SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
S C H E D U L E 13D
(Rule 13d-101)
INFORMATION TO BE INCLUDED IN STATEMENTS FILED PURSUANT
TO RULE 13d -1(a) AND AMENDMENTS THERETO FILED PURSUANT TO
RULE 13d-2(a).
(Amendment No. )(1)
NETWORK - 1 SECURITY SOLUTIONS, INC.
- --------------------------------------------------------------------------------
(Name of Issuer)
COMMON STOCK, $0.01 PAR VALUE
- --------------------------------------------------------------------------------
(Title of Class of Securities)
64121N109
--------------
(CUSIP Number)
Copy to:
Applewood Associates, L.P.
68 Wheatley Road Morrison Cohen Singer & Weinstein, LLP
Brookville, New York 11545 750 Lexington Avenue
Telephone (516) 626-3070 New York, New York 10022
Telephone (212) 735-8600
- --------------------------------------------------------------------------------
(Name, Address and Telephone Number of Person
Authorized to Receive Notices and Communications)
November 12, 1998
- --------------------------------------------------------------------------------
(Date of Event which Requires Filing this Statement)
If the filing person has previously filed a statement on Schedule 13G to report
the acquisition that is the subject of this Schedule 13D, and is filing this
schedule because of Rule 13d-1(e), 13d-1(f) or 13d-(g), check the following box
|_|.
NOTE: Schedules filed in paper format shall include a signed original and five
copies of the schedule, including all exhibits. See Rule 13d-7(b) for other
parties to whom copies are to be sent.
(Continued on following page(s))
- --------
(1) The remainder of this cover page shall be filled out for a reporting
person's initial filing on this form with respect to the subject class of
securities, and for any subsequent amendment containing information which would
alter disclosures provided in a prior cover page.
The information required on the remainder of this cover page shall
not be deemed to be "filed" for the purpose of Section 18 of the Securities
Exchange Act of 1934 or otherwise subject to the liabilities of that section of
the Act but shall be subject to all other provisions of the Act (however, see
the Notes).
- 1 of 26-
<PAGE>
CUSIP
No. 64121N109 13D
================================================================================
1 | Names of Reporting Persons
| I.R.S. Identification Nos. of Above Persons (Entities Only)
| Applewood Associates, L.P.
|
- --------------------------------------------------------------------------------
2 | Check the Appropriate Box if a Member of a Group* (a) |_|
| (b) |_|
- --------------------------------------------------------------------------------
3 | SEC Use Only
|
- --------------------------------------------------------------------------------
4 | Source of Funds* WC, OO
|
- --------------------------------------------------------------------------------
5 | Check Box if Disclosure of Legal Proceedings is Required
| Pursuant to Item 2(d) or 2(e) |_|
- --------------------------------------------------------------------------------
6 | Citizenship or Place of Organization New York
|
- --------------------------------------------------------------------------------
| 7 | Sole Voting Power
| | 1,194,659 shares 25.2%
Number of |-----------------------------------------------------------
Shares | 8 | Shared Voting Power
Beneficially | | 0 shares 0%
Owned By |-----------------------------------------------------------
Each | 9 | Sole Dispositive Power
Reporting | | 1,194,659 shares 25.2%
Person |-----------------------------------------------------------
With | 10 | Shared Dispositive Power
| | 0 shares 0%
- --------------------------------------------------------------------------------
11 | Aggregate Amount Beneficially Owned By Each Reporting Person
| 1,194,659 shares
|
- --------------------------------------------------------------------------------
12 | Check Box if the Aggregate Amount in Row (11) excludes Certain Shares* |_|
|
- --------------------------------------------------------------------------------
13 | Percent of Class Represented by Amount in Row (11)
| 25.2%
|
- --------------------------------------------------------------------------------
14 | Type of Reporting Person*
| PN
================================================================================
*SEE INSTRUCTIONS BEFORE FILLING OUT!
- 2 of 26-
<PAGE>
CUSIP
No. 64121N109 13D
================================================================================
1 | Names of Reporting Persons
| I.R.S. Identification Nos. of Above Persons (Entities Only)
| Applewood Capital Corp.
|
- --------------------------------------------------------------------------------
2 | Check the Appropriate Box if a Member of a Group* (a) |_|
| (b) |_|
- --------------------------------------------------------------------------------
3 | SEC Use Only
|
- --------------------------------------------------------------------------------
4 | Source of Funds* WC, OO
|
- --------------------------------------------------------------------------------
5 | Check Box if Disclosure of Legal Proceedings is Required
| Pursuant to Item 2(d) or 2(e) |_|
- --------------------------------------------------------------------------------
6 | Citizenship or Place of Organization New York
|
- --------------------------------------------------------------------------------
| 7 | Sole Voting Power
| | 0 shares 0%
Number of |-----------------------------------------------------------
Shares | 8 | Shared Voting Power
Beneficially | | 1,194,659 shares 25.2%
Owned By |-----------------------------------------------------------
Each | 9 | Sole Dispositive Power
Reporting | | 0 shares 0%
Person |-----------------------------------------------------------
With | 10 | Shared Dispositive Power
| | 1,194,659 shares 25.2%
- --------------------------------------------------------------------------------
11 | Aggregate Amount Beneficially Owned By Each Reporting Person
| 1,194,659 shares
|
- --------------------------------------------------------------------------------
12 | Check Box if the Aggregate Amount in Row (11) excludes Certain Shares* |_|
|
- --------------------------------------------------------------------------------
13 | Percent of Class Represented by Amount in Row (11)
| 25.2%
|
- --------------------------------------------------------------------------------
14 | Type of Reporting Person*
| CO
================================================================================
*SEE INSTRUCTIONS BEFORE FILLING OUT!
- 3 of 26-
<PAGE>
CUSIP
No. 64121N109 13D
================================================================================
1 | Names of Reporting Persons
| I.R.S. Identification Nos. of Above Persons (Entities Only)
| Irwin Lieber
|
- --------------------------------------------------------------------------------
2 | Check the Appropriate Box if a Member of a Group* (a) |_|
| (b) |_|
- --------------------------------------------------------------------------------
3 | SEC Use Only
|
- --------------------------------------------------------------------------------
4 | Source of Funds* PF, OO
|
- --------------------------------------------------------------------------------
5 | Check Box if Disclosure of Legal Proceedings is Required
| Pursuant to Item 2(d) or 2(e) |_|
- --------------------------------------------------------------------------------
6 | Citizenship or Place of Organization United States
|
- --------------------------------------------------------------------------------
| 7 | Sole Voting Power
| | 77,944 shares 1.8%
Number of |-----------------------------------------------------------
Shares | 8 | Shared Voting Power
Beneficially | | 1,194,659 shares 25.2%
Owned By |-----------------------------------------------------------
Each | 9 | Sole Dispositive Power
Reporting | | 77,944 shares 1.8%
Person |-----------------------------------------------------------
With | 10 | Shared Dispositive Power
| | 1,194,659 shares 25.2%
- --------------------------------------------------------------------------------
11 | Aggregate Amount Beneficially Owned By Each Reporting Person
| 1,272,603 shares
|
- --------------------------------------------------------------------------------
12 | Check Box if the Aggregate Amount in Row (11) excludes Certain Shares* |_|
|
- --------------------------------------------------------------------------------
13 | Percent of Class Represented by Amount in Row (11)
| 26.5%
|
- --------------------------------------------------------------------------------
14 | Type of Reporting Person*
| IN
================================================================================
*SEE INSTRUCTIONS BEFORE FILLING OUT!
- 4 of 26-
<PAGE>
CUSIP
No. 64121N109 13D
================================================================================
1 | Names of Reporting Persons
| I.R.S. Identification Nos. of Above Persons (Entities Only)
| Barry Rubenstein
|
- --------------------------------------------------------------------------------
2 | Check the Appropriate Box if a Member of a Group* (a) |_|
| (b) |_|
- --------------------------------------------------------------------------------
3 | SEC Use Only
|
- --------------------------------------------------------------------------------
4 | Source of Funds* PF, OO
|
- --------------------------------------------------------------------------------
5 | Check Box if Disclosure of Legal Proceedings is Required
| Pursuant to Item 2(d) or 2(e) |_|
- --------------------------------------------------------------------------------
6 | Citizenship or Place of Organization United States
|
- --------------------------------------------------------------------------------
| 7 | Sole Voting Power
| | 85,704 shares 1.9%
Number of |-----------------------------------------------------------
Shares | 8 | Shared Voting Power
Beneficially | | 1,259,067 shares 26.5%
Owned By |-----------------------------------------------------------
Each | 9 | Sole Dispositive Power
Reporting | | 85,704 shares 1.9%
Person |-----------------------------------------------------------
With | 10 | Shared Dispositive Power
| | 1,259,067 shares 26.5%
- --------------------------------------------------------------------------------
11 | Aggregate Amount Beneficially Owned By Each Reporting Person
| 1,344,771 shares
|
- --------------------------------------------------------------------------------
12 | Check Box if the Aggregate Amount in Row (11) excludes Certain Shares* |_|
|
- --------------------------------------------------------------------------------
13 | Percent of Class Represented by Amount in Row (11)
| 28.0%
|
- --------------------------------------------------------------------------------
14 | Type of Reporting Person*
| IN
================================================================================
*SEE INSTRUCTIONS BEFORE FILLING OUT!
- 5 of 26-
<PAGE>
CUSIP
No. 64121N109 13D
================================================================================
1 | Names of Reporting Persons
| I.R.S. Identification Nos. of Above Persons (Entities Only)
| Barry Fingerhut
|
- --------------------------------------------------------------------------------
2 | Check the Appropriate Box if a Member of a Group* (a) |_|
| (b) |_|
- --------------------------------------------------------------------------------
3 | SEC Use Only
|
- --------------------------------------------------------------------------------
4 | Source of Funds* PF, OO
|
- --------------------------------------------------------------------------------
5 | Check Box if Disclosure of Legal Proceedings is Required
| Pursuant to Item 2(d) or 2(e) |_|
- --------------------------------------------------------------------------------
6 | Citizenship or Place of Organization United States
|
- --------------------------------------------------------------------------------
| 7 | Sole Voting Power
| | 31,040 shares 0.7%
Number of |-----------------------------------------------------------
Shares | 8 | Shared Voting Power
Beneficially | | 1,194,659 shares 25.2%
Owned By |-----------------------------------------------------------
Each | 9 | Sole Dispositive Power
Reporting | | 31,040 shares 0.7%
Person |-----------------------------------------------------------
With | 10 | Shared Dispositive Power
| | 1,194,659 shares 25.2%
- --------------------------------------------------------------------------------
11 | Aggregate Amount Beneficially Owned By Each Reporting Person
| 1,225,699 shares
|
- --------------------------------------------------------------------------------
12 | Check Box if the Aggregate Amount in Row (11) excludes Certain Shares* |_|
|
- --------------------------------------------------------------------------------
13 | Percent of Class Represented by Amount in Row (11)
| 25.8%
|
- --------------------------------------------------------------------------------
14 | Type of Reporting Person*
| IN
================================================================================
*SEE INSTRUCTIONS BEFORE FILLING OUT!
- 6 of 26-
<PAGE>
CUSIP
No. 64121N109 13D
================================================================================
1 | Names of Reporting Persons
| I.R.S. Identification Nos. of Above Persons (Entities Only)
| Seth Lieber
|
- --------------------------------------------------------------------------------
2 | Check the Appropriate Box if a Member of a Group* (a) |_|
| (b) |_|
- --------------------------------------------------------------------------------
3 | SEC Use Only
|
- --------------------------------------------------------------------------------
4 | Source of Funds* PF, OO
|
- --------------------------------------------------------------------------------
5 | Check Box if Disclosure of Legal Proceedings is Required
| Pursuant to Item 2(d) or 2(e) |_|
- --------------------------------------------------------------------------------
6 | Citizenship or Place of Organization United States
|
- --------------------------------------------------------------------------------
| 7 | Sole Voting Power
| | 4,656 shares 0.1%
Number of |-----------------------------------------------------------
Shares | 8 | Shared Voting Power
Beneficially | | 1,194,659 shares 25.2%
Owned By |-----------------------------------------------------------
Each | 9 | Sole Dispositive Power
Reporting | | 4,656 shares 0.1%
Person |-----------------------------------------------------------
With | 10 | Shared Dispositive Power
| | 1,194,659 shares 25.2%
- --------------------------------------------------------------------------------
11 | Aggregate Amount Beneficially Owned By Each Reporting Person
| 1,199,315 shares
|
- --------------------------------------------------------------------------------
12 | Check Box if the Aggregate Amount in Row (11) excludes Certain Shares* |_|
|
- --------------------------------------------------------------------------------
13 | Percent of Class Represented by Amount in Row (11)
| 25.3%
|
- --------------------------------------------------------------------------------
14 | Type of Reporting Person*
| IN
================================================================================
*SEE INSTRUCTIONS BEFORE FILLING OUT!
- 7 of 26-
<PAGE>
CUSIP
No. 64121N109 13D
================================================================================
1 | Names of Reporting Persons
| I.R.S. Identification Nos. of Above Persons (Entities Only)
| Jonathan Lieber
|
- --------------------------------------------------------------------------------
2 | Check the Appropriate Box if a Member of a Group* (a) |_|
| (b) |_|
- --------------------------------------------------------------------------------
3 | SEC Use Only
|
- --------------------------------------------------------------------------------
4 | Source of Funds* PF, OO
|
- --------------------------------------------------------------------------------
5 | Check Box if Disclosure of Legal Proceedings is Required
| Pursuant to Item 2(d) or 2(e) |_|
- --------------------------------------------------------------------------------
6 | Citizenship or Place of Organization United States
|
- --------------------------------------------------------------------------------
| 7 | Sole Voting Power
| | 3,104 shares 0.1%
Number of |-----------------------------------------------------------
Shares | 8 | Shared Voting Power
Beneficially | | 1,194,659 shares 25.2%
Owned By |-----------------------------------------------------------
Each | 9 | Sole Dispositive Power
Reporting | | 3,104 shares 0.1%
Person |-----------------------------------------------------------
With | 10 | Shared Dispositive Power
| | 1,194,659 shares 25.2%
- --------------------------------------------------------------------------------
11 | Aggregate Amount Beneficially Owned By Each Reporting Person
| 1,197,763 shares
|
- --------------------------------------------------------------------------------
12 | Check Box if the Aggregate Amount in Row (11) excludes Certain Shares* |_|
|
- --------------------------------------------------------------------------------
13 | Percent of Class Represented by Amount in Row (11)
| 25.2%
|
- --------------------------------------------------------------------------------
14 | Type of Reporting Person*
| IN
================================================================================
*SEE INSTRUCTIONS BEFORE FILLING OUT!
- 8 of 26-
<PAGE>
CUSIP
No. 64121N109 13D
================================================================================
1 | Names of Reporting Persons
| I.R.S. Identification Nos. of Above Persons (Entities Only)
| Woodland Venture Fund
|
- --------------------------------------------------------------------------------
2 | Check the Appropriate Box if a Member of a Group* (a) |_|
| (b) |_|
- --------------------------------------------------------------------------------
3 | SEC Use Only
|
- --------------------------------------------------------------------------------
4 | Source of Funds* WC, OO
|
- --------------------------------------------------------------------------------
5 | Check Box if Disclosure of Legal Proceedings is Required
| Pursuant to Item 2(d) or 2(e) |_|
- --------------------------------------------------------------------------------
6 | Citizenship or Place of Organization New York
|
- --------------------------------------------------------------------------------
| 7 | Sole Voting Power
| | 41,128 shares 0.9%
Number of |-----------------------------------------------------------
Shares | 8 | Shared Voting Power
Beneficially | | 23,280 shares 0.5%
Owned By |-----------------------------------------------------------
Each | 9 | Sole Dispositive Power
Reporting | | 41,128 shares 0.9%
Person |-----------------------------------------------------------
With | 10 | Shared Dispositive Power
| | 23,280 shares 0.5%
- --------------------------------------------------------------------------------
11 | Aggregate Amount Beneficially Owned By Each Reporting Person
| 64,408 shares
|
- --------------------------------------------------------------------------------
12 | Check Box if the Aggregate Amount in Row (11) excludes Certain Shares* |_|
|
- --------------------------------------------------------------------------------
13 | Percent of Class Represented by Amount in Row (11)
| 1.5%
|
- --------------------------------------------------------------------------------
14 | Type of Reporting Person*
| PN
================================================================================
*SEE INSTRUCTIONS BEFORE FILLING OUT!
- 9 of 26-
<PAGE>
CUSIP
No. 64121N109 13D
================================================================================
1 | Names of Reporting Persons
| I.R.S. Identification Nos. of Above Persons (Entities Only)
| Seneca Ventures
|
- --------------------------------------------------------------------------------
2 | Check the Appropriate Box if a Member of a Group* (a) |_|
| (b) |_|
- --------------------------------------------------------------------------------
3 | SEC Use Only
|
- --------------------------------------------------------------------------------
4 | Source of Funds* WC, OO
|
- --------------------------------------------------------------------------------
5 | Check Box if Disclosure of Legal Proceedings is Required
| Pursuant to Item 2(d) or 2(e) |_|
- --------------------------------------------------------------------------------
6 | Citizenship or Place of Organization New York
|
- --------------------------------------------------------------------------------
| 7 | Sole Voting Power
| | 23,280 shares 0.5%
Number of |-----------------------------------------------------------
Shares | 8 | Shared Voting Power
Beneficially | | 41,128 shares 0.9%
Owned By |-----------------------------------------------------------
Each | 9 | Sole Dispositive Power
Reporting | | 23,280 shares 0.5%
Person |-----------------------------------------------------------
With | 10 | Shared Dispositive Power
| | 41,128 shares 0.9%
- --------------------------------------------------------------------------------
11 | Aggregate Amount Beneficially Owned By Each Reporting Person
| 64,408 shares
|
- --------------------------------------------------------------------------------
12 | Check Box if the Aggregate Amount in Row (11) excludes Certain Shares* |_|
|
- --------------------------------------------------------------------------------
13 | Percent of Class Represented by Amount in Row (11)
| 1.5%
|
- --------------------------------------------------------------------------------
14 | Type of Reporting Person*
| PN
================================================================================
*SEE INSTRUCTIONS BEFORE FILLING OUT!
- 10 of 26-
<PAGE>
CUSIP
No. 64121N109 13D
================================================================================
1 | Names of Reporting Persons
| I.R.S. Identification Nos. of Above Persons (Entities Only)
| Marilyn Rubenstein
|
- --------------------------------------------------------------------------------
2 | Check the Appropriate Box if a Member of a Group* (a) |_|
| (b) |_|
- --------------------------------------------------------------------------------
3 | SEC Use Only
|
- --------------------------------------------------------------------------------
4 | Source of Funds* OO
|
- --------------------------------------------------------------------------------
5 | Check Box if Disclosure of Legal Proceedings is Required
| Pursuant to Item 2(d) or 2(e) |_|
- --------------------------------------------------------------------------------
6 | Citizenship or Place of Organization United States
|
- --------------------------------------------------------------------------------
| 7 | Sole Voting Power
| | 0 shares 0%
Number of |-----------------------------------------------------------
Shares | 8 | Shared Voting Power
Beneficially | | 64,408 shares 1.5%
Owned By |-----------------------------------------------------------
Each | 9 | Sole Dispositive Power
Reporting | | 0 shares 0%
Person |-----------------------------------------------------------
With | 10 | Shared Dispositive Power
| | 64,408 shares 1.5%
- --------------------------------------------------------------------------------
11 | Aggregate Amount Beneficially Owned By Each Reporting Person
| 64,408 shares
|
- --------------------------------------------------------------------------------
12 | Check Box if the Aggregate Amount in Row (11) excludes Certain Shares* |_|
|
- --------------------------------------------------------------------------------
13 | Percent of Class Represented by Amount in Row (11)
| 1.5%
|
- --------------------------------------------------------------------------------
14 | Type of Reporting Person*
| IN
================================================================================
*SEE INSTRUCTIONS BEFORE FILLING OUT!
- 11 of 26-
<PAGE>
CUSIP
No. 64121N109 13D
================================================================================
1 | Names of Reporting Persons
| I.R.S. Identification Nos. of Above Persons (Entities Only)
| Woodland Services Corp.
|
- --------------------------------------------------------------------------------
2 | Check the Appropriate Box if a Member of a Group* (a) |_|
| (b) |_|
- --------------------------------------------------------------------------------
3 | SEC Use Only
|
- --------------------------------------------------------------------------------
4 | Source of Funds* OO
|
- --------------------------------------------------------------------------------
5 | Check Box if Disclosure of Legal Proceedings is Required
| Pursuant to Item 2(d) or 2(e) |_|
- --------------------------------------------------------------------------------
6 | Citizenship or Place of Organization New York
|
- --------------------------------------------------------------------------------
| 7 | Sole Voting Power
| | 0 shares 0%
Number of |-----------------------------------------------------------
Shares | 8 | Shared Voting Power
Beneficially | | 64,408 shares 1.5%
Owned By |-----------------------------------------------------------
Each | 9 | Sole Dispositive Power
Reporting | | 0 shares 0%
Person |-----------------------------------------------------------
With | 10 | Shared Dispositive Power
| | 64,408 shares 1.5%
- --------------------------------------------------------------------------------
11 | Aggregate Amount Beneficially Owned By Each Reporting Person
| 64,408 shares
|
- --------------------------------------------------------------------------------
12 | Check Box if the Aggregate Amount in Row (11) excludes Certain Shares* |_|
|
- --------------------------------------------------------------------------------
13 | Percent of Class Represented by Amount in Row (11)
| 1.5%
|
- --------------------------------------------------------------------------------
14 | Type of Reporting Person*
| CO
================================================================================
*SEE INSTRUCTIONS BEFORE FILLING OUT!
- 12 of 26-
<PAGE>
This statement, dated November 12, 1998, relates to the reporting persons'
ownership of the common stock of Network - 1 Security Solutions, Inc. (the
"Issuer").
ITEM 1. SECURITY AND ISSUER
(a) Common Stock, $0.01 par value per share ("Common Stock"),
(CUSIP No. 64121N109).
(b) Series C Convertible Preferred Stock, $.01 par value, per
share (the "Series C Preferred Stock"), may be converted at
any time into an equal number of Common Stock, at the option
of the holder, subject to adjustment in the event of a merger,
consolidation, reclassification, or stock split, subdivision
or combination of the Issuer's securities. The Series C
Preferred Stock vote on all matters with the Common Stock,
with each share of Series C Preferred Stock entitled to the
number of votes equal to the number of shares of Common Stock
into which it may be converted. The holders of Series C
Preferred Stock are entitled to a liquidation preference of
$5.25 per share plus any declared, but unpaid dividends, and
may elect by a majority of the holders of the Series C
Preferred Stock to receive such amount upon the sale of all or
substantially all of the Issuer's assets or in the event of a
merger into another entity.
(c) Option, exercisable as of March 14, 1996, expiring March 14,
2006, entitling the holder thereof to purchase up to an
aggregate of 31,040 shares of Common Stock, at $6.44 per
share, (the "Advisory Option").
(d) Option, exercisable as of March 14, 1996, expiring March 14,
2006, entitling the holder thereof to purchase up to an
aggregate of 18,624 shares of Common Stock, at $9.66 per share
(the "1996 Advisory Option").
(e) Option, to purchase 20,000 shares of Common Stock, expiring
October 22, 2008, entitling the holder thereof to purchase
Common Stock at $6.00 per share, exercisable commencing on
October 28, 1998. Options to purchase one-quarter of the total
number of shares vests on each of October 28, 1998, January
28, 1999, April 28, 1999 and July 28, 1999 (the "1998
Directors Option").
(f) Network - 1 Security Solutions, Inc.
70 Walnut Street
Wellesley Hills, MA 02481
(781) 239-8280
This statement relates to the shares of Common Stock of the Issuer. The
information contained herein gives effect to a one-for-1.61083 reverse stock
split of the Common Stock effected on July 20, 1998.
- 13 of 26-
<PAGE>
ITEM 2. IDENTITY AND BACKGROUND
1. (a) Applewood Associates, L.P., a limited partnership organized
under the laws of the State of New York ("Applewood").
(b) Address: c/o Applewood Capital Corp.
68 Wheatley Road
Brookville, New York 11545
(c) Principal Business: Investments.
(d) No.
(e) No.
2. (a) Applewood Capital Corp., a corporation organized under
the laws of the State of New York ("Applewood Capital").
(b) Address: c/o Barry Rubenstein
68 Wheatley Road
Brookville, New York 11545
(c) Principal Business: Investments.
(d) No.
(e) No.
Applewood Capital is a general partner of Applewood.
3. (a) Barry Rubenstein, a general partner of Applewood, an officer
and director of Applewood Capital, a general partner of
Woodland Venture Fund and Seneca Ventures, and a director of
the Issuer.
(b) Address: 68 Wheatley Road
Brookville, New York 11545
(c) Principal Business: Investments.
(d) No.
(e) No.
(f) Citizenship: United States
Barry Rubenstein is the husband of Marilyn Rubenstein.
4. (a) Irwin Lieber, a general partner of Applewood and an officer
and director of Applewood Corp. and a director of the Issuer.
(b) Address: 767 Fifth Avenue
New York, New York 10153
(c) Principal Business: Investments.
(d) No.
(e) No.
(f) Citizenship: United States
- 14 of 26-
<PAGE>
Irwin Lieber is the father of Seth Lieber and Jonathan Lieber.
5. (a) Barry Fingerhut, a general partner of Applewood and an officer
and director of Applewood Capital.
(b) Address: 767 Fifth Avenue
New York, New York 10153
(c) Principal Occupation: Investments.
(d) No.
(e) No.
(f) Citizenship: United States.
6. (a) Seth Lieber, a general partner of Applewood and an officer of
Applewood Capital.
(b) Address: 767 Fifth Avenue
New York, New York 10153
(c) Principal Occupation: Investments.
(d) No.
(e) No.
(f) Citizenship: United States.
7. (a) Jonathan Lieber, a general partner of Applewood and an officer
of Applewood Capital.
(b) Address: 767 Fifth Avenue
New York, New York 10153
(c) Principal Occupation: Investments.
(d) No.
(e) No.
(f) Citizenship: United States.
8. (a) Woodland Venture Fund, a New York limited partnership (the
"Fund").
(b) Address: 68 Wheatley Road
Brookville, New York 11545
(c) Principal Occupation: Investments.
(d) No.
(e) No.
9. (a) Seneca Ventures, a New York limited partnership ("Seneca").
(b) Address: 68 Wheatley Road
Brookville, New York 11545
(c) Principal Occupation: Investments.
(d) No.
(e) No.
- 15 of 26-
<PAGE>
10. (a) Marilyn Rubenstein, an officer of Services.
(b) Address: 68 Wheatley Road
Brookville, New York 11545
(c) Principal Occupation: Investments.
(d) No.
(e) No.
(f) Citizenship: United States.
11. (a) Woodland Services Corp.,a New York corporation and a general
partner of the Fund and Seneca ("Services").
(b) Address: 68 Wheatley Road
Brookville, New York 11545
(c) Principal Occupation: Investments.
(d) No.
(e) No.
ITEM 3. Source and Amount of Funds or Other Consideration.
From February 24, 1999 through May 14, 1998, Applewood purchased
$1,900,000 principal amount notes and warrants to purchase 339,111 shares of
Common Stock from the Issuer (the "Private Financing").
As part of the Private Financing, in consideration of Applewood's
investment of $1,000,000 in May 1998, the Issuer, CMH Capital Management Corp.
("CMH") and Applewood entered into an advisory agreement, which amended an
earlier advisory agreement between CMH and the Issuer. Pursuant to the new
advisory agreement, the Issuer agreed to increase the cash fee payable to CMH,
if the Issuer completes a merger or sale of all or substantially all of its
assets at any time up to January 15, 2001, from 2% to 3% of the value of the
consideration received by the Issuer. CMH agreed to share such consideration
with Applewood and in addition agreed to the Lock-Up Agreement described below.
On July 8, 1998, the Issuer entered into an exchange agreement
with Applewood and other holders of outstanding warrants and options. Applewood
exchanged warrants to purchase 339,111 shares of Common Stock at exercise prices
ranging from $4.83 to $6.44 per share for 261,565 shares of Common Stock.
The individual reporting persons obtained funds for the purchase
of the securities from personal funds and other funds.
Applewood obtained funds for the purchase of the securities from
working capital and other funds.
The amount of funds used in acquiring the securities are set forth
below:
- 16 of 26-
<PAGE>
<TABLE>
<CAPTION>
Total
Consideration
-----------------
<S> <C>
Applewood Associates, L.P. $5,511,556
Barry Rubenstein 200,000
Irwin Lieber 150,000
Barry Fingerhut 200,000
Seth Lieber 30,000
Jonathan Lieber 20,000
Woodland Venture Fund 265,000
Seneca Ventures 150,000
</TABLE>
ITEM 4. Purpose of Transaction.
Other than each of Barry Rubenstein and Irwin Lieber's capacity as
directors of the Issuer, no reporting person has any present plan or proposal
which would relate to or result in any of the matters set forth in subparagraphs
(a) - (j) of Item 4 of Schedule 13D except as set forth herein.
ITEM 5. Interests in Securities of the Issuer.
(a) The following list sets forth the aggregate number and
percentage (based on 4,362,631 shares of Common Stock outstanding as reported in
the Issuer's prospectus dated November 12, 1998) of outstanding shares of Common
Stock owned beneficially by each reporting person named in Item 2, as of
November 12, 1998:
- 17 of 26-
<PAGE>
<TABLE>
<CAPTION>
Shares of Common Percentage of Shares
Stock Beneficially of Common Stock
Name Owned(2) Beneficially Owned(2)
---- -------- ---------------------
<S> <C> <C>
Applewood Associates, L.P. 1,194,659(3) 25.2%
Applewood Capital Corp. 1,194,659(3,4) 25.2%
Barry Rubenstein 1,344,771(3,4,5,6,7) 28.0%
Irwin Lieber 1,272,603(3,4,8) 26.5%
Barry Fingerhut 1,225,699(3,4,9) 25.8%
Seth Lieber 1,199,315(3,4,10) 25.3%
Jonathan Lieber 1,197,763(3,4,11) 25.2%
Woodland Venture Fund 64,408(4,6,7) 1.5%
Seneca Ventures 64,408(4,6,7) 1.5%
Marilyn Rubenstein 64,408(4,6,7) 1.5%
Woodland Services Corp. 64,408(4,6,7) 1.5%
</TABLE>
- --------
(2) Includes shares of Common Stock issuable upon the exercise of the
Advisory Option, the 1996 Advisory Option and the 1998 Directors
Option.
(3) Includes 811,963 shares of Common Stock and 382,696 shares of Series
C Preferred Stock.
(4) The reporting person disclaims beneficial ownership of these
securities, except to the extent of his/her/its equity interest
therein.
(5) Includes 31,040 shares of Common Stock owned individually by Barry
Rubenstein, 31,040 shares of Common Stock issuable upon the exercise
of the Advisory Option, 18,624 shares of Common Stock issuable upon
the exercise of the 1996 Advisory Option and 5,000 shares of Common
Stock issuable upon the exercise of the 1998 Directors Option.
(6) Includes 41,128 shares of Common Stock owned by the Fund.
(7) Includes 23,280 shares of Common Stock owned by Seneca.
(8) Includes 23,280 shares of Common Stock owned individually by Irwin
Lieber, 31,040 shares of Common Stock issuable upon the exercise of
the Advisory Option, 18,624 shares of Common Stock issuable upon the
exercise of the 1996 Advisory Option and 5,000 shares of Common
Stock issuable upon the exercise of the 1998 Directors Option.
(9) Includes 31,040 shares of Common Stock owned individually by Barry
Fingerhut.
(10) Includes 4,656 shares of Common Stock owned individually by Seth
Lieber.
(11) Includes 3,104 shares of Common Stock owned individually by Jonathan
Lieber.
- 18 of 26-
<PAGE>
(b) Applewood has sole power to vote and to dispose of 1,194,659
shares of Common Stock (including 382,696 shares issuable upon the conversion of
the Series C Preferred Stock), representing approximately 25.2% of the
outstanding Common Stock.
Applewood Capital, by virtue of being a general partner of
Applewood, may be deemed to have shared power to vote and to dispose of
1,194,659 shares of Common Stock (including 382,696 shares issuable upon the
conversion of the Series C Preferred Stock), representing approximately 25.2% of
the outstanding Common Stock.
Barry Rubenstein, by virtue of being a general partner of
Applewood, the Fund and Seneca, may be deemed to have shared power to vote and
to dispose of 1,259,067 shares of Common Stock (including 382,696 shares
issuable upon the conversion of the Series C Preferred Stock), representing
approximately 26.5% of the outstanding Common Stock. Barry Rubenstein has sole
power to vote and to dispose of 85,704 shares of Common Stock (which includes
shares issuable upon the exercise of the Advisory Option, the 1996 Advisory
Option and the 1998 Directors Option), representing approximately 1.9% of the
outstanding Common Stock.
Irwin Lieber, by virtue of being a partner of Applewood, may be
deemed to have shared power to vote and to dispose of 1,194,659 shares of Common
Stock (including 382,696 shares issuable upon the conversion of the Series C
Preferred Stock), representing approximately 25.2% of the outstanding Common
Stock. Irwin Lieber has sole power to vote and to dispose of 77,944 shares of
Common Stock (which includes shares issuable upon the exercise of the Advisory
Option, the 1996 Advisory Option of the 1998 Directors Option), representing
approximately 1.8% of the outstanding Common Stock.
Barry Fingerhut, by virtue of being a partner of Applewood, may be
deemed to have shared power to vote and to dispose of 1,194,659 shares of Common
Stock (including 382,696 shares issuable upon the conversion of the Series C
Preferred Stock), representing approximately 25.2% of the outstanding Common
Stock. Barry Fingerhut has sole power to vote and to dispose of 31,040 shares of
Common Stock, representing approximately 0.7% of the outstanding Common Stock.
Seth Lieber, by virtue of being a general partner of Applewood,
may be deemed to have shared power to vote and to dispose of 1,194,659 shares of
Common stock (including 382,696 shares issuable upon the conversion of the
Series C Preferred Stock), representing approximately 25.2% of the outstanding
Common Stock. Seth Lieber has sole power to vote and to dispose of 4,656 shares
of Common Stock, representing approximately 0.1% of the outstanding Common
Stock.
Jonathan Lieber, by virtue of being a general partner of
Applewood, may be deemed to have shared power to vote and to dispose of
1,194,659 shares of Common stock (including 382,696 shares issuable upon the
conversion of the Series C Preferred Stock), representing
- 19 of 26-
<PAGE>
approximately 25.2% of the outstanding Common Stock. Jonathan Lieber has sole
power to vote and to dispose of 3,104 shares of Common Stock, representing
approximately 0.1% of the outstanding Common Stock.
The Fund has sole power to vote and to dispose of 41,128 shares of
Common Stock, representing approximately .9% of the outstanding Common Stock,
and may be deemed to have shared power to vote and to dispose of 23,280 shares
of Common Stock, representing approximately .5% of the outstanding Common Stock.
Seneca has sole power to vote and to dispose of 23,280 shares of
Common Stock, representing approximately .5% of the outstanding Common Stock,
and may be deemed to have shared power to vote and to dispose of 41,128 shares
of Common Stock, representing approximately .9% of the outstanding Common Stock.
Marilyn Rubenstein, by virtue of being an officer of Services, may
be deemed to have shared power to vote and to dispose of 64,408 shares of Common
Stock, representing approximately 1.5% of the outstanding Common Stock.
Services by virtue of being a general partner of the Fund and
Seneca, may be deemed to have shared power to vote and to dispose of 64,408
shares of Common Stock, representing approximately 1.5% of the outstanding
Common Stock.
(c) The following is a description of all transactions in shares
of Common Stock of the Issuer by the reporting persons identified in Item 2 of
this Schedule 13D effected from September 12, 1998 through November 12, 1998,
inclusive:
<TABLE>
<CAPTION>
Date of Number of Shares Purchase or Sale
Name of Shareholder Purchase or Sale Purchased or (Sold) Price per Share
------------------- ---------------- ------------------- ---------------
<S> <C> <C> <C>
Applewood Associates, L.P. 11/12/98 240,000 $6.26
</TABLE>
The shares of Common Stock were acquired by Applewood in the
over-the-counter market.
On October 19, 1998, Applewood loaned the Issuer $75,000 at an
interest rate of 10% per annum, which note was repaid upon the consummation of
the offering.
On October 20, 1998, the Issuer entered into an agreement,
effective upon the consummation of the initial public offering, with Applewood
(and other holders of outstanding promissory notes), to deliver 382,696 shares
of Series C Preferred Stock to Applewood in exchange for the cancellation of the
promissory notes payable to Applewood, including accrued interest, of
$2,009,156.
- 20 of 26-
<PAGE>
(d) No other person has the right to receive or the power to
direct the receipt of dividends from, or the proceeds from the sale of such
securities.
(e) Not applicable.
ITEM 6. Contracts, Arrangements, Understandings or Relationships with
Respect to Securities of the Issuer
Each of Robert Russo, William Hancock, Corey M. Horowitz, Pisces
Investors, L.P., Security Partners, L.P., CMH, Kenneth Conquest and the Issuer,
entered into a lock-up agreement, with Applewood as a condition of additional
financing provided to the Issuer by Applewood, on May 14, 1998 (the "Lock-Up
Agreement"). The Lock-Up Agreement prohibits the sale in the public market of
any of the securities ( including, without limitation, securities convertible
into or exchangeable for other securities, rights, options or warrants to
subscribe for, purchase or otherwise acquire other securities) of the Issuer
owned by each of them as of the effective date (the "Effective Date") of the
Registration Statement of the Issuer relating to its initial public offering of
securities, without the consent of Applewood, unless sixty (60%) percent of the
Issuer's securities owned by Applewood and certain Applewood affiliates as of
the Effective Date subsequently have been sold.
The Lock-Up Agreement does not preclude any of the participating
parties from selling or otherwise disposing of the Issuer's securities acquired
in the public market, or privately selling or otherwise disposing of the
Issuer's securities on a private basis, provided such transferee agrees in
writing, to be bound by the same terms and provisions of the above-mentioned
Lock-Up Agreement.
Corey M. Horowitz, CMH, Pisces Investors L.P. and Security
Partners, L.P. appointed Applewood its proxy to represent and to vote all of the
shares of capital stock (Common Stock and preferred stock) on all matters coming
before the shareholders of the Issuer for a vote or written consent, until the
Effective Date.
Each of the reporting persons entered into a lock-up agreement
(the "Underwriter's Lock-Up"), with Whale Securities Co., L.P., the underwriter
of the initial public offering. The Underwriter's Lock-Up prohibits the
reporting persons from selling or otherwise disposing of any shares of Common
Stock for a period of 12 months from the Effective Date or exercise any rights
to cause the Issuer to register any shares of Common Stock for sale pursuant to
the Securities Act of 1933, in each case, without the Underwriter's prior
written consent. In addition, after the 12 month period expires, the reporting
persons will not sell or otherwise dispose of, in any 3 month period, more then
would be permissible under the volume limitations of Rule 144 without the
Underwriter's prior written consent.
In addition, for a period of 5 years from the Effective Date, each
of the reporting persons have agreed to vote all of their shares in favor of one
designee of the Underwriter to the Board of Directors.
- 21 of 26-
<PAGE>
ITEM 7. Materials to be Filed as Exhibits
Exhibit A. Agreement among the reporting persons by which they
have agreed to file this Schedule 13D and all necessary amendments, as required
by Rule 13d- 1(f).
- 22 of 26-
<PAGE>
SIGNATURE
After reasonable inquiry and to the best of his/her/its knowledge and
belief, each of the undersigned hereby certifies that the information set forth
in this Schedule is true, complete and correct.
Dated: November 25, 1998
APPLEWOOD ASSOCIATES, L.P.
By: Barry Rubenstein
-------------------------------------
Barry Rubenstein, A General Partner
APPLEWOOD CAPITAL CORP.
By: Barry Rubenstein
-------------------------------------
Barry Rubenstein, President
SENECA VENTURES
By: Barry Rubenstein
-------------------------------------
Barry Rubenstein, A General Partner
WOODLAND VENTURE FUND
By: Barry Rubenstein
-------------------------------------
Barry Rubenstein, A General Partner
WOODLAND SERVICES CORP.
By: Barry Rubenstein
-------------------------------------
Barry Rubenstein, President
- 23 of 26-
<PAGE>
Barry Rubenstein
-------------------------------------
Barry Rubenstein
Irwin Liber
-------------------------------------
Irwin Lieber
Barry Fingerhut
-------------------------------------
Barry Fingerhut
Marilyn Rubenstein
-------------------------------------
Marilyn Rubenstein
Seth Lieber
-------------------------------------
Seth Lieber
Jonathan Lieber
-------------------------------------
Jonathan Lieber
ATTENTION: INTENTIONAL MISSTATEMENTS OR OMISSIONS OF FACT CONSTITUTE
FEDERAL CRIMINAL VIOLATIONS (SEE 18 U.S.C. 1001).
- 24 of 26-
<PAGE>
JOINT FILING AGREEMENT
In accordance with Rule 13d-1(f) under the Securities Exchange Act of
1934, as amended, the undersigned hereby agree to the joint filing on behalf of
each of them of a statement on Schedule 13D (including amendments thereto) with
respect to the Common Stock, par value $.01 per share, of NETWORK - 1 SECURITY
SOLUTIONS, INC. and that this Agreement be filed as an Exhibit to such statement
on Schedule 13D.
IN WITNESS WHEREOF, the undersigned hereby execute this Agreement this
25th day of November, 1998.
APPLEWOOD ASSOCIATES, L.P.
By: Barry Rubenstein
-------------------------------------
Barry Rubenstein, A General Partner
APPLEWOOD CAPITAL CORP.
By: Barry Rubenstein
-------------------------------------
Barry Rubenstein, President
SENECA VENTURES
By: Barry Rubenstein
-------------------------------------
Barry Rubenstein, A General Partner
WOODLAND VENTURE FUND
By: Barry Rubenstein
-------------------------------------
Barry Rubenstein, A General Partner
WOODLAND SERVICES CORP.
By: Barry Rubenstein
-------------------------------------
Barry Rubenstein, President
- 25 of 26-
<PAGE>
Barry Rubenstein
-------------------------------------
Barry Rubenstein
Irwin Liber
-------------------------------------
Irwin Lieber
Barry Fingerhut
-------------------------------------
Barry Fingerhut
Marilyn Rubenstein
-------------------------------------
Marilyn Rubenstein
Seth Lieber
-------------------------------------
Seth Lieber
Jonathan Lieber
-------------------------------------
Jonathan Lieber
- 26 of 26-
