**UNITED
      STATES**


**SECURITIES
      AND EXCHANGE COMMISSION**


**Washington,
      D.C. 20549**





**FORM
      10-K/A**


(Amendment
      No. 1)





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





For
      the
      fiscal year ended December 31, 2006


OR





o 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 000-25781





**NET
      PERCEPTIONS, INC.**


**(Exact
      Name of Registrant as Specified in its Charter)**







**Delaware**
            **41-1844584****(State
                or Other Jurisdiction**
            **(I.R.S.
                Employer Identification No.)****of
                Incorporation or Organization)****One
                Landmark Square, Stamford, Connecticut**
            **06901****(Address
                of Principal Executive Offices)**
            **(Zip
                Code)**




**(203)
      428-2040**


**(Registrant’s
      telephone number, including area code)**





**Securities
      registered pursuant to Section 12(b) of the Act:**





**Title
                of each class**
            **Name
                of each exchange on which registered**None
            Not
                applicable





**Securities
      registered Pursuant to Section 12(g) of the Act:**





**Common
      Stock, par value $.0001 per share**


**(Title
      of class)**





**Preferred
      Stock Purchase Rights**


**(Title
      of class)**





Indicate
      by check mark if the registrant is a well-known seasoned issuer, as defined
      in
      Rule 405 of the Securities Act.


YES o NO x





Indicate
      by check mark if the registrant is not required to file reports pursuant to
      Section 13 or Section 15(d) of the Exchange


Act.
      YES
o NO x





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
o





Indicate
      by check mark if disclosure of delinquent filers pursuant to Item 405 of
      Regulation S-K is not contained herein, and will not be contained, to the best
      of Registrant's knowledge, in the definitive proxy or information statement
      incorporated by reference in Part III
      of
      this Form 10-K or any amendment to this Form 10-K. x





Indicate
      by check mark whether the registrant is a large accelerated filer, an
      accelerated filer, or a non-accelerated filer. See definition of “accelerated
      filer and large accelerated filer” in Rule 12b-2 of the Exchange Act. Large
      accelerated filer o Accelerated
      filer Non-accelerated
      filer x





Indicate
      by check mark whether the Registrant is a shell company (as defined in Rule
      12b-2 of the Exchange Act) YES o NO x





The
      aggregate market value of voting and non-voting stock held by non-affiliates
      of
      the Registrant, based upon the last sale price of the Registrant’s Common Stock,
      par value $0.0001 per share, reported on the OTC Pink Sheets Electronic
      Quotation Service on June 30, 2006 was $19,085,712 .





As
      of
      April 27, 2007, there were outstanding 41,382,147 shares of the
      Registrant’s Common Stock, $0.0001 par value.





**DOCUMENT
      INCORPORATED BY REFERENCE**




None.












**EXPLANATORY
        NOTE**
 
 This
        Amendment No. 1 on Form 10-K/A (this “Amendment”) amends Net Perceptions
        Inc.'s (the “Company”) Annual Report on Form 10-K for the fiscal year ended
        December 31, 2006, originally filed with the Securities and Exchange
        Commission (the "SEC") on April 2, 2007 (the “Original Filing”). We are filing
        this Amendment to include the information required by Part III, Items 10,
        11,
        12, 13 and 14 and not included in the Original Filing as we will not file
        our
        definitive proxy statement within 120 days of the end of the Company’s fiscal
        year ended December 31, 2006. In addition, in connection with the filing of
        this Amendment and pursuant to the rules of the Securities and Exchange
        Commission, we are including with this Amendment certain currently dated
        certifications. Accordingly, Item 15 of Part IV has also been amended to
        reflect the filing of these currently dated certifications.
 
 Except
        as
        described above, no other changes have been made to the Original Filing.
        The
        Original Filing continues to speak as of the date of the Original Filing,
        and we
        have not updated the disclosures contained therein, including our financial
        statements and the notes to the financial statements, to reflect any events
        which occurred at a date subsequent to the filing of the Original Filing.
        In
        this Amendment, unless the context indicates otherwise, the terms “Company,”
“we,” “us,” and “our” refer to Net Perceptions, Inc. and its subsidiaries.









**NET
      PERCEPTIONS, INC.**


**ANNUAL
      REPORT ON FORM 10-K/A**


**FOR
      THE YEAR ENDED DECEMBER 31, 2006**





**TABLE
      OF CONTENTS**





**Page****PART
                III**ITEM
                10.
            DIRECTORS
              AND EXECUTIVE OFFICERS OF THE REGISTRANT AND RELATED STOCKHOLDER
              MATTERS
            2ITEM
                11.
            EXECUTIVE
              COMPENSATION
            4ITEM
                12.
            SECURITY
              OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
            21ITEM
                13.
            CERTAIN
              RELATIONSHIPS AND RELATED TRANSACTIONS
            24ITEM
                14.
            PRINCIPAL
              ACCOUNTANT FEES AND SERVICES
            25**PART
                IV**ITEM
                15.
            EXHIBITS,
              FINANCIAL STATEMENT SCHEDULES
            27**SIGNATURES**
            28**EXHIBIT
                INDEX**
            29




1




**PART
        III**
 
 **ITEM
        10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT** **AND
        RELATED STOCKHOLDER MATTERS**
  **Board
        of Directors**
  The
        age
        and principal occupation for the past five years of each our current members
        of
        our Board of Directors:
 
 **Warren
        B. Kanders** ,
        49, has
        served as Non-Executive Chairman of our Board of Directors since October
        3, 2006
        and Executive Chairman of our Board of Directors from April 2004 to October
        3,
        2006. Mr. Kanders has served as the Founder and Chairman of the Board of
        Armor
        Holdings, Inc. since January 1996 and as its Chief Executive Officer since
        April
        2003. Mr. Kanders has served as a member of the Board of Directors of Clarus
        Corporation since June 2002 and as the Executive Chairman of Clarus
        Corporation’s Board of Directors since December 2002 and as the Chairman of the
        Board of Directors of Langer, Inc. since November 2004. From October 1992
        to May
        1996, Mr. Kanders served as Founder and Vice Chairman of the Board of Benson
        Eyecare Corporation. Mr. Kanders also serves as President of Kanders &
Company, Inc. (“Kanders & Company”), a private investment firm owned and
        controlled by Mr. Kanders that makes investments in and renders consulting
        services to public and private entities. Mr. Kanders received a B.A. degree
        in
        Economics from Brown University in 1979.
 
 **Nicholas
        Sokolow** ,
        57, has
        served as one of our directors since April 2004. Mr. Sokolow has served as
        a member of the Board of Directors of Armor Holdings, Inc. since January
        1996
        and as a member of the Board of Directors of Clarus Corporation since June
        2002.
        Mr. Sokolow has been a partner in the law firm of Sokolow, Carreras &
Associes since 1994. From June 1973 until October 1994, Mr. Sokolow was an
        associate and partner in the law firm of Coudert Brothers.
 
 **David
        A. Jones** ,
        56, has
        served as one of our directors since June 2004. Mr. Jones has over 30 years
        experience as a senior executive with expertise in private wealth management
        and
        securities trading. Since January 2004, Mr. Jones has been the President
        of D.A.
        Jones LLC, where he serves as a professional trustee and independent advisor
        of
        high net worth individuals and families. From August 1994 until December
        2003,
        Mr. Jones served as a managing director and the senior client executive at
        Deutsche Bank Private Wealth Management (formerly Bankers Trust). Since 1982,
        Mr. Jones has served on the board of trustees of The Jewish Home & Hospital
        Lifecare System in New York and served as its chairman from 1997 until
        2001.
  **Executive
        Officers**
  The
        following table sets forth the name, age and position of each of our current
        executive officers as of the date hereof. Our executive officers are appointed
        by and serve at the discretion of the Board of Directors of Net Perceptions.
 **Name**
                **Age**
                **Position**Albert
                    Weggeman
                43
                President
                    and Chief Executive OfficerJonathan
                    LaBarre
                37
                Chief
                    Financial Officer, Secretary and TreasurerPaul
                    Vesey
                51
                President
                    and General Manager of Concord
                    Steel
  2
  **Albert
        W. Weggeman** ,
        43, has
        served as President and Chief Executive Officer since October 3, 2006. From
        2005
        until 2006, he served as President of Tyden Group, Inc., a global manufacturer
        of cargo security and product identification and traceability technology.
        From
        2001 until 2005 Mr. Weggeman was Chief Operating Officer for Key Components,
        Inc. LLC a company specializing in the design and manufacture of engineered
        components for a broad range of OEM applications and customers. From 1999
        until
        2001 Mr. Weggeman was President of a General Electric Company subsidiary
        focused
        on the manufacture and sale of outdoor electrical products. Mr. Weggeman
        also
        served in various leadership roles in M&A, Marketing, Operations and
        Strategic Planning functions for multinational manufacturing companies. Mr.
        Weggeman graduated with an Electrical Engineering degree from Northeastern
        University in 1988 and an MBA from Kellogg Graduate School of Management
        in
        Chicago in 1992. He is a graduate of General Electric Company’s Manufacturing
        Management Program.
 
 **Jonathan
        LaBarre** ,
        37, has
        served as Chief Financial Officer, Secretary and Treasurer since December
        1,
        2006. Mr. LaBarre previously worked for Terex Corporation, a diversified
        global
        manufacturer, where he served as Senior Finance Manager, Corporate Finance
        since
        February 2002. From April 1999 until January 2002, Mr. LaBarre served in
        various
        finance leadership roles for Pratt & Whitney’s International Product Center,
        Division of United Technologies Corporation, a producer of aerospace, elevators
        and air conditioning products. Prior to that, from October 1997 until March
        1999, Mr. LaBarre held various accounting and finance positions with The
        Stanley
        Works, an S&P 500 company. Mr. LaBarre graduated with a B.S. in Accounting
        from the Central Connecticut State University in 1994 and received a M.B.A.
        from
        Western New England College in 2000. Mr. LaBarre is a certified public
        accountant.
 
 **Paul
        Vesey** ,
        51, has
        served as the President of Concord since October 3, 2006 and previously served
        as Concord’s Vice President from 1991 to 2006. Since 1980 Mr. Vesey has been
        employed by Concord in a variety of positions including Plant and General
        Manager with responsibilities that have included product development, sales
        and
        marketing.
 
 **Involvement
        in Certain Legal Proceedings**
 
 No
        director, executive officer, or person nominated to become a director or
        executive officer has, within the last five years: (i) had a bankruptcy petition
        filed by or against, or a receiver, fiscal agent or similar officer appointed
        by
        a court for, any property or any business of such person or entity with respect
        to which such person was a general partner or executive officer either at
        the
        time of the bankruptcy or within two years prior to that time; (ii) been
        convicted in a criminal proceeding or is currently subject to a pending criminal
        proceeding (excluding traffic violations and other minor offenses); (iii)
        been
        subject to any order, judgment or decree, not subsequently reversed, suspended
        or vacated, of any court of competent jurisdiction, permanently or temporarily
        enjoining, barring, suspending or otherwise limiting his involvement in any
        type
        of business, securities or banking activities or practice; (iv) been found
        by a
        court of competent jurisdiction (in a civil action), the Securities and Exchange
        Commission or the Commodity Futures Trading Commission to have violated a
        federal or state securities or commodities law, and the judgment has not
        been
        subsequently reversed, suspended or vacated.
 
 **Section
        16(A) Beneficial Ownership Reporting Compliance**
 
 Section
        16(a) of the Exchange Act requires our directors and executive officers and
        any
        persons who own more than 10% of our capital stock to file with the Securities
        and Exchange Commission (and, if such security is listed on a national
        securities exchange, with such exchange), various reports as to ownership
        of
        such capital stock. Such persons are required by Securities and Exchange
        Commission regulations to furnish us with copies of all Section 16(a) forms
        they
        file.
  3
  Based
        solely upon reports and representations submitted by the directors, executive
        officers and holders of more than 10% of our capital stock, all Forms 3,
        4 and 5
        showing ownership of and changes of ownership in our capital stock during
        the
        2006 fiscal year were timely filed with the Securities and Exchange Commission.
 
 **Code
        of Ethics**
 
 We
        have
        adopted a Code of Ethics for Senior Executive Officers and Senior Financial
        Officers, a Code of Business Conduct and Ethics for directors, officers,
        employees, agents, representatives, subsidiaries and affiliates, an Audit
        Committee Charter, Complaint Procedures for Accounting and Auditing Matters,
        a
        Compensation Committee Charter, a Nominating/Corporate Governance Committee
        Charter, and Corporate Governance Guidelines, all of which are available
        at our
        Internet website, www.netperceptions.com, at the tab ‘‘Investor Relations.’’ We
        will provide to any person without charge, upon request, a copy of the foregoing
        materials. We intend to disclose future amendments to the provisions of the
        foregoing documents, policies and guidelines and waivers therefrom, if any,
        on
        our Internet website and/or through the filing of Current Reports on Form
        8-K
        with the Securities and Exchange Commission. Information on our Internet
        website
        does not constitute a part of this report.
 
 **Audit
        Committee**
 
 The
        Audit
        Committee is responsible for the oversight and evaluation of (i) the
        qualifications, independence and performance of our independent auditors;
        (ii)
        the performance of our internal audit function; and (iii) the quality and
        integrity of our financial statements and the effectiveness of our internal
        control over financial reporting. In addition, the committee recommends to
        the
        Board of Directors the appointment of independent auditors and analyzes the
        reports and recommendations of such auditors.
 
 Our
        Audit
        Committee is currently comprised of Messrs. Sokolow and Jones, with Mr. Sokolow
        serving as the Chairman, both of whom were determined by the Board to be
        independent of Net Perceptions based on the NASDAQ’s definition of
“independence”. Our Board of Directors currently does not have an audit
        committee financial expert (as such term is defined under the Sarbanes-Oxley
        Act
        of 2002 and the rules and regulations promulgated thereunder) serving on
        its
        Audit Committee. However, the Board of Directors is looking for and considering
        candidates to appoint to the Board of Directors and the Audit Committee who
        will
        serve on the Audit Committee as an audit committee financial expert. The
        Audit
        Committee met four times during fiscal 2006. The Board of Directors has adopted
        a written Charter for the Audit Committee, a copy of which was attached to
        our
        Proxy Statement for the Annual Meeting of Stockholders held on June 23, 2004
        and
        is available at www.netperceptions.com ,
        our
        Internet website, at the tab “Corporate Governance”.
 
 **ITEM
        11. EXECUTIVE COMPENSATION**
 
 **Compensation
        Discussion and Analysis**
 
 *Overview*
 
 The
        Compensation Committee of the Board of Directors (the “Compensation Committee”)
        assists the Board in establishing compensation packages for Net Perceptions’
executive officers and non-employee directors and administering Net Perceptions’
incentive plans. The Compensation Committee is generally responsible for
        setting
        and administering the policies which govern annual executive salaries, raises
        and bonuses and certain awards of stock options and common stock, and, where
        applicable, compliance with the requirements of Section 162(m) of the Internal
        Revenue Code of 1986, as amended (the “IRC”) and such responsibility is
        generally limited to the actions taken by the Compensation Committee, although
        at times the full Board has determined annual executive salaries, raises
        and,
        where the Company has determined that compliance with the provisions of Section
        162(m) is not required, bonuses as well as grants of stock options and common
        stock without having first received recommendations from the Compensation
        Committee. From time to time, the Compensation Committee reviews our
        compensation packages to ensure that they remain competitive with the
        compensation packages offered by similarly-situated companies and continue
        to
        incentivize management and align management’s interests with those of our
        stockholders.
  4
  The
        Compensation Committee is comprised of two directors, each of whom has
        considerable experience in executive compensation issues. Each member of
        the
        Compensation Committee meets the independence requirements specified by the
        NASDAQ and by Section 162(m) of the IRC.
 
 *Executive
        Compensation Philosophy*
 
 The
        general philosophy of our executive compensation program is to attract and
        retain talented management while ensuring that our executive officers are
        compensated in a way that advances the interests of our stockholders. In
        pursuing these objectives, the Compensation Committee believes that it is
        critical that a substantial portion of each executive officer’s compensation be
        contingent upon our overall performance. The Compensation Committee is also
        guided by the principle that our compensation packages must be competitive,
        must
        support our overall strategy and objectives, and must provide significant
        rewards for outstanding financial performance while establishing clear
        consequences for underperformance. Annual bonuses and long-term awards for
        our
        executive officers should take into account not only objective financial
        goals,
        but also individual performance goals that reinforce our core values, which
        include leadership, accountability, ethics and corporate governance. It is
        the
        Compensation Committee’s responsibility to determine the performance goals for
        the performance-based compensation payable identified on the summary
        compensation table on page 27 in compliance with Section 162(m) of the IRC,
        subject to ratification by the Board, and to certify compliance with such
        goals
        before such compensation is paid. Subject to this limitation, the Compensation
        Committee may also make recommendations to the Board with respect to non-Chief
        Executive Officer compensation and, either alone or with the other independent
        members of our Board, to determine and approve our Chief Executive Officer’s
        compensation.
 
 In
        determining the compensation packages for our executive officers and
        non-employee directors, the Compensation Committee and the Board of Directors
        have evaluated the history and performance of Net Perceptions, previous
        compensation practices and packages awarded to Net Perceptions’ executive
        officers and non-employee directors, and compensation policies and packages
        awarded to executive officers and non-employee directors at similarly-situated
        companies.
 
 *Use
        of Outside Consultants*
 
 The
        Compensation Committee has the authority to retain and terminate any independent
        compensation consultant and to obtain independent advice and assistance from
        internal and external legal, accounting and other advisors.
  5
  *Compensation
        Program Components*
 
 Our
        executive compensation program emphasizes company performance, individual
        performance and an increase in stockholder value over time in determining
        executive pay levels. Our executive compensation program consists of three
        key
        elements: (i) annual base salaries; (ii) a performance-based annual bonus;
        and (iii) periodic grants of stock options and restricted stock. The
        Compensation Committee believes that this three-part approach best serves
        our
        and our stockholders’ interests by motivating executive officers to improve our
        financial position, holding executives accountable for the performance of
        the
        organizations for which they are responsible and by attracting key executives
        into our service. Under our compensation program, annual compensation for
        executive officers are composed of a significant portion of pay that is “at
        risk” -- specifically, the annual bonus, stock options and restricted
        stock.
 
 *Annual
        Cash Compensation*
 
 *Base
        Salary* .
        In
        reviewing and approving the base salaries of our executive officers, the
        Compensation Committee considers the scope of work and responsibilities,
        and
        other individual-specific factors; the recommendation of the Chief Executive
        Officer and (except in the case of his own compensation); compensation for
        similar positions at similarly-situated companies; and the executive's
        experience. Except where an existing agreement establishes an executive’s
        salary, the Compensation Committee reviews executive officer salaries annually
        at the end of the fiscal year and establishes the base salaries for the upcoming
        fiscal year. In 2006, the salaries for the Company’s Named Executive Officers
        (other than Ms. Luckfield) were established pursuant to their respective
        employment agreements. In 2006, Mr. Kanders, who served as our Executive
        Chairman of the Board Directors until October 3, 2006, did not in his individual
        capacity receive a salary and was not awarded a cash bonus, stock options
        to
        purchase our common stock, shares of restricted common stock.
 
 *Performance-Based
        Annual Bonus* .
        With
        regard to the compensation of the Named Executive Officers subject to Section
        162(m) of the IRC, the Compensation Committee establishes the performance
        goals
        and then certifies the satisfaction of such performance goals prior to the
        payment of the performance-based bonus compensation. In reviewing and approving
        the annual performance-based bonus for our executive officers, the Compensation
        Committee may also consider an executive’s contribution to the overall
        performance of Net Perceptions as well as annual bonuses awarded to persons
        holding similar positions at similarly-situated companies.
 
 *Equity-Based
        Compensation*
 
 Executive
        officers of Net Perceptions and other key employees who contribute to the
        growth, development and financial success of Net Perceptions are eligible
        to be
        awarded stock options to purchase our common stock, shares of restricted
        common
        stock, and bonuses of shares of common stock under our equity incentive plans.
        Awards under this plan help relate a significant portion of an employee’s
        long-term remuneration directly to stock price appreciation realized by all
        our
        stockholders and aligns an employee’s interests with that of our stockholders.
        The Compensation Committee believes equity-based incentive compensation aligns
        executive and stockholder interests because (i) the use of a multi-year lock-up
        or vesting schedule for equity awards encourages executive retention and
        emphasizes long-term growth, and (ii) paying a significant portion of
        management’s compensation in our equity provides management with a powerful
        incentive to increase stockholder value over the long term. In connection
        with
        the Company’s prior acceleration of the vesting and issuance of certain stock
        options, the Company required the optionees to execute lock-up, confidentiality
        and non-competition agreements as a condition to the acceleration of such
        stock
        options. Such lock-up, confidentiality and non-competition agreements executed
        with the Company’s employees provide the Company with added protection. The
        Compensation Committee determines appropriate individual long-term incentive
        awards in the exercise of its discretion in view of the above criteria and
        applicable policies.
  6
  *Perquisites
        and Other Personal and Additional Benefits*
  Executive
        officers participate in other employee benefit plans generally available
        to all
        employees on the same terms as similarly situated employees.
  The
        Company maintains a qualified 401(k) plan that provides for a Company
        contribution based on a matching schedule of a maximum of 20% up to the
        applicable IRS limits.
  The
        Company also provides Named Executive Officers with perquisites and other
        personal benefits that the Company and the Compensation Committee believe
        are
        reasonable and consistent with its overall compensation program to better
        enable
        the Company to attract and retain superior employees for key positions. The
        Compensation Committee periodically reviews the levels of perquisites and
        other
        personal benefits provided to Named Executive Officers.
  The
        costs
        to the Company associated with providing these benefits for executive officers
        named in the Summary Compensation Table are reflected in the “All Other
        Compensation” column of the Summary Compensation Table.
  *Accounting
        and Tax Considerations* ****
 
 Section
        162(m) of the IRC generally disallows a tax deduction to public corporations
        for
        compensation other than performance-based compensation over $1,000,000 paid
        for
        any fiscal year to an individual who, on the last day of the taxable year,
        was
        (i) the chief executive officer or (ii) among the four other highest
        compensated executive officers whose compensation is required to be reported
        in
        the Summary Compensation Table contained herein. Compensation programs generally
        will qualify as performance-based if (1) compensation is based on
        pre-established objective performance targets, (2) the programs’ material
        features have been approved by stockholders, and (3) there is no discretion
        to
        increase payments after the performance targets have been established for
        the
        performance period. The Compensation Committee desires to maximize deductibility
        of compensation under Section 162(m) of the IRC to the extent practicable
        while
        maintaining a competitive, performance-based compensation program. However,
        the
        Compensation Committee also believes that it must reserve the right to award
        compensation which it deems to be in our best interest and our stockholders
        but
        which may not be tax deductible under Section 162(m) of the IRC.
 
 *Post-Employment
        and Other Events*
 
 Retirement,
        death, disability and change-in-control events trigger the payment of certain
        compensation to the Named Executive Officers that is not available to all
        salaried members. Such compensation is discussed under the headings “Employment
        Agreements” and “Potential Payments Upon Termination or Change in
        Control.”
  7
  *Role
        of Executive Officers in Compensation Decisions*
 
 The
        Compensation Committee determines the total compensation of our Chief Executive
        Officer and oversees the design and administration of compensation and benefit
        plans for all of the Company’s employees. Certain executive officers, including
        the Chief Executive Officer and Chief Financial Officer may attend a portion
        of
        most regularly scheduled Compensation Committee meetings, excluding executive
        sessions. The Compensation Committee also obtains input from our legal, finance
        and tax functions, as appropriate.
 
 *Summary*
 
 The
        Compensation Committee believes that the total compensation package has been
        designed to motivate key management to improve the operations and financial
        performance of the Company, thereby increasing the market value of our Common
        Stock. The tables in this Executive Compensation section reflect the
        compensation structure established by the Compensation Committee.
 
 **Summary
        Compensation Table**
 
 The
        following summary compensation table sets forth information concerning the
        annual and long-term compensation earned for the periods presented below
        by our
        executive officers and persons as to whom disclosure is required under the
        applicable rules of the SEC (collectively, the “Named Executive
        Officers”).
  8
 **SUMMARY
          COMPENSATION TABLE**
  Name
                    and Principal Position (a)
                
                Year
                    (b)
                
                Salary
                    ($) (c)
                
                Bonus
                    ($) (d)
                
                Stock
                    Awards ($) (e)
                
                Option
                    Awards ($) (f)
                
                Non-Equity
                    Incentive Plan Compensation ($) (g)
                
                Change
                    in Pension Value and Nonqualified Deferred Compensation Earnings
                    (h)
                
                All
                    Other Compensation ($) (i)
                
                Total
                    ($) (j)Warren
                    B. Kanders
                  Executive
                    Chairman
                
                
                2006
                
                
                —
                
                
                —
                
                
                —
                
                
                —
                
                
                —
                
                
                —
                
                
                —
                
                
                (1)Albert
                    W. Weggeman
                  President
                    and CEO(2)
                
                
                2006
                
                
                75,000
                
                
                75,000
                
                
                —
                
                
                2,217,363
                
                
                —
                
                
                —
                
                
                39,383
                
                
                2,406,746Jonathan
                    LaBarre
                  CFO,
                    Secretary, and Treasurer (3)
                
                
                2006
                
                
                17,083
                
                
                51,833
                
                
                —
                
                
                640,000
                
                
                —
                
                
                —
                
                
                1,750
                
                
                710,666Paul
                    Vesey
                  President
                    of Concord Steel (4)
                
                
                2006
                
                
                53,090
                
                
                125,000
                
                
                285,833
                
                
                —
                
                
                —
                
                
                —
                
                
                107,787
                
                
                571,710Nigel
                    P. Ekern
                  Chief
                    Admininstrative Officer (5)
                
                
                2006
                
                
                206,250
                
                
                —
                
                
                —
                
                
                —
                
                
                —
                
                
                —
                
                
                500,000
                
                
                706,250Susan
                    Luckfield
                  Controller(6)
                
                
                2006
                
                
                2,500
                
                
                —
                
                
                —
                
                
                —
                
                
                —
                
                
                —
                
                
                —
                
                
                2,500
 (1)
           In 2006, Mr. Kanders, who served as our Executive Chairman of the Board
          Directors until October 3, 2006, did not in his individual capacity receive
          a
          salary and was not awarded a cash bonus, stock options to purchase our
          common
          stock or shares of restricted common stock. Does not include (i)
          8,274,000 shares of the Company’s common stock, valued at $0.89 per share,
          issued pursuant to the terms of the Equity Compensation Agreement, dated
          September 22, 2006, by and between Net Perceptions and Kanders & Company;
          and (ii) a fee payable to Kanders & Company pursuant to the terms of the
          Consulting Agreement, dated September 22, 2006, equal to (a) $500,000 in
          cash
          per annum during the term of such consulting agreement; and (b) 1% of the
          amount
          by which Net Perceptions’ revenues exceeds $60,000,000, payable in shares of Net
          Perceptions’ common stock valued at the weighted average price of the common
          stock for the fiscal year in question. The terms of the equity compensation
          agreement and the consulting agreement are discussed under the heading
“Certain
          Relationships and Related Transactions” in this Proxy Statement.
  (2) 
          Mr. Weggeman commenced employment as the Company's President and Chief
          Executive
          Officer effective October 3, 2006. The Company pays Mr. Weggeman a base
          salary
          of $300,000 per year pursuant to the terms of his employment agreement
          which is
          discussed under the heading “Employment Agreements” in this Proxy Statement.
          Other Compensation includes $33,333 for consulting services provided to
          the
          Company prior to the commencement of Mr. Weggeman's employment with the
          Company
          and $6,050 for health benefits.
  (3) 
          Mr. LaBarre commenced employment as the Company's Chief Financial Officer,
          Secretary and Treasurer effective December 1, 2006. The Company pays Mr.
          LaBarre
          a base salary of $205,000 per year pursuant to the terms of his employment
          agreement which is discussed under the heading “Employment Agreements” in this
          Proxy Statement. Other Compensation relates to health benefits.
  (4) 
          Mr. Vesey's salary earned from the October 3, 2006 acqusition of Concord
          Steel
          through December 31, 2006. The Company pays Mr. Vesey a base salary of
          $180,000
          per year pursuant to the terms of his employment agreement which is discussed
          under the heading “Employment Agreements” in this Proxy Statement. Other
          Compensation includes $100,000 for closing the acqusition of Concord Steel,
          $1,737 for three months of vehicle allowance and $6,050 for health benefits.
  (5) 
          Mr. Ekern resigned as Chief Administrative Officer effective October 3,
          2006.
          Other Compensation reflects his severance payment which was paid in full
          on
          January 2, 2007 pursuant to the terms of the resignation and severance
          agreement
          and general release dated December 11, 2006.
  (6) 
          Ms. Luckfield resigned as Controller effective December 1, 2006.
  9
  **Grants
        of Plan-Based Awards**
 
 The
        following table contains certain information regarding grants of plan based
        awards in fiscal year 2006 by each of the Named Executive Officers.
  **Estimated
                    Future Payouts Under Non-Equity Incentive Plan
                    Awards**
                
                **Estimated
                    Future Payouts Under Equity Incentive Plan Awards**Name
                    (a)
                
                Grant
                    Date (b)
                
                Committee
                    Action Date
                
                Threshold
                    ($) (c)
                
                Target
                    $ (d)
                
                Maximum
                    ($) (e)
                
                Threshold
                    ($) (f)
                
                Target
                    $ (g)
                
                Maximum
                    ($) (h)
                
                All
                    Other
                  Stock
                    Awards:
                  Number
                    of Shares of Stock or Units
                  (#)
                    (i)
                
                All
                    Other
                  Option
                    Awards: Number of Securities Underlying Options
                  (#)
                    (j)
                
                Exercise
                    or
                  Base
                    Price of Option Awards ($/Sh) (k)Warren
                    B. Kanders
                
                
                9/22/2006
                
                
                —
                
                
                —
                
                
                —
                
                
                —
                
                
                —
                
                
                —
                
                
                —
                
                
                —
                
                
                —
                
                
                —Albert
                    W. Weggeman
                
                
                10/3/2006
                
                
                —
                
                
                75,000
                
                
                75,000
                
                
                75,000
                
                
                —
                
                
                —
                
                
                —
                
                
                —
                
                
                2,491,419
                
                
                1,594,508Jonathan
                    LaBarre
                
                
                12/1/2006
                
                
                —
                
                
                51,833
                
                
                51,833
                
                
                51,833
                
                
                —
                
                
                —
                
                
                —
                
                
                —
                
                
                250,000
                
                
                640,000Paul
                    Vesey
                
                
                10/3/2006
                
                
                —
                
                
                125,000
                
                
                125,000
                
                
                125,000
                
                
                21,177
                
                
                21,177
                
                
                21,177
                
                
                147,059
                
                
                —
                
                
                —Nigel
                    P. Ekern
                
                
                —
                
                
                —
                
                
                —
                
                
                —
                
                
                —
                
                
                —
                
                
                —
                
                
                —
                
                
                —
                
                
                —
                
                
                —Susan
                    Luckfield
                
                
                —
                
                
                —
                
                
                —
                
                
                —
                
                
                —
                
                
                —
                
                
                —
                
                
                —
                
                
                —
                
                
                —
                
                
                —
  **Outstanding
        Equity Awards at Fiscal Year End**
 
 The
        following table contains certain information concerning stock options and
        stock
        awards held by the Named Executive Officers at December 31, 2006.
  **Option
                    Awards**
                
                **Stock
                    Awards**Name
                    (a)
                
                Number
                    of Securities Underlying Unexercised Options (#) Exercisable
                    (b)
                
                Number
                    of Securities Underlying Unexercised Options (#) Unexercisable
                    (b)
                
                Equity
                    Incentive Plan Awards: Number of Securities Underlying Unexcercised
                    Unearned Options (#) (d)
                
                Option
                    Exercise Price ($) (e)
                
                Option
                    Expiration Date (f)
                
                Number
                    of Shares or Units of Stock That Have Not Vested (#) (g)
                
                Market
                    Value of Shares or Units of Stock That Have Not Vested ($)
                    (h)
                
                Equity
                    Incentive Plan Awards: Number of Unearned Shares, Units or Other
                    Rights
                    That Have Not Vested (#) (i)
                
                Equity
                    Incentive Plan Awards: Market or Payout Value of Unearned Shares,
                    Units or
                    Other Rights That Have Not Vested ($) (j)Warren
                    B. Kanders
                
                
                —
                
                
                —
                
                
                —
                
                
                —
                
                
                —
                
                
                —
                
                
                —
                
                
                —
                
                
                —Albert
                    W. Weggeman
                
                
                69,206
                
                
                2,422,213
                
                
                —
                
                
                0.64
                
                
                9/22/2016
                
                
                —
                
                
                —
                
                
                —
                
                
                —Jonathan
                    LaBarre
                
                
                —
                
                
                250,000
                
                
                —
                
                
                2.56
                
                
                10/03/2016
                
                
                —
                
                
                —
                
                
                —
                
                
                —Paul
                    Vesey
                
                
                —
                
                
                —
                
                
                —
                
                
                —
                
                
                —
                
                
                147,059
                
                
                360,295
                
                
                —
                
                
                —Nigel
                    P. Ekern
                
                
                —
                
                
                —
                
                
                —
                
                
                —
                
                
                —
                
                
                121,528
                
                
                297,744
                
                
                —
                
                
                —
                    ——
                
                
                —
                
                
                —
                
                
                —
                
                
                —
                
                
                44,445
                
                
                108,890
                
                
                —
                
                
                —Susan
                    Luckfield
                
                
                17,000
                
                
                33,000
                
                
                —
                
                
                0.74
                
                
                12/31/2014
                
                
                —
                
                
                —
                
                
                —
                
                
                —
  10
  **Option
        Exercises and Stock Vested During Fiscal 2006**
 
 The
        following table contains certain information concerning stock options and
        stock
        awards that vested by the Named Executive Officers at December 31,
        2006.
 **Option
                    Awards**
                
                **Stock
                    Awards**Name
                    (a)
                
                Number
                    of Shares Acquired on Exercise (#) (b)
                
                Value
                    Realized on Exercise ($) (c)
                
                Number
                    of Shares Acquired on Vesting (#) (d)
                
                Value
                    Realized on Vesting ($) (e)Warren
                    B. Kanders
                
                
                —
                
                
                —
                
                
                —
                
                
                —Albert
                    W. Weggeman
                
                
                —
                
                
                —
                
                
                —
                
                
                —Jonathan
                    LaBarre
                
                
                —
                
                
                —
                
                
                —
                
                
                —Paul
                    Vesey(1)
                
                
                —
                
                
                —
                
                
                11,765
                
                
                21,177Nigel
                    P. Ekern
                
                
                —
                
                
                —
                
                
                —
                
                
                —Susan
                    Luckfield
                
                
                —
                
                
                —
                
                
                —
                
                
                —
 (1)
          Mr.
          Vesey was granted 158,824 options to purchase shares of common stock on
          October
          3, 2006 of which 11,765 vested as of the grant date.
  **Pension
        Benefits - Fiscal 2006**
 
 There
        were no pension benefits earned by our Named Executive Officers during the
        year
        ended December 31, 2006.
 
 **Nonqualified
        Deferred Compensation - Fiscal 2006**
 
 There
        were no nonqualified deferred compensation benefits earned by our Named
        Executive Officers during the year ended December 31, 2006.
 
 **Potential
        Payments Upon Termination or Change of Control**
 
 The
        tables below reflect the amount of compensation to each of the Named Executive
        Officers of the Company in the event of termination of such executive’s
        employment. The amount of compensation payable to each Named Executive Officer
        upon voluntary termination; retirement; involuntary not-for-cause termination;
        involuntary for cause termination; termination following a change of control;
        retention following a change of control and in the event of disability or
        death
        of the executive is shown below. The amounts shown assume that such termination
        was effective as of December 31, 2006, and thus includes amounts earned through
        such time and are estimates of the amounts which would be paid out to the
        executives upon their termination. The actual amounts to be paid out can
        only be
        determined at the time of such executive’s separation from the Company.
 
 *Payments
        Made Upon Termination*
 
 Regardless
        of the manner in which a Named Executive Officer’s employment terminates, he may
        be entitled to receive amounts earned during his term of employment.
  11
  *Payments
        Made Upon Retirement*
 
 In
        the
        event of the retirement of a Named Executive Officer, no additional benefits
        are
        paid.
 
 *Payments
        Made Upon a Change of Control*
 
 Upon
        a
        change of control, in addition to the benefits listed under the heading
“Payments Made Upon Termination”, stock option and restricted stock awards
        granted to the Named Executive Officers under our 1999 Equity Stock Plan
        will
        generally automatically vest become exercisable except to the extent such
        awards
        are not assumed by the successor company or replaced with a comparable award.
        In
        addition, in the event that any stock options or restricted stock granted
        under
        our 1999 Equity Incentive Plan is assumed by a successor company and within
        18
        months after the change of control the Named Executive Officer employment
        is
        involuntarily terminated, then all such stock options or restricted stock
        shall
        automatically become fully vested and exercisable.
 
 Generally,
        pursuant to the 1999 Equity Incentive Plan, a change of control is deemed
        to
        occur in the event that:
 
 •
              the
                  current members of the Board cease to constitute fewer than two-thirds
                  of
                  the Board;
 
 •
              the
                  Company shall have been sold by either (i) a sale of all or substantially
                  all its assets, or (ii) a merger or consolidation, other than any
                  merger
                  or consolidation pursuant to which the Company acquires another
                  entity, or
                  (iii) a tender offer, whether solicited or unsolicited;
                  or
 
 •
              any
                  party, other than the Company, is or becomes the “beneficial owner” (as
                  defined in the Securities Exchange Act of 1934, as amended (the
“Exchange
                  Act”)), directly or indirectly, of voting securities representing 50%
                  or
                  more of the total voting power of the
                  Company.
  12
  **Albert
        W. Weggeman**
 
 The
        following table shows the potential payments upon termination or a change
        of
        control of the Company for Albert W. Weggeman, the Company’s President and Chief
        Executive Officer.
 Executive
                    Benefits Upon payments Upon Separation (a)
                
                Voluntary
                    Termination on 12/31/06 ($) (b)
                
                Without
                    Cause Termination on 12/31/06 ($) (e)
                
                Change-in-Control
                    and Termination on 12/31/06 ($) (f)
                
                Change
                    in Control Retention on 12/31/06 ($) (g)**Compensation**Cash
                    Severance Salary
                
                
                —
                
                
                300,000
                (1)
                
                —
                
                
                —Stock
                    Options
                
                
                —
                
                
                —
                
                
                —
                
                
                —Restricted
                    Stock
                
                
                —
                
                
                —
                
                
                3,000,000
                (2)
                
                —**Total**
                
                
                —
                
                
                300,000
                
                
                3,000,000
                
                
                —
  (1)
            Mr.
                Weggeman to receive one year base salary pursuant to the terms of
                his
                employment agreement which is discussed under the heading “Employment
                Agreements” in this Report. 
 (2)
            Mr.
                Weggeman’s unvested shares of restricted stock will fully vest and valued
                using the December 31, 2006 market price of $2.45 per share. 
 **Jonathan
        LaBarre**
 
 The
        following table shows the potential payments upon termination or a change
        of
        control of the Company for Jonathan LaBarre, the Company’s Chief Financial
        Officer, Secretary and Treasurer.
  Executive
                    Benefits Upon payments Upon Separation (a)
                
                Voluntary
                    Termination on 12/31/06 ($) (b)
                
                Without
                    Cause Termination on 12/31/06 ($) (e)
                
                Change-in-Control
                    and Termination on 12/31/06 ($) (f)
                
                Change
                    in Control Retention on 12/31/06 ($) (g)**Compensation**Cash
                    Severance Salary
                
                
                —
                
                
                205,000
                (1)
                
                —
                
                
                —Stock
                    Options
                
                
                —
                
                
                —
                
                
                (2)
                
                
                —Restricted
                    Stock
                
                
                —
                
                
                —
                
                
                —
                
                
                —**Total**
                
                
                —
                
                
                205,000
                (1)
                
                —
                
                
                —
  (1)
            Mr.
                LaBarre to receive one year base salary pursuant to the terms of
                his
                employment agreement which is discussed under the heading “Employment
                Agreements” in this Report. 
 (2)
            Mr.
                LaBarre’s unvested stock options will be accelerated. No amount was
                entered in the above chart due to the December 31, 2006 market price
                of
                $2.45 per share being greater than the exercise price of Mr. LaBarre’s
                stock options.  13
  **Paul
        Vesey**
 
 The
        following table shows the potential payments upon termination or a change
        of
        control of the Company for Paul Vesey, the Company’s President of Concord Steel.
 Executive
                    Benefits Upon payments Upon Separation (a)
                
                Voluntary
                    Termination on 12/31/06 ($) (b)
                
                Without
                    Cause Termination on 12/31/06 ($) (e)
                
                Change-in-Control
                    and Termination on 12/31/06 ($) (f)
                
                Change
                    in Control Retention on 12/31/06 ($) (g)**Compensation**Cash
                    Severance Salary
                
                
                —
                
                
                495,000
                (1)
                
                495,000
                (1)
                
                495,000
                (1)Stock
                    Options
                
                
                —
                
                
                —
                
                
                —
                
                
                —Restricted
                    Stock
                
                
                —
                
                
                264,706
                (2)
                
                264,706
                (2)
                
                264,706
                (2)**Total**
                
                
                —
                
                
                759,706
                
                
                759,706
                
                
                759,706
  (1)
            Mr.
                Vesey to receive two years and nine months base salary of $180,000
                per
                year pursuant to the terms of his employment agreement which is discussed
                under the heading “Employment Agreements” in this
                Report. 
 (2)
            Mr.
                Vesey’s unvested shares of restricted shares will be accelerated and
                valued using the December 31, 2006 market price of
                $2.45.  **Warren
        B. Kanders**
 
 Pursuant
        to the terms of the consulting agreement, dated September 22, 2006, by and
        between Net Perceptions and Kanders & Company, upon a “change-in-control”
(as defined in the consulting agreement), Kanders & Company will be entitled
        to a one-time lump sum cash payment equal to three times the average amount
        Kanders & Company received during the two fiscal years preceding such
“change-in-control,” subject to certain limitations as set forth in the
        consulting agreement. Upon the death or permanent disability of Mr. Kanders,
        the
        Company agreed to make a one time lump sum cash payment to Kanders & Company
        equal to that amount Kanders & Company would be entitled to receive upon a
“change-in-control”. Upon payment of the amounts due to Kanders & Company
        either upon the occurrence of a “change-in-control”, or upon the death or
        permanent disability of Mr. Kanders, the consulting agreement will terminate.
        Mr. Kanders is the sole stockholder of Kanders & Company. The terms of the
        consulting agreement are discussed under the heading “Certain Relationships and
        Related Transactions” in this Report.
 
 **Nigel
        P. Ekern**
 
 On
        December 11, 2006, the Company entered into a Resignation and Severance
        Agreement and General Release (the "Agreement") with Mr. Nigel P. Ekern,
        our
        Chief Administrative Officer, which provides that Mr. Ekern's employment
        with
        the Company is terminated effective as of December 31, 2006, and he shall
        receive a severance payment of $250,000, to be paid over a period of one
        year.
        Additionally, all unvested options shall fully vest on December 15, 2006
        (the
        "Option Vesting Date"), all options shall terminate at the earlier of (i)
        the
        termination date set forth in the option agreements or (ii) December 31,
        2007,
        and all restrictions on transfer of shares acquirable upon exercise of options
        shall terminate as of the Option Vesting Date. Also under the terms of the
        Agreement, all restricted stock awards and shares of restricted stock which
        are
        not presently vested in full as of January 1, 2007 (the "RSA Vesting Date"),
        and
        all restrictions on the transfer of shares of restricted stock shall expire
        on
        the RSA Vesting Date. The Agreement further provides that Mr. Ekern has agreed
        to customary confidentiality, non-disparagement, assignment-of-inventions,
        and
        non-competition provisions, and has given the Company a general release.
        All
        provisions of Mr. Ekern's prior employment agreement with the Company, dated
        as
        of May 1, 2006, have been terminated.
  14
  Executive
                    Benefits Upon payments Upon Separation (a)
                
                Voluntary
                    Termination on 12/31/06 ($) (b)
                
                Without
                    Cause Termination on 12/31/06 ($) (e)
                
                Change-in-Control
                    and Termination on 12/31/06 ($) (f)
                
                Change
                    in Control Retention on 12/31/06 ($) (g)**Compensation**Cash
                    Severance Salary
                
                
                350,000
                
                
                —
                
                
                350,000
                
                
                —Stock
                    Options
                
                
                —
                
                
                —
                
                
                —
                
                
                —Restricted
                    Stock
                
                
                91,693
                
                
                —
                
                
                91,693
                
                
                —**Total**
                
                
                441,693
                
                
                —
                
                
                441,693
                
                
                —
  **Susan
        Luckfield**
 
 The
        following table shows the potential payments upon termination or a change
        of
        control of the Company for Susan Luckfield, the Company’s former Controller.
 Executive
                    Benefits Upon payments Upon Separation (a)
                
                Voluntary
                    Termination on 12/31/06 ($) (b)
                
                Without
                    Cause Termination on 12/31/06 ($) (e)
                
                Change-in-Control
                    and Termination on 12/31/06 ($) (f)
                
                Change
                    in Control Retention on 12/31/06 ($) (g)**Compensation**Cash
                    Severance Salary
                
                
                —
                
                
                —
                
                
                —
                
                
                —Stock
                    Options
                
                
                —
                
                
                —
                
                
                28,499
                (1)
                
                —Restricted
                    Stock
                
                
                —
                
                
                —
                
                
                —
                
                
                —**Total**
                
                
                —
                
                
                —
                
                
                28,499
                
                
                —
  (1)
            Ms.
                Luckfield served as our Controller until the commencement of Mr.
                LaBarre's
                employment with the Company effective December 1,
                2006. 
 (2)
            Ms.
                Luckfield's unvested stock options will be accelerated and valued
                using
                the December 31, 2006 market price of $2.45. 
 15
 
 **Employment
        Agreements**
 
 **Albert
        W. Weggeman**
 
 On
        September 22, 2006, we entered into an employment agreement with Albert W.
        Weggeman which provides that he will serve as our President and Chief Executive
        Officer for a three year term that commenced on October 3, 2006, subject
        to
        earlier termination as set forth in the employment agreement. The employment
        agreement provides for a base salary of $300,000. The Compensation Committee
        and
        the Board of Directors shall review Mr. Weggeman’s base salary annually and,
        based on a number of factors, including, without limitation, Net Perceptions’
performance and Mr. Weggeman’s performance, may in their sole and absolute
        discretion, increase Mr. Weggeman’s base salary. In addition, Mr. Weggeman is
        entitled to receive annual and other bonuses as may be determined in the
        sole
        discretion of the Compensation Committee and the Board of
        Directors.
 
 In
        the
        event Mr. Weggeman’s employment is terminated by Net Perceptions without “cause”
(as such term is defined in his employment agreement) or if Net Perceptions
        fails to renew or extend the term of his employment agreement, and the Net
        Perceptions so elects, and Mr. Weggeman has complied with the terms of his
        employment agreement, Net Perceptions may continue to pay Mr. Weggeman his
        base
        compensation for up to an additional 12 months. In addition, Mr. Weggeman’s
        employment agreement may be terminated at Net Perceptions’ option for “cause”
(as such term is defined in his employment agreement).
 
 Mr.
        Weggeman’s employment agreement contains a non-competition covenant and
        non-solicitation provisions (relating to Net Perceptions’ employees and
        customers) effective during the term of his employment and for one year after
        any termination of Mr. Weggeman’s employment and for the duration of any
        extended severance period in the event of termination of employment without
        cause due to failure to renew or extend the employment agreement.
 
 Pursuant
        to the terms of the employment agreement, Mr. Weggeman received a non-plan
        option to purchase 2,491,419 shares of Net Perceptions’ common stock, having an
        exercise price equal to $0.64 per share, of which (i) 1,245,709 shares shall
        vest in three equal installments commencing on the first anniversary of the
        date
        of grant; (ii) 415,237 shares shall vest if Net Perceptions’ EBITDA (based
        upon its audited financial statements) for the year ending December 31, 2007,
        is
        not less than $13,800,000, or if EBITDA for the two years ending December
        31,
        2008 is not less than $29,500,000; (iii) 415,237 shares shall vest if
        EBITDA for the year ending December 31, 2008, is not less than $15,700,000,
        or
        if EBITDA for the two years ending December 31, 2009 is not less than
        $32,900,000; and (iv) 415,236 shares shall vest if EBITDA for the year
        ending December 31, 2009, is not less than $17,200,000, or if Net Perceptions
        (in its absolute discretion) elects to extend or renew Mr. Weggeman's employment
        for an additional three-year term, and the EBITDA for the two years ending
        December 31, 2010, exceeds a target to be determined by the Net Perceptions
        and
        set forth in such extended or renewed employment agreement. In addition,
        Mr.
        Weggeman may be entitled, during the term of the employment agreement, to
        receive additional options, at such exercise prices and other terms as the
        Compensation Committee of the Board may, in its sole and absolute discretion,
        determine. Pursuant to the terms of the employment agreement, Mr. Weggeman
        also
        received, under our 1999 Equity Incentive Plan, the following amounts of
        shares
        of Net Perceptions’ restricted common stock (the “Restricted Stock”): (i)
        $1,000,000 of Restricted Stock upon Net Perceptions achieving annual earnings
        before interest, taxes, depreciation and amortization, as computed by Net
        Perceptions on or prior to its filing of its annual report on Form 10-K,
        on a
        consistent basis (“EBITDA”) of at least $25,000,000 in a fiscal year of Net
        Perceptions; (ii) $1,000,000 of Restricted Stock shall be granted upon Net
        Perceptions achieving annual EBITDA of at least $50,000,000 in a fiscal year
        of
        Net Perceptions; and (iii) $1,000,000 shall be granted upon Net Perceptions
        achieving annual EBITDA of at least $75,000,000 in a fiscal year of Net
        Perceptions. Each of the grants specified in (i)-(iii) above are one-time
        grants
        which vest on the date on which the Company’s Form 10-K is filed in respect of
        the fiscal year for which the grant is being made and the grant price will
        be
        the closing price of shares of Net Perceptions’ common stock on the principal
        exchange on which it is traded on such date. Additionally, pursuant to the
        terms
        of the employment agreement, Mr. Weggeman agreed not to sell, pledge,
        hypothecate or otherwise transfer the Restricted Stock within a one year
        period
        after grant without the consent of the Board of Directors.
  16
  During
        the term of his employment, Mr. Weggeman shall be entitled to participate
        in or
        benefit from, in accordance with the eligibility and other provisions thereof,
        Net Perceptions’ medical insurance and other fringe benefit plans or policies as
        it may make available to, or have in effect for, its personnel with commensurate
        duties from time to time. Net Perceptions’ retains the right to terminate or
        alter any such plans or policies from time to time. Mr. Weggeman shall also
        be
        entitled to four weeks paid vacation each year, sick leave and other similar
        benefits in accordance with policies of Net Perceptions from time to time
        in
        effect for personnel with commensurate duties.
 
 **Jonathan
        LaBarre**
 
 On
        December 1, 2006, we entered into an employment agreement with Jonathan LaBarre
        which provides that he will serve as our Chief Financial Officer and Principal
        Financial Officer for a three year term, subject to earlier termination as
        set
        forth in the employment agreement. The employment agreement provides for
        a base
        salary of $205,000 and a one-time bonus in the amount of $45,000 payable
        upon
        the filing of the Company’s annual report on Form 10-K for the year ended
        December 31, 2006. The Compensation Committee and the Board of Directors
        shall
        review Mr. LaBarre’s base salary annually and, based on a number of factors,
        including, without limitation, Net Perceptions’ performance and Mr. LaBarre’s
        performance, may in their sole and absolute discretion, increase Mr. LaBarre’s
        base salary. In addition, Mr. LaBarre is entitled to receive annual and other
        bonuses as may be determined in the sole discretion of the Compensation
        Committee and the Board of Directors.
 
 In
        the
        event Mr. LaBarre’s employment is terminated by Net Perceptions without “cause”
(as such term is defined in his employment agreement) or if Net Perceptions
        fails to renew or extend the term of his employment agreement, and the Net
        Perceptions so elects, and Mr. LaBarre has complied with the terms of his
        employment agreement, Net Perceptions may continue to pay Mr. LaBarre his
        base
        compensation for up to an additional 12 months. In addition, Mr. LaBarre’s
        employment agreement may be terminated at Net Perceptions’ option for “cause”
(as such term is defined in his employment agreement).
  Mr.
        LaBarre’s employment agreement contains a non-competition covenant and
        non-solicitation provisions (relating to Net Perceptions’ employees and
        customers) effective during the term of his employment and for one year after
        any termination of Mr. LaBarre’s employment and for the duration of any extended
        severance period in the event of termination of employment without cause
        due to
        failure to renew or extend the employment agreement.
 
 Pursuant
        to the terms of the employment agreement, Mr. LaBarre received an option
        under
        Net Perceptions’ 1999 Equity Incentive Plan to purchase 250,000 shares of Net
        Perceptions’ common stock, having an exercise price of $2.56, of which (i)
        125,000 shares shall vest in three equal annual installments commencing on
        the
        first anniversary of the date of grant; (ii) 41,668 shares shall vest if
        Net Perceptions’ EBITDA (as reflected in its audited financial statements) for
        the year ending December 31, 2007, is not less than $13,800,000, or if EBITDA
        for the two years ending December 31, 2008 is not less than $29,500,000;
        (iii) 41,666 shares shall vest if EBITDA for the year ending December 31,
        2008, is not less than $15,700,000, or if EBITDA for the two years ending
        December 31, 2009 is not less than $32,900,000; and (iv) 41,666 shares
        shall vest if EBITDA for the year ending December 31, 2009, is not less than
        $17,200,000, or if Net Perceptions’ (in its absolute discretion) elects to
        extend or renew Mr. LaBarre's employment for an additional three-year term,
        and
        the EBITDA for the two years ending December 31, 2010, exceeds a target to
        be
        determined by Net Perceptions’ and set forth in such extended or renewed
        employment agreement. In addition, Mr. LaBarre may be entitled, during the
        term
        of the employment agreement, to receive additional options, at such exercise
        prices and other terms as the Compensation Committee of the Board may, in
        its
        sole and absolute discretion, determine.
  17
  During
        the term of his employment, Mr. LaBarre shall be entitled to participate
        in or
        benefit from, in accordance with the eligibility and other provisions thereof,
        Net Perceptions’ medical insurance and other fringe benefit plans or policies as
        it may make available to, or have in effect for, its personnel with commensurate
        duties from time to time. Net Perceptions’ retains the right to terminate or
        alter any such plans or policies from time to time. Mr. LaBarre shall also
        be
        entitled to four weeks paid vacation each year, sick leave and other similar
        benefits in accordance with policies of Net Perceptions from time to time
        in
        effect for personnel with commensurate duties.
 
 **Paul
        Vesey**
 
 On
        October 3, 2006, we entered into an employment agreement with Paul Vesey
        which
        provides that he will serve as the President and General Manager of Concord
        Steel for a three year term, subject to earlier termination as set forth
        in the
        employment agreement. The employment agreement provides for a base salary
        of
        $180,000 and a one-time bonus in the amount of $125,000, if Net Perceptions
        exceeds revenues of $80,700,000 for the 2006 fiscal year, payable upon the
        filing of the Company’s annual report on Form 10-K for the year ended December
        31, 2006. The Compensation Committee and the Board of Directors shall review
        Mr.
        Vesey’s base salary annually and, based on a number of factors, including,
        without limitation, Net Perceptions’ performance and Mr. Vesey’s performance,
        may in their sole and absolute discretion, increase Mr. Vesey’s base salary. In
        addition, Mr. Vesey is entitled to receive annual and other bonuses as may
        be
        determined in the sole discretion of the Compensation Committee and the Board
        of
        Directors.
 
 In
        the
        event Mr. Vesey’s employment is terminated by Net Perceptions without “cause”
(as such term is defined in his employment agreement), Mr. Vesey is entitled
        to
        receive his base compensation for the remainder of the term and all of his
        unvested stock awards shall vest at the end the applicable non-compete period
        as
        set forth in his employment agreement. In the event that Net Perceptions
        fails
        to renew or extend the term of Mr. Vesey’s employment agreement, and Mr. Vesey
        has complied with the terms of the employment agreement, Net Perceptions
        will
        continue to pay Mr. Vesey his base compensation for up to an additional 12
        months. In addition, Mr. Vesey’s employment agreement may be terminated at Net
        Perceptions’ option for “cause” (as such term is defined in his employment
        agreement).
  18
  Mr.
        Vesey’s employment agreement contains a non-competition covenant and
        non-solicitation provisions (relating to Net Perceptions’ employees and
        customers) effective during the term of his employment and for one year after
        any termination of Mr. Vesey’s employment and for the duration of any extended
        severance period in the event of termination of employment without cause
        due to
        failure to renew or extend the employment agreement.
 
 Pursuant
        to the terms of the employment agreement, Mr. Vesey received the following
        amounts of Restricted Stock under Net Perceptions’ 1999 Equity Incentive Plan:
        (i) 147,059 shares of Restricted Stock, which shall vest upon the occurrence
        of
        any of the following: (i) the Company achieving revenues of at least $90,000,000
        for the fiscal year ending December 31, 2007, (ii) the Company achieving
        gross
        profit of at least $18,600,000 for the fiscal year ending December 31, 2007
        or
        (iii) the Company achieving EBITDA of at least $14,800,000 for the fiscal
        year
        ending December 31, 2007 and (ii) 11,765 shares of fully vested Restricted
        Stock
        upon the commencement date. The grant specified in (i) above is a one-time
        grant
        which vests on the date on which the Company’s Form 10-K is filed in respect of
        the fiscal year for which the grant is being made and the grant price will
        be
        the closing price of shares of Net Perceptions’ common stock on the principal
        exchange on which it is traded on such date. Additionally, pursuant to the
        terms
        of the employment agreement, Mr. Vesey agreed not to sell, pledge, hypothecate
        or otherwise transfer the Restricted Stock within a one year period after
        grant
        without the consent of the Board of Directors.
 
 During
        the term of his employment, Mr. Vesey shall be entitled to participate in
        or
        benefit from, in accordance with the eligibility and other provisions thereof,
        Net Perceptions’ medical insurance and other fringe benefit plans or policies as
        it may make available to, or have in effect for, its personnel with commensurate
        duties from time to time. Net Perceptions’ retains the right to terminate or
        alter any such plans or policies from time to time. Mr. Vesey shall also
        be
        entitled to four weeks paid vacation each year, sick leave and other similar
        benefits in accordance with policies of Net Perceptions from time to time
        in
        effect for personnel with commensurate duties.
 
 **Nigel
        P. Ekern**
  On
        May 1,
        2006, the Company entered into an employment agreement with its Chief
        Administrative Officer, Mr. Nigel P. Ekern, for an indefinite term, terminable
        on notice at the election of the Company or Mr. Ekern, at a salary of $75,000
        per year, plus performance bonuses, if any, which may be awarded by the Board
        of
        Directors in its discretion. His duties under the agreement require him to
        serve
        as an executive of the Company, and to devote only such time as is necessary
        to
        the performance of his duties. If Mr. Ekern is terminated without cause by
        the
        Company (other than upon a change of control), he is entitled to 12 months'
        severance pay. Under the agreement, Mr. Ekern agreed that he will not sell
        any
        shares of the Company’s securities granted to him under any stock incentive plan
        or similar plan until after his termination date.
 
 **Compensation
        Committee Report**
 
 The
        Company’s Compensation Committee of the Board (the “Compensation Committee”) has
        submitted the following report for inclusion in this Report:
 
 Our
        Compensation Committee has reviewed and discussed the Compensation Discussion
        and Analysis contained in this Report with management. Based on our Compensation
        Committee’s review of and the discussions with management with respect to the
        Compensation Discussion and Analysis, our Compensation Committee recommended
        to
        the Board of Directors that the Compensation Discussion and Analysis be included
        in this Report and in the Company’s Annual Report on Form 10-K for the fiscal
        year ended December 31, 2006 for filing with the SEC.
  19
  MEMBERS
        OF THE COMPENSATION COMMITTEE
 
 Nicholas
        Sokolow (Chairman)
 David
        A.
        Jones
  **Compensation
        Committee Interlocks And Insider Participation**
 
 During
        fiscal 2006, none of the members of our Compensation Committee, (i) served
        as an
        officer or employee of Net Perceptions or its subsidiaries, (ii) was formerly
        an
        officer of Net Perceptions or its subsidiaries or (iii) entered into any
        transactions with Net Perceptions or its subsidiaries. During fiscal 2006,
        none
        of our executive officers (i) served as a member of the compensation committee
        (or other board committee performing similar functions or, in the absence
        of any
        such committee, the board of directors) of another entity, one of whose
        executive officers served on our Compensation Committee, (ii) served as director
        of another entity, one of whose executive officers served on our Compensation
        Committee, or (iii) served as member of the compensation committee (or other
        board committee performing similar functions or, in the absence of any such
        committee, the board of directors) of another entity, one of whose executive
        officers served as a director of Net Perceptions.
 
 **Director
        Summary Compensation Table**
 
 The
        following table summarizes the compensation paid to our non-employee directors
        for the fiscal year ended December 31, 2006:
  Name
                  (a)
                
                Fees
                    Earnedor
                    Paid inCash
                  ($)(b)
                
                Stock
                    Awards
                  ($)(c)
                
                Option
                  Awards
                  ($)(d)
                
                Non-Equity
                  Incentive
                    Plan
                  Compensation
                  ($)(e)
                
                Change
                    in Pension
                  Value
                    and
                  Nonqualified
                  Deferred
                  Compensation
                  Earnings
                  (f)
                
                All
                    Other
                  Compensation
                    ($)(g)
                
                Total
                  ($)(h)Warren
                    B. Kanders
                
                
                —
                
                
                —
                
                
                —
                
                
                —
                
                
                —
                
                
                —
                
                
                (1)Nicholas
                    Sokolow
                
                
                —
                
                
                89,000
                (2)
                
                —
                
                
                —
                
                
                —
                
                
                —
                
                
                89,000David
                    A. Jones
                
                
                —
                
                
                89,000
                (2)
                
                —
                
                
                —
                
                
                —
                
                
                —
                
                
                89,000Gianmaria
                    C. Delzanno
                
                
                —
                
                
                —
                
                
                —
                
                
                —
                
                
                —
                
                
                675,000
                (3)
                
                675,000
  (1)
          In
          2006, Mr. Kanders, who served as our Executive Chairman of the Board Directors
          until October 3, 2006, did not in his individual capacity receive a salary
          and
          was not awarded a cash bonus, stock options to purchase our common stock
          or shares of restricted common stock. Does not include (i) 8,274,000 shares
          of the Company’s common stock, valued at $0.89 per share, issued pursuant to the
          terms of the Equity Compensation Agreement, dated September 22, 2006, by
          and
          between Net Perceptions and Kanders & Company; and (ii) a fee payable to
          Kanders & Company pursuant to the terms of the Consulting Agreement, dated
          September 22, 2006, equal to (a) $500,000 in cash per annum during the
          term of
          such consulting agreement; and (b) 1% of the amount by which Net Perceptions’
revenues exceeds $60,000,000, payable in shares of Net Perceptions’ common stock
          valued at the weighted average price of the common stock for the fiscal
          year in
          question. The terms of the equity compensation agreement and the consulting
          agreement are discussed under the heading “Certain Relationships and Related
          Transactions” in this Report.
  (2)
          Mr.
          Sokolow and Mr. Jones were both granted 100,000 shares restricted stock
          awards
          on September 22, 2006 at $0.89 per share.
  (3)
          Effective September 22, 2006, Gianmaria Delzanno resigned as a member of
          the
          Board of Directors. A general release and success payment was paid on March
          6,
          2007.
  20
  *Discussion
        of Director Compensation*
 
 We
        do not
        provide our directors with cash compensation for their services as members
        of
        the Board of Directors, although directors are reimbursed for expenses in
        connection with attendance at Board and committee meetings. Directors who
        are
        also our employees are eligible to participate in our 1999 Equity Incentive
        Plan. None of the members of our current Board of Directors is currently
        an
        employee of the Company. Non-employee directors are eligible to participate
        in
        our 1999 Non-Employee Director Option Plan. Pursuant to the terms of the
        1999
        Non-Employee Director Option Plan, each non-employee director receives an
        automatic option grant to purchase 50,000 shares of common stock upon his
        or her
        initial election or appointment to the Board. From time to time, non-employee
        directors may also receive discretionary option or stock grants under our
        equity
        incentive plans. Effective September 22, 2006, the Company entered into a
        restricted stock award agreement with Mr. Jones and Mr. Sokolow pursuant
        to
        which each director was awarded 100,000 shares of restricted common stock
        under
        the Company's 1999 Equity Incentive Plan, which vest immediately but are
        subject
        to prohibitions on transfer which expire in eight consecutive quarterly tranches
        of 12,500 shares each, commencing September 30, 2006 and expiring June 30,
        2008.
 
 **ITEM
        12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT**
 
 
 **Beneficial
        Ownership Of Company Common Stock By**
 **Directors,
        Officers And Principal Stockholders**
 
 The
        following table sets forth as of April 27, 2007 certain information regarding
        the beneficial ownership of the common stock outstanding by (i) each person
        known to us to own or control 5% or more of our common stock, (ii) each of
        our
        directors and nominees, (iii) each of our named executive officers set forth
        in
        the summary compensation table on page 9, and (iv) our named executive officers,
        directors and nominees as a group. Unless otherwise indicated, each of the
        stockholders shown in the table below has sole voting and investment power
        with
        respect to the shares beneficially owned. Unless otherwise indicated, the
        address of each person named in the table below is c/o Net Perceptions, Inc.,
        One Landmark Square, 22 nd Floor,
        Stamford, Connecticut 06901.
  21
 Name
                
                Common
                    Stock Beneficially
                  Owned
                    (1)
                
                
                
                Percentage
                  of
                    Common
                  Stock
                    (2)Warren
                    B. Kanders
                    and Kanders & Company, Inc.
                
                
                13,995,555
                
                
                (3)
                
                
                33.8
                %White
                    Rock Capital Management, L.P.
                  3131
                    Turtle Creek Boulevard, Suite 800
                  Dallas,
                    Texas 75219
                
                
                4,243,000
                
                
                (5)
                
                
                10.3
                %CRC
                    Acquisition Co., LLC
                  One
                    Landmark Square
                  Stamford
                    CT
                  06901
                
                
                3,529,412
                
                
                (4)
                
                
                8.5
                %Austin
                    W. Marxe and David M. Greenhouse
                  537
                    Madison Ave., Suite 2600
                  New
                    York, NY 10022
                
                
                1,345,057
                
                
                (6)
                
                
                3.3
                %Nigel
                    P. Ekern
                  741
                    Hollow Tree Ridge Road
                  Darien
                    CT 06820
                
                
                431,205
                
                
                (7)
                
                
                1.0
                %Nicholas
                    Sokolow
                
                
                410,776
                
                
                (8)
                    (9)
                
                
                1.0
                %Albert
                    W. Weggeman
                
                
                276,824
                
                
                (10)
                
                
                *David
                    A. Jones
                
                
                150,000
                
                
                (11)
                
                
                *Gianmaria
                    C. Delzanno
                
                
                50,000
                
                
                (12)
                
                
                *Susan
                    Luckfield
                
                
                33,334
                
                
                (13)
                
                
                *Paul
                    Vesey
                
                
                11,765
                
                
                (14)
                
                
                *Jonathan
                    LaBarre
                
                
                —
                
                
                (15)
                
                
                *All
                    directors, nominees for directors and named executiveofficers as a group (9 persons)
                
                
                15,359,459
                
                
                (16)
                
                
                37.1
                %
  (1)
              
              As
                  used in this table, a beneficial owner of a security includes any
                  person
                  who, directly or indirectly, through contract, arrangement, understanding,
                  relationship or otherwise has or shares within 60 days of April
                  27, 2007:
                  (a) the power to vote, or direct the voting of, such security or
                  (b)
                  investment power which includes the power to dispose, or to direct
                  the
                  disposition of, such security.(2)
              
              Percentage
                  of beneficial ownership is based on 41,382,147 shares of common
                  stock
                  outstanding as of April 27, 2007.(3)
              
              Includes
                  5,628,300 shares of common stock issuable upon conversion of a
                  2%
                  Convertible Subordinated Note, due April 21, 2014, based upon a
                  conversion
                  price of $0.45, subject to adjustment (the “Note”). The Note was issued to
                  Olden Acquisition LLC, a Delaware limited liability company, on
                  April 21,
                  2004. The sole member of Olden is Kanders & Company, Inc., of which
                  Warren B. Kanders is the sole shareholder and the President. Mr.
                  Kanders
                  disclaims beneficial ownership of the Note and the shares of common
                  stock
                  into which it is convertible. Also includes, a stock grant of (i)
                  8,274,000 shares of common stock pursuant to the terms of the equity
                  compensation agreement, dated September 22, 2006, by and between
                  Net
                  Perceptions, Inc. and Kanders & Company, Inc.; and (ii) 93,255 shares
                  of common stock pursuant to the terms of the consulting agreement,
                  dated
                  September 22, 2006 by and between Net Perceptions, Inc. and Kanders
&
                  Company, Inc. Mr. Kanders disclaims beneficial ownership of the
                  shares of
                  common stock granted pursuant to these
                  agreements.
  22
  (4)
              
              Based
                  on a Schedule 13D filed by CRC Acquisition Co. LLC, and certain
                  of their
                  affiliates, on October 11, 2006.(5)
              
              Based
                  on a Schedule 13G/A filed by White Rock Capital Management, L.P.,
                  and
                  certain of its affiliates, on January 24, 2007.(6)
              
              Based
                  on a Schedule 13G/A filed byAustin
                  W. Marxe and David M. Greenhouse, and certain of their affiliates,
                  on
                  April 9, 2007.(7)
              
              Includes
                  Mr. Ekern’s 431,205 vested shares of restricted common stock.(8)
              
              Includes
                  Mr. Sokolow’s options to purchase 50,000 shares of common stock that are
                  presently exercisable or exercisable within 60 days of April 27,
                  2006; and
                  100,000 shares of restricted stock granted and fully vested on
                  September
                  22, 2006 at $0.89 per share.(9)
              
              Includes
                  260,776 shares of common stock held by Comadets, LLC of which Mr.
                  Sokolow
                  is the Managing Member. Mr. Sokolow disclaims beneficial ownership
                  of the
                  shares of common stock.(10)
              
              Includes
                  Mr. Weggeman’soptions to purchase 276,824 shares of common stock that are presently
                  exercisable or exercisable within 60 days of April 27, 2007.Excludes
                  options to purchase 968,885 shares of common stock that are presently
                  unexercisable and unexercisablewithin
                  60 days of April 27, 2006.(11)
              
              Includes
                  Mr.Jones’100,000 shares of restricted stock granted and fully vested on
                  September
                  22, 2006 at $0.89 per share.(12)
              
              Includes
                  Mr.Delzanno’soptions to purchase 50,000 shares of common stock that are presently
                  exercisable or exercisable within 60 days of April 27, 2007.(13)
              
              Includes
                  Ms. Luckfield’soptions to purchase 33,334 shares of common stock that are presently
                  exercisable or exercisable within 60 days of April 27, 2007.Excludes
                  options to purchase 16,666 shares of common stock that are presently
                  unexercisable and unexercisablewithin
                  60 days of April 27, 2006.(14)
              
              Includes
                  Mr. Vesey’s 11,765 vested shares of restricted common stock. Excludes
                  147,059 unvested shares of restricted common stock, which have
                  no voting,
                  dividend and other distribution rights.(15)
              
              Excludes
                  Mr. LaBarre’s options to purchase 125,000 shares of common stock that are
                  presently unexercisable and unexercisablewithin
                  60 days of April 27, 2006.(16)
              
              See
                  footnotes (3) and (7) through (15).
  23
 **SECURITIES
          AUTHORIZED FOR ISSUANCE**
 **UNDER
          EQUITY COMPENSATION PLANS**
 
 The
          following table sets forth certain information regarding our equity plans
          as of
          December 31, 2006:
  Plan
                      Category
                  
                  (A)
                    Number
                      of securities to be
                    issued
                      upon exercise of
                    outstanding
                      options,
                    warrants
                      and rights
                  
                  (B)
                    Weighted
                      average
                    exercise
                      price of
                    outstanding
                    options,
                      warrants
                    and
                      rights
                  
                  (C)
                    Number
                      of securities remaining
                    available
                      for future issuance under
                    equity
                      comensation plans (excluding
                    securities
                      reflected in column (A)Equity
                      compensation plans
                    approved
                      by security holders
                  
                  
                  470,661
                  
                  $
                  1.65
                  
                  
                  1,272,754
                  (1)Equity
                      compensation plans
                    not
                      approved by security
                    holders(2)
                      (3)
                  
                  
                  2,491,419
                  
                  $
                  0.64
                  
                  
                  490,043Total
                  
                  
                  2,962,080
                  
                  $
                  0.80
                  
                  
                  1,762,797
 
 (1)
                In
                    addition to stock options, awards under our 1999 Equity Incentive
                    Plan
                    (the “1999 Plan”) may take the form of restricted stock, stock
                    appreciation rights and stock units as specified in such plan.
                    If such
                    awards are granted, they will reduce the number of shares of
                    common stock
                    available for issuance pursuant to future stock option awards.
                    674,955
                    shares of restricted stock have been issued from the 1999 Plan
                    in 2004 and
                    2005 and therefore reduced the number of shares common stock
                    available for
                    future issuance.
 
 (2)
                The
                    Company’s 2000 Stock Plan (the “2000 Plan”) was adopted by the Board
                    effective April 20, 2000. The Company has reserved 500,000 shares
                    of
                    common stock for issuance under the 2000 Plan. Nonstatutory options
                    and
                    restricted stock awards may be granted under the 2000 Plan to
                    employees of
                    the Company (or any parent or subsidiary corporation) who are
                    neither
                    officers nor Board members at the time of grant or consultants.
                    All option
                    grants will have an exercise price per share equal to not less
                    than 85% of
                    the fair market value per share of common stock on the grant
                    date. Each
                    option will vest in installments over the optionee’s period of service
                    with the Company. The purchase price for newly issued restricted
                    shares
                    awarded under the 2000 Stock Plan may be paid in cash, by promissory
                    note
                    or by the rendering of past or future services. Outstanding options
                    will
                    vest on an accelerated basis in the event the Company is acquired
                    and
                    those options are not assumed or replaced by the acquiring entity.
                    An
                    option or award will become fully exercisable or fully vested
                    if the
                    holder’s employment or service is involuntarily terminated within 18
                    months following the acquisition. The Board may amend or terminate
                    the
                    2000 Plan at any time. The 2000 Plan will continue in effect
                    indefinitely
                    unless the Board decides to terminate
                    it.
 
 (3)
                Includes
                    a non-plan option to purchase 2,491,419 shares of Net Perceptions’ common
                    stock, having an exercise price equal to $0.64 per share, that
                    were issued
                    to Mr. Weggeman pursuant to the terms of his employment
                    agreement.
 
 24
  **ITEM
        13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS**
 
 On
        September 22, 2006, the Company entered into an Equity Compensation Agreement
        (the “Compensation Agreement”) with Kanders & Company, Inc. for prior
        strategic, consulting, investment banking and advisory services to the Company
        in connection with Company’s asset redeployment strategy. As compensation for
        such past services, the Company agreed to issue to Kanders & Company
        8,274,000 shares of its common stock. Pursuant to the terms and conditions
        of
        the Compensation Agreement, the Company granted “demand” and “piggyback”
registration rights to Kanders & Company with respect to the shares of
        common stock that are issued under the Compensation Agreement.
 
 Also,
        on
        September 22, 2006, the Company entered into a five year consulting agreement
        (the “Consulting Agreement”) with Kanders & Company, providing that Kanders
& Company will render investment banking and financial advisory services to
        the Company on a non-exclusive basis, including strategic planning, assisting
        in
        the development and structuring of corporate debt and equity financings,
        introductions to sources of capital, guidance and advice as to (i) potential
        targets for mergers and acquisitions, joint ventures, and strategic alliances,
        including facilitating the negotiations in connection with such transactions,
        (ii) capital and operational restructuring, and (iii) shareholder
        relations. The Consulting Agreement provides for Kanders & Company to
        receive a fee equal to (i) $500,000 in cash per annum during the term of
        the
        Consulting Agreement, payable monthly, and (ii) 1% of the amount by which
        the
        Company’s revenues as reported in the Company’s Form 10-K, or if no such report
        is filed by the Company, as reflected in the Company’s audited financial
        statements for the fiscal year in question, exceeds $60,000,000, payable
        in
        shares of common stock of the Company (the “Stock Fee”) valued at the weighted
        average price of the Company’s common stock for the fiscal year in question.
        Upon a “change-in-control” (as defined in the Consulting Agreement), Kanders
& Company will be entitled to a one-time lump sum cash payment equal to
        three times the average amount Kanders & Company received during the two
        fiscal years preceding such “change-in-control,” subject to certain limitations
        as set forth in the Consulting Agreement. Upon the death or permanent disability
        of Mr. Kanders, the Company agreed to make a one time lump sum cash payment
        to
        Kanders & Company equal to that amount Kanders & Company would be
        entitled to receive upon a “change-in-control”. Upon payment of the amounts due
        to Kanders & Company either upon the occurrence of a “change-in-control”, or
        upon the death or permanent disability of Mr. Kanders, the Consulting Agreement
        will terminate.
 
 We
        occupy
        space made available to us at no cost by Kanders & Company, an entity owned
        and controlled by the Company’s Non-Executive Chairman, Warren B. Kanders. This
        arrangement can be terminated at any time.
 
 During
        the year ended December 31, 2006, the Company reimbursed Clarus Corporation
        (“Clarus”), an entity it shares office space with, an aggregate of $65,000 for
        telecommunication, professional and general office expenses which Clarus
        incurred on behalf of the Company. Warren B. Kanders, our Non-Executive
        Chairman, also serves as the Executive Chairman of Clarus.
 
 The
        Board
        of Directors has a general practice of requiring directors interested in
        a
        transaction not to participate in deliberations or to vote upon transactions
        in
        which they have an interest, and to be sure that transactions with directors,
        executive officers and major shareholders are on terms that align the interests
        of the parties to such agreements with the interests of the stockholders.
  25
  **Director
        Independence**
 
 In
        accordance with the listing requirements of the NASDAQ, the Board of Directors
        has evaluated each of its directors’ independence from Net Perceptions based on
        the definition of “independence” established by the NASDAQ. Based on the Board’s
        review and the NASDAQ definition of “independence”, the Board has determined
        that the Board is currently comprised of a majority of independent directors,
        consisting of each of the following directors: Messrs. Sokolow and Jones.
        As
        required by the NASDAQ listing requirements, these independent directors
        meet at
        regularly scheduled executive sessions without management. The Board has
        also
        determined that each of the members of our Audit Committee is “independent” for
        purposes of Section 10A(m)(3) of the Exchange Act.
  **ITEM
        14. PRINCIPAL ACCOUNTANT FEES AND SERVICES**
 
 Aggregate
        fees for professional services rendered for Net Perceptions by (i)
        PricewaterhouseCoopers LLP for the fiscal years ended December 31, 2006 and
        2005
        and (ii) McGladrey & Pullen, LLP for the fiscal year ended December 31,
        2006, were:
  **PricewaterhouseCoopers
                    LLP**
                
                **McGladrey
                    & Pullen, LLP****Fiscal
                    2006 Fees**
                
                **Fiscal
                    2005 Fees**
                
                **Fiscal
                    2006 Fees**Audit
                    Fees
                
                $
                55,741
                
                $
                76,048
                
                $
                416,549Audit-Related
                    Fees
                
                
                26,877
                
                
                —
                
                
                163,121Tax
                    Fees
                
                
                13,450
                
                
                23,150
                
                
                44,010All
                    Other Fees
                
                
                —
                
                
                —
                
                
                —**Total
                    Fees**
                
                **$**
                **96,068**
                
                **$**
                **99,198**
                
                **$**
                **623,680**
  **Audit
        Fees**
 
 The
        Audit
        Fees for the years ended December 31, 2006 and 2005, respectively, were for
        professional services rendered for the audit of our consolidated financial
        statements for the fiscal years ended December 31, 2006 and 2005, as applicable,
        and for the review of our consolidated financial statements included in our
        quarterly reports on Form 10-Q for fiscal 2006 and 2005, as applicable.
 
 **Audit
        Related Fees**
 
 The
        Audit
        Related Fees as of the fiscal years ended December 31, 2006, were related
        to the
        audit of Concord Steel financial statements for fiscal years 2005, 2004,
        and
        2003. Concord Steel was acquired by Net Perceptions on October 3,
        2006.
 
 **Tax
        Fees**
 
 Tax
        Fees
        as of the fiscal years ended December 31, 2006 and 2005, respectively, were
        for
        services related to tax compliance, including the preparation of tax returns
        and
        claims for refund, tax planning and advice, including assistance with tax
        services for net operating loss and sales tax matters and requests for rulings
        or technical advice from tax authorities.
  26
  **All
        Other Fees**
 
 There
        were no fees incurred for All Other Fees for the fiscal year ended December
        31,
        2006 and 2005.
  **Auditor
        Independence**
  The
        Audit
        Committee has considered the non-audit services provided by McGladrey &
Pullen LLP and PricewaterhouseCoopers LLP and determined that the provision
        of
        such services had no effect on McGladrey & Pullen LLP’s and
        PricewaterhouseCoopers LLP’s independence from Net Perceptions.
 
 **Audit
        Committee Pre-Approval Policy and Procedures**
 
 The
        Audit
        Committee must review and pre-approve all audit and non-audit services provided
        by our independent registered public accountants, and has adopted a Pre-approval
        Policy. In conducting reviews of audit and non-audit services, the Audit
        Committee will determine whether the provision of such services would impair
        the
        auditor’s independence. The term of any pre-approval is 12 months from the date
        of pre-approval, unless the Audit Committee specifically provides for a
        different period. Any proposed services exceeding pre-approved fee ranges
        or
        limits must be specifically pre-approved by the Audit Committee.
 
 Requests
        or applications to provide services that require pre-approval by the Audit
        Committee must be accompanied by a statement of the independent auditors
        as to
        whether, in the auditor’s view, the request or application is consistent with
        the Securities and Exchange Commission’s rules on auditor independence. Each
        pre-approval request or application must also be accompanied by documentation
        regarding the specific services to be provided.
 
 Since
        the
        adoption of the Pre-approval Policy by the Audit Committee in April 2004,
        the
        Audit Committee has not waived the pre-approval requirement for any services
        rendered by our independent registered public accountants.
 
 **Appointment
        of Independent Registered Public Accounting Firm**
 
 Effective
        October 11, 2006, the Audit Committee of the Company dismissed
        PricewaterhouseCoopers LLP, our independent certified public accountant since
        fiscal year 1996, and appointed McGladrey & Pullen, LLP as its independent
        auditors. This change was the result of an extensive search made at the request
        of the Audit Committee to review the services and costs associated with the
        external audit function.
 
 PricewaterhouseCoopers
        LLP’s report on the Company’s financial statements for the past two years did
        not contain an adverse opinion, disclaimer of opinion, or qualification or
        modification as to uncertainty, audit scope, or accounting
        principles.
 
 During
        the two most recent fiscal years and the interim period preceding October
        11,
        2006, there have been no disagreements with PricewaterhouseCoopers LLP on
        any
        matters of accounting principles or practices, financial statement disclosure,
        or auditing scope or procedure which, if not resolved to the satisfaction
        of
        PricewaterhouseCoopers LLP, would have caused it to make reference to the
        subject matter of the disagreement in connection with its report.
 
 The
        Company (or someone on its behalf) has not consulted McGladrey & Pullen, LLP
        during the two most recent fiscal years and the subsequent interim period
        preceding September 30, 2006 regarding the application of accounting principles
        to a specified transaction or the type of audit opinion that might be rendered
        on the Company’s financial statements.


27


**PART
      IV**





**ITEM
      15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES**





*(a)*  *Financial
      Statements*





None.




*3.*
            **The
                following Exhibits are hereby filed as part of this Annual Report
                on Form
                10-K/A:




**Exhibit**
              **Number**
            
            **Description**




31.1**
            
            Certification
              of principal executive officer pursuant to Exchange Act Rules Rule
              13(a)-14(a) and15(a)-14(a), as adopted pursuant to Section 302 of the
              Sarbanes-Oxley Act of 2002.31.2**
            
            Certification
                of principal financial officer pursuant to Exchange Act Rules Rule
                13(a)-14(a) and15(a)-14(a), as adopted pursuant to Section 302 of
                the
                Sarbanes-Oxley Act of 2002.32.1**
            
            Certification
                of principal executive officer pursuant to 18 U.S.C. Section 1350,
                as
                adopted pursuant to Section 906 of the Sarbanes-Oxley Act of
                2002.32.2**
            
            Certification
                of principal financial officer pursuant to 18 U.S.C. Section 1350,
                as
                adopted pursuant to Section 906 of the Sarbanes-Oxley Act of
                2002.








**
      filed
      herewith.




*(b)*
            The
                exhibits are listed in Item 15. (a)(3)
                above.





*(c)*
            None.




28




**SIGNATURES**





Pursuant
      to the requirements of Section 13 or 15(d) of the Securities Exchange Act of
      1934, as amended, the registrant has caused this report to be signed on its
      behalf by the undersigned, thereunto duly authorized.




NET
              PERCEPTIONS,
              INC.By:
            */s/
              ALBERT W. WEGGEMAN, JR*Albert
              W. Weggeman, JrPresident
              and
              Chief Executive Officer


Date:
      April 30, 2007




Pursuant
      to the requirements of the Securities Exchange Act of 1934, as amended, this
      report has been signed below by the following persons on behalf of the
      registrant in the capacities indicated on April 30, 2007.





**Signature**
            
            **Title***/s/
                ALBERT W. WEGGEMAN, JR***
              Albert W. Weggeman, Jr
            
            President
                and Chief Executive Officer*/s/
                JONATHAN LABARRE***
              Jonathan LaBarre
            
            Chief
                Financial Officer*/s/
                WARREN B. KANDERS*
              Warren B. Kanders
            
            Non-Executive
                Chairman of the Board of Directors*/s/
                DAVID A. JONES*
              David A. Jones
            
            Director*/s/
                NICHOLAS SOKOLOW*
              Nicholas Sokolow
            
            Director





29


EXHIBIT
      INDEX





**Exhibit**
              **Number**
            
            **DESCRIPTION******31.1
            
            Certification
                of principal executive officer pursuant to Exchange Act Rules Rule
                13(a)-14(a) and15(a)-14(a), as adopted pursuant to Section 302 of
                the
                Sarbanes-Oxley Act of 2002.31.2
            
            Certification
                of principal financial officer pursuant to Exchange Act Rules Rule
                13(a)-14(a) and15(a)-14(a), as adopted pursuant to Section 302 of
                the
                Sarbanes-Oxley Act of 2002.32.1
            
            Certification
                of principal executive officer pursuant to 18 U.S.C. Section 1350,
                as
                adopted pursuant to Section 906 of the Sarbanes-Oxley Act of
                2002.32.2
            
            Certification
                of principal financial officer pursuant to 18 U.S.C. Section 1350,
                as
                adopted pursuant to Section 906 of the Sarbanes-Oxley Act of
                2002.




30