Because fluctuations can happen, we believe that comparisons of the results of our operations for preceding quarters are not necessarily predictive of future quarters and that investors should not rely on the results of any one quarter as an indication of how we will perform in the future. Investors should also understand that, if the revenue or operating results for any quarter are less than the level expected by securities analysts or the market in general, the market price of our common stock could immediately and significantly decline.

The market for our telecommunicationscommunications networking products is characterized by rapid technological change and the frequent introduction of products based on new technologies. The overall telecommunications andcommunications networking industry is volatile, as the effects of new technologies, new standards, new products and short life cycles contribute to changes in the industry and the performance of industry participants. In addition, the market for our communications networking products has declined as native IP-based networks continue to proliferate, so that our products in this area are likely to remain viable in networks only in shrinking numbers. Future revenue will depend upon our ability to anticipate technological change and to develop and introduce enhanced products of our own on a timely basis that comply with new industry standards. New product introductions, or the delays thereof, could contribute to quarterly fluctuations in operating results as orders for new products commence and orders for existing products decline. Moreover, significant delays can occur between a product introduction and commencement of volume production. A typical time period from design-win of one of our telecommunicationscommunications networking products to actual production is 18 to 30 months. This timing has varied significantly during times of mergers, economic instability, and technology changes affecting platform architectures. Our inability to develop and manufacture new products in a timely manner, the existence of reliability, quality or availability problems in our products or their component parts, or the failure to achieve market acceptance for our products could have a material adverse effect on our operating results, financial condition and cash flows.

While we enjoy very good relationships with our customers, there can be no assurance that our principal customers will continue to purchase products from us at the current levels. Orders from our customers are affected by factors such as new product introductions, product life cycles, inventory levels, manufacturing strategies, contract awards, competitive conditions and general economic conditions. In addition, the market for our communications networking products has declined as native IP-based networks continue to proliferate. Customers typically do not enter into long-term volume purchase contracts with us, and they have certain rights to extend or delay the shipment of their orders. The loss of one or more of our major customers, or the reduction, delay or cancellation of orders or a delay in shipment of products to such customers, could have a material adverse effect on our operating results, financial condition and cash flows.

In the telecommunicationscommunications networking industry, a design-win occurs when a customer or prospective customer notifies us that our product has been selected to be integrated with their product. Ordinarily, there are a number of steps between the design-win and when customers initiate production shipments. Design-wins reach production volumes at varying rates, typically beginning approximately 18 to 30 months after the design-win occurs. A variety of risks, such as schedule delays, customer consolidations, cancellations of programs and changes in customer markets, can delay or prevent the design-win from reaching the production phase. The customer's failure to bring its product (into which our product is designed) to the production phase could have an adverse effect on our operating results, financial condition and cash flows.

If we deliver products or services with errors, defects or problems, our credibility, market acceptance and sales of our products and services could be harmed. Further, if our products or services contain errors, defects or problems, we may be required to expend significant capital and resources to alleviate such problems. Defects could also lead to product liability lawsuits against us or our customers, tort or warranty claims, increased insurance costs or increased service and warranty costs, any of which could harm our business. We have agreed to indemnify our customers in some circumstances against liability from defects in our products. While no such litigation currently exists, product liability litigation arising from errors, defects or problems, even if it resulted in an outcome favorable to us, would be time consuming and costly to defend. Existing or future laws, or unfavorable judicial decisions, could negate any limitation-of-liability provisions that are included in our license agreements. A product liability claim, whether or not successful, could seriously harm our business, financial condition and results of operations.

We maintain insurance coverage for product liability claims. Although we believe this coverage is adequate, there can be no assurance that coverage under insurance policies will be adequate to cover specific product liability claims made against us. In addition, product liability insurance could become more expensive and difficult to maintain and may not be available in the future on commercially reasonable terms or at all. The amount and scope of any insurance coverage may be inadequate if a product liability claim is successfully asserted against us.

Certain components used in our products are currently available from one or only a limited number of sources. There can be no assurance that future supplies will be adequate for our needs or will be available with acceptable prices and terms. Inability in the future to obtain sufficient limited-source components, or to develop alternative sources, could result in delays in product introduction or shipments, and increased component prices could negatively affect gross margins, either of which could have a material adverse effect on our operating results, financial condition and cash flows.

Although we believe our products do not infringe on the proprietary rights of third parties, there can be no assurance that infringement claims will not be asserted, possibly resulting in costly litigation in which we may not ultimately prevail. Adverse determinations in such litigation could result in the loss of proprietary rights, subject us to significant liabilities, require that we seek licenses from third parties or prevent us from manufacturing or selling our products, any of which could have a material adverse effect on our operating results, financial condition and cash flows.

It may be necessary to obtain technology licenses from others due to the large number of patents in the markets we serve and the rapid rate of issuance of new patents and new standards or to obtain important new technology. There can be no assurance that these third party technology licenses will be available on commercially reasonable terms. The loss of, or inability to, obtain any of these technology licenses could result in delays or reductions in product shipments. Such delays or reductions in product shipments could have a material adverse effect on our operating results, financial condition and cash flows.

Our success and the pursuit of our business strategy depend on the continued contributions of our personnel and on our ability to attract and retain skilled employees for our current and future business. Changes in personnel could adversely affect our operating results, financial condition and cash flows.

In 2012,2014, we derived approximately 43%44% of our revenues from sales outside of North America. Economic and political conditions in some of these markets, as well as different legal, tax, accounting and other regulatory requirements, may adversely affect our operating results, financial condition and cash flows. We are exposed to adverse movements in foreign currency exchange rates because we conduct business on a global basis and in some cases in foreign currencies. Our former operations in France have been measuredwere transacted in the local currency and converted into U.S. Dollars based on published exchange rates for the periods reported and were therefore subject to risk of exchange rate fluctuations (See Item 7A. “Quantitative and Qualitative Disclosures about Market Risk – Foreign Currency Risk” below).

We believe our current financial resources will be sufficient to meet our present working capital and capital expenditure requirements for the next twelve months.

Our common stock is currently listed on the NASDAQ GlobalCapital Market. The NASDAQ GlobalCapital Market’s continued listing standards for our common stock require, among other things, that (i) the closing bid price for our common stock not fall below $1.00; (ii) we have at least 400300 beneficial holders and/or holders of record of our common stock; (iii) our stockholders’ equity not fall below $10$2.5 million; (iv) we have more than 750,000500,000 shares held by the public (excluding officers, directors, and beneficial holders of 10% or more) with a market value of at least $5.0$1.0 million; and (v) we have at least two registered and active dealers meeting the requirements set forth in the standards.

In addition, we may choose to voluntarily delist voluntarily from NASDAQ, or even deregister from the reporting requirements with the SEC (i.e., “go dark”), in the event we believe we may be subject to havea delisting proceeding, or for any other reason our Board of Directors determines it to be in the best interest of our stockholders.

If our common stock trade onis delisted by, or we voluntarily delist from, the over-the-counter bulletin board or the “pink sheets,” or even to “go dark.”

Certain provisions of the Texas corporate statute, to which we are subject, limits business combinations with any “affiliated shareholder,” which is generally any person or group of persons that is, or has been during the preceding three years, the beneficial owner of 20% or more of our outstanding voting shares. Also, we have in place a shareholder rights plan, commonly referred to as a “poison pill” (see Note 9 in the notes to the consolidated financial statements).  The statutory provisions and the rights plan may discourage, delay or prevent a third party from acquiring us or acquiring a large portion of our shares (including by initiating a tender offer), even if our shareholders might receive for their shares in any such acquisition a premium over the then current market price of the shares.

As a smaller reporting company, we are not subject to the provisions of the Sarbanes-Oxley Act of 2002 that require an attestation report from our independent registered public accounting firm regarding our internal controls over financial reporting. If we cease to qualify as a smaller reporting company or as a non-accelerated filer, we would become subject to this requirement, which could cause us to incur substantial additional costs and may adversely affect our financial results. The failure of our independent registered public accounting firm to concur with management’s assessment of the effectiveness of our internal controls over financial reporting may result in investors losing confidence in the reliability of our financial statements, which may result in a decrease in the trading price of our common stock. It may also prevent us from providing the required financial information in a timely manner which could materially and adversely impact our business, our financial condition and the trading price of our common stock, and it may prevent us from otherwise complying with the standards applicable to us as a public company and subject us to additional regulatory consequences.

None.

The Company’s executive officesoperations are locatedconducted in a 22,000-square-foot43,000-square-foot leased facility located in Plano, Texas.  The executive offices serve as the primary location for the Company’s administrative, development and marketing functions.  The Company’s manufacturing and operations center is located in a 24,000-square-foot leased facility in Carrollton, Texas. The executive offices lease extends through February 2014, and the manufacturing and operations center lease extends through March 2014.2025. The Company believes that its facilities and equipment are in good operating condition and are adequate for its operations. The Company owns mosta large portion of the equipment used in its operations. Such equipment consists primarily of engineering equipment, manufacturing and test equipment, computer equipment and fixtures.