Enablence Next Generation Network Solutions for Innovative Broadband

Service Providers

Investor Presentation February 2011

Safe Harbor StatementThe presentation of this information may contain forward looking statements that are based on current expectations, forecasts and assumptions that include risks and uncertainties that could cause actual outcomes and results to differ materially. These risks and uncertainties include, but are not limited to pricing, competition, dependency on new product development, reliance on major customers, customer demand for our products and services, control of costs and expenses, international growth, uncertain general industry and market conditions and growth rates, and unpredictable impacts of global recession and uncertain general domestic and international economic conditions including interest rate and currency exchange rate fluctuations.

For a further list and description of such risks and uncertainties see the reports filed by Enablence Technologies Inc. with SEDAR (www.sedar.com).

While the information herein is collected and compiled with care, neither Enablence Technologies Inc. nor any of its affiliated companies represents, warrants or guarantees the accuracy or the completeness of the information. The information is presented solely for educational purposes, and is not to be considered as either legal or accounting advice.

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Presentation Outline

Section Page Number

Company Overview

The Market

Enablence Solutions

Enablence Financial Overview

4

10

21

43

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Company Overview

4

Enablence OverviewEnablence Technologies Inc. designs, manufactures and sells fiber-to-the-home (FTTH) equipment and multi-service access platforms for triple-play residential and business services and optical components and subsystems to a global customer base. Enablence delivers a key portion of the infrastructure for next generation telecommunication systems. The Company’s product lines address all three segments of optical networks: Access, connecting homes and businesses to the network; Metro, communication rings within large cities; and Long-haul, linking cities and continents. The Company’s Access solutions enable voice, data, video, and Internet communications across both copper and fiber based network infrastructures.

Office Locations

HQ – Toronto, Canada

Optical Components Division – Fremont, California; Zurich, Switzerland; Ottawa, Canada

Systems Division – Alpharetta, Georgia; Portsmouth, New Hampshire; Herzliya, Israel

History

Founded: 2004

Went public July 24, 2006

7 acquisitions since 2007

TSX-V Listed in Canada

Acquired Teledata Networks in 2010

Installations

75 Countries Worldwide

600 + Customers Worldwide

480 Systems Customers

120 Optical Components & Subsystems Customers

Resources

Employees – 358i. R&D – 132ii. Sales & Marketing – 74ii i. Operations & Support – 103iv. G&A - 49

Manufacturing

Third party

US, Taiwan, China, Israel

Full service including

Purchasing, production

QA and testing, shipment to customers

5

Enablence History

6

Event Result FY2004 FY2005 FY2006 FY2007 FY2008 FY2009 FY2010 FY2011

PLC Devices PLC transceiver development

TSX-V Listing Public listing and funding

Albis Acquisition Advanced photodiode offering

ANDevices Acquisition Expansion of components product offering

Wave7 Acquisition Expansion to full fiber system offering install base

DuPont Acquisition Expansion of components product offering

Pannaway Acquisition Introduction of fiber/coax solution in North American market install base

Teledata Acquisition Introduction of fiber/coax solution in International market install base

Management Team Restructured Significant revenue and margin expansion

Components DivisionCorporate Systems Division

Enablence Overview

7

Recent Milestones

• Generated $34.6 million in revenue, the highest in the Company’s history o Optical Components and Subsystems division (“OCS”) generated record revenues of $8.8

million;o Systems division (“Systems”) generated record revenues of $25.7 million including the

Company’s largest ever sale of over $12 million to a customer in Central Asia

• Reported gross margins of 32% in the quarter, up 4% from the September quarter • Reduced Adjusted EBITDA loss to $1.1 million for the quarter, down from $5.6

million in the prior year and $3.8 million in the September quarter• Entered into a joint venture agreement with Sunsea Telecommunications Co. Ltd. in

China, expected to commence operations in fiscal 2012

• Completed a public offering, generating net cash proceeds of $19.7 million• Developed an initial cost reduction program to remove between $1 -2 million of

costs per quarter

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Enablence Management Team

Business UnitsCorporate Functions

9

Market Overview

10

Market Overview

Enablence Technologies Inc. designs, manufactures and sells fiber-to-the-home (FTTH)

equipment and multi-service access platforms

for triple-play residential and business

services and optical components and subsystems to a global customer base.

Enablence delivers a key portion of the infrastructure for next generation

telecommunication systems. The Company’s product lines address all three segments of

optical networks: Access, connecting homes and businesses to the network; Metro,

communication rings within large cities; and Long-haul, linking cities and continents. The

Company’s Access solutions enable voice, data, video, and Internet communications

across both copper and fiber based network infrastructures.

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Enablence in Optical Networks

ROADM

•TODC VMUX

OCM

AWG

VOA

OXC

METRO(Ottawa)

Toronto

San Jose

Central Office

ONT

ONT

MDU-ONT

Transceivers& Photodiodes(inside ONTs)

Splitter1 x 32

Splitter1 x 32

ACCESS•LONG HAUL 500km

10-15 km

•10-15 km

5,000 km

OLT /MSAP

Components Division Systems Division

Global Market Growth Trends

DSL, ADSL, ADSL2+VDSL, VDSL 2DSL, ADSL, ADSL2+VDSL, VDSL 2

POTs, VOIPxDSL, HDTVVOD

POTs, VOIPxDSL, HDTVVOD

GPON, GE-PONActive P2PGPON, GE-PONActive P2P

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Growing online services driving demand for FTTH expansion – in footprint and speed

Broadband Market Trends

Source: Point-Topic 9/2010

• 497 Million broadband subscribers at Q2/2010• 53 Million new broadband subscribers annually • Broadband penetration by technology: 64% - DSL , 13.2% - Fiber• FTTP Market – $2.18 Billion in 2009, expected to grow to $5 Billion in 2014 • MSAP and Broadband aggregation market - $3.7 Billion

Subscriber Growth Trends

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Fiber and copper broadband CPE net adds

Copper net adds (ADSL, VDSL, DOCSIS)

Fiber net adds (PON, ETTH)

Source: Infonetics 2010

GPON & EPON CPE Net Add Forecast

Growth shifting to Fiber

/ GPON

Evolution of Broadband Technologies

Bandwidth [Mb/s]

Technology

1 6 10 142

SHDSL

Fast Internet, E-learningInfotainment, Gaming

Multimedia Home, Broadcast TV/ VoD, HDTV 3 channels, High Speed

VPN

Streaming Media, Video ConferencingVirtual Private Networks

Tele-working

ADSL2+/ADSL2+ADSL/ADSL2ADSL.lite

24 100

GEPON/ GPON

Current Market ‘Sweet Spot’

VDSL and VDSL2

ENA Technology Strength Intl

TD Technology Strength Intl

16

17

Optical Network Market: TDM PON Network

ON

T

ON

T

ON

T

ON

T

All ONUs receive all traffic

Splitter Only one wavelength is transmitted

OLT

Telecom and Datacom Ecosystem

Telecom and Datacom systems makersENABLENCE

Alcatel-Lucent, Ericsson, Nokia-Siemens, Cisco, Huawei, ZTE, Fujitsu, NEC, Hitachi, Tellabs, Calix

Telecom and Datacom systems makersENABLENCE

Alcatel-Lucent, Ericsson, Nokia-Siemens, Cisco, Huawei, ZTE, Fujitsu, NEC, Hitachi, Tellabs, Calix

Components and subsystems makersENABLENCE

JDSU, Oclara, Opnext, Oplink, NeoPhtonics, Gemfire, Accelink, O-Net, Sumitomo, Furukawa

Components and subsystems makersENABLENCE

JDSU, Oclara, Opnext, Oplink, NeoPhtonics, Gemfire, Accelink, O-Net, Sumitomo, Furukawa

Subcomponents and materials vendorsENABLENCE

JDSU, Oclara, NeoPhotonics, Emcore ,Mitsubishi, Sumitomo,

Subcomponents and materials vendorsENABLENCE

JDSU, Oclara, NeoPhotonics, Emcore ,Mitsubishi, Sumitomo,

Worldwide carriers for Long‐Haul, Metro, Access networksVerizon, ATT, BT, DT, FT, China Mobil, China Unicom, NTT,….. Worldwide carriers for Long‐Haul, Metro, Access networksVerizon, ATT, BT, DT, FT, China Mobil, China Unicom, NTT,….. 

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What Do Customers Need?

1. Evolve into multi services to increase stagnating revenues:

1. From basic to advanced voice (VoIP, High

Definition Voice)

2. From basic data to ultra high speed data

3. From no video to HDTV, VOD, IPTV, 3DTV

2. Future proof high capacity, ultra high bandwidth networks to

meet bandwidth demand

3. Networks that can adjust to changing traffic patterns, reliable

and built for IP

4. Networks that are easier, cheaper to manage and maintain to

reduce operating costs

By enabling our customers to expand their offerings and create new revenue streams, Enablence solutions help generate more revenue per customer at lower OPEX, creating more return on their assets.

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Target Customers and Applications

Telco

Tier 1, 2, 3

MSO

Cable TV

Multi Systems Operators

Muni-Power

Municipalities

Power Companies

Real Estate

Real Estate Developers

Real Estate Owners

Primary Market Secondary Market

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Enablence Solutions

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Enablence in Optical Networks

ROADM

•TODC VMUX

OCM

AWG

VOA

OXC

METRO(Ottawa)

Toronto

San Jose

Central Office

ONT

ONT

MDU-ONT

Transceivers& Photodiodes(inside ONTs)

Splitter1 x 32

Splitter1 x 32

ACCESS•LONG HAUL 500km

10-15 km

•10-15 km

5,000 km

OLT /MSAP

Components Division Systems Division

Over 60 Tier 1 Customers

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Enablence Systems Division OverviewA global leader in next generation broadband access communications networks to enable service providers to provide triple play services for increased profitability.

Service providers select Enablence carrier solutions to move from TDM/ATM to state of the art IP/Ethernet core either to maximize their copper or add optical access solutions to provide 100+ HDTV channels, advanced voice and ultrafast internet access for improved revenue generation, lower OPEX.

Office Locations

Systems Division

Alpharetta, Georgia; Portsmouth, New Hampshire; Herzilya, Israel

History

Formed from Wave7 Optics, Pannaway Networks and Teledata Networks

Installations

480+ Systems Customers

60 Tier 1, 420 Tier 2 and 3

40% market share in North American IOCs

Leading vendor to CLEC, Municipal, Power segments in North America

Major installations PTTs, MSOs, Cable TV operators

Major Applications

Fiber-to-the-Home

Fiber-to-the-Business

Fiber-to-the-Curb with xDSL Copper Last Mile

Multi-Dwelling Units, Office Towers

Wireless Backhaul24

300+ NA Customers300+ NA Customers

Systems Installed in 75 Countries

Cyprus

HondurasCosta Rica

Dominican Republic

Aruba

ColumbiaEcuador

Peru

Bolivia

Chile Argentina

Brazil

l

Estonia

PolandGermanyNetherlands

PortugalCzech Republic

Slovakia

Austria

Hungary

Ukraine

Romania

ItalyGreeceBulgaria

Turkey

Jordan

GhanaKenya

Botswana

South Africa

Russia

Kazakhstan

ThailandVietnam

Taiwan

Indonesia

Papua New Guinea

Australia

New Zealand

Bangladesh

Japan

Egypt

Andorra

Denmark

Greenland

Norway

Mexico

France

China

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Recent Customer Announcements

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Date Customer Description

Jan 27, 2011 Wightman Telecom Enablence picked for IP Voice Upgrade, first BA 

win in North America

Jan 16, 2011 Valley Telephone Enablence selected for Broadband Stimulus 

Upgrade

Dec 14, 2010 Sunsea JV Enablence Chinese Partnership

Dec 8, 2010 En‐Touch, Houston Enablence provides Subscribers FTTH Network

Sept 30, 2010 Unnamed Tier 1 Central Asian Services 

Provider

Enablence wins $12.4 M next generation 

broadband access order in Central Asia

Aug 31, 2010 Unnamed Tier 1 Customer, China Enablence deploys advanced broadband access 

solutions in China

July 27, 2010 Tier 1 Central American Service Provider Enablence secures follow‐on order for 

broadband deployment

May 4, 2010 Various Unnamed International Customer 

Orders

Enablence builds international sales momentum 

in Q4 to all three international regions

Systems Division Business Strategy Highlights

1. Achieve critical mass to reach profitability

2. Reduce costs and improve profitability through improved outsourcing, “design to cost”

and by consolidating the supply chain

3. Improve product mix by adding new higher margin products (e.g. wireless ONTs)

4. Introduced 10G ready products and 10G modules to give an upgrade path and create

new revenue opportunities

5. Adding new resources for increased and improved sales coverage

6. Aggressively pursuing new government stimulus funded projects in North America

7. Expanding sales internationally to capture international market opportunities in

emerging markets, position the company to Tier 1 larger operators

8. Putting in place world-class quality assurance program

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Evolution of Broadband Technologies

Bandwidth [Mb/s]

Technology

1 6 10 142

SHDSL

Fast Internet, E-learningInfotainment, Gaming

Multimedia Home, Broadcast TV/ VoD, HDTV 3 channels, High Speed

VPN

Streaming Media, Video ConferencingVirtual Private Networks

Tele-working

ADSL2+/ADSL2+ADSL/ADSL2ADSL.lite

24 100

GEPON/ GPON

Current Market ‘Sweet Spot’

VDSL and VDSL2

ENA Technology Strength Intl

TD Technology Strength Intl

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Systems Product Offerings

ENA MAGNM-20/10

& BASENA TRIDENT7

& COLTTD BroadAccess 1000E &

300E ONT Family

Markets Served23” North American Standard CompliantHybrid fiber/copper

19” International Standard Compliant

PON Pure play

19” International Standard Compliant

Hybrid fiber/copper

Global Compliance with NA and Int’l Versions

GPON ● ● Adapt ENA GPON ●

GEPON ● ●

Active P2P Ethernet ● ● Adapt ENA P2P

Ethernet ●

POTS ● ● ●

ADSL2+ ● ● ●

VDSL 2 Adapt TD VDSL 2 ● ●

T1/PWE3 ● ● ●

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Worldwide Product Positioning

North America International

ONT’s

Trident/Colt(Hi-capacity GPON OLT platform)

Broad Access/BAS

(DSLAM)

MAGNM(Multi-Service

Access Platform)

Broad Access (Multi-Service

Access Gateway)

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Current BroadAccess Positioning

• Lead product for any new xDSL/POTS opportunities• Value Proposition

– Full Featured Platform– Full TR-101 implementation– MLT, SELT, IGMP Proxy, DHCP snoop, DAI, features– POTS/ADSL2+/VDSL2/SHDSL

– Proven Design Deployed Worldwide– Very Cost Effective

– Disruptive to traditional NA competitors

Platform Convergence Roadmap

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May July Nov

ADSL2+ and POTS ADSL2+ and POTS ADSL2+ and POTS

Advanced P2P and GPONAdvanced P2P and GPON 10 

Gbps/slot fabricAdvanced P2P and GPON 10 

Gbps/slot fabric

10 Gbps/slot fabric 10 Gbps/slot backplane 10 Gbps/slot backplane

10 Gbps/slot backplane

Advanced GPON and EPON Advanced GPON and EPON Advanced GPON and EPON

Open access features Open access features Open access features

2.5 Gbps/slot fabric 2.5 gbps/slot fabric 2.5 gbps/slot fabric

5 Gbps Backlane 5 Gbps Backlane 5 Gbps Backlane

Release 29 Release 29.5 Release 30.0

DSL2+,POTS and VDSL2 ADSL2+,POTS and VDSL2 ADSL2+,POTS and VDSL2Basic GPON and P2P (no integrated 

ONT provisioning) Advanced GPON and P2P Advanced GPON, EPON and P2P

2 Gbps/slot fabric 2 Gbps/slot fabric Open access features

10Gbps/slot Backplane 40 Gbps/slot backplane 10 Gbps/slot fabric

40 Gbps/slot backplane

MAGNM

Trident7

Broad Access

Teledata Networks Proprietary and Confidential Information

Main Competitors

International

North American

Adtran-TA 5000 Calix (E7-20, Occam BLC 6000) Zhone -

MXK

•Built for the internet protocol and internet age

•Industry leading capacity, port density

•Ability to service existing copper and new optical network segments

• Upgrade copper based services ADSL 2, VDSL 2

•Total end-to-end network solution to enable multi-play

services

Enablence Next Generation Evolution Solution for Existing Access Networks

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• Built for the internet protocol and internet age

• Large optical network build-outs

• High capacity to enable multi-play services

• Easy to roll out, use and manage

• High reliability architecture for meet Tier 1 requirements

• Total end-to-end network solution

Enablence All Optical Solution for New Next Generation Access Networks

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Optical Components & Subsystems Division Overview

A global leader in integrated optical components & subsystems based on its revolutionary, proprietary Planar Lightwave (PLC) circuit technology that enables systems companies to increase functionality in a reduced footprint.

Systems companies around the world select Enablence for their next generation CWDM and DWDM components and subsystems for long haul, metro and access network systems.

Office Locations

Optical Components Division – Fremont, CA, Ottawa, Canada and Zurich, Switzerland

History

2004 established the Transceiver Unit

2007 to 2009 acquired Albis Optoelectronics, ANDevices and DuPont Photonics

Installations

Present in all major optical networks worldwide

120+ Customers Worldwide

11 Tier 1 Systems Developers

Non-telecom segments: test & measurement, aerospace, defence, medical, public sector R&D

Major Applications

Transmission (e.g., 2.5G to 100G)

Switching & routing (e.g., ROADMs)

Wavelength management (e.g., Mux/Demux)

Performance Monitoring

Recent/Major Customer Wins:North America:

Tellabs

Ciena

Finisar

Intel

International:

Alcatel-Lucent

Fujitsu

Huawei

LG-Ericsson

Nokia-Siemens Networks

ZTE

8-channel Receiver Before

PLC

8-channel Receiver Using PLC: one 2” chip!

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Metro and Long Haul Network Components

• Metro and long haul networks are undergoing radical

changes to meet the bandwidth demand driven by the

new services on access networks:

• Moving from 44 to 88 channels

• Channel speed from 10 Gbps to 40Gbps or

100Gbps

• Moving from traditional ring or line to “mesh”

connectivity

• New highly integrated, high speed, high capacity

components are needed for new functions to manage the

complexities37

Component Division Business Strategy Highlights

1. Strategically position the division as a 40G/100G supplier2. Aggressive cost reduction, including supply chain changes to leverage low

cost regions/China and “design to cost” approaches 3. complete the joint venture with Sunsea to provide higher volumes and

access to the Chinese market for optical components based on Enablence's proprietary Planar Lightwave Circuit (PLC) technology.

4. Focus on Tier 1 requirements where we can achieve larger volumes and broader mandates

5. Aggressively pursue NRE engineering projects for new products yielding multi-million revenues profiles

6. Diversify into other markets such as instrumentation, aerospace & defense

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Component Division Product Strategy

• Evolve with agility to capture market demand– AWG spacing between channels moves from 100GHz to 50GHz– More demand from integrated subsystem products (VMUX, OCM,

AWG+TapPD, multicast switch)– Ability to deliver AWG technology either thermal or athermal – Expanded photodiode solutions from low-cost PINs to state-of-the-art APDs

• Support new product roll-out in Systems products• Lead the photonic integration

– 100G transceivers with 8-12ch DWDM technology---partner with ZTE– 100G transceivers with coherent technology---partner with Opnext– Develop applications in instrumentation and aerospace---Lunar, DSC,

Lockheed-Martin

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Joint Venture with Sunsea• The scope of business - to research and develop, design,

manufacture and sell PLC, optical modules and related optoelectronics products, and provide contract manufacturing services for related products.

• Initial investment in the JV expected to be US$18 million, of which;– Sunsea shall contribute US$9.2 million for 51%– Enablence shall contribute US$8.8 million for 49%

• Enablence will contribute in cash, equipment and know-how with the total value of US$8.8 million as follows:

– US$3.5 million shall be in cash, – US$1.0 million shall be in the form of equipment,– US$4.3 million shall be in the form of know-how.

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Total revenue expected to be $8-10m in first year, $15-20m in second year

Component Division Value Proposition Highlights

1. Expert in four areas: transmission, switching, routing, wavelength and signal performance management

2. Broad range of 40G and 100G integrated PLC modules and subsystems for next generation metro and long haul networks

3. Leader in supplying integrated optical modules and subsystems based on patented “optical chip” technology to all key Tier 1, 2 systems vendors for dramatically reduced size and increased functionality

4. Unique production facilities for PLC optical chip production5. Optical integration of dozens components on PLC chip through automated

manufacturing offers a path to cost reduction and improved reliability6. Offers full solutions for feasibility, design, manufacturing of standard and

custom solutions7. Committed to world-class quality, services and support

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Vertical Integration Leveraging Optical Components Division Products

ONT’s & Transport

Fabrics &Optical Protection

Switching

Fabrics & Transport

42

Financial Overview

43

Key Trends / Model

Target Business Model:•Target double digit organic revenue growth•Target Gross Margin improvement to 40%•Target Adjusted EBITDA1 to 10%

44(1) Adjusted EBITDA does not have any standardized meaning according to GAAP. It is therefore unlikely to be comparable to similar measures presented by other companies. Adjusted EBITDA comprises: Net loss excluding the following: (i) interest income and expense, (ii) income tax recovery and expense, (iii) depreciation and amortization, (iv) assetImpairment charges, (v) stock based compensation, and (vi) restructuring charges. A reconciliation of Adjusted EBITDA with the GAAP measure of Net loss is included in our MD&A

Trailing 8 Quarter Results

45

* Adjusted EBITDA does not have any standardized meaning according to GAAP. It is therefore unlikely to be comparable to similar measures presented by other companies Adjusted EBITDA comprises: Net loss excluding the following: (i) interest income and expense, (ii) income tax recovery and expense, (iii) depreciation and amortization, (iv) asset Impairment charges, (v) stock based compensation, and (vi) restructuring charges. A reconciliation of Adjusted EBITDA with the GAAP measure of Net loss is included in our MD&A

3 months 3 months 2 months 3 months 3 months 3 months 3 months 3 months

Fiscal Period EndedDec 31,

2010Sept 30,

2010June 30,

2010April 30,

2010Jan 31,

2010Oct 31,

2009July 31,

2009April 30,

2009

Revenues 34,567$ 28,059$ 9,798$ 14,094$ 12,329$ 14,883$ 12,586$ 14,049$ Gross margin 10,965 7,716 2,168 3,671 1,268 3,470 3,032 2,923

Gross margin % 31.7% 27.5% 22.1% 26.0% 10.3% 23.3% 24.1% 20.8%

ExpensesResearch & development 5,497 5,359 2,405 3,540 3,120 3,387 3,987 4,959 Sales & marketing 3,974 3,764 1,685 2,314 2,295 2,605 2,944 3,441 General & administrative 3,066 2,874 1,467 2,346 1,870 1,707 1,826 2,177 Subtotal 12,537 11,997 5,557 8,200 7,285 7,699 8,757 10,577

Stock based compensation 661 272 122 225 382 438 391 324 Amortization 3,966 4,109 774 1,148 1,879 2,172 1,834 1,337 Restructuring charges 84 827 - 1,788 141 226 132 - Impairment of intangible assets - - - - (4,355) - - - Other income (expense) (104) (79) (192) (248) (4,420) (65) 279 48 Recovery of future income taxes 1,038 1,180 169 (693) 2,448 461 920 (3,541)

Net loss for the period (5,349) (8,388) (4,308) (8,631) (10,391) (6,669) (6,883) (12,808)

Adjusted EBITDA* $ (1,122) $ (3,831) $ (3,109) $ (4,111) $ (5,598) $ (3,810) $ (5,289) $ (7,337)

**

** **

**

Trailing 8 Quarter Results (B/S)

46

Fiscal Period EndedDec 31,

2010Sept 30,

2010June 30,

2010April 30,

2010Jan 31,

2010Oct 31,

2009July 31,

2009April 30,

2009

CURRRENT ASSETS   Cash and Cash equivalents $17,491 $6,052 $6,854 $23,407 $5,868 $11,296 $14,952 $11,503   Accounts receivable 26,612 24,436 25,745 11,707 9,594 12,260 10,078 11,439    Inventories 20,773 20,248 20,018 13,754 15,173 18,363 19,223 20,138    Prepaid expenses and deposits 2,762 3,448 3,847 2,317 2,089 2,099 2,186 2,398    Restricted cash 2,953 4,091 7,594 1,546 1,626 103 103 111

70,591 58,275 64,058 52,731 34,350 44,121 46,542 45,589

PROPERTY, PLANT AND EQUIPMENT 11,222 11,447 11,628 10,582 11,496 12,320 12,523 13,946 INTANGIBLE ASSETS AND OTHER ASSETS 29,261 33,868 4,343 4,727 5,503 11,609 13,352 16,545 GOODWILL 42,964 44,123 14,721 14,046 14,786 14,960 14,899 16,496 UNALLOCATED PURCHASE PRICE - - 57,637 - - - -

$154,037 $147,713 $152,387 $82,086 $66,135 $83,010 $87,316 $92,576

CURRENT LIABILITIES   Operating Line of Credit $70 $70 $3,077 $ - $ - $ - $ - $864   Accounts payable and accrued liabilities 38,798 39,201 37,245 14,244 14,081 17,401 14,702 15,843    Current portion of notes payable 1,779 1,259 1,166 1,102 1,145 1,210 1,122 1,331    Deferred revenue 1,545 5,298 8,388 6,148 7,077 6,806 7,433 9,862

42,192 45,828 49,876 21,494 22,303 25,417 23,257 27,900

NOTES PAYABLE 16,131 17,263 14,674 4,040 4,561 4,855 5,209 6,103 EMPLOYEE FURTURE BENEFITS 1,390 1,445 1,486 - - - - - FUTRUE INCOME TAX LIABILITY 9,496 10,863 3,787 3,788 3,487 6,185 6,861 8,062

69,209 75,399 69,823 29,322 30,351 36,457 35,327 42,065

SHAREHOLDERS' EQUITY 84,828 72,314 82,564 52,764 35,784 46,553 51,989 50,511

$154,037 $147,713 $152,387 $82,086 $66,135 $83,010 $87,316 $92,576

Working Capital $28,399 $12,447 $14,182 $31,237 $12,047 $18,704 $23,285 $17,689

Systems DivisionGross MarginTarget 40%+

Reduce COGS and OCOGS with Improved Supply Chain Practices

Reduce Total Landed and Repair Costs Through Structural Changes of Manufacturing Base

Tactical Improvements Structural Changes

+

Current Gross Margin

Improve Forecasting and Planning

Improve Direct Materials and Manuf. Mngmnt.

Reduce Product Complexity, Improve Quality

Reduce Warranty and Repair Expenses

Shift OLT High-Volume Build to Asia-Based CM

Exit High Cost CMs

Repair OLTs In-Market, ONTs in Bulk at ODMRebuild Component and Test Engineering

Use Low-Cost Region ONT ODM For Builds

Gross Margin Improvements

47

Summary

1. Good market with strong growth profile

2. Strong product portfolio to address diverse market needs

3. Solid Intellectual Property, with over 200 patents

4. Diversified revenue base in geographic terms; making our business more stable

5. Impressive collection of Tier 1 and 2 customers in all major markets

6. Experienced and globally diverse management, R&D, sales and operations teams

7. Targeting profitable growth driven by scalable business model

48