Exhibit 10.3


    
      

    


    EXHIBIT
      10.3

     

     

    CONFIDENTIAL
      PRIVATE PLACEMENT MEMORANDUM

    SUPPLEMENT
      NO 1

     

    


    


    


    


    Target
      Offering: 15,000,000 Shares of

    COMMON
      STOCK

    $6,000,000
      at $0.40 per Share

    


     

    We
      are
      providing this Confidential Supplement (“Supplement”) to potential investors to
      update information contained in our Confidential Private Placement Memorandum
      (the “PPM”) dated December 7, 2005, which describes the private offering of our
      common shares. Except as otherwise noted, all terms and provisions of the PPM
      are in full force and effect and all terms shall maintain the meaning given
      to
      them in the PPM.

     

    This
      Supplement updates information contained in the PPM and should be read together
      with the PPM. The purpose of this Supplement is to notify prospective investors
      (1) of an increase in the maximum amount of the offering by an additional
      7,500,000 Shares of Common Stock ($3,000,000) for maximum total of 15,000,000
      shares of Common Stock ($6,000,000); and (2) that this Offering shall terminate
      on February 28, 2006. Since the date of the original PPM, there are no other
      material updates.

     

    This
      Supplement should be read in its entirety, and should be read in conjunction
      with, not in lieu, of the PPM. Any statement in the PPM, including statements
      in
      exhibits, will be deemed to be modified and superceded to the extent discussed
      in this Supplement.

     

    Investing
      in the common stock is speculative and involves a high degree of risk. You
      should not invest in the common stock unless you are in a position to lose
      the
      entire amount of your investment. See “RISK
      FACTORS,”
      from our Annual Report on Form 10-KSB (the “Form 10-KSB”), filed with the
      Securities and Exchange Commission (the “SEC”) on March 31, 2005, and our
      Quarterly Report on Form 10-QSB for the period ended October 2, 2005 (the “3Q05
      10-QSB”), filed with the SEC on November 16, 2005 (collectively, the Form 10-KBS
      and the 3Q05 10-QSB, and all other public filings with the SEC are referred
      to
      hereinafter as the “Public Filings”), and are incorporated herein by reference.
      This offering is not complete without reviewing the information presented in
      these documents. You can review these documents free of charge at the SEC
      website, www.SEC.gov.
      

     

    
      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

    

     

    THE
      SECURITIES OFFERED HEREBY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT
      OR
      UNDER THE SECURITIES LAWS OF ANY STATE OR OTHER JURISDICTION AND ARE BEING
      OFFERED AND SOLD SOLELY WITHIN THE UNITED STATES EXCLUSIVELY TO ACCREDITED
      INVESTORS (AS DEFINED IN RULE 501(a) OF REGULATION D UNDER THE SECURITIES ACT)
      IN RELIANCE UPON EXEMPTIONS FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES
      ACT AND SUCH LAWS. 

    


    THIS
      MEMORANDUM SHALL NOT CONSTITUTE AN OFFER TO SELL OR A SOLICITATION OF AN OFFER
      TO BUY THE SECURITIES IN ANY JURISDICTION IN WHICH SUCH OFFER OR SOLICITATION
      WOULD BE UNLAWFUL. THE SECURITIES OFFERED HEREBY HAVE NOT BEEN APPROVED OR
      DISAPPROVED BY THE U.S. SECURITIES AND EXCHANGE COMMISSION, ANY STATE SECURITIES
      COMMISSION OR ANY OTHER REGULATORY AUTHORITY. ANY REPRESENTATION TO THE CONTRARY
      IS UNLAWFUL.

    
 

    The
      common stock of the Company (the “Common
      Stock)
      is
      listed on the Over the Counter Bulletin Board (the “OTCBB”)
      under
      the symbol “PRNW”.
      The
      closing price for the Common Stock on the OTCBB on February 6, 2005 was $0.73.
      The price of the Offered Shares will be Forty Cents ($0.40) per
      share.

     

    
 

     

    The
      date of this Supplement is February 7, 2005.


    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    PROCERA
      NETWORKS, INC.

    
 

    15,000,000
      Shares of Common Stock

    ($6,000,000)

     

    Summary
      of the Offering

     

    The
      following is a summary of certain aspects of this Amendment to the Memorandum.
      This summary is qualified in its entirety by the more detailed information
      appearing elsewhere in this Amendment and the Memorandum, including the exhibits
      hereto, and the description of any document is qualified in its entirety by
      the
      terms of such document.

    


    
      	
              Issuer:

            	 	
              PROCERA
                NETWORKS, INC., a Nevada corporation (the “Company”).

            
	
              Securities
                Offered:

            	 	
              Up
                to 15,000,000 Shares of ($6,000,000) Common stock of Procera (the
                “Offered
                Shares”).
                The Offered Shares will have certain registration rights as more
                fully
                described in the Registration Rights Agreement. Except as set forth
                in
                such Agreement, Procera will have no other obligation to register
                the
                Offered Shares.

            
	
              Offering
                Price:

            	 	
              Forty
                Cents ($0.40) per Share of Common Stock (the “Offering
                Price”).

            
	
              Common
                Stock Outstanding

            	 	
              Amount
                Prior to the Offering:

            
	 	 	
              30,780,317
                shares of Common Stock (1)

            
	 	 	
              Amount
                After Maximum Offering:

            
	 	 	
              45,780,317
                shares of Common Stock (assuming maximum amount of 15,000,000 shares
                are
                sold) (1)
                (2)

            
	 	 	 	
              (1)
                Excludes 7,500,000 shares of our common stock reserved for issuance
                under
                our two stock option plans under, 

            
	 	 	 	
              (2)
                which options to acquire approximately 3,856,000 shares of our common
                stock were issued and remain outstanding, and 3,644,000 remain available
                for issuance as of February 7, 2006. An additional 150,000 options
                were
                granted outside of the Company’s stock option plans. This also excludes
                7,121,910 shares of Common Stock reserved for issuance upon the exercise
                of warrants issued prior to this Offering.

            
	 	 	 	
              (3)
                Excludes
                up to 1,500,000 shares of common stock issuable upon the exercise
                of
                warrants that we will be issued to the Placement Agent if the maximum
                amount of 15,000,000 Shares are sold in this offering. 

            
	
              Closing
                Date:

            	 	
              The
                Company anticipates closing the Offering on February 28, 2006.