td>
            </tr>
            <tr>
              <td align="justify" valign="top" width="30%" style="border-bottom: black thin solid;">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">/s/
                  Robert
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              </td>
              <td align="justify" valign="top" width="10%" style="border-bottom: #ffffff solid;">&#160;</td>
              <td align="justify" valign="top" width="30%" style="border-bottom: #ffffff solid;">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Director</font></div>
              </td>
              <td align="justify" valign="top" width="10%" style="border-bottom: #ffffff solid;">&#160;</td>
              <td align="justify" valign="top" width="20%" style="border-bottom: #ffffff solid;">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">February
                  12, 2007</font></div>
              </td>
            </tr>
            <tr>
              <td align="justify" valign="top" width="30%" style="border-bottom: medium none;">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Robert
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              </td>
              <td align="justify" valign="top" width="10%" style="border-bottom: medium none;">&#160;</td>
              <td align="justify" valign="top" width="30%" style="border-bottom: medium none;">&#160;</td>
              <td align="justify" valign="top" width="10%" style="border-bottom: medium none;">&#160;</td>
              <td align="justify" valign="top" width="20%" style="border-bottom: medium none;">&#160;</td>
            </tr>
            <tr>
              <td align="justify" valign="top" width="30%" style="border-bottom: medium none;">&#160;</td>
              <td align="justify" valign="top" width="10%" style="border-bottom: medium none;">&#160;</td>
              <td align="justify" valign="top" width="30%" style="border-bottom: medium none;">&#160;</td>
              <td align="justify" valign="top" width="10%" style="border-bottom: medium none;">&#160;</td>
              <td align="justify" valign="top" width="20%" style="border-bottom: medium none;">&#160;</td>
            </tr>
            <tr>
              <td align="justify" valign="top" width="30%">&#160;</td>
              <td align="justify" valign="top" width="10%">&#160;</td>
              <td align="justify" valign="top" width="30%">&#160;</td>
              <td align="justify" valign="top" width="10%">&#160;</td>
              <td align="justify" valign="top" width="20%">&#160;</td>
            </tr>
            <tr>
              <td align="left" valign="top" width="30%" style="border-bottom: black thin solid;">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">/s/
                  Laurent
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              </td>
              <td align="justify" valign="top" width="10%" style="border-bottom: #ffffff solid;">&#160;</td>
              <td align="justify" valign="top" width="30%" style="border-bottom: #ffffff solid;">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Director</font></div>
              </td>
              <td align="justify" valign="top" width="10%" style="border-bottom: #ffffff solid;">&#160;</td>
              <td align="justify" valign="top" width="20%" style="border-bottom: #ffffff solid;">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">February
                  12, 2007</font></div>
              </td>
            </tr>
            <tr>
              <td align="justify" valign="top" width="30%" style="border-bottom: medium none;">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Laurent
                  Ohana</font></div>
              </td>
              <td align="justify" valign="top" width="10%" style="border-bottom: medium none;">&#160;</td>
              <td align="justify" valign="top" width="30%" style="border-bottom: medium none;">&#160;</td>
              <td align="justify" valign="top" width="10%" style="border-bottom: medium none;">&#160;</td>
              <td align="justify" valign="top" width="20%" style="border-bottom: medium none;">&#160;</td>
            </tr>

        </table>
      </div>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div id="PGBRK" style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">
      <div id="FTR">
        <div id="GLFTR" style="WIDTH: 100%" align="left">
        </div>
      </div>
      <div id="PN" style="PAGE-BREAK-AFTER: always">
        <div style="WIDTH: 100%; TEXT-ALIGN: center">
        </div>
        <div style="WIDTH: 100%; TEXT-ALIGN: center">
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        </div>
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      <div id="HDR">
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    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><a name="eolPage24"/><a name="FIS_EXHIBIT_INDEX"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>INDEX
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    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center">&#160;</div>
    <div>&#160;</div>
    <div>
      <table align="center" border="0" cellpadding="0" cellspacing="0" id="hangingindent" width="100%" style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">

          <tr valign="top" style="line-height: 1.25;">
            <td style="width: 36pt;"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">&#160;</font></td>
            <td style="width: 54pt;"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong><u>No.</u>&#160;</strong></font></td>
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      </table>
      <table align="center" border="0" cellpadding="0" cellspacing="0" id="hangingindent" width="100%" style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">

          <tr valign="top" style="line-height: 1.25;">
            <td style="width: 36pt;">&#160;</td>
            <td style="width: 54pt;">&#160;</td>
            <td>&#160;</td>
          </tr>

      </table>
      <table align="center" border="0" cellpadding="0" cellspacing="0" id="hangingindent" width="100%" style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">

          <tr valign="top" style="line-height: 1.25;">
            <td style="width: 36pt;">&#160;</td>
            <td style="width: 54pt;">&#160;</td>
            <td>&#160;</td>
          </tr>

      </table>
      <table align="center" border="0" cellpadding="0" cellspacing="0" id="hangingindent" width="100%" style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">

          <tr valign="top" style="line-height: 1.25;">
            <td style="width: 36pt;">&#160;</td>
            <td style="width: 54pt;">&#160;</td>
            <td>&#160;</td>
          </tr>

      </table>
      <table align="center" border="0" cellpadding="0" cellspacing="0" id="hangingindent" width="100%" style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">

          <tr valign="top" style="line-height: 1.25;">
            <td style="width: 36pt;">&#160;</td>
            <td style="width: 54pt;">
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">4.1</font></div>
            </td>
            <td>
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The
                Company&#8217;s Amended and Restated 1996 Stock Option Plan. Previously filed as
                an attachment to the Company&#8217;s Proxy Statement filed on October 6, 2000,
                and incorporated herein by
                reference.</font></div>
            </td>
          </tr>

      </table>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 72pt; TEXT-INDENT: -72pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div>
      <table align="center" border="0" cellpadding="0" cellspacing="0" id="hangingindent" width="100%" style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">

          <tr valign="top" style="line-height: 1.25;">
            <td style="width: 36pt;">&#160;</td>
            <td style="width: 54pt;">
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">4.2*</font></div>
            </td>
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              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Form
                of Stock Option Agreement.</font></div>
            </td>
          </tr>

      </table>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div>
      <table align="center" border="0" cellpadding="0" cellspacing="0" id="hangingindent" width="100%" style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">

          <tr valign="top" style="line-height: 1.25;">
            <td style="width: 36pt;">&#160;</td>
            <td style="width: 54pt;">
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">5.1*</font></div>
            </td>
            <td>
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Opinion
                of Eiseman Levine Lehrhaupt &amp; Kakoyiannis, P.C. regarding legality of
                securities being registered.</font></div>
            </td>
          </tr>

      </table>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 99pt; TEXT-INDENT: -99pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div>
      <table align="center" border="0" cellpadding="0" cellspacing="0" id="hangingindent" width="100%" style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">

          <tr valign="top" style="line-height: 1.25;">
            <td style="width: 36pt;">
            </td>
            <td align="left" style="width: 54pt;"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">23.1*</font></td>
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              <div align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Consent
                of Radin Glass &amp; Co., LLP independent certified <font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">public
                accountants.</font></font></div>
            </td>
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              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Consent
                of Eisner LLP, former independent registered accounting
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      </table>
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            </td>
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              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Consent
                of Eiseman Levine Lehrhaupt &amp; Kakoyiannis, P.C. (contained in Exhibit
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    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
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              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">No
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WWW.EXFILE.COM, INC. -- 14909 -- NETWORK-1 SECURITY SOLUTIONS, INC. -- FORM S-8
As
      filed with the Securities and Exchange Commission on
      February 12, 2007
REGISTRATION
      NO. 333-_______
SECURITIES
      AND EXCHANGE
COMMISSION
WASHINGTON,
      D.C. 20549
FORM
      S-8
REGISTRATION
      STATEMENT
UNDER
THE
      SECURITIES ACT OF 1933
NETWORK-1
      SECURITY SOLUTIONS, INC.
(Exact
      name of registrant as specified in its charter)
DELAWARE
11-3027591
(State
                  or other jurisdiction
(I.R.S.
                  employer
of
                  incorporation)
identification
                  number)
445
      PARK AVENUE, SUITE 1028
NEW
      YORK, NEW YORK 10022
(212)
      829-5770
(Address,
      including zip code, and telephone number, including area code,
of
      Registrant
'
s
      principal executive offices)
NETWORK-1
      SECURITY SOLUTIONS, INC.
AMENDED
      AND RESTATED 1996 STOCK OPTION PLAN
10
      INDIVIDUAL OPTION AGREEMENTS
(Full
      title of the plan)
COREY
      M. HOROWITZ
CHAIRMAN
      AND CHIEF EXECUTIVE OFFICER
NETWORK-1
      SECURITY SOLUTIONS, INC.
445
      PARK AVENUE, SUITE 1028
NEW
      YORK, NEW YORK 10022
(212)
      829-5770
(Address,
      including zip code, and telephone number,
including
      area code, of agent for service)
COPIES
      TO:
SAM
      SCHWARTZ, ESQ.
EISEMAN
      LEVINE LEHRHAUPT & KAKOYIANNIS, PC
805
      THIRD AVENUE, 10
TH
FLOOR, NEW YORK, NEW YORK 10022
(212)
      752-1000
CALCULATION
                OF REGISTRATION FEE
TITLE
                OF EACH CLASS OF SECURITIES
TO
                BE REGISTERED
----------------------------------------
AMOUNT
                TO BE REGISTERED (1) (2)
------------------
PROPOSED
MAXIMUM
OFFERING
                PRICE
PER
                SHARE (3)
--------------
PROPOSED
                MAXIMUM AGGREGATE OFFERING
PRICE
                (3)
------------------
AMOUNT
REGISTRATION
                FEE
------------
Common
                Stock, par value $.01 per share....
4,132,731
$1.40
$5,785,823
$619.08
(1)
      Represents 1,457,370 shares of common stock, par value $.01 per share (the
"
Common
      Stock
"
), of Network-1
      Security Solutions, Inc. (the "Company") issuable upon exercise of stock options
      granted by the Company under its Amended and Restated 1996 Stock Option Plan
      (the "Stock Option Plan") and 2,675,361 shares of Common Stock of the Company
      that may be offered or sold pursuant to 10 individual option agreements in
      favor
      of certain employees, officers, directors and consultants of the Company (the
      "Option Agreements"), for which no registration statement has previously been
      filed. Pursuant to Rule 429 under the Securities Act, the combined prospectus
      included in this Registration Statement includes 1,800,000 unsold shares
      included in and carried forward from the Company's Registration Statement (No.
      333-117064) filed on December 30, 1999 and 735,000 unsold shares included
      in and carried forward from the Company's Registration Statement (No. 333-64066)
      filed on June 28, 2001, in addition to the 4,132,731 shares initially
      registered hereunder.
(2)
      Pursuant to Rule 416, this registration statement also covers such indeterminate
      additional shares of Common Stock as may become issuable as a result of any
      future anti-dilution adjustment in accordance with the terms of the Stock Option
      Plan and the Option Agreements.
(3)
      Pursuant to Rule 457 (c) and (h) promulgated under the Securities Act, includes
      (i) an aggregate of 1,457,370 shares with respect to which options have been
      granted under the Stock Option Plan and (ii) an aggregate of 2,675,361 shares
      with respect to the Option Agreements, based on the average of the high and
      low
      sales prices for the shares of Common Stock as reported on The OTC Bulletin
      Board on February 6, 2007 of $1.40.
Pursuant
      to Rule 429 under the Securities Act, this Registration Statement contains
      a
      combined prospectus that covers 1,800,000 unsold shares of common stock being
      carried forward from the Company's Registration Statement No. 333-93895 and
      735,000 unsold shares of Common Stock being carried forward from the Company's
      Registration Statement No. 333-64066 in addition to the 4,132,731 shares
      registered hereunder. This Registration Statement also constitutes a
      Post-Effective Amendment No. 1 to Registration Statement No. 333-93895 and
      Registration Statement No. 333-64066.
EXPLANATORY
      NOTES
On
      December 30, 1999, Network-1 Security Solutions, Inc. (the "Company")
      filed a Registration Statement on Form S-8 (Registration No. 333-93895)
      registering 1,800,000 shares of our Common Stock, par value $.01 per share
      (the
"Common Stock"), issuable upon exercise of stock options granted under our Stock
      Option Plan. On November 9, 2000, our shareholders approved an increase of
      735,000 shares of Common Stock under the Stock Option Plan to a total of
      2,535,000 shares. On June 28, 2001, we filed a registration statement on Form
      S-8 (Registration No. 333-64066) registering an additional 735,000 shares of
      our
      Common Stock, par value $.01 per share (the "Common Stock"), issuable upon
      exercise of stock options granted by us under the Stock Option Plan. On
      November 27, 2001, our shareholders approved an increase of 1,465,000
      shares of our Common Stock under the Stock Option Plan to a total of 4,000,000
      shares. We have prepared this Registration Statement in accordance with the
      requirements of Form S-8 under the Securities Act of 1933, as amended (the
      "Securities Act"), to register an aggregate of 4,132,731 shares of our Common
      Stock including 1,457,370 additional shares of Common Stock issuable upon
      exercise of stock options granted under our Stock Option Plan and 2,675,361
      additional shares of our Common Stock issuable pursuant to 10 individual option
      agreements.
This
      Form
      S-8 includes a Reoffer Prospectus and is a combined prospectus pursuant to
      Rule
      429 of the Securities Act, relating also to Registration Statement No. 333-93895
      and Registration Statement No. 333-64066, and contains the Form S-3 information
      required by General Instruction C.1 for Form S-8. The Reoffer Prospectus may
      be
      utilized for reofferings and resales of shares of Common Stock acquired pursuant
      to the Stock Option Plan and the 10 individual option agreements by selling
      stockholders who may be deemed "affiliates" (as such term is defined in Rule 405
      under the Securities Act) of the Company.
The
      amount of securities to be offered or resold under the re-offer prospectus
      by
      each shareholder and any other person with whom he or she is acting in concert
      for the purpose of selling our securities, may not exceed, during any three
      (3)
      month period, the amount specified in Rule 144(e) as promulgated under the
      Securities Act of 1933, as amended.
PART
      I
INFORMATION
      REQUIRED IN THE SECTION 10(A) PROSPECTUS
The
      Company will provide documents containing the information specified in Part
      1 of
      Form S-8 to employees as specified by Rule 428(b)(1) under the Securities Act.
      Pursuant to the instructions to Form S-8, the Company is not required to file
      these documents either as part of this Registration Statement or as prospectuses
      or prospectus supplements pursuant to Rule 424 under the Securities Act.
PROSPECTUS
6,667,731
      SHARES
NETWORK-1
      SECURITY SOLUTIONS, INC.
COMMON
      STOCK ($.01 PAR VALUE)
This
      prospectus relates to the reoffer and resale by certain selling stockholders
      of
      shares of our Common Stock that may be issued by us to the selling stockholders
      upon the exercise of stock options granted under our Amended and Restated 1996
      Stock Option Plan and upon exercise options issued to directors, employees
      and
      consultants, pursuant to 10 individual option agreements. The shares are being
      reoffered and resold for the account of the selling stockholders and we will
      not
      receive any of the proceeds from the resale of the shares.
The
      selling stockholders have advised us that the resale of their shares may be
      effected from time to time in one or more transactions on the OTC Bulletin
      Board, in negotiated transactions or otherwise, at market prices prevailing
      at
      the time of the sale or at prices otherwise negotiated. See "Plan of
      Distribution." We will bear all expenses in connection with the preparation of
      this prospectus.
Our
      Common Stock is traded on the OTC Bulletin Board. On February 6, 2007, the
      closing price for our Common Stock, as reported by the OTC Bulletin Board,
      was
      $1.37.
THE
      SECURITIES OFFERED IN THIS PROSPECTUS INVOLVE A HIGH DEGREE OF RISK. YOU SHOULD
      CAREFULLY CONSIDER THE FACTORS DESCRIBED UNDER THE HEADING "RISK FACTORS"
BEGINNING ON PAGE 4 OF THIS PROSPECTUS.
NEITHER
      THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES COMMISSION
      HAS
      APPROVED OR DISAPPROVED OF THESE SECURITIES OR PASSED UPON THE ADEQUACY OR
      ACCURACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL
      OFFENSE.
THE
      DATE OF THIS PROSPECTUS IS FEBRUARY 12, 2007.
TABLE
      OF CONTENTS
PAGE
ABOUT
                  THIS PROSPECTUS
3
THE
                  COMPANY
3
RISK
                  FACTORS
4
WHERE
                  YOU CAN FIND MORE INFORMATION
9
INCORPORATION
                  OF CERTAIN DOCUMENTS BY REFERENCE
9
NOTE
                  REGARDING FORWARD-LOOKING STATEMENTS
10
USE
                  OF PROCEEDS
11
SELLING
                  STOCKHOLDERS
11
PLAN
                  OF DISTRIBUTION
16
LEGAL
                  MATTERS
18
EXPERTS
18
DISCLOSURE
                  OF COMMISSION POSITION ON INDEMNIFICATION
18
2
ABOUT
      THIS PROSPECTUS
This
      prospectus is part of a registration statement we filed with the Securities
      and
      Exchange Commission (the "SEC") and therefore omits certain information in such
      registration statement. We have also filed exhibits with the registration
      statement that are not included in this prospectus, and you should refer to
      the
      applicable exhibit for a complete description of any statement referring to
      any
      document. You can inspect a copy of the registration statement and its exhibits,
      without charge, at the SEC's public reference room, and can copy such material
      upon paying the SEC's prescribed rates.
You
      should rely only on the information and representations provided or incorporated
      by reference in this prospectus or any related supplement. We have not
      authorized anyone else to provide you with different information. The Selling
      Stockholders will not make an offer of these shares in any state where the
      offer
      is not permitted. You should not assume that the information in this prospectus
      or any supplement is accurate as of any date other than the date on the front
      of
      those documents.
THE
                COMPANY
Our
                principal business is the acquisition, development, licensing and
                protection of our intellectual property. We presently own six patents
                covering various telecommunications and data networking technologies.
                Our
                strategy is to pursue licensing and strategic business alliances
                with
                companies in industries that manufacture and sell products that make
                use
                of the technologies underlying our patents as well as with other
                users of
                the technologies who benefit directly from the technologies including
                corporate, educational and governmental entities.
In
                February 2004, we initiated licensing efforts relating to one of
                our
                patents (U.S. Patent No. 6,218,930) covering the remote delivery
                of power
                over Ethernet cables (the "Remote Power Patent"). We have focused, and
                will continue to focus, our efforts on licensing our Remote Power
                Patent.
                As of the date of this prospectus, we have not entered into any license
                agreements with respect to our Remote Power Patent. During the next
                12
                months, our management does not anticipate licensing efforts for
                our other
                patents besides the Remote Power Patent. Our Remote Power Patent
                relates
                to, among other things, several key technologies underlying the IEEE
                803.3af Power Over Ethernet standard that was approved on June 13,
                2003 by
                the Institute of Electrical and Electronic Engineers. This standard
                governs the delivery of power over Ethernet cables in order to remotely
                power network connected devices, including wireless switches, wireless
                access points, RFID card readers, VOIP telephones, enterprise LAN
                switches
                and network cameras.
Our
                future success is largely dependent upon our proprietary technologies,
                our
                ability to protect our intellectual property rights and to enter
                into
                license agreements for our technology. In addition to our patent
                litigation against D-Link Corporation and D-Link Systems, Incorporated
                for
                infringement of our Remote Power Patent as described below, it may
                be
                necessary for us to commence patent litigation against additional
                third
                parties whom we believe require a license to our patents. We also
                may be
                subject to third party claims seeking to invalidate our patents.
On
                August 10, 2005, we commenced patent litigation against D-Link Corporation
                and D-Link Systems, Incorporated in the United States District Court
                for
                the Eastern District of Texas, Tyler division (Civil Action No. 6:05W291),
                for infringement of our Remote Power Patent. Our complaint seeks,
                among
                other things, a judgment that our Remote Power Patent is enforceable
                and
                has been infringed by the defendants. We are also seeking a permanent
                injunction restraining the defendants from continued infringement,
                or
                active inducement of infringement by others, of our Remote Power
                Patent.
                In the event the Court determines that our Remote Power Patent was
                not
                valid or enforceable and/or that the defendants did not infringe,
                any such
                determination would have a material adverse effect on our
                company.
We
                were incorporated under the laws of the State of Delaware in July
                1990.
                Our executive offices are located at 445 Park Avenue, Suite 1028,
                New
                York, New York 10022 and our telephone number at that address is
                (212)
                829-5700. Our web site can be found
at
http://www.network-1.com
.
3
RISK
      FACTORS
An
      investment in our Common Stock involves a high degree of risk. The risk factors
      listed below are those that we consider to be material to an investment in
      our
      Common Stock and those which, if realized, could have material adverse effects
      on our business, financial condition or results of operations as specifically
      discussed below. In such an event, the trading price of our Common Stock could
      decline, and you could lose all or part of your investment. Before you invest
      in
      our Common Stock, you should be aware of various risks, including those
      described below. You should carefully consider these risk factors, together
      with
      all of the other information included or incorporated by reference in this
      prospectus, before you decide whether to purchase our Common Stock. This section
      includes or refers to certain forward-looking statements. You should refer
      to
      the explanation of the qualifications and limitations on such forward-looking
      statements discussed on page 10.
We
      have a history of losses and no revenue from current
      operations.
We
      have
      incurred substantial operating losses since our inception, which has resulted
      in
      an accumulated deficit of $(45,377,000) as of September 30, 2006. For the years
      ended December 31, 2005 and 2004, we incurred net losses of $(1,332,000) and
      $(1,953,000), respectively. For the nine months ended September 30, 2006, we
      incurred a net loss of $(1,056,000). We have financed our operations primarily
      by sales of equity securities. Since December 2002, when we discontinued our
      security software products and following the commencement of our patent
      technology licensing business in November 2003, we have had no material revenue
      from operations for the years ended December 31, 2004, December 31, 2005 and
      for
      the nine months ended September 30, 2006. Our ability to achieve revenue
      and generate positive cash flow from operations is dependent upon consummating
      licensing agreements with respect to our patented technologies. We may not
      be
      successful in achieving licensing agreements with third parties and our failure
      to do so would have a material adverse effect on our business, financial
      condition and results of operations. We may not be able to achieve revenue
      or
      generate positive cash flow from operations from our licensing
      business.
We
      could be required to stop operations if we are unable to develop our technology
      licensing business or raise capital when needed.
We
      anticipate, based on our currently proposed plans and assumptions relating
      to
      our operations (including the timetable of, costs and expenses associated with
      our continued operations), that our cash position of $2,129,000 at September
      30,
      2006 will more likely than not be sufficient to satisfy our operations and
      capital requirements until December 2007. However, we may expend our funds
      prior
      thereto. In the event our plans change, or our assumptions change or prove
      to be
      inaccurate (due to unanticipated expenses, difficulties, delays or otherwise),
      we could have insufficient funds to support our operations prior to December
      2007. Our inability to obtain additional financing when needed
,
      absent
      generating sufficient cash from licensing arrangements,
would
      have a material adverse effect on the Company, requiring us to curtail or
      possibly cease our operations. In addition, any additional equity financing
      may
      involve substantial dilution to the interests of our then existing stockholders.
4
Our
      licensing business may not be successful.
In
      November 2003, we entered the technology licensing business following our
      acquisition of six patents relating to various telecommunications and data
      networking technologies including, among others, patents covering the delivery
      of remote power over Ethernet and the transmission of audio, video and data
      over
      computer and telephony networks. Accordingly, we have a limited history in
      the
      technology licensing business upon which an evaluation of our prospects and
      future performance can be made. Our prospects must be considered in light of
      the
      risks, expenses and difficulties frequently encountered in the development,
      operation and expansion of a new business based on patented technologies in
      a
      highly specialized and competitive market. We may not be able to achieve revenue
      or profitable operations from our licensing business.
Our
      future source of licensing revenue is uncertain.
In
      February 2004, we initiated our first licensing efforts relating to the
      technologies in our remote power patent (U.S. Patent No. 6,218,930) (the "Remote
      Power Patent"). To date, we have not entered into any licensing agreements with
      third parties with respect to our Remote Power Patent or our other patented
      technologies. Our inability to consummate licensing agreements and achieve
      revenue from our patented technologies would have a material adverse effect
      on
      our operations and our ability to continue our business. In addition, in the
      event we consummate license arrangements with third parties, such arrangements
      are not likely to produce a stable or predictable stream of revenue in the
      foreseeable future. Furthermore, the success of our licensing efforts
depends
upon the
      strength of our intellectual property rights.
We
      are currently relying upon the efforts of ThinkFire to consummate licensing
      agreements for our Remote Power Patent with certain select potential
      licensees.
On
      November 30, 2004, we entered into a Master Services Agreement (the "Agreement")
      with ThinkFire Services USA, Ltd. ("ThinkFire") pursuant to which we granted
      ThinkFire the exclusive (except for us and related companies) worldwide rights
      to negotiate license agreements for our Remote Power Patent with respect to
      certain potential licensees agreed to between the parties. Either we or
      ThinkFire can terminate the Agreement upon 60 days notice for any reason or
      upon
      30 days notice in the event of a material breach. We have agreed to pay
      ThinkFire a fee not to exceed 20% of the royalty payments received from license
      agreements consummated by ThinkFire on our behalf. ThinkFire may not be
      successful in consummating license agreements on our behalf and even if such
      agreements are consummated they may not result in significant royalty payments
      to us.
Our
      success is dependent upon our ability to protect our proprietary
      technologies.
Our
      success is substantially dependent upon our proprietary technologies and our
      ability to protect our intellectual property rights. We currently hold 6 patents
      issued by the U.S. Patent Office that relate to various telecommunications
      and
      data 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 PoE networks. We rely upon our patents and trade
      secret laws, non-disclosure agreements with our employees, consultants and
      third
      parties to protect our intellectual property rights. The complexity of patent
      and common law, combined with our limited resources, create risk that our
      efforts to protect our proprietary technologies may not be successful. We cannot
      assure you that our patents will be upheld or that third parties will not
      invalidate our patent rights. In the event our intellectual property rights
      are
      not upheld, such an event would have a material adverse effect on
      us.
5
We
      are currently relying upon our contingency fee agreement with Blank
      Rome.
In
      August
      2005, we entered into an agreement with Blank Rome, LLP ("Blank Rome"), a
      national law firm, pursuant to which Blank Rome has been engaged to represent
      us
      in connection with all litigation involving our Remote Power Patent. Blank
      Rome
      has agreed to represent us with respect to each litigation pertaining to the
      Remote Power Patent on a full contingency basis (except for any proceeding
      before the International Trade Commission). As compensation for its services
      on
      a full contingency basis, Blank Rome will receive from us percentages of Net
      Consideration (as defined in the Agreement) ranging from 12.5% to 35% received
      by us by way of settlement or judgment in connection with each litigation
      matter. We have also agreed to compensate Blank Rome in an amount equal to
      10%
      of the Net Consideration received by us from certain designated parties mutually
      agreed upon by us and Blank Rome (the "Designated Parties") in the event that
      prior to commencement of litigation such Designated Parties enter into license
      agreements or similar agreements with us during the period of Blank Rome's
      engagement.
The
      Agreement may be terminated by either Blank Rome or us upon 30 days notice.
      If
      we elect to terminate the Agreement, we will compensate Blank Rome in an amount
      equal to 5% of the Net Consideration received by us from the Designated Parties
      with whom Blank Rome has not commenced litigation on our behalf, provided that
      such parties had substantive licensing or settlement discussions related to
      our
      Remote Power Patent during the term of the Agreement and entered into a license
      agreement or similar agreement with us providing for Net Consideration within
      the 12 month period following termination. In addition, in the event of
      termination, Blank Rome will receive its pro-rata share of Net Consideration
      based upon its hourly time charges with respect to parties against whom Blank
      Rome commenced litigation (or defended) on our behalf. In the event our
      agreement with Blank Rome is terminated, depending upon our financial resources
      at the time, we may need to enter into a contingent fee agreement with a new
      law
      firm in order to enforce and/or defend our Remote Power Patent and our inability
      to secure such an arrangement on satisfactory terms and on a timely basis may
      have a material adverse effect on us.
Any
      litigation to protect our intellectual property or any third party claims to
      invalidate our patents could have a material adverse effect on our
      business.
Our
      success depends on our ability to protect our intellectual property rights.
      In
      August 2005, we commenced patent litigation against D-Link Corporation and
      D-Link Systems, Incorporated for infringement of our Remote Power Patent (see
      below Risk Factors - "We face uncertainty of outcome of litigation with
      D-Link"). In the future, it may be necessary for us to commence patent
      litigation against additional third parties whom we believe require a license
      to
      our patents. In addition, we may be subject to claims seeking to invalidate
      our
      patents, as has been asserted by D-Link as a defense in the pending litigation.
      These types of claims, with or without merit, may subject us to costly
      litigation and diversion of management's focus. If we are unsuccessful in
      enforcing and validating our patents and/or if third parties making claims
      against us seeking to invalidate our patents are successful, they may be able
      to
      obtain injunctive or other equitable relief, which effectively could block
      our
      ability to license or otherwise capitalize on our proprietary technologies.
      Successful litigation against us resulting in a determination that our patents
      are invalid would have a material adverse effect on us.
We
      face uncertainty as to the outcome of litigation with
      D-Link.
On
      August
      10, 2005, we commenced litigation against D-Link Corporation and D-Link Systems,
      Incorporated in the United States District Court for the Eastern District of
      Texas, Tyler division (Civil Action No. 6:05W291), for infringement of our
      Remote Power Patent. Our complaint seeks, among other things, a judgment that
      our Remote Power Patent is duly enforceable and has been infringed by the
      defendants. We also seek a permanent injunction restraining defendants from
      continued infringement, or active inducement of infringement by others, of
      our
      Remote Power Patent. On February 27, 2006, the D-Link defendants filed answers
      and asserted counterclaims. In their answers, the D-Link defendants asserted
      that they did not infringe any valid claim of our Remote Power Patent, and
      further asserted that our asserted patent claims are invalid and/or
      unenforceable. In addition to these defenses, the D-Link defendants also
      asserted counterclaims for, among other things, non-infringement, invalidity
      and
      unenforceability of the Remote Power Patent.
6
Material
      licensing revenues from our Remote Power Patent may be dependent upon the
      applicability of the IEEE Standard.
The
      Institute of Electrical and Electronic Engineers (IEEE) is a non-profit,
      technical professional association of more than 360,000 individual members
      in
      approximately 175 countries. The Standards Association of the IEEE is
      responsible for the creation of global industry standards for a broad range
      of
      technology industries. In 1999, the IEEE formed a task force to facilitate
      the
      adoption of a standardized methodology for the delivery of remote power over
      Ethernet networks which would insure interoperability among vendors of switches
      and terminal devices. In June 2003, the IEEE Standards Association approved
      the
      802.3af Power Over Ethernet standard (the "Standard"), which covers technologies
      deployed in delivering power over Ethernet cables including whether deployed
      in
      switches or as standalone midspan hubs both of which provide power to remote
      devices including wireless access points, IP phones and network based cameras.
      The technology is commonly referred to as Power Over Ethernet ("PoE"). We
      believe our Remote Power Patent covers several of the key technologies covered
      by the Standard. However, there is a risk that as a result of litigation a
      court
      may determine otherwise and such a determination would have a material adverse
      effect on our ability to enter into license agreements and achieve revenue
      and
      profits from our Remote Power Patent.
We
      face intense competition and we may not be able to successfully
      compete.
The
      telecommunications and data networking market is characterized by intense
      competition and rapidly changing business conditions, customer requirements
      and
      technologies. Our current and potential competitors have longer operating
      histories, greater name recognition and possess substantially greater financial,
      technical, marketing and other competitive resources than us. Although we
      believe that we have rights to enforceable patents relating to
      telecommunications and data networking, there can be no assurance that third
      parties will not invalidate any or all of our patents. In addition, the
      telecommunications and data networking industries may develop technologies
      that
      may be more effective than our proprietary technologies or that render our
      technologies less marketable or obsolete.
Our
      markets are subject to rapid technological change and our technologies face
      potential technology obsolescence.
The
      telecommunications and data networking technology market including, transmission
      of audio, video and data over computer and telephony networks and the delivery
      of remote power over Ethernet markets, are characterized by rapid technological
      changes, changing customer requirements, frequent new product introductions
      and
      enhancements, and evolving industry standards. The introduction of products
      embodying new technologies and the emergence of new industry standards may
      render our technologies obsolete or less marketable. To the extent we are able
      to achieve revenue in the future, such revenue will be derived from licensing
      our technologies based on existing and evolving industry standards.
Dependence
      upon CEO and Chairman
.
Our
      success is largely dependent upon the personal efforts of Corey M. Horowitz,
      our
      Chairman and Chief Executive Officer and Chairman of the Board of Directors.
      The
      loss of the services of Mr. Horowitz would have a material adverse effect on
      our
      business and prospects. We are currently negotiating with Mr. Horowitz the
      terms of a new employment agreement as his employment agreement expired in
      November 2006. We do not maintain key-man life insurance on the life of Mr.
      Horowitz.
7
Risks
      related to
low
priced
      stocks.
Our
      common stock currently trades on the
OTC
      Bulletin Board under the symbol NSSI. Since
the
      trading price of our common stock is below $5.00 per share, our common stock
      is
      considered a penny stock. SEC regulations generally define a penny stock to
      be
      an equity security that is not listed on Nasdaq or a national securities
      exchange and that has a market value of less than $5.00 per share, subject
      to
      certain exceptions. SEC regulations require broker-dealers to deliver to a
      purchaser of our common stock a disclosure schedule explaining the penny stock
      market and the risks associated with it. Various sales practice requirements
      are
      also imposed on broker-dealers who sell penny stocks to persons other than
      established customers and accredited investors (generally institutions).
      Broker-dealers must also provide the customer with current bid and offer
      quotations for the penny stock, the compensation of the broker-dealer and
      monthly account statements disclosing recent price information for the penny
      stock held in the customer's account.
The
      significant number of options and warrants outstanding may adversely effect
      the
      market price for our common stock.
As
      of
      February 1, 2007, there are outstanding options and warrants to purchase an
      aggregate of 9,281,481 shares of our common stock at exercise prices ranging
      from $.12 to $10.00. To the extent that outstanding options and warrants are
      exercised, stockholder percentage ownership will be diluted and any sales in
      the
      public market of the common stock underlying such options may adversely affect
      prevailing market prices for our common stock.
We
      have a significant amount of authorized but unissued preferred stock, which
      may
      affect the likelihood of a change of control in our
      company.
Our
      Board
      of Directors has the authority, without further action by the stockholders,
      to
      issue 10,000,000 shares of preferred stock on such terms and with such rights,
      preferences and designations as our Board of Directors may determine. Such
      terms
      may include restricting dividends on our common stock, dilution of the voting
      power of our common stock or impairing the liquidation rights of the holders
      of
      our common stock. Issuance of such preferred stock, depending on the rights,
      preferences and designations thereof, may have the effect of delaying, deterring
      or preventing a change in control. In addition, certain "anti-takeover"
provisions in Delaware law may restrict the ability of our stockholders to
      authorize a merger, business combination or change of control.
In
      the
      event that the Court determines that our Remote Power Patent was not valid
      or
      enforceable and/or that the defendants did not infringe, any such determination
      would have a material adverse effect on us.
Our
      stock price may be volatile.
The
      market price of our common stock is likely to be highly volatile and could
      fluctuate widely in price in response to various factors, many of which are
      beyond our control, including the following:
·
our
                ability to successfully enforce and/or defend our Remote Power
                Patent;
·
our
                ability to enter into favorable license agreements with third parties
                with
                respect to our Remote Power Patent;
·
our
                ability to achieve revenues and
                profits;
·
our
                ability to raise capital when
                needed;
8
·
sales
                of our common stock;
·
our
                ability to execute our business
                plan;
·
technology
                changes;
·
legislative,
                regulatory and competitive developments;
                and
·
economic
                and other external factors.
In
      addition, the securities markets have from time to time experienced significant
      price and volume fluctuations that are unrelated to the operating performance
      of
      particular companies. These market fluctuations may also materially and
      adversely affect the market price of our common stock.
Sales
      of a substantial number of shares of our common stock may cause the price of
      our
      common stock to decline.
We
      have
      registered for resale 22,453,987 shares of common stock, including shares
      issuable upon exercise of outstanding options and warrants that are not
      currently freely tradable. If our stockholders sell substantial amounts of
      our
      common stock in the public market, including shares issued upon the exercise
      of
      outstanding options and warrants, the market price of our common stock could
      fall. These sales also may make it more difficult for us to sell equity or
      equity-related securities in the future at a time and price that we deem
      reasonable or appropriate.
Additional
      stock offerings may dilute current stockholders.
We
      may
      need to issue additional shares of our capital stock or securities convertible
      or exercisable for shares of our capital stock, including preferred stock,
      options or warrants. The issuance of additional capital stock may dilute the
      ownership of our current stockholders.
WHERE
      YOU CAN FIND MORE INFORMATION
We
      file
      annual, quarterly and current reports, and other information with the SEC.
      You
      may read and copy any document we file at the SEC's public reference room
      located at Judiciary Plaza, 450 Fifth Street, N.W., Washington, D.C. 20549.
      The
      SEC has prescribed rates for copying. You may obtain further information on
      the
      operation of the public reference room by calling the SEC at 1-800-SEC-0330.
      Our
      SEC filings are also available to the public over the Internet at the SEC's web
      site at
http://www.sec.gov
.
INCORPORATION
      OF CERTAIN DOCUMENTS BY REFERENCE
The
      SEC
      allows us to "incorporate by reference" the information we file with them, which
      means that we can disclose important information to you by referring you to
      those documents. The information we incorporate by reference is considered
      to be
      a part of this prospectus and information that we file later with the SEC will
      automatically update and replace the information in this prospectus.
      Accordingly, we incorporate by reference the documents listed below and any
      future filings we make with the SEC under Sections 13(a), 13(c), 14 or 15(d)
      of
      the Securities Exchange Act of 1934, as amended:
1.
Our
                Annual Report on Form 10-KSB for the year ended December 31, 2005
                (filed
                April 12, 2006);
9
2.
Our
                current reports on Form 8-K and Form 8-K/A filed on February 8, 2006,
                February 9, 2006, February 15, 2006, March 31, 2006,
                April 17, 2006, May 16, 2006, August 7, 2006,
                September 14, 2006, November
15,
                2006, November 28, 2006 and December 22, 2006
;
3.
Our
                Quarterly Report on Form 10-QSB for the period ended March 31, 2006,
                June 30, 2006 and September 30, 2006 (filed May 15, 2006,
                August 3, 2006 and November 14, 2006);
                and
4.
The
                description of our Common Stock incorporated by reference in our
                Registration Statement on Form 8-A (filed October 9, 1998), as amended
                on
                November 3, 1998.
All
      documents subsequently filed by the Company pursuant to Section 13(a), 13(c)
      or
      15(d) of the Securities Exchange Act of 1934, as amended, prior to the filing
      of
      a post-effective amendment to the Registration Statement which indicates that
      all shares of Common Stock offered hereunder have been sold or which deregisters
      all shares then remaining unsold, shall be deemed to be incorporated herein
      by
      reference and to be part hereof from the date of filing of such documents.
      Any
      statement contained in a document incorporated or deemed to be incorporated
      by
      reference herein shall be deemed to be modified or superseded for purposes
      of
      this Registration Statement to the extent that a statement contained herein
      or
      in any other subsequently filed document which is also or is deemed to be
      incorporated by reference herein modifies or supersedes such statement. Any
      such
      statement so modified or superseded shall not be deemed, except as so modified
      or superseded, to constitute a part of this Registration Statement.
We
      will
      provide at no cost to each person to whom this prospectus is delivered, upon
      written or oral request, a copy of any of these filings, excluding the exhibits
      to such filings that we have not specifically incorporated by reference in
      such
      filings. You should direct such requests to us at 445 Park Avenue, Suite 1028,
      New York, New York 10021, Attention: Corey M. Horowitz, Chairman and Chief
      Executive Officer, telephone number (212) 829-5770.
NOTE
      REGARDING FORWARD-LOOKING STATEMENTS
This
      prospectus contains certain forward-looking statements that are statements
      that
      include information based upon beliefs of our management, as well as assumptions
      made by and information available to our management. Statements containing
      terms
      such as "believes," "expects," "anticipates," "intends" or similar words are
      intended to identify forward-looking statements.
Our
      management, based upon assumptions they consider reasonable, has compiled these
      forward-looking statements. Such statements reflect our current views with
      respect to future events. These statements involve known and unknown risks
      and
      uncertainties that may cause our actual results in future periods to differ
      materially from what is currently anticipated. We make cautionary statements
      in
      certain sections of this prospectus, including under "Risk Factors." You should
      read these cautionary statements as being applicable to all related
      forward-looking statements wherever they appear in this prospectus, the
      materials referred to in this prospectus or the materials incorporated by
      reference into this prospectus.
You
      are
      cautioned that no forward-looking statement is a guarantee of future performance
      and you should not place undue reliance on any forward-looking statement. Such
      statements speak only as of the date of this prospectus and we are not
      undertaking any obligation to publicly release any revisions to these
      forward-looking statements to reflect events or circumstances after the date
      of
      this prospectus or to reflect the occurrence of unanticipated events.
10
USE
      OF PROCEEDS
The
      shares of common stock offered by this prospectus are being registered for
      the
      account of the selling stockholders identified in this prospectus. See "Selling
      Shareholders." All net proceeds from the sale of common shares will go to the
      shareholders who offer and sell their shares. We will not receive any part
      of
      the proceeds from such sales. We will, however, receive the exercise price
      of
      the options at the time of their exercise (exclusive of options to purchase
      4,295,361 shares which may be exercised on a "cashless" basis). If all of the
      options are exercised (assuming no exercise on a "cashless" basis), we will
      realize proceeds in the amount of $4,933,656. Such proceeds will be contributed
      to working capital and will be used for general corporate purposes.
SELLING
      STOCKHOLDERS
This
      prospectus relates to the reoffer and resale of shares of common stock ("Common
      Stock") issued or that may be issued to the selling stockholders under our Stock
      Option Plan and other options issued to officers, directors, employees and
      consultants pursuant to 10 individual option agreements. The following table
      sets forth (i) the number of shares of Common Stock beneficially owned by each
      selling stockholder as of the date of this prospectus, (ii) the number of shares
      to be offered for resale by each selling stockholder (i.e., the total number
      of
      shares underlying options held by each selling stockholder irrespective of
      whether such options are presently exercisable or exercisable within sixty
      days
      of the date of this prospectus), and (iii) the number and percentage of shares
      of our Common Stock to be held by each selling stockholder after completion
      of
      the offering.
NAME
NUMBER
                OF SHARES BENEFICIALLY OWNED PRIOR TO
OFFERING(1)
NUMBER
                OF SHARES BEING
OFFERED(2)
NUMBER
                OF SHARES OF BENEFICIALLY OWNED AFTER
OFFERING(3)
PERCENTAGE
                OUTSTANDING COMMON STOCK AFTER
OFFERING(3)
Corey
                M. Horowitz
8,684,226(5)
4,348,486(6)
4,335,740
21.2%
Barry
                Rubenstein
3,743,251(7)
59,375(8)
3,683,876
19.3%
Irwin
                Lieber
2,048,338(9)
59,375(10)
1,988,963
10.4%
Robert
                Graifman
341,027(11)
115,000(12)
226,027
1.2%
Harry
                Schessel
132,500(13)
140,000(14)
0
0
Jon
                Greene
117,500(15)
167,500(16)
0
0
David
                Kahn
160,625(17)
200,000(18)
0
0
Murray
                Fish
100,000(19)
100,000
0
0
Laurent
                Ohana
150,000(20)
100,000(21)
50,000
*
Edward
                James
75,000(22)
75,000
0
0
Emanuel
                Pearlman
66,250(23)
66,250
0
0
Mark
                Tuomenoska
60,000(24)
60,000
0
0
Jonathan
                Mark
60,000(25)
60,000
0
0
Robert
                Pons
100,000(26)
100,000
0
0
Daniel
                Geer
20,000(27)
20,000
0
0
Jonathan
                Maslow
50,000(28)
50,000
0
0
11
George
                Conant
17,500(29)
17,500
0
0
Ronald
                Keenan
17,500(30)
17,500
0
0
Andrew
                Maslow
17,500(31)
17,500
0
0
Robert
                Rosenbaum
16,800(32)
16,800
0
0
William
                Hancock
15,000(33)
15,000
0
0
Robert
                Russo
15,000(34)
15,000
0
0
Sam
                Schwartz
36,084(35)
12,500
23,584
*
Michael
                Matthews
11,594(36)
11,594
0
0
Brad
                Taylor
10,937(37)
10,937
0
0
Kenneth
                Conquest
10,000(38)
10,000
0
0
Marcus
                Ranum
8,575(39)
8,575
0
0
Michael
                Metzler
7,812(40)
7,812
0
0
Al
                Maguire
7,600(41)
7,600
0
0
Gustin
                Partners
7,500(42)
7,500
0
0
Marty
                Dorfman
6,500(43)
6,500
0
0
Paul
                Hacker
4,375(44)
4,375
0
0
Ethan
                Hutchison
4,000(45)
4,000
0
0
Lauren
                Whitehouse
2,500(46)
2,500
0
0
Christie
                Rotter
1,552(46)
1,552
0
0
Hiroyuki
                Nozawa
2,000(47)
2,000
0
0
*
      Less
      than 1%
(1)
Unless
                otherwise indicated, the Company believes that all persons named
                in the
                above table have sole voting and investment power with respect to
                all
                shares of Common Stock beneficially owned by them. A person is deemed
                to
                be the beneficial owner of securities that can be acquired by such
                person
                within 60 days from the date hereof upon the exercise of options,
                warrants
                or convertible securities. Each beneficial owner's percentage ownership is
                determined by assuming that options, warrants and convertible securities
                held by such person (but not those held by any other person) and
                which are
                exercisable or convertible within 60 days have been exercised and
                converted.
(2)
Consists
                of shares issuable upon the exercise of options both currently exercisable
                and not currently exercisable.
12
(3)
Beneficial
                ownership of shares held by each selling stockholder after this offering
                assumes that each selling stockholder sold all of the shares it is
                offering in this prospectus but actually will depend on the number
                of
                shares sold by such selling stockholder in this
                offering.
(4)
Assumes
                a base of 19,764,724 shares of Common Stock
                outstanding.
(5)
Includes
                (i) 381,303 shares of Common Stock held by Mr. Horowitz, (ii) 4,337,861
                shares of Common Stock subject to currently exercisable stock options
                held
                by Mr. Horowitz, (iii) 2,467,800 shares of Common Stock held by CMH
                Capital Management Corp. ("CMH"), an entity solely owned by Mr. Horowitz,
                (iv) 550,000 shares of Common Stock subject to currently exercisable
                warrants held by CMH, (v) 750,000 shares of Common Stock subject
                to
                currently exercisable options held by CMH, (vi) 67,471 shares of
                Common
                Stock owned by Donna Slavitt, the wife of Mr. Horowitz, (vii) 127,500
                shares of Common Stock held by two trusts and a custodian account
                for the
                benefit of Mr. Horowitz's three children and (viii) 2,291 shares of Common
                Stock held by Horowitz Partners, a general partnership of which Mr.
                Horowitz is a partner. Does not include options to purchase 10,625
                shares
                of Common Stock which are not currently exercisable. The address
                of CMH
                Capital Management Corp. is 445 Park Avenue, New York, New York
                10022.
(6)
Includes
                4,337,861 shares of Common Stock subject to currently exercisable
                stock
                options held by Mr. Horowitz and 10,625 shares of Common Stock
                subject to stock options not currently
                exercisable.
(7)
Includes
                (i) 1,280,207 shares of Common Stock held by Wheatley Partners II,
                L.P.,
                (ii) 194,280 shares of Common Stock held by Wheatley Partners, L.P.,
                (iii)
                16,868 shares of Common Stock held by Wheatley Foreign Partners,
                L.P.,
                (iv) 150,012 shares of Common Stock held by Mr. Rubenstein, (v) 47,500
                shares of Common Stock subject to currently exercisable stock options
                held
                by Mr. Rubenstein, and (vi) 829,226, 619,983, 309,316, 294,810 and
                1,049
                shares of Common Stock held by Woodland Venture Fund, Seneca Ventures,
                Woodland Partners, Brookwood Partners, L.P. and Marilyn Rubenstein,
                respectively. Does not include options to purchase 11,875 shares
                of Common
                Stock held by Mr. Rubenstein which are not currently exercisable.
                The
                aforementioned beneficial ownership by Mr. Rubenstein is based upon
                Amendment No. 6 to Schedule 13D jointly filed by Mr. Rubenstein and
                related parties with the Securities and Exchange Commission on January
                3,
                2005 and Form 4s filed by Mr. Rubenstein with the Securities and
                Exchange
                Commission on December 21, 2004 and February 17, 2005. Barry Rubenstein
                is
                a general partner of Wheatley Partners II, L.P. and a member of the
                general partner of each of Wheatley Partners, L.P. and Wheatley Foreign
                Partners, L.P. Barry Rubenstein and Woodland Services Corp. are the
                general partners of Woodland Venture Fund and Seneca Ventures. Barry
                Rubenstein is the President and sole director of Woodland Services
                Corp.
                Marilyn Rubenstein is the wife of Barry Rubenstein. Mr. Rubenstein
                disclaims beneficial ownership of the shares of Common Stock held
                by
                Wheatley Partners II, L.P., Wheatley Partners, L.P. and Wheatley
                Foreign
                Partners, L.P., except to the extent of his equity interest therein.
                The
                address of Barry Rubenstein is 68 Wheatley Road, Brookville, New
                York
                11545. The address of Wheatley Partners II, L.P. and Wheatley Partners,
                L.P. is 60 Cuttermill Road, Great Neck, New York 11021. The address
                of
                Wheatley Foreign Partners, L.P. is c/o Fiduciary Trust, One Capital
                Place,
                Snedden Road, P.O. Box 162, Grand Cayman, British West Indies. The
                address
                for Woodland Venture Fund, Seneca Ventures, Brookwood Partners, L.P.
                and
                Woodland Partners is c/o Barry Rubenstein, 68 Wheatley Road, Brookville,
                New York 11545.
(8)
Includes
                47,500 shares of Common Stock to currently exercisable stock options
                and
                11,875 shares of Common Stock subject to stock options not currently
                exercisable.
13
(9)
Includes
                (i) 1,280,207 shares of Common Stock held by Wheatley Partners II,
                L.P.,
                (ii) 194,280 shares of Common Stock held by Wheatley Partners, L.P.,
                (iii) 16,868 shares of Common Stock held by Wheatley Foreign Partners,
                L.P., (iv) 509,483 shares of Common Stock owned by Mr. Lieber, and
                (v)
                47,500 shares of Common Stock subject to currently exercisable stock
                options owned by Mr. Lieber. Does not include options to purchase
                11,875
                shares of Common Stock owned by Mr. Lieber which are not currently
                exercisable. The aforementioned beneficial ownership by Mr. Lieber
                is
                based upon Amendment No. 6 to Schedule 13D jointly filed by Mr. Lieber
                and
                related parties with Securities and Exchange Commission on January
                3, 2005
                and Form 4s filed with the Securities and Exchange Commission on
                December
                21, 2004 and February 17, 2005. Mr. Lieber disclaims beneficial ownership
                of the shares of Common Stock held by Wheatley Partners II, L.P.,
                Wheatley
                Partners, L.P. and Wheatley Foreign Partners, L.P., except to the
                extent
                of his equity interest therein. The address of Irwin Lieber is c/o
                Wheatley Partners, II, L.P., 80 Cuttermill Road, Great Neck, New
                York
                11021.
(10)
Includes
                47,500 shares of Common Stock subject to currently exercisable stock
                options and 11,875 shares of Common Stock subject to stock options
                not
                currently exercisable.
(11)
Includes
                (i) 154,777 shares of Common Stock, (ii) 75,000 shares subject to
                currently exercisable warrants and (iii) 111,250 shares subject to
                currently exercisable stock options issued to Mr. Graifman. Does
                not
                include options to purchase 3,750 shares of Common Stock which are
                not
                currently exercisable.
(12)
Includes
                111,250 shares subject to currently exercisable stock options issued
                to
                Mr. Graifman and 3,750 shares of Common Stock subject to stock
                options not currently exercisable.
(13)
Includes
                132,500 shares of Common Stock subject to currently exercisable stock
                options issued to Mr. Schessel. Does not include options to purchase
                7,500
                shares of Common Stock which are not currently
                exercisable.
(14)
Includes
                132,500 shares subject to currently exercisable stock options issued
                to
                Mr. Schessel and 7,500 shares of Common Stock subject to options
                which are not currently
                exercisable.
(15)
Includes
                117,500 shares of Common Stock subject to currently exercisable options.
                Does not include options to purchase 50,000 shares of Common Stock
                which
                are not currently exercisable.
(16)
Includes
                117,500 shares of Common Stock subject to currently exercisable options
                issued to Mr. Greene and 50,000 shares of Common Stock subject to
                options which are not currently
                exercisable.
(17)
Includes
                160,625 shares of Common Stock subject to currently exercisable stock
                options issued to Mr. Kahn. Does not include options to purchase
                39,375
                shares of Common Stock which are not currently
                exercisable.
(18)
Includes
                160,625 shares of Common Stock subject to currently exercisable options
                and 39,375 shares of Common Stock subject to options which are not
                currently exercisable.
(19)
Includes
                100,000 shares of Common Stock subject to currently exercisable
                options.
(20)
Includes
                150,000 shares of Common Stock subject to currently exercisable options
                and warrants issued to Mr. Ohana.
(21)
Includes
                100,000 shares of Common Stock subject to currently exercisable options
                issued to Mr. Ohana.
(22)
Includes
                75,000 shares of Common Stock subject to currently exercisable
                options.
14
(23)
Includes
                66,250 shares of Common Stock subject to currently exercisable
                options.
(24)
Includes
                60,000 shares of Common Stock subject to currently exercisable
                options.
(25)
Includes
                60,000 shares of Common Stock subject to currently exercisable
                options.
(26)
Includes
                100,000 shares of Common Stock subject to currently exercisable
                options.
(27)
Includes
                20,000 shares of Common Stock subject to currently exercisable
                options.
(28)
Includes
                50,000 shares of Common Stock subject to currently exercisable
                options.
(29)
Includes
                17,500 shares of Common Stock subject to currently exercisable
                options.
(30)
Includes
                17,500 shares of Common Stock subject to currently exercisable
                options.
(31)
Includes
                17,500 shares of Common Stock subject to currently exercisable
                options.
(32)
Includes
                16,800 shares of Common Stock subject to currently exercisable
                options.
(33)
Includes
                15,000 shares of Common Stock subject to currently exercisable
                options.
(34)
Includes
                15,000 shares of Common Stock subject to currently exercisable
                options.
(35)
Includes
                12,500 shares of Common Stock subject to currently exercisable
                options.
(36)
Includes
                11,594 shares of Common Stock subject to currently exercisable
                options.
(37)
Includes
                10,937 shares of Common Stock subject to currently exercisable
                options.
(38)
Includes
                10,000 shares of Common Stock subject to currently exercisable
                options.
(39)
Includes
                8,575 shares of Common Stock subject to currently exercisable
                options.
(40)
Includes
                7,812 shares of Common Stock subject to currently exercisable
                options.
(41)
Includes
                7,600 shares of Common Stock subject to currently exercisable
                options.
(42)
Includes
                7,500 shares of Common Stock subject to currently exercisable
                options.
(43)
Includes
                6,500 shares of Common Stock subject to currently exercisable
                options.
(44)
Includes
                4,375 shares of Common Stock subject to currently exercisable
                options.
(45)
Includes
                4,000 shares of Common Stock subject to currently exercisable
                options.
(46)
Includes
                2,500 shares of Common Stock subject to currently exercisable
                options.
(47)
Includes
                1,552 shares of Common Stock subject to currently exercisable
                options.
(48)
Includes
                2,000 shares of Common Stock subject to currently exercisable
                options.
15
PLAN
      OF DISTRIBUTION
This
      offering is self-underwritten. Neither we nor the selling stockholders have
      employed an underwriter for the sale of Common Stock by the selling
      stockholders. We will bear all expenses in connection with the preparation
      of
      this prospectus. The selling stockholders will bear all expenses associated
      with
      the sale of their Common Stock. There can be no assurance that the selling
      stockholders will sell any or all of the shares of Common Stock offered by
      them
      under this prospectus or otherwise.
At
      the
      time a selling stockholder makes an offer to sell shares, to the extent required
      by the Securities Act of 1933, as amended, a prospectus will be delivered.
      If a
      supplemental prospectus is required, one will be delivered setting forth the
      number of shares being offered and the terms of the offering.
The
      selling stockholders may offer their shares of Common Stock directly or through
      pledgees, donees, transferees or other successors in interest in one or more
      of
      the following transactions:
·
ordinary
                brokerage transactions in which the broker-dealer solicits
                purchasers;
·
block
                trades in which the broker-dealer will attempt to sell the shares
                as agent
                but may position and resell a portion of the block as principal to
                facilitate the transaction;
·
purchases
                by a broker-dealer as principal and resale by the broker-dealer for
                its
                account;
·
an
                exchange distribution in accordance with the rules of the applicable
                exchange;
·
privately
                negotiated transactions;
·
broker-dealers
                may agree with the selling stockholders to sell a specified number
                of such
                shares at a stipulated price per
                share;
·
a
                combination of any such methods of sale;
                and
·
any
                other method permitted pursuant to applicable
                law.
The
      selling stockholders may offer their shares of Common Stock at any of the
      following prices:
·
fixed
                prices that may be changed;
·
market
                prices prevailing at the time of
                sale;
·
prices
                related to such prevailing market prices;
                and
·
at
                negotiated prices.
The
      selling stockholders may effect transactions by selling shares to or through
      broker-dealers, and all such broker-dealers may receive compensation in the
      form
      of discounts, concessions, or commissions from the selling stockholders and/or
      the purchasers of shares of Common Stock for whom such broker-dealers may act
      as
      agents or to whom they sell as principals, or both (which compensation as to
      a
      particular broker-dealer might be in excess of customary
      commissions).
16
Any
      broker-dealer acquiring Common Stock from the selling stockholders may sell
      the
      shares either directly, in its normal market-making activities, through or
      to
      other brokers on a principal or agency basis or to its customers. Any such
      sales
      may be at prices then prevailing on the OTC Bulletin Board or at prices related
      to such prevailing market prices or at negotiated prices to its customers or
      a
      combination of such methods. The selling stockholders and any broker-dealers
      that act in connection with the sale of the Common Stock hereunder might be
      deemed to be "underwriters" within the meaning of Section 2(11) of the
      Securities Act; any commission received by them and any profit on the resale
      of
      shares as principal might be deemed to be underwriting discounts and commissions
      under the Securities Act. Any such commissions, as well as other expenses
      incurred by the selling stockholders and applicable transfer taxes, are payable
      by the selling stockholders.
The
      selling stockholders reserve the right to accept, and together with any agent
      of
      the selling stockholder, to reject in whole or in part any proposed purchase
      of
      the shares of Common Stock. The selling stockholders will pay any sales
      commissions or other seller's compensation applicable to such
      transactions.
Since
      we
      do not satisfy the registrant requirements for use of Form S-3 at the time
      of
      filing this prospectus, the Rule 144(e) volume limitations shall be applicable
      to the amount of securities to be reoffered or resold by means of this reoffer
      prospectus by each person, and any other person with whom he or she is acting
      in
      concert for purposes of selling securities of the Company. The volume
      limitations in Rule 144(e) provide for the sale within any three-month period
      a
      number of shares that does not exceed the greater of: (i) 1% of the number
      of
      shares of Common Stock then outstanding (which currently equals 197,765 as
      of
      the date of this prospectus) or (ii) the average weekly trading volume during
      the four prior calendar weeks.
We
      have
      not registered or qualified offers and sales of shares of the Common Stock
      under
      the laws of any country other than the United States. To comply with certain
      states' securities laws, if applicable, the selling stockholders will offer and
      sell their shares of Common Stock in such jurisdictions only through registered
      or licensed brokers or dealers. In addition, in certain states the selling
      stockholders may not offer or sell shares of Common Stock unless we have
      registered or qualified such shares for sale in such states or we have complied
      with an available exemption from registration or qualification.
The
      selling stockholders with respect to any purchase or sale of shares of Common
      Stock are required to comply with Regulation M promulgated under the Securities
      Exchange Act of 1934, as amended. In general, Rule 102 under Regulation M
      prohibits any person connected with a distribution of securities (the
"Distribution") from directly or indirectly bidding for, or purchasing for any
      account in which he or she has a beneficial interest, any of such securities
      or
      any right to purchase such securities, for a period of one business day before
      and after completion of his or her participation in the Distribution (we refer
      to that time period as the "Distribution Period").
During
      the Distribution Period, Rule 104 under Regulation M prohibits the selling
      stockholders and any other persons engaged in the Distribution from engaging
      in
      any stabilizing bid or purchasing of our Common Stock except for the purpose
      of
      preventing or retarding a decline in the open market price of our Common Stock.
      No such person may effect any stabilizing transaction to facilitate any offering
      at the market. Inasmuch as the selling shareholders will be reoffering and
      reselling our Common Stock at the market, Rule 104 prohibits them from effecting
      any stabilizing transaction in contravention of Rule 104 with respect of our
      Common Stock.
There
      can
      be no assurance that the selling stockholders will sell any or all of the shares
      offered by them hereunder or otherwise.
17
LEGAL
      MATTERS
The
      validity of the shares of Common Stock offered hereby have been passed upon
      for
      us by Eiseman Levine Lehrhaupt & Kakoyiannis, P.C., 805 Third Avenue, New
      York, New York 10022. Sam Schwartz, a partner of that firm, owns 23,584 shares
      of our Common Stock and options to purchase 12,500 shares of our Common Stock
      as
      of the date of this prospectus.
EXPERTS
The
      financial statements for the year ended December 31, 2005 incorporated in
      this prospectus by reference to the Annual Report on Form 10-KSB for the year
      ended December 31, 2005 have been so incorporated in reliance on the report
      of
      Radin, Glass & Co., LLP, independent accountants, given on the authority of
      said firm as experts in auditing and accounting. The financial statements for
      the year ended December 31, 2004 incorporated in this prospectus by
      reference to the Annual Report on Form 10-KSB for the year ended
      December 31, 2005 have been so incorporated in reliance on the report of
      Eisner LLP, an independent registered accounting firm, given on the authority
      of
      said firm as experts in auditing and accounting.
DISCLOSURE
      OF COMMISSION POSITION ON INDEMNIFICATION
FOR
      SECURITIES ACT LIABILITIES
Our
      Certificate of Incorporation and Bylaws provide our directors with protection
      for breaches of their fiduciary duties to us
and
our
      shareholders. Insofar as indemnification for liabilities arising under the
      Securities Act may be permitted to our directors, officers or persons
      controlling us, we have been advised that it is the SEC's opinion that such
      indemnification is against public policy as expressed in the Securities Act
      and
      is, therefore, unenforceable.
In
      the
      event that a claim for indemnification against such liabilities (other than
      the
      payment by us of expenses incurred or
paid
by a
      director, officer or controlling person in the successful defense of any action,
      suit or proceeding) is asserted by such director, officer or controlling person
      in connection with the securities being registered, we will, unless in the
      opinion of our counsel the matter has been settled by controlling precedent,
      submit to a court of appropriate jurisdiction the question whether such
      indemnification by it is against public policy as expressed in the Securities
      Act and will be governed by the final adjudication of such issue.
18
PART
      II
INFORMATION
      REQUIRED IN THE REGISTRATION STATEMENT
ITEM
      3.  INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The
      following documents filed by Network-1 Security Solutions, Inc. (the "Company")
      with the Securities and Exchange Commission (the "Commission") pursuant to the
      Securities Exchange Act of 1934, as amended (the "Exchange Act"), and the
      Securities Act of 1933, as amended (the "Securities Act"), are incorporated by
      reference in, and made a part of, this Registration Statement:
1.
Our
                Annual Report on Form 10-KSB for the year ended December 31, 2005
                (filed
                April 12, 2006);
2.
Our
                current reports on Form 8-K and Form 8-K/A filed on February 8, 2006,
                February 9, 2006, February 15, 2006, March 31, 2006,
                April 17, 2006, May 16, 2006, August 7, 2006,
                September 14, 2006, November
15,
                2006, November 28, 2006 and December 22, 2006
;
3.
Our
                Quarterly Report on Form 10-QSB for the period ended March 31, 2006,
                June 30, 2006 and September 30, 2006 (filed May 15, 2006,
                August 3, 2006 and November 14, 2006);
                and
4.
The
                description of our Common Stock incorporated by reference in our
                Registration Statement on Form 8-A (filed October 9, 1998), as amended
                on
                November 3, 1998.
All
      reports and other documents subsequently filed by the Company pursuant to
      Sections 13(a), 13(c), 14 and 15(d) of the Exchange Act, prior to the filing
      of
      a post-effective amendment that indicates that all shares of Common Stock
      offered hereby have been sold or which deregisters all shares then remaining
      unsold, shall be deemed to be incorporated by reference in this Registration
      Statement and to be a part hereof from the date of filing of such reports and
      other documents. Any statement contained in a document incorporated or deemed
      to
      be incorporated by reference herein shall be deemed to be modified or superseded
      for purposes of this Registration Statement to the extent that a statement
      contained herein or in any other subsequently filed document which also is
      incorporated or deemed to be incorporated by reference herein modifies or
      supersedes such statement. Any statement so modified or superseded shall not
      be
      deemed, except as so modified or superseded, to constitute a part of this
      Registration Statement.
We
      will
      provide at no cost to each person to whom this prospectus is delivered, upon
      written or oral request, a copy of any of these filings, excluding the exhibits
      to such filings that we have not specifically incorporated by reference in
      such
      filings. You should direct such requests to us at 445 Park Avenue, Suite 1028,
      New York, New York 10021, Attention: Corey M. Horowitz, Chairman and Chief
      Executive Officer, telephone number (212) 829-5770.
ITEM
      4.  DESCRIPTION OF SECURITIES
Not
      applicable.
ITEM
      5.  INTERESTS OF NAMED EXPERTS AND COUNSEL
The
      validity of the Common Stock offered hereby has been passed upon by the Company
      by Eiseman Levine Lehrhaupt & Kakoyiannis, P.C. ("ELLK"), 805 Third Avenue,
      New York, New York 10022, Sam Schwartz, a partner of ELLK, currently owns 23,584
      shares of our Common Stock and options to purchase 12,500 shares of our Common
      Stock.
ITEM
      6.  INDEMNIFICATION OF DIRECTORS AND OFFICERS
Section
      145 of the Delaware General Corporations Law (the "DGCL") contains provisions
      entitling the Company's directors and officers to indemnification from
      judgments, fines, amounts paid in settlement, and reasonable expenses (including
      attorneys' fees) as the result of an action or proceeding in which they may be
      involved by reason of having been a director or officer of the Company. In
      its
      Certificate of Incorporation, the Company has included a provision that limits,
      to the fullest extent now or hereafter permitted by the DGCL, the personal
      liability of its directors to the Company or its stockholders for monetary
      damages arising from a breach of their fiduciary duties as directors. Under
      the
      DGCL as currently in effect, this provision limits a director's liability except
      where such director (i) breaches his duty of loyalty to the Company or its
      stockholders, (ii) fails to act in good faith or engages in intentional
      misconduct or a knowing violation of law, (iii) authorizes payment of an
      unlawful dividend or stock purchase or redemption as provided in Section 174
      of
      the DGCL, or (iv) obtains an improper personal benefit. This provision does
      not
      prevent the Company or its stockholders from seeking equitable remedies, such
      as
      injunctive relief or rescission. If equitable remedies are found not to be
      available to stockholders in any particular case, stockholders may not have
      any
      effective remedy against actions taken by directors that constitute negligence
      or gross negligence.
The
      Certificate of Incorporation also includes provisions to the effect that
      (subject to certain exceptions) the Company shall, to the maximum extent
      permitted from time to time under the law of the State of Delaware, indemnify,
      and upon request shall advance expenses to, any director or officer to the
      extent that such indemnification and advancement of expenses is permitted under
      such law, as it may from time to time be in effect. In addition, the Bylaws
      require the Company to indemnify, to the full extent permitted by law, any
      director, office, employee or agent of the Company for acts which such person
      reasonably believes are not in violation of the Company's corporate purposes as
      set forth in the Certificate of Incorporation. At present, the DGCL provides
      that, in order to be entitled to indemnification, an individual must have acted
      in good faith and in a manner he or she reasonably believed to be in or not
      opposed to the Company's best interests.
Insofar
      as indemnification for liabilities arising under the Securities Act may be
      permitted to directors, officers and controlling persons of the Company pursuant
      to any charter, provision, by-law, contract, arrangement, statute or otherwise,
      the Company has been advised that in the opinion of the Securities and Exchange
      Commission such indemnification is against public policy as expressed in the
      Securities Act and is, therefore, unenforceable.
ITEM
      7.  EXEMPTION FROM REGISTRATION CLAIMED
Not
      applicable.
ITEM
      8.  EXHIBITS
No.
Description
4.1
The
                  Company's Amended and Restated 1996 Stock Option Plan.  Previously
                  filed as an attachment to the Company's Proxy Statement filed on October
                  6, 2000, and incorporated herein by reference.
4.2*
Form
                  of Stock Option Agreement.
5.1*
Opinion
                  of Eiseman Levine Lehrhaupt & Kakoyiannis, P.C. regarding legality of
                  securities being registered.
23.1*
Consent
                  of Radin Glass & Co., LLP independent registered public accounting
                  firm.
23.2*
Consent
                  of Eisner LLP, former independent registered public accounting
                  firm.
23.3*
Consent
                  of Eiseman Levine Lehrhaupt & Kakoyiannis, P.C.  (contained in
                  Exhibit 5.1).
24.1*
No
                  person has signed this Registration Statement under a power of
                  attorney. A
                  power of attorney relating to the signing of amendments hereto
                  is
                  incorporated in the signature page
                  hereof.
*
      Filed
      herewith
ITEM
      9.  UNDERTAKINGS.
(1)
      The
      undersigned Registrant hereby undertakes:
(a)
      To
      file, during any period in which offers or sales are being made, a
      post-effective amendment to this Registration Statement to:
(i)
Include
      any prospectus required by Section 10(a)(3) of the Securities Act;
(ii)  Reflect
      in the prospectus any facts or events which, individually or together, represent
      a fundamental change in the information in the registration statement.
      Notwithstanding the foregoing, any increase or decrease in volume of securities
      offered (if the total dollar value of securities offered would not exceed that
      which was registered) and any deviation from the low or high end of the
      estimated maximum offering range may be reflected in the form of prospectus
      filed with the Commission pursuant to Rule 424(b) if, in the aggregate, the
      changes in volume and price represent no more than a 20 percent change in the
      maximum aggregate offering price set forth in the "Calculation of Registration
      Fee" table in the effective registration statement;
(iii) Include
      any additional or changed material information on the plan of
      distribution.
provided,
      however, that the undertakings set forth in paragraphs (a)(1)(i) and (a)(1)(ii)
      above do not apply if the information required to be included in a
      post-effective amendment by those paragraphs is contained in reports filed
      with
      or furnished to the SEC by the Registrant pursuant to section 13 or section
      15(d) of the Securities Exchange Act of 1934 that are incorporated by reference
      in this Registration Statement.
(b)
      For
      determining liability under the Securities Act, treat each post-effective
      amendment as a new Registration Statement of the securities offered, and the
      offering of securities at that time to be the initial
bona
      fide
offering.
(c)
      File
      a post-effective amendment to remove from registration any of the securities
      that remain unsold at the end of this offering.
(2)
The
      undersigned Registrant hereby undertakes that, for purposes of determining
      any
      liability under the Securities Act of 1933, each filing of the registrant's
      annual report pursuant to Section 13(a) or 15(d) of the Securities Exchange
      Act of 1934(and, where applicable, each filing of an employee benefit plan's
      annual report pursuant to Section 15(d) of the Securities Exchange Act of 1934)
      that is incorporated by reference in the registration statement shall be deemed
      to be a new registration statement relating to the securities offered therein,
      and the offering of such securities at that time shall be deemed to be the
      initial
bona
      fide
offering
      thereof.
(2)
      Insofar as indemnification for liabilities arising under the Securities Act
      may
      be permitted to directors, officers and controlling persons of the Registrant,
      pursuant to the foregoing provisions, or otherwise, the Registrant has been
      advised that in the opinion of the Securities and Exchange Commission such
      indemnification is against public policy as expressed in the Securities Act
      and
      is, therefore, unenforceable.
In
      the
      event that a claim for indemnification against such liabilities (other than
      the
      payment by the Registrant of expenses incurred or paid by a director, officer
      or
      controlling person of the registrant in the successful defense of any action,
      suit or proceeding) is asserted by such director, officer or controlling person
      in connection with the securities being registered, the Registrant will, unless
      in the opinion of its counsel the matter has been settled by controlling
      precedent, submit to a court of appropriate jurisdiction the question whether
      such indemnification by it is against public policy as expressed in the
      Securities Act and will be governed by the final adjudication of such
      issue.
SIGNATURES
Pursuant
      to the requirements of the Securities Act of 1933, the Registrant certifies
      that
      it has reasonable grounds to believe that it meets all of the requirements
      for
      filing on Form S-8 and has duly caused this Registration Statement to be signed
      on its behalf by the undersigned, thereunto duly authorized, in the City of
      New
      York, State of New York.
Dated:    
      February 12, 2007
NETWORK-1
              SECURITY SOLUTIONS, INC.
By:
/s/ Corey
              M.
              Horowitz
Corey M. Horowitz
Chairman
              and Chief Executive Officer
KNOW
      ALL
      MEN BY THESE PRESENTS, that each director and officer whose signature appears
      below constitutes and appoints Corey M. Horowitz his true and lawful
      attorney-in-fact and agent, with full power and substitution and
      re-substitution, to sign in any and all capacities any and all amendments or
      post-effective amendments to this Registration Statement on Form S-8 and to
      file
      the same with all exhibits thereto and other documents in connection therewith
      with the Securities and Exchange Commission, granting to such attorney-in-fact
      and agent, full power and authority to do all such other acts and execute all
      such other documents as he may deem necessary or desirable in connection with
      the foregoing, as fully as the undersigned might or could do in person, hereby
      ratifying and confirming all that such attorney-in-fact and agent may lawfully
      do or cause to be done by virtue hereof.
Pursuant
      to the requirements of the Securities Act of 1933, this Registration Statement
      has been signed by the following persons in the capacities and on the dates
      indicated:
Signature
Title
Date
/s/
                  Corey M.
                  Horowitz
Chairman
                  and Chief Executive Officer
February
                  12, 2007
Corey
                  M. Horowitz
(principal
                  executive officer)
/s/
                  David C.
                  Kahn
Chief
                  Financial Officer
February
                  12, 2007
David
                  C. Kahn
(principal
                  financial and accounting officer)
/s/
                  Robert
                  Graifman
Director
February
                  12, 2007
Robert
                  Graifman
/s/
                  Robert
                  Pons
Director
February
                  12, 2007
Robert
                  Pons
/s/
                  Laurent
                  Ohana
Director
February
                  12, 2007
Laurent
                  Ohana
INDEX
      TO EXHIBITS
No.
Description
4.1
The
                Company's Amended and Restated 1996 Stock Option Plan. Previously filed as
                an attachment to the Company's Proxy Statement filed on October 6, 2000,
                and incorporated herein by
                reference.
4.2*
Form
                of Stock Option Agreement.
5.1*
Opinion
                of Eiseman Levine Lehrhaupt & Kakoyiannis, P.C. regarding legality of
                securities being registered.
23.1*
Consent
                of Radin Glass & Co., LLP independent certified
public
                accountants.
23.2*
Consent
                of Eisner LLP, former independent registered accounting
                firm.
23.3*
Consent
                of Eiseman Levine Lehrhaupt & Kakoyiannis, P.C. (contained in Exhibit
                5.1).
24.1*
No
                person has signed this Registration Statement under a power of attorney.
                A
                power of attorney relating to the signing of amendments hereto is
                incorporated in the signature page
                hereof.
*
      Filed
      herewith