752431--5/29/2008--NETWORK_EQUIPMENT_TECHNOLOGIES

related topics

{customer, product, revenue}

{operation, international, foreign}

{property, intellectual, protect}

{stock, price, operating}

{control, financial, internal}

{acquisition, growth, future}

{product, market, service}

{operation, natural, condition}

{personnel, key, retain}

{loan, real, estate}

{competitive, industry, competition}

{regulation, change, law}

{financial, litigation, operation}

{regulation, government, change}

We have incurred net losses in the past and may incur losses in the future. Our operating results may continue to fluctuate. Our stock price is volatile and could decline substantially. 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. Our recent acquisition of Quintum Technologies involves numerous risks and challenges. 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. Litigation may materially adversely affect our business. Our operations in foreign countries are subject to political, economic and regulatory risks. 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 having 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 outsource our product manufacturing and are transitioning between vendors. 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. We are exposed to fluctuations in the market values of our investment portfolio. The location of our facilities subjects us to the risk of earthquake and floods. Any material weakness or significant deficiency identified in our internal controls could have an adverse effect on our business.

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752431--5/29/2008--NETWORK_EQUIPMENT_TECHNOLOGIES_INC