----

----

| x | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
|---|-----------------------------------------------------------------------------------------|

| o | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934For the transition period from ______ to ______ |
|---|-----------------------------------------------------------------------------------------------------------------------------------------|

| Delaware                                                       |   | 11-3027591                        |
|----------------------------------------------------------------|--------|-----------------------------------|
| (State or other jurisdiction of incorporation or organization) |   | (IRS Employer Identification No.) |

| 445 Park Avenue, Suite 1020New York, New York |   | 10022      |
|-----------------------------------------------|--------|------------|
| (Address of principal executive offices)      |   | (zip code) |

| Large accelerated filer  ̈ | Accelerated filer  ̈ | Non-accelerated filer  ̈(Do not check if a smaller reporting company) | Smaller reporting company x |
|--------------------------------|--------------------------|---------------------------------------------------------------------------|-----------------------------|

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|                |                                                                                                                          | Page No. |
|---------------------|-------------------------------------------------------------------------------------------------------------------------------|----------|
| PART I.             | FINANCIAL INFORMATION                                                                                                         |     |
|                |                                                                                                                          |     |
| Item 1.             | Financial Statements                                                                                                          |     |
|                |                                                                                                                          |     |
|                | Condensed Balance Sheets as of June 30, 2012 (unaudited) and December 31, 2011                                                | 3        |
|                |                                                                                                                          |     |
|                | Condensed Statements of Income and Comprehensive Income for the three and six months ended June 30, 2012 and 2011 (unaudited) | 4        |
|                |                                                                                                                          |     |
|                | Condensed Statements of Cash Flows for the six months ended June 30, 2012 and 2011 (unaudited)                                | 5        |
|                |                                                                                                                          |     |
|                | Notes to Interim Unaudited Condensed Financial Statements                                                                     | 6        |
|                |                                                                                                                          |     |
| Item 2.        | Management’s Discussion and Analysis of Financial Condition and Results of Operations                                   | 16       |
|                |                                                                                                                          |     |
| Item 3.        | Quantitative and Qualitative Disclosures About Market Risk                                                               | 21       |
|                |                                                                                                                          |     |
| Item 4.             | Controls and Procedures                                                                                                  | 21       |
|                |                                                                                                                          |     |
|                |                                                                                                                          |     |
|                |                                                                                                                          |     |
| PART II.            | OTHER INFORMATION                                                                                                             |     |
|                |                                                                                                                          |     |
| Item 1.             | Legal Proceedings                                                                                                        | 21       |
|                |                                                                                                                          |     |
| Item 1A.       | Risk Factors                                                                                                             | 21       |
|                |                                                                                                                          |     |
| Item 2.   | Unregistered Sales of Equity Securities and Use of Proceeds                                                              | 22       |
|                |                                                                                                                          |     |
| Item 3.             | Defaults Upon Senior Securities                                                                                          | 22       |
|                |                                                                                                                          |     |
| Item 5.        | Other Information                                                                                                        | 22       |
|                |                                                                                                                          |     |
| Item 6.        | Exhibits                                                                                                                 | 22       |
|                |                                                                                                                          |     |
|                |                                                                                                                          |
| SIGNATURES          | 23                                                                                                                            |

----

|                                                                                                                                                                                                                                                                    |   | June 30,    |            |          | DECEMBER 31, |   |
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|-------------|-----------------|---------------|--------------|--------|
|                                                                                                                                                                                                                                                                    |   | 2012        |            |          | 2011         |   |
|                                                                                                                                                                                                                                                                    |   | (UNAUDITED) |            |          |         |   |
| ASSETS:                                                                                                                                                                                                                                                                 |   |        |            |          |         |   |
|                                                                                                                                                                                                                                                                    |   |        |            |          |         |   |
| CURRENT ASSETS:                                                                                                                                                                                                                                                         |   |        |            |          |         |   |
|    Cash and cash equivalents                                                                                                                                                                                                                             |   | $           | 21,279,000      |          |         | $      | 20,661,000 |   |
|    Marketable securities                                                                                                                                                                                                                                 |   |        | 558,000         |          |         |   | 556,000 |   |
|    Royalty receivables                                                                                                                                                                                                                                   |   |        | 1,924,000       |          |         |   | 760,000 |   |
|    Other current assets                                                                                                                                                                                                                                  |   |        |  208,000   |          |         |   | 156,000 |   |
|                                                                                                                                                                                                                                                                    |   |        |            |          |         |   |   |   |
|         Total Current Assets                                                                                                                                                                                                    |   |        | 23,969,000      |          |         |   |  22,133,000 |   |
|                                                                                                                                                                                                                                                                    |   |        |            |          |         |   |   |   |
| OTHER ASSETS:                                                                                                                                                                                                                                                           |   |        |            |          |         |   |   |   |
|    Deferred tax asset                                                                                                                                                                                                                                    |   |        | 6,335,000       |          |         |   | 6,903,000 |   |
|    Patents, net of accumulated amortization                                                                                                                                                                                                              |   |        | 69,000          |          |         |   | 74,000 |   |
|    Security deposits                                                                                                                                                                                                                                     |   |        |  19,000    |          |         |   |  19,000 |   |
|                                                                                                                                                                                                                                                                    |   |        |            |          |         |   |   |   |
|                                                                                                                                                                                                                                                                    |   |        |            |          |         |   |   |   |
|         Total Other Assets                                                                                                                                                                                                      |   |        |  6,423,000 |          |         |   |  6,996,000 |   |
|                                                                                                                                                                                                                                                                    |   |        |            |          |         |   |   |   |
|         TOTAL ASSETS                                                                                                                                                                                                            |   | $           | 30,392,000      |          |         | $      | 29,129,000 |   |
|                                                                                                                                                                                                                                                                    |   |        |            |          |         |   |   |   |
| LIABILITIES:                                                                                                                                                                                                                                                            |   |        |            |          |         |   |   |   |
|                                                                                                                                                                                                                                                                    |   |        |            |          |         |   |   |   |
| CURRENT LIABILITIES:                                                                                                                                                                                                                                                    |   |        |            |          |         |   |   |   |
|    Accounts payable                                                                                                                                                                                                                                      |   | $           | 67,000          |          |         | $      | 180,000 |   |
|    Accrued expenses                                                                                                                                                                                                                                      |   |        |  639,000   |          |         |   |  1,551,000 |   |
|                                                                                                                                                                                                                                                                    |   |        |            |          |         |   |   |   |
|                                                                                                                                                                                                                                                                    |   |        |            |          |         |   |   |   |
|         TOTAL LIABILITIES                                                                                                                                                                                                       |   |        |  706,000   |          |         |   |  1,731,000 |   |
|                                                                                                                                                                                                                                                                    |   |        |            |          |         |   |   |   |
| COMMITMENTS AND CONTINGENCIES                                        |   |        | —         |          |         |   | — |   |
|                                                                                                                                                                                                                                                                    |   |        |            |          |         |   |   |   |
| STOCKHOLDERS' EQUITY                                                                                                                                                                                                                                                    |   |        |            |          |         |   |   |   |
|                                                                                                                                                                                                                                                                    |   |        |            |          |         |   |   |   |
| Common stock - $0.01 par value ; authorized 50,000,000 shares;                                                                                                                                                                                                          |   |        |            |          |         |   |   |   |
|    25,963,094 and 25,037,518 shares issued and outstanding at                                                                                                                                                                                            |   |        |            |          |         |   |   |   |
|    June 30,2012 and December 31,2011, respectively                                                                                                                                                                                                       |   |        | 260,000         |          |         |   | 250,000 |   |
|                                                                                                                                                                                                                                                                    |   |        |            |          |         |   |   |   |
| Additional paid-in capital                                                                                                                                                                                                                                              |   |        | 59,448,000      |          |         | $      | 57,728,000 |   |
| Accumulated deficit                                                                                                                                                                                                                                                     |   |        | (30,019,000     | )             |         |   | (30,575,000 | ) |
| Other comprehensive income (loss)                                                                                                                                                                                                                                       |   |        |  (3,000    | )   |         |   |  (5,000 | ) |
|                                                                                                                                                                                                                                                                    |   |        |            |          |         |   |   |   |
|         TOTAL STOCKHOLDERS’ EQUITY                                                                                                                                                                                        |   |        | 29,686,000      |          |         |   | 27,398,000 |   |
|                                                                                                                                                                                                                                                                    |   |        |            |          |         |   |   |   |
|         TOTAL LIABILITIES AND STOCKHOLDER’S EQUITY                                                                                                                                                                        |   | $           | 30,392,000      |          |         | $      | 29,129,000 |   |

----

|                                                                                                             |   | Three Months Ended June 30, |        |   | Six Months Ended June 30, |   |
|------------------------------------------------------------------------------------------------------------------|--------|----------------------------------|-------------|--------|--------------------------------|--------|
|                                                                                                             |   |  2012                       |        |   |  2011                     |   |   |  2012 |   |   | 2011 |   |
|                                                                                                             |   |                             |        |   |                           |   |   |   |   |   |   |   |
| ROYALTY REVENUE                                                                                                  |   | $                                | 1,966,000   |   |                           | $      | 1,814,000 |   |   | $ | 6,391,000 |   |   | $ | 5,390,000 |   |
| COST OF REVENUE                                                                                                  |   |                             | 562,000     |   |                           |   | 514,000 |   |   |   | 1,948,000 |   |   |   | 1,542,000 |   |
|     GROSS PROFIT                                                                             |   |                             | 1,404,000   |   |                           |   | 1,300,000 |   |   |   | 4,443,000 |   |   |   | 3,848,000 |   |
| OPERATING EXPENSES:                                                                                              |   |                             |        |   |                           |   |   |   |   |   |   |   |   |   |   |   |
|    General and Administrative                                                                     |   |                             | 446,000     |   |                           |   | 537,000 |   |   |   | 1,036,000 |   |   |   | 1,283,000 |   |
|    Additional Patent Expense                                                                      |   |                             | —     |   |                           |   | 1,000,000 |   |   |   | — |   |   |   | 1,000,000 |   |
|    Non-Cash compensation                                                                          |   |                             | 74,000      |   |                           |   | 113,000 |   |   |   | 165,000 |   |   |   | 209,000 |   |
|                                                                                                             |   |                             |        |   |                           |   |   |   |   |   |   |   |   |   |   |   |
| TOTAL OPERATING EXPENSES                                                                                         |   |                             | 520,000     |   |                           |   | 1,650,000 |   |   |   | 1,201,000 |   |   |   | 2,492,000 |   |
|                                                                                                             |   |                             |        |   |                           |   |   |   |   |   |   |   |   |   |   |   |
| OPERATING INCOME (LOSS)                                                                                          |   |                             | 884,000     |   |                           |   | (350,000 | ) |   |   | 3,242,000 |   |   |   | 1,356,000 |   |
|                                                                                                             |   |                             |        |   |                           |   |   |   |   |   |   |   |   |   |   |   |
|                                                                                                             |   |                             |        |   |                           |   |   |   |   |   |   |   |   |   |   |   |
|                                                                                                             |   |                             |        |   |                           |   |   |   |   |   |   |   |   |   |   |   |
| OTHER INCOME (EXPENSES):                                                                                         |   |                             |        |   |                           |   |   |   |   |   |   |   |   |   |   |   |
|    Interest income, net                                                                           |   |                             | 10,000      |   |                           |   | 16,000 |   |   |   | 19,000 |   |   |   | 32,000 |   |
|                                                                                                             |   |                             |        |   |                           |   |   |   |   |   |   |   |   |   |   |   |
|                                                                                                             |   |                             |        |   |                           |   |   |   |   |   |   |   |   |   |   |   |
|                                                                                                             |   |                             |        |   |                           |   |   |   |   |   |   |   |   |   |   |   |
| INCOME (LOSS) BEFORE INCOME TAXES                                                                                |   |                             | 894,000     |   |                           |   | (334,000 | ) |   |   | 3,261,000 |   |   |   | 1,388,000 |   |
|                                                                                                             |   |                             |        |   |                           |   |   |   |   |   |   |   |   |   |   |   |
|                                                                                                             |   |                             |        |   |                           |   |   |   |   |   |   |   |   |   |   |   |
| INCOME TAXES (BENEFIT)                                                                                           |   |                             |        |   |                           |   |   |   |   |   |   |   |   |   |   |   |
|    Current                                                                                        |   |                             | 9,000       |   |                           |   | — |   |   |   | 33,000 |   |   |   | 56,000 |   |
|    Deferred                                                                                       |   |                             | 148,000     |   |                           |   | (7,000,000 | ) |   |   | 568,000 |   |   |   | (7,000,000 | ) |
|    Total Income Taxes (Benefit)                                                                   |   |                             | 157,000     |   |                           |   | (7,000,000 | ) |   |   | 601,000 |   |   |   | (6,944,000 | ) |
| NET INCOME                                                                                                       |   | $                                | 737,000     |   |                           | $      | 6,666,000 |   |   | $ | 2,660,000 |   |   | $ | 8,332,000 |   |
|                                                                                                             |   |                             |        |   |                           |   |   |   |   |   |   |   |   |   |   |   |
|                                                                                                             |   |                             |        |   |                           |   |   |   |   |   |   |   |   |   |   |   |
| Net Income per share -  Basic                                                                          |   | $                                |   0.03 |   |                           | $      | 0.26 |   |   | $ |   0.10 |   |   | $ | 0.32 |   |
|        -  Diluted                                                        |   | $                                |   0.02 |   |                           | $      | 0.21 |   |   | $ |   0.09 |   |   | $ | 0.27 |   |
|                                                                                                             |   |                             |        |   |                           |   |   |   |   |   |   |   |   |   |   |   |
|                                                                                                             |   |                             |        |   |                           |   |   |   |   |   |   |   |   |   |   |   |
| Weighted average number of common shares outstanding:                                                            |   |                             |        |   |                           |   |   |   |   |   |   |   |   |   |   |   |
|                                                                                                             |   |                             |        |   |                           |   |   |   |   |   |   |   |   |   |   |   |
|        -  Basic                                                          |   |                             | 26,192,920  |   |                           |   | 25,974,609 |   |   |   | 25,595,913 |   |   |   | 25,961,815 |   |
|        -  Diluted                                                        |   |                             | 28,819,929  |   |                           |   | 31,195,523 |   |   |   | 28,729,256 |   |   |   | 31,182,729 |   |
|                                                                                                             |   |                             |        |   |                           |   |   |   |   |   |   |   |   |   |   |   |
| NET INCOME                                                                                                       |   | $                                | 737,000     |   |                           | $      | 6,666,000 |   |   | $ | 2,660,000 |   |   | $ | 8,332,000 |   |
|                                                                                                             |   |                             |        |   |                           |   |   |   |   |   |   |   |   |   |   |   |
| OTHER COMPREHANSIVE INCOME NET OF TAX:     Unrealized gain (loss) arising during period |   |                             | 3,000       |   |                           |   | — |   |   |   | 2,000 |   |   |   | — |   |
|                                                                                                             |   |                             |        |   |                           |   |   |   |   |   |   |   |   |   |   |   |
| COOMPREHENSIVE INCOME                                                                                            |   | $                                | 740,000     |   |                           | $      | 6,666,000 |   |   | $ | 2,662,000 |   |   | $ | 8,332,000 |   |

----

|                                                                                                      |   | Six Months Ended June 30, |       |
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|--------------------------------|------------|
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |   | 2012                           |       |   | 2011 |   |
| CASH FLOWS FROM OPERATING ACTIVITIES:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |   |                           |       |   |   |   |
|     Net Income                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |   | $                              | 2,660,000  |   |   | $ | 8,332,000 |   |
|     Adjustments to reconcile net income to net cash                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |   |                           |       |   |   |   |   |   |
|     provided by (used in) operating activities:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |   |                           |       |   |   |   |   |   |
|       Depreciation and amortization                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |   |                           | 5,000      |   |   |   | 5,000 |   |
|       Non-cash compensation                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |   |                           | 165,000    |   |   |   | 290,000 |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |   |                           |       |   |   |   |   |   |
|       Source (use) of cash from changes in operating assets                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |   |                           |       |   |   |   |   |   |
|       and liabilities:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |   |                           |       |   |   |   |   |   |
|          Royalty receivables and other current assets                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |   |                           | (1,162,000 | ) |   |   | (1,513,000 | ) |
|          Accounts payable and accrued expenses                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |   |                           | (1,012,000 | ) |   |   | 491,000 |   |
|          Income Taxes Payable                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |   |                           | (67,000    | ) |   |   | (52,000 | ) |
|          Deferred tax asset                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |   |                           | 568,000    |   |   |   | (7,000,000 | ) |
|          Security deposits                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |   | —                        |       |   |   |  (13,000 | ) |
|     NET CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |   |                           | 1,157,000  |   |   |   |  459,000 |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |   |                           |       |   |   |   |   |   |
|     CASH FLOWS FROM FINANCING ACTIVITIES:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |   |                           |       |   |   |   |   |   |
|        Value of shares delivered to fund withholding taxes                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |   |                           | (487,000   | ) |   |   | — |   |
|        Repurchase of treasury stock                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |   |                           | (52,000    | ) |   |   | — |   |
|        Proceeds from exercises of options and warrants                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |   |                           |       |   |   |   |  15,000 |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |   |                           |       |   |   |   |   |   |
| NET CASH PROVIDED (USED IN) FINANCING ACTIVITIES                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |   |                           | (539,000   | ) |   |   |  15,000 |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |   |                           |       |   |   |   |   |   |
|          NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |   |                           | 618,000    |   |   |   | 474,000 |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |   |                           |       |   |   |   |   |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |   |                           |       |   |   |   |   |   |
| CASH AND CASH EQUIVALENTS, beginning of period                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |   |                           | 20,661,000 |   |   |   | 21,348,000 |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |   |                           |       |   |   |   |   |   |
| CASH AND CASH EQUIVALENTS, end of period                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |   | $                              | 21,279,000 |   |   | $ | 21,822,000 |   |
|                                                                                                 |   |                           |       |   |   |   |   |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |   |                           |       |   |   |   |   |   |
| SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |   |                           |       |   |   |   |   |   |
|        Cash paid during the periods for:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |   |                           |       |   |   |   |   |   |
|           Interest                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |   | $                              | —    |   |   | $ | — |   |
|           Taxes                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |   | $                              | 72,000     |   |   | $ | 108,000 |   |

----

----

----

|                                                                                                        | SIX MONTHS ENDED JUNE 30,                                        |
|-------------------------------------------------------------------------------------------------------------|------------------------------------------------------------------|
|                                                                                                        |      2012      |   |      2011      |
| Risk-free interest ratesExpected option life in yearsExpected stock price volatilityExpected dividend yield | 0.71-0.89% 5 years45.86%-0-                                 |   | 2.05-2.18%5 years42.04%- 0 - |

----

|                                                                                                                                                |   | Six Months Ended June 30 |       |   | Three Months Ended June 30, |   |
|-----------------------------------------------------------------------------------------------------------------------------------------------------|--------|-------------------------------|------------|--------|----------------------------------|--------|
|                                                                                                                                                |   | 2012                          |       |   | 2011                             |   |   | 2012 |   |   | 2011 |   |
|                                                                                                                                                |   |                          |       |   |                             |   |   |   |   |   |   |   |
| Weighted-average common shares outstanding – basic                                                                                            |   |                          | 25,595,913 |   |                             |   | 25,961,815 |   |   |   | 26,192,920 |   |   |   | 25,974,609 |   |
| Dilutive effect of options and warrants                                                                                                             |   |                          | 3,133,343  |   |                             |   | 5,220,914 |   |   |   | 2,627,009 |   |   |   | 5,220,914 |   |
| Weighted-average common shares outstanding – diluted                                                                                          |   |                          | 28,729,256 |   |                             |   | 31,182,729 |   |   |   | 28,819,929 |   |   |   | 31,195,523 |   |
| Options and Warrants excluded from the computation of diluted income (loss) per share because the effect of inclusion would have been anti-dilutive |   |                          | 2,326,657  |   |                             |   | 5,679,001 |   |   |   | 2,832,991 |   |   |   | 5,697,001     |   |

|              |   | June 30, 2012 |             |   | December 31, 2011 |   |
|-------------------|--------|--------------------|------------------|--------|------------------------|--------|
|              |   |               |             |   |                   |   |
| Cash              |   | $                  | 1,211,000        |   |                   | $      | 1,135,000 |   |
| Money market fund |   |               | 20,068,000       |   |                   |   | 19,526,000 |   |
| Total             |   | $                  |  21,279,000 |   |                   | $      | 20,661,000 |   |

----

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| Period                          | Total Number of Shares Purchased | Average Price Paid Per Share | Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs | Maximum Number (or Approximate Dollar Value) of Shares that May Yet Be Purchased Under the Plans or Programs |
|---------------------------------|----------------------------------|------------------------------|----------------------------------------------------------------------------------|--------------------------------------------------------------------------------------------------------------|
| April 1 to April 30, 2012       | 27,757                           | $1.35                        | 27,757                                                                           | $1,975,134                                                                                                   |
| May 1 to May 31, 2012 | -0-                              | —                      | -0-                                                                              | $1,975,134                                                                                                   |
| June 1 to June 30, 2012         | -0-                              | —                      | -0-                                                                              | $1,975,134                                                                                                   |

|   | 31.1 | Controls and Procedure Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. |
|--------|------|----------------------------------------------------------------------------------------------------------------------------|

|   | 31.2 | Controls and Procedure Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. |
|--------|------|----------------------------------------------------------------------------------------------------------------------------|

|   | 32.1 | Certification of Chief Executive Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. |
|--------|------|-----------------------------------------------------------------------------------------------------|

|   | 32.2 | Certification of Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. |
|--------|------|-----------------------------------------------------------------------------------------------------|

|   | 101.INS  | XBRL Instance Document.* |
|--------|---------------|--------------------------|

|   | 101.SCH  | XBRL Schema Document.* |
|--------|---------------|------------------------|

|   | 101.CAL  | XBRL Calculation Linkbase Document.* |
|--------|---------------|--------------------------------------|

|   | 101.DEF | XBRL Definition Linkbase Document.* |
|--------|---------|------------------------------------------|

|   | 101.LAB  | XBRL Label Linkbase Document.* |
|--------|---------------|--------------------------------|

|   | 101.PRE     | XBRL Presentation Linkbase Document.* |
|--------|---------------------------------|---------------------------------------|

| * | Pursuant to Rule 405(a)(2) of Regulation S-T, the Company will furnish the XBRL Interactive Data Files with detailed footnote tagging as Exhibit 101 in an amendment to this Form 10-Q within the permitted 30-day grace period for the first quarterly period in which detailed footnote tagging is required after the filing date of this Form 10-Q. |
|---|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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|                                  | NETWORK-1 SECURITY SOLUTIONS, INC. |                                 |
|---------------------------------------|------------------------------------|--------------------------------------|
|                                  |                               |                                 |
|                                  |                               |                                 |   |
| Date:  August 14, 2012 | By:                                | /s/ Corey M. Horowitz           |   |
|                                  |                               | Corey M. Horowitz                    |   |
|                                  |                               | Chairman and Chief Executive Officer |   |
|                                  |                               |                                 |   |
|                                  |                               |                                 |   |
|                                  |                               |                                 |   |
|                                  |                               |                                 |   |
| Date:  August 14, 2012 | By:                                | /s/ David C. Kahn                    |   |
|                                  |                               | David C. Kahn                        |   |
|                                  |                               | Chief Financial Officer              |   |
|                                  |                               |                                 |   |
|                                  |                               |                                 |   |
|                                  |                               |                                 |   |
|                                  |                               |                                 |   |

----