UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

(Mark One)

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

For the quarterly period ended ~~September~~December 3031, 2011

¨	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from _______ to _______

COMMISSION FILE NUMBER: 001-14753

NETWORK 1 FINANCIAL GROUP, INC.

(Exact Name of Registrant as specified in its charter)

Delaware		11-3423157
(State or other jurisdiction of		(I.R.S. Employer
incorporation or organization)		Identification No.)

2 Bridge Avenue, 4thFloor

Red Bank, NJ 07701

(Address of principal executive offices)

(732) 758-9001

(Registrant’s telephone number)

Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports) and (2) has been subject to such filing requirements for the past 90 days. YES þ NO ¨

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). YES ¨ NO ¨

Indicate by check mark whether the Registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer ¨		Accelerated filer ¨
Non-accelerated filer ¨		Smaller reporting company þ

Indicate by check mark whether the Registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). YES ¨ NO þ

As of November 10, 2011, the Registrant had 48,635,057 shares of its Common Stock, $.001 par value, outstanding.

NETWORK 1 FINANCIAL GROUP, INC.

FORM 10-Q

~~SEPTEMBER~~DECEMBER 3031, 2011

TABLE OF CONTENTS

		Page	~~Page~~
PART I – FINANCIAL INFORMATION		1	1
ITEM 1.	CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)	~~CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)~~1	1
ITEM 2.	MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS	~~MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS~~2	2
ITEM 3.	QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK	~~QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK~~5	4
ITEM 4T.	CONTROLS AND PROCEDURES	~~CONTROLS AND PROCEDURES~~5	4
PART II – OTHER INFORMATION		6	5
ITEM 1.	LEGAL PROCEEDINGS	~~LEGAL PROCEEDINGS~~6	5
ITEM 2.	UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS	~~UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS~~6	5
ITEM 3.	DEFAULTS UPON SENIOR SECURITIES	~~DEFAULTS UPON SENIOR SECURITIES~~6	5
ITEM 4.	SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS	~~SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS~~6	5
ITEM 5.	OTHER INFORMATION	~~OTHER INFORMATION~~6	5
ITEM 6.	EXHIBITS	~~EXHIBITS~~6	5
SIGNATURES		7	6

PART I – FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS (UNAUDITED)

Index to Consolidated Financial Statements

Condensed Consolidated Statement of Financial Condition	F–1	~~F–1~~
Condensed Consolidated Statements of Operations	F–2	~~F–2~~
Condensed Consolidated Statement of Equity	F–3	~~F–3~~
Condensed Consolidated Statement of Cash Flows	F–4	~~F–4~~
Notes to Condensed Consolidated Financial Statements	F–5	~~F–5~~

NETWORK 1 FINANCIAL GROUP, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL CONDITION

~~September~~December 3031, 2011 (unaudited) and June 30, 2011

	SEPTEMBER 30,			JUNE 30,
	DECEMBER			JUNE
	2011			2011
	(unaudited)
ASSETS
Cash	$	67,~~947~~759		$	58,856
Commission Receivable from Clearing Firm		863,~~391~~036		$	78,021
Notes Receivable - Related Party		55,631			59,002
Note Receivable Network 1 Financial Advisors Inc.		44,600			59,002
Deposit with clearing organization		~~322~~325,~~050~~382			345,137
Due from Affiliates		912,~~180~~183			45,482
Advances to Registered Representatives: net of reserve
for uncollectible accounts of $ $90,000 respectively.		76,058			70,231
for uncollectible accounts of $90,000.		79,982			70,231
Securities held for resale, at market		8583,~~493~~574			83,415
Property and Equipment, net.		1626,~~185~~532			17,935
Other Assets		27,000			27,000
TOTAL ASSETS:	$	~~606~~670,~~935~~048		$	785,079
LIABILITIES AND EQUITY
LIABILITIES
Line of Credit	$	30,000		$	30,000
Notes Payable		119,~~183~~245			4,088
Commissions Payable		2995,~~520~~395			78,943
Capital Leases payable		1614,~~542~~048			18,588
Accounts Payable, accrued expenses and other liabilities		~~140~~166,~~075~~315			173,923
TOTAL LIABILITIES		227,320			305,542
		-
TOTAL LIABILITIES		315,003			305,542
Commitments and Contingencies
EQUITY
Common Stock, $.001 par value;					-
100,000,000 shares authorized; 56,560,057 and 55,560,057 issued and 48,635,057 and 47,635,057 outstanding, respectively		56,560			55,560
100,000,000 shares authorized; 56,560,057 and
Additional Paid In Capital		2,059,888			2,022,888
55,560,057 issued and 48,635,054 and 47,635,057 outstanding, respectively.		56,560			55,560
Additional Paid In Capital		2,055,538			2,022,888
Treasury Stock at cost; 7,925,000 shares		(5,129	)		(5,129	)
Accumulated deficit		(12,~~946~~058,~~704~~274	)		(1,808,782	)
Total stockholders equity		164,615			264,537
Common stock subscribed		87,000			-
Total stockholders equity		140,045			264,537
Non-controlling interest		215,000			215,000
TOTAL EQUITY		~~379~~355,~~615~~045			479,537
TOTAL LIABILITIES AND EQUITY	$	~~606~~670,~~935~~048		$	785,079

(the accompanying notes are an integral part of these unaudited condensed consolidated financial statements)

F-1

NETWORK 1 FINANCIAL GROUP, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

THREE AND SIX MONTHS ENDED ~~SEPTEMBER 30~~DECEMBER 31, 2011 and 2010

(unaudited)

	SEPTEMBER			SEPTEMBER
	For The Three Months Ended						For The Six Months Ended
	2011			2010
	December 31,						December 31,
Revenues:
	2011			2010			2011			2010
Commissions	$	349,167		$	169,788
Revenues:
Net dealer inventory gains		9,122			146,288
Commissions	$	388,023		$	226,950		$	737,190		$	396,738
Investment banking		3,000			99,063
Net dealer inventory gains		162,550			178,412			171,672			324,700
Interest and Dividends		6,145			6,890
Investment banking		101,600			29,100			104,600			128,163
Transfer fees and clearing services		-			6,633
Interest and Dividends		1,769			6,208			7,914			13,098
Investment advisory		74,949			107,777
Transfer fees and clearing services		-			-			-			6,633
Other		335			11,000
Investment advisory		66,629			277,341			141,578			385,116
Total Revenue		442,718			547,439
Other		-			25,500			335			36,500
Operating Expenses:
Total Revenue		720,571			743,511			1,163,289			1,290,948
Commissions		169,045			87,386
Operating Expenses:
Compensation and Related Expenses		176,323			253,486
Commissions		351,103			78,084			520,148			165,470
Clearing Fees		48,331			47,229
Compensation and Related Expenses		206,693			283,975			383,016			537,461
Communications and data processing		28,716			33,285
Clearing Fees		39,682			52,919			88,013			100,148
Interest		587			3,398
Communications and data processing		26,493			39,868			55,209			73,153
Occupancy and related expenses		22,044			41,753
Interest		578			676			1,165			4,074
Office Expenses		37,693			49,022
Occupancy and related expenses		46,928			54,315			68,972			96,068
Professional Fees		95,343			115,381
Office Expenses		77,264			59,608			114,957			108,630
Depreciation		2,558			2,160
Professional Fees		80,954			82,215			176,297			197,596
Total Operating Expenses		580,640			633,100
Depreciation		2,446			1,719			5,004			3,879
Loss from Operations		(137,922	)		(85,663	)
Total Operating Expenses		832,141			653,379			1,412,781			1,286,479
Other Income
(Loss) Income from Operations		(111,570	)		90,132			(249,492	)		4,469
Gain on change in derivative liability		-			10,084
Other Income
Total Other Income		-			10,084
Gain on change in derivative liability		-			3,098			-			13,182
Net loss	$	(137,922	)	$	(75,579	)
Total Other Income		-			3,098			-			13,182
Loss per common share (basic and diluted)	$	(0.003	)	$	(0.003	)
Net (loss) Income		(111,570	)		93,230			(249,492	)		17,651
Weighted average common shares outstanding		48,580,709			23,393,529
Loss/Income attributable to non-controlling interest		-			-						-
Net (loss) Income attributable to common shareholders	$	(111,570	)	$	93,230		$	(249,492	)	$	17,651
(Loss) Income per common share (basic and diluted)	$	(0.002	)	$	0.002		$	(0.005	)	$	0.002
Weighted average common shares outstanding		56,058,427			40,360,057			50,144,568			40,360,057

(the accompanying notes are an integral part of these unaudited condensed consolidated financial statements)

F-2

NETWORK 1 FINANCIAL GROUP, INC. and SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENT OF EQUITY

For the ~~three~~six months ended ~~September~~December 3031, 2011

(Unaudited)

					Additional		Treasury			Accumulated			Non-Controlling
	Common Stock				Additional paid-in-capital		Treasury Stock			Accumulated Deficit			Common Stock Subscribed		Non-Controlling interest				Total
	Common Stock				paid-in-capital		Stock			Defecit			interest			Total
	Shares		Amount
	Shares		Amount
Balance - June 30, 2011		55,560,057	$	55,560	$	2,022,888	$	(5,129	)	$	(1,808,782	)	$	-	$	215,000			$	479,537
Balance - June 30, 2011		55,560,057	$	55,560	$	2,022,888	$	(5,129	)	$	(1,808,782	)	$	215,000		$	479,537
Sale of Common Stock														87,000						87,000
Shares issued for services		1,000,000	$	1,000	$	37,000								-		$	~~38,000~~			38,000
Net loss										$	(137,922	)				$	(137,922	)
Net Loss											(249,492	)		-						(249,492	)
Balance - September 30, 2011		56,560,057	$	56,560	$	2,059,888	$	(5,129	)	$	(1,946,704	)	$	215,000		$	379,615
Balance - December 31, 2011		57,560,057	$	56,560	$	2,055,538	$	(5,129	)	$	(2,058,274	)	$	87,000	$	215,000			$	355,045

(the accompanying notes are an integral part of these unaudited condensed consolidated financial statements)

F-3

NETWORK 1 FINANCIAL GROUP, INC. AND SUBSIDIARIES.

CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS

For the ~~three~~six months ended ~~September~~December 3031, 2011 and 2010

(unaudited)

	September			September
	2011			2010
CASH FLOWS FROM OPERATING ACTIVITIES
Net Loss attributable to common shareholders	$	(137,922	)	$	(75,579	)
Net (Loss) Income attributable to common shareholders		(249,492	)	$	17,651
Adjustments to reconcile net loss to net cash used in operating activities:					-
Depreciation		25,~~558~~004			23,~~160~~879
Gain on change in derivative liability		-			(10,084	)
(Gain) Loss on change in derivative liability		-			(13,182	)
Stock based compensation		2,000			-
Changes in operating assets and liabilities
Due from clearing organization		23,087			332,468
Commission Receivable from Clearing Firm		14,985			(25,957	)
Securities held for resale, at market		(2,078	)		11,550
Due from clearing organization		19,755			325,352
Advances to/from registered representatives		(55,250	)		6,405
Securities held for resale, at market		(159	)		(282,204	)
Other assets		-			16,913
Advances to/from registered representatives		6,701			4,852
Securities sold, but not yet purchased, at market		-			11,933
Other assets		-			28,059
Accounts Payable, accrued expenses & other Liabilities		2,153			(31,950	)
Due to clearing organization		-			12,822
Commission Receivable from Clearing Organization		69,630			(76,113	)
Accounts Payable, accrued expenses & other Liabilities		28,393			(21,136	)
TOTAL ADJUSTMENTS		4276,~~100~~679			~~263~~32,~~282~~485
NET CASH (USED IN) PROVIDED BY OPERATING ACTIVITIES		(95172,~~822~~813	)		~~187~~50,~~703~~136
CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of property and equipment		(808	)		-
Purchase of Equipment		(13,602	)		-
NET CASH USED IN INVESTING ACTIVITIES		(808	)		-
NET CASH (USED IN) INVESTING ACTIVITIES		(13,602	)		-
CASH FLOWS FROM FINANCING ACTIVITIES
Advances to affiliated companies		3633,~~302~~299			12,~~970~~880
Advances from affiliated companies		~~3,370~~-			(~~270~~1,182	)
Repayment of Notes Payable		7,095			(295	)
Proceeds from sale of common stock		87,000			-
Repayment of capital lease		(2,046	)		(533	)
Repayment of notes receivable		14,401			-
					-
Repayment of Notes Payable		5,158			(2,168	)
NET CASH PROVIDED BY FINANCING ACTIVITIES		44,721			872
Repayment of line of credit		-			(25,000	)
NET (DECREASE) INCREASE IN CASH		(51,909	)		188,575
Repayment of capital lease		(4,540	)		(3,614	)
CASH - Beginning of Period		58,856			2,635
NET CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES		135,318			(29,084	)
CASH - End of Period	$	6,947		$	191,210
NET (DECREASE) INCREASE IN CASH		(51,097	)		21,052
CASH - Beginning of Year		58,856			2,635
CASH - End of Year	$	7,759		$	23,687
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION
Cash paid during Quarter
Cash paid during year
Interest	$	~~571~~1,165		$	34,~~398~~074
Income Taxes	$	-2,645		$	2,162

(the accompanying notes are an integral part of these unaudited condensed consolidated financial statements)

F-4

NETWORK 1 FINANCIAL GROUP, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE ~~THREE~~SIX MONTHS ENDED ~~SEPTEMBER~~DECEMBER 3031, 2011 ~~AND 2010~~

(unaudited)

~~NOTE~~ 1 – Basis of Presentation (Reverse Merger and Corporate Structure)

Network 1 Financial Securities, Inc. (“NETW”) was organized as a Texas corporation on March 15, 1983 and is registered as a broker-dealer with the Securities and Exchange Commission (~~the “~~SEC”), the State of Texas and various other states. NETW is an introducing broker-dealer that clears all transactions with and for customers on a fully disclosed basis with a clearing broker. The accompanying unaudited condensed consolidated statement of operations for the six months ended December, 31 2011 consolidate the following variable interest entities (“VIEs”): Network 1 Financial Advisors, Inc, Network 1 Financial Assurance, Inc., National Financial Services Group, Inc. and Shark Rivers Investors, LLC through the companies merger date of June 9, 2009. As of December 31, 2011, none of the assets, liabilities and results of operations of the VIEs are included as part of the consolidation.

On June 9, 2009, NETW completed a merger transaction (the “Reverse Merger”) with International Smart Sourcing, Inc. (“ISSI”), an inactive publicly registered shell corporation with no significant assets or operations. ISSI was incorporated in February 1998 in Delaware. As a result of the Reverse Merger, NETW became a wholly owned subsidiary of ISSI and the current assets of NETW were merged with ISSI. NETW’s shareholders acquired control of ISSI.

Upon completion of the Reverse Merger transaction, ISSI changed its name to Network 1 Financial Group, Inc. (the “Company”).

All references to Common Stock, share and per share amounts have been retroactively restated to reflect the exchange ratio of 17.16 shares of ISSI’s Common Stock for 1 share of the acquirer's Common Stock outstanding immediately prior to the Reverse Merger as if the exchange had taken place as of the beginning of the earliest period presented.

The accompanying unaudited condensed consolidated financial statements present on a consolidated basis the accounts of the Company and its subsidiaries. All significant intercompany accounts and transactions have been eliminated in consolidation.

The accompanying unaudited condensed consolidated financial statements for the ~~three~~six month periods ended ~~September~~December 3031, 2011 and 2010 have been prepared by the Company pursuant to the rules and regulations of the Securities and Exchange Commission, including Form 10-Q and Regulation S-X. The information furnished herein reflects all adjustments (consisting of normal recurring accruals and adjustments) which are, in the opinion of management, necessary to fairly present the operating results for the respective periods. Certain information and footnote disclosures normally present in annual financial statements prepared in accordance with accounting principles generally accepted in the United States of America have been omitted pursuant to such rules and regulations. The Company believes that the disclosures provided are adequate to make the information presented not misleading. These financial statements should be read in conjunction with the audited financial statements and explanatory notes for the year ended June 30, 2011 as disclosed in the Company's 10-K for that year as filed with the SEC, as it may be amended.

The results of the ~~three~~six months ended ~~September~~December 3031, 2011 are not necessarily indicative of the results to be expected for the pending full year ending June 30, 2012.

F-5

NETWORK 1 FINANCIAL GROUP, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE ~~THREE~~SIX MONTHS ENDED ~~SEPTEMBER~~DECEMBER 3031, 2011 ~~AND 2010~~

(unaudited)

NOTE 2 - Summary of Significant Accounting Policies

Use of Estimates

The preparation of the unaudited condensed consolidated financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements, as well as the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

Revenue Recognition

Customer security transactions and the related commission income and expense are recorded as of the trade date. Investment banking revenues include gains, losses, and fees, net of syndicate expenses, arising from securities offerings in which the Company acts as an underwriter or agent. Investment banking revenues also include fees earned from providing financial advisory services. Investment banking management fees are recorded on the offering date, sales concessions on the settlement date, and underwriting fees at the time the underwriting is completed and the income is reasonably determinable. Customers who are financing their transaction on margin are charged interest. The Company’s margin requirements are in accordance with the terms and conditions mandated by its clearing firm. The interest is billed on the average daily balance of the margin account.

Net dealer inventory gains result from securities transactions entered into for the account and risk of the Company. Net dealer inventory gains are recorded on a trade date basis. Investment advisory fees are account management fees for high net worth clients based on the amount of the assets under management. These fees are billed quarterly and recognized at such time that the service is performed and collection is probable.

The Company generally acts as an agent in executing customer orders to buy or sell listed and over-the-counter securities in which it does not make a market, and charges commissions based on the services the Company provides to its customers. In executing customer orders to buy or sell a security in which the Company makes a market, the Company may sell to, or purchase from, customers at a price that is substantially equal to the current inter-dealer market price plus or minus a mark-up or mark-down. The Company may also act as agent and execute a customer's purchase or sale order with another broker-dealer market-maker at the best inter-dealer market price available and charge a commission. Mark-ups, mark-downs and commissions are generally priced competitively based on the services it provides to its customers. In each instance the commission charges, mark-ups or mark-downs, are in compliance with guidelines established by the FINRA.

Marketable securities are carried at fair value, with changes in value included in the statement of income in the period of change. Fair value is generally determined by quoted market prices. Non-marketable securities are valued at fair value as determined by management.

F-6

NETWORK 1 FINANCIAL GROUP, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE ~~THREE~~SIX MONTHS ENDED ~~SEPTEMBER~~DECEMBER 3031, ~~2011AND 2010~~2011

(unaudited)

Fair Value of Financial Instruments

FASB requires that the Company disclose estimated fair values of financial instruments. The carrying amounts reported in the statement of financial position for current assets and current liabilities qualifying as financial instruments approximate fair value because of their short maturities.

In April 2009, the FASB issued provisions that require that companies also disclose the fair value of financial instruments during interim reporting periods similar to those that are currently provided annually. These pronouncements are effective for interim reporting periods ending after June 15, 2009.

On July 1, 2008, the Company adopted the provisions of Accounting Standard Codification (“ASC”) Topic 820, which defines fair value for accounting purposes, establishes a framework for measuring fair value and expands disclosure requirements regarding fair value measurements. The Company’s adoption of ASC 820 did not have a material impact on its condensed consolidated financial statements. Fair value is defined as an exit price, which is the price that would be received upon sale of an asset or paid upon transfer of a liability in an orderly transaction between market participants at the measurement date. The degree of judgment utilized in measuring the fair value of assets and liabilities generally correlates to the level of pricing observability. Financial assets and liabilities with readily available, actively quoted prices or for which fair value can be measured from actively quoted prices in active markets generally have more pricing observability and require less judgment in measuring fair value. Conversely, financial assets and liabilities that are rarely traded or not quoted have less price observability and are generally measured at fair value using valuation methods that require more judgment. These valuation techniques involve some level of management estimation and judgment, the degree of which is dependent on the price transparency of the asset, liability or market and the nature of the asset or liability. The Company has categorized its financial assets and liabilities measured at fair value into a three level hierarchy in accordance with ASC 820.

Reclassifications

Certain reclassifications have been made in prior year’s financial statements to conform to classifications used in the current year.

F-7

NETWORK 1 FINANCIAL GROUP, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE ~~THREE~~SIX MONTHS ENDED ~~SEPTEMBER~~DECEMBER 3031, 2011 ~~AND 2010~~

(unaudited)

NOTE 3 - Recent Accounting Pronouncements

Management does not believe there are any issued, but not yet effective, accounting standards if currently adopted which would have a material effect on the accompanying unaudited condensed consolidated financial statements.

NOTE 4 –- Securities ~~held~~Owned ~~for~~and ~~resale~~Securities Sold, But Not Yet Purchased, At Market

The following table shows the market values of the Company's investment securities owned and securities sold, but not yet purchased as of ~~September~~December 3031, 2011 and June 30, 2011, respectively:

September 30, 2011				June 30, 2011
	December 31, 2011			June 30, 2011
$	85,493		$	83,415
	Owned			Owned
	$	83,574		$	83,415

F-8

NETWORK 1 FINANCIAL GROUP, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE ~~THREE~~SIX MONTHS ENDED ~~SEPTEMBER~~DECEMBER 3031, 2011 ~~AND 2010~~

(unaudited)

NOTE 5 - Due from Clearing Organization

The following represents amounts on deposit ~~in the Company’s clearing broker inventory account~~ with Southwest Securities, Inc. (“Southwest”) and Legent Clearing LLC (“Legent”) ~~for~~with the ~~fiscal~~Company’s ~~year~~clearing ~~ended~~broker ~~June~~inventory ~~30, 2011, and for the three months ended September 30, 2011~~account:

	September 30, 2011							June 30, 2011
	December 31, 2011		June 30, 2011
	Southwest		Legent		Total			Southwest		Legent		Total
Cash	$	268,570	$	275,380
Cash	$	14,495	$	254,960	$	275,380	$	14,495	$	260,885	$	275,380
Marketable securities		56,812		69,757
Marketable securities, net of fair value adjustments		0		52,595		52,595		-		69,757		69,757
Total	$	325,382	$	345,137
	$	14,495	$	307,555	$	322,050	$	14,495	$	330,642	$	345,137
Less: securities sold short		-		-
Total due from clearing organization	$	325,382	$	345,137

The marketable securities are primarily comprised of corporate stocks. Marketable securities on deposit with Legent ~~are~~as ~~reflected~~of December at31, ~~fair~~2011 ~~value. As~~and ofJune ~~September~~ 30, 2011, are ~~the~~reflected at fair value. The Company is required to maintain a ~~clearing~~deposit ~~deficit~~balance of $100,000 with Legent. Currently Southwest retains $14,495 in deposit and Legent currently retains $310,000 in deposits for the firm.

For the ~~three~~six months ~~ended~~ending ~~September~~December 3031, 2011, the Company used the services of Legent to clear its brokerage business. ~~Southwest~~The Company ceased ~~clearing~~using ~~the~~Southwest ~~Company’s~~Securities ~~brokerage business~~ on August 13, 2010 and Legent commenced clearing on August 16, 2010. The Company incurred charges of approximately $4948,~~320~~251 and $97,570 for the three and six months ended ~~September~~December 3031, 2011 and approximately $23,387 with Southwest and $2349,~~841~~252 with Legent for the ~~three~~six months ended ~~ending~~December ~~September 30~~31, ~~2010~~2011.

~~NOTE 6~~ F- ~~Related Party Transactions~~9

AsNETWORK of1 ~~September~~FINANCIAL 30GROUP, ~~2011~~INC. ~~and~~AND ~~June 30, 2011, due from (to) affiliated companies consisted of the following:~~SUBSIDIARIES

	September 30,		June 30,
	2011		2011
Network 1 Financial Advisors Inc.(b)	$	55,781	$	67,362
Network 1 Financial Assurance, Inc. (a) (b)	$	146	$	200
National Financial Services Group (c)	$	8,884	$	37,189

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

~~(a)~~FOR ~~Represents~~THE ~~expenses~~SIX ~~paid~~MONTHS onENDED ~~behalf~~DECEMBER of31, ~~an affiliated company whose directors are officers and shareholders of the Company.~~2011

(bunaudited) ~~Represents amounts due in the form of a promissory note from an affiliated company whose officers and shareholders are officers and shareholders of the Company.~~

FNOTE 6 -9 Related Party Transactions

~~NETWORK~~As 1of ~~FINANCIAL~~December ~~GROUP~~31, ~~INC.~~2011 ~~AND~~and ~~SUBSIDIARIES~~June 30, 2011, due to (from) affiliated companies consisted of the following:

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

	December 31,		June 30,
	2011		2011

Network 1 Financial Advisors Inc.(a) (b)	$	47,900	$	67,095

Network 1 Financial Assurance, Inc. (b)	$	-	$	200

National Financial Services Group (b)	$	8,884	$	37,189

~~FOR~~(a) ~~THE~~Represents ~~THREE~~amounts ~~MONTHS~~due ~~ENDED~~from ~~SEPTEMBER~~an ~~30,~~affiliated ~~2011~~company ~~AND~~whose ~~2010~~officers and shareholders are officers and shareholders’ of the Company.

(~~unaudited~~b) Represents amounts due in the form of a promissory note from an affiliated company whose officers and shareholders are officers and shareholders of the Company.

NOTE 7 - ~~Capital~~Line ~~Lease~~of ~~Obligation~~Credit – Bank

The Company’s ~~has~~bank ~~equipment~~line ~~under~~of acredit ~~capital~~is ~~leases~~payable ~~expiring~~on ~~in August 2012 and September 2015~~demand. The maximum ~~assets~~amount ~~and liabilities under~~ the ~~capital~~Company ~~lease~~could ~~are~~borrow ~~recorded~~is at$100,000. Indebtedness ~~the~~under ~~lower of~~ the ~~present~~line ~~value~~ of ~~the~~credit ~~minimum~~provides ~~lease~~for ~~payments~~interest or at the ~~fair~~bank’s ~~value~~prime ofrate, ~~the~~plus ~~assets~~1.0% ~~The~~(approximately ~~assets~~4.25% ~~are~~at ~~included~~December in31, ~~property~~2011). ~~and~~As ~~equipment~~of ~~and~~December is31, ~~amortized~~2011 ~~over~~and ~~the~~June ~~estimated~~30, ~~life~~2011, of the amount ~~assets.~~outstanding ~~The interest rate~~ under ~~the~~this ~~lease~~credit isfacility ~~6.60%~~was ~~and~~$30,000 ~~6.89%~~ and is$30,000 ~~imputed based on the lessor’s implicit rate of return~~respectively. The ~~Capital~~Company ~~lease~~ is ~~payable~~currently not in ~~monthly~~default ~~installments~~ of its ~~$532~~line ~~and~~of ~~$210,~~credit ~~including~~with ~~interest~~the ~~through August 2012 and September 2015~~bank.

~~Amortization~~Indebtedness ofunder ~~assets~~the ~~held~~credit ~~under~~agreement is collateralized by substantially all of the ~~capital~~assets ~~lease~~of isthe ~~included~~Company inand ~~depreciation~~an ~~expense~~officers’ personal guarantee.

AtNOTE ~~September~~8 ~~30,~~- ~~2011,~~Notes ~~annual minimum future lease payments under the capital lease are as follows:~~Payable

June 30,	Amount
2012	$	7,391
2013		2,517
2014		2,517
2015		2,517
2016		1,600
Total minimum lease payments	$	16,542

Notes payable include settlement agreements entered into with FINRA in September 2010 and May 2010 for monetary sanctions imposed against the Company. As of 2011, notes payable consists of the following:

NOTE 8 - Line of Credit – Bank

	December 31, 2011		June 30, 2011

Note payable to FINRA in monthly installments of $500 per month including interest at a rate of 6.25% through January 2012	$	824	$	3,264

Note payable to FINRA in monthly installments of $500 per month including interest at a rate of 6.25% through May 2013.		8,421		-

Note payable to FINRA in monthly installments of $500. per month including interest at a rate of 6.25% through August 2011		-		824

Total notes payable	$	9,245	$	4,088

The Company’s bank line of credit is payable on demand. The maximum amount the Company could borrow is $100,000. Indebtedness under the line of credit provides for interest at the bank’s prime rate, plus 1.0% (approximately 4.25% at September 30, 2011). As of September 30, 2011 and June 30, 2011, the amount outstanding under this credit facility was $30,000.F-10

~~Indebtedness~~NETWORK ~~under~~1 ~~the~~FINANCIAL ~~credit~~GROUP, ~~agreement~~INC. isAND ~~collateralized by substantially all of the assets of the Company and an officers’ personal guarantee.~~SUBSIDIARIES

~~NOTE~~NOTES 9TO –CONDENSED ~~Notes~~CONSOLIDATED ~~Payable~~FINANCIAL STATEMENTS

~~Notes~~FOR ~~payable~~THE ~~include~~SIX ~~settlement~~MONTHS ~~agreements~~ENDED ~~entered~~DECEMBER ~~into with the FINRA in September 2011~~31, ~~September 2010 and May 2010, for monetary sanctions imposed against the Company. As of September 30,~~ 2011 ~~and June 30, 2011, notes payable consists of the following:~~

	September 30, 2011		June 30, 2011
Note payable to FINRA in monthly installments of $500 per month including interest at a rate of 6.25% through January 2012	$	1,808	$	3,264
Note payable to FINRA in monthly installments of $ 500 per month including interest at a rate of 6.25% through May 2013		9,375		-0-
Note payable to FINRA in monthly installments of $500 per month including interest at a rate of 6.25% through August 2011		-0-		824
Total notes payable	$	11,183	$	4,088

(unaudited)

NOTE 109 -– ~~Net~~ Capital ~~Requirements~~Lease Obligation

~~NETW~~The isCompany has equipment under a ~~registered~~capital ~~broker-dealer~~leases expiring in August 2012 and isSeptember ~~subject~~2015. toThe assets and liabilities under the ~~SEC’s~~capital ~~Uniform~~lease ~~Net~~are ~~Capital~~recorded ~~Rule~~at ~~15c3-1.~~the ~~This~~lower ~~requires~~of ~~that~~the ~~NETW~~present ~~maintain~~value of the minimum ~~net~~lease ~~capital~~payments or the fair value of ~~$100,000~~the assets. The assets are included in property and ~~also~~equipment ~~requires~~and ~~that~~is amortized over the ~~ratio~~estimated life of ~~aggregate~~the ~~indebtedness,~~assets. asThe ~~defined,~~interest torate ~~net~~under ~~capital~~the lease is 6.60% and 6.89% and is imputed based on the lessor’s implicit rate of return. The Capital lease is payable in monthly installments of $532 and $210, ~~shall~~including ~~not~~interest ~~exceed~~through 15August 2012 toand 1September 2015.

AsAmortization of ~~September~~assets ~~30,~~held ~~2011~~under ~~and~~the ~~June 30, 2011, NETW’s net~~ capital ~~exceeded~~lease ~~the~~is ~~requirement~~included in bydepreciation ~~approximately $37,316 and $65,212 , respectively~~expense.

~~Advances,~~At ~~dividend~~December ~~payments~~31, ~~and other equity withdrawals are restricted by the regulations of the SEC~~2011, ~~and~~annual ~~other~~minimum ~~regulatory~~future ~~agencies~~lease ~~are~~payments ~~subject to certain notification and other provisions of~~ under the ~~net~~ capital ~~rules~~lease ofare ~~the SEC. NETW qualifies under the exemptive provisions of Rule 15c3-3~~ as ~~NETW does not carry security accounts for customers or perform custodial functions related to customer securities.~~follows:

NOTE 11 – Capital Stock.

June 30,	Amount

2012	$	4,897
2013		2,517
2014		2,517
2015		2,517
2016		1,600

Total minimum lease payments	$	14,048

WeNOTE ~~are~~10 ~~authorized~~– toCapital ~~issue 100,000,000 shares of common stock with a par value of $~~Stock.~~001 per share.~~

OnWe ~~July~~are 6,authorized ~~2011~~to weissue ~~issued an aggregate of 900~~100,000,000 shares of common stock ~~for~~with a ~~previously~~par ~~accrued services valued at $36,000 based on the~~ value of ~~the~~$.001 ~~stock~~per ~~at the time of issuance~~share.

On July 6, 2011 ~~the~~we ~~Company~~ issued ~~100~~an aggregate of 900,000 shares of ~~$0.001 par value Company~~ common stock tofor apreviously ~~Company~~accrued ~~director. The~~ services ~~were~~ valued at $236,000 based on the value of the stock at the time of issuance.

~~NOTE~~On 12July -6, ~~Warrants~~2011 the Company issued 100,000 shares of $0.001 par value common stock to a Company director. The services were valued at $2,000 based on the value of the stock at the time of issuance.

~~The~~On ~~following~~October is28, ~~additional~~2011, ~~information~~the ~~with~~Company ~~respect~~authorized the issuance of 4,350,000 share of $0.001 par value common stock valued at $0.02 to ~~the~~an ~~Company’s~~investor ~~warrants~~for as$87,000. As of ~~September~~December 3031, 2011: the authorized stock has not been issued and is listed under Common Stock Subscribed.

F-1011

NETWORK 1 FINANCIAL GROUP, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE ~~THREE~~SIX MONTHS ENDED ~~SEPTEMBER~~DECEMBER 3031, 2011 ~~AND 2010~~

(unaudited)

~~WARRANTS~~NOTE ~~OUTSTANDING~~11 ~~AND~~- ~~EXERCISABLE~~Net Capital Requirements

		Number of		Weighted
		Outstanding		Average	Weighted
		Shares		Remaining	Average
Exercise		Underlying		Contractual	Exercise
Price		Warrants		Life	Price
$	0.16		7,657,733	0.07 years	$	0.16
			7,657,733	0.07 years	$	0.16

NETW is a registered broker-dealer and is subject to the SEC’s Uniform Net Capital Rule 15c3-1. This requires that NETW maintain minimum net capital of $100,000 and also requires that the ratio of aggregate indebtedness, as defined, to net capital, shall not exceed 15 to 1.

~~Note:~~As ~~The~~of ~~warrants’~~December ~~expiration~~31, ~~date~~2011 isand ~~October~~June 2330, 2011, NETW’s net capital exceeded the requirement by approximately $21,514 and $65,212, respectively.

~~NOTE~~Advances, 13dividend payments and other equity withdrawals are restricted by the regulations of the SEC, and other regulatory agencies are subject to certain notification and other provisions of the net capital rules of the SEC. NETW qualifies under the exemptive provisions of Rule 15c3-3 ~~Fair~~as ~~Value~~NETW ~~Measurements~~does not carry security accounts for customers or perform custodial functions related to customer securities.

~~The~~NOTE ~~financial~~12 assets of the Company measured at fair value on a recurring basis are cash, due from clearing organization, marketable securities, derivatives and debt. The Company’s cash equivalents, due from clearing organization and marketable securities are generally classified within Level 1 of the fair value hierarchy because they are valued using quoted market prices, broker or dealer quotations, or alternative pricing sources with reasonable levels of price transparency. The Company’s long-~~term~~ ~~investments,~~Fair ~~derivative~~Value liabilities and debt are classified within Level 3 of the fair value hierarchy because they are valued using unobservable inputs, due to the fact that observable inputs are not available, or situations which there is little, if any, market activity for the asset or liability at the measurement date.Measurements

·The financial assets of the Company measured at fair value on a recurring basis are cash, due from clearing organization, marketable securities, derivatives and debt. The Company’s cash equivalents, due from clearing organization and marketable securities are generally classified within Level 1: ~~Unadjusted~~of the fair value hierarchy because they are valued using quoted market prices, inbroker ~~active~~or ~~markets~~dealer ~~that~~quotations, or alternative pricing sources with reasonable levels of price transparency. The Company’s long-term investments, derivative liabilities and debt are ~~accessible~~classified atwithin level 3 of the ~~measurement~~fair ~~date~~value ~~for~~hierarchy ~~identical~~because ~~unrestricted~~they ~~assets~~are valued using unobservable inputs, due to the fact that observable inputs are not available, or ~~liabilities;~~situations which there is little, if any, market activity for the asset or liability at the measurement date.

· Level 21: ~~Quoted~~Unadjusted quoted prices in active markets that are ~~not~~accessible ~~active~~at orthe ~~inputs~~measurement ~~which~~date ~~are observable, either directly or indirectly ,~~ for ~~substantially~~identical ~~the~~unrestricted ~~full~~assets ~~term of the asset~~ or ~~liability~~liabilities; or

· Level 32: ~~Prices~~Quoted orprices ~~valuation~~in ~~techniques~~markets that ~~require~~are not active or inputs ~~that~~which are ~~both~~observable, ~~significant~~either todirectly or indirectly , for substantially the ~~fair~~full ~~value~~term ~~measurement~~of ~~and~~the ~~are~~asset ~~unobservable.~~or liability; or

~~The~~· ~~following~~Level ~~table~~3: ~~sets~~Prices ~~forth~~or ~~the~~valuation ~~Company’s~~techniques ~~short~~that ~~and~~require ~~long~~inputs ~~term~~that ~~investments~~require asinputs ofthat ~~September 30, 2011, which~~ are ~~measured~~both atsignificant ~~fair~~to ~~value on a recurring basis by level within~~ the fair value ~~hierarchy. As~~measurement ~~required~~and ~~by ASC 820 (formerly SFAS No. 157), these~~ are ~~classified based on the lowest level of input that is significant to the fair value measurement:~~unobservable.

	Level 1		Level 2		Level 3		Total
Due from clearing organization	$	52,595		-		-	$	52,595
Securities owned, at market values		85,493		-		-		85,493
Total Assets	$	138,088		-		-	$	138,088

The following table sets forth the Company’s short and long term investments as of December 31, 2011, which are measured at fair value on a recurring basis by level within the fair value hierarchy. As required, by ASC 820 (formerly SFAS No. 157), these are classified based on the lowest level of input that is significant to the fair value measurement:

NOTE 14 – Subsequent Events

	Level 1		Level 2		Level 3		Total
Due from clearing organization	$	254,485		-		-	$	254,485
Securities owned, at market values		83,574		-		-		83,574
	$	338,059		-		-	$	338,059

~~On October 28, 2011 the firm sold 4.350,000 shares of its common stock to an affiliated person, for gross proceeds of $87,000.~~F-12

FNOTE 13 -11 Subsequent Event

~~ITEM~~The 2company secured financing from a minority shareholder via a discounted note maturing on February 1, 2015 for a face amount of $100,000 the total proceeds received by the Company was $59,400 in marketable securities. ~~MANAGEMENT'S~~The ~~DISCUSSION~~note ~~AND~~will ~~ANALYSIS~~accrue ORin ~~PLAN~~36 OFequal ~~OPERATION~~increments. There is no prepayment penalty. The Company also issued 500,000 options/warrants to purchase its common stock for $0.10 per share expiring February 1, 2015.

~~Some of the statements contained in this Quarterly Report on Form 10~~F-Q, which are not purely historical, are forward-looking statements, including, but not limited to, statements regarding the Company's objectives, expectations, hopes, beliefs, intentions or strategies regarding the future. In some cases, you can identify forward-looking statements by the use of the words "may," "will," "should," "expects," "plans," "intends," "anticipates," "believes," "estimates," "predicts," "potential," or "continue" or the negative of those terms or other comparable terminology. Although we believe that the expectations reflected in the forward-looking statements are reasonable, our actual results could differ materially from those disclosed in these statements due to various risk factors and uncertainties affecting our business. We caution you not to place undue reliance on these forward-looking statements. We do not assume responsibility for the accuracy and completeness of the forward-looking statements and we do not intend to update any of the forward-looking statements after the date of this report to conform them to actual results. You should read the following discussion in conjunction with our financial statements and related notes included elsewhere in this report. For a more complete understanding of our industry, the drivers of our business and our current period results, you should read the following Management's Discussion and Analysis of Financial Condition and Results of Operation in conjunction with the audited financial statements and notes thereto set forth in our Annual Report on Form 10-K for the year ended June 30, 2011 and our other filings with the SEC.13

~~OVERVIEW~~ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION

OnSome ~~June~~of 9,the ~~2009~~statements contained in this Quarterly Report on Form 10-Q, ~~the~~which ~~Company~~are ~~(then~~not ~~known~~purely ashistorical, ~~"International~~are ~~Smart~~forward-looking ~~Sourcing~~statements, ~~Inc."~~including, orbut ~~"ISSI")~~not ~~closed~~limited ~~certain~~to, ~~transactions~~statements ~~contemplated~~regarding the inCompany’s aobjectives, ~~certain~~expectations, ~~Stock~~hopes, ~~Purchase~~beliefs, ~~Agreement~~intentions ~~dated~~or asstrategies ofregarding ~~March~~the 26future. In some cases, ~~2009~~you can ~~(the~~identify ~~"Agreement")~~forward-looking ~~which~~statements weby ~~entered~~the ~~into~~use ~~with~~of ~~Network~~the 1words ~~Financial~~“may,” ~~Securities~~“will,” ~~Inc.~~“should,” a“expects,” “plans,” ~~privately~~“intends,” ~~held~~“anticipates,” ~~Texas~~“believes,” ~~corporation~~“estimates,” ~~("NETW")~~“predicts,” “potential,” ~~and~~or ~~certain~~“continue” ~~former~~or ~~shareholders~~the negative of ~~NETW~~those terms or other comparable terminology. AtAlthough we believe that the ~~closing,~~expectations wereflected ~~acquired~~in ~~1,250,528~~the ~~shares~~forward-looking statements are reasonable, orour ~~approximately~~actual 97results could differ materially from those disclosed in these statements due to various risk factors and uncertainties affecting our business.~~55%,~~ ofWe ~~common~~caution ~~stock~~you ofnot to ~~NETW~~place ~~outstanding~~undue reliance on ~~such~~these ~~date~~forward-looking ~~(the~~statements. ~~"Reverse~~We ~~Merger").~~do Innot ~~accordance~~assume ~~with~~responsibility for the ~~terms~~accuracy and completeness of the ~~Agreement,~~forward-looking statements and we ~~issued~~do ~~21,460,622~~not ~~shares~~intend to update any of ~~our~~the ~~common~~forward-looking ~~stock~~statements after the date of this report to conform them to actual results. You should read the ~~former~~following ~~shareholders~~discussion ofin ~~NETW,~~conjunction with our financial statements and related notes included elsewhere in ~~exchange~~this ~~for~~report. For a more complete understanding of our industry, the ~~acquisition~~drivers of our business and our current period results, byyou should read the ~~Company,~~following Management’s Discussion and Analysis of ~~approximately~~Financial ~~97.55%~~Condition and Results of Operation in conjunction with the ~~outstanding~~audited ~~common~~financial ~~shares~~statements ofand ~~NETW~~notes thereto set forth in our Annual Report on Form 10-K for the year ended June 30, 2010 and our other filings with the SEC.

As of the closing date, the former shareholders of NETW held approximately 66% of the issued and outstanding common shares of the Company. The issuance of the 21,460,622 common shares to the former shareholders of NETW was deemed to be a reverse acquisition for accounting purposes, by ISSI of NETW, as NETW will control the post-merged company. Accordingly, NETW, the accounting acquirer entity, is regarded as the predecessor entity as of June 9, 2009.OVERVIEW

~~Upon~~On ~~the~~June ~~completion~~9, of2009, the ~~Reverse~~Company ~~Merger~~(then known as “International Smart Sourcing, weInc.” ~~became~~or ~~the~~“ISSI”) ~~ultimate~~closed ~~parent~~certain ~~company~~transactions ofcontemplated ~~NETW~~in ~~and~~a wecertain ~~changed~~Stock ~~our~~Purchase ~~name~~Agreement dated ~~from~~as ~~"International~~of ~~Smart~~March ~~Sourcing~~26, ~~Inc."~~2009 to(the "“Agreement”) which we entered into with Network 1 Financial ~~Group~~Securities, Inc.", a privately held Texas corporation ("“NETW ~~Group~~”)," and certain former shareholders of NETW. At the ~~"Company~~closing," "we," ~~"us~~acquired 1,"250,528 shares, or ~~"our"~~approximately 97.55%, of common stock of NETW outstanding on such date (the “Reverse Merger”). In accordance with the terms of the Agreement, we issued 21,460,622 shares of our common stock to the former shareholders of NETW, in exchange for the acquisition, by the Company, of approximately 97.55% of the outstanding common shares of NETW.

~~During~~As of the ~~quarter~~closing ~~ended September 30~~date, ~~2011,~~the weformer ~~had~~shareholders aof ~~decrease~~NETW inheld ~~our~~approximately 66% ~~investment~~of ~~banking~~the ~~fees~~issued and a ~~decrease in~~outstanding ~~our~~common ~~investment~~shares ~~advisory~~of ~~consulting fees. In~~ the ~~same period, we had an increase in commission income but a decrease in trading profits~~Company. The ~~decrease~~issuance inof ~~investment~~the ~~banking~~21,460,622 ~~fees~~common ~~was~~shares ~~attributable~~ to ~~a reduction in~~ the ~~number~~former shareholders of ~~completed~~NETW ~~private~~was ~~placements~~deemed ~~and~~to be a ~~decrease~~reverse ~~in our~~acquisition ~~investment~~for ~~advisory~~accounting ~~consulting fees~~purposes, ~~which was~~by ~~due~~ISSI ~~to a lesser number~~ of ~~companies seeking our services. The increase in commissions earned in~~ NETW's, ~~daily~~as ~~transaction business was due primarily to a increase in activity from~~ NETW's ~~retail~~will ~~clients.~~control ~~The~~the ~~decrease~~post-merged ~~in trading profits was due to increased market volatility~~company. Accordingly, ~~Overall~~NETW, ~~we experienced a increase in losses in~~ the ~~quarter~~accounting ~~ended~~acquirer ~~September 30~~entity, ~~2011~~is ~~compared~~regarded toas the ~~same~~predecessor ~~period~~entity inas ~~the~~of ~~prior~~June ~~year~~9, 2009.

WeUpon ~~had~~the acompletion ~~loss from operations~~ of ~~approximately $137,922 for~~ the ~~quarter~~Reverse ~~ended September 30~~Merger, ~~2011,~~we ~~which~~became ~~represents~~the anultimate parent ~~increase~~company of ~~$52,259~~NETW ~~over~~and ~~our~~we ~~net~~changed ~~loss~~our ofname ~~$85,663~~from in“International ~~the~~Smart ~~same~~Sourcing, ~~period in the prior year~~Inc.” ~~This increase was primarily due~~ to ~~decreased~~“Network ~~revenues~~1 ~~which~~Financial Group, ~~consisted~~Inc.” of(“NETW ~~lower investment banking commissions~~Group,” athe ~~decrease in net dealer inventory gains~~“Company,” ~~investment advisory fees offset by a reduction in operating expenses in occupancy~~“we,” ~~office expenses~~“us,” ~~professional~~or ~~fees and compensation and related expenses~~“our”). Management continues to seek income stabilization from consulting and investment banking fees as well as by reducing its exposure to market positions. Management believes that in order to expand its marketing and recruitment of experienced registered representatives it will need to seek additional sources of funding.

2During the quarter ended December 31, 2011, we had a increase in our investment banking fees, a decrease in interest and dividends, we experienced an increase in commission income, a decrease in net dealer inventory gains investment and investment advisory fees. . The increase in investment banking fees was attributable to an increase in private placement activity. The firm’s net dealer inventory gains showed a decrease which offset the increase in commission’s income. The decrease in advisory consulting fees was due to less fees paid in stock of the client companies. The increase in commissions earned in NETW’s daily transaction business was due primarily to a increase in greater commissions received from NETW’s retail clients. The decrease in trading profits was due to market volatility. Overall, we experienced a loss in the quarter ended December 31, 2011 compared to the same period in the prior year.

~~Critical~~We ~~Accounting~~had ~~Policies~~a loss from operations of approximately $111,570 for the quarter ended December 31, 2011, which represents an decrease of $204,800 over our profit of $93,230 in the same period in the prior year. This decrease in profit was primarily due to an decrease in payment of fees in the form of stock of client companies and ~~Estimates~~the decrease in the market value of the client companies stock, an increase in operating expenses, which consisted of higher commissions paid, decrease in professional fees, decrease in interest expense, offset by increases in office expenses. Management continues to seek income stabilization from consulting and investment banking fees as well as by reducing its exposure to market positions. Management believes that in order to expand its marketing and recruitment of experienced registered representatives it will need to seek additional sources of funding.

Our discussion and analysis of financial condition and results of operations are based upon the condensed consolidated financial statements, which have been prepared in accordance with generally accepted accounting principles as recognized in the United States of America. The preparation of these financial statements requires that we make estimates and judgments that affect the reported amounts of assets, liabilities, revenue and expenses, and disclosure of contingent assets and liabilities. We base our estimates on historical experience and on various other assumptions that management believes to be reasonable under the circumstances. Actual results may differ from these estimates under different assumptions or conditions. For a complete description of accounting policies, see Note 2 ~~to our financial statements included in our Form 10-K for the year ended June 30, 2011. There were no significant changes in critical accounting estimates.~~

~~Results~~Critical ofAccounting ~~Operations~~Policies and Estimates

~~For~~Our ~~the~~discussion ~~three~~and ~~months~~analysis ~~ended~~of ~~September~~financial ~~30,~~condition ~~2011~~ and ~~2010,~~results of weoperations ~~generated~~are ~~$442,718~~based ~~and~~upon ~~$547,439~~the ofunaudited condensed consolidated ~~revenue~~financial statements, ~~respectively.~~which ~~The~~have ~~decrease~~been prepared in accordance ~~revenue~~with ofgenerally ~~$104,721~~accepted accounting principles as recognized in the ~~quarter~~United ~~ended~~States ~~September~~of ~~30,~~America. The preparation ~~2011~~of ~~represents~~these afinancial ~~19%~~statements ~~decrease~~requires inthat ~~revenue~~we ~~over~~make estimates and judgments that affect the ~~corresponding~~reported ~~period~~amounts inof assets, ~~2010~~liabilities, revenue and isexpenses, ~~due~~and todisclosure aof ~~decrease~~contingent inassets ~~dealer~~and ~~inventory~~liabilities. We ~~gains~~base orour estimates ~~trading~~on ~~profits~~historical experience and aon ~~decrease~~various inother ~~investment~~assumptions ~~advisory~~that ~~fees.~~management ~~The~~believes ~~decrease~~to inbe ~~inventory~~reasonable ~~gains~~under orthe circumstances. Actual ~~trading~~results ~~profits~~may ~~was~~differ ~~due~~from ~~primarily~~these toestimates ~~increased~~under ~~market~~different ~~volatility~~assumptions or conditions. For ~~The~~a ~~decrease~~complete indescription ~~investment~~of ~~advisory~~accounting ~~fees~~policies, issee ~~primarily~~Note ~~due~~2 to aour ~~decrease~~financial statements included in our ~~fees~~Form ~~earned~~10-K infor ~~our~~the ~~advisory~~year ~~business~~ended toJune ~~companies~~30, ~~and~~2011. There ~~individuals~~were no significant changes in critical accounting estimates.

WeResults ~~reported an operating loss~~ of $137,922 in the three months ended September 30, 2011 compared to a loss of $85,663 for the corresponding period in the prior year, which represents an increase of $52,259. The increase in operating loss was due to an increase in commissions payable and an increase in clearing fees, as well as a reduction in compensation and related expenses, occupancy and relates expenses, office expense, and professional fees..Operations

~~Our~~For ~~consolidated operating expenses were $580,640 and $633,100 for~~ the ~~quarters~~six months ended ~~September~~December 3031, 2011 ~~and~~compared ~~2010,~~to ~~respectively, representing a decrease of $52,460 or 8% from~~ the six ~~prior~~months ~~period,~~ended ~~and~~December ~~represents 131% and 116% of revenue~~31, respectively. The decrease in our expenses in 2011 was primarily due to a reduction of compensation and related expenses, occupancy and related expenses, office expenses, and professional fees offset by an increase in commission paid to register representatives...2010

~~Interest~~Revenues. Our ~~expense~~consolidated ~~was~~income ~~$587~~results ~~and $3,398~~ for the ~~quarters~~six months ended ~~September~~December 3031, 2011 ~~and~~compared ~~2010~~to the six months ended December 31, ~~respectively~~2010, showed a decrease in revenue of $2127,~~811~~ 659 or 8310%. ~~The~~Total ~~decrease~~revenue ~~was~~for ~~due~~the tosix amonths ~~reduction~~ended inDecember ~~interest~~31, ~~rates~~2011 ~~and~~was a$1,163,289 ~~reduction~~versus in$1,290,948 ~~debt~~for ~~financing~~the six months ended December 31, 2010.

~~Our~~The ~~consolidated~~decrease ~~loss~~in revenue for the six month period ended December 31, 2010 was due primarily to an decrease in investment advisory fees of $~~137~~243,~~922~~538 or 63% and a decrease of $85153,~~663~~028 ~~for~~or 47% in net dealer gains. We experienced a decrease in revenues of $23,563 or 18% from our investment banking business compared to our revenues in the ~~three~~corresponding ~~months~~period ended ~~September~~December 3031, ~~2011~~2010 ~~and~~due ~~2010,~~to ~~respectively~~less private placement activity.

~~LIQUIDITY~~Operating ~~AND~~Expenses. ~~CAPITAL~~Our ~~RESOURCES~~consolidated operating expenses for the six month period ended December 31, 2011 were $1,412,782 or 121%, of revenue versus $1,286,479, or 99%, of revenue. This represents an increase of $126,303 or 10 %, over the corresponding period ended December 31, 2010. The increase was due to an increase in commission expense of $354,678; offset by a reduction of clearing fees of $12,135; a reduction of interest expense of $2,909; a reduction of profession fees of $21,299; decreases of $154,445 in compensation and related expenses ;an decrease of $17,944 for communication and data processing and an decrease in occupancy and related expenses of $27,096 for the six months ended December 31, 2011 compared to the corresponding period in December 31, 2010.

~~Our~~The ~~primary~~increase ~~source~~in ofcommission ~~liquidity~~expense is ~~cash~~due ~~generated~~to ~~from~~higher ~~operations~~commissions charged ~~and~~for ~~from~~retail ~~short-term~~customer ~~financing~~transactions ~~arrangements.~~and Wecommissions ~~had~~paid ~~$6,947~~for incapital ~~cash~~placements ~~and~~for asclient ~~of September 30, 2011~~companies.

WeProfit ~~generated~~and ~~negative~~Loss. Our ~~cash~~consolidated ~~flow~~loss ~~from~~was ~~operations of~~ $95249,~~822~~ 492 for the ~~three~~six ~~months~~month period ended ~~September~~December 3031, 2011 ~~comprised~~compared ~~primarily~~to ofa ~~cash~~profit ~~proceeds~~of ~~from~~$4,469 for the ~~receivables from Legent~~ ~~Clearing~~corresponding ~~LLC.~~period ~~Cash~~in ~~flows~~2010. ~~provided~~This byrepresents a ~~financing~~decrease ~~activities~~of $253,961 for the ~~three~~six months ended ~~September~~December 3031, 2011 ~~were~~compared ~~$44,721~~to the same period in 2010. The loss is attributed to increase in commission expense and office expenses.

3For the three months ended December 31, 2011compared to the three months ended December 31, 2010

~~Our~~Revenues. Total ~~business~~revenue ~~has~~for ~~experienced~~the ~~difficulty~~three inmonths ~~closing~~ended December ~~investment~~31, ~~banking~~2010 ~~private~~was ~~placements~~$720,571 ~~due~~versus to$743,511 ~~volatile~~for ~~market~~the ~~conditions~~three ~~subsequent~~months toended ~~September~~December 3031, ~~2011~~2010. ~~Accordingly~~We experienced a decrease in revenue of $22,940 weor 3 ~~are~~%, ~~experiencing~~for ~~liquidity~~the ~~and~~three ~~cash~~months ~~flow~~ended ~~problems~~December 31, 2011 compared to the same period in 2010.

WeThe ~~will~~decrease ~~need~~in ~~additional~~revenue ~~funds~~for in the ~~near~~three ~~term~~month period ended December 31, 2011 was due primarily to ~~finance~~a ~~operations~~decrease in investment advisory fees of $210,712 or 76% and ~~meet~~a ~~revenue~~reduction of $15,862 ~~profitability~~or 9%, ~~growth~~in net dealer gains and $4,439 ~~diversification~~in interest and ~~other~~dividends ~~strategic~~compared ~~goals~~to the same period in 2010. We experienced an increase of $72,500 or 249% in our investment banking fees, and an increase of $161,073 or 71% in commission income for the ~~foreseeable~~three ~~future~~months ended December 31, 2011 compared to the same period in 2010. The increase was attributed to higher commissions receive from client transactions and an increase in private placement activity.

Additional financing transactions may include the issuance of equity or debt securities, obtaining credit facilities, or other financing mechanisms. However, the trading price of our common stock and the downturn in the U.S. stock and debt markets could make it more difficult to obtain financing through the issuance of equity or debt securities. Further, if we issue additional equity or debt securities, stockholders may experience additional dilution or the new equity securities may have rights, preferences or privileges senior to those of existing holders of our common stock. If additional financing is not available or is not available on acceptable terms, we will have to curtail our operations. The firm is currently reviewing its options due to its liquidity problems.3

~~Off~~Operating ~~Balance~~Expenses. Our ~~Sheet~~consolidated ~~Arrangements~~operating expenses for the three month period ended December 31, 2011 were $832,142 or 115% of revenue compared to $653,379, or 88% of revenue, for the same period in 2010, representing a increase of $178,763, or 27%, The increase was due to an increase in commissions payable of $273,019; an increase in office expenses of $17,656; offset by a reduction of compensation an related expensed of $77,282; a decrease in clearing fees of $13,237; a decrease in professional fees of $1,261;a decrease in communications and data processing of $13,375; a decrease in occupancy and related expenses $7,387 for the three months ended December 31, 2011 compared to the same period in 2010.

WeThe doincrease ~~not~~in ~~have~~commission ~~any~~expense ~~off-balance~~is ~~sheet~~due ~~arrangements~~to ~~that~~higher commissions wereceived ~~are~~from ~~required~~retail tocustomers ~~disclose~~and ~~pursuant~~a tochange ~~these~~in ~~regulations. In~~ the ~~ordinary~~mix ~~course~~ of ~~business~~products, weand ~~enter~~an ~~into~~increase ~~operating~~in ~~lease~~office ~~commitments,~~expense ~~purchase~~due ~~commitments~~to expenses ~~and~~associated ~~other~~with ~~contractual~~the ~~obligations. These~~hiring ~~transactions~~of ~~are~~additional ~~recognized~~sales inpersonnel. ~~our~~This ~~financial~~was ~~statements~~offset by a decrease in ~~accordance~~professional ~~with~~fees, ~~generally~~communications ~~accepted~~and data ~~accounting~~processing, ~~principles~~occupancy inand related expenses for the ~~United~~three ~~States.~~months ended December 31, 2011

~~Inflation~~Profit and Loss Our consolidated loss was $111,570, for the three months ended December 31, 2011, compared to a profit of $90,132 for the same period in 2010. This represents a decrease of $201,702 for the three months ended December 31, 2011, compared to the same period in 2010.

We LIQUIDITY ~~believe~~AND ~~that~~CAPITAL ~~inflation has not had a material effect on our operations to date.~~RESOURCES

~~Recent~~Our ~~Accounting~~primary ~~Pronouncements~~source of liquidity is cash generated from operations and from short-term financing arrangements. We had $7,759 in cash and as of December 31, 2011.

~~See~~We ~~Note 2~~generated negative cash flow from operations of $172,813 for the ~~Unaudited~~six ~~Condensed~~months ~~Consolidated~~ended ~~Financial~~December ~~Statements~~31, ~~for~~2011 acomprised ~~full~~primarily ~~description~~ of ~~new~~cash ~~accounting~~proceeds ~~pronouncements,~~from ~~including~~ the receivables from Legent Clearing ~~respective~~LLC. ~~expected~~Cash ~~dates~~flows ofprovided ~~adoption~~by ~~and~~financing ~~effects~~activities onfor ~~results~~the ofsix ~~operations~~months ~~and~~ended ~~financial~~December ~~condition.~~31, 2011 were $135,318

~~ITEM~~Our 3business has experienced difficulty in closing sufficient investment banking private placements due to market conditions subsequent to December 31, 2011. ~~QUANTITATIVE~~Accordingly, ~~AND~~we ~~QUALITATIVE~~are ~~DISCLOSURES~~experiencing ~~ABOUT~~liquidity ~~MARKET~~and ~~RISK~~cash flow problems.

~~Not~~We ~~applicable~~will need additional funds in the near term to finance operations and meet revenue, profitability, growth, diversification and other strategic goals for the foreseeable future.

~~ITEM~~Additional 4financing transactions may include the issuance of equity or debt securities, obtaining credit facilities, or other financing mechanisms. ~~CONTROLS~~However, ~~AND~~the ~~PROCEDURES~~trading price of our common stock and the downturn in the U.S. stock and debt markets could make it more difficult to obtain financing through the issuance of equity or debt securities. Further, if we issue additional equity or debt securities, stockholders may experience additional dilution or the new equity securities may have rights, preferences or privileges senior to those of existing holders of our common stock. If additional financing is not available or is not available on acceptable terms, we will have to curtail our operations. The firm is currently reviewing its options due to its liquidity problems.

~~(a)~~Off ~~Evaluation~~Balance ofSheet ~~Disclosure Controls and Procedures~~Arrangements

AsWe ofdo ~~the~~not ~~end~~have ofany ~~the~~off-balance ~~period~~sheet ~~covered~~arrangements that bywe ~~this~~are ~~report,~~required ~~the~~to ~~Company~~disclose ~~carried~~pursuant ~~out~~to anthese ~~evaluation,~~regulations. In ~~under~~ the ~~supervision~~ordinary ~~and~~course ~~with the participation~~ of ~~the Company’s management~~business, ~~including~~we ~~the~~enter ~~Company’s~~into ~~Chief~~operating lease ~~Executive Officer and the Company’s Chief Financial Officer~~commitments, ofpurchase ~~the~~commitments ~~effectiveness of the design~~ and ~~operation~~other ofcontractual ~~the~~obligations. These ~~Company’s~~transactions ~~disclosure~~are ~~controls~~recognized ~~and procedures (as defined~~ in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended). Based on this evaluation, the Company’s Chief Executive Officer and Chief Financial Officer concluded that the Company’s disclosure controls and procedures were not effective as of September 30, 2011 due to the identification of a material weakness. A material weakness is a control deficiency or combination of control deficiencies such that there is a reasonable possibility that a material misstatement of our ~~annual or interim~~ financial statements ~~will~~in ~~not~~accordance bewith ~~prevented~~generally oraccepted ~~detected~~accounting onprinciples ain ~~timely~~the ~~basis~~United States.

To address the material weakness described below, we performed additional analysis and performed other procedures to ensure our financial statements were prepared in accordance with GAAP. Accordingly, management believes that the financial statements included in this Quarterly Report on Form 10-Q, fairly present, in all material aspects, our financial condition, results of operations and cash flows for the periods presented in accordance with GAAP.Inflation

~~The~~We ~~weakness,~~believe ~~identified~~that byinflation ~~management,~~has ~~related~~not tohad ~~the lack~~a ofmaterial ~~necessary accounting resources to ensure consistently complete and accurate reporting of financial reporting. To mitigate the current limited resources and limited employees, we rely heavily~~ effect on ~~direct management oversight of transactions. As we grow, we expect to increase~~ our ~~number~~operations ~~of employees, which will enable us~~ to ~~implement adequate segregation of duties within the internal control framework~~date.

WeRecent ~~believe~~Accounting that for the reasons described above, after we hire additional qualified in-house personnel, we will be able to improve our disclosure controls and procedures, remedy the material weakness identified above and provide reasonable assurance that assets are safeguarded from loss or unauthorized use, that transactions are recorded in accordance with GAAP under management’s directions, and that financial records are reliable to prepare financial statements. However, because of inherent limitations in all control systems, no evaluation can provide absolute assurance that all control issues and instances of fraud, if any, will be or have been detected.Pronouncements

4See Note 2 of the Unaudited Condensed Consolidated Financial Statements for a full description of new accounting pronouncements, including the respective expected dates of adoption and effects on results of operations and financial condition.

~~(b) Changes in internal control over financial reporting~~4

~~There~~ITEM ~~were~~3. noQUANTITATIVE ~~changes~~AND inQUALITATIVE ~~the~~DISCLOSURES ~~Company’s~~ABOUT ~~internal~~MARKET control over financial reporting in the Company’s first fiscal quarter of the fiscal year ending June 30, 2011 covered by this Quarterly Report on Form 10-Q, that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.RISK

~~PART~~Not ~~II – OTHER INFORMATION~~applicable.

ITEM 14. ~~LEGAL~~CONTROLS ~~PROCEEDINGS~~AND PROCEDURES

We(a) ~~are~~Evaluation ~~not~~of ~~party~~Disclosure toControls ~~any~~and ~~material legal proceedings, nor to our knowledge, are there any proceedings threatened against us.~~Procedures

~~ITEM~~As 2of the end of the period covered by this report, the Company carried out an evaluation, under the supervision and with the participation of the Company’s management, including the Company’s Chief Executive Officer and the Company’s Chief Financial Officer, of the effectiveness of the design and operation of the Company’s disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended). ~~UNREGISTERED~~Based ~~SALES~~on OFthis ~~EQUITY~~evaluation, ~~SECURITIES~~the ~~AND~~Company’s ~~USE~~Chief OFExecutive ~~PROCEEDS~~Officer and Chief Financial Officer concluded that the Company’s disclosure controls and procedures were not effective as of December 31, 2011 due to the identification of a material weakness. A material weakness is a control deficiency or combination of control deficiencies such that there is a reasonable possibility that a material misstatement of our annual or interim financial statements will not be prevented or detected on a timely basis.

OnTo ~~October~~address 28the material weakness described below, ~~2011~~we ~~the~~performed ~~firm~~additional analysis ~~sold~~and 4performed other procedures to ensure our financial statements were prepared in accordance with GAAP.~~350~~ Accordingly,~~000~~ management ~~shares~~believes ofthat ~~its~~the ~~common~~financial ~~stock~~statements toincluded anin ~~affiliated~~this ~~person~~Quarterly Report on Form 10-Q, ~~for~~fairly ~~gross~~present, ~~proceeds~~in ofall ~~$87~~material aspects,~~000~~ our financial condition, results of operations and cash flows for the periods presented in accordance with GAAP.

~~ITEM~~The 3weakness, identified by management, related to the lack of necessary accounting resources to ensure consistently complete and accurate reporting of financial reporting. ~~DEFAULTS~~To ~~UPON~~mitigate ~~SENIOR~~the current ~~SECURITIES~~limited resources and limited employees, we rely heavily on direct management oversight of transactions. As we grow, we expect to increase our number of employees, which will enable us to implement adequate segregation of duties within the internal control framework.

~~None~~We believe that for the reasons described above, after we hire additional qualified in-house personnel, we will be able to improve our disclosure controls and procedures, remedy the material weakness identified above and provide reasonable assurance that assets are safeguarded from loss or unauthorized use, that transactions are recorded in accordance with GAAP under management’s directions, and that financial records are reliable to prepare financial statements. However, because of inherent limitations in all control systems, no evaluation can provide absolute assurance that all control issues and instances of fraud, if any, will be or have been detected.

~~ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.~~5

We(b) ~~have~~Changes ~~not~~in ~~submitted~~internal ~~any~~control ~~matters~~over tofinancial ~~a vote of security holders during the three-month period covered by this quarterly report.~~reporting

~~ITEM~~There 5.were ~~OTHER~~no ~~INFORMATION~~changes in the Company’s internal control over financial reporting in the Company’s first fiscal quarter of the fiscal year ending June 30, 2011 covered by this Quarterly Report on Form 10-Q, that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.

OnPART ~~October~~II ~~23,~~– ~~2011~~OTHER ~~the company did not extent the outstanding warrants and were allowed to expire~~INFORMATION

ITEM 61. ~~EXHIBITS~~LEGAL PROCEEDINGS

Exhibits:
31.1		Rule 13a – 14(a)/15d – 14(a) Certification, as adopted pursuant to Section 302 of the Sarbanes Oxley Act of 2002
31.2		Rule 13a – 14(a)/15d – 14(a) Certification, as adopted pursuant to Section 302 of the Sarbanes Oxley Act of 2002
32.1		Certification of the Chief Executive Officer pursuant to 18 U.S.C. § 1350, as adopted pursuant to Section 906 of the Sarbanes Oxley Act of 2002
32.2		Certification of the Chief Financial Officer pursuant to 18 U.S.C. § 1350, as adopted pursuant to Section 906 of the Sarbanes Oxley Act of 2002

We are not party to any material legal proceedings, nor to our knowledge, are there any proceedings threatened against us.

5ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

~~SIGNATURES~~On October 28, 2011 the firm sold 4,350,000 shares of its common stock to an affiliated person, for gross proceeds of $87,000.

~~Pursuant~~ITEM to3. ~~the~~DEFAULTS ~~requirements~~UPON ofSENIOR ~~Section 13(a) and 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.~~SECURITIES

		NETWORK 1 FINANCIAL GROUP, INC.
November 21, 2011		/s/ Damon D Testaverde
Date		Damon D Testaverde
		Chief Executive Officer, President
November 21, 2011		/s/ William R. Hunt, Jr.
Date		William R. Hunt, Jr.
		Interim Chief Financial Officer
		Interim Principal Financial Officer

None.

6ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.

~~EXHIBIT~~We ~~INDEX~~have not submitted any matters to a vote of security holders during the three-month period covered by this quarterly report.

Exhibit		Description
31.1		Rule 13a – 14(a)/15d – 14(a) Certification, as adopted pursuant to Section 302 of the Sarbanes Oxley Act of 2002
31.2		Rule 13a – 14(a)/15d – 14(a) Certification, as adopted pursuant to Section 302 of the Sarbanes Oxley Act of 2002
32.1		Certification of the Chief Executive Officer pursuant to 18 U.S.C. § 1350, as adopted pursuant to Section 906 of the Sarbanes Oxley Act of 2002
32.2		Certification of the Chief Financial Officer pursuant to 18 U.S.C. § 1350, as adopted pursuant to Section 906 of the Sarbanes Oxley Act of 2002

ITEM 5. OTHER INFORMATION

7None.

ITEM 6. EXHIBITS

Exhibits:

31.1		Rule 13a – 14(a)/15d – 14(a) Certification, as adopted pursuant to Section 302 of the Sarbanes Oxley Act of 2002

31.2		Rule 13a – 14(a)/15d – 14(a) Certification, as adopted pursuant to Section 302 of the Sarbanes Oxley Act of 2002

32.1		Certification of the Chief Executive Officer pursuant to 18 U.S.C. § 1350, as adopted pursuant to Section 906 of the Sarbanes Oxley Act of 2002

32.2		Certification of the Chief Financial Officer pursuant to 18 U.S.C. § 1350, as adopted pursuant to Section 906 of the Sarbanes Oxley Act of 2002

SIGNATURES

Pursuant to the requirements of Section 13(a) and 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

		NETWORK 1 FINANCIAL GROUP, INC.

February 21, 2012		/s/ Damon D Testaverde
Date		Damon D Testaverde
		Chief Executive Officer, President

February 21, 2012		/s/ William R. Hunt, Jr.
Date		William R. Hunt, Jr.
		Interim Chief Financial Officer
		Interim Principal Financial Officer

EXHIBIT INDEX

Exhibit		Description

31.1		Rule 13a – 14(a)/15d – 14(a) Certification, as adopted pursuant to Section 302 of the Sarbanes Oxley Act of 2002

31.2		Rule 13a – 14(a)/15d – 14(a) Certification, as adopted pursuant to Section 302 of the Sarbanes Oxley Act of 2002

32.1		Certification of the Chief Executive Officer pursuant to 18 U.S.C. § 1350, as adopted pursuant to Section 906 of the Sarbanes Oxley Act of 2002

32.2		Certification of the Chief Financial Officer pursuant to 18 U.S.C. § 1350, as adopted pursuant to Section 906 of the Sarbanes Oxley Act of 2002

Filing Compare · NETWORK 1 FINANCIAL GROUP, INC.