752431--5/25/2007--NETWORK_EQUIPMENT_TECHNOLOGIES

related topics

{customer, product, revenue}

{operation, international, foreign}

{stock, price, operating}

{control, financial, internal}

{property, intellectual, protect}

{product, market, service}

{operation, natural, condition}

{acquisition, growth, future}

{personnel, key, retain}

{competitive, industry, competition}

{regulation, change, law}

{regulation, government, change}

We have incurred net losses in the past and may continue to incur losses in the future. Our operating results may continue to fluctuate. stock price is volatile and could decline substantially. We are dependent on revenue from the Promina product line. A significant portion of our revenue is generated from sales to governmental agencies. Our success depends on our ability to develop new products and product enhancements that will achieve market acceptance. Gross margins could decline over future periods. Regulations and other factors, some of which are beyond our control, affect our ability to sell into international markets. The market for our products is highly competitive and many of our competitors have greater resources than we do. If we are unable to sign competitive resale partners, our future product and service revenue will be adversely affected. Our products have long sales cycles, making it difficult to predict when a customer will place an order and when to forecast revenue from the related sale. Because it is difficult for us to accurately forecast sales, particularly within a given time frame, we face a risk of carrying too much or too little inventory. If we are unable to attract, recruit and retain key personnel, then we may not be able to successfully manage our business. Our ability to ship our products in a timely manner is dependent on the availability of component parts and other factors. We single-source our manufacturing processes and are transitioning between vendors; a failure or delay by our contract-manufacturing vendors could affect our ability to ship our products timely. Our intellectual property rights may not be adequate to protect our business. We rely on technologies licensed from third parties. We face risks associated with changes in regulations and tariffs, including regulation of the Internet. We are exposed to fluctuations in the exchange rates of foreign currency. The location of our facilities subjects us to the risk of earthquake and floods. We may engage in acquisitions or similar transactions that could disrupt our operations, cause us to incur substantial expenses, result in dilution to our stockholders, and harm our business if we cannot successfully integrate the acquired business, products, technologies or personnel. Any material weakness or significant deficiency identified in our internal controls could have an adverse effect on our business.

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752431--5/25/2007--NETWORK_EQUIPMENT_TECHNOLOGIES_INC