Since the beginning of the financial year, SAF Tehnika has made considerable investments in the development of the company. This is consistent with the business strategy and objectives which involve broad market expansion and significant growth of sales volumes. Among the investments is a new automated modern manufacturing line which has been implemented and additional considerable increase in human resources. Part of this investment was influenced by various expected large-scale projects in India which imposed first shipments as early as Q3 of the financial year and were, at the time, thought to be strategically important for the long-term development of the company. Due to the delay in realizing the above-mentioned projects and to continue to maintain the company's profitability at the forecasted levels, the SAF Tehnika management board has adopted a cost cutting plan. This involves a temporary salary reduction for a limited time. The plan envisions a decrease in management salaries of 30% and for employees of 15% as well as an adjustment to production capacity until the successful realization of these projects. The company does not foresee any obstacles which might prevent realization of these projects. Sales volume to China keeps its positive dynamics and SAF Tehnika management is satisfied with the 2007 forecast submitted by the Chinese partner. The company is not in possession of any information that would indicate that the products of SAF Tehnika have been copied in China and are being sold in any region. In light of the company's successful sales history, current backlog and forecasted orders for China, the company has no reason to believe that any of the company's product lines have been copied in China. SAF Tehnika maintains the guidelines unchanged regarding expected increase in turnover during financial year 2006/07. Based on an analysis of the preliminary data the previous quarter, Q3, will be profitable and the company expects favourable results in Q4. Market conditions are very competitive for all participants in the telecommunications industry from equipment vendors to network operators. The current situation should not be considered as a crisis in the company or the industry. The company management perceives the current phase as a period often experienced by many high-growth, high-technology companies which invest heavily in anticipation of market opportunities and to increase competitiveness.