UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                   FORM 10-KSB

(Mark  One)
     [X]  Annual report under Section 13 or 15(d) of the Securities Exchange Act
          of 1934 for the fiscal year ended December 28, 2003

     [ ]  Transition report under Section 13 or 15(d) of the Securities
          Exchange Act of 1934 for the transition period from ____ to______.


                        Commission file number: 000-49862

                             PROCERA NETWORKS, INC.
                 ----------------------------------------------
                 (Name of small business issuer in its charter)


                  Nevada                               33-0974674
       --------------------------------     ---------------------------------
       (State or other jurisdiction of      (IRS Employer Identification No.)
       incorporation  or  organization)


3175 South Winchester Boulevard, Campbell, California                  95008
----------------------------------------------------------             -----
     (Address of principal executive offices)                       (Zip Code)

Issuer's  telephone  Number  (408)  874-4675
                             ---------------

Check whether the issuer: (1) filed all reports required to be filed by Section
13 or 15(d) of the Exchange Act during the past 12 months (or for such shorter
period that the registrant was required to file such reports), and (2) has been
subject to such filing requirements for the past 90 days.

     Yes  X      No
     --------    -------
The  number of outstanding shares of the issuer's common stock, $0.001 par value
(the  only  class  of  voting  stock),  as  of December 31, 2003 was 22,622,156.


<PAGE>
                                TABLE OF CONTENTS

                                     PART I


                                                                           Page

Item 1     Description of Business                                            1

Item 2     Description of Property                                           16

Item 3     Legal Proceedings                                                 16

Item 4     Submission of Matters to a Vote of Security Holders               17

                                    PART II

Item 5     Market for Common Equity and Related Stockholder Matters          17

Item 6     Management's Discussion and Analysis or Plan of Operation         18

Item 7     Financial Statements                                              23

Item 8     Changes in and Disagreements with Accountants on Accounting       46
           and Financial Disclosures

Item 8A    Controls and Procedures                                           46

                                    PART III

Item 9     Directors and Executive Officers of the Registrant                47

Item 10    Executive Compensation                                            50

Item 11    Security Ownership of Certain Beneficial Owners and Management    51
           and Related Stockholder Matters

Item 12    Certain Relationships and Related Transactions.                   52

Item 13    Exhibits and Reports on Form 8-K.                                 56

Item 14    Principal Accountant Fees and Services.                           57

Signatures                                                                   57

Index to Exhibits

Certifications


<PAGE>
                                     PART I
                                     ------

     This  report  contains  forward-looking  statements  within  the meaning of
Section 27A of the Securities Act and Section 21E of the Securities Exchange Act
of  1934  (the  "Exchange  Act"). We have based these forward-looking statements
largely  on  our  current  expectations  and projections about future events and
financial  trends  affecting  the  financial  condition  of  our business. These
forward-looking  statements  are subject to a number of risks, uncertainties and
assumptions,  including,  among  other  things:

     -    general economic and business conditions, both nationally and in our
          markets,
     -    our history of losses,
     -    our expectations and estimates concerning future financial
          performance, financing plans and the impact of competition,
     -    our ability to implement our growth strategy,
     -    anticipated trends in our business,
     -    advances in technologies, and
     -    other risk factors set forth under "Risk Factors" in this prospectus.

     In  addition,  in  this  report,  we  use  words  such  as  "anticipates,"
"believes,"  "plans," "expects," "future," "intends," and similar expressions to
identify  forward-looking  statements.

We  undertake  no  obligation  to  update publicly or revise any forward-looking
statements,  whether  as a result of new information, future events or otherwise
after  the  date  of this prospectus. In light of these risks and uncertainties,
the  forward-looking  events  and circumstances discussed in this prospectus may
not  occur  and actual results could differ materially from those anticipated or
implied  in  the  forward-looking  statements.

ITEM  1.     DESCRIPTION OF BUSINESS

INTRODUCTION

     We  were  formed  as  a  result of a merger and plan of reorganization (the
"Merger") between Zowcom, Inc. ("Zowcom") and Procera Networks, Inc., a Delaware
corporation  ("PNI").  On  October  16,  2003,  PNI  merged  into  Zowcom  in  a
stock-for-stock  transaction.  In the merger, Zowcom issued 19,617,947 shares of
its  restricted  common  stock  and warrants to purchase 1,705,000 shares of its
restricted common stock to the stockholders of PNI in exchange for 100% of PNI's
issued  and  outstanding  shares  of  common  stock  and  warrants. In addition,
Zowcom's  management,  which held 6,000,000 shares of Zowcom's restricted common
stock,  tendered  all  of  their shares for redemption in exchange for aggregate
cash  consideration  of  $88,000,  or  $0.0147  per  share.

     As  a  result  of the Merger, Zowcom continued as the surviving corporation
and  the  stockholders of PNI became stockholders of Zowcom. The stockholders of
Zowcom  prior  to  the  Merger  owned  approximately  7.6%  of  the  issued  and
outstanding  shares  of  Zowcom  common  stock  after  the Merger. If all Zowcom
warrants  acquired  pursuant  to  the Merger were exercised, the stockholders of
Zowcom would own approximately 7% of the issued and outstanding shares of Zowcom
common  stock.  The  stockholders of PNI prior to the Merger owned approximately
92.4%  of  the  issued  and  outstanding


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<PAGE>
shares  of Zowcom common stock after the Merger. If all Zowcom warrants acquired
pursuant  to  the  Merger  were  exercised,  the  stockholders  of PNI would own
approximately  93%  of the issued and outstanding shares of Zowcom common stock.

     Pursuant  to  the Merger, Zowcom assumed PNI's operations and business plan
and  changed  its  name  to  Procera  Networks,  Inc.

INDUSTRY  BACKGROUND

     We  operate  in  the switching and routing industry. This industry includes
all  software  and hardware devices that control how, when and where voice, data
and  video  is  transmitted  and  received.  The  industry  is based upon large,
sophisticated  communications  networks  operated  by  large  telecommunications
companies.  Large,  medium  and  small  sized  enterprises  utilize  these
communications  networks  by  linking their internal computer and communications
networks  to  these  larger telecommunications networks. We sell our products to
small,  medium  and  large sized enterprises, internet service providers (ISPs),
OEMs,  VARs  and system integrators that (i) seek to optimize the speed of their
networks; (ii) seek to increase efficiency of their networks and work force; and
(iii)  reduce  the  costs  and legal liability exposure associated with computer
networks  by  managing  the  communications  entering  and  leaving the computer
networks.

     With the rapid proliferation of information and the explosive growth of the
Internet,  the  need  for  larger  and  more sophisticated computer networks has
increased  dramatically over the past ten years. As the need for larger and more
sophisticated  computer  networks has grown, so has the cost of (i) the hardware
and  software  operating  the  network;  (ii)  the software applications used by
businesses;  and  (iii)  the routers and switches necessary to manage and direct
the  incoming  and  outgoing  data,  voice and video traffic.  Network users are
demanding  a  solution  that  allows  them  to make better use of their computer
network  assets  and  improve  the  quality of service ("QoS") for each computer
network  use as opposed to constantly increasing bandwidth and purchasing larger
more  expensive  switches  and  routers  to  manage  the  increasing  volume and
complexity  of  computer  network  traffic.

     Additionally,  in today's work environment a significant amount of computer
network usage is unrelated to the business of the employer. Employees play video
games,  buy  and  sell  stocks, visit gambling websites, view pornography, check
their  personal  e-mail and use their employer's computer network for many other
purposes  unrelated  to their employment or the business of their employer. This
can  slow  down  the  entire  network  of  the  employer.

THE  PROCERA  NETWORKS  SOLUTION

     We  are  a hardware and software development company that has developed the
first  hardware-based, scalable, Layer 7 switching and network management system
that operates at full wire speed, enabling the full Layer 7 packet processing to
be  integrated  with  switching and routing without materially degrading network
speed  or  latency. In short, our products enable the computer network to manage
information  in  a  more  sophisticated  manner  thereby increasing employee and
computer  network  efficiency  and  substantially  reducing the costs of network
expansion.  Our  hardware solution presents an affordable opportunity for medium
and  small  sized  enterprises  to  more efficiently manage their networks on an
individual,  end-user basis in order to: (i) increase efficiency of the computer
network,


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<PAGE>
(ii)  eliminate  legal  liability  issues  stemming  from  employees'  use  of
company-provided  computer network for non-business purposes such as downloading
pornography  or  computer  viruses, and (iii) simplify the increasing demands on
corporations to comply with new laws regarding data storage and email archiving.

     Historically,  computer network managers have relied on Layer 2 and Layer 3
switches  to  control  the  network activity based on certain limited protocols.
They  are  only  switches  for the entire network, however, and do not allow the
network  manager  to control the activity from one end user to the next. Layer 2
and  Layer 3 switches force network managers to choose a set of protocols for an
entire  network,  regardless  of  the  individual  needs  of  the end users. For
example,  the  computer  network  access  needs for accounting personnel and the
company's  fleet  mechanics  are  significantly  different.  Layer 2 and Layer 3
switches  do  not  allow  a  company  network manager to optimize the use of the
company's  computer  network by prioritizing and customizing access of employees
in  these  two  groups.

     While  Layer  2  and  Layer 3 switches are broadly available and, generally
thought  of  as  a  commodity,  Layer  7  content-based  switching  and  network
management  is in the early stages of deployment and poses significant technical
challenges.  We  believe that over the next several years, Layer 7 content-based
switching  and network management will proliferate within private enterprise and
public  networks in both the wireline and wireless networks.  By establishing an
early  technological lead we may be positioned to capitalize on this anticipated
market  growth.

     We  have developed a proprietary hardware platform that is based largely on
standard,  off  the  shelf components (such as PHY, MAC, Switch Fabric, MPU). We
believe  that  this approach is much simpler, more flexible, and costs less than
most  competing approaches. Most competing approaches are typically based on one
or  more  high-density Application Specific Integrated Circuit ("ASIC") devices,
which  are  custom  made and have a fixed function that cannot be modified. ASIC
devices have 12-18 month design cycles and production cycles and require lengthy
redesign  to  modify  platform  features  and  performance.  We  have  developed
proprietary  software  to  run  on  our  hardware  platform  that  provides  a
differentiated  Layer  7  switching  and  network  management  solution.

     The  solution  to this problem of efficient network management is the smart
routing Layer 7 switch. This device can become an indispensable component of the
enterprise or service provider network infrastructure by increasing performance,
security,  availability and scalability at the software application level. These
Layer  7  switches have broad applications in large markets and are projected to
proliferate  in  wireline and wireless uses within private enterprise and public
networks.

     Our  hardware  and  software  development  started in mid-2000 as a part of
Milan  Technology  ("Milan"),  an operating division of Digi International, Inc.
("Digi").  In  March 2002, Digi completed the sale of its Milan division, opting
to  spin  out  the  PNI  product  line  into  a  separate  corporation.

     Under  the  leadership  of  Douglas  Glader,  Digi's former Chief Operating
Officer,  coupled  with  some  initial  support  from  Digi,  a  core team of 23
individuals  left  Milan to create PNI. On September 19, 2003, PNI purchased all
intellectual  property  previously owned by Digi. See "DESCRIPTION OF BUSINESS -
Intellectual  Property".


                                        3
<PAGE>
OUR  PRODUCTS

     We  have  recently  brought  to  market  the  Procera  MLS-XP,  our  unique
non-blocking,  Layer  7  switch and network management system. The MLS-XP allows
network  administrators to control, monitor and secure network traffic with very
high  levels  of  speed,  specificity,  granularity,  accuracy  and  ease.

     We  are  currently  shipping  MLS-XP  switches  with  Layer  7 software for
security  (content  control),  quality of service ("QoS") (packet shaping), flow
metering  and  surveillance.  A  feature enhancement software release for MLS-XP
should  be  delivered in the first quarter of 2004. A new RDS switch platform is
in  development  for  the  second  quarter  of  2004  that  will  have  feature
enhancements  to  address  service  provider  markets.

     Additional  products  currently  in  design include MLS switches to support
Gigabit  Ethernet,  security  products  and  complimentary  networking  software
applications.

     If  we  successfully  establish  ourselves in our initial target markets of
small  and  mid-size  companies,  we plan to introduce additional products which
target  other  applications, including a family of next generation chassis-class
products  that  will  address  higher  performance requirements including larger
corporate enterprise and metropolitan area network (MAN) content-based switching
applications.  Building upon the solid foundation of our existing technology and
designs,  our  product  additional line is intended to deliver scalability, very
high port density, and possibly as much as two times the current market leaders'
speed,  at  the  price of current Layer 3 and Layer 4 products, while delivering
advanced  Layer 7 functionality. We are also designing a variety of form factors
and  interfaces (such as OC-3/12/48/VC, T1, DSL, 10G Ethernet) that are suitable
for the large enterprise and carrier markets, and are tailoring our firmware for
a  variety  of  OEM  customers  and  partners.

APPLICATIONS  OF  OUR  TECHNOLOGY

     Our  technology  can  be  applied  to  a  wide  range of data switching and
management  applications, but we are initially focusing on two applications that
we  believe  offer  significant  near term revenue opportunity: Network Attached
Storage  (NAS)  and  e-mail/message  archiving  for  both wire-line and wireless
networks.

     NAS  is  a  rapidly  growing  market  that  is  both  competing  with,  and
complementary  to  Storage Area Networks (SAN), as businesses, universities, and
government  agencies  strive  to  store  and  manage  an  increasing  volume  of
information.  Our  technology  improves the performance of NAS devices, improves
the  security  of  NAS  traffic,  and lowers the total cost of the NAS solution,
making  NAS  a  highly attractive solution compared to expensive and complex SAN
installations.

     E-mail  and  message  archiving  is a specific storage application that has
quickly  emerged as a critical need. In addition to conventional e-mail traffic,
instant  messages  (IMs),  SMS/MMS  cellular text messages, and wireless e-mail,
e-mail  and  message archiving may need to be monitored and properly indexed and
archived.  Our  technology  provides  a  scalable,  high  performance e-mail and
message  archiving solution that can be installed in both wire-line and wireless
LANs  and  WANs,  as  well  as  in cellular telephone networks. Furthermore, our
technology  enables  the  control, monitoring, and archiving


                                        4
<PAGE>
of  any  message  type  regardless of source or transport method. Current e-mail
archiving  solutions  are  typically  limited to standard e-mail traffic passing
through a company's e-mail server, and cannot effectively archive other types of
messages.

DISTRIBUTION  METHODS

     We currently sell our products directly as well as through distributors and
resellers.  We  plan  to  pursue  OEM agreements and partnerships to deliver our
technology  to  the  marketplace.  Recognizing the difficulty in attacking large
entrenched competitors in the network switch/router market, we will position our
products  as application-specific network appliances that enhance and extend the
capabilities  of  existing  storage,  switching  and  transmission  equipment in
network  installations.  We  believe we can generate revenue growth and help our
OEM partners differentiate their network and storage solutions from competition.
We  have  established  relationships  with  several major OEM's that may provide
significant  revenue  opportunities  within  the  next  6-12  months.

COMPETITION

     The  Layer  2  and  Layer  3  switching  categories  already  have  clearly
established  brand  leaders  such  as  Cisco Systems, Inc., Foundry Networks and
Extreme Networks, Inc. The Layer 2-3 switch market is becoming commoditized. The
Layer  7  space  remains  open  for  new  companies  with  superior products and
performance  to  establish  themselves  as  market  leading  players.

     Our  Layer  7  switch  applications are different from other Layer 7 switch
applications.  Companies  like  Cisco  Systems,  Inc.,  Extreme  Networks, Inc.,
Foundry Networks, Inc., and Alteon (a division of Nortel) provide Layer 7 server
load  balancing  for  data  center  environments. Server load balancing switches
distribute  web  requests  across multiple servers and supply Layer 2-3 switches
with some limited Layer 7 capability. Procera's Layer 7 application switches are
used  for  applications such as security (disallowing certain types of traffic),
rate  limiting,  QoS  (prioritizing  traffic)  and  surveillance (monitoring and
archiving  of email, instant messaging). However, no current competitor provides
a  hardware-based  Layer  7  product  that  performs  all  of these applications
entirely  at wire-speed. This distinction may open up a variety of customers and
markets  to  us,  such  as  the  NAS  controller, message archiving and wireless
markets,  where  the inherent performance limitations and additional overhead of
processor-based  Layer  7  solutions  are  unacceptable.

     There  are  QoS  appliance  companies  who  offer  non-wire-speed,
processor-based, WAN-facing devices that control, prioritize, monitor and report
on  bandwidth  usage.  Packeteer,  Inc. offers a range of products that sell for
significantly  more than Procera's products. Packeteer's products typically have
2  or  3  ports  that  operate  between  a company's firewall and the local area
network  to  provide  quality of service functionality.  Our MLS-XP has 26 ports
and  performs  all  Layer  7  applications  at  wire-speed  on  all  ports.

MANUFACTURING

     We presently outsource the manufacturing of our products to Delta Networks,
located  in the People's Republic of China. By outsourcing such manufacturing to
China,  we  can take advantage of low labor rates existing in China and keep our
own  overhead  low.


                                        5
<PAGE>
INTELLECTUAL  PROPERTY

     PNI's  development team designed and delivered the industry's first Layer 7
switching  and  network  management  product,  and  in  May  2002 filed a patent
application  with  the  U.S.  Patent  and  Trademark  Office.  A  second  patent
application was filed in August 2002. We have filed two patent applications with
a  total  of 101 claims, covering a number of very important ideas and concepts.
For example, one of our patents has a claim protecting the starting and stopping
of policies and network instructions based upon time including the minute, hour,
day,  month  or  year.  The  patent  also contains a claim that protects "packet
shaping  policies" such as determining which software applications have priority
on  the computer network and thereby will load and operate faster than others of
lesser  priority.  The  patent also protects the process of establishing network
policies based upon an analysis of the computer network's traffic and usage. For
example,  our  product  can  instruct  the  network  to  add  information, track
information, delete information or perform other functions based upon the nature
of  the  particular  data  entering  or  leaving  the  computer  network.

     We  currently  require  all employees to sign confidentiality agreements as
well  as  proprietary  information  and  inventions  agreements.

EMPLOYEES

     As of December 31, 2003, we employed 19 people, of which 7 were employed in
engineering,  5 in operations, 3 in sales and marketing, and 4 in management and
administration.  None  of our employees are members of a labor union. We believe
that  relations  with  our  employees  are  good.

RISK  FACTORS

     Any  of the following risks could materially adversely affect our business,
financial  condition, or operating results and could negatively impact the value
of  our  common  stock.


     WE  ARE AN EARLY STAGE COMPANY AND THE PRODUCT OF A RECENT MERGER, AND HAVE
A  LIMITED  OPERATING  HISTORY  ON  WHICH  TO  EVALUATE OUR POTENTIAL FOR FUTURE
SUCCESS.

     We  were  formed as a result of a merger of two separate companies, Procera
Networks,  Inc.,  a  Delaware  corporation  ("PNI")  and  Zowcom, Inc., a Nevada
corporation  ("Zowcom"),  in  October  2003,  and  to  date have only one fiscal
quarter  of  combined  operations.  In  addition, both Zowcom and PNI had only a
limited  operating  history  prior  to  the  merger.  Therefore,  we have only a
limited  operating  history  upon  which  you  can  evaluate  our  business  and
prospects,  and  we  have  yet to develop sufficient experience regarding actual
revenues  to  be  received  from  our  combined  operations.

     We  have only recently launched many of the products and services described
herein  and  therefore  are a start-up company.  You must consider the risks and
uncertainties frequently encountered by early stage companies in new and rapidly
evolving  markets.  If  we  are  unsuccessful  in  addressing


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<PAGE>
these risks and uncertainties, our business, results of operations and financial
condition  will  be  materially  and  adversely  affected.

     WE  EXPECT  LOSSES  FOR  A  PERIOD  OF  TIME.

     For  the  year  ended  December  31, 2003, we had losses from operations of
$2,898,155. We will continue to incur losses from operations for the foreseeable
future.  These  losses  will  result  primarily  from  costs  related to product
development  and  substantial sales and marketing expenses. In addition, we plan
to  invest heavily in marketing and promotion, to hire additional employees, and
to  enhance  our  network  content and management technologies. We believe these
expenditures  are  necessary  to  build  and  maintain  hardware  and  software
technology  and to penetrate the markets for our products. If our revenue growth
is  slower than we anticipate or our operating expenses exceed our expectations,
our  losses  will  be significantly greater. We may never achieve profitability.

     IF  THE  REGISTRATION  STATEMENT  THAT  WE  FILED ON JANUARY 8, 2004 IS NOT
DECLARED  EFFECTIVE  BY  JUNE 6, 2004, WE WILL NOT RECEIVE THE SECOND TRANCHE OF
FUNDING  FROM  OUR  DECEMBER  2003  PRIVATE  PLACEMENT.

     The  shares registered for resale in the registration statement filed by us
on  January  8,  2004  include  shares  to  be  issued to certain of the selling
stockholders  upon  the exercise of special warrants (the "Special Warrants") on
the effective date of the registration statement. Under the terms of the Special
Warrants,  the  form  of  which  is  included  as an exhibit to the registration
statement,  the  investors  from  the December private offering are committed to
purchasing  an  aggregate  of  1,086,250 shares of our common stock at $2.00 per
share,  provided  that  the  registration statement is declared effective by the
Securities  and  Exchange Commission ("SEC") on or before June 6, 2004. Provided
that  the  registration  statement is declared effective by the SEC on or before
June  6,  2004,  those  investors  will  also  receive  warrants  to purchase an
aggregate of 1,086,250 additional shares of common stock at an exercise price of
$2.00  per  share.  In the event that the registration statement is not declared
effective  on  or  before  June  6,  2004,  the selling stockholders will not be
obligated  to exercise the Special Warrants and we will not receive the proceeds
therefrom.  The  loss  of these proceeds could have a material adverse impact on
our  financial  condition  and  business  prospects.

     WE  MAY  NEED  FURTHER  CAPITAL.

     Based  on  current  reserves and anticipated cash flow from operations, and
assuming  we  receive  the  proceeds  from  the  Special  Warrants, we currently
anticipate  that  the available funds will be sufficient to meet our anticipated
needs  for  working  capital, capital expenditures and business expansion for 12
months.  Thereafter,  we  will  need  to  raise additional funds.  If any of our
assumptions  is  incorrect,  we  may  need to raise capital before the end of 12
months.  If  additional  funds  are  raised  through  the  issuance of equity or
convertible  debt  securities, the percentage ownership of our stockholders will
be  reduced, stockholders may experience additional dilution and such securities
may have rights, preferences and privileges senior to those of our common stock.
There  can  be no assurance that additional financing will be available on terms
favorable  to  us  or  at  all.  If  adequate funds are not available or are not
available  on  acceptable  terms,  we  may  not  be able to fund expansion, take
advantage  of  unanticipated  acquisition  opportunities,  develop  or  enhance
services  or products or respond to


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<PAGE>
competitive  pressures.  Such  inability could have a material adverse effect on
our  business,  results  of  operations  and  financial  condition.

     YOUR  HOLDINGS  MAY  BE  DILUTED  IN  THE  FUTURE.

     We are authorized to issue up to 50,000,000 shares of common stock.  To the
extent  of  such  authorization,  our  Board of Directors will have the ability,
without seeking stockholder approval, to issue additional shares of common stock
in  the  future  for  such  consideration as our Board of Directors may consider
sufficient.  The  issuance  of additional common stock in the future will reduce
the  proportionate  ownership  and  voting  power  of  our  common stock held by
existing  stockholders.  At  December  31, 2003, there were 22,572,156 shares of
common  stock outstanding, warrants to purchase 3,444,588 shares of common stock
outstanding,  rights  to  purchase  575,000  shares  of common stock and special
warrants  to  purchase  1,086,250  shares  of  common  stock  outstanding, whose
exercise  could  have  a substantial dilutive effect on the common stock held at
the  time  of  conversion.  The  designation and issuance of series of preferred
stock  in the future would create additional securities that would have dividend
and  liquidation  preferences  over  our  common  stock.

     COMPETITION  FOR  EXPERIENCED  PERSONNEL  IS  INTENSE  AND OUR INABILITY TO
ATTRACT  AND  RETAIN  QUALIFIED  PERSONNEL  COULD  SIGNIFICANTLY  INTERRUPT  OUR
BUSINESS  OPERATIONS.

     Our  future success will depend, to a significant extent, on the ability of
our  management  to  operate  effectively,  both  individually  and  as  a group
subsequent  to  our recent merger.  Given our early stage of development, we are
dependent  on  our  ability  to  attract,  retain  and motivate high caliber key
personnel.  We  have  recently  expanded  our  sales  force, and we are actively
searching  for  systems  engineers, research and development engineers and sales
and  marketing  personnel, all of whom are in short supply.  We currently have a
small indirect channel partner and end-user service and support organization and
will need to increase our staff to support new indirect channel partners and end
users  and  the  expanding  needs  of existing indirect channel partners and end
users.  Additionally,  we  rely  on  qualified systems engineers and service and
support  personnel  to  provide  pre-  and  post-sales technical support for our
products.  Competition  for  qualified  personnel  in  the  networking industry,
including  systems  engineers,  sales  and  service  and  support  personnel, is
intense,  and  we  may  not  be  successful  in  attracting  and  retaining such
personnel.  There  may  be  only  a limited number of persons with the requisite
skills  to serve in these key positions and it may become increasingly difficult
to hire such persons.  Our business will suffer if we encounter delays in hiring
these  additional  personnel.

     Our performance is substantially dependent on the continued services and on
the  performance of our executive officers and other key employees, particularly
Douglas J. Glader, our Chief Executive Officer.  The loss of the services of any
of our executive officers or key employees could materially and adversely affect
our  business.  Additionally,  we  believe  we  will need to attract, retain and
motivate  talented  management  and  other  highly  skilled  employees  to  be
successful.  We may be unable to retain our key employees or attract, assimilate
and  retain  other  highly  qualified  employees  in the future. Competitors and
others  have in the past and may in the future attempt to recruit our employees.
We  do  not  have  employment  contracts  with  any  of  our  personnel.


                                        8
<PAGE>
     WE  MAY BE UNABLE TO COMPETE EFFECTIVELY WITH OTHER COMPANIES IN OUR MARKET
SECTOR  WHO ARE SUBSTANTIALLY LARGER AND MORE ESTABLISHED AND HAVE SIGNIFICANTLY
GREATER  RESOURCES  THAN  OUR  COMPANY.

     We  compete in a new, rapidly evolving and highly competitive sector of the
networking technology market.  We expect competition to persist and intensify in
the  future  from  a  number  of different sources.  Increased competition could
result  in  reduced  prices and gross margins for our products and could require
increased  spending  by  us on research and development, sales and marketing and
customer  support,  any of which could harm our business.  We compete with Cisco
Systems,  Inc.,  Packeteer,  Inc.,  Foundry Networks, Inc. and Extreme Networks,
Inc., which sell products incorporating competing technologies.  We also compete
with  several  small  private  companies  that utilize competing technologies to
provide  bandwidth management.  In addition, our products and technology compete
for  information  technology  budget  allocations  with  products  that  offer
monitoring  capabilities,  such as probes and related software.  Lastly, we face
indirect competition from companies that offer enterprises and service providers
increased  bandwidth  and  infrastructure upgrades that increase the capacity of
their  networks,  which  may  lessen  or delay the need for bandwidth management
solutions.

     Many  of  our  competitors  are  substantially  larger than we are and have
significantly  greater  financial, sales and marketing, technical, manufacturing
and  other  resources  and  more  established  distribution  channels.  These
competitors  may be able to respond more rapidly to new or emerging technologies
and  changes  in  customer  requirements  or  devote  greater  resources  to the
development,  promotion  and  sale  of  their  products  than  we  can.  We have
encountered,  and  expect to encounter, customers who are extremely confident in
and  committed to the product offerings of our competitors. Furthermore, some of
our  competitors  may  make  strategic  acquisitions  or  establish  cooperative
relationships  among  themselves or with third parties to increase their ability
to  rapidly  gain  market  share  by  addressing  the  needs  of our prospective
customers.  These  competitors  may  enter  our  existing or future markets with
solutions  that  may be less expensive, provide higher performance or additional
features  or  be  introduced  earlier  than  our  solutions.  Given  the  market
opportunity  in  the  bandwidth management solutions market, we also expect that
other companies may enter our market with alternative products and technologies,
which  could reduce the sales or market acceptance of our products and services,
perpetuate  intense  price  competition  or  make our products obsolete.  If any
technology  that  is  competing  with  ours  is or becomes more reliable, higher
performing, less expensive or has other advantages over our technology, then the
demand  for  our  products  and  services  would  decrease, which would harm our
business.

     THE PROCERA FAMILY OF PRODUCTS IS CURRENTLY OUR ONLY SUITE OF PRODUCTS, AND
ALL  OF  OUR  CURRENT  REVENUES  AND  A SIGNIFICANT PORTION OF OUR FUTURE GROWTH
DEPENDS  ON  THEIR  COMMERCIAL  SUCCESS.

     All  of our current revenues and a significant portion of our future growth
depend  on  the commercial success of our family of products, which are the only
products  that  we currently offer. If our target customers do not widely adopt,
purchase  and  successfully deploy the Procera switching family of products, our
revenues  will  not  grow  significantly.


                                        9
<PAGE>
     THE  MARKET  IN WHICH WE COMPETE IS SUBJECT TO RAPID TECHNOLOGICAL PROGRESS
AND  TO  COMPETE  WE  MUST CONTINUALLY INTRODUCE NEW PRODUCTS THAT ACHIEVE BROAD
MARKET  ACCEPTANCE.

     The  network  equipment  market  is  characterized  by  rapid technological
progress,  frequent  new product introductions, changes in customer requirements
and  evolving  industry standards. If we do not regularly introduce new products
in  this  dynamic  environment,  our  product  lines  will  become  obsolete.
Developments  in  routers  and  routing software could also significantly reduce
demand  for  our  products.  Alternative  technologies  could achieve widespread
market acceptance and displace the technology on which we have based our product
architecture.  We cannot assure you that our technological approach will achieve
broad  market acceptance or that other technologies or devices will not supplant
our  own  products  and  technology.

     IF  THE  BANDWIDTH  MANAGEMENT SOLUTIONS MARKET FAILS TO GROW, OUR BUSINESS
WILL  FAIL.

     The  market  for  bandwidth  management  solutions  is in an early stage of
development  and its success is not guaranteed.  Therefore, we cannot accurately
assess  the  size  of the market, the products needed to address the market, the
optimal distribution strategy, or the competitive environment that will develop.
In  order  for  us  to be successful, our potential customers must recognize the
value  of more sophisticated bandwidth management solutions, decide to invest in
the  management  of  their  networks  and  the performance of important business
software  applications  and,  in  particular,  adopt  our  bandwidth  management
solutions.  The growth of the bandwidth management solutions market also depends
upon  a  number of factors, including the availability of inexpensive bandwidth,
especially  in  international  markets,  and  the  growth of wide area networks.

     FUTURE  PERFORMANCE  WILL  DEPEND ON THE INTRODUCTION AND ACCEPTANCE OF NEW
PRODUCTS.

     Our  future  performance  will  also  depend on the successful development,
introduction  and  market  acceptance  of new and enhanced products that address
customer  requirements  in  a timely and cost-effective manner.  In the past, we
have  experienced delays in product development and such delays may occur in the
future.  The  introduction  of new and enhanced products may cause our customers
to  defer  or  cancel  orders  for  existing products.  Therefore, to the extent
customers defer or cancel orders in the expectation of new product releases, any
delay  in  the  development  or  introduction  of  new  products could cause our
operating  results  to suffer.  The inability to achieve and maintain widespread
levels  of  market  acceptance  for  our  current  and  future  products  may
significantly  impair  our  revenue  growth.

     INTRODUCTION  OF OUR NEW PRODUCTS MAY CAUSE CUSTOMERS TO DEFER PURCHASES OF
OUR  EXISTING  PRODUCTS  WHICH  COULD  HARM  OUR  OPERATING  RESULTS

     When  we  announce  new  products  or  product  enhancements  that have the
potential  to  replace  or  shorten  the  life  cycle  of our existing products,
customers  may  defer purchasing our existing products. These actions could harm
our operating results by unexpectedly decreasing sales, increasing our inventory
levels  of  older  products  and  exposing  us  to  greater  risk  of  product
obsolescence.


                                       10
<PAGE>
     IF  WE  ARE  UNABLE  TO  EFFECTIVELY  MANAGE  OUR GROWTH, WE MAY EXPERIENCE
OPERATING  INEFFICIENCIES  AND  HAVE DIFFICULTY MEETING DEMAND FOR OUR PRODUCTS.

     We  have  rapidly  and significantly expanded our operations and anticipate
that  further significant expansion will be required to address potential growth
in  our  customer  base  and market opportunities.  This expansion could place a
significant strain on our management, products and support operations, sales and
marketing  personnel  and  other  resources,  which  could  harm  our  business.

     In  the  future,  we may experience difficulties meeting the demand for our
products  and  services.  The  installation  and  use  of  our products requires
training. If we are unable to provide training and support for our products, the
implementation  process  will  be longer and customer satisfaction may be lower.
In  addition, our management team may not be able to achieve the rapid execution
necessary  to fully exploit the market for our products and services.  We cannot
assure  you that our systems, procedures or controls will be adequate to support
the  anticipated  growth  in  our  operations.

     We may not be able to install management information and control systems in
an  efficient  and timely manner, and our current or planned personnel, systems,
procedures  and  controls  may not be adequate to support our future operations.

     OUR LIMITED ABILITY TO PROTECT OUR INTELLECTUAL PROPERTY AND DEFEND AGAINST
CLAIMS  MAY  ADVERSELY  AFFECT  OUR  ABILITY  TO  COMPETE.

     We  rely  on a combination of patent, copyright, trademark and trade secret
laws and restrictions on disclosure to protect our intellectual property rights.
However,  we  cannot  assure  you that the actions we have taken will adequately
protect  our  intellectual  property  rights  or  that  other  parties  will not
independently  develop similar or competing products that do not infringe on our
patents.  We  enter  into  confidentiality  or  license  agreements  with  our
employees,  consultants  and  corporate  partners,  and  control  access  to and
distribution  of  our software, documentation and other proprietary information.
Despite  our efforts to protect our proprietary rights, unauthorized parties may
attempt  to  copy or otherwise misappropriate or use our products or technology.

     Our industry is characterized by the existence of a large number of patents
and  frequent  claims  and  related  litigation  regarding  patent  and  other
intellectual  property  rights.  If  we  are  found  to infringe the proprietary
rights  of  others, or if we otherwise settle such claims, we could be compelled
to  pay  damages  or royalties and either obtain a license to those intellectual
property  rights or alter our products so that they no longer infringe upon such
proprietary rights.  Any license could be very expensive to obtain or may not be
available  at  all.  Similarly,  changing  our  products  or  processes to avoid
infringing  the  rights  of  others  may  be  costly or impractical.  Litigation
resulting  from  claims  that we are infringing the proprietary rights of others
could result in substantial costs and a diversion of resources, and could have a
material  adverse  effect  on  our  business, financial condition and results of
operations.


                                       11
<PAGE>
     OUR  DEPENDENCE  ON  CONTRACT  MANUFACTURERS  FOR  SUBSTANTIALLY ALL OF OUR
MANUFACTURING  REQUIREMENTS  COULD  HARM  OUR  OPERATING  RESULTS.

     If the demand for our products grows, we will need to increase our material
purchases,  contract  manufacturing  capacity,  and  internal  test  and quality
functions.  Any  disruptions  in product flow could limit our revenue, adversely
affect  our  competitive position and reputation, and result in additional costs
or  cancellation  of  orders  under  agreements  with  our  customers.

     We  rely  on independent contractors to manufacture our products. We do not
have  long-term  contracts  with  any  of these manufacturers. Delays in product
shipments from contract manufacturers are not unusual. Similar or other problems
may  arise  in  the  future,  such as inferior quality, insufficient quantity of
products, or the interruption or discontinuance of operations of a manufacturer,
any  of which could have a material adverse effect on our business and operating
results.

     We  do  not  know  whether  we  will  effectively  manage  our  contract
manufacturers  or that these manufacturers will meet our future requirements for
timely  delivery  of  products  of sufficient quality and quantity. We intend to
transition  the  manufacture  of  some  of  our  products  from  one  contract
manufacturer  to another. We also intend to regularly introduce new products and
product  enhancements,  which  will  require  that  we  rapidly  achieve  volume
production  by coordinating our efforts with those of our suppliers and contract
manufacturers.  The  inability  of our contract manufacturers to provide us with
adequate  supplies  of  high-quality  products  or  a reduction in the number of
contract  manufacturers  may  cause a delay in our ability to fulfill orders and
may  have  a  material  adverse  effect  on  our business, operating results and
financial  condition.

     As  part  of  our cost-reduction efforts, we will need to realize lower per
unit  product  costs  from  our  contract  manufacturers  by  means  of  volume
efficiencies  and  the  utilization  of  manufacturing  sites  in  lower-cost
geographies. However, we cannot be certain when or if such price reductions will
occur.  The  failure  to obtain such price reductions would adversely affect our
gross  margins  and  operating  results.

     IF  OUR  PRODUCTS  CONTAIN UNDETECTED SOFTWARE OR HARDWARE ERRORS, WE COULD
INCUR  SIGNIFICANT  UNEXPECTED  EXPENSES  AND  LOSE  SALES.

     Network  products frequently contain undetected software or hardware errors
when  new  products  or  new  versions or updates of existing products are first
released  to  the  marketplace.  In the past, we have experienced such errors in
connection  with  new products and product upgrades.  We expect that such errors
or  component  failures  will be found from time to time in the future in new or
existing  products,  including  the  components  incorporated therein, after the
commencement of commercial shipments. These problems may have a material adverse
effect  on  our  business by causing us to incur significant warranty and repair
costs,  diverting  the  attention  of our engineering personnel from new product
development efforts, delaying the recognition of revenue and causing significant
customer  relations  problems.  Further,  if  our  product  is  not  accepted by
customers  due  to  defects,  and  such returns exceed the amount we accrued for
defect  returns  based on our historical experience, our operating results would
be  adversely  affected.


                                       12
<PAGE>
     Our  products  must  successfully  interoperate  with  products  from other
vendors.  As  a  result,  when  problems  occur  in a computer or communications
network,  it  may  be  difficult  to identify the sources of these problems. The
occurrence  of  hardware  and  software  errors,  whether  or  not caused by our
products, could result in the delay or loss of market acceptance of our products
and  any  necessary  revisions  may  cause us to incur significant expenses. The
occurrence  of  any such problems would likely have a material adverse effect on
our  business,  operating  results  and  financial  condition.

     WE EXPECT THE AVERAGE SELLING PRICES OF OUR PRODUCTS TO DECREASE, WHICH MAY
REDUCE  GROSS  MARGIN  OR  REVENUE.

     The  network  equipment  industry  has  traditionally  experienced  a rapid
erosion  of  average  selling  prices  due  to  a  number  of factors, including
competitive pricing pressures, promotional pricing, technological progress and a
slowdown  in  the economy that has resulted in excess inventory and lower prices
as companies attempt to liquidate this inventory. We anticipate that the average
selling  prices  of  our  products  will  decrease  in the future in response to
competitive pricing pressures, excess inventories, increased sales discounts and
new  product  introductions  by  us  or  our  competitors.  We  may  experience
substantial  decreases  in  future  operating  results due to the erosion of our
average  selling  prices.  Competitive  pressures  are expected to increase as a
result  of the industry slowdown that began at the end of 2000, coupled with the
slow  recover  of  the  broader  economy.

     SOME OF OUR CUSTOMERS MAY NOT HAVE THE RESOURCES TO PAY FOR OUR PRODUCTS AS
A  RESULT  OF  THE  CURRENT  ECONOMIC  ENVIRONMENT.

     With  the  current economic slowdown, some of our customers are forecasting
that  their  revenue  for  the  foreseeable  future will generally be lower than
originally  anticipated. Some of these customers are experiencing, or are likely
to experience, serious cash flow problems and, as a result, find it increasingly
difficult  to  obtain  financing,  if at all. If some of these customers are not
successful  in  generating  sufficient  revenue  or securing alternate financing
arrangements, they may not be able to pay, or may delay payment for, the amounts
that  they  owe  us. Furthermore, they may not order as many products from us as
forecast,  or  cancel  orders  with  us  entirely.  The inability of some of our
potential  customers  to  pay  us for our products may adversely affect our cash
flow, the timing of our revenue recognition and the amount of revenue, which may
cause  our  stock  price  to  decline.

     LEGISLATIVE  ACTIONS,  HIGHER  INSURANCE COSTS AND POTENTIAL NEW ACCOUNTING
PRONOUNCEMENTS ARE LIKELY TO IMPACT OUR FUTURE FINANCIAL POSITION AND RESULTS OF
OPERATIONS.

     Recent  regulatory  changes,  including the Sarbanes-Oxley Act of 2002, and
future  accounting pronouncements and regulatory changes, will have an impact on
our  future  financial  position  and  results  of operations. These changes and
proposed  legislative  initiatives  are  likely  to  increase  our  general  and
administrative  costs.  In addition, insurance costs, including health, workers'
compensation  and  directors  and  officers'  insurance  premiums,  have  been
dramatically  increasing  and  likely to continue to increase in the future as a
result  of  high  claims rates over the past year. Further, proposed initiatives
could  result  in  changes  in accounting rules, including legislative and other
proposals  to  account for employee stock options as an expense. These and other
potential  changes  could  materially  increase  the  expenses  we  report under
generally  accepted  accounting  principles,  and adversely affect our operating
results.


                                       13
<PAGE>
     OUR  PRODUCTS  MUST  COMPLY  WITH  EVOLVING  INDUSTRY STANDARDS AND COMPLEX
GOVERNMENT  REGULATIONS  OR  ELSE OUR PRODUCTS MAY NOT BE WIDELY ACCEPTED, WHICH
MAY  PREVENT  US  FROM  GROWING  OUR  NET  REVENUE  OR  ACHIEVING PROFITABILITY.

     The  market  for network equipment products is characterized by the need to
support  industry  standards  as  different standards emerge, evolve and achieve
acceptance.  We  will  not  be  competitive  unless we continually introduce new
products  and  product  enhancements  that meet these emerging standards. In the
past,  we  have  introduced  new  products that were not compatible with certain
technological  standards,  and  in  the future we may not be able to effectively
address  the compatibility and interoperability issues that arise as a result of
technological  changes and evolving industry standards. Our products must comply
with  various United States federal government regulations and standards defined
by  agencies  such  as  the  Federal  Communications  Commission, in addition to
standards  established  by governmental authorities in various foreign countries
and  recommendations  of the International Telecommunication Union. If we do not
comply  with  existing  or  evolving  industry standards or if we fail to obtain
timely  domestic  or foreign regulatory approvals or certificates we will not be
able  to sell our products where these standards or regulations apply, which may
prevent  us  from  sustaining  our  net  revenue  or  achieving  profitability.

     FAILURE  TO SUCCESSFULLY EXPAND OUR SALES AND SUPPORT TEAMS OR EDUCATE THEM
IN  REGARD  TO  TECHNOLOGIES  AND  OUR  PRODUCT  FAMILIES MAY HARM OUR OPERATING
RESULTS.

     The  sale  of our products and services requires a concerted effort that is
frequently  targeted  at  several  levels  within  a  prospective  customer's
organization.  We  may  not be able to increase net revenue unless we expand our
sales  and  support  teams  in order to address all of the customer requirements
necessary  to  sell  our  products.

     We  cannot  assure  you  that  we  will  be  able to successfully integrate
employees  into our company or to educate current and future employees in regard
to  rapidly  evolving  technologies and our product families. A failure to do so
may  hurt  our  revenue  growth  and  operating  results.

     WE  MUST  CONTINUE TO DEVELOP AND INCREASE THE PRODUCTIVITY OF OUR INDIRECT
DISTRIBUTION CHANNELS TO INCREASE NET REVENUE AND IMPROVE OUR OPERATING RESULTS.

     Our  distribution  strategy  focuses primarily on developing and increasing
the  productivity  of  our  indirect distribution channels through resellers and
distributors. If we fail to develop and cultivate relationships with significant
resellers,  or  if  these  resellers  are not successful in their sales efforts,
sales  of our products may decrease and our operating results could suffer. Many
of  our  resellers  also  sell products from other vendors that compete with our
products.  We  cannot  assure  you that we will be able to enter into additional
reseller  and/or distribution agreements or that we will be able to successfully
manage  our  product  sales channels. Our failure to do any of these could limit
our  ability to grow or sustain revenue. In addition, our operating results will
likely fluctuate significantly depending on the timing and amount of orders from
our  resellers. We cannot assure you that our resellers and/or


                                       14
<PAGE>
distributors  will  continue  to  market  or  sell  our  products effectively or
continue  to  devote the resources necessary to provide us with effective sales,
marketing  and  technical  support.

     OUR  HEADQUARTERS  ARE  LOCATED  IN NORTHERN CALIFORNIA WHERE DISASTERS MAY
OCCUR  THAT  COULD  DISRUPT  OUR  OPERATIONS  AND  HARM  OUR  BUSINESS.

     Our  corporate  headquarters  are  located  in  Silicon  Valley in Northern
California.  Historically,  this region has been vulnerable to natural disasters
and  other  risks,  such as earthquakes, which at times have disrupted the local
economy  and  posed  physical  risks  to  our  and  our manufacturers' property.

     In  addition,  terrorist acts or acts of war targeted at the United States,
and  specifically  Silicon  Valley,  could cause damage or disruption to us, our
employees,  facilities,  partners,  suppliers,  distributors  and resellers, and
customers,  which  could  have  a  material adverse effect on our operations and
financial  results.  We  currently do not have redundant, multiple site capacity
in  the  event of a natural disaster or catastrophic event. In the event of such
an  occurrence,  our  business  would  suffer.

     ACQUISITIONS  MAY  DISRUPT  OR  OTHERWISE  HAVE  A  NEGATIVE  IMPACT ON OUR
BUSINESS.

     We  may  acquire or make investments in complementary businesses, products,
services  or  technologies  on  an opportunistic basis when we believe they will
assist us in carrying out our business strategy. Growth through acquisitions has
been  a  successful  strategy  used  by  other  network  control  and management
technology  companies.  We  do  not  have  any present understanding, nor are we
having any discussions relating to any such acquisition or investment. If we buy
a  company,  then  we  could  have  difficulty  in  assimilating  that company's
personnel  and  operations.  In  addition,  the  key  personnel  of the acquired
company  may  decide  not  to  work  for  us.  An acquisition could distract our
management and employees and increase our expenses.  Furthermore, we may have to
incur  debt  or  issue equity securities to pay for any future acquisitions, the
issuance  of  which  could  be  dilutive  to  our  existing  shareholders.

     ANTI-TAKEOVER  PROVISIONS AND OUR RIGHT TO ISSUE PREFERRED STOCK COULD MAKE
A  THIRD-PARTY  ACQUISITION  OF  US  DIFFICULT.

     We  are  a Nevada corporation. Anti-takeover provisions of Nevada law could
make  it more difficult for a third party to acquire control of us, even if such
change  in  control  would  be  beneficial  to  stockholders.  Our  articles  of
incorporation  provide  that  our  Board  of Directors may issue preferred stock
without  stockholder  approval.  The  issuance  of preferred stock could make it
more  difficult  for  a  third  party to acquire us.  All of the foregoing could
adversely  affect  prevailing  market  prices  for  our  common  stock.

     OUR  COMMON  STOCK  PRICE  IS  LIKELY  TO  BE  HIGHLY  VOLATILE.

     The market price of our common stock is likely to be highly volatile as the
stock  market  in general, and the market for small cap and micro cap technology
companies in particular, has been highly volatile.  Investors may not be able to
resell  their shares of our common stock following periods of volatility because
of  the  market's adverse reaction to volatility.  We cannot assure you that our
stock  will


                                       15
<PAGE>
trade  at  the  same levels of other stocks in our industry or that our industry
stocks  in  general will sustain their current market prices. Factors that could
cause  such  volatility  may  include,  among  other  things:

-    actual  or  anticipated  fluctuations  in  our quarterly operating results;
-    announcements  of  technological  innovations;
-    changes  in  financial  estimates  by  securities  analysts;
-    conditions  or  trends  in  the  network  control  and management industry;
-    changes  in the market valuations of other such industry related companies;
     and
-    the  acceptance of market makers and institutional investors of the Company
     and  our  stock.

     In  addition  our stock is currently traded on the NASD O-T-C Market and it
is  uncertain  that  we  will  be  able to successfully apply for listing on the
American  Stock Exchange or the NASDAQ National Market or SmallCap market in the
foreseeable  future  due  to  the  trading  price  for  our Common Stock, market
capitalization,  our  working  capital and revenue history.  Failure to list our
shares  on  the American Stock Exchange or the National or SmallCap Markets will
impair  the  liquidity  for  our  common  stock.

     SHARES  ELIGIBLE  FOR FUTURE SALE BY OUR CURRENT STOCKHOLDERS MAY ADVERSELY
AFFECT  OUR  STOCK  PRICE.

     To date, we have had a very limited trading volume in our common stock. Our
registration  statement  filed  by us on January 8, 2004 and amended on March 1,
2004  includes  the  registration  of  10,243,753 shares of our common stock for
resale  by  certain selling stockholders. Sales of substantial amounts of common
stock,  including  shares  issued  upon  the exercise of outstanding options and
warrants,  under  Securities and Exchange Commission Rule 144 or otherwise could
adversely  affect  the  prevailing  market  price  of our common stock and could
impair  our  ability  to  raise  capital  at  that  time through the sale of our
securities.  See  "Market  For  Common  Equity and Related Stockholder Matters".

     ADDITIONAL SHARES HELD BY EXISTING STOCKHOLDERS MAY BE SOLD INTO THE PUBLIC
MARKET  IN  THE  FUTURE,  WHICH  MAY  CAUSE  OUR  STOCK  PRICE  TO  DECLINE.

     Sales  of  a substantial number of shares of common stock after the date of
this  report  could  adversely  affect  the market price of our common stock and
could  impair our ability to raise capital through the sale of additional equity
securities.  As  of December 31, 2003, we have 22,622,156 shares of common stock
outstanding.

ITEM  2.     DESCRIPTION  OF  PROPERTY

     Our  headquarters are located at 3175 South Winchester Boulevard, Campbell,
California,  95008.  We  have a twelve-month lease through June 30, 2004 and the
rent  is  $6,832 per month for 4,532 square feet. We believe that our facilities
are  adequate for our needs and that additional suitable space will be available
on  acceptable  terms  as  required.

ITEM  3.     LEGAL  PROCEEDINGS

     None.


                                       16
<PAGE>
ITEM  4.     SUBMISSION  OF  MATTERS  TO  A  VOTE  OF  SECURITY  HOLDERS

     On  September  29,  2003,  Zowcom submitted a Definitive Proxy Statement on
Form DEFM14A requesting stockholders to approve the Agreement and Plan of Merger
between  Zowcom  and  PNI  and the change of the name of the company to "Procera
Networks, Inc."(the "Merger") during the special meeting of stockholders held on
October  15, 2003. There were a total of 6,345,097 shares of voting common stock
present  at  the meeting by proxy out of 7,610,000 shares of voting common stock
issued  and  outstanding.  Shareholders  voted  6,341,397  shares  in favor of a
proposal  to  merge  with  PNI. A total of 3,700 shares abstained from voting on
this  proposal,  and  no  shares  voted  against  it.


                                     PART II

ITEM  5.     MARKET  FOR  COMMON  EQUITY  AND  RELATED  STOCKHOLDER
             MATTERS

MARKET  FOR  COMMON  EQUITY

     Our  common  stock  is  quoted  on  the OTC Bulletin Board under the symbol
"PRNW".  Our  common  stock has been traded on the OTC Bulletin Board since June
24,  2003.  Prior  to that date, our common stock was not actively traded in the
public  market.  For  the  periods indicated, the following table sets forth the
high  and  low  bid  prices  per share of common stock as stated in the Over the
Counter  Bulletin  Board  Quarterly  Trade and Quote Summary Report for the year
ended  December 31, 2003. These prices represent inter-dealer quotations without
retail  markup, markdown, or commission and may not necessarily represent actual
transactions.

<TABLE>
<CAPTION>
                                                           HIGH BID   LOW BID
                                                           ---------  --------
<S>                                                        <C>        <C>
First Quarter 2003                                               N/a       N/a
Second Quarter 2003                                        $    1.35  $      0
Third Quarter 2003                                         $    7.55  $   1.17
Fourth Quarter 2003                                        $    7.10  $   2.60
</TABLE>

     On  March  8,  2004, the closing price of our common stock on the OTCBB was
$3.33.

HOLDERS

As  of  December 31, 2003, we had approximately 101 holders of our common stock.
The  number  of  record  holders was determined from the records of our transfer
agent  and  does  not include beneficial owners of common stock whose shares are
held  in the names of various security brokers, dealers, and registered clearing
agencies.  The  transfer  agent  of  our  common stock is Pacific Stock Transfer
Company,  500  East  Warm  Springs  Road,  Suite  240,  Las Vegas, Nevada 89119.

DIVIDEND  POLICY

     We  have  not  declared  or  paid any cash dividends on our common stock or
other  securities  and  do  not  anticipate  paying  any  cash  dividends in the
foreseeable  future.  Any  future determination to pay cash dividends will be at
the  discretion  of  the  Board  of  Directors  and  will  be dependent upon our
financial


                                       17
<PAGE>
condition,  results  of operations, capital requirements, and such other factors
as  the  Board  of  Directors  deem  relevant.


ITEM  6.     MANAGEMENT'S  DISCUSSION  AND  ANALYSIS  OF FINANCIAL
             CONDITION AND RESULTS  OF  OPERATIONS

OVERVIEW.

     Procera  Networks,  Inc.  is  a  development  stage  high technology device
company  engaged  in  the  development  and  marketing  of  wire-speed  layer  7
Intelligent  Content  Management  ("ICM")  network  solutions.  Our  MLS Layer 7
application  switch  product  family  provides  wire-speed  switching,  routing,
content  control, flow metering (bandwidth limiting), packet shaping (quality of
service  prioritization),  surveillance (monitoring/archiving of emails, instant
messaging)  for  secure delivery of information and applications across wireless
and  wireline  networks.  In  short, our products enable the computer network to
manage  information  in a more sophisticated manner, thereby increasing employee
and  computer network efficiency and substantially reducing the costs of network
expansion.  Our  hardware/software  solution  presents an affordable opportunity
for medium and small sized enterprises to more efficiently manage their networks
on  an  individual,  end-user basis in order to:  (i) increase efficiency of the
computer  network; (ii) minimize legal liability issues stemming from employees'
use  of  company-provided  computer network for non-business purposes; and (iii)
simplify  the increasing demands on businesses to comply with new laws regarding
data  storage  and  email  archiving.

     We  were  formed  as  a  result of a merger and plan of reorganization (the
"Merger") between Zowcom, Inc. ("Zowcom") and Procera Networks, Inc., a Delaware
corporation  incorporated  on May 1, 2002.  On October 16, 2003, PNI merged into
Zowcom  in  a  stock-for-stock  transaction.  As  a result of the Merger, Zowcom
continued as the surviving corporation, assumed the operations and business plan
of  PNI,  the  stockholders  of  PNI  became  stockholders of Zowcom, and Zowcom
changed  its  name  to  Procera Networks, Inc. ("PNI") (trading symbol OTC:  BB:
PRNW.OB).   Zowcom  was  incorporated  on  July 11, 2001 and provided customized
websites  and  web-based  planning  services.  It generated less than $10,000 in
revenues  per  year.

     You should read this discussion in conjunction with the selected historical
financial  information  and  the financial statements and related notes included
elsewhere  in  this  report.

     Financial  information  for the period from May 1, 2002 (date of inception)
to  December 31, 2002 is the historical financial information of PNI.  Financial
information  for  the  year  ended December 31, 2003 is the historical financial
information  of  PNI  and  Zowcom  combined.

RESULTS  OF  OPERATIONS  FOR  THE  YEAR  ENDED  DECEMBER  31,  2003   AND  THE
PERIOD  FROM  MAY  1,  2002  (DATE  OF  INCEPTION)  TO  DECEMBER  31,  2002

     From  the  date  of its inception on May 1, 2002 through December 31, 2003,
PNI  has  operated, and will continue to operate through at least the first half
of  2004,  as  a  development  stage  company,  devoting  all of its efforts and
resources  to  developing  and  testing  new  products  and preparing for market
introductions  of  its  products.


                                       18
<PAGE>
SALES.

     Sales  of  $175,368 and $32,085 for the periods ended December 31, 2002 and
December  31,  2003,  respectively, represent amounts received for products sold
for  test  and  evaluation  purposes. Initial revenues from sales of products to
commercial  customers  are  projected to begin in the second quarter of 2004 and
are expected to grow significantly during the second, third, and fourth quarters
of  2004  due  to  the  release of our improved MLS 4.0 software and several new
revisions  of our hardware platform products. We also believe that our increased
marketing  and  sales  efforts  will  increase  our  revenue  during  2004.

GROSS  PROFIT.

     We  incurred  a  loss  of  $29,787  for the period ended December 31, 2003,
compared to a gross profit of $85,493 for the period ended December 31, 2002. We
believe  that our gross profit expected from the sales of products to commercial
customers  during  the  last  nine  months  of 2004 will increase significantly,
provided  our  revenues  grow  as  anticipated.

OPERATING  EXPENSES.

     Operating  expenses  of  $1,517,448 for the period ended December 31, 2002,
which  include  salary  and  benefit  payments  for a staff of 23 employees, are
particularly  low  because:  (a)  PNI was in existence for only eight (8) months
during  2002;  and  (b)  all  employees  were paid only minimum wage salaries of
$2,340  per  month  during  five  (5)  months  of  this  period.

     Operating  expenses  of $2,868,368 for the year ended December 31, 2003 are
lower  than  what  we  expect for future periods for the following reasons:  (a)
all  employees  were paid only minimum wage salaries of $2,340 per month for the
first  three months of 2003; (b) 21 of 23 employees were terminated on March 31,
2003  and  PNI  ceased operations for the months of April and May, 2003; and (c)
only 13 of the 21 terminated employees were re-hired at 70% of expected salaries
in  June  2003  and  PNI  re-started  operations as a development stage company.

     As  of  December  31, 2003, the Company's headcount had increased to 20 and
monthly operating expenses totaled approximately $300,000.  This monthly expense
rate  is  expected  to  continue through the first quarter of 2004 and will then
increase  during  each  of  the  second, third, and fourth quarters, in order to
support  our  projected  business  growth,  reaching a projected monthly expense
level  of  $500,000  by  December  31,  2004.

INTEREST  EXPENSE.

     Interest  expense of $344,599 for the year ended December 31, 2003 included
a  charge of $138,940 for the fair market value of a warrant which was issued to
a  lender  during 2003.  The additional interest expense of  $205,659 related to
the increase in outstanding loan principal from $1,080,000 on January 1, 2003 to
$1,355,000  on  July 31, 2003.  No interest was paid in cash during 2003.  As of
July 31, 2003, all outstanding loan principal of $1,355,000 and accrued interest
of  $258,833  was  converted,  at  the  option  of  all respective lenders, into
3,227,666  shares  of  PNI's  restricted  common  stock.


                                       19
<PAGE>
     During  the  eight-month period ended December 31, 2002, all cash resources
of  PNI  were  attained  from short-term convertible loans.  Interest expense of
$88,925 was accrued during this eight-month period as outstanding loan principal
grew  from  $150,000  on  May  1,  2002  to $1,080,000 by December 31, 2002.  No
interest was paid in cash during the eight-month period ended December 31, 2002.

     PNI has no loans outstanding as of December 31, 2003.

NET  LOSS.

     We  incurred  a  net  loss  of $3,242,188 for the period ended December 31,
2003,  compared  to  a  net loss of $1,509,084 for the period ended December 31,
2002.  In  the course of its development activities, PNI has sustained operating
loses  and  expects such loses to continue through 2004. Based on: (i) our plans
to  introduce  new revisions of our hardware platform products during the second
and third quarters of 2004; and (ii) the optimistic forecasts of expected demand
for  our  new  products by our value added resellers, we expect revenues to grow
during  the last half of 2004, increasing the likelihood of profitability by the
close  of  2004.

LIQUIDITY  AND  CAPITAL  RESOURCES.

     From  our  date  of  inception (May 1, 2002) through December 31, 2002, PNI
obtained  the  majority  of  its cash resources from the issuance of convertible
notes  payable,  totaling  $1,080,000.  The remainder of our cash resources came
from  sales  of  $175,368,  and  the  sale  of stock to our founders for $8,115.

     During  the  first  four  months  of 2003, PNI obtained cash resources from
additional  convertible  loans,  totaling  $275,000.

     In  May  2003,  the outstanding amount of unpaid salary of $560,194 owed to
former  employees  was  converted into 1,120,388 shares of PNI restricted common
stock.

     In  June  2003,  we  completed a private placement of 808,000 shares of PNI
restricted  common  stock  at  $0.50  per  share and issued warrants to purchase
404,000  shares  of  restricted  common  stock  at a purchase price of $0.75 per
share,  raising  an  aggregate  of  $404,000 in gross proceeds. The warrants are
exercisable  immediately  and  expire  in  June  2008.

     In  July  2003,  the  outstanding principal amount of the convertible notes
payable  of  $1,355,000  and  accrued  interest  and  loan fees of $258,833 were
converted  into  3,227,666  shares  of  PNI  restricted  common  stock  using  a
conversion  rate  of  $0.50  per  share.  In  addition,  361,893  shares  of PNI
restricted common stock were issued to note holders in accordance with the terms
of  their  agreements.

     In  August  2003, we completed a private placement sale of 1,695,000 shares
of  PNI  restricted  common  stock  at  $1.00 per share, raising an aggregate of
$1,695,000  in  gross  proceeds.

     In  October 2003, we issued an unsecured convertible promissory note in the
amount  of  $500,000  to an investor, and a warrant to purchase 31,250 shares of
PNI  restricted  common  stock  with  an exercise


                                       20
<PAGE>
price  of $2.00 per share. The warrant is exercisable immediately and expires in
October  2006.  In  December  2003,  the  outstanding  principal  amount  of the
convertible  note  payable  and  accrued  interest of $5,918 were converted into
252,959  shares of PNI restricted common stock, using a conversion rate of $2.00
per  share.

     In  December  2003,  we  completed  a  brokered private placement sale (the
"Placement")  of  2,172,500  shares  of  common  stock.  We  raised  a  total of
$4,345,000 in the Placement, but have received only $2,172,500 in gross proceeds
as  of  December  31,  2003 from the sale of 1,086,250 shares of common stock at
$2.00  per  share.  The  remaining gross proceeds of $2,172,500 will be received
from  the  sale  of  1,086,250  shares  of  common  stock  to  certain  existing
stockholders  pursuant  to  special  warrants,  provided that PNI's registration
statement,  as  filed  on  Form SB-2 with the Securities Exchange and Commission
("SEC")  on  January 8, 2004, is declared effective by the SEC on or before June
6,  2004.  In  response to information inquiries by the SEC, we filed an amended
registration  statement  on  March  1,  2004.

     We believe that cash and cash equivalents of $1,935,741 on hand at December
31,  2003,  plus gross proceeds of $2,172,500 to be received upon declaration by
the  SEC  that  PNI's  registration  is effective, will be sufficient to support
PNI's  growth operations through September 30, 2004, without relying on incoming
revenue  from  sales.  We  expect  that  additional funds will need to be raised
through  the issuance of equity or convertible debt securities during the second
quarter  of 2004 in order to sustain PNI's operations through December 31, 2004.

CRITICAL  ACCOUNTING  POLICIES  AND  ESTIMATES

     Our  financial  statements have been prepared in accordance with accounting
principles  generally  accepted in the United States of America. The preparation
of  these  financial  statements  requires  us to make significant estimates and
judgments  that affect the reported amounts of assets, liabilities, revenues and
expenses  and  related  disclosure  of  contingent  assets  and  liabilities. We
evaluate estimates, including those related to bad debts, inventories and income
taxes,  on  an ongoing basis. We base our estimates on historical experience and
on  various  other  assumptions  that  are  believed  to be reasonable under the
circumstances,  the  results  of which form the basis for making judgments about
the carrying values of assets and liabilities that are not readily apparent from
other  sources.  Actual  results may differ from these estimates under different
assumptions  or  conditions.

     We  believe  the  following  critical  accounting  policies,  among others,
involve  the more significant judgments and estimates used in the preparation of
our  financial  statements:

     We  recognize  revenue in accordance with SEC Staff Accounting Bulletin No.
104,  "Revenue  Recognition  in  Financial Statements" (SAB 104). Under SAB 104,
revenue  is  recognized  when  the  title  and  risk  of loss have passed to the
customer,  there is persuasive evidence of an arrangement, delivery has occurred
or  services  have  been  rendered, the sales price is fixed or determinable and
collectibility  is  reasonably assured.  We recognize revenue from product sales
upon  shipment  to  the  customer provided no significant obligations remain and
collection  of  the  receivable  is  probable.  Upon  shipment,  we  provide for
estimated  product  returns  and  discounts.


                                       21
<PAGE>
     We  maintain an allowance for doubtful accounts for estimated bad debts. If
the  financial  condition  of our customers were to deteriorate, resulting in an
impairment  of  their  ability  to make payments, additional allowances might be
required.

     Inventories  are  recorded  at  the  lower of cost or market on a first-in,
first-out  basis.  On  an  ongoing  basis,  we  review for estimated obsolete or
excess  inventories  and  write  down  our  inventories  to  their estimated net
realizable value based upon our projections of future product demand and product
lifecycle and product development plans.  These write downs are reflected in our
cost  of  revenue.  Actual  product  demand  may differ from our projections, in
which  case  we  may have understated or overstated the provision for excess and
obsolete  inventory,  which  would  have  an  impact  on  our operating results.

     We  generally  warrant  our products for a specific period of time, usually
one year, against material defects. We provide for the estimated future costs of
warranty  obligations  in  costs  of  goods  sold  when  the  related revenue is
recognized.  The  accrued warranty costs represent our best estimate at the time
of  sale  of  the  total  costs  that we will incur to repair or replace product
parts,  which  fail  while still under warranty. The amount of accrued estimated
warranty  costs  is  primarily  based  on  historical  experience  as to product
failures  as  well as current information on repair costs. Actual warranty costs
could  differ  from  the  estimate  amounts. On a quarterly basis, we review the
accrued  balances  and  update  the  historical warranty cost trends. If we were
required  to  accrue additional warranty cost in the future, it would negatively
affect  operating  results.

     The  carrying  value  of  our  deferred  tax  assets are dependent upon our
ability  to  generate  sufficient  future  taxable  income  in  certain  tax
jurisdictions.  Should  we determine that we would not be able to realize all or
part of our deferred tax assets in the future, an adjustment to the deferred tax
assets  would  be  charged  to income in the period such determination was made.
Currently,  our  deferred  tax  assets  are  fully  reserved.




                                       22
<PAGE>
ITEM 7.  FINANCIAL STATEMENTS

                             PROCERA NETWORKS, INC.
                         (a development stage enterprise)



                                    Contents


Report of Independent Accountants                                             24

Audited Financial Statements:

     Balance Sheet                                                            25

     Statements of Operations                                                 26

     Statements of Stockholders' Equity (Deficit)                             27

     Statements of Cash Flows                                                 28

     Notes to Financial Statements                                       29 - 45




                                       23
<PAGE>
                        REPORT OF INDEPENDENT ACCOUNTANTS



The  Board  of  Directors  and  Stockholders
of  Procera  Networks,  Inc.


We  have  audited  the  accompanying  balance sheet of Procera Networks, Inc. (a
development stage enterprise) as of December 31, 2003 and the related statements
of operations, stockholders' equity (deficit), and cash flows for the year ended
December  31,  2003,  for  the  period  from  May 1, 2002 (date of inception) to
December  31,  2002  and, cumulatively, for the period from May 1, 2002 (date of
inception)  to  December  31,  2003.  These  financial  statements  are  the
responsibility  of the Company's management. Our responsibility is to express an
opinion  on  these  financial  statements  based  on  our  audits.

We conducted our audits in accordance with auditing standards generally accepted
in  the  United  States  of  America.  Those  standards require that we plan and
perform  the  audit  to  obtain reasonable assurance about whether the financial
statements  are free of material misstatement. An audit includes examining, on a
test  basis,  evidence  supporting  the amounts and disclosures in the financial
statements.  An audit also includes assessing the accounting principles used and
significant  estimates  made  by  management,  as well as evaluating the overall
financial  statement  presentation.  We  believe  that  our  audits  provide  a
reasonable  basis  for  our  opinion.

In  our  opinion,  the financial statements referred to above present fairly, in
all  material  respects,  the financial position of Procera Networks, Inc. as of
December  31, 2003, and the results of its operations and its cash flows for the
year  ended  December  31,  2003,  for  the  period  from  May  1, 2002 (date of
inception)  to  December  31, 2002 and, cumulatively, for the period from May 1,
2002  (date  of  inception)  to December 31, 2003, in conformity with accounting
principles  generally  accepted  in  the  United  States  of  America.

The  accompanying  financial  statements  have  been  prepared  assuming Procera
Networks, Inc. will continue as a going concern. As more fully described in Note
2,  the  Company has incurred net losses since its inception and has experienced
severe  liquidity  problems.  These conditions raise substantial doubt about the
Company's  ability  to continue as a going concern. Management's plans in regard
to  these  matters are also described in Note 2. The financial statements do not
include  any adjustments that might result from the outcome of this uncertainty.


/s/ Burr, Pilger & Mayer LLP

Palo  Alto,  California
February  16,  2004, except for Note 13, which is as of March 12, 2004


                                       24
<PAGE>
<TABLE>
<CAPTION>
                                   PROCERA NETWORKS, INC.
                              (a development stage enterprise)

                                       BALANCE SHEET

                                     December 31, 2003

                                           ASSETS


<S>                                                                            <C>
Current assets:
     Cash and cash equivalents                                                 $ 1,935,741
     Inventory                                                                      94,603
     Prepaid expenses                                                              193,475
     Restricted cash                                                                10,000
                                                                               ------------
              Total current assets                                               2,233,819


Property and equipment, net                                                         72,578
                                                                               ------------

              Total assets                                                     $ 2,306,397
                                                                               ============


                               LIABILITIES AND STOCKHOLDERS' EQUITY

Current liabilities:
     Accounts payable                                                          $    31,604
     Accrued liabilities                                                           395,062
                                                                               ------------
              Total current liabilities                                            426,666
                                                                               ------------

Commitments and contingencies (Note 6)

Stockholders' equity:
     Preferred stock, $0.001 par value; 5,000,000 shares authorized;
        none issued and outstanding at December 31, 2003                                 -
     Common stock, $0.01 par value, 50,000,000 shares authorized; 22,572,156
        shares issued and outstanding at December 31, 2003                          22,572
     Additional paid-in-capital                                                  6,608,431
     Deficit accumulated during the development stage                           (4,751,272)
                                                                               ------------
              Total stockholders' equity                                         1,879,731
                                                                               ------------
              Total liabilities and stockholders' equity                       $ 2,306,397
                                                                               ============
<FN>



                           The accompanying notes are an integral
                             part of these financial statements
</TABLE>


                                       25
<PAGE>
<TABLE>
<CAPTION>
                                                  PROCERA NETWORKS, INC.
                                             (a development stage enterprise)

                                                 STATEMENTS OF OPERATIONS


                                                                                                          Cumulative
                                                                                   Period from           Period from
                                                                                   May 1, 2002           May 1, 2002
                                                                 Year Ended    (date of inception)   (date of inception)
                                                                December 31,            to                    to
                                                                    2003        December 31, 2002     December 31, 2003
                                                               --------------  --------------------  --------------------
<S>                                                            <C>             <C>                   <C>


Sales                                                          $      32,085   $           175,368   $           207,453
Cost of sales                                                         61,872                89,875               151,747
                                                               --------------  --------------------  --------------------
Gross profit                                                         (29,787)               85,493                55,706
                                                               --------------  --------------------  --------------------

Operating expenses:
  Engineering                                                      1,376,012               554,545             1,930,557
  Sales and marketing                                                340,912               324,238               665,150
  General and administrative                                       1,151,444               638,665             1,790,109
                                                               --------------  --------------------  --------------------
Total operating expenses                                           2,868,368             1,517,448             4,385,816
                                                               --------------  --------------------  --------------------

Loss from operations                                              (2,898,155)           (1,431,955)           (4,330,110)


 Interest and other income                                               566                11,796                12,362
 Interest expense                                                   (344,599)              (88,925)             (433,524)
                                                               --------------  --------------------  --------------------

Net loss                                                       $  (3,242,188)  $        (1,509,084)  $        (4,751,272)
                                                               ==============  ====================  ====================

Net loss per share - basic and diluted                         $       (0.30)  $             (0.58)
                                                               ==============  ====================

Shares used in computing net loss per share-basic and diluted     10,700,244             2,624,401
                                                               ==============  ====================
<FN>



                           The accompanying notes are an integral
                             part of these financial statements
</TABLE>


                                       26
<PAGE>
<TABLE>
<CAPTION>
                                                    PROCERA NETWORKS, INC.
                                               (a development stage enterprise)

                                         STATEMENTS OF STOCKHOLDERS' EQUITY (DEFICIT)

                               Period From May 1, 2002 (date of inception) to December 31, 2003

                                                                                                             Common stock
                                                                      Common stock          Additional       subscriptions
                                                                -------------------------    paid-in     --------------------
                                                                  Shares        Amount       capital       Shares     Amount
                                                                -----------  ------------  ------------  ----------  --------
<S>                                                             <C>          <C>           <C>           <C>         <C>
Issuance of comon stock to founders
    at $0.001 per share from May - October 2002                  8,115,000   $     8,115   $         -           -   $     -
  Common stock subscription issued in connection
    with advisory agreement at $0.001 per share
    in May 2002                                                                                          1,200,000     1,200
  Common stock subscription issued in connection
    with convertible notes payable at $0.001 and $0.01
    per share from June - December 2002                                                                    190,360     1,004

  Net loss
                                                                -----------  ------------  ------------  ----------  --------

Balances, December 31 , 2002                                     8,115,000         8,115             -   1,390,360     2,204
  Issuance of comon stock to founders
    at $0.001 per share from January - August 2003               3,750,000         3,750                (1,200,000)   (1,200)
  Issuance of common stock to former employees for
    conversion of unpaid salary at $0.01 per share in May 2003   1,120,388         1,120        10,084
  Issuance of common stock for cash at $0.50 per
    share in June 2003, less issuance costs of $7,500              808,000           808       395,692
  Issuance of common stock for cash at $0.001 per
    share upon exercise of warrants in June 2003                   500,000           500
  Issuance of common stock upon conversion of
    notes payable at $0.50 per share in July 2003                3,227,666         3,228     1,610,605
  Issuance of common stock to noteholders
    at $0.001 - $0.50 per share in January - July 2003             361,893           362        28,915    (190,360)   (1,004)
  Issuance of common stock for services provided
    at $0.50 per share in July 2003                                 40,000            40        19,960
  Issuance of common stock for cash at $1.00 per
    share in August  2003, less issuance costs of $5,500         1,695,000         1,695     1,687,805
  Issuance of common stock in connectrion with
    merger with Zowcom  at $0.01 in October 2003                 1,610,000         1,610        (1,610)
  Issuance of common stock for cash at $0.001 per
    share upon exercise of warrants inNovember 2003                  5,000             5
  Issuance of common stock upon conversion of
    notes payable at $2.00 per share in December 2003              252,959           253       505,665
  Issuance of common stock for cash at $2.00 per
    share in December 2003, less issuance costs of $299,109      1,086,250         1,086     1,872,305
  Fair value of common stock warrants issued to
    non-employees                                                                              394,322
  Stock based employee compensation                                                             84,688

  Net loss
                                                                -----------  ------------  ------------  ----------  --------

Balances, December  31, 2003                                    22,572,156   $    22,572   $ 6,608,431           -   $     -
                                                                ===========  ============  ============  ==========  ========


                                                                            Deficit
                                                                          accumulated
                                                               Receivable  during the        Total
                                                                  for     devlopement    stockholders'
                                                                 stock       stage      equity(deficit)
                                                                --------  ------------  ----------------
<S>                                                             <C>       <C>           <C>
Issuance of comon stock to founders
    at $0.001 per share from May - October 2002                 $     -   $         -   $         8,115
  Common stock subscription issued in connection
    with advisory agreement at $0.001 per share
    in May 2002                                                  (1,200)                              -
  Common stock subscription issued in connection
    with convertible notes payable at $0.001 and $0.01
    per share from June - December 2002                                                           1,004

  Net loss                                                                 (1,509,084)       (1,509,084)
                                                                --------  ------------  ----------------

Balances, December 31 , 2002                                     (1,200)   (1,509,084)       (1,499,965)
  Issuance of comon stock to founders
    at $0.001 per share from January - August 2003                1,200                           3,750
  Issuance of common stock to former employees for
    conversion of unpaid salary at $0.01 per share in May 2003                                   11,204
  Issuance of common stock for cash at $0.50 per
    share in June 2003, less issuance costs of $7,500                                           396,500
  Issuance of common stock for cash at $0.001 per
    share upon exercise of warrants in June 2003                                                    500
  Issuance of common stock upon conversion of
    notes payable at $0.50 per share in July 2003                                             1,613,833
  Issuance of common stock to noteholders
    at $0.001 - $0.50 per share in January - July 2003                                           28,273
  Issuance of common stock for services provided
    at $0.50 per share in July 2003                                                              20,000
  Issuance of common stock for cash at $1.00 per
    share in August  2003, less issuance costs of $5,500                                      1,689,500
  Issuance of common stock in connectrion with
    merger with Zowcom  at $0.01 in October 2003                                                      -
  Issuance of common stock for cash at $0.001 per
    share upon exercise of warrants inNovember 2003                                                   5
  Issuance of common stock upon conversion of
    notes payable at $2.00 per share in December 2003                                           505,918
  Issuance of common stock for cash at $2.00 per
    share in December 2003, less issuance costs of $299,109                                   1,873,391
  Fair value of common stock warrants issued to
    non-employees                                                                               394,322
  Stock based employee compensation                                                              84,688

  Net loss                                                                 (3,242,188)       (3,242,188)
                                                                --------  ------------  ----------------

Balances, December  31, 2003                                    $     -   $(4,751,272)  $     1,879,731
                                                                ========  ============  ================
<FN>

                     The accompanying notes are an integral

                       part of these financial statements
</TABLE>


                                       27
<PAGE>
<TABLE>
<CAPTION>
                                               PROCERA NETWORKS, INC.
                                          (a development stage enterprise)

                                               STATEMENTS OF CASH FLOW


                                                                                                     Cumulative
                                                                              Period from           Period from
                                                                              May 1, 2002           May 1, 2002
                                                            Year Ended    (date of inception)   (date of inception)
                                                           December 31,         through               through
                                                               2003        December 31, 2002     December 31, 2003
                                                          --------------  --------------------  --------------------
<S>                                                       <C>             <C>                   <C>
Cash flows from operating activities:
  Net loss                                                $  (3,242,188)  $        (1,509,084)  $        (4,751,272)
  Adjustments to reconcile net loss to
    net cash used in operating activities:
  Gain on disposal of property and equipment                          -               (11,796)              (11,796)
  Common stock issued for services rendered                      31,204                     -                31,204
  Accrued interest on convertible notes payable                 177,451                87,300               264,751
  Stock based compensation                                      479,010                     -               479,010
  Common stock issued in connection
    with convertible notes payable                               28,273                 1,004                29,277
  Depreciation                                                   21,241                 1,197                22,438
  Changes in assets and liabilities:
    Accounts receivable                                          23,289               (23,289)                    -
    Inventory                                                    33,392              (127,995)              (94,603)
    Prepaid expenses                                           (163,534)              (29,941)             (193,475)
    Accounts payable                                           (110,455)              142,059                31,604
    Accrued liabilities                                         (41,670)              385,935               344,265
                                                          --------------  --------------------  --------------------
            Net cash used in operating activities            (2,763,987)           (1,084,610)           (3,848,597)
                                                          --------------  --------------------  --------------------

Cash flows used in investing activities:
    Purchase of property and equipment                          (36,772)              (10,651)              (47,423)
    Proceeds from sale of property and equipment                      -                15,000                15,000
    Increase in restricted cash                                 (10,000)                    -               (10,000)
                                                          --------------  --------------------  --------------------
            Net cash used in investing activities               (46,772)                4,349               (42,423)
                                                          --------------  --------------------  --------------------

Cash flows providing by financing activities:
    Proceeds from issuance of common stock, net               3,963,646                 8,115             3,971,761
    Proceeds from convertible notes payable                     775,000             1,080,000             1,855,000
                                                          --------------  --------------------  --------------------
            Net cash provided by financing activities         4,738,646             1,088,115             5,826,761
                                                          --------------  --------------------  --------------------

Net increase in cash and cash equivalents                     1,927,887                 7,854             1,935,741

Cash and cash equivalents, beginning of period                    7,854                     -                     -
                                                          --------------  --------------------  --------------------

Cash and cash equivalents, end of period                  $   1,935,741   $             7,854   $         1,935,741
                                                          ==============  ====================  ====================

Supplemental cash flow information:
Cash paid for interest                                    $           -   $                 -   $                 -
Cash paid for income taxes                                $           -   $                 -   $                 -

Non cash investing and financing activities:
Property and equipment acquired with accrued liabilites   $           -   $            50,797   $            50,797
Issuance of common stock in exchange for convertible
notes payable and accrued interest                        $   2,119,751   $                 -   $         2,119,751
Issuance of common stock in connection with merger
with Zowcom, Inc.                                         $       1,610   $                 -   $             1,610
Issuance of common stock in connection with note payable  $      28,273   $             2,204   $            30,477
Issuance of common stock pursuant to common stock
subscription agreements                                   $      30,477   $                 -   $            30,477
<FN>


                                       The accompanying notes are an integral
                                         part of these financial statements
</TABLE>


                                       28
<PAGE>
                             PROCERA NETWORKS, INC.
                        (a development stage enterprise)

                    Notes to Financial Statements, continued
                               ___________________

1.   FORMATION AND BUSINESS OF THE COMPANY

     Procera  Networks, Inc. ("Procera" or the "Company"), formerly Zowcom, Inc.
     ("Zowcom,")  was  incorporated  in  Nevada on July 11, 2001. On October 16,
     2003,  Procera  Networks,  Inc., a Delaware corporation ("PNI") merged into
     Zowcom,  Inc. in a stock-for-stock transaction, as a result of a merger and
     plan  of  reorganization  agreement  (the "Merger") between Zowcom and PNI.
     Pursuant  to  the Merger, Zowcom assumed PNI's operations and business plan
     and  changed  its  name  to  Procera  Networks,  Inc.

     Procera  Networks,  Inc.  is  a  development  stage  high technology device
     company  engaged  in  the  development  and marketing of wire-speed Layer 7
     network  solutions.  The  MLS  Layer  7  application  switch product family
     provides  wire-speed  switching,  routing,  content  control, flow metering
     (bandwidth  limiting),  packet shaping (quality of service prioritization),
     surveillance (monitoring/archiving of emails, instant messaging) for secure
     delivery  of  information  and  applications  across  wireless and wireline
     networks.  The  Company is in the development stage, devoting substantially
     all of its efforts to product development, raising financing and recruiting
     personnel.  The  Company  has  funded its operations substantially from the
     proceeds  from  notes  payable  and  issuance  of  common  stock.

     In  the  course  of  its  development activities, the Company has sustained
     operating  losses  and  expects  such  losses  to  continue  through  the
     foreseeable  future.  The  Company  will  finance  its operations primarily
     through  its  cash  and  cash  equivalents,  future  financing  and  future
     revenues. However, there can be no assurance that such efforts will succeed
     or  that  sufficient  funds  will  be  available.

     FISCAL  YEAR

     The  Company  maintains its accounting records on a 52-53 week fiscal year.
     The  fiscal  year  ends on the last Sunday of December and, as a result, an
     extra  week  is  added  every five or six years. Fiscal years 2003 and 2002
     ended  December  28,  2003  and  December  29,  2002,  respectively.  For
     presentation  purposes,  the  financial  statements  are shown as ending on
     December  31.

2.   SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

     BASIS  OF  PRESENTATION

     The accompanying financial statements have been prepared in conformity with
     accounting  principles  generally accepted in the United States of America,
     which  contemplate continuation of the Company as a going concern. However,
     at  December 31, 2003, the Company has an accumulated deficit of $4,751,272
     and  has  sustained  an  operating cash flow deficiency of $3,848,597 since
     inception.  In  addition, the Company had insufficient cash at December 31,
     2003  to  fund  its  operations  for  the  next  fiscal year. The Company's
     activities  have been financed principally through borrowings and issuances
     of  equity.


                                       29
<PAGE>
                             PROCERA NETWORKS, INC.
                        (a development stage enterprise)

                    Notes to Financial Statements, continued
                               ___________________

2.   SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, continued

     BASIS  OF  PRESENTATION,  continued

     The  Company  will require additional financing to fund ongoing operations.
     Management  is  actively pursuing additional equity and debt financing from
     both  institutional and corporate investors. There can be no assurance that
     any  new  debt or equity financing could be successfully consummated. These
     factors  raise substantial doubt about the Company's ability to continue as
     a  going  concern.  The financial statements do not include any adjustments
     relating  to  the  recoverability  and classification of the recorded asset
     amounts or amounts and classification of liabilities that might result from
     the  outcome  of  this  uncertainty.

     USE  OF  ESTIMATES

     The  preparation  of  financial  statements  in  conformity with accounting
     principles  generally  accepted  in  the  United States of America requires
     management  to  make  estimates  and assumptions that affect certain report
     amounts  and  disclosures.  Accordingly,  actual  results could differ from
     those  estimates.

     FAIR  VALUE  OF  FINANCIAL  INSTRUMENTS

     The  carrying  amounts  of  certain  of the Company's financial instruments
     including cash and cash equivalents, prepaid expenses, accounts payable and
     accrued  liabilities  approximate fair value due to their short maturities.

     CONCENTRATION  OF  CREDIT  RISK

     Financial  instruments  that  potentially  subject  the  Company  to  a
     concentration  of  credit  risk  consist  of  cash and cash equivalents and
     accounts  receivable. Cash and cash equivalents are deposited in demand and
     money  market  accounts  in one financial institution in the United States.
     Deposits  held  with  financial  institutions  may  exceed  the  amount  of
     insurance  provided  on  such deposits. The Company has not experienced any
     material  losses  on  its  deposits  of  cash  and  cash  equivalents.

     ADVERTISING  COSTS

     Advertising  costs  are  expenses as incurred. Advertising expenses for the
     period  ended  December  31,  2003  and  2002  were  not  significant.


     CASH  AND  CASH  EQUIVALENTS  AND  RESTRICTED  CASH

     The  Company considers all highly liquid investments to mature within three
     months  or  less  to  be  cash  equivalents.  Restricted  cash  consists of
     certificates  of  deposit  held  with  financial institutions as a security
     deposit.


                                       30
<PAGE>
                             PROCERA NETWORKS, INC.
                        (a development stage enterprise)

                    Notes to Financial Statements, continued
                               ___________________

2.   SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, continued

     ACCOUNTS  RECEIVABLE

     Accounts  receivable  are  stated at net realizable value. Customers are on
     cash  on  delivery  until  credit  approval.  Uncollectible receivables are
     recorded  as  bad  debt  expense  when  all  efforts  to  collect have been
     exhausted  and  recoveries  are  posted  as  they  are  received.

     INVENTORY

     Inventory is stated at the lower of cost or market. Cost is determined on a
     standard  cost  basis  which  approximates  actual  cost  on  the first-in,
     first-out  ("FIFO")  method.  Lower  of  cost  or  market  is  evaluated by
     considering  obsolescence, excessive levels of inventory, deterioration and
     other  factors.  All  inventory  on hand at December 31, 2003 were finished
     goods.

     PROPERTY  AND  EQUIPMENT

     Property and equipment are stated at cost. Depreciation is calculated using
     the  straight-line  method  over  the estimated useful lives of the assets,
     which  is  three years for computer, tooling, test and office equipment and
     two  years  for  software.  Leasehold  improvements are amortized using the
     straight-line  method  over the estimated useful lives of the assets or the
     term  of  the  lease,  whichever is shorter. Whenever assets are retired or
     otherwise  disposed  of,  the cost and related accumulated depreciation are
     removed  from the accounts, and any resulting gain or loss is recognized in
     income  for  the period. The cost of maintenance and repairs is expensed as
     incurred;  significant  improvements  are  capitalized.

     IMPAIRMENT  OF  LONG-LIVED  ASSETS

     The  Company  evaluates  its  long-lived  assets for indicators of possible
     impairment by comparison of the carrying amounts to future net undiscounted
     cash  flows  expected to be generated by such assets when events or changes
     in  circumstances  indicate  the  carrying  amount  of  an asset may not be
     recoverable.  Should  an  impairment  exist,  the  impairment loss would be
     measured  based  on the excess carrying value of the asset over the asset's
     fair  value  or  discounted estimates of future cash flows. The Company has
     not  identified  any  such  impairment  losses  to  date.

     STOCK  BASED  COMPENSATION

     The  Company  accounts  for  stock-based  employee  compensation  using the
     intrinsic  value  method  under Accounting Principles Board Opinion No. 25,
     "Accounting  for  Stock  Issued  to  Employees"  ("APB  25"),  and  related
     interpretations and complies with the disclosure provisions of Statement of
     Financial  Accounting  Standards  ("SFAS")  No.  148,  "Accounting  for
     Stock-Based  Compensation, Transition and Disclosure - an Amendment of FASB
     Statement  No. 123." The following table illustrates the effect on net loss
     and  net  loss  per  share  if  the  Company  had  applied  the fair market
     recognition  provisions  of  SFAS  No.  123,  "Accounting  for  Stock-Based
     Compensation,"  to  stock-based  employee  compensation.


                                       31
<PAGE>
                             PROCERA NETWORKS, INC.
                        (a development stage enterprise)

                    Notes to Financial Statements, continued
                               ___________________

2.   SUMMARY  OF  SIGNIFICANT  ACCOUNTING  POLICIES,  continued

     STOCK  BASED  COMPENSATION,  continued


<TABLE>
<CAPTION>
                                                                      CUMULATIVE
                                               PERIOD FROM           PERIOD FROM
                                               MAY 1, 2002           MAY 1, 2002
                             YEAR ENDED    (DATE OF INCEPTION)   (DATE OF INCEPTION)
                            DECEMBER 31,     TO DECEMBER 31,              TO
                                2003               2002           DECEMBER 31, 2003
                           --------------  --------------------  --------------------
<S>                        <C>             <C>                   <C>

     Net loss as reported  $  (3,242,188)  $        (1,509,084)  $        (4,751,272)

     Add: Stock-based
     employee
     compensation
     expense included in
     reported net loss,           84,688                     -                84,688
     net of related tax
     effects
     Deduct: Total
     stock-based
     employee
     compensation
     expense determined
     under fair value
     based method for all        (84,688)                    -               (84,688)
                           --------------  --------------------  --------------------
     awards, net of
     related tax effects
     Pro forma net loss    $  (3,242,188)  $        (1,509,084)  $        (4,751,272)
                           ==============  ====================  ====================
</TABLE>

     INCOME  TAXES

     Income  taxes are recorded under the liability method, under which deferred
     tax  assets  and liabilities are determined based on the difference between
     the  financial  statement  and  tax  bases  of assets and liabilities using
     enacted  tax  rates  in  effect  for  the year in which the differences are
     expected  to  affect  taxable  income. Valuation allowances are established
     when  necessary  to  reduce deferred tax assts to the amount expected to be
     realized.

     REVENUE  RECOGNITION

     Revenue  is recognized when a purchase order has been received, the product
     has  been  shipped, the sales price is fixed or determinable and collection
     of  the  resulting  receivable  is  probable.

     RESEARCH  AND  DEVELOPMENT

     Research  and  development  costs  are  charged  to operations as incurred.


                                       32
<PAGE>
                             PROCERA NETWORKS, INC.
                        (a development stage enterprise)

                    Notes to Financial Statements, continued
                               ___________________

2.   SUMMARY  OF  SIGNIFICANT  ACCOUNTING  POLICIES,  continued

     SHIPPING  AND  HANDLING  COSTS

     The  Company  includes  shipping and handling costs associated with inbound
     and  outbound  freight  in  costs  of  goods  sold.

     PRODUCT  DEVELOPMENT  COSTS

     The  Company's  policy  is to capitalize product development costs incurred
     after  technological feasibility has been demonstrated, which is determined
     to  be  the time a working model has been completed. To date costs incurred
     subsequent  to the establishment of technological feasibility have not been
     significant  and  all  product  development  costs  have  been  charged  to
     "Engineering"  in  the  statements  of  operations.

     COMPREHENSIVE  INCOME

     The  Company  has  adopted  Statement of Financial Accounting Standards No.
     130,"Reporting  Comprehensive  Income,"  which  establishes  standards  for
     reporting  comprehensive  income  and  its  components  in  the  financial
     statements. To date, the Company's comprehensive income has equaled its net
     income.

     NET  LOSS  PER  SHARE

     Basic  earnings  per  share ("EPS") is computed by dividing net loss by the
     weighted  average  number  of  common  shares  outstanding  for the period.
     Diluted  EPS  reflects  the potential dilution that could occur from common
     shares  issuable  through  stock  options,  warrants  and other convertible
     securities,  if  dilutive.

     The following table is a reconciliation of the numerator (net loss) and the
     denominator  (number  of  shares)  used  in  the  basic  and  diluted  EPS
     calculations  and  sets forth potential shares of common stock that are not
     included  in  the diluted net loss per share calculation as their effect is
     antidilutive:


<TABLE>
<CAPTION>
                                                                             PERIOD FROM MAY
                                                                            1, 2002 (DATE OF
                                                          YEAR ENDED          INCEPTION) TO
                                                       DECEMBER 31, 2003    DECEMBER 31, 2002
                                                      -------------------  -------------------
<S>                                                   <C>                  <C>
     Numerator - Basic and diluted                    $       (3,242,188)  $       (1,509,084)
                                                      ===================  ===================

     Denominator - basic and diluted
             Weighted average common shares
             outstanding                                      13,159,835            7,010,000
             Weighted average unvested common shares
             subject to repurchase                           (2,459,591)          (4,385,599)
                                                      -------------------  -------------------
     Total                                                    10,700,244            2,624,401
                                                      ===================  ===================
     Net loss per share - basic and diluted           $           ( 0.30)  $            (0.58)
                                                      ===================  ===================

     Antidilutive securities:
             Common stock subject to repurchase                        -            5,086,250
             Warrants                                          3,444,588              645,000
</TABLE>


                                       33
<PAGE>
                             PROCERA NETWORKS, INC.
                        (a development stage enterprise)

                    Notes to Financial Statements, continued
                               ___________________

2.   SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, continued

     RECENT  ACCOUNTING  PRONOUNCEMENTS

     In  May  2003, the Financial Accounting Standards Board issued Statement of
     Financial  Accounting  Standards  No.  150  ("SFAS  150"),  "Accounting for
     Certain  Financial Instruments with Characteristics of both Liabilities and
     Equity."  SFAS  No.  150 requires that certain financial instruments, which
     under  previous guidance could be accounted for as equity, be classified as
     liabilities  in the statement of financial position. Mandatorily redeemable
     financial  instruments  are  subject  to the provisions of SFAS 150 for the
     first fiscal period beginning after December 15, 2003. The Company believes
     that  the  adoption  of  SFAS  150  will  not have a material impact on the
     financial  position  or  results  of  operations  of  the  Company.

3.   MERGER WITH ZOWCOM, INC.

     On  October  16,  2003, Zowcom, Inc., a Nevada corporation and public shell
     ("Zowcom"),  merged  with  Procera  Networks,  Inc.  a Delaware corporation
     ("Procera")  (the  "Merger")  pursuant  to  an Agreement and Plan of Merger
     between  Zowcom  and  Procera  (the  "Agreement").

     In  the  Merger,  Zowcom  issued 19,617,947 shares of its restricted common
     stock  and  warrants  to purchase 1,479,000 shares of its restricted common
     stock  to  the  stockholders  of  Procera in exchange for 100% of Procera's
     issued  and  outstanding  shares of common stock and warrants. In addition,
     Zowcom's  management,  which  held  6,000,000 shares of Zowcom's restricted
     common  stock,  tendered  all  of  their shares for redemption by Zowcom in
     exchange  for  $88,000.

     As  a  result of the Merger, Zowcom continued as the surviving corporation,
     assumed  the  operations  and business plan of Procera, the stockholders of
     Procera  became  stockholders  of  Zowcom  and  Zowcom  changed its name to
     Procera  Networks,  Inc.

     For  accounting  purposes,  the  merger is considered a capital transaction
     rather  than a business combination and a recapitalization of Procera since
     Zowcom  has  only  a  minor  amount  of  net  assets and no operations. The
     transaction  was valued based on the value of Zowcom's net tangible assets,
     with  no  goodwill  recognized.  The  net  tangible asset value was zero as
     Procera  did not receive any of the assets or assume any of the liabilities
     of  Zowcom.  The  statement  of stockholder's equity (deficit) reflects the
     issuance  of  1,610,000  shares  of  common  stock  which  represents  the
     outstanding  shares of Zowcom's common stock at the time of the merger. The
     historical  financial  statements  prior  to  October 16, 2003 are those of
     Procera.

     The  following  unaudited  pro  forma  summary is provided for illustrative
     purposes only and is not necessarily indicative of the consolidated results
     of  operations for future periods or that actually would have been realized
     had  Zowcom  and  Procera  been  a  consolidated  entity during the periods
     presented.  The summary combines the results of operations as if the merger
     between  Zowcom  and  Procera  had  taken  place as of the beginning of the
     periods  presented.

<TABLE>
<CAPTION>
                                                           2003          2002
                                                       ------------  ------------
<S>                                                    <C>           <C>

     Sales                                             $    32,085   $   177,413
     Net loss                                          $(3,284,163)  $(1,590,276)
     Net loss per share - basic and diluted            $     (0.27)  $     (0.38)
</TABLE>


                                       34
<PAGE>
                             PROCERA NETWORKS, INC.
                        (a development stage enterprise)

                    Notes to Financial Statements, continued
                               ___________________

4.   BALANCE SHEET DETAILS

     Prepaid  expenses  consist  of  the  following  at  December  31,  2003:

<TABLE>
<CAPTION>
<S>                                                         <C>
     Prepaid insurance premiums                             $133,195
     Security deposit for human resources/payroll services    50,615
     Other                                                     9,665
                                                            --------
              Total                                         $193,475
                                                            ========
</TABLE>



Property  and  equipment  consists  of  the  following  at  December  31,  2003:

<TABLE>
<CAPTION>
<S>                                  <C>
     Tooling and test equipment      $ 21,447
     Office equipment                  36,997
     Computer equipment                36,572
                                     ---------
              Total                    95,016

     Less: accumulated depreciation   (22,438)
                                     ---------
                                     $ 72,578
                                     =========
</TABLE>



Accrued  liabilities  consist  of  the  following  at  December  31,  2003:

<TABLE>
<CAPTION>
<S>                                                     <C>
     Payroll and related expenses                       $183,831
     Stock issuance costs related to private placement   119,975
     Professional fees                                    84,500
     Other                                                 6,756
                                                        --------
              Total                                     $395,062
                                                        ========
</TABLE>


5.   CONVERTIBLE NOTES PAYABLE

     In  May,  June,  July,  September  and  November  2002,  the Company issued
     $1,080,000 in convertible notes payable to certain investors. The principal
     amount of the convertible notes payable, together with interest at 0.5% per
     month is due and payable upon demand by the holders of the note on or after
     March 31, 2003. The outstanding principal and accrued interest of the notes
     are  convertible,  at  the  option  of the holders, into Series B preferred
     stock  at  the  purchase price paid for the Series B preferred stock at the
     first  closing.  The  Company  must  also  pay a monthly fee of 1.5% of the
     outstanding  principal amount of the note. Additionally, the holders of the
     notes  are  entitled to 2% of the outstanding principal amount of each note
     per  month  in  shares  of  the  Company's  common stock. For example, this
     provision  provides  for  two  shares of common stock to be earned for each
     $100 of principal outstanding each month. These notes are collateralized by
     a  senior  security  interest in all of the assets of the Company, held pro
     rata  with  the  other  outstanding  senior  secured  creditors  and solely
     subordinate  to  senior  bank  financing or senior secured financing from a
     corporate  strategic  partner  of  the  Company.

     In  connection  with the convertible notes payable issued in November 2002,
     the  Company  granted  warrants  to  purchase  common  stock  (Note  8).


                                       35
<PAGE>
                             PROCERA NETWORKS, INC.
                        (a development stage enterprise)

                    Notes to Financial Statements, continued
                               ___________________

5.   CONVERTIBLE  NOTES  PAYABLE,  continued

     In  January  2003,  the  Company  issued  a convertible note payable in the
     amount  of  $25,000 to an investor. The principal amount of the convertible
     note  payable,  together with interest at 0.5% per month is due and payable
     upon  demand  by  the  holders  of the note on or after March 31, 2003. The
     outstanding  principal  and accrued interest of the note is convertible, at
     the  option  of  the  holder, into Series B preferred stock at the purchase
     price  paid  for  the  Series  B  preferred stock at the first closing. The
     Company  must  also  pay a monthly fee of 1.5% of the outstanding principal
     amount  of the note. Additionally, the holder of the note is entitled to 2%
     of  the outstanding principal amount of the note per month in shares of the
     Company's  common  stock.

     The  note  is  collateralized  by  a senior security interest in all of the
     assets  of  the  Company,  held  pro rata with the other outstanding senior
     secured creditors and solely subordinate to senior bank financing or senior
     secured  financing  from  a  corporate  strategic  partner  of the Company.

     In  April 2003, the Company issued a convertible note payable in the amount
     of  $250,000  to  an investor. The principal amount of the convertible note
     payable,  together with interest at 0.5% per month is due and payable on or
     after March 31, 2004. The outstanding principal and accrued interest of the
     note  is  convertible, at the option of the holder, into Series B preferred
     stock  at  the  purchase price paid for the Series B preferred stock at the
     first  closing. The note is collateralized by a senior security interest in
     all  of the assets of the Company, held pro rata with the other outstanding
     senior secured creditors and solely subordinate to senior bank financing or
     senior secured financing from a corporate strategic partner of the Company.

     In  July  2003,  the  outstanding principal amount of the convertible notes
     payable  of  $1,355,000  and accrued interest and loan fees of $258,833 was
     converted  into 3,227,666 shares of common stock using a conversion rate of
     $0.50  per share. Additionally, the Company issued 361,893 shares of common
     stock  to  the  note  holders  in  accordance  with  the  agreements.

     In  October  2003,  the  Company issued an unsecured convertible promissory
     note  in the amount of $500,000 to an investor. The principal amount of the
     convertible  note  payable,  together  with  interest  at 8% per annum, was
     originally due and payable on April 22, 2004. The outstanding principal and
     accrued  interest  of the note is convertible, at the option of the holder,
     into  common  stock  at a conversion rate of $2.00 per share. In connection
     with  the  unsecured  convertible  promissory  note,  the  Company  granted
     warrants  to  purchase  common  stock  (Note  8).

     In  December  2003,  the  outstanding  principal  amount  of  the unsecured
     convertible  note  payable  of  $500,000 and accrued interest of $5,918 was
     converted  into  252,959  shares  of  common  stock  at  $2.00  per  share.

6.   COMMITMENTS AND CONTINGENCIES

     In  June  2003,  the  Company  entered  into  a six month agreement for the
     sublease  of  3,200  square  feet  of  space for $1.00 per square foot plus
     $2,300  in  monthly  common area expenses and a one time deposit of $3,200.
     Upon  expiration,  the  sublease will renew monthly, therefore there are no
     future  minimum  payments under this lease. Rent expense for the year ended
     December  31,  2003,  the  period  from  May 1, 2002 (date of inception) to
     December  31,  2002 and for the cumulative period from May 1, 2002 (date of
     inception)  to  December  31,  2003  was  $83,476,  $102,000  and $185,476,
     respectively.


                                       36
<PAGE>
                             PROCERA NETWORKS, INC.
                        (a development stage enterprise)

                    Notes to Financial Statements, continued
                               ___________________

7.   GUARANTEES

     INDEMNIFICATION  AGREEMENTS

     The  Company  enters  into  standard  indemnification  arrangements  in our
     ordinary  course  of  business. Pursuant to these arrangements, the Company
     indemnifies,  holds  harmless,  and  agrees  to  reimburse  the indemnified
     parties for losses suffered or incurred by the indemnified party, generally
     our  business partners or customers, in connection with any U.S. patent, or
     any  copyright  or  other  intellectual  property infringement claim by any
     third party with respect to our products. The term of these indemnification
     agreements  is  generally  perpetual  anytime  after  the  execution of the
     agreement.  The  maximum  potential  amount  of future payments the Company
     could  be required to make under these agreements is unlimited. The Company
     has  never  incurred  costs  to defend lawsuits or settle claims related to
     these  indemnification  agreements.  As  a result, the Company believes the
     estimated  fair  value  of  these  agreements  is  minimal.

     The  Company has entered into indemnification agreements with its directors
     and  officers  that may require the Company: to indemnify its directors and
     officers  against  liabilities  that may arise by reason of their status or
     service  as  directors  or  officers,  other  than liabilities arising from
     willful misconduct of a culpable nature; to advance their expenses incurred
     as  a  result  of  any  proceeding  against  them as to which they could be
     indemnified;  and to obtain directors' and officers' insurance if available
     on  reasonable  terms,  which  the  Company  currently  has  in  place.

     PRODUCT  WARRANTY

     The  Company warrants its products for a specific period of time, generally
     twelve  months,  against  material  defects.  The  Company provides for the
     estimated  future  costs  of warranty obligations in cost of sales when the
     related  revenue  is  recognized. The accrued warranty costs represents the
     best  estimate  at  the  time  of  sale of the total costs that the Company
     expects to incur to repair or replace product parts, which fail while still
     under  warranty.  The  amount  of  accrued  estimated  warranty  costs  are
     primarily  based on historical experience as to product failures as well as
     current  information  on repair costs. The Company periodically reviews the
     accrued  balances  and  updates  the  historical  warranty cost trends. The
     following  table  reflects  the  change  in  the Company's warranty accrual
     during  the  year  ended  December  31,  2003:

<TABLE>
<CAPTION>
<S>                                                 <C>
          Warranty accrual, beginning of year       $  5,274
          Charged to cost of sales                   ( 1,553)
          Actual warranty expenditures                  (157)
          Warranty accrual, end of year                3,564
                                                    =========
</TABLE>


                                       37
<PAGE>
                             PROCERA NETWORKS, INC.
                        (a development stage enterprise)

                    Notes to Financial Statements, continued
                               ___________________

8.   STOCKHOLDERS' EQUITY (DEFICIT)

     COMMON  STOCK

     During  2002,  the  Company  issued 8,115,000 shares of its common stock to
     founders  and  certain  employees for cash under stock purchase agreements,
     some  of  which  contain  repurchase  provisions.  During 2003, the Company
     issued  3,750,000  shares  of  its  common  stock  to  certain  directors,
     consultants  and  employees  under stock purchase agreements, some of which
     contain  repurchase  provisions.  These  shares are generally released from
     repurchase  provisions  ratably  over  three  years.

     In connection with the termination and rehiring of employees all restricted
     shares  were  vested.

     In  June  2003, the Company completed a private placement of 808,000 shares
     of  the Company's common stock at $0.50 per share. The Company received net
     proceeds  of  $396,500 after deducting the offering expenses. In connection
     with the private placement, the Company granted warrants to purchase common
     stock  (Note  7-Warrants).

     In  July  2003,  the  Company  issued  40,000  shares  of common stock to a
     professional  advisor  for services rendered. The Company recorded a charge
     of  $20,000 for the estimated fair value of the common stock on the date of
     issuance.

     In  August  2003,  the  Company  completed a private placement of 1,695,000
     shares  of  the  Company's  common  stock  at  $1.00 per share. The Company
     received  net proceeds of $1,689,500 after deducting the offering expenses.

     In  December  2003,  the  Company completed a brokered private placement of
     1,086,250  shares  of  the  Company's  common stock at $2.00 per share. The
     Company  received  net  proceeds of $1,873,391 after deducting the offering
     expenses.  In  connection  with  the private placement, the Company granted
     warrants and special warrants to purchase common stock (Note 7-Warrants and
     Special  Warrants).

     COMMON  STOCK  SUBSCRIPTIONS

     In  connection  with  the  convertible  notes payable (Note 5), the Company
     agreed  to  issue 190,360 shares of common stock in 2002 and 171,533 shares
     of  common  stock  in  2003  to  the  holders of the notes. The Company has
     recorded the earned shares as a common stock subscription which resulted in
     a  charge to interest expense of $1,004 in 2002 and $28,273 in 2003. In May
     2002,  the  Company  entered into an advisory agreement with a director and
     agreed  to  issue  1,200,000  shares  of  common stock at $0.001 per share.

     In  August  and  September  2003,  the  Company issued 1,200,000 shares and
     361,893  shares  of  common  stock  in  satisfaction  of  the  common stock
     subscriptions,  respectively.  At  December  31, 2003, there were no common
     stock  subscriptions  outstanding.

     WARRANTS

     In November 2002, the Company issued warrants to purchase 50,000 and 20,000
     shares  of  common  stock  with  an  exercise  price  of  $0.075 per share,
     respectively,  in  connection  with the convertible notes payable (Note 5).
     The  warrants  are exercisable immediately and expire in November 2007. The
     fair  value  of  warrants calculated using the Black-Scholes option pricing
     model  was  not considered material, and accordingly, no value was ascribed
     to  them  for  financial  reporting  purposes.


                                       38
<PAGE>
                             PROCERA NETWORKS, INC.
                        (a development stage enterprise)

                    Notes to Financial Statements, continued
                               ___________________

8.   STOCKHOLDERS' EQUITY (DEFICIT), continued

     WARRANTS,  continued

     In  December  2002,  the Company issued warrants to purchase 100,000 shares
     and  75,000  shares  of  common stock to two advisory board members with an
     exercise  price  of $0.075 per share. The vesting terms of the warrants are
     based  on  completion  of  service  on  the  advisory board over a two year
     period,  with  the initial vesting occurring upon signing of the agreement.
     The  warrants  expire in December 2007. One of the agreements was signed in
     2002  and  the  other  in  2003.  The  fair  value  of the warrants will be
     calculated  quarterly  using the Black-Scholes option pricing model and the
     Company  will  record  quarterly  charges  over  the  vesting period of the
     warrants.  For  the  year  ended  December  31,  2003, the Company recorded
     charges of $135,975 and $104,340 relating to these warrants. The fair value
     of  the  warrants was not considered material in 2002, and accordingly, the
     Company  did  not  record  any  charges relating to these warrants in 2002.

     In December 2002, the Company issued warrants to purchase 400,000 shares of
     common  stock  for  advisory  services  with an exercise price of $0.01 per
     share. The vesting terms of the warrant are based on completion of advisory
     services  and  the  attainment  of  certain  milestones  relating  to  OEM
     customers.  The  warrants  expire  in  June 2004 unless the advisor has not
     exercised  his  vested  warrant  then  the advisor shall have an additional
     three  years to exercise the vested warrants. At December 31, 2003, 200,000
     of  the  warrants  have  vested  in  connection with advisory services. The
     Company  calculated  the  fair  value  of  the  vested  warrants  using the
     Black-Scholes option pricing model and recorded a charge of $1,075 relating
     to  this  warrant.  The  warrant  will  be  revalued as it vests and future
     charges  will  be  recorded  based on the amount of the warrant that vests.

     In  June  and  July  2003,  the Company issued warrants to purchase 770,000
     shares and 6,000 shares of common stock with exercise prices between $0.001
     and  $0.075  per  share  to placement agents in connection with the private
     placement  of  common  stock  in  June  2003.  The warrants are exercisable
     immediately  and  expire  in June and July 2008. The fair value of warrants
     calculated  using  the  Black-Scholes option pricing model was $319,083 and
     has  been recorded as additional issuance costs of the transaction. In June
     2003,  warrants  to  purchase 500,000 shares of common stock were exercised
     for  $500.  In December 2003, warrants to purchase 250,000 shares of common
     stock  were  cancelled.

     In  June  2003,  the  Company  issued warrants to purchase 50,000 shares of
     common  stock  with an exercise price of $0.50 per share to a legal firm in
     connection  with their engagement to provide legal services to the Company.
     The  warrants are exercisable immediately and expire in June 2008. The fair
     value  of  the  warrants  calculated using the Black-Scholes option pricing
     model  was  $13,992  and  was  recognized  as  legal fees in the year ended
     December  31,  2003.

     In  June  2003,  the  Company issued warrants to purchase 404,000 shares of
     common stock with an exercise price of $0.75 per share to certain investors
     in  connection  with  the  private placement in June 2003. The warrants are
     exercisable  immediately  and  expire  in  June 2008. The fair value of the
     warrants  calculated  using  the  Black-Scholes  option  pricing  model was
     $93,663.  Since  the  warrants related to capital raising activities, there
     was  no  charge  recorded  in  the financial statements for these warrants.


                                       39
<PAGE>
                             PROCERA NETWORKS, INC.
                        (a development stage enterprise)

                    Notes to Financial Statements, continued
                               ___________________

8.   STOCKHOLDERS' EQUITY (DEFICIT), continued

     WARRANTS,  continued

     In  October  2003,  the Company issued warrants to purchase 6,125 shares of
     common  stock  for  advisory  services  with an exercise price of $2.00 per
     share. The warrants are exercisable immediately and expire in October 2006.
     The  fair  value  of  warrants  calculated  using  the Black-Scholes option
     pricing  model  was  $27,232  and  has been recorded as additional issuance
     costs  of  the  transaction.

     In  October  2003, the Company issued warrants to purchase 31,250 shares of
     common  stock  with an exercise price of $2.00 per share in connection with
     the  unsecured  convertible  notes  payable  (Note5).  The  warrants  are
     exercisable immediately and expire in June 2006. The fair value of warrants
     calculated  using  the  Black-Scholes option pricing model was $138,940 and
     was  recorded  as  a discount on the debt and amortized to interest expense
     over  the  life  of  the  debt.  During  the  year ended December 31, 2003,
     $138,940  was  charged  to  interest  expense.

     In December 2003, the Company issued warrants to purchase 109,713 shares of
     common  stock  with  an  exercise price of $2.00 per share to the placement
     agents  in  connection  with  the  private  placement in December 2003. The
     warrants are exercisable immediately and expire one year following the date
     on  which  the  registration  statement  for  the  shares has been declared
     effective  by  the  Securities  and  Exchange Commission. The fair value of
     warrants  calculated  using  the  Black-Scholes  option  pricing  model was
     $207,553  and  has  been  recorded  as  additional  issuance  costs  of the
     transaction.

     In  December 2003, the Company issued warrants to purchase 2,172,500 shares
     of  common  stock  with  an  exercise  price  of $2.00 per share to certain
     investors  in  connection  with the private placement in December 2003. The
     warrants are exercisable immediately and expire one year following the date
     on  which  the  registration  statement  for  the  shares has been declared
     effective  by  the  Securities  and  Exchange Commission. The fair value of
     warrants  calculated  using  the  Black-Scholes  option  pricing  model was
     $4,109,900. Since the warrants related to capital raising activities, there
     was  no  charge  recorded  in  the financial statements for these warrants.

     At December 31, 2003, warrants to purchase 3,444,588 shares of common stock
     are  outstanding.


                                       40
<PAGE>
                             PROCERA NETWORKS, INC.
                        (a development stage enterprise)

                    Notes to Financial Statements, continued
                               ___________________

8.   STOCKHOLDERS' EQUITY (DEFICIT), continued

     WARRANTS,  continued

     The  following  table  sets  forth  the  key  terms  of  these  warrants:

<TABLE>
<CAPTION>
                                                                       WEIGHTED
                                                                        AVERAGE     REASONS FOR
     DATE OF  UNDERLYING     SHARES      VESTING OF      EXPIRATION    EXERCISE      GRANT OF
      GRANT   SECURITY       GRANTED       GRANT            DATE         PRICE       WARRANTS
     -------  ------------  ---------  --------------  --------------  ---------  ---------------
<C>           <S>           <C>        <C>             <C>             <C>        <C>

     11/2002  Common stock     70,000  Immediate              11/2007  $   0.075  Raising capital
     12/2002  Common stock    175,000  Over 2 year            12/2007      0.075  Board
                                       service period                             services
     12/2002  Common stock    400,000  Milestones              6/2004       0.01  Customer
                                                                                  base
      6/2003  Common stock    424,000  Immediate               6/2008       0.72  Raising capital
      6/2003  Common stock     50,000  Immediate               6/2008       0.50  Legal services
      7/2003  Common stock      6,000  Immediate               7/2008      0.075  Raising capital
     10/2003  Common stock      6,125  Immediate              10/2006       2.00  Raising capital
     10/2003  Common stock     31,250  Immediate               6/2006       2.00  Raising capital
     12/2003  Common stock  2,282,213  Immediate         1 year after       2.00  Raising capital
                            ---------                    effective date
                                                         of SB-2
                            3,444,588                                  $    1.45
                            =========
</TABLE>

     SPECIAL  WARRANTS

     In December 2003, the Company issued special warrants to purchase 1,086,250
     shares of common stock with an exercise price of $2.00 per share to certain
     investors  in  connection  with  the  private  placement of common stock in
     December  2003.  The  special  warrants  will  be  automatically  exercised
     immediately  upon  the  declaration  of  the effectiveness of the Company's
     registration  statement  filed  with the Securities and Exchange Commission
     covering  the  shares  issued  in  the December 2003 private placement. The
     special warrants shall terminate if the effective date for the registration
     statement  occurs  after  June 6, 2004. At December 31, 2003, none of these
     warrants  were  vested,  thus  the  warrants  were  not  valued.

     At  December  31,  2003,  all  of  the  special  warrants  are outstanding.

     RIGHT  TO  PURCHASE  COMMON  STOCK

     In  July,  August  and  September  2003,  the  Company granted the right to
     purchase  250,000  shares,  175,000 shares and 150,000 shares with exercise
     prices  of $0.075, $0.10 and $0.25 per share, respectively, to employees in
     connection  with  employment  agreements. The rights vest over a three year
     period  and  expire  in  July,  August and September 2006. The Company will
     record  stock compensation expense for the excess of the deemed fair market
     value  over  the  exercise  price at the date of issuance. The compensation
     expense  is  being  recognized over the vesting period of three years using
     the straight line method. For the year ended December 31, 2003, the Company
     recorded  stock  compensation  expense  of  $84,688.


                                       41
<PAGE>
                             PROCERA NETWORKS, INC.
                        (a development stage enterprise)

                    Notes to Financial Statements, continued
                               ___________________

8.   STOCKHOLDERS' EQUITY (DEFICIT), continued

     RIGHT  TO  PURCHASE  COMMON  STOCK,  continued

     Stock  compensation  to  be  recorded in future periods will be $140,268 in
     2004, $94,062 in 2005 and $57,214 in 2006. The amount of stock compensation
     expense  to  be  recorded  in  future  periods  could decrease if the stock
     purchase  rights  do  not  fully  vest.

     At  December 31, 2003, all of the above rights to purchase common stock are
     outstanding.

     TRANSACTIONS  WITH  EMPLOYEES

     Due to the Company's cash position and lack of ability to obtain additional
     financing,  the  Company  was  forced  to terminate all of its employees on
     March  31,  2003.  In  April  2003, the Company rehired its chief executive
     officer  and  its  chief financial officer to restart its operations and to
     continue  to  search  for  financing  or  a  possible  merger  transaction.

     In  April 2003, the Company reached agreement with its former employees and
     executed  Settlement  and  Release  Agreements whereby the former employees
     gave  up  their right to their accrued unpaid salary in exchange for common
     stock  of  the  Company equal to two times their accrued salary with a fair
     value  of  $0.01  per share. For example, for each dollar of accrued salary
     the  employee  earned,  they  received 2 shares of common stock with a fair
     value of $0.01 per share. In July 2003, the Company issued 1,120,388 shares
     of  its  common  stock  to former employees for their unpaid accrued salary
     through  March  2003.  The value of the common stock issued was $11,204. In
     addition,  all  shares  of restricted common stock were vested upon rehire.

     2003  STOCK  OPTION  PLAN

     In  August  2003, the board of directors adopted the 2003 Stock Option Plan
     (the  "Plan").  The  Plan provides for the issuance of both incentive stock
     options  and  nonqualified  stock  options.

     Nonqualified  and  incentive  stock  options  may  be granted to employees,
     consultants,  and directors of the Company. The Plan provides for the grant
     of  incentive  and  nonqualified  stock options to purchase up to 2,500,000
     shares  of  common  stock.  During  the  year  ended December 31, 2003, the
     Company  did  not  grant  any  stock  options  under  the  Plan.

9.   INCOME TAXES

     There  is  no  provision  for income taxes because the Company has incurred
     operating  losses. Deferred income taxes reflect the net tax effects of net
     operating  loss and tax credit carryovers and temporary differences between
     the  carrying  amounts  of  assets  and liabilities for financial reporting
     purposes  and  the  amounts  used  for  income  tax  purposes.  Significant
     components  of  the  Company's  deferred  tax  assets  are  as  follows:


                                       42
<PAGE>
                             PROCERA NETWORKS, INC.
                        (a development stage enterprise)

                    Notes to Financial Statements, continued
                               ___________________

9.   INCOME TAXES, continued

<TABLE>
<CAPTION>
<S>                                           <C>
          Net operating loss carryforwards    $ 1,678,595
          Research credits                        145,315
          Non-deductible accrued expenses         247,797
                                              ------------
                   Total deferred tax assets    2,071,707

          Valuation allowance                  (2,071,707)
                                              ------------
               Net deferred tax assets        $         -
                                              ============
</TABLE>


     As  of  December  31, 2003, the Company had federal and state net operating
     loss carryforwards of approximately $4,214,399. The net operating loss will
     expire  at  various  dates beginning in 2013 through 2022, if not utilized.
     The  Company  also  has federal and California research and development tax
     credits  of  $70,962 and $74,353 respectively. The federal research credits
     will  begin  to expire in the year 2022 and the California research credits
     have  no  expiration  date.

     The  change in the valuation allowance was a net increase of $1,549,000 and
     $522,700  for  year  and  period  ended  December  31,  2003  and  2002,
     respectively.

     Utilization  of  the  net  operating losses and credits may be subject to a
     substantial  annual  limitation due to the "change in ownership" provisions
     of  the  Internal  Revenue  Code  of 1986 and similar state provisions. The
     annual  limitation may result in the expiration of net operating losses and
     credits  before  utilization.

10.  RELATED PARTY TRANSACTIONS

     In  2002, the Company entered into an advisory agreement with a director of
     the  Company  whereby  the individual will provide advisory services to the
     Company.  The  individual  received a common stock subscription to purchase
     1,200,000  shares  of common stock at $0.001 per share. In August 2003, the
     individual  exercised  the  common stock subscription to purchase 1,200,000
     shares  of  common  stock at $0.001 per share. Additionally, the individual
     held  a  convertible  note  payable  in  the  amount  of $150,000, which is
     included  in  the  convertible  notes payable amount of $1,355,000 that was
     converted  into  the  Company's  common  stock  in  July  2003.

     In  May  2003,  the  Company  entered into an advisory agreement with Cagan
     McAfee  Capital Partners, LLC ("CMCP") to assist in a $5,000,000 financing.
     One  of the owners of CMCP is a director of the Company. In connection with
     the advisory agreement, the Company agreed to sell CMCP 2,000,000 shares of
     its common stock at $0.001 per share, which was purchased in August 2003 by
     CMCP.

     In  August  2003,  the  Company  entered  into an Assignment and Assumption
     Agreement  with  Douglas  J.  Glader,  the  Company's  president  and chief
     executive  officer,  whereby  Douglas  J.  Glader  assigned  his  option to
     purchase  certain  tangible  property, finished goods inventory, furniture,
     capital equipment and intellectual property rights from Digi International,
     Inc.  ("Digi")  to  the  Company  with  the  consent  of  Digi  (Note  11).


                                       43
<PAGE>
                             PROCERA NETWORKS, INC.
                        (a development stage enterprise)

                    Notes to Financial Statements, continued
                               ___________________

11.  TRANSACTIONS WITH DIGI INTERNATIONAL, INC.

     In May 2002, the Company entered into a Purchase and License Agreement with
     Digi  whereby  the  Company  desired  to  acquire  or license all of Digi's
     tangible and intangible assets, intellectual property and personal property
     related to the business of layer 2 through layer 7 switches in exchange for
     issuing  shares  of  the  Company's  stock, representing 19.9% of the fully
     diluted  capitalization  of  the Company, to Digi. The Agreement was set to
     close  on  July 31, 2002 but was amended to close on March 31, 2003. As the
     Company  did  not  have an equity financing, no shares were issued to Digi.
     However,  the  Company  did  have  full  use  of  the  related  assets  and
     intellectual  property.

     In  May  2002,  the Company entered into a Distribution Agreement with Digi
     whereby  the  Company became the exclusive, worldwide distributor of Digi's
     product,  as  defined.

     In  March  2003,  Digi  and  Douglas  J.  Glader entered into an Option and
     License  Agreement  whereby  Digi  terminated  its  Purchase  and  License
     Agreement  with  the  Company  and  granted  Douglas J. Glader the right to
     purchase  the  right,  title  and  interest  in the tangible and intangible
     assets, intellectual property and personal property related to the business
     which  was previously covered by the Purchase Agreement between the Company
     and  Digi  for  $300,000.

     In  August  2003,  the  Company  entered  into an Assignment and Assumption
     Agreement  with  Douglas  J.  Glader whereby Douglas J. Glader assigned his
     option  to  purchase  certain  tangible property, finished goods inventory,
     furniture,  capital equipment and intellectual property rights from Digi to
     the  Company  with  the  consent  of  Digi.

     In  September 2003, the Company exercised the option and paid Digi $300,000
     for  the  rights,  title  and  interest  in  the  assets  described  in the
     Assignment  and  Assumption Agreement. The $300,000 purchase price included
     $267,960  of  inventory  and  $32,040  of  fixed  assets.

12.  SEGMENT INFORMATION

     The  Company operates in one segment, using one measure of profitability to
     manage  its  business.  Revenues  for geographic regions are based upon the
     customer's  location. The following is a summary of revenue by geographical
     region:

<TABLE>
<CAPTION>
                                        Period from May 1,      Cumulative Period
                                           2002 (date of     from May 1, 2002 (date
                        Year Ended         Inception) to        of inception) to
                    December 31, 2003    December 31, 2002      December 31,2003
                    ------------------  -------------------  -----------------------

<S>                 <C>                 <C>                  <C>
     United States  $           14,494  $           150,475  $               164,969
     Australia                       -               15,900                   15,900
     Asia                        4,446                8,993                   13,439
     Europe                      7,200                    -                    7,200
     Middle East                 5,945                    -                    5,945
                    ------------------  -------------------  -----------------------
                    $           32,085  $           175,368  $               207,453
                    ==================  ===================  =======================
</TABLE>

     All  of  the  Company's long-lived assets are located in the United States.


                                       44
<PAGE>
                             PROCERA NETWORKS, INC.
                        (a development stage enterprise)

                    Notes to Financial Statements, continued
                               ___________________

12.  SEGMENT INFORMATION, continued

     The  Company's  accounts  receivable  are  derived from revenue earned from
     customers  located in the United States, Europe, Australia, the Middle East
     and  Asia.  The  Company  performs  ongoing  credit  evaluations of certain
     customers'  financial condition and, generally, requires no collateral from
     its  customers.  For  the  year  ended  December  31,  2003, five customers
     accounted for 22%, 19%, 17%, 14% and 13% of revenues, respectively. For the
     period  from  May  1,  2002  (date  of  inception) to December 31, 2002 two
     customers  accounted  for  51%  and  13%  of  revenues,  respectively.

13.  SUBSEQUENT EVENTS

     On  December 30, 2003, the Company signed a Distributor Agreement with DC7,
     Inc.  ("DC7"),  a  developer,  integrator  and  distributor  of networking,
     storage  and  security  products focused on the enterprise, government, and
     mid-range  markets.  DC7  will  act  as  a non-exclusive distributor of the
     Company's  MLS  Application  Switches.

     On  January 5, 2004, the Company reached an agreement with the sub-landlord
     to  lease  an  additional  1,132  square  feet of office space at $1.00 per
     square feet per month. The Company occupies a total of 4,332 square feet of
     office  space  after  the addition. The Company will pay $6,832 monthly for
     rent  and  common  area  expenses.

     On  January  8,  2004, the Company filed a Registration Statement under the
     Securities  Act  of  1933  on  Form  SB-2  with the Securities and Exchange
     Commission to register 10,222,928 shares of common stock in connection with
     the  private  placement  of  common  stock  in  December  2003.

     On  January  9,  2004,  the  Company  signed  a  term sheet for a potential
     licensing  and  business  arrangement  with Ezyte, Inc., to develop an open
     switching  platform  EZ-2-XML  which  integrates XML and web services based
     switching  capabilities with the wire-speed Layer 7 switching technology of
     the  Company.  The  Company  and Ezyte anticipate execution of a definitive
     agreement  during  the  first  quarter  of  2004.

     On February 2, 2004, the Company signed an agreement with Instream Partners
     to  settle  the  total compensation due to Instream Partners as a result of
     the  financing  relationship  that  was entered into between the parties on
     July 7, 2003. The Company will pay Instream Partners a total of $115,000 in
     cash  with  50%  payable  upon signing this agreement and the remaining 50%
     payable  when  the  special  warrants are exercised. The Company will issue
     20,000  shares  of  unregistered common stock to Instream Partners with the
     intent  of  registering  these shares with the next registration statement.

     On  February  17,  2004,  the  Company  signed  an  Authorized  Distributor
     Agreement with ServGate Technologies, Inc., a developer and manufacturer of
     network  security  products.  The  Company  will  act  as  a non-exclusive,
     independent,  distributor  of  ServGate's  network  security  products.

     On  March  12,  2004,  the Company hired a new Executive Vice-President and
     Chief  Technical  Officer  and  agreed  to  issue  him  options to purchase
     1,200,000  shares  of  common  stock at an exercise price equal to the fair
     market  value  of  the  Company's  common  stock on the day the options are
     approved  by  the  Company's  board  of directors. In addition, the Company
     entered  into  a letter of understanding to acquire two businesses owned by
     the  new  employee.  The Company will issue a total of 900,000 unregistered
     shares of common stock in exchange for the assets and intellectual property
     of  these businesses. The expected completion date of these transactions is
     March  24,  2004.


                                       45
<PAGE>
ITEM  8.     CHANGES  IN  AND  DISAGREEMENTS  WITH ACCOUNTANTS ON
             ACCOUNTING AND FINANCIAL  DISCLOSURE

     Effective  on  October  24, 2003, as a result of the Merger between Zowcom,
Inc.  and  Procera  Networks,  Inc.,  Lesley, Thomas, Schwarz & Postma, Inc. was
dismissed  as  the  principal  accountant  engaged  to  audit Zowcom's financial
statements.  Lesley,  Thomas,  Schwarz  &  Postma,  Inc.  performed the audit of
Zowcom's  financial  statements for the fiscal years ended December 31, 2001 and
2002.  During  this  period  and  the  subsequent  interim period prior to their
dismissal,  there  were  no disagreements with Lesley, Thomas, Schwarz & Postma,
Inc.  on any matter of accounting principles or practices, financial   statement
disclosure  or  auditing scope or procedure, which disagreements if not resolved
to  the satisfaction of Lesley, Thomas, Schwarz & Postma, Inc. would have caused
them to make reference to this subject matter of the disagreements in connection
with  their  report,  nor  were  there  any  "reportable events" as such term is
defined  in  Item  304(a)(1)(iv)  of  Regulation  S-B,  promulgated  under  the
Securities  Exchange  Act  of  1934,  as  amended
("Regulation  S-B").

     The  audit  reports  of Lesley, Thomas, Schwarz & Postma, Inc. for Zowcom's
fiscal  years  ended  December  31,  2001  and  2002  did not contain an adverse
opinion,  or  a  disclaimer  of  opinion, or qualification or modification as to
uncertainty,  audit  scope,  or  accounting  principles.

     Zowcom  requested Lesley, Thomas, Schwarz & Postma, Inc. to furnish it with
a  letter addressed to the Securities and Exchange Commission stating whether it
agrees  with  the  statements  made  above  by  us. A copy of such letter, dated
October  24,  2003,  has  been  filed  with  the  SEC.

     Effective  October  24,  2003,  we  engaged Burr, Pilger & Mayer LLP, whose
address  is  Two Palo Alto Square, Suite 250, 3000 El Camino Real, Palo Alto, CA
94306  to audit our financial statements. During our most recent fiscal year and
the subsequent period prior to such appointment, we have not consulted the newly
engaged  accountant  regarding  the  application  of  accounting principles to a
specified transaction or the type of audit opinion that might be rendered on our
financial  statements,  nor  on  any  matter  that  was  either the subject of a
disagreement  or  a  reportable  event.

     Our Board of Directors approved the change in accountants described herein.

ITEM  8A.     CONTROLS  AND  PROCEDURES

     On  December  31,  2003,  our  management  concluded  its evaluation of the
effectiveness  of  the Company's disclosure controls and procedures.  As of that
date,  our  Chief  Executive Officer and Chief Financial Officer concluded  that
the  Company  maintains effective disclosure controls and procedures that ensure
information  required  to  be  disclosed  in  the  Company's  reports  under the
Securities  Exchange Act of 1934 is recorded, processed, summarized and reported
within  the  time periods specified in the SEC's rules and forms.  Specifically,
the  disclosure  controls  and procedures assure that information is accumulated
and  communicated  to  the  Company's  management, including its Chief Executive
Officer  and  Chief Financial Officer, as appropriate, to allow timely decisions
regarding  required  disclosure.  There  have been no significant changes in the
Company's  internal controls or in other factors that could significantly affect
these  controls  subsequent  to  the  date  of  management's  evaluation.


                                       46
<PAGE>
                                    PART III

ITEM  9.     DIRECTORS,  EXECUTIVE  OFFICERS,  PROMOTERS  AND  CONTROL
             PERSONS; COMPLIANCE  WITH  SECTION  16(A)  OF  THE  EXCHANGE
             ACT.

     The following table sets forth certain information regarding our directors,
executive  officers  and  certain  key  employees  as  of  December  31,  2003:

<TABLE>
<CAPTION>
NAME               AGE                      POSITION
-------------------------------------------------------------------------
<S>                <C>  <C>
Douglas J. Glader   60  President, Chief Executive Officer and a Director
Jay Zerfoss         69  Chief Financial Officer and Secretary
Greg Dewing         48  Vice President of Sales
Magnus Hansen       58  Vice President of Engineering
John McQuade        57  Director of Operations and Support
Patrick Wong        41  Director of Product Management and Marketing
Eric McAfee         41  Director
Tom Williams        65  Director
</TABLE>


     DOUGLAS  J.  GLADER has served as our President and Chief Executive Officer
and  as  a  member  of  our Board of Directors since the October 2003 merger. He
served as President and Chief Executive Officer of PNI since founding PNI in May
2002.  Prior  to founding PNI, Mr. Glader served from 1996 to 2002 in key senior
executive  positions  at  Digi  International,  Inc.,  including  Executive Vice
President,  Chief  Operating  Officer,  Senior  Vice  President  of  Worldwide
Manufacturing  and  Operations,  and General Manager of Milan Technology, Digi's
LAN  products  division.  Mr.  Glader  has  more  than 27 years of experience in
general  management  with  firms  such  as  Memorex, Measurex Corporation, Altus
Corporation  and Direct Incorporated, all located in the San Francisco Bay Area.
In  addition to co-founding Greyhawk Systems, Inc., a manufacturer of electronic
imaging  hardware  and software, Mr. Glader has managed manufacturing operations
in  Belgium, Ireland, Mexico and the Pacific Rim. Mr. Glader serves on the board
of  directors  of  Uromedica,  a  privately held company in Plymouth, Minnesota.

     JAY  ZERFOSS  has served as our Chief Financial Officer and Secretary since
the October 2003 merger.  He served as the Chief Financial Officer and Secretary
of  PNI  from May 2002 to October 2003.  Mr. Zerfoss is an accomplished CPA with
extensive  experience  as  a  Controller,  Treasurer,  Director of Finance, Vice
President of Finance and Administration, and CFO for a variety of organizations.
His  areas of expertise include start-up high technology manufacturing companies
with  national  and  global  concerns,  rendering  board of directors reporting,
financial  statement  preparation,  cash  management  reporting,  planning  and
budgeting,  policies  and  internal  controls,  attorney,  auditor,  and banking
relationships.  Prior  to  joining  PNI,  Mr. Zerfoss was Director of Finance at
InnoWave  Broadband  Inc.  From  January 1998 until November 2001. From November
2001  until  May  2002,  Mr.  Zerfoss  was  an independent financial consultant.

     GREG  DEWING  has  served  as our Vice President of Sales since the October
2003  merger.  He served as Vice President of Sales of PNI from November 2002 to
October  2003. Mr. Dewing is a senior sales executive with more than 19 years of
experience  in  OEM,  end  user  and VAR partnerships. Prior to


                                       47
<PAGE>
joining  PNI,  Mr.  Dewing  was with Network Peripherals Inc. from December 1998
until  July  2002,  where he led the OEM sales efforts for North America, Europe
and  Asia  Pacific.  Mr.  Dewing  took  a  sabbatical  prior  to  joining  PNI.

     MAGNUS  HANSEN  has  served  as our Vice President of Engineering since the
October 2003 merger.  He served as Vice President of Engineering of PNI from May
2002  to  October  2003.  Mr.  Hansen  is  a  senior  executive  with  extensive
experience  in  software,  optical,  electrical, and mechanical engineering. His
management experience includes more than 27 years leading development and design
teams  at  a  variety  of  organizations  in  the Silicon Valley area.  Prior to
joining PNI, Mr. Hansen was Director of Technology at Milan Technology from June
1996  until  May  2002.

     JOHN  A. MCQUADE has served as our Director of Operations and Support since
the  October  2003  merger.  He served as Director of Operations and Support for
PNI  from  May  2002  to October 2003. Mr. McQuade is a senior executive with 25
years  of  high-tech  operations,  quality  and  technical  support  experience,
including  expatriate  positions  in  Asia and Europe.  He worked with Digi from
November  1992  to  May  2002  as the Director of Customer Service and Technical
Support  in  Sunnyvale  on  the  General  Manager's  staff.

     PATRICK WONG has served as our Director of Product Management and Marketing
since  the October 2003 merger.  He served as Director of Product Management and
Marketing  of  PNI  from  July 2003 to October 2003.  Mr. Wong has over 18 years
experience  in  marketing, business development, IT, engineering and management.
His  industry  experience  spans  networking, software development, security and
optical  networking.  He  worked  as  the Sales and Marketing Manager at Finisar
Corp.  From  April  1998 until August 2000. From August 2000 until March 2002 he
was  the  Director  of  Product  Marketing  at  Nexgi  Systems  Corp.

     ERIC  A.  MCAFEE has served as a member of our Board of Directors since the
October  2003  merger.  He  served as a Director of PNI from May 2002 to October
2003.  Mr.  McAfee  is  a  principal  at  Berg McAfee Companies and Cagan McAfee
Capital  Partners, two financial advisory firms that assist small companies with
finding  funding sources. Mr. McAfee is a Silicon Valley venture capitalist with
investments in more than 25 Internet, software and telecommunications companies.
Mr.  McAfee  has  co-founded  five  technology companies, including:  NetStream;
MindArrow;  Global  Digital,  an  Internet  software  company with 210 newspaper
customers; NewMedia; and the predecessor to IQ Biometrix, a provider of security
software  for 5,000 police departments.  Mr. McAfee was selected to serve on the
George W. Bush Information Technology National Advisory Board, and is a graduate
of  the  Stanford  Graduate  School  of  Business  Executive  Program.

     TOM  WILLIAMS  has  served  as a member of our Board of Directors since the
October  2003  merger.  He  served as a Director of PNI from May 2002 to October
2003.  Mr.  Williams  has  20  years'  experience  as CFO and General Counsel in
start-up  and  medium-sized  venture  capital-backed  technology companies.  Mr.
Williams'  early  years were spent with IBM and Shell Oil Company in engineering
and  legal  positions.  In  1971,  Mr.  Williams  joined  the management team of
Measurex  Corp., a process control start-up, responsible for engineering project
budgeting  and patent matters as the company grew from $4 million to $50 million
in  revenues.  In  1976,  Mr.  Williams and two partners took over management of
Altus  Corporation,  guided  the  company  through bankruptcy and raised venture
capital.  From  1984  though  1993, Mr. Williams was CFO and General Counsel for
Greyhawk  Systems,


                                       48
<PAGE>
an innovator in high-resolution electronic imaging, which was sold in 1993. From
1993  to  1997,  Mr. Williams was in the private practice of law. In 1997 he was
appointed  as  CFO  of  IC  WORKS,  Inc., a venture capital-backed semiconductor
company, on an interim basis to guide a financial turnaround. Within six months,
the  company was brought from near bankruptcy to a cash positive position, which
allowed  the  company to be sold in 1998 for more than $100 million. Since 1999,
Mr. Williams has been CFO at Bandwidth9, a company developing tunable lasers for
the  fiber  optics  industry.  Mr.  Williams  holds  a B.S. Degree in electrical
engineering, and a law degree from the University of Minnesota and a M.B.A. from
the  University of California at Berkeley. He is a member of the California, New
York  (inactive),  Federal  and  Patent  bars.

     Our  executive  officers are elected by the Board of Directors on an annual
basis  and  serve  at  the  discretion of the Board of Directors, subject to the
terms  of  any  employment  agreements with us, until their successors have been
duly elected and qualified or until their earlier resignation or removal.  There
are  no  family  relationships  between  any  directors  and executive officers.

BOARD  COMMITTEES

     We  currently  have  two  committees  of  our Board of Directors: the Audit
Committee  and  the  Compensation  Committee.

     The  Compensation  Committee  determines  the  salaries  and  incentive
compensation  of  our officers and provides recommendations for the salaries and
incentive  compensation  of our other employees. The Compensation Committee also
administers  our  stock  option  plan.  There  are  currently two members of the
Compensation  Committee,  Messrs.  McAfee  and  Williams.  Mr. Glader, our Chief
Executive  Officer,  participated  in  deliberations  of  the Board of Directors
relating  to  his  compensation.

     The  Audit Committee reviews, acts on and reports to the Board of Directors
regarding  various  auditing  and accounting matters, including the selection of
our  independent auditors, the monitoring of the rotation of the partners of the
independent  auditors,  the review of our financial statements, the scope of the
annual  audits,  fees  to  be  paid  to  the  auditors,  the  performance of our
independent  auditors  and  our  accounting  practices.  There are currently two
members  of  the  Audit  Committee,  Messrs.  Glader  and  Williams.

Audit  Committee  Financial  Expert

     Our  Board  of  Directors  has  determined that we do not have at least one
audit  committee  financial  expert  serving  on our audit committee.  Under the
applicable  Securities  and  Exchange  Commission  standard,  an audit committee
financial  expert  means  a  person  who  has  the  following  attributes:

-    An  understanding of generally accepted accounting principles and financial
     statements;
-    The  ability  to  assess  the  general  application  of  such principles in
     connection  with  the  accounting  for  estimates,  accruals  and reserves;
-    Experience  preparing,  auditing,  analyzing  or  evaluating  financial
     statements  that  present  a  breadth and level of complexity of accounting
     issues  that  are  generally  comparable  to  the breadth and complexity of
     issues  that  can  reasonably  be expected to be raised by the registrant's
     financial  statements,  or  experience  actively  supervising  one  or more
     persons  engaged  in  such  activities;


                                       49
<PAGE>
-    An  understanding  of  internal  controls  and  procedures  for  financial
     reporting;  and
-    An  understanding  of  audit  committee  functions.

Compliance  with  Section  16(a)  of  the  Securities  Exchange  Act  of  1934.

     Section  16(a) of the Exchange Act requires our officers and directors, and
persons  who  own  more  than  10%  of  the our common stock, to file reports of
ownership  and  changes  of  ownership of such securities with the United States
Securities  and  Exchange  Commission.  Based  on  a  review of the our records,
management believes that all filing requirements applicable to the our officers,
directors  and  holders  of more than 10% of our common stock were complied with
during  the  2003 fiscal year, except that: with respect to Mr. McAfee, a Form 3
was  filed  late.

Code  of  Ethics.

     We  do not have a code of ethics. The Board of Directors intends to discuss
the preparation and adoption of a Code of Ethics at its next meeting. Due to the
recent  completion  of the merger between PNI and Zowcom, the Board of Directors
had  decided  to postpone the adoption of a code of ethics until the Company was
able  to  focus its business plan and develop a greater infrastructure.  Once we
have  adopted  a  code  of  ethics  a  copy may be obtained by sending a written
request  to  the  Company.

DIRECTORS'  COMPENSATION

     Directors who are also our employees receive no additional compensation for
serving  on  the  Board.  We reimburse non-employee Directors for all travel and
other  expenses  incurred  in connection with attending meetings of the Board of
Directors.  Our  Directors  who  are  also  employees  may  participate in other
incentive  plans  described  under  "Item  10.  Executive  Compensation."

ITEM  10.     EXECUTIVE  COMPENSATION

     The  following  table  sets  forth  all compensation paid in respect of the
individuals  who  served,  during the year ended December 31, 2003, as our Chief
Executive Officer and the next five mostly highly compensated executive officers
of  the  (collectively  the  "NAMED  EXECUTIVE OFFICERS") whose total salary and
bonus  was in excess of $100,000 per annum. Except as listed below, there are no
bonuses,  other  annual  compensation,  restricted  stock  awards  or  stock
options/SARS  or  any  other  compensation  paid  to  executive  officers.

<TABLE>
<CAPTION>
                                            ANNUAL COMPENSATION
                                  -----------------------------------------
NAME AND PRINCIPAL                                          OTHER ANNUAL
POSITION                  YEAR    SALARY ($)   BONUS ($)  COMPENSATION ($)
         (a)              (b)         (c)         (d)            (e)
---------------------------------------------------------------------------
<S>                     <C>       <C>          <C>        <C>
Douglas J. Glader,      2003 (1)  $   222,203          0                 0
CEO                        2002   $    63,928          0                 0

Jay Zerfoss,               2003   $    94,746          0                 0
CFO                        2002   $    50,329          0                 0

Magnus Hansen,             2003   $    58,157          0                 0


                                       50
<PAGE>
V.P., Engineering          2002   $    29,416          0                 0

Patrick Wong,              2003   $    51,154          0                 0
Director,  Marketing       2002   $         0          0                 0

John McQuade,              2003   $    63,735          0                 0
Director,  Operations      2002   $    25,860          0                 0

Gregory Dewing,            2003   $    53,217          0                 0
V.P., Sales                2002   $     2,340          0                 0

Dan Spaulding,          2003 (2)  $         0          0                 0
CEO                        2002   $         0          0  $         200 (3)

<FN>

(1)  Mr.  Glader's  employment  letter provides that he receive his then current
base  salary  for  an  additional  18  months in the event that he is terminated
without  cause.  There  are  no  other  severance  provisions.
(2)  Mr.  Spaulding  resigned  from  all  positions  that  he  held with Zowcom,
effective  October  17,  2003  pursuant  to  the  merger  with  PNI.
(3)  Mr.  Spaulding was issued 200,000 shares of the Company's common stock with
a  fair  market  value  of  $200  for  services  rendered as a promoter in 2002.
</TABLE>

ITEM  11.     SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
              MANAGEMENT AND RELATED  STOCKHOLDER  MATTERS

     The following table sets forth certain information known to us with respect
to  the beneficial ownership of our common stock as of December 31, 2003 and (i)
all  persons who are known to us to be beneficial owners of five percent or more
of  the  common  shares,  (ii)  each of our Directors, (iii) the Named Executive
Officers  named  in the Executive Compensation  section  of  this  annual report
and  (iv)  all  current  Directors  and  executive  officers  as  a  group.

<TABLE>
<CAPTION>
                                                         PERCENT OF CLASS
NAME AND ADDRESS OF                 SHARES BENEFICIALLY    BENEFICIALLY
BENEFICIAL OWNER                           OWNED               OWNED
--------------------------------------------------------------------------
<S>                                 <C>                  <C>
Douglas Glader (1)                            4,271,754              18.9%

Gregory Dewing                                  450,510                 2%

Magnus Hansen                                   675,232                 3%

Jay Zerfoss                                     680,318                 3%

John A. McQuade                                 656,086               2.9%

Thomas Williams                                 100,000               0.4%
46410 Fremont Blvd.
Fremont, CA 94538

Eric McAfee (2) (4)                           1,292,940               5.7%


                                       51
<PAGE>
10600 N. De Anza Blvd., Suite 250
Cupertino, CA  95014

Patrick Wong (3)                                250,000               1.1%

John Minnis Trust                             1,232,959               5.5%
1781 Pinehurst Court
Milpitas, CA  95035

Clyde Berg (4) (5)                            1,292,940               5.7%
10600 N. De Anza Blvd., Suite 250
Cupertino, CA 95014

All officers and directors                    8,376,840                37%
as a group (eight persons)
<FN>

(1)  Douglas Glader, who owns 4,148,970 shares of Procera's common stock, is the
father  of  Eric  Glader,  who  owns  122,784  shares of Procera's common stock.
(2)  Eric McAfee owns 832,500 shares of Procera's common stock as an individual.
Mr.  McAfee's  children  also  own  100,00  shares  of  Procera's  common stock.
(3)  Patrick  Wong  has a warrant to purchase 250,000 shares of Procera's common
Stock  at  $.075  per  share.
(4)  Berg  McAfee Companies owns 720,880 shares of Procera's common stock and is
owned  in  equal shares by Eric McAfee and Clyde Berg. Therefore, Eric McAfee is
the  beneficial  owner of 50%, or 360,440 of those shares, and Clyde Berg is the
beneficial  owner  of  50%,  or  360,440  of  those  shares.
(5)  Clyde  Berg  is the owner of 932,500 shares of Procera's common stock as an
individual.
</TABLE>

     Beneficial  ownership  is  determined  in  accordance with the rules of the
Securities  and Exchange Commission and includes voting or investment power with
respect to the securities. Common shares subject to options or warrants that are
currently exercisable or exercisable within 60 days of March 15, 2004 are deemed
to  be  outstanding  and to be beneficially owned by the person or group holding
such  options  or warrants for the purpose of computing the percentage ownership
of  such  person  or group but are not treated as outstanding for the purpose of
computing  the  percentage  ownership  of  any  other  person  or  group. Unless
otherwise indicated, the address for each of the individuals listed in the table
is  care  of  Procera Networks, Inc., 3175 South Winchester Boulevard, Campbell,
California  95008.  Unless otherwise indicated by footnote, the persons named in
the  table have sole voting and sole investment power with respect to all common
shares  shown  as  beneficially  owned  by them, subject to applicable community
property  laws. Percentage of beneficial ownership is based on 22,622,156 shares
of  our  common  stock  outstanding  as  of  March  15,  2004.

ITEM  12.     CERTAIN  RELATIONSHIPS  AND  RELATED  TRANSACTIONS

     Frank  Drechsler  was  issued  5,000,000 shares of our common stock in July
2002  in  exchange  for  his services as our promoter. The value of the services
performed  by  Mr.  Drechsler  was  approximately  $5,000. Marc Seely was issued
800,000  shares of our common stock in July 2002 in exchange for his services as
our promoter. The value of the services performed by Mr. Seely was approximately
$800.  Dan  Spaulding was issued 200,000 shares of our common stock in July 2002
in  exchange  for  his


                                       52
<PAGE>
services  as  our promoter. The value of the services performed by Mr. Spaulding
was  approximately  $200.

     Eric  McAfee  received  rights to purchase 1,200,000 shares of common stock
for  his services as a financial advisor to the Company from May 1, 2002 through
October 31, 2002. Eric McAfee then assigned the rights to Berg McAfee Companies,
which  is  owned  in  equal  parts  by  Eric  McAfee and Clyde Berg. Eric McAfee
purchased 600,000 shares of common stock at $0.001 per share in August 2003.

     Cagan  McAfee  Capital  Partners  ("CMCP")  received  rights  to  purchase
2,000,000  shares  of  common stock for its services as a finder in our December
2003  private  placement.  Eric  McAfee,  as  an owner of CMCP purchased 665,000
shares  at  $0.001  per  share  in  August  2003.

     Douglas  J.  Glader  and  Gregory  Dewing  have employment letters with the
Company  discussed  elsewhere  in  this  annual  report and included as exhibits
hereto.

     We  believe that all of the transactions set forth above were made on terms
no  less  favorable  to us than could have been obtained from unaffiliated third
parties.  We  intend  that  all  future  transactions with affiliated persons be
approved  by  a  majority of the Board of Directors, including a majority of the
independent  and  disinterested outside directors on the Board of Directors, and
be  on  terms  no  less favorable to us than could be obtained from unaffiliated
third  parties.

DESCRIPTION  OF  SECURITIES

     The  descriptions  in  this  section  and  in other sections of this annual
report of our securities and various provisions of our articles of incorporation
and  our  bylaws are limited solely to descriptions of the material terms of our
securities,  articles of incorporation and bylaws. Our articles of incorporation
and  bylaws  have  been  filed  with  the SEC as exhibits to this annual report

     Our authorized capital stock consists of 50,000,000 shares of common stock,
par  value  $0.001 per share, and 5,000,000 shares of preferred stock, par value
$0.001 per share. As of December 31, 2003, 22,622,156 shares of our common stock
and  no shares of our preferred stock were issued and outstanding. This excludes
an  aggregate  of  4,019,588  shares  of common stock reserved for issuance upon
exercise  of  stock  purchase  rights  and  warrants.

COMMON  STOCK

     The  holders  of  our  common  stock  are  entitled  to equal dividends and
distributions  per  share with respect to the common stock when, and if declared
by  the  Board of Directors from funds legally available therefore. No holder of
any  shares  of our common stock has a pre-emptive right to subscribe for any of
our  securities,  nor  are any common stock subject to redemption or convertible
into other of our securities. Upon liquidation, dissolution or winding up of the
Company,  and  after  payment of creditors and preferred stockholders the assets
will  be  divided  pro-rata  on a share-for-share basis among the holders of the
shares  of  common  stock.  All shares of common stock now outstanding are fully
paid,  validly  issued  and  non-assessable.


                                       53
<PAGE>
     Each  share  of  common  stock  is entitled to one vote with respect to the
election  of  any  Director  or  any  other  matter  upon which stockholders are
required  or  permitted  to  vote.  Holders  of  the  common  stock  do not have
cumulative voting rights, so the holders of more than 50% of the combined shares
voting  for  the  election  of  Directors may elect all of the Directors if they
choose  to  do  so, and, in that event, the holders of the remaining shares will
not  be  able  to  elect  any  members  to  the  Board  of  Directors.

PREFERRED  STOCK

     We  may  issue  shares  of preferred stock in one or more classes or series
within  a  class  as  may  be  determined  by  our  Board  of Directors, who may
establish,  from time to time, the number of shares to be included in each class
or series, may fix the designation, powers, preferences and rights of the shares
of each such class or series and any qualifications, limitations or restrictions
thereof,  and may increase or decrease the number of shares of any such class or
series  without  any  further  vote or action by the stockholders. Any preferred
stock  so  issued  by the Board of Directors may rank senior to the common stock
with  respect  to  the  payment  of  dividends  or  amounts  upon  liquidation,
dissolution  or  winding up of Procera, or both. In addition, any such shares of
preferred  stock may have class or series voting rights. Moreover, under certain
circumstances,  the issuance of preferred stock or the existence of the unissued
preferred  stock  might  tend to discourage or render more difficult a merger or
other  change  in  control  of  Procera.

     No  shares  of  preferred stock are currently outstanding.  The issuance of
preferred  stock,  while  providing  desirable  flexibility  in  connection with
possible  acquisitions  and  other  corporate purposes, could have the effect of
making  it  more  difficult  for  a third party to acquire, or of discouraging a
third  party  from  acquiring,  a  majority  of  our  outstanding  voting stock.

RECENT  SALES  OF  UNREGISTERED  SECURITIES

     From  January  1,  2003 to the date of this annual report, we have sold the
following  unregistered  securities.

     In January 2003, certain advisors and directors purchased 150,000 shares of
our  common  stock  for  $0.001  per  share.

     In  May 2003, the outstanding amount of unpaid salaries of $560,194 owed to
former employees was converted into 1,120,388 shares of our common stock using a
conversion  rate  of  $0.50  per  share.

     In  June  2003,  we  completed a private placement of 808,000 shares of our
common  stock  at $0.50 per share and issued warrants to purchase 404,000 shares
of  common  stock  at  a  purchase  price  of  $0.75 per share. The warrants are
exercisable  immediately  and  expire  in  June  2008. We raised an aggregate of
$404,000  in  gross  proceeds.

     In  June  2003,  a  warrant  holder  exercised warrants to purchase 500,000
shares  of  our  common  stock  at  $0.001  per  share.


                                       54
<PAGE>
     In  June 2003, an employee purchased 400,000 shares of our common stock for
$0.001  per  share.

     In  July  2003,  the  outstanding principal amount of the convertible notes
payable  of  $1,355,000  and  accrued  interest  and  loan  fees of $258,833 was
converted into 3,227,666 shares of common stock using a conversion rate of $0.50
per  share.  Additionally,  we issued 361,893 shares of common stock to the note
holders  in  accordance  with  the  agreements.

     In  August  2003, certain advisors and directors purchased 3,200,000 shares
of  our  common  stock  at  $0.001  per  share.

     In August 2003, we completed a private placement of 1,695,000 shares of our
common  stock  at $1.00 per share. We raised an aggregate of $1,695,000 in gross
proceeds.

     In  October 2003, we issued an unsecured convertible promissory note in the
amount of $500,000 to an investor.  The principal amount of the convertible note
payable, together with interest at 8% per annum was due and payable on April 22,
2004.  The  outstanding  principal  and  accrued  interest  of  the  note  is
convertible, at the option of the holder, into common stock at a conversion rate
of  $2.00 per share.  Additionally, we issued warrants to purchase 31,250 shares
of  common  stock  with  an  exercise  price of $2.00 per share.  The warrant is
exercisable  immediately  and  expires  in  October 2006.  In December 2003, the
outstanding  principal  amount  of  the convertible note payable of $500,000 and
accrued  interest  of  $5,918  was  converted  into 252,959 shares of restricted
common  stock.

     In  December  2003,  a warrant holder exercised a warrant to purchase 5,000
shares  of  our  common  stock  at  $0.001  per  share.

     In  December  2003,  we completed a brokered private placement of 2,172,500
shares of common stock as described elsewhere in this annual report. We raised a
total  of  $4,345,000  in the placement, but have only received $2,172,500 as of
December 31, 2003 from the sale of 1,086,250 shares of common stock at $2.00 per
share.  An  additional  $2,172,500  will  be received from the sale of 1,086,250
shares  of  common  stock  to  certain existing stockholders pursuant to special
warrants, provided that our registration statement filed with the SEC on January
8,  2004  is  declared  effective  by  the  SEC  on or before June 6, 2004. Each
investor  in the Placement completed a subscription agreement, a special warrant
agreement  and  a warrant agreement, forms of which are filed as exhibits to the
registration  statement,  and  represented  to  us  that  they  were  accredited
investors  purchasing  the shares for their own account. Investors participating
in the Placement received registration rights with respect to the shares issued,
and  the  registration  statement  filed  on  January  8,  2004  satisfied  our
obligations.


                                       55
<PAGE>
ITEM  13.     EXHIBITS  AND  REPORTS  ON  FORM  8-K

(a)  Exhibits


<TABLE>
<CAPTION>
<S>    <C>
----------------------------------------------------------------------------------------------------
 2.1*  Agreement and Plan of Merger included in our Preliminary Proxy Statement on Schedule
       14A filed on August 25, 2003 and incorporated herein by reference.
----------------------------------------------------------------------------------------------------

----------------------------------------------------------------------------------------------------
 3.1*  Articles of Incorporation included as Exhibit 3.1 to our form SB-2 filed on February 11, 2002
       and incorporated herein by reference.
----------------------------------------------------------------------------------------------------

----------------------------------------------------------------------------------------------------
 3.2*  Bylaws included as Exhibit 3.2 to our form SB-2 filed on February 11, 2002 and incorporated
       herein by reference.
----------------------------------------------------------------------------------------------------

----------------------------------------------------------------------------------------------------
10.1*  2003 Stock Option Plan
----------------------------------------------------------------------------------------------------

----------------------------------------------------------------------------------------------------
10.2*  Sublease Agreement
----------------------------------------------------------------------------------------------------

----------------------------------------------------------------------------------------------------
10.3*  Employee Offer Letter for Douglas J. Glader
----------------------------------------------------------------------------------------------------

----------------------------------------------------------------------------------------------------
10.4*  Employee Offer Letter for Gregory Dewing
----------------------------------------------------------------------------------------------------

----------------------------------------------------------------------------------------------------

----------------------------------------------------------------------------------------------------

----------------------------------------------------------------------------------------------------
 31.1  Certification of Chairman and Chief Executive Officer Pursuant to Section 302 of the
       Sarbanes-Oxley Act of 2002 (18 U.S.C. Sec. 1350) (transmitted herewith).
----------------------------------------------------------------------------------------------------

----------------------------------------------------------------------------------------------------
 31.2  Certification of Vice Chairman and Chief Financial Officer Pursuant to Section 302 of the
       Sarbanes-Oxley Act of 2002 (18 U.S.C. Sec. 1350) (transmitted herewith).
----------------------------------------------------------------------------------------------------

----------------------------------------------------------------------------------------------------
 32.1  Written Statement of Chairman and Chief Executive Officer Pursuant to Section 906 of the
       Sarbanes-Oxley Act of 2002 (18 U.S.C. Section 1350) (transmitted herewith).
----------------------------------------------------------------------------------------------------

----------------------------------------------------------------------------------------------------
 32.2  Written Statement of Vice Chairman and Chief Financial Officer Pursuant to Section 906 of
       the Sarbanes-Oxley Act of 2002 (18 U.S.C. Section 1350) (transmitted herewith).
----------------------------------------------------------------------------------------------------
</TABLE>

*     Previously  filed.

(b)  Reports  on  Form  8-K

     (1)  On  October  24,  2003, we furnished a report on Form 8-K under Item 1
reporting  that  we  changed  our name to Procera Networks, Inc. pursuant to the
Agreement  and  Plan  of  Merger  between  Zowcom  and Procera, and under Item 2
reporting  that  we  assumed  Procera's  business  operations,  and under Item 4
reporting  that  we engaged Burr, Pilger & Mayer LLP as our principal accountant
to  audit  our  financial  statements.


                                       56
<PAGE>
     (2)  On November 20, 2003, we furnished a report on Form 8-K/A to amend and
supplement  report  on  Form  8-K  filed on October 24, 2003. The report on Form
8-K/A  is  being  amended  and  supplemented  to  include  the effective date of
changing our principal accountant from Lesley, Thomas, Schwarz & Postma, Inc. to
Burr,  Pilger  &  Mayer  LLP  required  by  Item  4.
     (3)  On  December  10, 2003, we furnished a report on Form 8-K under Item 5
reporting  the  completion  of  an equity offering of 2,175,000 shares of common
stock  at  $2.00  per  share.
     (4)  On December 30, 2003, we furnished a report on Form 8-K/A to amend and
supplement  report  on Form 8-K filed on October 24, 2003 in connection with the
merger  with  Procera Networks, Inc., a Delaware corporation. The report on Form
8-K is being amended and supplemented to include the financial statements of the
business  acquired  and  the pro forma financial information required by Item 7.

ITEM  14.     PRINCIPAL  ACCOUNTANT  FEES  AND  SERVICES

Below  is the aggregate amount of fees billed for professional services rendered
by  our  principal  accountants  with  respect  to  our  last  two fiscal years:

                                                             2003    2002
                                                            -------  -----
Audit fees                                                  $44,795  $ ---
Audit-related fees                                           36,315    ---
Tax fees                                                        ---    ---
All other fees                                                  ---    ---



All  of  the professional services rendered by our principal accountants for the
audit  of  our  annual  financial  statements and review of financial statements
included  in  our  Form  10-QSB  or  services  that are normally provided by the
accountant  in  connection  with statutory and regulatory filings or engagements
for  last  two  fiscal  years  were  approved  by  the  audit  committee.
SIGNATURES

     In  accordance with section 13 and 15 (d) of the Securities Exchange Act of
1934,  the  registrant has duly caused this report to be signed on its behalf by
the  undersigned,  thereunto  duly  authorized.


Procera Networks, Inc.



/s/ Douglas J. Glader
-----------------------------
Douglas J. Glader
President and CEO/Director
March 16, 2004


                                       57
<PAGE>
     In  accordance with the Securities Exchange Act of 1934, this Annual Report
on  Form  10-KSB has been signed below by the following persons on behalf of the
registrant  and  in  the  capacities  and  on  the  dates  indicated.

SIGNATURE               TITLE                               DATE
---------               -----                               ----

/s/ Douglas J. Glader   President, Chief Executive Officer  March 16, 2004
----------------------
Douglas J. Glader       and Director

/s/ Jay Zerfoss         Chief Financial Officer and Chief   March 16, 2004
----------------------
Jay Zerfoss             Accounting Officer

                        Director
----------------------
Eric McAfee

/s/ Thomas Williams     Director                            March 16, 2004
----------------------
Tom Williams

/s/ Scott McClendon     Director                            March 16, 2004
----------------------
Scott McClendon


EXHIBIT  INDEX

<TABLE>
<CAPTION>
<S>    <C>
----------------------------------------------------------------------------------------------------
 2.1*  Agreement and Plan of Merger included in our Preliminary Proxy Statement on Schedule
       14A filed on August 25, 2003 and incorporated herein by reference.
----------------------------------------------------------------------------------------------------

----------------------------------------------------------------------------------------------------
 3.1*  Articles of Incorporation included as Exhibit 3.1 to our form SB-2 filed on February 11, 2002
       and incorporated herein by reference.
----------------------------------------------------------------------------------------------------

----------------------------------------------------------------------------------------------------
 3.2*  Bylaws included as Exhibit 3.2 to our form SB-2 filed on February 11, 2002 and incorporated
       herein by reference.
----------------------------------------------------------------------------------------------------

----------------------------------------------------------------------------------------------------
10.1*  2003 Stock Option Plan
----------------------------------------------------------------------------------------------------

----------------------------------------------------------------------------------------------------
10.2*  Sublease Agreement
----------------------------------------------------------------------------------------------------

----------------------------------------------------------------------------------------------------
10.3*  Employee Offer Letter for Douglas J. Glader
----------------------------------------------------------------------------------------------------

----------------------------------------------------------------------------------------------------
10.4*  Employee Offer Letter for Gregory Dewing
----------------------------------------------------------------------------------------------------

----------------------------------------------------------------------------------------------------

----------------------------------------------------------------------------------------------------

----------------------------------------------------------------------------------------------------
 31.1  Certification of Chairman and Chief Executive Officer Pursuant to Section 302 of the
       Sarbanes-Oxley Act of 2002 (18 U.S.C. Sec. 1350) (transmitted herewith).
----------------------------------------------------------------------------------------------------

----------------------------------------------------------------------------------------------------
 31.2  Certification of Vice Chairman and Chief Financial Officer Pursuant to Section 302 of the


                                       58
<PAGE>
       Sarbanes-Oxley Act of 2002 (18 U.S.C. Sec. 1350) (transmitted herewith).
----------------------------------------------------------------------------------------------------

----------------------------------------------------------------------------------------------------
 32.1  Written Statement of Chairman and Chief Executive Officer Pursuant to Section 906 of the
       Sarbanes-Oxley Act of 2002 (18 U.S.C. Section 1350) (transmitted herewith).
----------------------------------------------------------------------------------------------------

----------------------------------------------------------------------------------------------------
 32.2  Written Statement of Vice Chairman and Chief Financial Officer Pursuant to Section 906 of
       the Sarbanes-Oxley Act of 2002 (18 U.S.C. Section 1350) (transmitted herewith).
----------------------------------------------------------------------------------------------------
</TABLE>

*     Previously  filed.





                                       59
<PAGE>