**UNITED
      STATES**


**SECURITIES
      AND EXCHANGE COMMISSION**


**Washington
      D.C. 20549**


____________________





**FORM
      10-QSB**





(X)
              QUARTERLY
                  REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
                  ACT OF
                  1934





**For
      the quarterly period ended April 30, 2005**





(
                  )
              TRANSITION
                  REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
                  ACT OF
                  1934





For
      the
      transition period from _________ to __________





_________________








Commission
      file number: 000-26952








**ENTRADA
      NETWORKS, INC.**


(Exact
      name of registrant as specified in its charter)





**Delaware**
            **33-0676350**(State
                or other jurisdiction of
            (I.R.S.
                Employerincorporation
                or organization)
            Identification
                No.)




**5755
                Oberlin Drive, Suite 204, San Diego, California
                92121**(Address
                of principal executive office) (Zip Code)**(858)
                597-1102**(Registrant’s
                telephone number, including area code)





Indicate
      by check mark whether the registrant (1) has filed all reports required to
      be
      filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
      the
      preceding 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
      ___





Indicate
      the number of shares of each of the registrant’s classes of common stock, as of
      the latest practicable date.





Title
            Date
            OutstandingCommon
                Stock, $.001 Par Value
            July
                7, 2005
            16,805,076











**ENTRADA
                NETWORKS, INC.*****AND
                SUBSIDIARIES******CONSOLIDATED
                BALANCE SHEETS APRIL 30 AND JANUARY 31, 2005******(In
                Thousands)***
            
            
            **April
                30,**
            
            
            **January
                31,****2005**
            
            
            **2005****ASSETS****CURRENT ASSETS****Cash and equivalents**
            
            **$**
            **-**
            
            **$**
            **148****Accounts receivable, net of allowance for doubtful accounts of $58
                and
                $59, respectively**
            
            
            **317**
            
            
            **596****Inventory, net**
            
            
            **2,176**
            
            
            **2,154****Deferred costs**
            
            
            **-**
            
            
            **960****Prepaid expenses and other current assets**
            
            
            **482**
            
            
            **444****TOTAL CURRENT ASSETS**
            
            
            **2,975**
            
            
            **4,302****PROPERTY
                AND EQUIPMENT, NET**
            
            
            **420**
            
            
            **496****GOODWILL**
            
            
            **1,135**
            
            
            **1,135****OTHER
                ASSETS****Deposits**
            
            
            **23**
            
            
            **23****TOTAL OTHER ASSETS**
            
            
            **23**
            
            
            **23****TOTAL
                ASSETS**
            
            **$**
            **4,553**
            
            **$**
            **5,956****LIABILITIES
                AND STOCKHOLDERS' EQUITY (DEFICIT)****CURRENT
                LIABILITIES****Bank Overdraft**
            
            
            **19**
            
            
            **-****Accounts payable**
            
            
            **981**
            
            
            **691****Other current and accrued liabilities**
            
            
            **425**
            
            
            **498****Short-term debt****Bank**
            
            
            **205**
            
            
            **295****Other**
            
            
            **1,900**
            
            
            **1,819****Total Short-Term Debt**
            
            
            **2,105**
            
            
            **2,114****Deferred Revenue**
            
            
            **1,152**
            
            
            **1,135****TOTAL
                CURRENT LIABILITIES**
            
            
            **4,682**
            
            
            **4,438****TOTAL
                LIABILITIES**
            
            
            **4,682**
            
            
            **4,438****COMMITMENTS
                AND CONTINGENCIES****STOCKHOLDERS'
                EQUITY (DEFICIT)****Preferred stock, $.001 par value; 2,000 shares authorized; -0- shares
                issued.****Common stock, $.001 par value; 150,000 shares authorized; 16,805
                shares****issued and outstanding at April 30, 2005; 15,430 shares
                issued****and outstanding at January 31, 2005**
            
            
            **16**
            
            
            **15****Treasury Stock, 86,026 shares at cost at April 30, 2005 and January
                31,
                2005**
            
            
            **(26**
            **)**
            
            **(26**
            **)****Additional paid-in capital**
            
            
            **53,699**
            
            
            **54,523****Accumulated deficit**
            
            
            **(53,818**
            **)**
            
            **(52,994**
            **)****TOTAL
                STOCKHOLDERS' EQUITY (DEFICIT)**
            
            
            **(129**
            **)**
            
            **1,518****TOTAL
                LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)**
            
            **$**
            **4,553**
            
            **$**
            **5,956**





See
        accompanying notes to consolidated financial statements.





2


**ENTRADA
                  NETWORKS, INC.*****AND
                  SUBSIDIARIES******CONSOLIDATED
                  STATEMENTS OF OPERATIONS FOR THE QUARTER ENDED APRIL 30, 2005 and,
                  2004******(In
                  Thousands, except per share amounts)*****2005**
              
              **2004****NET
                  REVENUES****PRODUCT**
              
              **$**
              **515**
              
              **$**
              **205****SERVICES**
              
              
              **460**
              
              
              **175****TOTAL NET REVENUES**
              
              
              **975**
              
              
              **380****COST
                  OF REVENUE****PRODUCT**
              
              
              **363**
              
              
              **272****SERVICES**
              
              
              **214**
              
              
              **66****TOTAL COST OF REVENUE**
              
              
              **577**
              
              
              **338****GROSS
                  PROFIT**
              
              
              **398**
              
              
              **42****OPERATING
                  EXPENSES****Selling and marketing**
              
              
              **126**
              
              
              **78****Engineering, research and development**
              
              
              **155**
              
              
              **240****General and administrative**
              
              
              **629**
              
              
              **402****TOTAL OPERATING EXPENSES**
              
              
              **910**
              
              
              **720****INCOME
                  (LOSS) FROM OPERATIONS**
              
              
              **(512**
              **)**
              
              **(678**
              **)****OTHER
                  INCOME (EXPENSE)****Interest expense, net**
              
              
              **(312**
              **)**
              
              **(59**
              **)****TOTAL OTHER INCOME (EXPENSE)**
              
              
              **(312**
              **)**
              
              **(59**
              **)****NET
                  INCOME (LOSS)**
              
              **$**
              **(824**
              **)**
              **$**
              **(737**
              **)****INCOME
                  (LOSS) PER COMMON SHARE):****BASIC AND DILUTED WEIGHTED AVERAGE COMMON SHARES
                  OUTSTANDING**
              
              
              **16,637**
              
              
              **13,901****NET INCOME (LOSS) PER COMMON SHARE:****BASIC**
              
              **$**
              **(0.05**
              **)**
              **$**
              **(0.05**
              **)****DILUTED**
              
              **$**
              **(0.05**
              **)**
              **$**
              **(0.05**
              **)**


See
        accompanying notes to consolidated financial statements.





3


**ENTRADA
                NETWORKS, INC.*****AND
                SUBSIDIARIES******CONSOLIDATED
                STATEMENTS OF CASH FLOWS FOR THE THREE MONTHS ENDED APRIL 30, 2005
                AND
                2004******(In
                Thousands)*****2005**
            
            
            **2004****CASH
                FLOWS FROM OPERATING ACTIVITIES**Net income (loss)
            
            $
            (824
            )
            $
            (737
            )**Adjustments
                to reconcile net income (loss) to net cash provided by (used in)
                operating
                activities**Depreciation
                and amortization
            
            
            84
            
            
            90Non
                cash interest associated with debt discount amortization
            
            
            171
            
            
            12Provision
                for doubtful accounts receivable
            
            
            -
            
            
            27Provision
                for inventory reserve
            
            
            (64
            )
            
            -**Changes
                in assets and liabilities, net of effects of business entity
                acquisition:**Accounts
                receivable
            
            
            279
            
            
            313Inventories
            
            
            42
            
            
            43Prepaid
                and other current assets
            
            
            (38
            )
            
            61Bank overdraft
            
            
            19
            
            
            -Accounts
                payable
            
            
            289
            
            
            (172
            )Accrued interest
            
            
            21
            
            
            -Accrued
                expenses
            
            
            (73
            )
            
            (59
            )Deferred revenue
            
            
            17
            
            
            -**NET CASH USED IN OPERATING ACTIVITIES**
            
            
            (77
            )
            
            (422
            )**CASH
                FLOWS FROM INVESTING ACTIVITIES:**Purchase
                of property and equipment
            
            
            (8
            )
            
            (5
            )**NET CASH USED IN INVESTING ACTIVITIES**
            
            
            (8
            )
            
            (5
            )**CASH
                FLOWS FROM FINANCING ACTIVITIES:**Borrowing on short-term line of credit
            
            
            414
            
            
            242Payments on short-term line of credit
            
            
            (503
            )
            
            (184
            )Proceeds from issuances of notes payable
            
            
            -
            
            
            500Repayments on notes payable
            
            
            (112
            )
            
            -Exercise of warrants as a repayment of debt
            
            
            138
            
            
            -Deferred
                financing costs
            
            
            -
            
            
            (25
            )**NET CASH PROVIDED BY (USED IN) FINANCING
                ACTIVITIES**
            
            
            (63
            )
            
            533INCREASE
                (DECREASE) IN CASH AND CASH EQUIVALENTS
            
            
            (148
            )
            
            106CASH
                AND CASH EQUIVALENTS - BEGINNING OF QUARTER
            
            
            148
            
            
            72CASH
                AND CASH EQUIVALENTS - END OF QUARTER
            
            $
            -
            
            $
            178


See
        accompanying notes to consolidated financial statements.


4
 ENTRADA
            NETWORKS, INC. AND SUBSIDIARIES
 NOTES
            TO
            CONSOLIDATED FINANCIAL STATEMENTS
 (UNAUDITED)
            (In thousands, except per share amounts)


**1.**  **THE
      BUSINESS**





Entrada
      Networks, Inc., through its wholly owned subsidiaries, (the "Company", "we",
      "our" or "us"), is in the business of developing, marketing and selling products
      for the network connectivity segments. Our Torrey Pines Networks ("Torrey
      Pines") subsidiary designs, manufactures, markets and sells storage area network
      ("SAN") transport products. Torrey Pines Networks acquired all of the
      outstanding stock of Microtek Systems, Inc. on May 14, 2004. Microtek Systems
      is
      a provider of security, digital imaging, information infrastructures and storage
      solutions. Microtek Systems extends our core competencies in network and storage
      connectivity into solutions and applications specific to verticals, notably
      insurance, healthcare and financial sectors.





Our
      Rixon
      Networks ("Rixon") subsidiary designs, manufactures, markets and sells a line
      of
      fast and gigabit Ethernet products that are incorporated into the remote access
      and other server products of Original Equipment Manufacturers ("OEM"). In
      addition, some of its products are deployed by telecommunications network
      operators, applications service providers, internet service providers, and
      the
      operators of corporate local area and wide area networks for the purpose of
      providing access to and transport within their networks. Our Sync Research
      ("Sync") subsidiary designs, manufactures, markets, sells and services frame
      relay products for some of the major financial institutions in the U.S. and
      abroad.





We
      manufacture and ship from our facility in Lake Forest, California with corporate
      offices in San Diego, California.





**2.**  **LIQUIDITY
        AND GOING CONCERN:**





The
      accompanying financial statements have been prepared assuming that the Company
      will continue as a going concern, which contemplates the realization of assets
      and the satisfaction of liabilities in the normal course of business. The
      Company incurred a net loss for the quarter ended April 30, 2005 of $824 and
      has
      incurred losses since inception totaling $53,818 through April 30, 2005, and
      is
      dependent on raising additional financing to fund operations through the fiscal
      year ending January 31, 2006 and beyond. These factors raise substantial doubt
      about the Company's ability to continue as a going concern.





In
      order
      to continue as a going concern and to increase its revenues to a level necessary
      to achieve a profitable level of operations, the Company will need, among other
      things, additional capital resources. Management has been working on plans
      to
      obtain such resources for the Company that includes external financing to meet
      its working capital requirements and executing strategies of internal
      development and growth through acquisition. The financial statements do not
      include any adjustments that might be necessary if the Company is unable to
      continue as a going concern.





**3.**  **BASIS
      OF PRESENTATION**





Entrada
      Networks, Inc., the “Company,”“We,”“Our” or “Us,” has prepared, without audit,
      the accompanying financial data for the three months ended April 30, 2005 and
      2004 in accordance with accounting principles generally accepted in the United
      States of America for interim financial information and pursuant to the rules
      and regulations of the Securities and Exchange Commission. Certain information
      and footnote disclosures normally included in financial statements prepared
      in
      accordance with accounting principles generally accepted in the United States
      of
      America have been condensed or omitted pursuant to such rules and regulations.
      The January 31, 2005 balance sheet was derived from audited financial
      statements, but does not include all disclosures required by accounting
      principles generally accepted in the United States of America. However, we
      believe that the disclosures in these consolidated financial statements are
      adequate to make the information presented not misleading. These consolidated
      financial statements should be read in conjunction with the consolidated
      financial statements and the notes thereto included in our Annual Report on
      Form
      10-KSB filed with the Securities and Exchange Commission on June 14,
      2005.





5
 6
 ENTRADA
              NETWORKS, INC. AND SUBSIDIARIES
 NOTES
              TO
              CONSOLIDATED FINANCIAL STATEMENTS
 (UNAUDITED)
              (In thousands, except per share amounts)


The
      preparation of financial statements in conformity with accounting principles
      generally accepted in the United States of America requires management to make
      estimates that affect the reported amounts of assets, liabilities, revenues
      and
      expenses, and the disclosure of contingent assets and liabilities. Actual
      results could materially differ from these estimates. In the opinion of
      management, all adjustments (which include only normal recurring adjustments)
      necessary to present fairly the financial position, results of operations and
      cash flows as of April 30, 2005 and for the three months ended April 30, 2004,
      have been made. The results of operations for the three months ended April
      30,
      2005 are not necessarily indicative of the operating results for the full year.





All
      references to a fiscal year refer to the fiscal year ending on January 31 of
      that year. For example, references to fiscal 2005 refer to the fiscal year
      beginning on February 1, 2004 and ending on January 31, 2005.





**4.**  **RECENT
      ACCOUNTING PRONOUNCMENTS**





In
      December 2004, the FASB issued statement No. 123R, , "Share-Based Payment",
      a
      revision to statement No. 123 "Accounting for Stock Based Compensation." This
      statement replaces statement no. 123 and supersedes APB No. 25. This statement
      sets accounting requirements for "share-based" compensation to employees,
      including employee-stock-purchase-plans (ESPPs) and provides guidance on
      accounting for awards to non-employees. This Statement will require the Company
      to recognize in the income statement the grant-date fair value of stock options
      and other equity-based compensation issued to employees, but expresses no
      preference for a type of valuation model. For public entities, this Statement
      is
      effective for the first interim period beginning after December 15, 2005. The
      Company will adopt this Statement in our fiscal year beginning February 1,
      2006
      and is evaluating this pronouncement's effect on the Company's financial
      position and net income.





In
      November 2004, the FASB issued statement No. 151, "Inventory Costs." This
      statement eliminates the "so abnormal" criterion in ARB 43 "Inventory Pricing"
      and no longer permits a company to capitalize inventory costs on their balances
      sheets when the production defect rate varies significantly from the expected
      rate. The Statement reduces the differences between U.S. and international
      accounting standards. This Statement is effective for inventory cost incurred
      during annual periods beginning after June 15, 2005. We will adopt this
      Statement in our fiscal year beginning February 1, 2006. We do not believe
      that
      this pronouncement will have a material effect on the Company's financial
      position and net income.





In
      December 2004, the FASB issued  Staff Position No. 109-1 ("FAS 109-1"),
      "Application of FASB Statement No. 109, Accounting for Income Taxes, for the
      Tax
      Deduction on Qualified Production Activities Provided by the American Jobs
      Creation Act of 2004." FAS 109-1 clarifies that the deduction will be treated
      as
      a "special deduction" as described in Statement of Financial Accounting
      Standards No. 109, "Accounting for Income Taxes." As such, the special deduction
      has no effect on deferred tax assets and liabilities existing at the date of
      enactment. The impact of the deduction will be reported in the period in which
      the deduction is claimed. We are currently assessing the financial impact of
      FAS
      109-1 on our consolidated financial statements.





7
 ENTRADA
            NETWORKS, INC. AND SUBSIDIARIES
 NOTES
            TO
            CONSOLIDATED FINANCIAL STATEMENTS
 (UNAUDITED)
            (In thousands, except per share amounts)




**5.**  **STOCK-BASED
      COMPENSATION**







All
      stock options issued to employees have an exercise price not less than the
      fair
      market value of our common stock on the date of grant, and in accordance with
      the accounting for such options utilizing the intrinsic value method there
      is no
      related compensation expense recorded in our financial statements. Options
      which
      were granted prior to our August 31, 2000 merger were valued as part of the
      consideration for the merger. Had compensation cost for stock-based compensation
      been determined based on the fair value at the grant dates in accordance with
      Statement of Financial Accounting Standards No. 123, our net loss and loss
      per
      share for the three months ended April 30, 2005 and 2004 would have been as
      follows:





**Three
                Months Ended April 30,**
            ********
            ****
            **2005**
            ****
            **2004**Net
                income (loss):As
                reported
            
            $
            (824
            )
            $
            (737
            )Add:
                Stock based employee compensation expense
            
            
            -
            
            
            20Deduct:
                Total stock based employee compensation expense
                determined under fair value method
            
            
            (18
            )
            
            (111
            )Pro
                forma income (loss) per share:
            
            $
            (842
            )
            $
            (828
            )Basic
                and diluted EPS as reported
            
            $
            (0.05
            )
            $
            (0.05
            )Pro
                forma basic and diluted EPS
            
            $
            (0.05
            )
            $
            (0.06
            )











**6.**  **INVENTORY**





Consolidated
      inventories at April 30, 2005 and January 31, 2005 consist of the
      following:





**April
                30, 2005**
            ****
            ****
            **January
                31, 2005**Raw
                material
            
            $
            2,031
            
            $
            1,994Work
                in process
            
            
            60
            
            
            45Finished
                goods
            
            
            2,388
            
            
            2,483Total
              inventories
            
            
            4,479
            
            
            4,522Less:
                valuation reserve
            
            
            (2,303
            )
            
            (2,368
            )Net
                inventories
            
            $
            2,176
            
            $
            2,154





**7.**  **OTHER
      CURRENT AND ACCRUED LIABILITIES**





**Other
      current and accrued liabilities at  April 30, 2005 and January 31, 2005
      consisted of the following:**





**April
                30, 2005**
            
            
            **January
                31, 2005**Payroll
                and employee benefits
            
            $
            139
            
            $
            186Accrued
                expenses
            
            
            150
            
            
            164Sales
                tax payable
            
            
            9
            
            
            8Accrued
                audit fees
            
            
            63
            
            
            65Office
                lease
            
            
            14
            
            
            15Other
            
            
            50
            
            
            60Total
            
            $
            425
            
            $
            498





8
 ENTRADA
            NETWORKS, INC. AND SUBSIDIARIES
 NOTES
            TO
            CONSOLIDATED FINANCIAL STATEMENTS
 (UNAUDITED)
            (In thousands, except per share amounts)




**8.**  **SHORT
      TERM DEBT**





Short
      term debt at April 30, 2005 and January 31, 2005 consisted of the
      following:





**April
                30, 2005**
            ****
            ****
            **January
                31, 2005**Bank:Floating
                interest rate loan based on 5.0% over lender's
            
            $
            -
            
            $
            295prime
                rate secured by all of our tangible assetsFloating interest rate loan based on 8% over lender's
            
            
            205
            
            
            -prime
                rate secured by all of our tangible assetsOther:Term Notes at fixed interest rate of 24%Principal balance outstanding
            
            
            1,815
            
            
            1,875Less: unamortized discount
            
            
            -
            
            
            (171
            )Net balance
            
            
            1,815
            
            
            1,704Promissory Note at a fixed interest rate of 6%
            
            
            85
            
            
            115Total other
            
            
            1,900
            
            
            1,819Total
            
            $
            2,105
            
            $
            2,114





9
 ENTRADA
            NETWORKS, INC. AND SUBSIDIARIES
 NOTES
            TO
            CONSOLIDATED FINANCIAL STATEMENTS
 (UNAUDITED)
            (In thousands, except per share amounts)




**9.**  **STOCKHOLDERS’
      EQUITY**





In
      November 2004, the Company issued 10,000,000 warrants in connection with a
      marketing agreement entered into with Trilogy Capital Partners
      ("Trilogy").  Based on the valuation of warrants issued to Trilogy,
      as
      determined using a Black-Scholes valuation model, deferred costs and paid in
      capital in the amount of $1,159 were recorded related to the warrants during
      the
      fourth quarter of the fiscal year ended January 31, 2005. The deferred cost
      was
      being amortized to marketing expense over the original six-month term of the
      agreement.





On
      May
      31, 2005, the parties finalized agreement to terminate the original agreement
      and Trilogy agreed to return to Entrada 8,500,000 of the 10,000,000
      warrants originally issued to them. As the decision to terminate the agreement
      with Trilogy had been made by the Company prior to April 30, 2005, and since
      the
      termination was finalized prior to the issuance of the financial statements
      for
      the quarter ended April 30, 2005, the financial statements for the quarter
      ended
      April 30, 2005 have been adjusted to reflect the termination of the agreement
      and return of warrants by Trilogy. As a result, no expense was recorded during
      the quarter for the amortization of the unamortized deferred cost, and deferred
      cost and paid in capital have been reduced by $960.





**10.**  **LOSS
      PER SHARE CALCULATION**





Due
      to
      the net losses for the three-month period ended April 30, 2005 and 2004,
      potentially dilutive securities have been excluded in the calculation of diluted
      loss per share because their inclusion would be anti-dilutive. Accordingly,
      basic and diluted loss per share for the periods presented are the same.
      Additionally, there were no dividends paid during these reporting periods.





Potentially
      dilutive securities excluded in the calculation of diluted loss per common
      share
      include options to purchase 3,477,518 and 2,135,434 shares of common stock
      outstanding during the quarters ended April 30, 2005 and 2004, respectively,
      and
      shares issuable upon conversion of, and a total of 20,700,757 shares underlying
      warrants issued in connection with, our bank and other loan debt.





**11.**  **CONCENTRATION
      OF CREDIT RISK**





Financial
      instruments that potentially subject us to concentration of credit risk consist
      primarily of temporary cash investments and trade receivables. As regards the
      former, we place our temporary cash investments with high credit financial
      institutions. At times such amounts may exceed F.D.I.C. limits.





Although
      we are directly affected by the economic well being of significant customers
      listed in the following tables, management does not believe that significant
      credit risk exists at April 30, 2005. We perform ongoing evaluations of our
      customers and require letters of credit or other collateral arrangements as
      appropriate.





At
      April
      30, 2005, Ingram Micro accounted for 12.6% and Bay Area Medical Center accounted
      for 11.0% of net receivables. At January 31, 2005, Rorke Data accounted for
      12.1% of net receivables.





10
 ENTRADA
            NETWORKS, INC. AND SUBSIDIARIES
 NOTES
            TO
            CONSOLIDATED FINANCIAL STATEMENTS
 (UNAUDITED)
            (In thousands, except per share amounts)




There
      were no customers accounting for more than 10% of net revenues during the
      quarters ended April 30, 2005. Customers accounting for more than 10% of net
      revenues during the quarter ended April 30, 2004 were:





Three months
                ended April 30,**2005**
            **2004**IntregraSys
            -
            22.7%Geico
                Insurance
            -
            14.8%Ingram
                Micro
            -
            13.8%





11
  **12.**  **OPERATING
        SEGMENT INFORMATION**





***Geographical
      Information***





The
      table
      below presents revenues based on the locations of the customer:





**Three
                months ended April 30,******
            ****
            **2005**
            ****
            ****
            **20**04Net
                Revenues:United States
            
            $
            955
            
            $
            323Europe
            
            
            20
            
            
            57Other
            
            
            --
            
            
            --Total
                net revenues
            
            $
            975
            
            $
            380







***Products
      and Service Revenue***






The
      table
      below presents revenues for groups of similar products and services:




**Three
                months ended April
                30,****2005**
            ****
            ****
            **2004**Net
                Revenues:Network adapter cards
            
            $
            121
            
            $
            130Frame relay network products
            
            
            15
            
            
            75Solutions Sales
            
            
            379
            
            
            -Service and support
            
            
            460
            
            
            175Total net revenue
            
            $
            975
            
            $
            380





***Supplemental
      Financial Information***





There
      were no inter-segment revenues.





12
 ENTRADA
            NETWORKS, INC. AND SUBSIDIARIES
 NOTES
            TO
            CONSOLIDATED FINANCIAL STATEMENTS
 (UNAUDITED)
            (In thousands, except per share amounts)




**Three
      Month Segment Financial Information ended April 30, 2005:**





We
      have
      three operating segments, Rixon Networks, Inc., Sync Research, Inc. and Torrey
      Pines Networks, Inc.




**Rixon
              Networks**
            ****
            ****
            **Sync
                Research**
            ****
            ****
            **Torrey
                Pines Networks**
            ****
            ****
            **Total**
            ********
            **Quarter
                ended April 30, 2005**Total
                Revenues
            
            $
            121
            
            $
            183
            
            $
            671
            
            $
            975Net
                Income (loss)
            
            
            (739
            )
            
            54
            
            
            (139
            )
            
            (824
            )Depreciation
                and amortization expense
            
            
            33
            
            
            -
            
            
            51
            
            
            84Inventory
                reserve additions
            
            
            (64
            )
            
            
            
            
            -
            
            
            (64
            )Capital
                asset additions
            
            
            -
            
            
            -
            
            
            8
            
            
            8Total
                Assets
            
            $
            1,823
            
            $
            290
            
            $
            2,440
            
            $
            4,553





**Three
      Month** **Segment
      Financial Information ended April 30, 2004:**





We
      have
      three operating segments, Rixon Networks, Inc., Sync Research, Inc. and Torrey
      Pines Networks, Inc.




Rixon
              Networks
            
            
            Sync
                Research
            
            
            Torrey
                Pines Networks
            
            
            Total**Quarter
                ended April 30, 2004**Total
                Revenues
            
            $
            130
            
            $
            250
            
            $
            -
            
            $
            380Net
                Income (loss)
            
            
            (693
            )
            
            75
            
            
            (119
            )
            
            (737
            )Depreciation
                and amortization expense
            
            
            35
            
            
            14
            
            
            41
            
            
            90Inventory
                reserve additions
            
            
            -
            
            
            -
            
            
            -
            
            
            -Capital
                asset additions
            
            
            5
            
            
            -
            
            
            -
            
            
            5Total
                Assets
            
            $
            2,162
            
            $
            693
            
            $
            678
            
            $
            3,533








13






**Item
      2. Management’s Discussion and Analysis of Financial Condition and Results of
      Operations**




Management’s
      Discussion and Analysis of Financial Condition and Results of Operations should
      be read in conjunction with the consolidated unaudited financial statements
      and
      related notes thereto. The results of operations in the consolidated unaudited
      financial statements reflect the operating results of Entrada Networks for
      all
      periods presented.





**Overview**





**Our
      Ability to Continue as a Going Concern**




We
      have
      suffered recurring losses from operations and as of April 30, 2005 we had a
      negative working capital of $1,708 thousand. We recognize that in order to
      meet
      our capital requirements, and continue to operate, additional funding is
      necessary. We are exploring additional sources of liquidity, through debt and
      equity financing alternatives. If we are (i) unable to grow our business or
      improve our operating cash flows, (ii) unsuccessful in retiring or restructuring
      the debt repayments due by July 31, 2005 in the aggregate amount of $1,815
      thousand in principal and interest, or (iii) unable to raise additional
      funds through offerings of our common stock, then we may be unable to continue
      as a going concern. There can be no assurance that additional financing will
      be
      available when needed or, if available, that it will be on terms favorable
      to us
      and our stockholders.





If
      we are
      not successful in generating sufficient cash flows from operations, or in
      raising additional capital required in sufficient amounts and on terms
      acceptable to us, these failures would have a material adverse effect on our
      business, results of operations and financial condition. If additional funds
      are
      raised through the issuance of equity securities, the percentage ownership
      of
      our current stockholders would be diluted.





**Our
      Strategic Plan is to:**




During
      the last three years, we have increasingly focused on our Torrey Pines Networks’
      product development efforts in the Storage Area Network and metropolitan network
      transport products marketplace. During fiscal 2004 and 2005, we reevaluated
      this
      strategy. This is provided below in the order of priority:




·Explore
                acquisition opportunities that fit into our existing technologies.
                This
                calls for acceleration of organic growth opportunities, especially
                in the
                storage area network transport product line where we are developing
                and
                marketing our SilverlineTM-CWDM product line, and to actively pursue
                acquisition opportunities to complement the current lines of business.·Commercialize
                Torrey Pines’ optical SilverlineTM SAN and metropolitan area networks
                transport product line·Bring
                our Rixon operation back to profitability through increased sales
                efforts
                and reduced overhead.·And,
                to maintain superior service and support for our Sync legacy products
                to
                sustain our recent profitable track




**Results
      of Operations/Comparison of the Three Months Ended April 30, 2005 and
      2004**




***Net
      revenues*** *.* Net
      revenues were $975 thousand for the three months ended April 30, 2005, compared
      with $380 thousand for the three months ended April 30, 2004. The increase
      in
      net revenues in the three months ended April 30, 2005 compared to the three
      months ended April 30, 2004 was due primarily
      to our Torrey Pines subsidiary's purchase of Microtek Systems in May
      2004.





Our
      Sync
      Research net revenues from the frame relay and service business declined 26.5%
      to $183 thousand for the three months ended April 30, 2005 compared
      to $250
      thoudand net revenues for the three months ended April 30, 2004. The largest
      portion of the drop for three months ended April 30, 2005 came from a 79.7%
      drop
      in product net revenues from $75 thoudand in three months ended April
      30,
      2004 to $15 thousand for three months ended April 30, 2005. This drop was due
      to
      reduced demand for our legacy products.





14




Our
      Rixon
      Networks net revenues are primarily from adapter card product revenues. These
      product revenues decreased 6.9% to $121 thousand for the three months ended
      April 30, 2005 from $130 thousand for the three months ended April 30,
      2004. This was primarily due to the timing of product purchasing.





Our
      Torrey Pines Network subsidiary revenues include the revenues of Microtek
      Systems. Revenues for the three
      months ended April 30, 2005 ,
      were
      $675 thousand. We had no revenue from Torrey Pines Networks for the three
      months ended April 30, 2004 .





***Gross
      profit*** *.* Cost of
      revenue consists principally of the cost of components and subcontract assembly
      from outside manufacturers, in addition to in-house system integration, quality
      control, final testing and configuration. Overall gross profit increased to
      $398
      thousand for the quarter ended April 30, 2005 from $43 thousand for the quarter
      ended April 30, 2004. Our gross margin increased to 40.8% for the three months
      ended April 30, 2005 as compared to 11.1% for the three months ended April
      30,
      2004. This is primarily due to our
      Torrey Pines subsidiary's purchase of Microtek Systems in May 2004. .





Our
      Sync
      Research gross profit of $93 thousand for the quarter ended April 30,
      2005
      remained approximately the same as $98 thousand for the quarter ended April
      30,
      2004.





Our
      Rixon
      Networks negative gross profit of $24 thousand for the quarter ended April
      30,
      2005 compared to a negative gross profit of $55 thousand for the quarter ended
      April 30, 2004. The reduction in negative gross profit was from lower fixed
      manufacturing costs.





Our
      Torrey Pines gross profit increased to $333 thousand for the quarter
      ended
      April 30, 2005 due primarily to our purchase of Microtek Systems,
      Inc.





***Selling
      and marketing*** *.* Selling
      and marketing expenses consist primarily of employee compensation and related
      costs, commissions to sales representatives, tradeshow expenses, facilities
      costs, and travel expenses. Selling and marketing expenses increased to $126
      thousand, or 12.9% of net revenues for the quarter ended April 30, 2005,
      compared to $78 thousand or 20.5% of net revenues for the quarter ended April
      30, 2004. The increase in selling and marketing expense and lower percentages
      reflects primarily the acquisition of Microtek Systems, Inc.





***Engineering,
      research and development*** *.* Engineering, research and development expenses consist primarily of compensation
      related costs for engineering personnel, facilities costs, and materials used
      in
      the design, development and support of our technologies. Engineering, research
      and development expenses were $155 thousand, or 15.9% of net revenues, for
      the
      quarter ended April 30, 2005, compared with $240 thousand, or 63.2% of net
      revenues, for the quarter ended April 30, 2004. The decrease in research and
      development percentage was primarily due to the higher revenues.





***General
      and administrative*** *.* General
      and administrative expenses consist primarily of employee compensation and
      related costs, legal and accounting fees and public company costs. General
      and
      administrative expenses increased to $629 thousand or 64.5% of net revenues
      for
      the quarter ended April 30, 2005 compared to $402 thousand or 106.1
      % of
      net revenues, for the quarter ended April 30, 2004. The increase in General
      and
      administrative expense and the decrease in  percentage was primarily
      due to
      the high revenues and the increase in expenses was primarily due to the
      acquisition of Microtek Systems, Inc.





***Income
      taxes*** *.* There
      was no provision for income taxes for the three-month periods ended April 30,
      2005 and 2004. At April 30, 2005, our deferred income tax assets consist of
      net
      operating loss carry forwards.





In
      assessing the reliability of deferred tax assets, management considers whether
      it is more likely than not that some portion or all of the deferred tax assets
      will not be realized. The ultimate realization of deferred tax assets is
      dependent upon the generation of future taxable income during the periods in
      which those temporary differences become deductible. Based upon the level of
      historical taxable income and projections for future taxable income over the
      periods which the deferred tax assets are deductible, management believes that
      insufficient evidence exists to conclude that it is more likely than not that
      the Company will realize the benefits of these deductible
      differences.





At
      January 31, 2005, the Company had available federal and state net operating
      loss
      carry forwards of approximately $95 million and $15 million, respectively,
      for
      income tax purposes. The federal and state losses will begin expiring in the
      2006 and 2005 tax years, respectively. As of January 2005and 2004 our effective
      income tax rate differs from the federal statutory income tax rate due to state
      taxes net of federal benefit and state net operating loss limitations.





15




The
      utilization of the loss carry forwards as an offset to future taxable income
      is
      subject to limitations under U.S. federal income tax laws. One such limitation
      is imposed when there is a greater than 50% ownership change. An ownership
      change may have occurred during the tax year ended January 31, 2001. As such,
      the above loss may be subject to the limitation of Section 382. At April 30,
      2005 and 2004, a valuation allowance was recorded to reduce the deferred tax
      asset to zero since the recognition of the tax benefit could not be assured.





***Liquidity
      and Capital Resources***





We
      had a
      negative working capital of $1,708 thousand at April 30, 2005, a decrease of
      $3,303 thousand from the positive $1,595 thousand at April 30, 2004.
      Cash
      flows used by operations were $77 thousand during the three months ended April
      30, 2005 compared with $422 thousand used by operations for the three months
      ended April 30, 2004. The decrease in cash flows provided by operations reflects
      a net loss from operations after adjustment for non-cash expenses including
      depreciation, amortization, reserves and valuation allowances as well as a
      decrease in accounts receivable. During the three months ended April 30, 2005,
      operating cash flow reflected decreases in cash used for accounts payables
      and
      accrued expenses offset by decreases in current assets. During the same three
      months last year, our cash flow provided by operations reflected decreases
      in
      accounts receivable along with accounts payable and accrued
      expenses.





Our
      investing activities consist primarily of purchases of property, plant and
      equipment and investing activities. Investments activities were $8 thousand
      in
      the three months ended April 30, 2005 and $5 thousand in the same three months
      ended April 30, 2004.





Our
      financing activities during the three months ended April 30, 2005 used cash
      flows of $63 thousand, primarily in connection with short-term bank and other
      debt. During the three months ended April 30, 2004, $533 thousand was provided
      primarily in conjunction with issuance of short-term debt.





We
      have
      in place a line of credit that allows us to bridge the gap between our daily
      cash requirements and the cash we have on hand. We and our subsidiaries, Rixon
      Networks, Inc., Sync Research, Inc., and Torrey Pines Networks, Inc., including
      its subsidiary, Microtek Systems, Inc., are parties to that certain Amendment
      to
      Loan Documents and that certain Loan and Security Agreement (together, the
      "Amended and Restated Loan Agreement") with Silicon Valley Bank, a California
      chartered bank ("Silicon Valley Bank") dated December 14, 2004, which Amended
      and Restated Loan Agreement amends and restates that certain Loan and Security
      Agreement between the same parties and dated February 20, 2001, as amended
      through December 13, 2004 (the "Prior Loan Agreement"). We require access to
      this line of credit in order to operate. The credit facility is due to expire
      on
      July 31, 2005.




Outstanding
      borrowings against this line of credit were $205 thousand at April 30, 2005.
      We
      continue to pursue external equity financing arrangements that could enhance
      our
      liquidity position. Nonetheless, our future capital requirements may vary
      materially from those now planned including the need for additional working
      capital to accommodate infrastructure needs. There can be no assurances that
      our
      working capital requirements will not exceed our ability to generate sufficient
      cash internally to support our requirements and that external financing will
      be
      available or that, if available, such financing can be obtained on terms
      favorable to us and our shareholders.




***Critical
      Accounting Policies and Estimate*** s





Our
      discussion and analysis of our financial condition and results of operations
      are
      based upon our consolidated financial statements, which have been prepared
      in
      accordance with accounting principles generally accepted in the United States.
      The preparation of these financial statements requires us to make estimates
      and
      judgments that affect the reported amounts of assets, liabilities, revenues
      and
      expenses, and related disclosures of contingent assets and liabilities. On
      an
      on-going basis, we evaluate our estimates, including those related to our
      valuation of inventory and our allowance for uncollectable accounts receivable.
      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
      materially differ from these estimates under different assumptions or
      conditions.





We
      believe the following critical accounting policies affect our more significant
      judgments and estimates used in the preparation of our consolidated financial
      statements:





Since
      we
      account for and report our physical inventory at the "lower of cost or market",
      and such net inventory comprises 73.1% of our current assets and 47.8% of total
      assets at April 30, 2005, we carefully evaluate the market value of that
      inventory on a continual basis. In a business such as ours, wherein we are
      stocking replacement parts to satisfy a customer's unknown needs, determining
      obsolescence is an inherently subjective process. Adjustments to obsolescence
      reserves are made based on judgments of market value that are supported by
      our
      best estimates of the future salability of specific items in that
      inventory *.*





Accounts
      receivable balances are evaluated on a continual basis and allowances are
      provided for potentially uncollectable accounts based on management's estimate
      of the collectability of customer accounts. If the financial condition of a
      customer were to deteriorate, resulting in an impairment of their ability to
      make payments, an additional allowance may be required. Allowance adjustments
      are charged to operations in the period in which the facts that give rise to
      the
      adjustments become known.





16




The
      following table presents, at April 30, 2005, our obligations and commitments
      to
      make future payments under contracts and contingent commitments.





**(In
                thousands)**
            
            
            
            
            
            **Less
                than**
            
            
            **1-3**
            
            
            **4-5**
            
            
            **After
                5****Contractual
                Obligations**
            
            
            **Total**
            
            
            **1Year**
            
            
            **Years**
            
            
            **Years**
            
            
            **Years**Short
                Term Debt
            
            $
            2,105
            
            $
            2,098
            
            $
            7
            
            $
            -
            
            $
            -Operating
                Leases
            
            
            327
            
            
            186
            
            
            141
            
            
            -
            
            
            -Total Contractual Cash Obligations
            
            $
            2,432
            
            $
            2,284
            
            $
            148
            
            $
            -
            
            $
            -





Our
      equity compensation plan and outstanding warrant information as of April 30,
      2005 is as follows::





Number
              of Securities to be Issued Upon Exercise
              of Outstanding Options, Warrants and Rights
            
            
            Weighted-Average
                Exercise price of Outstanding Options, Warrants and Rights
            
            
            Number
                of Securities Remaining Available for Future Issuance under Equity
                Compensation Plans (Excluding Securities Reflected in Column
                (a)
            )Plan
                categoryEquity
                Compensation Plans Approved by Security Holders
            
            
            3,477,518
            
            $
            0.46
            
            
            1,268,223Equity
                Compensation Plans Not Approved by Security Holders*
            
            
            20,700,757
            
            $
            0.13
            
            
            -Total
            
            
            24,178,275
            
            $
            0.18
            
            
            1,268,223





*
      Represents: (1) a fully-vested warrant to purchase up to 75,757 shares of our
      common stock at a per share exercise price of $3.30, issued to Silicon Valley
      Bank on February 20, 2001, which warrant expires on February 20, 2006; (2)
      fully-vested warrants to purchase up to an aggregate of 500,000 shares of our
      common stock at a per share exercise price of $0.35, issued on February 5,
      2004
      to the following individuals for the share amounts indicated, which warrants
      expire on February 5, 2007:





**Warrant
                Holder**
            **Shares**SBI
                Advisors, LLC
            400,000Shelly
                Singhal
            50,000Jon
                Buttles
            25,000Matt
                McGovern
            25,000





17




(3)
      fully-vested warrants to purchase up to an aggregate of 5,000,000 shares of
      our
      common stock at a per share exercise price of $0.16, issued on May 14, 2004
      to
      the following individuals for the share amounts indicated, which warrants expire
      on May 13, 2007:




**Warrant
                  Holder**
              **Shares**SBI
                  Brightline IV, LLC
              3,450,000John
                  Wang
              125,000J.
                  Michael Higginbotham
              125,000Suraj
                  Gohill
              125,000Robert
                  Gilman
              250,000Charles
                  Dominick
              250,000Franklin
                  C. Fisher, Jr.
              175,000Joseph
                  A. Schick
              25,000Phoenix
                  Capital Opportunity Fund
              225,000Jon
                  Buttles
              250,000






(4)
      fully
      vested warrants to purchase up to an aggregate of 15,000,000 shares of our
      common stock at a per share exercise price of $0.10, issued on October 21,
      2004
      to the following individuals for the share amounts indicated, which warrants
      expire on October 20, 2007, net of exercises:





**Warrant
                Holder**
            **Shares**David
                F. Evans
            3,250,000Crestwood
                Children's Trust
            3,500,000McGovern
                Living Trust (Dated September 28, 2004)
            3,500,000Jon
                Buttles
            3,375,000





(5)
      a
      warrant to purchase up to an aggregate of 1,500,000 shares of our common stock
      at a per share exercise price of $0.12, issued to Trilogy on November 10, 2004.
      This warrant is exercisable on the earlier of January 1, 2005 or the date on
      which the registration statement of which this prospectus is a part is effective
      and expires on November 10, 2006. As long as we have a class of securities
      registered under Section 12 of the Securities Exchange Act of 1934, Trilogy
      will
      not be entitled to exercise this warrant in an amount that, immediately
      following such purchase, would result in Trilogy beneficially owning 5% or
      more
      of our outstanding shares of common stock.





**Item
      3. Quantitative and Qualitative Disclosures About Market
      Risk**





We
      periodically need additional financing for expenditures associated with
      establishing and expanding our operations. The interest rate that we will be
      able to obtain on debt financing will depend on market conditions at that time,
      and may differ from the rates we have secured on our current debt. Additionally,
      the interest rates charged by our present lenders adjust on the basis of the
      lenders' prime rate.





We
      believe that the relatively moderate rate of inflation in the United States
      over
      the past few years has not had a significant impact on our sales or operating
      results or on the prices of raw materials. There can be no assurance, however,
      that inflation will not have a material adverse effect on our operating results
      in the future.





All
      of
      our revenues and expenses are currently denominated in U.S. dollars and to
      date
      our business has not been affected by currency fluctuations. In the future,
      however, we could conduct business in several different countries and thus
      fluctuations in currency exchange rates could cause our products to become
      relatively more expensive in particular countries, leading to a reduction in
      revenues in that country. In addition, inflation in such countries could
      increase our expenses. In the future, we may engage in foreign currency
      denominated revenues or pay material amounts of expenses in foreign currencies
      and, in such event, may experience gains and losses due to currency
      fluctuations. Our operating results could be adversely affected by such
      fluctuations.





We
      do not
      hold or issue derivative commodity instruments or other financial instruments
      for trading purposes. Investments do not impose a material market
      risk.





18




**Item
      4. Controls and Procedures**





**(a)
        Disclosure Controls and Procedures.** We maintain controls and procedures
        designed to ensure that we are able to collect the information required to
        disclose in the reports we file with the SEC, and to process, summarize and
        disclose this information within the time periods specified in the rules
        of the
        SEC. Our Chief Executive and Principle Accounting Officers are responsible
        for
        establishing and maintaining these procedures and, as required by the rules
        of
        the SEC, evaluate their effectiveness. Based on their evaluation of our controls
        and procedures which took place as of a date within 80 days prior
        to the
        filing date of this report, Chief Executive and Principle Accounting Officers
        believe that these procedures are effective to ensure that Entrada Networks
        is
        able to collect, process and disclose the information we are required to
        disclose in the reports it files with the SEC within the required time
        periods.





**(b)**  **Changes
      in Internal Controls.** We
      maintain a system of internal controls designed to provide reasonable assurance
      that: transactions are executed in accordance with our management’s general or
      specific authorization; transactions are recorded as necessary to (1) to permit
      preparation of financial statements in conformity with generally accepted
      accounting principles in the United States of America, and (2) to maintain
      accountability for assets; access to assets is permitted only in accordance
      with
      our management’s general or specific authorization; and the recorded
      accountability for assets is compared with the exiting assets at reasonable
      intervals and appropriate action is take with respect to any
      difference.





In
      connection with its audit of, and in the issuance of its report on the Company’s
      financial statements for the year ended January 31, 2005, our independent
      auditors identified certain items that it considers to be material weaknesses
      in
      the effectiveness of the Company’s internal controls pursuant to standards
      established by the Public Company Accounting Oversight Board. A “material
      weakness” is a reportable condition in which the design or operation of one or
      more of the specific control components has a defect or defects that could
      have
      a material adverse effect on our ability to record, process, summarize and
      report financial statements in a timely manner.





These
      material weaknesses are primarily due to limited resources in the accounting
      function which: a) limit the level of monitoring and oversight within the
      accounting function and which restricts the Company’s ability to gather,
      analyze, reconcile accounts, and report information relative to the financial
      statement assertions in a timely manner; and b) limit the ability to obtain
      optimum segregation of duties required to meet the increased public reporting
      demands. Additionally, the Company’s accounting functions are not centralized or
      effectively coordinated.





Management
      is giving serious consideration to the identified material weaknesses and
      reviewing alternatives that would streamline the accounting functions across
      the
      Company’s subsidiaries, and allocate additional resources to be able to perform
      the accounting functions effectively and in a timely manner.




**Part
      II. Other Information**




**Item
      5. Other Information**




This
      note is
      specified in dollar amounts.




On
      February
      8, 2005, Entrada and Silicon Valley Bank executed that certain Amendment to
      Loan
      Documents, effective as of February 8, 2004 (the "Loan Agreement Amendment"),
      pursuant to which the parties extended the expiration date of the Amended and
      Restated Loan Agreement (the “Maturity Date”) to March 1, 2005. And, on March 4,
      2005 the parties executed another Amendment to Documents, pursuant to which
      the
      Maturity Date was extended to March 31, 2005. This was further extended to
      July
      31, 2005. On April 5, 2005, Entrada and Silicon Valley Bank executed that
      certain Amendment to Loan Documents, effective as of March 31, 2004 (the "Loan
      Agreement Amendment"), pursuant to which the parties extended the expiration
      date of the Amended and Restated Loan Agreement to April 30, 2005. As per this
      Loan Agreement Amendment, the aggregate face amount of all financed receivables
      outstanding at any time may not exceed $625 thousand, and Silicon Valley Bank
      has no obligation to make advances to Entrada in excess of $500 thousand in
      the
      aggregate at any time outstanding. In addition, interest accrues at an annual
      rate equal to Silicon Valley Bank’s prime rate plus 8.0% (13.75%).





On
      May 3,
      2005, Entrada and Silicon Valley Bank executed that certain Amendment to Loan
      Documents, effective as of April 30, 2005 (the "Loan Agreement Amendment"),
      pursuant to which the parties extended the expiration date of the Amended and
      Restated Loan Agreement to July 31, 2005.





Effective
      January 29, 2005, Entrada Networks, Inc. ("Entrada") entered into the Third
      Amendment to Term Credit Agreement (the "Third Amendment") between Entrada,
      Hong
      Kong League Central Credit Union ("HKL"), HIT Credit Union ("HIT"), Brightline
      Bridge Partners I, LLC ("Brightline"), Matthew McGovern ("Mr. McGovern"), and
      Jon Buttles ("Mr. Buttles") (collectively, the "Lenders") and SBI Advisors,
      LLC
      ("SBI").





19




Pursuant
      to the Third Amendment, effective January 29, 2005, the Lenders agreed to extend
      from January 29, 2005 to March 31, 2005 the date on which Entrada must repay
      all
      unpaid principal owed by Entrada pursuant to the Original Credit Agreement,
      In
      addition, Any cash proceeds Entrada receives upon the issuance and sale of
      its
      equity securities shall be first used to pay any accrued interest, ant then
      Entrada will use 70% of the remaining cash proceeds to prepay the outstanding
      principal amount owed under the Original Credit agreement, as
      amended.





Effective
      March 30, 2005, Entrada entered into the Fourth Amendment between Entrada
      and the Lenders that amends the Term Credit Agreement dated March 30, 2004,
      between Entrada, HKL, HIT, Shelly Singhal ("Mr. Singhal") and SBI (the "Original
      Credit Agreement"), as amended by the First Amendment to Term Credit Agreement
      (the "First Amendment"), dated May 14, 2004, between Entrada, SBI and the
      Lenders identified therein, and as further amended by the Second Amendment
      to
      Term Credit Agreement (the "Second Amendment"), dated October 1, 2004, between
      Entrada, SBI and the Lenders identified therein and as further amended by the
      Third Amendment Term Credit Agreement (the "Third Amendment"), dated January
      29,
      2005, between Entrada, SBI and the Lenders identified
      therein.





Pursuant
      to the Fourth Amendment, effective March 30, 2005, the Lenders agreed to extend
      from March 31, 2005 to July 31, 2005 the date on which Entrada must repay all
      unpaid principal and interest owed by Entrada pursuant to the Original Credit
      Agreement, as amended.





Pursuant
      to the Fourth Amendment, effective March 30, 2005, the Lenders agreed to reduce
      the interest rate to 10% per annum and the balance of 14% to be Paid In Kind
      which shall be computed and compounded monthly. Currently we owe the Lenders
      $60
      thousand in interest and charges.




In
      addition, Upon repayment of all amounts payable under the terms of the Term
      Notes, Lenders will retain 5,000,000 of the 20,500,000 original
      Warrants issued to SBI Advisors, LLC or its designees, and the balance
      of
      unexercised Warrants held by such parties at the time of repayment of the Term
      Notes will be returned to Borrower. These parties and their warrants holdings
      are as follows: (1) 3,500,000 with McGovern Living Trust; (2) 3,650,000 with
      Jon
      Buttles; (3) 3,250,000 with David F. Evans; and (4) 3,500,000 with Crestwood
      Children’s Trust. The warrants retained by SBI or its designees shall be the
      then lowest priced warrants owned by SBI Advisors, LLC or its
      designees.





On
      May
      31, 2005, (1) Entrada terminated its engagement with Trilogy Capital Partners
      (Trilogy), (2) Trilogy agreed to return to Entrada 8,500,000 of the original
      10,000,000 Warrants issued to Trilogy, and (3) Entrada agreed to Trilogy
      retaining 1,500,000 of the Warrants.





**Certain
      Cautionary Statements**




*Certain
      statements in this document, including statements in the “Risk Factors,”“Our
      Business,” and Management’s Discussion and Analysis of Financial Condition and
      Results of Operations” sections, are forward-looking statements within the
      meaning of Section 27A of the Securities Act of 1933, as amended, Section 21E
      of
      the Securities Exchange Act of 1934, as amended, and the Private Securities
      Litigation Reform Act of 1995. These statements are not historical facts but
      rather reflect current expectations concerning future results and events. Words
      such as “believes,”“expects,”“intends,”“plans,”“anticipates,”“likely,”“will” and
      similar expressions identify such forward-looking statements. These
      forward-looking statements are subject to risks, uncertainties and other
      factors, including those set forth in the “Risk Factors” section of this
      document, some of which are beyond our control that could cause actual results
      to differ materially from those forecast or anticipated in such forward-looking
      statements. These factors include, but are not limited to, the technical and
      commercial success of our current and future products, reliance on vendors
      and
      product lines, competition, performance of new products, performance of
      affiliates and their future operating results, our ability to establish
      successful strategic alliances, quarterly and seasonal fluctuations, dependence
      on senior management and possible volatility of stock price. These factors
      are
      discussed generally in greater detail under the caption “Risk Factors” in this
      document.*




*We
      wish
      to caution readers not to place undue reliance on any such forward-looking
      statements, which speak only as of the date made. Such statements are subject
      to
      certain risks and uncertainties that could cause actual results to differ
      materially from historical earnings and those presently anticipated or
      projected. These risks and uncertainties are described in the following section.
      We specifically decline any obligation to publicly release the result of any
      revisions that may be made to any forward-looking statements to reflect
      anticipated or unanticipated events or circumstances occurring after the date
      of
      such statements, or to update the reasons why actual results could differ from
      those projected in the forward-looking statements.*




20





**Risk
      Factors**




In
      connection
      with the safe harbor contained in the Private Securities Litigation Reform
      Act
      of 1995 we are hereby identifying important factors that could cause actual
      results to differ materially from those contained in any forward-looking
      statements made by us or on our behalf. Any such statement is qualified by
      reference to the following cautionary statements:




**We
      may not be able to obtain additional funding on satisfactory terms.** We
      may be
      unable to obtain additional funding on satisfactory terms, which could interfere
      with our existing and planned operations, dilute our stockholders or impose
      burdensome financial restrictions on our business. Historically, we have relied
      upon cash from financing activities to fund most of the cash requirements of
      our
      operating and investing activities. Although we have been able to generate
      some
      but not sufficient cash from our operating activities in the recent past, there
      is no assurance we will be able to do so in the future.




General
      economic conditions may cause declines in investor confidence in and
      accessibility to capital markets. Further, because our common stock is not
      listed on a national exchange, the ability of any potential or future investors
      to achieve liquidity from our common stock is limited, which could inhibit,
      if
      not preclude, our ability to raise additional working capital on a timely basis,
      in sufficient amounts or on terms acceptable to us.






Any
      future financing may cause significant dilution to existing stockholders. Any
      debt financing or other financing of securities senior to our common stock
      would
      likely include financial and other covenants that will restrict our flexibility
      in the operation and management of our business. At a minimum, we expect these
      covenants to include restrictions on our ability to pay dividends on our common
      stock. Any failure to comply with these covenants would have a material adverse
      effect on our business, prospects, financial condition, results of operations
      and cash flows. In addition, we have paid, and will continue to be required
      to
      pay, interest on all amounts borrowed in debt financings, and the obligation
      to
      repay such interest could have a material adverse effect on our business,
      prospects, financial condition, results of operations and cash
      flow.






If
      adequate funds are not available, we may also be required to delay, scale back
      or eliminate portions of our operations and product development efforts or
      to
      obtain funds through arrangements with strategic partners or others that may
      require us to relinquish rights to certain of our technologies or potential
      products or other assets. Accordingly, the inability to obtain this financing
      could result in a significant loss of ownership and/or control of our
      proprietary technology and other important assets and could also adversely
      affect our ability to fund our continued operations and our product development
      efforts that historically have contributed significantly to our competitiveness.




**We
      have limited working capital.** Our
      working capital is limited and we are constantly challenged in executing our
      business plan. Additionally, our working capital does not allow us to fund
      significant organic growth opportunities or to cope with unforeseen
      contingencies. Unless we are able to secure additional external financing,
      for
      which there can be no assurance, we could be constrained in pursuing our
      business strategy and new opportunities aggressively.




**Our
      ability to continue as a going concern.** We
      have
      reevaluated and refocused our strategy in light of our current difficult
      financial condition. We believe that our strategy is viable and can be achieved.
      Nevertheless, unless we are able to improve revenue levels, cut further costs
      and raise additional capital to fund future operations, there can be no
      assurance that we will have sufficient liquidity and resources to successfully
      execute our plan and our plan may have to be severely curtailed.




We
      anticipate that our available cash resources may not be sufficient to meet
      our
      presently anticipated capital requirements for the next twelve months. We have
      suffered recurring losses from operations. As of April 30, 2005 we had a
      negative working capital of $1,708 thousand. We recognize that in order to
      meet
      our capital requirements, and continue to operate, additional funding is
      necessary. We are exploring additional sources of liquidity, through debt and
      equity financing alternatives. If we are (i) unable to grow our business or
      improve our operating cash flows as expected, (ii) unsuccessful in restructuring
      all or the necessary and required portion of the debt repayments due in July
      2005
      in the aggregate amounts of $1,815 thousand in principal and interest, or (iii)
      unable to raise additional funds through offerings of our common stock or
      exercise of outstanding warrants, then we may be unable to continue as a going
      concern. There can be no assurance that additional financing will be available
      when needed or, if available, that it will be on terms favorable to us and
      our
      stockholders.




21




If
      we are
      not successful in generating sufficient cash flows from operations, or in
      raising additional capital when required in sufficient amounts and on terms
      acceptable to us, these failures would have a material adverse effect on our
      business, results of operations and financial condition. If additional funds
      are
      raised through the issuance of equity securities, the percentage ownership
      of
      our current stockholders would be diluted.




**Our
      strategy to increasingly focus on the operations of Torrey Pines and restore
      the
      operations of Rixon to profitability involves risk and may not be successful.** We
      have
      increasingly focused on the operations of Torrey Pines and its efforts to
      develop transport products for the storage area network and metropolitan network
      marketplace. We have also focused on restoring the operations of Rixon to
      profitability. We may be unsuccessful with this strategy. We may be unsuccessful
      in commercializing our optical SilverlineTM storage area network and metropolitan
      area network transport product line and we may not be able to bring the
      operations of Rixon back to profitability through increased sales efforts and
      reduced overhead.




**We
      rely on a relatively limited number of customers, and the loss of any
      significant customer could materially and adversely affect our business and
      financial condition.** Historically,
      we have derived a significant portion of our revenues and accounts receivable
      from a relatively limited number of customers. The loss of one or more of these
      customers, or their inability to pay for our products and services, could have
      a
      material and adverse effect on our operating and financial results. In fact,
      Cisco Systems, our single largest customer during the fiscal year ended January
      31, 2004, discontinued purchasing an adapter card from us starting from the
      third quarter of our fiscal year ended January 31, 2004. During the twelve
      months ended January 31, 2004, Cisco Systems accounted for approximately 56.7%
      of our consolidated net revenues, whereas during the twelve months ended January
      31, 2005 and the three months ended April 30, 2005, it accounted for 0% of
      our
      net revenues.




**Our
      industry is highly competitive, and we may not have the resources required
      to
      compete successfully. The market for network connectivity products and services
      and storage area network transport equipment is extremely competitive and we
      expect competition to continue to intensify in the future** .
      Our
      primary competitors include Adaptec, Intel Corporation, Interphase, CNT, ADVA,
      Ciena, TransMode, Pandatel, Finisar, and MRV Communications. We may also face
      competition from a number of other companies that have announced plans for
      new
      products to address the same problems that our products address. Many of our
      current and potential competitors have significantly greater resources, name
      recognition and customer relationships than us. In particular, established
      companies in the telecommunications equipment or computing industries may seek
      to expand their product offerings by designing and selling products using
      competitive technology that could render our products obsolete or have a
      material adverse effect on our revenues.




**We
      operate in a market where emerging companies enter the markets in which we
      are
      competing and new products and technologies are**  **introduced.** Increased
      competition may result in further price reductions, reduced gross margins and
      loss of market share, any of which could materially and adversely affect our
      business operations or financial results. There are many competitors and
      potential competitors that are well funded and which may be able to "leap frog"
      beyond the technologies upon which we currently rely.




**Our
      business will be seriously harmed if we are not able to develop and
      commercialize new or enhanced products.** Our
      growth depends on our ability to successfully develop new or enhanced products.
      Our next generation of network management products and coarse wavelength
      division multiplexing products are under development. We cannot be sure whether
      these or other new products will be successfully developed and introduced to
      the
      market on a timely basis or at all. We will need to complete each of the
      following steps to successfully commercialize new products: complete product
      development, qualify and establish component suppliers, validate manufacturing
      methods, conduct extensive quality assurance and reliability testing, complete
      any software validation, and demonstrate systems interoperability.




If
      we do
      not develop these products in a timely manner, our competitive position and
      financial condition could be adversely affected.




In
      addition, as we introduce new or enhanced products, we must also manage the
      transition from older products to newer products. If we fail to do so, we may
      disrupt customer ordering patterns or may not be able to ensure that adequate
      supplies of new products can be delivered to meet anticipated customer demand.
      Any failure to effectively manage this transition may cause us to lose current
      and prospective customers.




22




**We
      maintain high levels of inventory with low turnover.** We
      have
      historically maintained high levels of inventory to meet the output requirements
      of our customers over which we have little influence and to support our older,
      or legacy, products already in service. Many of our products require custom
      parts with long lead times, and our inventory levels allow us to provide fast
      response to our customer needs. While we continually review our reserves for
      conservative valuations, significant changes in customer demand for our products
      could adversely and materially affect our business operations or financial
      results.




**Except
      for the fiscal year ending January 31, 2003, we incurred net operating losses
      over the recent past and may experience future losses.** We
      have
      incurred losses from operations during the three months ended April 30, 2005
      of
      $512 thousand, during the twelve months ended January 31, 2005 of $2,480
      thousand and during the twelve months ended January 31, 2004 of approximately
      $2,041 thousand. We have financed these losses through a combination of debt
      issuances, bank lines of credit and security placements. However, there can
      be
      no assurance that our working capital requirements will not exceed our ability
      to generate sufficient cash to support our requirements and the needed capital
      will have to be obtained from additional external sources.




**Our
      future growth depends on our ability to attract new customers, and on our
      customers' ability to sell additional services to their own customers.** Most
      of
      our potential customers evaluate our network connectivity and storage area
      products for integrated deployment in larger systems. There are a limited number
      of potential customers for our products. If we are not selected by a potential
      customer for a particular system project, our business may be seriously harmed.
      Similarly, our growth depends on our customers' success in selling integrated
      solutions based on our products and complementary products from others. We
      believe that our success will depend on our ability to effectively anticipate
      and adapt to customer requirements and offer products and services that meet
      customer demands. Any failure of our current or prospective customers to
      purchase products from us for any reason, including a downturn in their
      business, would seriously harm our ability to grow our business.




**The
      time that our customers and potential customers require for testing and
      qualification before purchasing our networking products and solutions can be
      long and variable, which may cause our results of operations to be
      unpredictable.** Before
      purchasing our products and solutions, potential customers must undertake a
      lengthy evaluation, testing and product qualification process. In addition,
      potential customers require time-consuming field trials of our products and
      solutions. Our sales effort requires the effective demonstration of the benefits
      of our products to, and significant training of, potential customers. In
      addition, the timing of deployment depends on many factors, including the
      sophistication of a customer and the complexity and size of a customer's
      networks. Our sales cycle, which is the period from the time a sales lead is
      generated until the recognition of revenue, often exceeds one year. The length
      and variability of our sales cycle is beyond our control and is affected by,
      among other things, our customers' build out and deployment schedules, our
      customers' access to product purchase financing, our customers' needs for
      functional demonstration and field trials, and the manufacturing lead time
      for
      our products. Because our sales cycles are long and variable, our results of
      operations may be unpredictable.






**Our
      products may have errors or defects that we find only after deployment, which
      could seriously harm our business.** Our
      products can only be fully tested after deployment. Our customers may discover
      errors or defects in our products, and our products may not operate as expected.
      If we are unable to fix errors or other problems that may be identified, we
      could experience loss of or delay in revenues and loss of market share, loss
      of
      customers, failure to attract new customers or achieve market acceptance,
      diversion of engineering resources, increased service and warranty costs, and
      legal actions by our customers. Any failure of our current or planned products
      to operate as expected could delay or prevent their adoption and seriously
      harm
      our business.




**If
      our products do not fully work with, or interoperate with, our customers'
      systems, installations will be delayed or canceled or our products could be
      returned.** Many
      of
      our customers require that our products be designed to work or interoperate
      with
      their existing networks, each of which may have different specifications and
      utilize a variety of protocols. Our customers' networks contain multiple
      generations of products that have been added over time as these networks have
      grown and evolved. Our products must work or interoperate with all of the
      products within these networks as well as future products in order to meet
      our
      customers' requirements. If we are required to modify our product design to
      be
      compatible with our customers' systems to achieve a sale, it may result in
      a
      longer sales cycle, increased research and development expense and reduced
      margins on our products. If our products do not fully work or interoperate
      with
      those of our customers' networks, installations could be delayed, orders for
      our
      products could be canceled or our products could be returned, any of which
      could
      seriously harm our business.




**If
      we fail to establish and successfully maintain strategic alliances, our business
      may be harmed.** Strategic
      alliances are an important part of our effort to expand our revenue
      opportunities and technological capabilities given our limited resources to
      commercialize our products and reach the market. We cannot be certain that
      we
      will be able to enter strategic alliances on terms that are favorable to us.
      Our
      business may be harmed if we fail to establish and maintain strategic alliances
      that extend our reach.




23




**Our
      business may be seriously harmed if we are unable to establish successful
      relationships with distributors and systems integrators.** We
      believe that our future success is dependent upon our ability to establish
      successful relationships with a variety of distributors and systems integrators.
      As we expand domestically and internationally, we will increasingly depend
      on
      distributors and systems integrators. If we are unable to establish and expand
      these relationships, we may not be able to increase market awareness or sales
      of
      our products, which may prevent us from achieving and maintaining
      profitability.




**Our
      business for storage area networking products may be seriously harmed if the
      market for storage area networking products does not develop as we expect.** Our
      planned product offerings are focused on the needs of customers that service
      storage area networks. The market for storage area networking products is new,
      and we cannot be certain that a viable market for our products will develop
      or
      be sustainable. If this market does not develop, or develops more slowly than
      we
      expect, our business may be seriously harmed. Furthermore, the storage area
      networking industry is subject to rapid technological change and newer
      technology or products developed by others could render our products
      uncompetitive or obsolete. If the standards adopted are different from those
      that we have chosen to support, market acceptance of our products would be
      significantly reduced and our business would be seriously harmed.




**We
      depend upon contract manufacturers, and any disruption in these relationships
      may cause us to fail to meet the demands of our customers and damage our
      customer relationships.** We
      use
      contract manufacturers to manufacture and assemble our products in accordance
      with our specifications. We do not have long-term contracts with any of them,
      and none of them are obligated to perform services for us for any specific
      period or at any specified price, except as may be provided in a particular
      purchase order. We may not be able to effectively manage our relationships
      with
      these manufacturers and they may not meet our future requirements for timely
      delivery or provide us with the quality of products that we and our customers
      require.




Each
      of
      our contract manufacturers also builds products for other companies. We cannot
      be certain that they will always have sufficient quantities of inventory
      available to fill our orders on a timely basis. Qualifying a new contract
      manufacturer and commencing volume production is expensive and time consuming
      and could result in a significant interruption in the supply of our products.
      If
      we are required to change contract manufacturers, we may suffer delays that
      could lead to the loss of revenue and damage our customer
      relationships.




**We
      rely on a limited number of suppliers for some of our components, and our
      business may be seriously harmed if our supply of any of these components is
      disrupted.** The
      major
      components of our products include circuit boards, microprocessors, chipsets,
      and memory components among other components. Most of these components are
      available from multiple sources. However, some components used in our products
      are obtained from single or limited sources and may from time to time be in
      short supply. We have from time to time experienced, and are experiencing,
      difficulty in obtaining some components. We do not have guaranteed supply
      arrangements with any of our suppliers, and we cannot assure you that our
      suppliers will continue to meet our requirements. Shortages of components could
      not only limit our production capacity but also could result in higher costs
      due
      to the higher costs of components in short supply or the need to use higher-cost
      substitute components. Significant increases in the prices of components could
      have a material adverse effect on our results of operations because we may
      not
      be able to adjust product pricing to reflect the increases in component costs.
      Also, an extended interruption in the supply of components or a reduction in
      their quality or reliability would have a material adverse effect on our
      financial condition and results of operations by impairing our ability to timely
      deliver quality products to our customers. Delays in deliveries due to shortages
      of components or other factors may result in cancellation by our customers
      of
      all or part of their orders. Although customers who purchase from us products
      that are not readily available from other sources would be less likely than
      other customers of ours to cancel their orders due to production delays, we
      cannot assure you that cancellations will not occur.




The
      availability of many of these components to us is dependent in part by our
      ability to provide suppliers with accurate forecasts of our future requirements.
      In the event of a disruption in supply or if we receive an unexpectedly high
      level of purchase orders, we may not be able to develop an alternate source
      in a
      timely manner or at favorable prices. Any of these events could hurt our ability
      to deliver our products to our customers and negatively affect our operating
      margins. In addition, our reliance on our suppliers exposes us to potential
      supplier production difficulties or quality variations. Any such disruption
      in
      supply would seriously impact our present and future sales.




In
      addition, we have from time to time received from manufacturers "last buy"
      notices that indicate that one or more components that we incorporate into
      our
      products will be discontinued.




24




If
      we are
      unable to participate in a last buy or are unable to purchase an adequate
      quantity of last buy components to cover our needs until the time, if any,
      that
      we are able to find an appropriate substitute component that works with the
      current design of our product or to redesign our product to allow for use of
      a
      substitute component, we may have to eliminate the product from our product
      line. We believe that with respect to many of our single source components,
      we
      could obtain similar components from other sources. However, in response to
      past
      last buy notices, we have been working to alter product designs on some of
      our
      products to allow us to use alternative components. We cannot assure you that
      we
      will be successful in our redesign of these products or that we will not
      experience difficulties associated with future last buys. Further, we cannot
      assure you that future severe shortages of components that could increase the
      cost or delay the shipment of our products will not occur.




**We
      may be unable to protect our intellectual property, which could limit our
      ability to compete** .
      We hold
      nine patents and have one patent pending for our SilverlineTM product design.
      Although we attempt to protect our intellectual property rights through patents,
      trademarks, and copyrights, by maintaining certain technology as trade secrets
      and by other measures, we cannot assure you that any patent, trademark,
      copyright or other intellectual property rights owned by us will not be
      invalidated, circumvented or challenged; that such intellectual property rights
      will provide competitive advantages to us; or that any of our future patent
      applications, if any, will be issued with the scope of the claims sought by
      us,
      if at all. We cannot assure you that others will not develop technologies that
      are similar or superior to our technology, or that our competitors will not
      duplicate our technology or "design around" the patents that we own. In
      addition, effective patent, copyright and trade secret protection may be
      unavailable or limited in certain foreign countries in which we do business
      or
      intend to do business in the future.




We
      believe that the future success of our business will depend on our ability
      to
      translate the technological expertise and innovation of our personnel into
      new
      and enhanced products. We cannot assure you that the steps taken by us will
      prevent misappropriation of our technology. In the future, we may take legal
      action to enforce our patents and other intellectual property rights, to protect
      our trade secrets, to determine the validity and scope of the proprietary rights
      of others, or to defend against claims of infringement or invalidity. Such
      litigation could result in substantial costs and diversion of resources and
      could harm our business and operating results.




**We
      could become subject to litigation regarding intellectual property rights,
      which
      could seriously harm our business and require us to incur significant costs.** In
      recent
      years, there has been significant litigation in the United States involving
      patents and other intellectual property rights. We may be a party to litigation
      in the future to protect our intellectual property or as a result of an
      allegation that we infringe others' intellectual property. Any parties asserting
      that our products infringe upon their proprietary rights would force us to
      defend ourselves, and possibly our customers or manufacturers against the
      alleged infringement. These claims and any resulting lawsuits, if successful,
      could subject us to significant liability for damages and invalidation of our
      proprietary rights. Additionally, any claims and lawsuits, regardless of their
      merits, would likely be time-consuming and expensive to resolve and would divert
      management time and attention.




Any
      claims of infringement of the intellectual property of others could also force
      us to do one or more of the following: stop selling, incorporating or using
      our
      products that use the challenged intellectual property; obtain from the owner
      of
      the infringed intellectual property right a license to sell or use the relevant
      technology, which may not be available to us on reasonable terms, or at all;
      or
      redesign the infringing products that use such technology. If we are forced
      to
      take any of the foregoing actions, our business may be seriously
      harmed.




**The
      markets that our products address are governed by regulations and evolving
      industry standards.** The
      market for our products is highly regulated and industry standards are
      intensive, with many standards evolving as new technologies are deployed. In
      the
      United States, our products must comply with various regulations defined by
      the
      Federal Communications Commission and standards established by Underwriters
      Laboratories. In addition, there are industry standards established by various
      organizations such as Fibre Channel Industry Association, American National
      Standards Institute, and Internet Engineering Task Force. We design our products
      in an effort to comply with those industry standards so that each particular
      product can be accepted by its intended customer. To the extent non-compliance
      with such standards has a detrimental effect on customer acceptance, we must
      address such non-compliance in the design of our products. Standards for new
      services and network management are still evolving. However, as the standards
      evolve, we will be required to modify our products or develop and support new
      versions of our products. The failure of our products to comply or delays in
      compliance could materially and adversely affect our business, operating results
      and financial condition.




25




**Our
      future revenues are unpredictable and our financial results may fluctuate.** Our
      revenue and operating results could fluctuate substantially from quarter to
      quarter and from year to year. This could result from any one or a combination
      of factors such as our development and the sale of new technologies and the
      cancellation or postponement of orders, the timing and amount of significant
      orders from our largest customers, our success in developing, introducing and
      shipping product enhancements and new products, the mix of products we sell,
      new
      product introductions by competitors, pricing actions taken by us or our
      competitors, the timing of delivery and availability of components from
      suppliers, changes in material costs and general economic
      conditions.




**Our
      business may be adversely affected by competitive pressures, which we must
      react
      to.** The
      industry we compete in is characterized by declining prices of existing
      products. Therefore continual improvements of manufacturing efficiencies and
      introduction of new products and enhancements to existing products are required
      to maintain gross margins. In response to customer demands or competitive
      pressures, or to pursue new product or market opportunities, we may take certain
      pricing or marketing actions, such as price reductions, volume discounts, or
      provisions of services at below market rates. These actions could materially
      and
      adversely affect our business, operating results and financial
      condition.




**If
      we are unsuccessful in our efforts to take advantage of distribution channels
      for our products, sales of our products may decline or fail to increase.** We
      channel many of our products through a network of distribution outlets. We
      are
      continuing to develop and solidify our relationships with certified resellers,
      distributors and system integrators, many of which are part of a worldwide
      distribution network. To the extent we are unsuccessful in our efforts to create
      or maintain an adequate quality and quantity of these relationships, sales
      of
      our products may decline or fail to increase as we work to establish effective
      channels to market.




**We
      rely heavily on our management and board of directors, and the loss of any
      of
      their services could materially and adversely affect our business.** Our
      success is highly dependent upon the continued services of key members of our
      management and board of directors, including our Chairman of the Board, Chief
      Executive Officer and President, Dr. Kanwar J.S. Chadha, Mr. James Dziak,
      President of Microtek Systems, Inc., a wholly-owned subsidiary of our Torrey
      Pines subsidiary, Mr. Raj Ganti, Chief Technology Officer, and Mr. Jim
      Loofbourrow, Vice President of Finance. The loss of Dr. Chadha, Mr. Dziak,
      Mr.
      Ganti, or Mr. Loofbourrow or one or more other key members of our management
      or
      board of directors could have a material adverse effect on us because each
      of
      these individuals has experience and skills upon which we draw heavily in our
      day-to-day operations and/or strategic planning activities. We do not maintain
      key-man life insurance policies on any member of management. Our ability to
      pay
      cash compensation to retain key members of our management and board of directors
      is limited by our cash flows.




**Our
      common stock price is subject to significant volatility, which could result
      in
      substantial losses for investors.** The
      stock
      market as a whole, and individual stocks in particular historically have
      experienced extreme price and volume fluctuations, which often have been
      unrelated to the performance of the related corporations. During the three
      months ended April 30, 2005 the high and low closing sale prices of our common
      stock were $0.18 and $0.09, **** respectively
      and for the fiscal year ended January 31, 2005, the high and low closing sale
      prices of our common stock were $0.38 and $0.08, respectively. The market price
      of our common stock may exhibit significant fluctuations in the future in
      response to various factors, many of which are beyond our control, and which
      include:





·Variations
                  in our quarterly operating results, which variations could result
                  from,
                  among other things, changes in the needs of one or more of our
                  customers;·Changes
                  in market valuations of similar companies and stock market price
                  and
                  volume fluctuations generally;·Economic
                  conditions specific to the industries in which we
                  operate;·Announcements
                  by us or our competitors of new or enhanced products, technologies
                  or
                  services or significant contracts, acquisitions, strategic relationships,
                  joint ventures or capital commitments;·Regulatory
                  developments;·Additions
                  or departures of key personnel; and·Future
                  sales of our common stock or other debt or equity
                  securities.




If
      our
      operating results in future quarters fall below the expectations of market
      makers and investors, the price of our common stock likely will decline, perhaps
      substantially. In the past, securities class action lawsuits have often been
      brought against companies following periods of volatility in the market price
      of
      their securities. We may in the future be the target of similar lawsuits.
      Securities lawsuits could result in substantial costs and liabilities and could
      divert management's attention and resources. Consequently, the price at which
      you purchase shares of our common stock may not be indicative of the price
      that
      will prevail in the trading market. You may be unable to sell your shares of
      common stock at or above your purchase price, which may result in substantial
      losses to you.




26




Shares
      of
      our common stock eligible or to become eligible for public sale could adversely
      affect our stock price and make it difficult for us to raise additional capital
      through sales of equity securities. As of April 30, 2005, we had outstanding
      16,805,076 shares of common stock, a substantial portion of which were
      unrestricted, were eligible for resale under Rule 144 of the Securities Act
      of
      1933, or were registered for resale or issued with registration rights.
      Disregarding beneficial ownership limitations that apply to some holders of
      our
      derivative securities, as of April 30, 2005, we also had outstanding options
      and
      warrants that were exercisable for or convertible into approximately 24,178,275
      shares of common stock, nearly all of which were issued with registration
      rights. Sales of a substantial number of shares of our common stock in the
      public market, or the perception that sales could occur, could adversely affect
      the market price for our common stock. Any adverse effect on the market price
      for our common stock could make it difficult for us to sell equity securities
      at
      a time and at a price that we deem appropriate.




**We
      may authorize a significant number of additional shares of common
      stock.** On
      January 27, 2005, our stockholders voted at our
      annual meeting of stockholders in favor
      of a
      proposal to amend our Amended and Restated Certificate of Incorporation, as
      amended to date, to increase the number of our authorized shares of common
      stock
      from 50,000,000 to 150,000,000 .
      As of
      April 30, 2005, we had issued and outstanding 16,805,076 shares
      of common stock, as well as stock options and warrants to acquire an aggregate
      of 24,178,275 additional shares of common stock. Increasing the number of authorized shares
      of
      our common stock enables our
      Board of Directors to issue additional shares of our common stock up to
      the number of authorized shares ,
      the
      effect of which will be to dilute the share holdings of our
      stockholders, which may adversely affect the market price of our
      stock.




**Because
      our stock is not listed on a national securities exchange, you may find it
      difficult to dispose of, or obtain quotations for our common
      stock.** Our
      common stock trades under the symbol "ESAN" on the OTC Bulletin Board. Because
      our stock trades on the OTC Bulletin Board rather than on a national securities
      exchange or on NASDAQ, you may find it difficult to either dispose of, or to
      obtain quotations as to the price of, our common stock.




**Because
      we are subject to the "Penny Stock" rules, the level of trading activity in
      our
      stock may be reduced.** Broker-dealer
      practices in connection with transactions in "penny stocks" are regulated by
      penny stock rules adopted by the Securities and Exchange Commission. Penny
      stocks, like shares of our common stock, generally are equity securities with
      a
      price of less than $5.00 (other than securities registered on some national
      securities exchanges or quoted on NASDAQ). The penny stock rules require a
      broker-dealer, prior to a transaction in a penny stock not otherwise exempt
      from
      the rules, to deliver a standardized risk disclosure document that provides
      information about penny stocks and the nature and level of risks in the penny
      stock market. The broker-dealer also must provide the customer with current
      bid
      and offer quotations for the penny stock, the compensation of the broker-dealer
      and its salesperson in the transaction, and, if the broker-dealer is the sole
      market maker, the broker-dealer must disclose this fact and the broker-dealer's
      presumed control over the market, and monthly account statements showing the
      market value of each penny stock held in the customer's account. In addition,
      broker-dealers who sell these securities to persons other than established
      customers and "accredited investors" must make a special written determination
      that the penny stock is a suitable investment for the purchaser and receive
      the
      purchaser's written agreement to the transaction. Consequently, these
      requirements may have the effect of reducing the level of trading activity,
      if
      any, in the secondary market for a security subject to the penny stock rules,
      and investors in our common stock may find it difficult to sell their shares.





27




**Item
      6. Exhibits and Reports on Form 8-K**





(a)
            Exhibits





None


(b)
            Reports
                on Form 8-K





Our Form 8-K filed February 1, 2005 reporting on the January 27, 2005 annual
      meeting.





Our Form 8-K filed February 4, 2005 reporting on our 3 rd loan
      amendments.





Our Form 8-K filed February 10, 2005 reporting on our bank loan amendment and
      our auditor change.





Our Form 8-K filed February 24, 2005 reporting on our new auditors.





Our Form 8-K filed April 18, 2005 reporting on our 4 th loan
      amendment and Silicon Valley Bank loan amendment.








(c)Certifications31.1 Statement Under Oath for Chief Executive Officer Pursuant to
                Section
                302 of the Sarbanes-Oxley Act.31.2 Statement Under Oath for Principal Financial Officer Pursuant
                to
                Section 302 of the Sarbanes-Oxley Act.32.1 Statement Under Oath for Chief Executive Officer Pursuant to
                Section
                906 of the Sarbanes-Oxley Act.32.2 Statement Under Oath for Principal Financial Officer Pursuant
                to
                Section 906 of the Sarbanes-Oxley
                Act.





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**Signatures**





Pursuant
      to the requirements 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.





ENTRADA
      NETWORKS, INC.





By: _/s/
      James G. Loofbourrow


James
      G.
      Loofbourrow


Principle
      Accounting Officer




Date:
      July 18, 2005







**SUBSIDIARIES
      OF THE REGISTRANT**






Rixon
      Networks, Inc., a Delaware corporation


Sync
      Research, Inc., a Delaware corporation


Torrey
      Pines Networks, Inc., a Delaware corporation


Microtek
      Systems, Inc. a Wisconsin corporation







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