SOURCE: Procera Networks

October 17, 2008 08:00 ET

Procera Networks Inc. Letter to Shareholders

LOS GATOS, CA--(Marketwire - October 17, 2008) - Procera Networks Inc. (AMEX: PKT)

Dear Shareholders and Friends of the Company:

During the panic of the financial markets and the resulting troubling decline of our share price, I have been called and e-mailed by many of you with concerns and suggestions. Interestingly, although the general economy has abruptly slowed with pundits foretelling a dire future, Procera's business has seen little to no ill effects from this economic slowdown. Our customers and prospects are generally large, well-funded companies primarily in the Telco, Cable and ISP industries, as well as higher education. Importantly, our products are not discretionary purchase decisions. We believe our technology to be a much-needed infrastructure upgrade to modernize or to render current the providers' networks so as to facilitate the creation of new services and to provide intelligence. The Internet itself is also somewhat recession insulated. In difficult times, commerce and entertainment can be far cheaper and convenient on the 'net.

It is my opinion that the decline of Procera's stock price is primarily correlated to the extreme decline of most public companies' stock and therefore relative valuations that are a reflection of unprecedented pessimism and illiquidity. Procera also was particularly hurt by what was reported to be distressed sales by some of our shareholders (margin calls, redemptions, financial issues, etc.).

Where does Procera stand today? We are ahead of my original expectations. We are executing in all key areas. These areas include sales wins with the new platforms, funnel growth, quality trials, and the addition of new partners. As of today, we have more than 20 active trials ongoing with our new PL10000 platform and hope to announce several key wins soon. I realize that although you chose to invest in Procera, there are many other public companies and alternative investments to compete for your hard-earned dollars. It is the moral obligation of Procera's management to perform at the very highest levels entirely on behalf of our customers and our shareholders.

Since I began leading this company, Procera Networks has made truly amazing progress. I inherited profoundly exciting intellectual property, world-class technical people, and a significant product lead in what I believe to be the next "Perfect Storm" in computer networking. Not only does the PL10000 provide 4 times the capacity of any DPI product on the market, but it has accuracy and features which were previously unheard of. Naturally, to see it work and to observe the emotional responses of customers and critics is something of which we at Procera are quite proud.

As you know, we closed a $6 million round of financing last month and have substantially no debt on our balance sheet. Furthermore, we are well along on reaching agreement with a "very solvent" local bank for an accounts receivable line of credit, if and when needed. Finally, we are closing in on operational breakeven which means that our only need for cash will be to support growth in receivables and inventory.

Let me conclude by saying that I have been at Procera only 9 months. In that time, we have rebuilt the sales & marketing departments, revamped the operations organization, introduced the PL10000 carrier class family of products and are conducting multiple Tier-1 pilot trials across the globe.

Thank you very much for your continued interest and support of our revolutionary, award-winning products. I look forward to providing you more detail on our next investor call in November.

Jim Brear
President & CEO

Safe Harbor Statement

This press release contains forward-looking statements within the meaning of The Private Securities Litigation Reform Act of 1995 (the "Act"). In particular, when used in this press release, the words "plan," "confident that," "believe," "scheduled," "expect," or "intend to," and similar conditional expressions are intended to identify forward-looking statements within the meaning of the Act and are subject to the safe harbor created by the Act. Such statements are subject to certain risks and uncertainties and actual results could differ materially from those expressed in any of the forward-looking statements.

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