NETWORK-1 SECURITY SOLUTIONS, INC.


                        Filed Pursuant to Rule 424(b)(3)
                           Registration No. 333-143710

                           PROSPECTUS SUPPLEMENT NO. 2
                       (To Prospectus dated July 6, 2007)


This is a prospectus supplement to our prospectus dated July 6, 2007 (the
"Prospectus") relating to the resale from time to time by selling stockholders
of up to 5,360,000 shares of our common stock, including shares issuable upon
exercise of outstanding warrants. On August 21, 2007, we filed with the
Securities and Exchange Commission a Current Report on Form 8-K. The text of the
Current Quarterly Report on Form 8-K is attached to and a part of this
supplement.

This prospectus supplement should be read in conjunction with the Prospectus and
may not be delivered or utilized without the Prospectus. This prospectus
supplement is qualified by reference to the Prospectus, except to the extent
that the information provided by this prospectus supplement supersedes the
information contained in the Prospectus.

The securities offered by the Prospectus involve a high degree of risk. You
should carefully consider the "Risk Factors" referenced on page 4 of the
Prospectus in determining whether to purchase the Common Stock.

The date of this prospectus supplement is August 21, 2007.

================================================================================

                                  UNITED STATES

                       SECURITIES AND EXCHANGE COMMISSION

                             Washington, D.C. 20549

                             -----------------------

                                    Form 8-K

                                 CURRENT REPORT

                     Pursuant to Section 13 or 15(d) of the

                         Securities Exchange Act of 1934

Date of Report (Date of earliest event reported):  August 16, 2007
                                                   -----------------------------



                       Network-1 Security Solutions, Inc.
--------------------------------------------------------------------------------
             (Exact name of registrant as specified in its charter)


        Delaware                      1-14896                    11-3027591
--------------------------------------------------------------------------------
(State or other jurisdiction        (Commission                (IRS Employer
     of incorporation)              File Number)             Identification No.)


              445 Park Avenue, Suite 1028, New York, New York 10022
--------------------------------------------------------------------------------
                    (Address of principal executive offices)


Registrant's telephone number, including area code:  (212) 829-5700


                                      N/A
--------------------------------------------------------------------------------
         (Former name or former address, if changed since last report.)




     Check the appropriate box below if the Form 8-K filing is intended to
simultaneously satisfy the filing obligation of the registrant under any of the
following provisions (SEE General Instruction A.2. below):

[_]  Written communications pursuant to Rule 425 under the Securities Act (17
     CFR 230.425)

[_]  Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR
     240.14a-12)

[_]  Pre-commencement communications pursuant to Rule 14d-2(b) under the
     Exchange Act (17 CFR 240.14d-2(b))

[_]  Pre-commencement communications pursuant to Rule 13e-4(c) under the
     Exchange Act (17 CFR 240.13e-4(c))

================================================================================


ITEM 1.01   ENTRY INTO A MATERIAL DEFINITIVE AGREEMENT

     On August 16, 2007, Network-1 Security Solutions, Inc. (the "Company")
issued a press release announcing the final license terms with D-Link
Corporation and D-Link Systems (collectively, "D-Link") as part of a definitive
Settlement Agreement of its patent infringement litigation against D-Link in the
United District Court for the Eastern District of Texas, Tyler Division, for
infringement of the Company's Remote Power Patent (U.S. Patent No. 6,218,930).






ITEM 9.01   FINANCIAL STATEMENTS ARE EXHIBITS

            Exhibit Number    Description
            --------------    -----------

                 10.1         Settlement Agreement

                 99.1         Press Release, dated August 16, 2007





























                                        2

                                    SIGNATURE

     Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.



                                   NETWORK-1 SECURITY SOLUTIONS, INC.



Dated:  August 20, 2007            By: /s/ Corey M. Horowitz
                                       -----------------------------------------
                                       Name:  Corey M. Horowitz
                                       Title: Chairman & Chief Executive Officer




































                                        3

                                                                    EXHIBIT 10.1
                                                                    ------------
                                                                    CONFIDENTIAL

                              SETTLEMENT AGREEMENT

This Settlement Agreement ("Agreement") is effective as of May 25, 2007 (the
"Effective Date"), by and between Network-1 Security Solutions, Inc., a Delaware
corporation having its principal place of business at 445 Park Avenue, Suite
1028, New York, New York, U.S.A. ("Network-1"), and D-Link Corp., a Taiwan
company with headquarters at No. 289, Xinhu 3rd Rd., Neihu District, Taipei City
114, Taiwan ("D-Link Corp."), and D-Link Systems, Inc., a California corporation
with headquarters at 17595 Mt. Herrmann Street, Fountain Valley, California
92708 ("D-Link Systems").


                                    RECITALS

     A.   Network-1 and D-Link Corp. and D-Link Systems are currently parties to
a civil action pending in the United States District Court for the Eastern
District Court of Texas, entitled NETWORK-1 SECURITY SOLUTIONS, INC. V. D-LINK
CORPORATION AND D-LINK SYSTEMS. INC., Civil Action No. 6:05-CV291 (the "Pending
Lawsuit") and

     B.   The parties to this Agreement, without admitting any liability, have
concluded that their interests would be best served by fully settling, and
thereby terminating and concluding, any and all claims, controversies and
demands relating in any way to the Pending Lawsuit which either party may have
against the other, on the terms and conditions set forth herein.

     NOW, THEREFORE, the undersigned parties to this Agreement herewith mutually
agree and contract with each other, for good and valuable consideration given
and received, as follows:

     (1)  Definitions.

          (a) "Action" means any suit, action, dispute, claim, counterclaim,
     arbitration or legal, administrative or other proceeding or governmental
     investigation, including without limitation any reexamination or request
     for reexamination.

          (b) "Agreement Related to Settlement and Dismissal" means the
     Agreement Related to Settlement and Dismissal, in the form attached hereto
     as Exhibit A, which, upon execution of this Agreement, will be executed by
     Network-1, D-Link Corp. and D- Link Systems and filed (together with a
     joint motion for entry thereof) with the United States District Court for
     the Eastern District of Texas, Tyler Division, for entry by the Court as a
     final judgment in the Pending Lawsuit.

          (c) "D-Link Party' "D-Link Parties" or "D-Link" means D-Link Corp. and
     D-Link Systems, each and/or collectively.

          (d) "D-Link Branded" means products sold by D-Link bearing the
     trademarks, trade names, or other commercial identities of D-Link, but not
     co-branded products or products made on an OEM or similar basis.

          (e) "D-Link Covenanted Party" means each of the D-Link Parties and
     their successors.

                                                                    CONFIDENTIAL


          (f) "Expiration Date" means the date on which the '930 Patent (as
     defined in Section 1(q)) shall expire.

          (g) "Have Made" means the right to purchase a Licensed Product from a
     third party (e.g., Subsidiaries, suppliers and vendors) and/or have a third
     party make a Licensed Product for the use by and/or sale or transfer by
     D-Link, said third party operating under the license grant to D-Link for
     the provision of Licensed Products to D-Link and for no other purpose.

          (h) "IEEE PoE Standards" -- shall mean the Power over Ethernet (PoE)
     IEEE Standard 802.3.af-2003 and 802.3.at-2003.

          (i) "Licensed Product" shall mean all D-Link Branded PoE enabled PSE
     and PD products (including PoE Adapters) sold or otherwise transferred by
     D-Link, as identified in Exhibit B, as amended from time to time, which:

               (i) comply with IEEE PoE Standards, except PSEs that exclusively
          use Spare Pairs for the transmission of operating power; and/or

               (ii)are proprietary PoE products, except those that exclusively
          use Spare Pairs for the transmission of or receipt of operating power.

          (j) "Net Sales" means with respect to any Licensed Product sold in the
     United States the greater of either (a) the selling price which D-Link
     would realize from an unaffilliated buyer in an arms-length sale of an
     identical product in the same quantity and at the same time and place as
     such sale, or (b) the selling price actually invoiced for such product to
     such an unaffiliated customer by D-Link, which greater amount shall then be
     reduced by Accepted Returns and further reduced by refunds, rebates,
     adjustment credits, price protection credits, and trade discounts
     ("Adjustments") on specific, previously invoiced Licensed Products on an
     item-by-item basis (and such Adjustments accounted for on an item-by-item
     basis in each royalty report) actually provided to customers previously
     invoiced for such Licensed Products, provided said Adjustments are not
     passed through to D-Link's suppliers or otherwise recovered by D-Link. For
     the avoidance of doubt, the costs of marketing campaigns, advertising,
     business development, or other similar expenses shall not be used in any
     manner as a credit, adjustment, or discount to reduce the Net Sales amount.

          (k) "Accepted Returns" shall mean Licensed Products previously
     invoiced by D-Link and subject to the royalty set forth in Section 5 of
     this Agreement and returned to D-Link, but only to the extent D-Link issues
     a credit or refund to the customer returning such Licensed Product in an
     amount for each returned Licensed Product no greater than that originally
     invoiced.

          (l) "Pending Lawsuit" has the meaning set forth in paragraph A of the
     Recitals to this Agreement.

          (m) "Person" or "person" means an individual, corporation,
     partnership, limited partnership, limited liability company, syndicate,
     person (including, without limitation, a

                                        2

                                                                    CONFIDENTIAL


     "person" as defined in Section 13(d)(3) of the Exchange Act), trust,
     association or entity or government, political subdivision, agency or
     instrumentality of a government.

          (n) "Power Over Ethernet" or "PoE" means the technology used to
     deliver electrical power over Ethernet network cabling for the purpose of
     supplying operating power to devices connected to said Ethernet network.

          (o) "PoE Adapter" - means a device that enables non-PoE Ethernet
     devices (i.e. lacking circuitry to accept power from the Ethernet network)
     to operate using power provided by PoE Power Sourcing Equipment (PSE) via
     an Ethernet cable.

          (p) "Power Sourcing Equipment" or "PSE" means any apparatus, device,
     equipment or product that supplies power to other devices in a PoE
     implementation.

          (q) "Powered Devices" or "PD" means any apparatus, device, equipment
     or product that receives or is capable of receiving power from PSEs in a
     PoE implementation.

          (r) The "930 Patent" means United States Patent Number 6,218,930, and
     any reissues and reexaminations thereof.

          (s) "RAND Licensing Program" -- means Network-1's licensing of the
     '930 Patent.

          (t) "RAND Royalty Rate" means the running royalty rate that becomes
     effective when a licensee agrees to pay a running royalty rate based on a
     royalty base of sales under a license agreement with Network-1 under the
     RAND Licensing Program, such running royalty rate taking into account
     factors, including, but not limited to, conditions on volumes and types of
     products licensed in such a license agreement.

          (u) "Spare Pairs" -- means the set of wires in a twisted pair cable
     not used for the transport of data in a 10/100 Ethernet network segment.

          (v) "Subsidiary" means a Person (as defined in Section 1(m)) which,
     directly or indirectly, is controlled by or is under common control with a
     Party hereto. As used herein, "control" (including the terms "controlled
     by" and "under common control with") means the possession, directly or
     indirectly, or as trustee or executor, of the power to direct or cause the
     direction of the management and policies of a person, whether through the
     ownership of voting securities, as trustee or executor, by contract or
     credit arrangement or otherwise.

     (2)  Agreement Related to Settlement and Dismissal. Upon execution of this
Agreement, Network-1 and D-Link Parties will execute the Agreement Related to
Settlement and Dismissal, in the form attached hereto as Exhibit A, and file
such Agreement Related to Settlement and Dismissal, with a joint motion for
entry thereof, with the United States District Court for the Eastern District of
Texas for entry by the Court as a final judgment in the Pending Lawsuit, The
covenants and agreements contained in this Agreement, with the exception of this
Section, shall not be effective until the date on which the Court enters such
Agreement Related to Settlement and Dismissal.

                                        3

                                                                    CONFIDENTIAL

     (3)  License Grant

          (a) Network-1 hereby grants to the D-Link Parties a personal,
     non-exclusive, non-transferable, royalty bearing license under the '930
     Patent (i) to make, use, lease, sell, offer for sale, import design, Have
     Made and otherwise transfer Licensed Products, including the right to
     procure or produce components therefore, (ii) to practice a method or
     process involved in the manufacture thereof, and (iii) practice any method
     or process involved in the use thereof. To the extent that the Licensed
     Products are sold or otherwise transferred by D-Link Parties to
     distributors, channel partners, retailers, customers and other non-OEM
     "arm's length" customers and/or end users, the license granted under this
     Section shall encompass such parties for such Licensed Products. To the
     extent that a third party is operating under the Have Made rights granted
     herein, the license granted under this Section shall encompass said third
     party, but only as to such third party's sales of Licensed Products to
     D-Link and other licensed conduct for D-Link contemplated herein, and not
     for sales to other parties.

     (4)  D-Link Covenants.

          The D-Link Parties and their successors hereby covenant from and after
     the Effective Date not to initiate any Action to challenge, directly or
     indirectly through their acting officers, directors, employees,
     representatives, or agents acting at D-Link's direction, the infringement
     or validity of the '930 Patent, and not to assist or cooperate in any
     Action, related to the non-infringement or invalidity of the '930 Patent or
     any declaratory judgment action under the Patent Act of the United States,
     title 35, United States Code, the Declaratory Judgment Act, title 28,
     United States Code, or otherwise; unless the D-Link Parties are required to
     do so pursuant to any applicable law, regulation, judicial or
     administrative order or decree, or request by other regulatory organization
     having authority pursuant to the law; PROVIDED; HOWEVER, that in such case
     the applicable D-Link Party gives Network-1 reasonable advance notice of
     the same (so as to afford Network-1 a reasonable opportunity to appear,
     object and obtain appropriate relief regarding such requirement). The
     covenant in this Section 4 shall not apply if Network-1, any of its
     Subsidiaries, successors, assigns, or any third party asserts the '930
     Patent, or otherwise institutes any claim, action or proceeding relating to
     the '930 Patent, other than as a result of a breach of this Agreement,
     against any D-Link Party or against D-Link's customers or suppliers based
     on the making, using, selling and/or offering for sale of products sold or
     transferred to them by D-Link, in which case, for the avoidance of doubt,
     such D-Link Party shall not be barred from asserting any noninfringement
     and/or invalidity counterclaims and/or defenses (or any other counterclaims
     and/or defenses) related to the action or proceeding relating to the '930
     Patent.

     (5)  Payments/Payment Terms.

          (a) Within five (5) business days of execution of this Agreement,
     D-Link will pay Network-1 an upfront payment of $100,000.

          (b) In further consideration for the license granted herein and except
     as otherwise stated herein, commencing on the Effective Date and provided
     that the registration of '930 Patent with the U.S. Patent Office is duly
     maintained by Network-1, with respect to

                                        4

                                                                    CONFIDENTIAL


     Licensed Products, D-Link will pay to Network-1 a running royalty of 3.25%
     (the "Royalty Rate") of D-Link's Net Sales for the sale of Licensed
     Products (except PoE Adapters), and 5% of D-Link's Net Sales from the sale
     of PoE Adapters (the "Adapter Royalty Rate"), for all sales that occur on
     or after the Effective Date. Royalties shall be paid monthly no later than
     twenty (20) days after the first day of each month, based on the preceding
     month's Net Sales. Royalties shall be submitted with a Monthly Royalty
     Report, in the form of Exhibit C, showing all Licensed Products sold by
     D-Link in the immediately preceding month. The Royalty Report will also
     list any additional products that fall within the scope of Licensed
     Products and that are to be added to Exhibit B.

          (c) Beginning March 31, 2008, D-Link shall be entitled to pay the
     lower of the Royalty Rate/Adapter Royalty Rate (hereinafter collectively
     referred to as "Rate") in 5(b) and the royalty rate that may be Network-1's
     RAND Royalty Rate in effect at that time. If D-Link chooses to accept such
     RAND Royalty Rate, its royalty payments under this Section 5(d) shall be
     calculated using the same methodology as the royalty payments in the
     license agreement that triggered the adjustment described herein and shall
     apply to all Licensed Products. The Rate can be reduced quarterly
     throughout the term of this Agreement to reflect the then current RAND
     Royalty Rate. Network-1 agrees that as of the Effective Date, the Royalty
     Rate set forth herein is Network-1's initial RAND Royalty Rate. If there is
     any change to the RAND Royalty Rate after the Effective Date, Network-1
     shall provide such changes to D-Link in writing on a quarterly basis. It is
     understood and agreed that the RAND Royalty Rate may include rates that
     vary according to units of licensed products shipped and any adjustments to
     the Rate will be at a rate consistent with similarly situated companies and
     volumes (units of licensed products sold) under the Network-1 RAND
     Licensing Program.

          (d) D-Link shall submit to Network-I a semi-annual royalty report
     ("Royalty Report") within thirty (30) days after the end of every six month
     anniversary of the Effective Date of the Agreement. The Royalty Report
     shall be certified by an appropriate responsible employee of D-Link setting
     forth the amount of the royalties and calculation thereof for the reported
     period regardless of whether or not any payment is due. The Royalty Report
     will also list any additional products that fall within the scope of
     Licensed Products and that are to be added to Exhibit B.

          (e) If the '930 Patent is found to be invalid by (i) a court of
     competent jurisdiction, (ii) a final decision of the U.S. Patent and
     Trademark Office after a re-examination, or (iii) the International Trade
     Commission, then D-Link shall be entitled to cease making royalty payments;
     provided, however, that in the event such finding is overturned by the U.S.
     Court of Appeals for the Federal Circuit or other higher court of competent
     jurisdiction, D-Link shall be responsible for back royalties plus interest
     at the Prime Rate as reflected in the Wall Street Journal as of the date of
     the ruling of' invalidity. Network-1 will provide D-Link with written
     notice of such a finding of invalidity (or any decision overturning such a
     finding) within twenty (20) days of the date of such decision.

          (f) In the event a third party's PoE products that comply with the
     IEEE PoE Standards are found not to infringe the '930 Patent by a court of
     competent jurisdiction (expressly including the International Trade
     Commission), D-Link may provide notice to

                                        5

                                                                    CONFIDENTIAL


     Network-1 that such finding could result in the termination of D-Link's
     obligation to pay royalties under the Agreement, and D-Link may provide
     notice to Network-1 that it intends to cease making royalty payments for
     Licensed Products of comparable form and function as the PoE products found
     not to infringe the '930 Patent. Network-1 shall provide D-Link with
     written notice of such a finding of non-infringement as soon as reasonably
     practicable. If the parties disagree with the effect the court's ruling has
     on D-Link's obligation to pay royalties under this Agreement, the parties
     may submit the issue whether the non-infringement finding would be
     applicable to the Licensed Products to a mutually agreed upon mediator
     followed, if necessary, by binding arbitration pursuant to the rules of the
     American Arbitration Association. In the event that the Arbitration Panel
     makes an award that said non-infringement finding applies to D-Link or the
     Licensed Products, then D-Link may cease further royalty payments for sales
     of the Licensed Product; provided, however, in the event such non
     infringement ruling is overturned by the U.S. Court of Appeals for the
     Federal Circuit or other higher court of competent jurisdiction, the
     obligations to pay royalties will be reinstated, with interest at the Prime
     Rate as reflected in the WALL STREET JOURNAL as of the date of such ruling
     of non-infringement, and this Agreement will remain in full force and
     effect irrespective of any prior arbitration ruling to the contrary.
     Network-1 will provide D-Link with written notice of such ruling within
     twenty (20) days of its issuance.

          (g) Irrespective of any ruling of a court, administrative body or
     arbitral tribunal, no royalties paid by D-Link shall be subject to refund
     except (1) overpayments made in error and identified by D-Link within
     twelve (12) months of actual or constructive notice of erroneous payment,
     whichever is later, (2) if D-Link is not given timely notice of a finding
     of non-infringement or invalidity and the parties do not take the dispute
     to mediation and binding arbitration, pursuant to Section 5(f), then D-Link
     may claim a refund payment for the delay period from the date of required
     notice until D-Link became aware of such non-infringement or invalidity
     decision, (3) in the event that mediation or arbitration requested under
     Section 5(f) is not completed (e.g., the arbitration award is not issued)
     within 120 days of a notice of intention to cease royalty payments by
     D-Link, then D-Link shall be entitled to a refund of all royalties paid
     after said 120-day period but only in the event a determination is made at
     mediation or arbitration that the third party ruling relieves D-Link of its
     obligation to pay further royalties. Any refund that D-Link may be entitled
     to pursuant to Sections 5(g)(l)(2) or (3) above, shall be taken as a credit
     in a subsequent Monthly Royalty Report; provided, however that if no
     further royalties are due under this agreement D-Link shall receive a
     refund instead of a credit.

          (h) Payments when provided for in this Agreement shall, when overdue,
     bear interest compounded monthly (prorated for periods of time less than
     one month) at an annualized rate of three percent (3%) over the prime rate
     quoted by the Wall Street Journal, in New York, on the date that the
     payment is due, for each month during the delinquency. If the amount of
     such charge exceeds the maximum permitted by law, such charge shall be
     reduced to such maximum.


                                        6

                                                                    CONFIDENTIAL


     (6)  Representations and Warranties.

          (a). Network-1 represents and warrants that it is a corporation in
     good standing under the laws of the State of Delaware; that it has the
     authority to enter into this Agreement and to grant the rights and to incur
     the obligations set forth herein; and that this Agreement is valid and
     binding and enforceable in accordance with its terms. Network-1 further
     represents and warrants that it has all right, title and interest in the
     '930 Patent and will maintain the valid registration of '930 Patent during
     the term of this Agreement.

          (b). D-Link Corp represents and warrants that it is a corporation in
     good standing under the laws of Taiwan ; that it has the authority to enter
     into this Agreement and to grant the rights and to incur the obligations
     set forth herein; and that this Agreement is valid and binding and
     enforceable in accordance with its terms.

          (c). D-Link Systems represents and warrants that it is a corporation
     in good standing under the laws of California; that it has the authority to
     enter into this Agreement and to grant the rights and to incur the
     obligations set forth herein; and that this Agreement is valid and binding
     and enforceable in accordance with its terms.

          (d). Each party to this Agreement warrants and represents that it has
     not heretofore assigned, transferred, hypothecated, or purported to assign,
     transfer, or hypothecate to any Person not a party hereto, the whole or any
     part or portion of its claims or rights which constitute matters released
     or discharged pursuant to this Agreement.

     (7)  Confidentiality. The fact that the parties have settled is itself not
confidential, but the terms of this Agreement (and the monthly and semi-annual
royalty reports of Paragraphs 5(b), 5(d) and Exhibit C and data contained
therein, as well as any audit data provided per Paragraph 11(c)) are
confidential except (i) if such information is generally available to the public
through no action of Network-1, (ii) to the extent necessary to comply with any
Court order, law, rule or regulation of any federal or state agency or
administrative body (including the Securities and Exchange Commission and the
U.S. securities laws) or contractual obligation of any party's insurance
carrier. If necessary, Network-1 may utilize this confidential information in
litigation against D-Link relating to royalty payments under this agreement;
however, the information must remain confidential (e.g., under the provisions of
a suitable protective order and/or filing under seal).

     (8)  SEC Filings and Press Releases. D-Link understands that following the
Effective Date, Network-1 will be required to file a Form 8-K with the SEC that
will include as an exhibit this Agreement (with exhibits) as well as a press
release. D-Link further understands that Network-l will be required to disclose
in certain of its SEC filings and press releases the amount of royalty revenue
received from D-Link pursuant to this Agreement and unless otherwise required by
the U.S. securities laws Network-1 will not disclose in its SEC filings or press
releases any other data contained in the monthly or semi-annual reports or audit
data referenced in paragraph 7 above. Network-1 agrees that any subsequent
license agreement of '930 Patent with a third party shall be filed with SEC, in
compliance with the SEC's rules and regulations regarding the filing of material
agreements.

                                        7

                                                                    CONFIDENTIAL


     (9)  Term and Termination.

          (a). This Agreement will commence on the Effective Date and will
     remain in force and effect until the Expiration Date unless earlier
     terminated. Other than as provided for in Section 9(b), the parties hereto
     may terminate this Agreement only by mutual written agreement.

          (b). In the event any party to this Agreement breaches any provision
     hereof and fails to cure such breach within ten (10) days of receipt of
     written notice thereof, any other party hereto may terminate the Agreement
     upon written notice to the other parties hereto.

          (c). Termination of this Agreement by mutual written agreement of the
     parties hereto shall not, unless otherwise agreed by the parties, have the
     effect of terminating, revoking or withdrawing rights and obligations set
     forth herein with respect to matters after the Effective Date and up
     through and including the effective date of termination hereunder.

          (d). The parties agree that, in the event of a dispute relating to a
     breach of this Agreement as found by United States District Court for the
     Eastern District of Texas, Tyler Division, the prevailing party shall be
     entitled to reasonable attorney's fees.

     (10) Release

          (a.) Network-1 on behalf of itself and its respective Subsidiaries,
     successors and assigns as of the Effective Date of this Agreement, hereby
     irrevocably releases except for failure to remit payments required under
     Section 5, D-Link Corp. and D-Link Systems, Inc., and their Subsidiaries
     (but only as to sales of Licensed Products to or on behalf of D-Link)
     officers, directors, employees, representatives, agents, customers, and
     suppliers, including any suppliers and customers in the chain of possession
     of Licensed Products, from any and all claims and causes of action, known
     or unknown, in any way related to the acts, omissions, transactions, and
     occurrences alleged in or arising out of the Pending Lawsuit, including
     Network-1's claim of infringement of the '930 Patent, with respect to any
     products manufactured, used, leased, sold, offered for sale, imported, or
     otherwise transferred by D-Link before the Effective Date of this
     Agreement.

     (11) Miscellaneous.

          (a). If any provision of this Agreement is held to be illegal, invalid
     or unenforceable under any present or future law, and if the rights or
     obligations of any party hereto under this Agreement will not be materially
     and adversely affected thereby, (i) such provision will be fully severable,
     (ii) this Agreement will be construed and enforced as if such illegal,
     invalid or unenforceable provision had never comprised a part hereof and
     (iii) the remaining provisions of this Agreement will remain in full force
     and effect and will not be affected by the illegal, invalid or
     unenforceable provision or by its severance herefrom.

          (b). Network-1, D-Link Corp. and D-Link Systems have had the advice of
     legal counsel in entering into this Agreement, and thus do so in accordance
     with their own free acts and deeds. The parties to this Agreement have
     participated jointly in the negotiating

                                        8

                                                                    CONFIDENTIAL


     and drafting of this Agreement. If an ambiguity or a question of intent or
     interpretation arises, this Agreement shall be construed as if drafted
     jointly by the parties hereto, and no presumption or burden of proof shall
     arise favoring or disfavoring any party hereto by virtue of the authorship
     of any provisions of this Agreement.

          (c). D-Link shall keep books and records adequate to accurately
     determine the payments under this Agreement, and retain such books and
     records for at least three (3) years after the delivery of the Royalty
     Report to which they relate. Network-1 shall have the right, no more than
     once per calendar year, to have an independent certified public accountant
     inspect all relevant books and records of D-Link on thirty (30) days' prior
     written notice and during regular business hours to verify the reports and
     payments required to be made hereunder. Such independent certified public
     accountant shall be selected by Network-1 and approved by D-Link. D-Link
     shall respond to Network-1's selection of auditor within ten (10) days and
     its approval shall not be unreasonably withheld. The auditor shall enter
     into an appropriate nondisclosure agreement with D-Link, and shall disclose
     no more information than is reasonably necessary to determine the payments
     owed hereunder. Should an underpayment in excess of ten percent (10%) be
     discovered, D-Link shall reimburse Network-1 for the cost of the audit. In
     any event, D-Link shall promptly pay any underpayment together with
     interest at the compounded annual rate quoted by Citibank N.A. in New York
     City or its reference rate on the last day of each month during the period
     of the delinquency.

          (d) Any and all notices, consents, or demands permitted or required to
     be made or given under this Agreement shall be in writing, signed by the
     individual giving such notice, consent, or demand and shall be delivered
     personally or sent by registered or certified mail, return receipt
     requested, to the other parties hereto at their addresses set forth below:

     To Network-1:         Network-1 Security Solutions, Inc.
                           445 Park Avenue, Suite 1028
                           New York, NY 10022

                           Attention:  Corey M. Horowitz, Chairman and CEO
                           Telephone:  (212) 829-5770
                           Facsimile:  (212) 829-5771


     With copies to:       Blank Rome LLP
                           600 New Hampshire Avenue, N.W., Suite 1200
                           Washington. DC 20037

                           Attention:  H. Keeto Sabharwal
                           Telephone:  (202) 772-5932


                                        9

                                                                    CONFIDENTIAL


                           Clifford Chance US LLP
                           31 West 52nd Street
                           New York, NY 10019-6131

                           Attention:  Victor Siber
                           Telephone:  (212) 878-8429
                           Facsimile:  (212) 878-8375


     To any D-Link Party:  D-Link Systems, Inc.
                           Attention:  Legal Department
                           17595 Mt. Herrmann Street
                           Fountain Valley, CA 92708
                           Telephone: (714) 885-6000
                           Facsimile: (866) 743-4589


     With copies to:       Attention: S.J. Christine Yang
                           THE LAW OFFICES OF S.J. CHRISTINE YANG
                           17220 Newhope Street, Suite 101
                           Fountain Valley, California 92708
                           Telephone (714) 641-4022
                           Facsimile:  (714) 641-2082


          (e). This Agreement may not be assigned by any party hereto without
     the express prior written consent of the other parties, which will not be
     unreasonably withheld, except in connection with a sale or assignment of
     the '930 Patent, merger, acquisition, reorganization or sale of all or
     substantially all of such party's assets or equity; provided, however, that
     in the event the Agreement is assigned to or assumed by a competitor of
     D-Link, the parties shall promptly meet and confer to agree upon an
     appropriate mechanism for protecting the confidentiality of D-Link's sales
     data and other confidential information. In the event of such merger or
     acquisition, the license granted herein shall be limited to Licensed
     Products that are being offered for sale at the time of the merger or
     acquisition, although the surviving entity may thereafter brand such
     products using its own trademark, logos and/or other commercial identities
     of D-Link. This Agreement is binding upon and inures to the benefit of the
     parties hereto, and their permitted assigns. Any transfer, sale, license or
     assignment of the '930 Patent shall be made subject to the rights granted
     hereunder.

          (f). This Agreement constitutes the entire agreement between the
     parties to this Agreement with respect to the subject matter hereof and
     supersedes all previous and contemporaneous negotiations, commitments and
     agreements, both written and oral, between the parties with respect to such
     subject matter including the Settlement Agreement and attached Term Sheet
     for Licensing Agreement entered into on April 25, 2007, between the
     Parties. Except for the provisions of Sections 3 through 6 and 10, nothing
     expressed or implied in this Agreement is intended or shall be construed to
     confer upon or give to any Person, other than the parties to this Agreement
     and their respective successors and permitted assigns, any rights or
     remedies under or by reason of this Agreement.

                                       10

                                                                    CONFIDENTIAL


          (g). This Agreement may be executed in separate counterparts, each of
     which shall be considered an original but all of which will constitute one
     agreement.

          (h) Each party agrees that this Agreement does not constitute evidence
     of, or any admission of, any liability, omission or wrongdoing of any kind,
     and it shall not be offered or received into evidence or otherwise filed or
     lodged in any proceeding against any party except as may be necessary to
     prove and enforce its terms. It is expressly understood and agreed that
     neither this Agreement nor any consideration provided pursuant to this
     Agreement are to be construed as an admission of liability on the part of
     the D-Link Parties or regarding any and all claims that were asserted in
     the Pending Lawsuit. To the contrary, the D-Link Parties have specifically
     denied any liability for all claims made by Network-1. This Agreement
     represents a settlement and compromise.

          (i) THIS AGREEMENT WILL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE
     WITH THE LAWS OF THE STATE OF TEXAS. EXCEPT AS PROVIDED FOR IN SECTION
     5(F), THE D-LINK PARTIES AND NETWORK-1 HEREBY IRREVOCABLY SUBMIT TO THE
     EXCLUSIVE JURISDICTION OF THE UNITED STATES DISTRICT COURT FOR THE EASTERN
     DISTRICT OF TEXAS, TYLER DIVISION, IN RESPECT OF ANY ACTION, SUIT OR
     PROCEEDING BROUGHT BY A D-LINK PARTY(IES) AND/OR NETWORK-1 TO ENFORCE THIS
     AGREEMENT, AND THE D-LINK PARTIES AND NETWORK-1 AGREE THAT ANY SUCH ACTION,
     SUIT OR PROCEEDING BROUGHT BY SUCH PARTY TO THIS AGREEMENT SHALL BE BROUGHT
     ONLY IN SUCH COURT (AND WAIVES ANY OBJECTION BASED ON FORUM NON CONVENIENS
     OR ANY OTHER OBJECTION TO VENUE THEREIN); PROVIDED, HOWEVER, THAT SUCH
     CONSENT TO JURISDICTION IS SOLELY FOR THE PURPOSE REFERRED TO IN THIS
     SECTION 11(I) AND SHALL NOT BE DEEMED TO BE A GENERAL SUBMISSION TO THE
     JURISDICTION OF SAID COURTS OR IN THE STATE OF TEXAS OTHER THAN FOR SUCH
     PURPOSE AND SHALL NOT APPLY WITH RESPECT TO, OR BE DEEMED TO INDICATE THE
     INTENT OF ANY PARTY HERETO WITH RESPECT TO, ANY ACTION BROUGHT BY OR
     AGAINST ANY PERSON(S) WHO IS NOT A PARTY TO THIS AGREEMENT. Any and all
     process may be served in any action, suit or proceeding arising in
     connection with this Agreement by complying with the provisions of Section
     11(d). Such service of process shall have the same effect as if the party
     being served were a resident in the State of Texas and had been lawfully
     served with such process in such jurisdiction. The parties hereby waive all
     claims of error by reason of such service. Nothing herein shall affect the
     right of any party to service of process in any other manner permitted by
     law or to commence legal proceedings or otherwise proceed against the other
     in any other jurisdiction to enforce judgments or rulings of the
     aforementioned courts.



                                       11

                                                                    CONFIDENTIAL


     IN WITNESS WHEREOF, each of the parties has caused two original copies of
this Agreement to be executed on its behalf by its duly authorized officer as of
the Effective Date.


     NETWORK-1 SECURITY SOLUTIONS, INC.


     By:  /s/ Corey M. Horowitz
          ------------------------------------
          Corey M. Horowitz
          Chairman and Chief Executive Officer



     D-LINK CORPORATION


     By:  /s/ Ah Jee Wang
          ------------------------------------
          Ah Jee Wang
          Chief Technology Officer



     D-LINK SYSTEMS, INC.


     By:  /s/ Ah Jee Wang
          ------------------------------------
          Ah Jee Wang
          Chief Technology Officer












                                       12

EXHIBIT 10.1                                                        CONFIDENTIAL
------------





                                    EXHIBIT A
                                    ---------

                         AGREEMENT RELATED TO SETTLEMENT

                                  AND DISMISSAL
































                                        1

                       IN THE UNITED STATES DISTRICT COURT

                        FOR THE EASTERN DISTRICT OF TEXAS

                                 TYLER DIVISION

                                      )
NETWORK-1 SECURITY SOLUTIONS,         )
INC.,                                 )
                                      )
                      Plaintiff,      )
V                                     )     Case No. 6:05-CV-291
                                      )
D-LINK CORPORATION AND D-LINK         )
SYSTEMS, INC.,                        )
                                      )
                      Defendants.     )



               AGREEMENT RELATED TO SETTLEMENT AND DISMISSAL
               ---------------------------------------------

     This cause coming before the Court on the Joint Motion for Entry of
Agreement Related to Settlement and Dismissal of the plaintiff, Network-1
Security Solutions, Inc. ("Network-1"), and the defendants D-Link Corporation
and D-Link Systems, Inc., ("D-Link Parties"), final judgment is entered as
follows:

          IT IS HEREBY ADJUDGED AND DECREED:

     1.   This Court has jurisdiction over the parties and the subject matter
pursuant to 35 U.S.C. ss.1338;

     2.   The action is dismissed with prejudice, PROVIDED, HOWEVER, that D-Link
Parties expressly reserves their right, in any future litigation regarding U.S.
Patent No. 6,218,930 in which D-Link Parties arc defendants or have been joined
as a party (in either case, other than through D-Link Parties' own voluntary
actions to become such parties), to assert any non-infringement and/or
invalidity counterclaims and/or any other counterclaims or defenses related to
such action;

     3.   The parties shall bear their own attorneys' fees and costs of this
action, and all rights of appeal are waived; and

     4.   All relief not expressly granted herein is denied,

                           Signed this _______ day of ______________, 2007.

                           _________________________________________
                           United States District Judge



                                        2

     The parties hereby agree to entry of the foregoing Agreement Related to
Settlement and Dismissal as a final judgment in this action.



Network-1 Security Solutions, Inc.            D-Link Parties,



By its attorneys,                             By their attorneys,



_______________________________               _______________________________

H. Keeto Sabharwal (KS-1763)                  John P. Bovich
Blank Rome LLP                                Reed Smith LLP
600 New Hampshire Avenue, N.W., Suite 1200    Two Embarcadero Center, Suite 2000
Washington, DC  20037                         San Francisco, CA  94111
Tel:  (202)  772-5932                         Tel:  415-543-8700




Dated:_______________, 2007















                                        3

                                    EXHIBIT B
                                    ---------

                                LICENSED PRODUCTS



Switches
--------
DES-1316
DES-1526 (eol)
DES-3010PA
DES-3828P
DXS-3227P
DWS-3227P
DES-1008PA
DES-1228P
DES-3028P (shipping in August 2007)
DES-3052P (shipping in August 2007)
DGS-3100-48P (not yet shipping)
DGS-3100-24P (not yet shipping)



Cameras
-------
DCS-1110



Access Points
-------------
DWL-2200AP
DWL-2210AP (eol)
DWL-2230AP
DWL-2700AP
DWL-3200AP
DWL-7200AP
DWL-7230AP
DWL-7700AP
DWL-8200AP
DWL-8220AP



Adapters
--------
DWL-P50



                                    EXHIBIT C
                                    ---------

                                 ROYALTY REPORT


                                                                                                 
The undersigned official of D-Link is providing the following information to Network-1 pursuant to that License Agreement dated
May 25, 2007 entered into between Network-1 and D-Link Corp. and D-Link Systems, Inc.  All capitalized terms used in this Report
have the definitions ascribed to them in the Agreement.  Their Report reflects the Royalties payable by D-Link for the month
[semi-annual] period ending ___________________.


----------------- ------ -------------- -------  -------  -------  ----------  ---------- ---------  -------------------------------
                         SELLING PRICE
LICENSED PRODUCT          CHARGED TO                                             PRICE                   CALCULATION
MODEL NO., NAME &  UNITS  UNAFFILIATED                             ADJUSTMENT  PROTECTION   TRADE             OF
  DESCRIPTION      SOLD      BUYER      RETURNS  REFUNDS  REBATES   CREDITS     CREDITS   DISCOUNTS       ROYALTIES
----------------- ------ -------------- -------  -------  -------  ----------  ---------- ---------  -----------  ---------  -------
                                                                                                     Net Selling  Royalty %  Amount
                                                                                                     Price                   of
                                                                                                                             Royalty
                                                                                                     -----------  ---------  -------




----------------- ------ -------------- -------  -------  -------  ----------  ---------- ---------  -------------------------------
                                                                                                     Due &        Total Royalties
                                                                                                     Payable      $_________________



The undersigned hereby certifies the foregoing an accurate and complete record of all royalties due and payable by D-Link for
the period ___________.



Signature:________________________                   Date:_______________________

Name:_____________________________

Title:____________________________


                                                                    EXHIBIT 99.1
                                                                    ------------
FOR IMMEDIATE RELEASE


              NETWORK-1 ANNOUNCES FINAL LICENSE TERMS AND DISMISSAL
                        OF PATENT LITIGATION WITH D-LINIK

   D-Link Agrees to License Network-1's Remote Power Patent for Its Power over
                         Ethernet Products through 2020

New York, New York-August 16, 2007-- Network-1 Security Solutions, Inc. (OTC BB:
NSSI) today announced that it has agreed to final licensing terms with D-Link
Corporation and D-Link Systems ("D-Link") as part of a definitive Settlement
Agreement of its patent infringement litigation against D-Link in the United
States District Court for the Eastern District of Texas, Tyler Division for
infringement of Network-1's Remote Power Patent (U.S. Patent No. 6,218,930).

       The license terms include the agreement by D-Link to license the Remote
Power Patent for its full term which expires in March 2020, and the payment of
monthly royalty payments (beginning as of May 26, 2007) based upon a running
royalty rate of 3.25% of the net sales of D-Link branded Power over Ethernet
products, including those products which comply with the IEEE 802.3af and
802.3at Standards. The royalty rate is subject to adjustment beginning the
second quarter of 2008 to a royalty rate consistent with other similarly
situated licensees of the Remote Power Patent that may vary according to units
and volumes of licensed products sold. In addition, D-Link has agreed to an
upfront payment to Network-1 of $100,000.

       The products covered by the settlement include D-Link Power over Ethernet
enabled switches, wireless access points, and network security cameras, among
others. As a result of the definitive Settlement Agreement, all claims and
counterclaims in the litigation currently pending in the Eastern District of
Texas have been dismissed with prejudice.

       "We are extremely pleased at the outcome of this litigation and having
D-Link as the first licensee of our Remote Power Patent," commented Corey M.
Horowitz, Chairman and Chief Executive Officer of Network-1. "This outcome is
consistent with Network-1's goal of making licenses available to the
technologies covered by the Remote Power Patent to the Power over Ethernet
industry in a manner that promotes the widespread adoption of this important
industry standard".

       The Remote Power Patent relates to, among other things, the delivery of
power over Ethernet cables in order to remotely power network connected devices
including, among others, wireless switches, wireless access points, REID card
readers, VoIP telephones and network cameras. In June 2003, the Institute of
Electrical and Electronic Engineers (IEEE) approved the 802.3af Power over
Ethernet ("PoE") standard which has led to the rapid adoption of PoE. The


IEEE is currently working on the 802.3at Power over Ethernet Plus (PoE Plus)
Standard which will increase the maximum power delivered to network devices of
up to 60 watts from the current 15 watts under 802.3af.



ABOUT NETWORK-1 SECURITY SOLUTIONS, INC.

Network-1 Security Solutions, Inc. is engaged in the acquisition, development,
licensing and protection of its intellectual property and proprietary
technologies. It currently owns six patents covering various telecommunications
and data networking technologies and is currently focusing its licensing efforts
on its Remote Power Patent (U S Patent No 6,218,930) covering the remote
delivery of power over Ethernet networks. The Remote Power Patent was granted by
the U.S. Office of Patents and Trademarks on April 17, 2001 and expires on March
7, 2020.

THIS RELEASE CONTAINS FORWARD-LOOKING STATEMENTS WITHIN THE MEANING OF THE SAFE
HARBOR PROVISIONS OF THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995. THESE
STATEMENTS ADDRESS FUTURE EVENTS AND CONDITIONS CONCERNING THE COMPANY'S
BUSINESS PLANS. SUCH STATEMENTS ARE SUBJECT TO A NUMBER OF RISK FACTORS AND
UNCERTAINTIES AS DISCLOSED IN THE COMPANY'S QUARTERLY REPORT ON FORM 10-QSB FOR
THE QUARTER ENDED JUNE 30, 2007 INCLUDING, AMONG OTHERS, THE ABILITY OF
NETWORK-1 TO OBTAIN LICENSE AGREEMENTS FROM THIRD PARTIES FOR ITS PATENT
PORTFOLIO, UNCERTAINTY OF PATENT LITIGATION, THE COMPANY'S ABILITY TO ACHIEVE
REVENUES AND PROFITS FROM ITS PATENT PORTFOLIO, THE COMPANY'S ABILITY TO RAISE
CAPITAL WHEN NEEDED, FUTURE ECONOMIC CONDITIONS AND TECHNOLOGY CHANGES AND
LEGISLATIVE, REGULATORY AND COMPETITIVE DEVELOPMENTS. EXCEPT AS OTHERWISE
REQUIRED TO BE DISCLOSED IN PERIODIC REPORTS, THE COMPANY EXPRESSLY DISCLAIMS
ANY FUTURE OBLIGATION OR UNDERTAKING TO UPDATE OR REVISE ANY FORWARD-LOOKING
STATEMENT CONTAINED HEREIN.



Contacts:

    Network-1 Security Solutions, Inc.

    Corey M. Horowitz, 212-829-5770
    Or
    Alliance Advisors, LLC
    Alan Sheinwald, 914-669-0222
    asheinwald@allianceadvisors.net
    -------------------------------







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

                       NETWORK-1 SECURITY SOLUTIONS, INC.
                       CONDENSED STATEMENTS OF OPERATIONS
                                    UNAUDITED





                                                    THREE MONTHS ENDED                   SIX MONTHS ENDED
                                                          JUNE 30,                            JUNE 30,
                                               ------------------------------      ------------------------------
                                                   2007              2006              2007              2006
                                               ------------      ------------      ------------      ------------
                                                                                         
Operating expenses:
      General and administrative               $    619,000      $    264,000      $  1,233,000      $    544,000
      Non Cash Compensation                         766,000            54,000         1,227,000           102,000
                                               ------------      ------------      ------------      ------------


LOSS BEFORE INTEREST INCOME                      (1,385,000)         (318,000)       (2,460,000)         (646,000)
Interest income - net                                48,000            18,000            63,000            30,000
                                               ------------      ------------      ------------      ------------

Net Loss                                       $ (1,337,000)     $   (300,000)     $ (2,397,000)     $   (616,000)
                                               ============      ============      ============      ============


LOSS PER COMMON SHARE: BASIC AND DILUTED       $      (0.06)     $      (0.02)     $      (0.11)     $      (0.03)
                                               ============      ============      ============      ============


WEIGHTED AVERAGE SHARES: BASIC AND DILUTED       22,589,449        19,049,724        21,194,834        18,444,617
                                               ============      ============      ============      ============










CONDENSED BALANCE SHEET AS OF 6/33/07





Cash and cash equivalents                             $ 5,145,000
                                                      ===========

     Total current assets                             $ 5,179,000
                                                      ===========

     Total assets                                     $ 5,270,000
                                                      ===========

     Total current liabilities                        $   270,000
                                                      ===========

     Total long term liabilities                      $       -0-
                                                      ===========

     Total stockholders' equity                       $ 5,000,000
                                                      ===========