Enterprises are becoming more geographically dispersed and their users are becoming increasingly mobile. As a result, enterprises are being driven to invest in enterprise mobility infrastructure to provide their users with secure mobility.

International Data Corporation, or IDC, an independent research firm, estimates that there were 744 million mobile workers worldwide in 2006. IDC defines mobile workers as employees who are mobile within an office or campus environment, home-based workers and workers whose jobs require them to travel outside their primary office.

Further, the market for enterprise mobility infrastructure solutions is large and growing. According to IDC, the market for enterprise-class WLAN solutions is expected to grow from $1.3 billion in 2006 to $3.0 billion in 2010.

According to Gartner, an independent research firm, worldwide end-user spending for VPN/firewall equipment is expected to grow from $5.0 billion in 2006 to $6.4 billion in 2010.

The Company’s Mobile Edge Architecture integrates a proprietary operating software, a number of optional value-add software modules, a centralized mobility management system, a series of high-performance programmable mobility controllers and a line of wired and wireless access points.

The proprietary software, which is installed on the Company’s mobility controllers, brings together network, security, application and RF management services to give network managers a centralized point-of-control over the access points, mobile users and mobile devices. It enables the hardware capabilities found in the Company’s mobility controllers, including high-speed authentication, scalable encryption and decryption, and dedicated packet processing.

To extend the base capabilities of the operating system, the Company offers a number of licensed software modules.

The Company’s Mobility Management System, or MMS, reduces total cost of ownership by reducing the need for additional personnel to manage the solution. The MMS automatically discovers, monitors and manages hundreds of controllers and thousands of access points and users simultaneously from a single console. The MMS software can be deployed on any PC platform or optionally purchased as a network appliance system.

The Company’s high-performance mobility controllers are built specifically to scale the operating system and additional software module capabilities to large networks. All of the Company’s mobility controllers share a common hardware architecture which includes a dedicated control processor, a high-performance programmable network processor unit and a unique programmable encryption engine.

The Company’s wireless access points and wired access concentrators serve as on-ramps that aggregate user traffic onto the enterprise network and direct this traffic to mobility controllers. In addition to providing network access, the Company’s wireless access points provide security monitoring services for wireless networks.

In the three months ended October 31, 2006, cost of revenues increased to $9.7 million from $9.2 million for the three months ended July 31, 2006.

In the three months ended October 31, 2006, research and development expenses increased to $5.1 million from $3.8 million for the three months ended July 31, 2006.

In the three months ended October 31, 2006, interest income increased to $112,000 from $100,000 for the three months ended July 31, 2006.