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SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549



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FORM 10-K/A

(Amendment No. 2)



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(Mark One)

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

For the fiscal year ended December 25, 2005

OR



| ̈ | 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: 000-30741



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OCCAM NETWORKS, INC.

(Exact name of registrant as specified in its charter)



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|                                                               |  |                                        
|-------------------------------------------------------------- |  | ---------------------------------------
|Delaware                                                       |  | 77-0442752                             
|(State or other jurisdiction of incorporation or organization) |  | (I.R.S. Employer Identification Number)
|                                                               | 
|77 Robin Hill Road Santa Barbara, CA                           |  | 93117                                  
|(Address of principal executive offices)                       |  | (Zip Code)                             

Registrants telephone number, including area code: (805) 692-2900



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

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

Common Stock, $0.001 Par Value



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

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (Sec. 229.405 of this chapter) is not contained herein, and will not be contained, to the best of the
registrants knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. ̈

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 (Check one):

Large Accelerated Filer ̈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 ̈No  x

Based on the
average bid and asked price on June 26, 2005 (the last business day of the registrants most recently completed second quarter), the aggregate market value of the voting common stock held by non-affiliates of the registrant on such date
was approximately $31.2 million. For purposes of this disclosure, the registrant has excluded shares of common stock held by directors, executive officers and holders of 5% or more of the registrants outstanding common stock in that such
persons may be deemed to be affiliates. This determination of affiliate status is not necessarily a conclusive determination for other purposes.

As of
March 8, 2006, the number of shares outstanding of the registrants common stock was 6,974,185 shares (15,871,341 shares including, 8,897,158 of common stock issuable upon conversion of outstanding Series A-2 preferred stock).



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EXPLANATORY NOTE

This report on Form 10-K/A (Amendment No. 2) is being filed to update the following portions of the Annual Report on Form 10-K filed by Occam Networks, Inc., a Delaware corporation, on March 30, 2006,
and amended on May 19, 2006: (i) the disclosure included in Item 9A. Controls and Procedures of Part II, (ii) the reference within the report of our prior independent registered public accounting firm with respect to the
Companys going concern included in Item 8. Financial Statements and Supplementary Data of Part II, and (iii) Note 1. Organization, Business and Basis of Presentation of Notes to Consolidated Financial
Statements included in Item 8. Financial Statements and Supplementary Data of Part II. In addition, pursuant to the rules of the Securities and Exchange Commission, certain currently dated certifications are included with this
Amendment.

The disclosures in Part II, Item 9A update managements conclusions concerning Occams disclosure controls and
procedures in light of Occams determination after the filing of the Form 10-K that certain of Occams filings under the Securities Exchange Act of 1934, as amended, had been made after the filing deadlines.

The revised Item 8 does not reflect any change or amendment to any previously filed financial statements. Rather, Note 1 to the Companys financial
statements has been revised to indicate that the Companys audited financial statements for the year ended December 26, 2004 were issued subject to a going concern qualification, which was previously disclosed in our Annual Report on Form 10-K
for such fiscal year filed on March 31, 2005. The revisions to Item 8 also include a conforming change to the form of report of our prior independent registered public accounting firm. Occam has filed the financial statements in their entirety as
required by Rule 12b-15 under the Exchange Act.



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PART II

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

Our consolidated financial statements and schedule required by
Regulation S-X are provided in this Annual Report on Form 10-K/A as listed in item 15(a) of this Form 10-K/A.

ITEM 9A. CONTROLS AND PROCEDURES

In connection with the initial filing of our Annual Report on Form 10-K for the year ended December 31, 2005, our chief executive
officer and chief financial officer evaluated the effectiveness of our disclosure controls and procedures (as defined in Rule 13a-15(e) promulgated under the Securities Exchange Act of 1934, as amended) as of the end of the period covered by the
report. Based on that evaluation, our chief executive officer and chief financial officer initially concluded that our disclosure controls and procedures were effective as of the end of the period covered by the report to provide reasonable
assurance that information we are required to disclose in reports that we file or submit under the Exchange Act is (i) accumulated and communicated to our management, including our chief executive officer and chief financial officer, as
appropriate, to allow timely decisions regarding disclosure and (ii) recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission rules and forms.

After the filing of our Annual Report on Form 10-K, we determined that our historic method of calculating the deadline for filing our reports under the
Exchange Act was incorrect. We manage our activities based on a 13-week accounting quarter such that the fiscal period end date is the last Sunday of each quarter rather than the end of the calendar period. Until the filing of our Quarterly Report
on Form 10-Q for the quarter ended March 26, 2006, which was timely filed, we calculated the filing deadline based on the calendar-period end date shown on our consolidated financial statements and not on our fiscal period end date. Beginning
with our Form 10-Q for the first quarter of fiscal 2006, we now present our financial statements and calculate our filing deadlines as of the actual fiscal period end date. Based on our review of our past filings, we believe that we (including our
predecessor Accelerated Networks, Inc.) were one to four days late in filing 14 Quarterly Reports on Form 10-Q and five Annual Reports on Form 10-K (excluding reports previously acknowledged as late on Form 12b-25).

In light of the subsequent determination that our historic method of calculating the deadline for filing our Exchange Act reports was incorrect,
management reevaluated the effectiveness of our disclosure controls and procedures. In particular, management evaluated whether the incorrect methodology constituted either a material weakness or significant deficiency under applicable standards.
Management determined that the incorrect methodology did not constitute a material weakness in that it did not result in any increase in the likelihood of a material misstatement of our financial statements. Management concluded, however, that the
incorrect methodology constituted a significant deficiency in that it adversely affected Occams ability to timely report external financial data.

As a result of its subsequent determination, our management has concluded that our disclosure controls and procedures were not effective as of the end of the period covered by our most recent Annual Report on Form
10-K to provide reasonable assurance that the information we were required to report in our Exchange Act reports was reported within the time periods specified in the Securities and Exchange Commissions rules and forms. The late filings had no
effect on the accuracy of the information contained in the Annual Report as filed, however, and management believes that the financial statements contained in our Annual Report on Form 10-K fairly present in all material respect our consolidated
financial position, results of operations, and cash flows for the periods presented.

Changes in our Controls and Procedures

We have corrected our method of calculating filing deadlines and timely filed our Quarterly Reports on Form 10-Q for the first and second quarters of
fiscal 2006. As a result, our management believes that the significant deficiency discussed above has been remedied.



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PART IV

ITEM 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES



|(a) | (1)    Financial Statements
|--- | ---------------------------



| |  | See index to Consolidated Financial Statements on page F-1.
| |  | -----------------------------------------------------------



| | (2) | Financial Statement Schedules
| | --- | -----------------------------

The financial statement
schedules have been omitted because they are not applicable or the information required to be set forth therein is included in the consolidated financial statements or notes thereto previously filed with our Annual Report on Form 10-K filed on
March 30, 2006.



| | (3) | Exhibits
| | --- | --------

The following exhibits are filed herewith or
incorporated by reference.



|            |  |                                                                                                                                                                                                                                                                                                                                                                            
|----------- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit No. |  | Exhibit Title                                                                                                                                                                                                                                                                                                                                                              
|2.1(1)      |  | Agreement and Plan of Merger and Reorganization, dated as of November 9, 2001, by and among Registrant, Odin Acquisition Corp. and Occam Networks Inc. (incorporated by reference to
Annex A to the Registration Statement on Form S-4 (Registration No. 333-75816) which the Securities and Exchange Commission declared effective on April 26, 2002).                    
|            | 
|2.2         |  | Amendment to Agreement and Plan of Merger and Reorganization, dated as of December 26, 2001, by and among Registrant, Odin Acquisition Corp. and Occam Networks, Inc. (incorporated by
reference to Annex AA to the Registration Statement on Form S-4 (Registration No. 333-75816) which the Securities and Exchange Commission declared effective on April 26, 2002).    
|            | 
|2.3         |  | Amendment No. 2 to Agreement and Plan of Merger and Reorganization, dated as of April 16, 2002, by and among Registrant, Odin Acquisition Corp. and Occam Networks, Inc. (incorporated
by reference to Annex AAA to the Registration Statement on Form S-4 (Registration No. 333-75816) which the Securities and Exchange Commission declared effective on April 26, 2002).
|            | 
|3.1         |  | Registrants Amended and Restated Certificate of Incorporation (incorporated by reference to the Exhibit with the same number on the Registrants Registration Statement on
Form S-1 and all amendments, thereto (File No. 333-31732).                                                                                                                                     
|            | 
|3.1.1       |  | Registrants Certificate of Amendment of Amended and Restated Certificate of Incorporation effective May 14, 2002 (incorporated by reference to Exhibit 3.1.1 of the
Registrants Quarterly Report on Form 10-Q filed on May 14, 2003).                                                                                                                                    
|            | 
|3.1.2       |  | Registrants Certificate of Amendment of Amended and Restated Certificate of Incorporation effective June 3, 2003 (incorporated by reference to Exhibit 3.1.2 of the
Registrants Quarterly Report on Form 10-Q filed on August 14, 2003).                                                                                                                                 
|            | 
|3.1.3       |  | Registrants Certificate of Amendment of Amended and Restated Certificate of Incorporation filed with the Secretary of State of the State of Delaware on November 11, 2004 (incorporated
by reference to Exhibit 3.1.3 of the Registrants Quarterly Report on Form 10-Q filed on November 15, 2004).                                                                      
|            | 
|3.1.4       |  | Certificate of Amendment to the Amended and Restated Certificate of Incorporation of Occam Networks, Inc. filed with the Secretary of State of the State of Delaware on September 2, 2005.
(Incorporated by reference to Exhibit 3.1.4 of the Registrants Quarterly Report on Form 10-Q filed on November 14, 2005)                                                       
|            | 
|3.2         |  | Registrants Amended and Restated Bylaws (incorporated by reference to Exhibit 3.2 of the Registrants Quarterly Report on Form 10-Q filed on May 14,
2003).                                                                                                                                                                                                               



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|            |  |                                                                                                                                                                                                                                                                                                                                                 
|----------- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit No. |  | Exhibit Title                                                                                                                                                                                                                                                                                                                                   
|4.2         |  | Specimen common stock certificate of Registrant (incorporated by reference to the Exhibit with the same number on the Registrants Registration Statement on Form S-1 and all
amendments, thereto (File No. 333-31732).                                                                                                                         
|            | 
|4.4         |  | Form of Certificate of Designation of the Series A Preferred Stock filed with the Secretary of State of the State of Delaware (incorporated by reference to Exhibit 4.2 of the
Registrants Current Report on Form 8-K filed on December 19, 2002).                                                                                             
|            | 
|4.4.1       |  | Certificate of Occam Networks, Inc. Eliminating Matters Set Forth in Certificate of Designation of Series A Convertible Preferred Stock (incorporated by reference to Exhibit 4.4.1
of the Registrants Quarterly Report on Form 10-Q filed on August 14, 2003).                                                                                
|            | 
|4.6         |  | Note and Warrant Purchase Agreement, dated as of November 9, 2001 by and among Occam Networks (California), Inc. and certain existing investors (incorporated by reference to Annex H
to the Registration Statement on Form S-4 (Registration No. 333-75816) which the Securities and Exchange Commission declared effective on April 26, 2002).
|            | 
|4.6.1       |  | First Amendment to Note and Warrant Purchase Agreement, dated as of December 19, 2002 by and among the Occam Networks, Inc., Occam Networks (California), Inc. and certain existing
investors (incorporated by reference to Exhibit 4.4 of the Registrants Current Report on Form 8-K filed on December 19, 2002).                             
|            | 
|4.8         |  | Series A-2 Preferred Stock Purchase Agreement dated as of November 19, 2003 by and among Occam Networks, Inc. and the investors (incorporated by reference to Exhibit 4.3 of the
Registrants Current Report on Form 8-K filed on November 21, 2003).                                                                                           
|            | 
|4.9         |  | Certificate of Designation of the Series A-2 Preferred Stock filed with the Secretary of State of the state of Delaware on November 19, 2003 (incorporated by reference to
Exhibit 4.4 of the Registrants Current Report on Form 8-K filed on November 21, 2003).                                                                              
|            | 
|4.9.1       |  | Certificate Increasing the Number of Shares of Preferred Stock Designated as Series A-2 Convertible Preferred Stock filed with the Secretary of State of Delaware on November 11,
2004 (incorporated by reference to Exhibit 4.9.1 of the Registrants Quarterly Report on Form 10-Q filed on November 15, 2004).                               
|            | 
|4.9.2       |  | Certificate of Registrant, Increasing the Number of Shares of Preferred Stock Designated as Series A-2 Convertible Preferred Stock, filed with the Secretary of Sate of Delaware on
January 7, 2005 (incorporated by reference to Exhibit 4.9.2 of the Registrants Current Report on Form 8-K filed on January 13, 2004).                      
|            | 
|4.9.3       |  | Certificate of Registrant, Increasing the Number of Shares of Preferred Stock Designated as Series A-2 Convertible Preferred Stock, filed with the Secretary of Sate of Delaware on
May 16, 2005 (incorporated by reference to Exhibit 4.9.3 of the Registrants Current Report on Form 8-K filed on May 17, 2005).                             
|            | 
|4.11        |  | Amendment No. 1 to Series A-2 Preferred Stock Purchase Agreement dated as of November 19, 2003 by and among Occam Networks, Inc. and the investors (incorporated by reference to
Exhibit 4.6 of the Registrants Current Report on Form 8-K filed on March 12, 2004).                                                                           
|            | 
|4.12        |  | Series A-2 Preferred Stock Purchase Warrant issued to Alta Partners (incorporated by reference to Exhibit 4.7 of the Registrants Current Report on Form 8-K filed on
March 12, 2004).                                                                                                                                                          
|            | 
|4.12.1      |  | Amendment and Notice of Exercise dated April 20, 2005 between Occam Networks, Inc. and Alta California Partners III, L.P. (incorporated by reference to the Registrants Current
Report on Form 8-K filed on April 21, 2005).                                                                                                                   
|            | 
|4.13        |  | Series A-2 Preferred Stock Purchase Warrant issued to Alta Embarcadero Partners III, LLC (incorporated by reference to Exhibit 4.8 of the Registrants Current Report on
Form 8-K filed on March 12, 2004).                                                                                                                                     
|            | 
|4.13.1      |  | Amendment and Notice of Exercise dated April 20, 2005 between Occam Networks, Inc. and Alta Embarcadero Partners III, LLC (incorporated by reference to the Registrants Current
Report on Form 8-K filed on April 21, 2005).                                                                                                                   



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|            |  |                                                                                                                                                                                                                                                                                                                                                                    
|----------- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit No. |  | Exhibit Title                                                                                                                                                                                                                                                                                                                                                      
|4.14        |  | Letter agreement dated March 8, 2004 between Occam Networks, Inc. and Alta Partners relating to board rights (incorporated by reference to Exhibit 4.9 of the Registrants
Current Report on Form 8-K filed on March 12, 2004).                                                                                                                                    
|            | 
|4.15        |  | Management rights agreement dated as of March 8, 2004 between Alta Partners and Occam Networks, Inc. (incorporated by reference to Exhibit 4.9 of the Registrants Current
Report on Form 8-K filed on March 12, 2004).                                                                                                                                            
|            | 
|4.16        |  | Amendment No. 2 to Series A-2 Preferred Stock Purchase Agreement dated as of November 19, 2003 by and among the Registrant and the investors (incorporated by reference to
Exhibit 4.11 of the Registrants Current Report on Form 8-K filed on April 9, 2004).                                                                                                    
|            | 
|4.17        |  | Specimen Series A-2 stock certificate of Registrant (incorporated by reference for the Exhibit with the same number on the Registrants Registration Statement on Form S-1 and
all amendments thereto (File No. 333-125060)).                                                                                                                                      
|            | 
|10.9(3)     |  | 1997 Stock Option/Stock Issuance Plan (incorporated by reference to the Exhibit with the same number on the Registrants Registration Statement on Form S-1 and all amendments,
thereto (File No. 333-31732).                                                                                                                                                      
|            | 
|10.11(3)    |  | Employee Stock Purchase Plan (incorporated by reference to the Exhibit with the same number on the Registrants Registration Statement on Form S-1 and all amendments, thereto (File
No. 333-31732).                                                                                                                                                               
|            | 
|10.14(2)    |  | Materials and Manufacturing Agreement Board Assembly Agreement dated as of March 15, 1999, by and between the Registrant and the Semiconductor Group of Arrow Electronics, Inc., as
amended (incorporated by reference to the Exhibit with the same number on the Registrants Registration Statement on Form S-1 and all amendments, thereto (File No. 333-31732).
|            | 
|10.19       |  | Standard Industrial/Commercial Multi-Tenant Lease dated as of May 6, 1999, between the Registrant and Tyler Pacific III, LLC. (incorporated by reference to the Exhibit with the same
number on the Registrants Registration Statement on Form S-1 and all amendments, thereto (File No. 333-31732).                                                              
|            | 
|10.25(3)    |  | Form of Director Indemnification Agreement (incorporated by reference to the Exhibit with the same number on the Registrants Registration Statement on Form S-1 and all amendments,
thereto (File No. 333-31732).                                                                                                                                                 
|            | 
|10.26(3)    |  | Form of Indemnification Agreement for all officers and directors appointed on or after May 14, 2003 (incorporated by reference to Exhibit 10.26 of the Registrants Annual
Report on Form 10-K filed on March 31, 2003).                                                                                                                                           
|            | 
|10.27       |  | Senior Loan and Security Agreement No. L6244 dated as of May 28, 1999, by and between the Registrant and Phoenix Leasing Incorporated (incorporated by reference to the Exhibit with
the same number on the Registrants Registration Statement on Form S-1 and all amendments, thereto (File No. 333-31732).                                                      
|            | 
|10.29(2)    |  | Standard Industrial/Commercial Multi-Tenant Lease dated as of February 29, 2000, by and between the Registrant and Tyler Pacific III, LLC (incorporated by reference to the Exhibit with
the same number on the Registrants Registration Statement on Form S-1 and all amendments, thereto (File No. 333-31732).                                                  
|            | 
|10.35       |  | Retainer Agreement dated as of February 5, 2001 by and between the Registrant and Regent Pacific Management Corporation. (incorporated by reference to Exhibit 10.35 to the
Registrants Annual Report on Form 10-K filed on May 8, 2001).                                                                                                                         
|            | 
|10.38       |  | Form of Voting Agreement dated as of November 9, 2001 between Occam and certain (Registration No. 333-75816) stockholders of Registrant (incorporated by reference to Annex B to
the Registration Statement on Form S-4 (Registration No. 333-75816) which the Securities and Exchange Commission declared effective on April 26, 2002).                           
|            | 
|10.39       |  | Form of Voting and Conversion Agreement dated as of November 9, 2001 between Registrant and certain Occam shareholders (incorporated by reference to Annex C to the Registration
Statement on Form S-4 (Registration No. 333-75816) which the Securities and Exchange Commission declared effective on April 26, 2002).                                            



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|            |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|----------- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit No. |  | Exhibit Title                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|10.42       |  | Form of Funding Agreement dated as of November 9, 2001 between Registrant and Occam (incorporated by reference to Annex F to the Registration Statement on Form S-4
(Registration No. 333-75816) which the Securities and Exchange Commission declared effective on April 26, 2002).                                                                                                                                                                                                                                                                          
|            | 
|10.43       |  | Guaranteed Promissory Note, dated as of March 18, 2002, issued by Occam in favor of the Registrant (incorporated by reference to Annex K1 to the Registration Statement on
Form S-4 (Registration No. 333-75816) which the Securities and Exchange Commission declared effective on April 26, 2002).                                                                                                                                                                                                                                                          
|            | 
|10.44       |  | Secured Guaranty dated as of March 18, 2002, entered into by 2180 Associates Fund VII, L.P., New Enterprise Associates 9, L.P., Norwest Venture Partners VIII, L.P., NVP
Entrepreneurs Fund VIII, L.P., U.S. Venture Partners VII, L.P., USVP Entrepreneur Partners VII-A, L.P. and USVP Entrepreneur Partners VII-B, L.P. in favor of the Registrant (incorporated by reference to Annex K2 to the Registration Statement on
Form S-4 (Registration No. 333-75816) which the Securities and Exchange Commission declared effective on April 26, 2002).       
|            | 
|10.45       |  | Guarantor Security Agreement, dated as of March 18, entered into by 2180 Associates Fund VII, L.P., New Enterprise Associates 9, L.P., Norwest Venture Partners VIII, L.P., NVP
Entrepreneurs Fund VIII, L.P., U.S. Venture Partners VII, L.P., USVP Entrepreneur Partners VII-A, L.P. and USVP Entrepreneur Partners VII-B, L.P. in favor of the Registrant (incorporated by reference to Annex K3 to the Registration Statement on
Form S-4 (Registration No. 333-75816) which the Securities and Exchange Commission declared effective on April 26, 2002).
|            | 
|10.46       |  | Employment Agreement dated February 13, 2002 between the Registrant and Robert Howard-Anderson (incorporated by reference to Exhibit 10.46 of the Registrants Quarterly Report
on Form 10-Q filed on August 12, 2002).                                                                                                                                                                                                                                                                                                                                       
|            | 
|10.47       |  | Employment Agreement dated June 17, 2002 between the Registrant and Howard Bailey (incorporated by reference to Exhibit 10.46 of the Registrants Quarterly Report on
Form 10-Q filed on August 12, 2002).                                                                                                                                                                                                                                                                                                                                                    
|            | 
|10.48       |  | Occam Networks Inc. 1999 Stock Plan (incorporated by reference to Exhibit 4.1 on the Registrants Statement on Form S-8 (File No. 333-91070)).                                                                                                                                                                                                                                                                                                                                                                                                                
|            | 
|10.49       |  | Occam Networks Inc. 1999 Stock Plan, Form of Stock Option Agreement (incorporated by reference to Exhibit 4.2 on the Registrants Statement on Form S-8 (File
No. 333-91070).                                                                                                                                                                                                                                                                                                                                                                                 
|            | 
|10.50       |  | Occam Networks Inc. 1999 Stock Plan, Form of Stock Option AgreementEarly Exercise (incorporated by reference to Exhibit 4.3 on the Registrants Statement on Form S-8
(File No. 333-91070).                                                                                                                                                                                                                                                                                                                                                                  
|            | 
|10.51       |  | Master Lease Agreement dated December 8, 2000 by and between Comdisco, Inc. and Occam Networks (California), Inc. (incorporated by reference to Exhibit 99.1 of the Registrants
Current Report on Form 8-K filed on October 1, 2002).                                                                                                                                                                                                                                                                                                                        
|            | 
|10.52       |  | Standard Industrial/Commercial Multi-Tenant Lease dated March 26, 2001 by and between Applied Magnetics Corporation, a Delaware corporation DBA Innovative Micro Technology, and Occam
Networks (California), Inc., a California corporation (incorporated by reference to Exhibit 99.2 of the Registrants Current Report on Form 8-K filed on October 1, 2002).                                                                                                                                                                                             
|            | 
|10.53       |  | Loan and Security Agreement between Silicon Valley Bank and Occam Networks, Inc., dated June 16, 2003 (incorporated by reference to Exhibit 10.53 of the Registrants Quarterly
Report on Form 10-Q filed on August 14, 2003).                                                                                                                                                                                                                                                                                                                                
|            | 
|10.54       |  | Warrant to Purchase Stock, dated June 16, 2003 (incorporated by reference to Exhibit 10.53 of the Registrants Quarterly Report on Form 10-Q filed on August 14,
2003).                                                                                                                                                                                                                                                                                                                                                                                       
|            | 
|10.55       |  | Security Agreement between Silicon Valley Bank and Occam Networks (California), Inc., dated June 16, 2003 (incorporated by reference to Exhibit 10.53 of the Registrants
Quarterly Report on Form 10-Q filed on August 14, 2003).                                                                                                                                                                                                                                                                                                                            
|            | 
|10.56       |  | Intellectual Property Security Agreement between Silicon Valley Bank and Occam Networks (California), Inc., dated June 16, 2003 (incorporated by reference to Exhibit 10.53 of the
Registrants Quarterly Report on Form 10-Q filed on August 14, 2003).                                                                                                                                                                                                                                                                                                      



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|            |  |                                                                                                                                                                                                                                                                                           
|----------- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit No. |  | Exhibit Title                                                                                                                                                                                                                                                                             
|10.57       |  | Senior Loan and Security Agreement dated December 17, 2004, by and between the Registrant and Hercules Technology Growth Capital, Inc. (incorporated by reference to Exhibit 10.57 of
the Registrants Current Report on Form 8-K filed on December 20, 2004).                            
|            | 
|10.58       |  | Warrant to acquire shares of common stock issued to Hercules Technology Growth Capital, Inc. on December 17, 2004 (incorporated by reference to Exhibit 10.58 of the
Registrants Current Report on Form 8-K filed on December 20, 2004).                                                 
|            | 
|10.59       |  | Warrant to acquire shares of Series A-2 preferred stock to Hercules Technology Growth Capital, Inc. on December 17, 2004 (incorporated by reference to Exhibit 10.59 of the
Registrants Current Report on Form 8-K filed on December 20, 2004).                                          
|            | 
|10.61       |  | Series A-2 Preferred Stock Purchased Agreement dated as of January 7, 2005, among the Registrant and certain investors (incorporated by reference to Exhibit 10.61 of the
Registrants Current Report on Form 8-K filed on January 13, 2005).                                             
|            | 
|10.62       |  | Fourth Amended and Restated Investors Rights Agreement dated as of January 7, 2005, among the Registrant and certain holders of its capital stock (incorporated by reference to
Exhibit 10.62 of the Registrants Current Report on Form 8-K filed on January 13, 2005).                 
|            | 
|10.63       |  | Letter Amendment Agreement among the Registrant, Occam Networks (California), Inc. and Hercules Technology Growth Capital, Inc. (incorporated by reference to Exhibit 10.63 of the
Registrants Current Report on Form 8-K filed on January 13, 2005).                                    
|            | 
|10.64       |  | Promissory Note between the Registrant and Hercules Technology Growth Capital, Inc. (incorporated by reference to Exhibit 10.64 of the Registrants Current Report on Form 8-K
filed on January 13, 2005).                                                                                
|            | 
|10.65       |  | Amendment No. 1 to Series A-2 Preferred Stock Purchase Agreement dated as of January 7, 2005, among the Registrant and certain investors (incorporated by reference to
Exhibit 10.65 of the Registrants Current Report on Form 8-K filed on March 24, 2005).                             
|            | 
|10.66       |  | Amendment No. 1 to Fourth Amended and Restated Investors Rights Agreement dated as of January 7, 2005, among the Registrant and certain holders of its capital stock
(incorporated by reference to Exhibit 10.66 of the Registrants Current Report on Form 8-K filed on March 24, 2005).
|            | 
|10.67(2)    |  | Manufacturing License Agreement dated as of March 18, 2005, by and between the Registrant and Tellabs Petaluma, Inc. (incorporated by reference to Exhibit 10.67 of the
Registrants Annual Report on Form 10-K filed on March 31, 2005)                                                  
|            | 
|10.67.1     |  | Amendment One to Manufacturing License Agreement dated March 18, 2005 between Tellabs Petaluma, Inc. and the Registrant (incorporated by reference to Exhibit 10.73 of the
Registrants Current Report on Form 8-K filed on May 17, 2005).                                                
|            | 
|10.68(2)    |  | Technology License Agreement dated as of March 18, 2005, by and between the Registrant and Tellabs Petaluma, Inc. (incorporated by reference to Exhibit 10.69 of the
Registrants Annual Report on Form 10-K filed on March 31, 2005).                                                    
|            | 
|10.68.1     |  | Amendment One to Technology License Agreement dated March 18, 2005 between Tellabs Petaluma, Inc. and the Registrant (incorporated by reference to Exhibit 10.74 of the
Registrants Current Report on Form 8-K filed on May 17, 2005).                                                   
|            | 
|10.70(2)    |  | Supply Agreement dated as of March 18, 2005, by and between the Registrant and Tellabs Petaluma, Inc. (incorporated by reference to Exhibit 10.70 of the Registrants Annual
Report on Form 10-K filed on March 31, 2005).                                                                
|            | 
|10.71       |  | Form of Director Offer Letter dated September 16, 2004 for Robert Bylin, Thomas Pardun and Kenneth Cole (incorporated by reference to the Exhibit with the same number on the Registrants
Registration Statement on Form S-1 and all amendments thereto (File No. 333-125060)).           
|            | 
|10.76(3)    |  | Executive Officer Stock Grant ProgramRestricted Stock Grant Agreement dated September 12, 2005 (incorporated by reference to Exhibit 10.75 of the Registrants Current
Report on Form 8-K filed in September 14, 2005).                                                                  



-7-



---

|            |  |                                                                                                                                                                                                                                                           
|----------- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit No. |  | Exhibit Title                                                                                                                                                                                                                                             
|10.77       |  | Standard Form Multi-Tenant Lease dated July 7, 2005, by and between Mission West Properties, L.P. II and the Registrant (incorporated by reference to Exhibit 10.77 of the
Registrants Current Report on Form 8-K filed on March 30, 2006).              
|            | 
|10.78(3)    |  | Amended and Restated 2000 Stock Incentive Plan, as amended June 2005. (previously filed as an exhibit to the Registrants Annual Report on Form 10-K filed on March 30,
2006)                                                                             
|            | 
|21.1        |  | Subsidiaries of the Registrant. (previously filed as an exhibit to the Registrants Annual Report on Form 10-K filed on March 30, 2006)                                                                                                                   
|            | 
|23.1        |  | Consent of PricewaterhouseCoopers LLP, Independent Registered Public Accounting Firm.                                                                                                                                                                     
|            | 
|23.2        |  | Consent of Singer Lewak Greenbaum & Goldstein LLP, Independent Registered Public Accounting Firm.                                                                                                                                                         
|            | 
|24.1        |  | Power of Attorney (included on page 9)                                                                                                                                                                                                                    
|            | 
|31.1        |  | Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.                                                                                                                                                       
|            | 
|31.2        |  | Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.                                                                                                                                                       
|            | 
|32.1        |  | Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. (previously filed as an exhibit to
the Registrants Annual Report on Form 10-K filed on March 30, 2006)
|            | 
|32.2        |  | Certification of Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. (previously filed as an exhibit to
the Registrants Annual Report on Form 10-K filed on March 30, 2006)

---

|(1) | Schedules omitted pursuant to Regulation S-K Item 601(b)(2) of the Securities Act. Registrant undertakes to furnish such schedules to the Commission upon request.
|--- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(2) | Confidential treatment has been requested and received for certain portions of this exhibit.
|--- | --------------------------------------------------------------------------------------------

|(3) | Management compensation plan/contract.
|--- | --------------------------------------



|(b) | Exhibits
|--- | --------

The exhibits filed as part of this report are
listed in Item 15(a)(3) of this Form 10-K/A.



|(c) | Exhibits
|--- | --------

The financial statement schedules required by
Regulation S-X and Item 8 of this form are listed in Item 15(a)(2) of this Form 10-K/A.



-8-



---

SIGNATURES

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



|                         |  |                      |  |                                                
|------------------------ |  | -------------------- |  | -----------------------------------------------
|                         |  | OCCAM NETWORKS, INC.
|                         |  |                     
|Date: September 16, 2006 |  | By:                  |  | /s/ Robert L. Howard-Anderson                  
|                         |  |                      |  | Robert L. Howard-Anderson                      
|                         |  |                      |  | President, Chief Executive Officer and Director

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed
below by the following persons on behalf of the Registrant and in the capacities and on the dates indicated.



|                                                        |  |                                                                               |  |                   
|------------------------------------------------------- |  | ----------------------------------------------------------------------------- |  | ------------------
|Signature                                               |  | Title                                                                         |  | Date              
|                                                        |  |                                                                              
|/s/ Robert L. Howard-Anderson Robert L.
Howard-Anderson |  | President, Chief Executive Officer and Director (Principal Executive Officer) |  | September 16, 2006
|                                                        |  |                                                                              
|/s/ Christopher B. Farrell Christopher
B. Farrell       |  | Chief Financial Officer (Principal Financial and
Accounting Officer)          |  | September 16, 2006
|                                                        |  |                                                                              
|/s/ Steven M. Krausz* Steven M.
Krausz                  |  | Director                                                                      |  | September 16, 2006
|                                                        |  |                                                                              
|/s/ Robert E. Bylin* Robert E.
Bylin                    |  | Director                                                                      |  | September 16, 2006
|                                                        |  |                                                                              
|/s/ Robert B. Abbott* Robert B.
Abbott                  |  | Director                                                                      |  | September 16, 2006
|                                                        |  |                                                                              
|/s/ Thomas E. Pardun* Thomas E.
Pardun                  |  | Director                                                                      |  | September 16, 2006
|                                                        |  |                                                                              
|/s/ Kenneth Cole* Kenneth
Cole                          |  | Director                                                                      |  | September 16, 2006
|                                                        |  |                                                                              
|/s/ Brian H. Strom* Brian H.
Strom                      |  | Director                                                                      |  | September 16, 2006



|      |  |                                         
|----- |  | ----------------------------------------
|* By: |  | /s/ Christopher B. Farrell              
|      |  | Christopher B. Farrell, Attorney-in-Fact



-9-



---

EXHIBIT INDEX



|            |  |                                                                                                                                                                                                                                                                                                                                                                            
|----------- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit No. |  | Exhibit Title                                                                                                                                                                                                                                                                                                                                                              
|2.1(1)      |  | Agreement and Plan of Merger and Reorganization, dated as of November 9, 2001, by and among Registrant, Odin Acquisition Corp. and Occam Networks Inc. (incorporated by reference to
Annex A to the Registration Statement on Form S-4 (Registration No. 333-75816) which the Securities and Exchange Commission declared effective on April 26, 2002).                    
|            | 
|2.2         |  | Amendment to Agreement and Plan of Merger and Reorganization, dated as of December 26, 2001, by and among Registrant, Odin Acquisition Corp. and Occam Networks, Inc. (incorporated by
reference to Annex AA to the Registration Statement on Form S-4 (Registration No. 333-75816) which the Securities and Exchange Commission declared effective on April 26, 2002).    
|            | 
|2.3         |  | Amendment No. 2 to Agreement and Plan of Merger and Reorganization, dated as of April 16, 2002, by and among Registrant, Odin Acquisition Corp. and Occam Networks, Inc.
(incorporated by reference to Annex AAA to the Registration Statement on Form S-4 (Registration No. 333-75816) which the Securities and Exchange Commission declared effective on April 26, 2002).
|            | 
|3.1         |  | Registrants Amended and Restated Certificate of Incorporation (incorporated by reference to the Exhibit with the same number on the Registrants Registration Statement on
Form S-1 and all amendments, thereto (File No. 333-31732).                                                                                                                                     
|            | 
|3.1.1       |  | Registrants Certificate of Amendment of Amended and Restated Certificate of Incorporation effective May 14, 2002 (incorporated by reference to Exhibit 3.1.1 of the
Registrants Quarterly Report on Form 10-Q filed on May 14, 2003).                                                                                                                                    
|            | 
|3.1.2       |  | Registrants Certificate of Amendment of Amended and Restated Certificate of Incorporation effective June 3, 2003 (incorporated by reference to Exhibit 3.1.2 of the
Registrants Quarterly Report on Form 10-Q filed on August 14, 2003).                                                                                                                                 
|            | 
|3.1.3       |  | Registrants Certificate of Amendment of Amended and Restated Certificate of Incorporation filed with the Secretary of State of the State of Delaware on November 11, 2004
(incorporated by reference to Exhibit 3.1.3 of the Registrants Quarterly Report on Form 10-Q filed on November 15, 2004).                                                                      
|            | 
|3.1.4       |  | Certificate of Amendment to the Amended and Restated Certificate of Incorporation of Occam Networks, Inc. filed with the Secretary of State of the State of Delaware on September 2, 2005.
(Incorporated by reference to Exhibit 3.1.4 of the Registrants Quarterly Report on Form 10-Q filed on November 14, 2005)                                                       
|            | 
|3.2         |  | Registrants Amended and Restated Bylaws (incorporated by reference to Exhibit 3.2 of the Registrants Quarterly Report on Form 10-Q filed on May 14,
2003).                                                                                                                                                                                                               
|            | 
|4.2         |  | Specimen common stock certificate of Registrant (incorporated by reference to the Exhibit with the same number on the Registrants Registration Statement on Form S-1 and all
amendments, thereto (File No. 333-31732).                                                                                                                                                    
|            | 
|4.4         |  | Form of Certificate of Designation of the Series A Preferred Stock filed with the Secretary of State of the State of Delaware (incorporated by reference to Exhibit 4.2 of the
Registrants Current Report on Form 8-K filed on December 19, 2002).                                                                                                                        
|            | 
|4.4.1       |  | Certificate of Occam Networks, Inc. Eliminating Matters Set Forth in Certificate of Designation of Series A Convertible Preferred Stock (incorporated by reference to Exhibit 4.4.1
of the Registrants Quarterly Report on Form 10-Q filed on August 14, 2003).                                                                                                           
|            | 
|4.6         |  | Note and Warrant Purchase Agreement, dated as of November 9, 2001 by and among Occam Networks (California), Inc. and certain existing investors (incorporated by reference to Annex H
to the Registration Statement on Form S-4 (Registration No. 333-75816) which the Securities and Exchange Commission declared effective on April 26, 2002).                           



-10-



---

|            |  |                                                                                                                                                                                                                                                                                                                           
|----------- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit No. |  | Exhibit Title                                                                                                                                                                                                                                                                                                             
|4.6.1       |  | First Amendment to Note and Warrant Purchase Agreement, dated as of December 19, 2002 by and among the Occam Networks, Inc., Occam Networks (California), Inc. and certain existing
investors (incorporated by reference to Exhibit 4.4 of the Registrants Current Report on Form 8-K filed on December 19, 2002).       
|            | 
|4.8         |  | Series A-2 Preferred Stock Purchase Agreement dated as of November 19, 2003 by and among Occam Networks, Inc. and the investors (incorporated by reference to Exhibit 4.3 of the
Registrants Current Report on Form 8-K filed on November 21, 2003).                                                                     
|            | 
|4.9         |  | Certificate of Designation of the Series A-2 Preferred Stock filed with the Secretary of State of the state of Delaware on November 19, 2003 (incorporated by reference to
Exhibit 4.4 of the Registrants Current Report on Form 8-K filed on November 21, 2003).                                                        
|            | 
|4.9.1       |  | Certificate Increasing the Number of Shares of Preferred Stock Designated as Series A-2 Convertible Preferred Stock filed with the Secretary of State of Delaware on November 11,
2004 (incorporated by reference to Exhibit 4.9.1 of the Registrants Quarterly Report on Form 10-Q filed on November 15, 2004).         
|            | 
|4.9.2       |  | Certificate of Registrant, Increasing the Number of Shares of Preferred Stock Designated as Series A-2 Convertible Preferred Stock, filed with the Secretary of Sate of Delaware on
January 7, 2005 (incorporated by reference to Exhibit 4.9.2 of the Registrants Current Report on Form 8-K filed on January 13, 2004).
|            | 
|4.9.3       |  | Certificate of Registrant, Increasing the Number of Shares of Preferred Stock Designated as Series A-2 Convertible Preferred Stock, filed with the Secretary of Sate of Delaware on
May 16, 2005 (incorporated by reference to Exhibit 4.9.3 of the Registrants Current Report on Form 8-K filed on May 17, 2005).       
|            | 
|4.11        |  | Amendment No. 1 to Series A-2 Preferred Stock Purchase Agreement dated as of November 19, 2003 by and among Occam Networks, Inc. and the investors (incorporated by reference to
Exhibit 4.6 of the Registrants Current Report on Form 8-K filed on March 12, 2004).                                                     
|            | 
|4.12        |  | Series A-2 Preferred Stock Purchase Warrant issued to Alta Partners (incorporated by reference to Exhibit 4.7 of the Registrants Current Report on Form 8-K filed on
March 12, 2004).                                                                                                                                    
|            | 
|4.12.1      |  | Amendment and Notice of Exercise dated April 20, 2005 between Occam Networks, Inc. and Alta California Partners III, L.P. (incorporated by reference to the Registrants Current
Report on Form 8-K filed on April 21, 2005).                                                                                             
|            | 
|4.13        |  | Series A-2 Preferred Stock Purchase Warrant issued to Alta Embarcadero Partners III, LLC (incorporated by reference to Exhibit 4.8 of the Registrants Current Report on
Form 8-K filed on March 12, 2004).                                                                                                               
|            | 
|4.13.1      |  | Amendment and Notice of Exercise dated April 20, 2005 between Occam Networks, Inc. and Alta Embarcadero Partners III, LLC (incorporated by reference to the Registrants Current
Report on Form 8-K filed on April 21, 2005).                                                                                             
|            | 
|4.14        |  | Letter agreement dated March 8, 2004 between Occam Networks, Inc. and Alta Partners relating to board rights (incorporated by reference to Exhibit 4.9 of the Registrants
Current Report on Form 8-K filed on March 12, 2004).                                                                                           
|            | 
|4.15        |  | Management rights agreement dated as of March 8, 2004 between Alta Partners and Occam Networks, Inc. (incorporated by reference to Exhibit 4.9 of the Registrants Current
Report on Form 8-K filed on March 12, 2004).                                                                                                   
|            | 
|4.16        |  | Amendment No. 2 to Series A-2 Preferred Stock Purchase Agreement dated as of November 19, 2003 by and among the Registrant and the investors (incorporated by reference to
Exhibit 4.11 of the Registrants Current Report on Form 8-K filed on April 9, 2004).                                                           
|            | 
|4.17        |  | Specimen Series A-2 stock certificate of Registrant (incorporated by reference for the Exhibit with the same number on the Registrants Registration Statement on Form S-1 and
all amendments thereto (File No. 333-125060)).                                                                                             



-11-



---

|            |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|----------- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit No. |  | Exhibit Title                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|10.9(3)     |  | 1997 Stock Option/Stock Issuance Plan (incorporated by reference to the Exhibit with the same number on the Registrants Registration Statement on Form S-1 and all amendments,
thereto (File No. 333-31732).                                                                                                                                                                                                                                                                                                                                          
|            | 
|10.11(3)    |  | Employee Stock Purchase Plan (incorporated by reference to the Exhibit with the same number on the Registrants Registration Statement on Form S-1 and all amendments, thereto (File
No. 333-31732).                                                                                                                                                                                                                                                                                                                                                   
|            | 
|10.14(2)    |  | Materials and Manufacturing Agreement Board Assembly Agreement dated as of March 15, 1999, by and between the Registrant and the Semiconductor Group of Arrow Electronics, Inc., as
amended (incorporated by reference to the Exhibit with the same number on the Registrants Registration Statement on Form S-1 and all amendments, thereto (File No. 333-31732).                                                                                                                                                                                    
|            | 
|10.19       |  | Standard Industrial/Commercial Multi-Tenant Lease dated as of May 6, 1999, between the Registrant and Tyler Pacific III, LLC. (incorporated by reference to the Exhibit with the same
number on the Registrants Registration Statement on Form S-1 and all amendments, thereto (File No. 333-31732).                                                                                                                                                                                                                                                  
|            | 
|10.25(3)    |  | Form of Director Indemnification Agreement (incorporated by reference to the Exhibit with the same number on the Registrants Registration Statement on Form S-1 and all amendments,
thereto (File No. 333-31732).                                                                                                                                                                                                                                                                                                                                     
|            | 
|10.26(3)    |  | Form of Indemnification Agreement for all officers and directors appointed on or after May 14, 2003 (incorporated by reference to Exhibit 10.26 of the Registrants Annual
Report on Form 10-K filed on March 31, 2003).                                                                                                                                                                                                                                                                                                                               
|            | 
|10.27       |  | Senior Loan and Security Agreement No. L6244 dated as of May 28, 1999, by and between the Registrant and Phoenix Leasing Incorporated (incorporated by reference to the Exhibit with
the same number on the Registrants Registration Statement on Form S-1 and all amendments, thereto (File No. 333-31732).                                                                                                                                                                                                                                          
|            | 
|10.29(2)    |  | Standard Industrial/Commercial Multi-Tenant Lease dated as of February 29, 2000, by and between the Registrant and Tyler Pacific III, LLC (incorporated by reference to the Exhibit with
the same number on the Registrants Registration Statement on Form S-1 and all amendments, thereto (File No. 333-31732).                                                                                                                                                                                                                                      
|            | 
|10.35       |  | Retainer Agreement dated as of February 5, 2001 by and between the Registrant and Regent Pacific Management Corporation. (incorporated by reference to Exhibit 10.35 to the
Registrants Annual Report on Form 10-K filed on May 8, 2001).                                                                                                                                                                                                                                                                                                             
|            | 
|10.38       |  | Form of Voting Agreement dated as of November 9, 2001 between Occam and certain (Registration No. 333-75816) stockholders of Registrant (incorporated by reference to Annex B to
the Registration Statement on Form S-4 (Registration No. 333-75816) which the Securities and Exchange Commission declared effective on April 26, 2002).                                                                                                                                                                                                               
|            | 
|10.39       |  | Form of Voting and Conversion Agreement dated as of November 9, 2001 between Registrant and certain Occam shareholders (incorporated by reference to Annex C to the Registration
Statement on Form S-4 (Registration No. 333-75816) which the Securities and Exchange Commission declared effective on April 26, 2002).                                                                                                                                                                                                                                
|            | 
|10.42       |  | Form of Funding Agreement dated as of November 9, 2001 between Registrant and Occam (incorporated by reference to Annex F to the Registration Statement on Form S-4
(Registration No. 333-75816) which the Securities and Exchange Commission declared effective on April 26, 2002).                                                                                                                                                                                                                                                                   
|            | 
|10.43       |  | Guaranteed Promissory Note, dated as of March 18, 2002, issued by Occam in favor of the Registrant (incorporated by reference to Annex K1 to the Registration Statement on
Form S-4 (Registration No. 333-75816) which the Securities and Exchange Commission declared effective on April 26, 2002).                                                                                                                                                                                                                                                   
|            | 
|10.44       |  | Secured Guaranty dated as of March 18, 2002, entered into by 2180 Associates Fund VII, L.P., New Enterprise Associates 9, L.P., Norwest Venture Partners VIII, L.P., NVP
Entrepreneurs Fund VIII, L.P., U.S. Venture Partners VII, L.P., USVP Entrepreneur Partners VII-A, L.P. and USVP Entrepreneur Partners VII-B, L.P. in favor of the Registrant (incorporated by reference to Annex K2 to the Registration Statement on
Form S-4 (Registration No. 333-75816) which the Securities and Exchange Commission declared effective on April 26, 2002).



-12-



---

|            |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|----------- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit No. |  | Exhibit Title                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|10.45       |  | Guarantor Security Agreement, dated as of March 18, entered into by 2180 Associates Fund VII, L.P., New Enterprise Associates 9, L.P., Norwest Venture Partners VIII, L.P., NVP
Entrepreneurs Fund VIII, L.P., U.S. Venture Partners VII, L.P., USVP Entrepreneur Partners VII-A, L.P. and USVP Entrepreneur Partners VII-B, L.P. in favor of the Registrant (incorporated by reference to Annex K3 to the Registration Statement on
Form S-4 (Registration No. 333-75816) which the Securities and Exchange Commission declared effective on April 26, 2002).
|            | 
|10.46       |  | Employment Agreement dated February 13, 2002 between the Registrant and Robert Howard-Anderson (incorporated by reference to Exhibit 10.46 of the Registrants Quarterly Report
on Form 10-Q filed on August 12, 2002).                                                                                                                                                                                                                                                                                                                                       
|            | 
|10.47       |  | Employment Agreement dated June 17, 2002 between the Registrant and Howard Bailey (incorporated by reference to Exhibit 10.46 of the Registrants Quarterly Report on
Form 10-Q filed on August 12, 2002).                                                                                                                                                                                                                                                                                                                                                    
|            | 
|10.48       |  | Occam Networks Inc. 1999 Stock Plan (incorporated by reference to Exhibit 4.1 on the Registrants Statement on Form S-8 (File No. 333-91070)).                                                                                                                                                                                                                                                                                                                                                                                                                
|            | 
|10.49       |  | Occam Networks Inc. 1999 Stock Plan, Form of Stock Option Agreement (incorporated by reference to Exhibit 4.2 on the Registrants Statement on Form S-8 (File
No. 333-91070).                                                                                                                                                                                                                                                                                                                                                                                 
|            | 
|10.50       |  | Occam Networks Inc. 1999 Stock Plan, Form of Stock Option AgreementEarly Exercise (incorporated by reference to Exhibit 4.3 on the Registrants Statement on Form S-8
(File No. 333-91070).                                                                                                                                                                                                                                                                                                                                                                  
|            | 
|10.51       |  | Master Lease Agreement dated December 8, 2000 by and between Comdisco, Inc. and Occam Networks (California), Inc. (incorporated by reference to Exhibit 99.1 of the Registrants
Current Report on Form 8-K filed on October 1, 2002).                                                                                                                                                                                                                                                                                                                        
|            | 
|10.52       |  | Standard Industrial/Commercial Multi-Tenant Lease dated March 26, 2001 by and between Applied Magnetics Corporation, a Delaware corporation DBA Innovative Micro Technology, and Occam
Networks (California), Inc., a California corporation (incorporated by reference to Exhibit 99.2 of the Registrants Current Report on Form 8-K filed on October 1, 2002).                                                                                                                                                                                             
|            | 
|10.53       |  | Loan and Security Agreement between Silicon Valley Bank and Occam Networks, Inc., dated June 16, 2003 (incorporated by reference to Exhibit 10.53 of the Registrants Quarterly
Report on Form 10-Q filed on August 14, 2003).                                                                                                                                                                                                                                                                                                                                
|            | 
|10.54       |  | Warrant to Purchase Stock, dated June 16, 2003 (incorporated by reference to Exhibit 10.53 of the Registrants Quarterly Report on Form 10-Q filed on August 14,
2003).                                                                                                                                                                                                                                                                                                                                                                                       
|            | 
|10.55       |  | Security Agreement between Silicon Valley Bank and Occam Networks (California), Inc., dated June 16, 2003 (incorporated by reference to Exhibit 10.53 of the Registrants
Quarterly Report on Form 10-Q filed on August 14, 2003).                                                                                                                                                                                                                                                                                                                            
|            | 
|10.56       |  | Intellectual Property Security Agreement between Silicon Valley Bank and Occam Networks (California), Inc., dated June 16, 2003 (incorporated by reference to Exhibit 10.53 of the
Registrants Quarterly Report on Form 10-Q filed on August 14, 2003).                                                                                                                                                                                                                                                                                                      
|            | 
|10.57       |  | Senior Loan and Security Agreement dated December 17, 2004, by and between the Registrant and Hercules Technology Growth Capital, Inc. (incorporated by reference to Exhibit 10.57 of
the Registrants Current Report on Form 8-K filed on December 20, 2004).                                                                                                                                                                                                                                                                                                
|            | 
|10.58       |  | Warrant to acquire shares of common stock issued to Hercules Technology Growth Capital, Inc. on December 17, 2004 (incorporated by reference to Exhibit 10.58 of the
Registrants Current Report on Form 8-K filed on December 20, 2004).                                                                                                                                                                                                                                                                                                                     
|            | 
|10.59       |  | Warrant to acquire shares of Series A-2 preferred stock to Hercules Technology Growth Capital, Inc. on December 17, 2004 (incorporated by reference to Exhibit 10.59 of the
Registrants Current Report on Form 8-K filed on December 20, 2004).                                                                                                                                                                                                                                                                                                              
|            | 
|10.61       |  | Series A-2 Preferred Stock Purchased Agreement dated as of January 7, 2005, among the Registrant and certain investors (incorporated by reference to Exhibit 10.61 of the
Registrants Current Report on Form 8-K filed on January 13, 2005).                                                                                                                                                                                                                                                                                                                 



-13-



---

|            |  |                                                                                                                                                                                                                                                                                           
|----------- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit No. |  | Exhibit Title                                                                                                                                                                                                                                                                             
|10.62       |  | Fourth Amended and Restated Investors Rights Agreement dated as of January 7, 2005, among the Registrant and certain holders of its capital stock (incorporated by reference to
Exhibit 10.62 of the Registrants Current Report on Form 8-K filed on January 13, 2005).                 
|            | 
|10.63       |  | Letter Amendment Agreement among the Registrant, Occam Networks (California), Inc. and Hercules Technology Growth Capital, Inc. (incorporated by reference to Exhibit 10.63 of the
Registrants Current Report on Form 8-K filed on January 13, 2005).                                    
|            | 
|10.64       |  | Promissory Note between the Registrant and Hercules Technology Growth Capital, Inc. (incorporated by reference to Exhibit 10.64 of the Registrants Current Report on Form 8-K
filed on January 13, 2005).                                                                                
|            | 
|10.65       |  | Amendment No. 1 to Series A-2 Preferred Stock Purchase Agreement dated as of January 7, 2005, among the Registrant and certain investors (incorporated by reference to
Exhibit 10.65 of the Registrants Current Report on Form 8-K filed on March 24, 2005).                             
|            | 
|10.66       |  | Amendment No. 1 to Fourth Amended and Restated Investors Rights Agreement dated as of January 7, 2005, among the Registrant and certain holders of its capital stock
(incorporated by reference to Exhibit 10.66 of the Registrants Current Report on Form 8-K filed on March 24, 2005).
|            | 
|10.67(2)    |  | Manufacturing License Agreement dated as of March 18, 2005, by and between the Registrant and Tellabs Petaluma, Inc. (incorporated by reference to Exhibit 10.67 of the
Registrants Annual Report on Form 10-K filed on March 31, 2005)                                                  
|            | 
|10.67.1     |  | Amendment One to Manufacturing License Agreement dated March 18, 2005 between Tellabs Petaluma, Inc. and the Registrant (incorporated by reference to Exhibit 10.73 of the
Registrants Current Report on Form 8-K filed on May 17, 2005).                                                
|            | 
|10.68(2)    |  | Technology License Agreement dated as of March 18, 2005, by and between the Registrant and Tellabs Petaluma, Inc. (incorporated by reference to Exhibit 10.69 of the
Registrants Annual Report on Form 10-K filed on March 31, 2005).                                                    
|            | 
|10.68.1     |  | Amendment One to Technology License Agreement dated March 18, 2005 between Tellabs Petaluma, Inc. and the Registrant (incorporated by reference to Exhibit 10.74 of the
Registrants Current Report on Form 8-K filed on May 17, 2005).                                                   
|            | 
|10.70(2)    |  | Supply Agreement dated as of March 18, 2005, by and between the Registrant and Tellabs Petaluma, Inc. (incorporated by reference to Exhibit 10.70 of the Registrants Annual
Report on Form 10-K filed on March 31, 2005).                                                                
|            | 
|10.71       |  | Form of Director Offer Letter dated September 16, 2004 for Robert Bylin, Thomas Pardun and Kenneth Cole (incorporated by reference to the Exhibit with the same number on the Registrants
Registration Statement on Form S-1 and all amendments thereto (File No. 333-125060)).           
|            | 
|10.76(3)    |  | Executive Officer Stock Grant ProgramRestricted Stock Grant Agreement dated September 12, 2005 (incorporated by reference to Exhibit 10.75 of the Registrants Current
Report on Form 8-K filed in September 14, 2005).                                                                  
|            | 
|10.77       |  | Standard Form Multi-Tenant Lease dated July 7, 2005, by and between Mission West Properties, L.P. II and the Registrant (incorporated by reference to Exhibit 10.77 of the
Registrants Current Report on Form 8-K filed on March 30, 2006).                                              
|            | 
|10.78(3)    |  | Amended and Restated 2000 Stock Incentive Plan, as amended June 2005. (previously filed as an exhibit to the Registrants Annual Report on Form 10-K filed on March 30,
2006)                                                                                                             
|            | 
|21.1        |  | Subsidiaries of the Registrant. (previously filed as an exhibit to the Registrants Annual Report on Form 10-K filed on March 30, 2006)                                                                                                                                                   
|            | 
|23.1        |  | Consent of PricewaterhouseCoopers LLP, Independent Registered Public Accounting Firm.                                                                                                                                                                                                     
|            | 
|23.2        |  | Consent of Singer Lewak Greenbaum & Goldstein LLP, Independent Registered Public Accounting Firm.                                                                                                                                                                                         



-14-



---

|            |  |                                                                                                                                                                                                                                                           
|----------- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit No. |  | Exhibit Title                                                                                                                                                                                                                                             
|24.1        |  | Power of Attorney (included on page 9)                                                                                                                                                                                                                    
|            | 
|31.1        |  | Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.                                                                                                                                                       
|            | 
|31.2        |  | Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.                                                                                                                                                       
|            | 
|32.1        |  | Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. (previously filed as an exhibit to
the Registrants Annual Report on Form 10-K filed on March 30, 2006)
|            | 
|32.2        |  | Certification of Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. (previously filed as an exhibit to
the Registrants Annual Report on Form 10-K filed on March 30, 2006)

---

|(1) | Schedules omitted pursuant to Regulation S-K Item 601(b)(2) of the Securities Act. Registrant undertakes to furnish such schedules to the Commission upon request.
|--- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(2) | Confidential treatment has been requested and received for certain portions of this exhibit.
|--- | --------------------------------------------------------------------------------------------

|(3) | Management compensation plan/contract.
|--- | --------------------------------------



-15-



---

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS



|                                                                                                |  |     
|----------------------------------------------------------------------------------------------- |  | ----
|                                                                                                |  | Page
|Audited Annual Consolidated Financial Statements                                                |  |     
|Report of Singer Lewak Greenbaum & Goldstein LLP, Independent Registered Public Accounting Firm |  | F-2 
|Report of PricewaterhouseCoopers LLP, Independent Registered Public Accounting Firm             |  | F-3 
|Consolidated Balance Sheets                                                                     |  | F-4 
|Consolidated Statements of Operations                                                           |  | F-5 
|Consolidated Statements of Redeemable Preferred Stock and Stockholders Equity (Deficit)        |  | F-6 
|Consolidated Statements of Cash Flows                                                           |  | F-9 
|Notes to Consolidated Financial Statements                                                      |  | F-10



F-1



---

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors and
Stockholders

Occam Networks, Inc. and subsidiary

Santa Barbara, California

We have audited the consolidated balance sheet of Occam Networks, Inc. and subsidiary (collectively, the Company) as of December 25, 2005 and the related consolidated statements of operations, stockholders deficit and
cash flows for the year then ended. These financial statements are the responsibility of the Companys management. Our responsibility is to express an opinion on these financial statements based on our audit.

We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we
plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provided a reasonable basis for
our opinion.

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the
financial position of Occam Networks, Inc. and subsidiary as of December 25, 2005, and the results of their operations and their cash flows for the year then ended in conformity with U.S. generally accepted accounting principles.

/S/ SINGER LEWAK GREENBAUM & GOLDSTEIN LLP

Los Angeles, California

March 10, 2006



F-2



---

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors and Stockholders of Occam Networks, Inc.

In our opinion, the accompanying consolidated balance sheet and the related consolidated statements of operations, stockholders
equity (deficit) and cash flows present fairly, in all material respects, the financial position of Occam Networks, Inc. and its subsidiaries (the Company) at December 26, 2004, and the results of their operations and their cash
flows for each of the two years in the period ended December 26, 2004, in conformity with accounting principles generally accepted in the United States of America. These financial statements are the responsibility of the Companys
management; our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits of these statements in accordance with the standards of the Public Company Accounting Oversight Board (United States).
Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for
our opinion.

The accompanying consolidated financial statements have been prepared assuming the Company will continue as a going concern.
As discussed in Note 1 to the financial statements, the Company has incurred significant operating losses and negative cash flows from operations since inception. These conditions raise substantial doubt about the Companys ability to continue
as a going concern. Managements plans in regards to these matters are also described in Note 1 to the financial statements. The accompanying financial statements do not include any adjustments that might result from the outcome of this
uncertainty.

/s/ PRICEWATERHOUSECOOPERS LLP

Los Angeles, California

March 25, 2005, except for the effects

of the reverse stock split discussed in Note 16,

as to which the date is
March 10, 2006.



F-3



---

OCCAM NETWORKS INC. AND SUBSIDIARY

CONSOLIDATED BALANCE SHEETS

(In thousands, except per share data)



|                                                                                                                                                                                                                                                                                                  |  |                  |          |   |                  |   |          |  
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | ---------------- | -------- | - | ---------------- | - | -------- | -
|                                                                                                                                                                                                                                                                                                  |  | December 26,2004 |          |   | December 25,2005 |  
|ASSETS                                                                                                                                                                                                                                                                                            |  |                  |          |   |                  |   |          |  
|Current assets:                                                                                                                                                                                                                                                                                   |  |                  |          |   |                  |   |          |  
|Cash and cash equivalents                                                                                                                                                                                                                                                                         |  | $                | 4,432    |   |                  | $ | 6,571    |  
|Restricted cash                                                                                                                                                                                                                                                                                   |  |                  | 2,101    |   |                  |   | 3,749    |  
|Accounts receivable, net                                                                                                                                                                                                                                                                          |  |                  | 5,217    |   |                  |   | 9,403    |  
|Inventories, net                                                                                                                                                                                                                                                                                  |  |                  | 6,611    |   |                  |   | 4,448    |  
|Prepaid and other current assets                                                                                                                                                                                                                                                                  |  |                  | 794      |   |                  |   | 1,684    |  
|                                                                                                                                                                                                                                                                                                  |  |                  |          |   |                  |   |          |  
|Total current assets                                                                                                                                                                                                                                                                              |  |                  | 19,155   |   |                  |   | 25,855   |  
|Property and equipment, net                                                                                                                                                                                                                                                                       |  |                  | 1,692    |   |                  |   | 1,889    |  
|Other assets                                                                                                                                                                                                                                                                                      |  |                  | 213      |   |                  |   | 203      |  
|                                                                                                                                                                                                                                                                                                  |  |                  |          |   |                  |   |          |  
|Total assets                                                                                                                                                                                                                                                                                      |  | $                | 21,060   |   |                  | $ | 27,947   |  
|                                                                                                                                                                                                                                                                                                  |  |                  |          |   |                  |   |          |  
|LIABILITIES, REDEEMABLE PREFERRED STOCK AND STOCKHOLDERS DEFICIT                                                                                                                                                                                                                                 |  |                  |          |   |                  |   |          |  
|Current liabilities:                                                                                                                                                                                                                                                                              |  |                  |          |   |                  |   |          |  
|Accounts payable                                                                                                                                                                                                                                                                                  |  | $                | 6,277    |   |                  | $ | 4,100    |  
|Deferred sales                                                                                                                                                                                                                                                                                    |  |                  |         |   |                  |   | 1,600    |  
|Accrued expenses                                                                                                                                                                                                                                                                                  |  |                  | 3,330    |   |                  |   | 4,859    |  
|Current portion of long term debt and capital lease obligations                                                                                                                                                                                                                                   |  |                  | 863      |   |                  |   | 1,233    |  
|                                                                                                                                                                                                                                                                                                  |  |                  |          |   |                  |   |          |  
|Total current liabilities                                                                                                                                                                                                                                                                         |  |                  | 10,470   |   |                  |   | 11,792   |  
|Long term debt and capital lease obligations                                                                                                                                                                                                                                                      |  |                  | 2,987    |   |                  |   | 1,324    |  
|                                                                                                                                                                                                                                                                                                  |  |                  |          |   |                  |   |          |  
|Total liabilities                                                                                                                                                                                                                                                                                 |  |                  | 13,457   |   |                  |   | 13,116   |  
|Commitments and contingencies (note 11)                                                                                                                                                                                                                                                           |  |                  |          |   |                  |   |          |  
|Redeemable preferred stock:                                                                                                                                                                                                                                                                       |  |                  |          |   |                  |   |          |  
|Series A-2 convertible preferred stock, $.001 par value, 4,600 shares authorized, 2,224 and 3,560 shares issued and outstanding at
December 26, 2004 and December 25, 2005, respectively, liquidation preference of $66,723 and $106,800 at December 26, 2004 and December 25, 2005, respectively |  |                  | 20,993   |   |                  |   | 34,869   |  
|Series A-2 convertible preferred stock warrant                                                                                                                                                                                                                                                    |  |                  | 503      |   |                  |   | 73       |  
|Stockholders deficit:                                                                                                                                                                                                                                                                            |  |                  |          |   |                  |   |          |  
|Common stock, $0.001 par value, 950,000 shares authorized; 6,714 and 6,871 shares issued and outstanding at December 26, 2004 and
December 25, 2005, respectively                                                                                                                                 |  |                  | 269      |   |                  |   | 275      |  
|Additional paid-in capital                                                                                                                                                                                                                                                                        |  |                  | 87,294   |   |                  |   | 87,903   |  
|Warrants                                                                                                                                                                                                                                                                                          |  |                  | 559      |   |                  |   | 559      |  
|Deferred stock compensation                                                                                                                                                                                                                                                                       |  |                  | (633     | ) |                  |   | (28      | )
|Accumulated deficit                                                                                                                                                                                                                                                                               |  |                  | (101,382 | ) |                  |   | (108,820 | )
|                                                                                                                                                                                                                                                                                                  |  |                  |          |   |                  |   |          |  
|Total stockholders deficit                                                                                                                                                                                                                                                                       |  |                  | (13,893  | ) |                  |   | (20,111  | )
|                                                                                                                                                                                                                                                                                                  |  |                  |          |   |                  |   |          |  
|Total liabilities, redeemable preferred stock and stockholders deficit                                                                                                                                                                                                                           |  | $                | 21,060   |   |                  | $ | 27,947   |  
|                                                                                                                                                                                                                                                                                                  |  |                  |          |   |                  |   |          |  

The accompanying notes are an integral part of these consolidated financial statements.



F-4



---

OCCAM NETWORKS, INC. AND SUBSIDIARY

CONSOLIDATED STATEMENTS OF OPERATIONS

(In thousands, except per share data)



|                                                                        |  |                  |         |   |                  |   |         |                  |  |   |        |  
|----------------------------------------------------------------------- |  | ---------------- | ------- | - | ---------------- | - | ------- | ---------------- |  | - | ------ | -
|                                                                        |  | Year ended       |        
|                                                                        |  | December 28,2003 |         |   | December 26,2004 |   |         | December 25,2005 | 
|Sales                                                                   |  | $                | 7,982   |   |                  | $ | 17,329  |                  |  | $ | 39,238 |  
|Cost of sales                                                           |  |                  | 7,930   |   |                  |   | 15,829  |                  |  |   | 27,208 |  
|                                                                        |  |                  |         |   |                  |   |         |                  |  |   |        |  
|Gross profit                                                            |  |                  | 52      |   |                  |   | 1,500   |                  |  |   | 12,030 |  
|Operating expenses:                                                     |  |                  |         |   |                  |   |         |                  |  |   |        |  
|Research and product development                                        |  |                  | 12,004  |   |                  |   | 7,448   |                  |  |   | 7,440  |  
|Sales and marketing                                                     |  |                  | 5,977   |   |                  |   | 6,584   |                  |  |   | 8,349  |  
|General and administrative                                              |  |                  | 2,331   |   |                  |   | 2,328   |                  |  |   | 3,420  |  
|                                                                        |  |                  |         |   |                  |   |         |                  |  |   |        |  
|Total operating expenses                                                |  |                  | 20,312  |   |                  |   | 16,360  |                  |  |   | 19,209 |  
|Loss from operations                                                    |  |                  | (20,260 | ) |                  |   | (14,860 | )                |  |   | (7,179 | )
|Interest income                                                         |  |                  | 101     |   |                  |   | 94      |                  |  |   | 249    |  
|Interest expense                                                        |  |                  | (284    | ) |                  |   | (223    | )                |  |   | (508   | )
|                                                                        |  |                  |         |   |                  |   |         |                  |  |   |        |  
|Loss before income taxes                                                |  |                  | (20,443 | ) |                  |   | (14,989 | )                |  |   | (7,438 | )
|Income tax benefit                                                      |  |                  | 11      |   |                  |   |        |                  |  |   |       |  
|                                                                        |  |                  |         |   |                  |   |         |                  |  |   |        |  
|Net loss                                                                |  |                  | (20,432 | ) |                  |   | (14,989 | )                |  |   | (7,438 | )
|Beneficial conversion feature                                           |  |                  | (3,038  | ) |                  |   | (3,288  | )                |  |   | (1,822 | )
|Interest attributable to common stock potentially subject to rescission |  |                  | 500     |   |                  |   |        |                  |  |   |       |  
|                                                                        |  |                  |         |   |                  |   |         |                  |  |   |        |  
|Net loss attributable to common stockholders                            |  |                  | (22,970 | ) |                  |   | (18,277 | )                |  |   | (9,260 | )
|                                                                        |  |                  |         |   |                  |   |         |                  |  |   |        |  
|Net loss per share attributable to common stockholders:                 |  |                  |         |   |                  |   |         |                  |  |   |        |  
|Basic and diluted                                                       |  | $                | (4.36   | ) |                  | $ | (2.73   | )                |  | $ | (1.37  | )
|                                                                        |  |                  |         |   |                  |   |         |                  |  |   |        |  
|Weighted average shares:                                                |  |                  |         |   |                  |   |         |                  |  |   |        |  
|Basic and diluted                                                       |  |                  | 5,268   |   |                  |   | 6,695   |                  |  |   | 6,759  |  
|                                                                        |  |                  |         |   |                  |   |         |                  |  |   |        |  
|Amortization of stock-based compensation included in:                   |  |                  |         |   |                  |   |         |                  |  |   |        |  
|Research and product development                                        |  | $                | 943     |   |                  | $ | 693     |                  |  | $ | 519    |  
|Sales and marketing                                                     |  |                  | 179     |   |                  |   | 119     |                  |  |   | 70     |  
|General and administrative                                              |  |                  | 105     |   |                  |   | 40      |                  |  |   | 6      |  
|                                                                        |  |                  |         |   |                  |   |         |                  |  |   |        |  
|Total amortization of stock-based compensation                          |  | $                | 1,227   |   |                  | $ | 852     |                  |  | $ | 595    |  
|                                                                        |  |                  |         |   |                  |   |         |                  |  |   |        |  

The accompanying notes are an integral part of these consolidated financial statements.



F-5



---

OCCAM NETWORKS, INC. AND SUBSIDIARY

CONSOLIDATED STATEMENTS OF REDEEMABLE PREFERRED STOCK AND
STOCKHOLDERS EQUITY (DEFICIT)

(In thousands)

Years ended December 28, 2003 , December 26, 2004 and December 25, 2005



|                                                                                                                   |  |                           |  |        |                         |   |        |              |   |        |   |         |                                   |  |       |                                  |  |          |                           |  |   |                     |   |  |       |        |   |  |   |     |   |  |   |        |   |  |   |         |   |  |   |         |  
|------------------------------------------------------------------------------------------------------------------ |  | ------------------------- |  | ------ | ----------------------- | - | ------ | ------------ | - | ------ | - | ------- | --------------------------------- |  | ----- | -------------------------------- |  | -------- | ------------------------- |  | - | ------------------- | - |  | ----- | ------ | - |  | - | --- | - |  | - | ------ | - |  | - | ------- | - |  | - | ------- | -
|                                                                                                                   |  | Series A-2Preferred Stock |  |        | Series APreferred Stock |   |        | Common Stock |   |        |   |         | Deferred Stock Based Compensation |  |       | CumulativeTranslation Adjustment |  |          | AdditionalPaid in Capital |  |   | Accumulated Deficit |   |  |       |       
|                                                                                                                   |  | Shares                    |  | Amount |                         |   | Shares |              |   | Amount |   |         | Shares                            |  |       | Amount                           |  | Warrants |                           |  |   |                     |   |  | Total |       
|Balance at December 29, 2002                                                                                       |  |                          |  | $      |                        |   |        | 1,472        |   |        | $ | 10,811  |                                   |  | 3,522 |                                  |  | $        | 141                       |  | $ | 480                 |   |  | $     | (3,432 | ) |  | $ | 16  |   |  | $ | 65,254 |   |  | $ | (65,961 | ) |  | $ | 7,309   |  
|Exercise of stock options                                                                                          |  |                          |  |        |                        |   |        |             |   |        |   |        |                                   |  | 79    |                                  |  |          | 3                         |  |   |                    |   |  |       |       |   |  |   |    |   |  |   | 252    |   |  |   |        |   |  |   | 255     |  
|Repurchase of early exercise options                                                                               |  |                          |  |        |                        |   |        |             |   |        |   |        |                                   |  | (3    | )                                |  |          |                          |  |   |                    |   |  |       |       |   |  |   |    |   |  |   | (7     | ) |  |   |        |   |  |   | (7      | )
|Increase in deemed fair value of stock options issued to consultants in exchange for ongoing professional
services |  |                          |  |        |                        |   |        |             |   |        |   |        |                                   |  |      |                                  |  |          |                          |  |   |                    |   |  |       | 2      |   |  |   |    |   |  |   | (2     | ) |  |   |        |   |  |   |        |  
|Reversal of deferred stock-based compensation on forfeiture of stock options                                       |  |                          |  |        |                        |   |        |             |   |        |   |        |                                   |  |      |                                  |  |          |                          |  |   |                    |   |  |       | 576    |   |  |   |    |   |  |   | (576   | ) |  |   |        |   |  |   |        |  
|Amortization of deferred stock-based compensation                                                                  |  |                          |  |        |                        |   |        |             |   |        |   |        |                                   |  |      |                                  |  |          |                          |  |   |                    |   |  |       | 1,227  |   |  |   |    |   |  |   |       |   |  |   |        |   |  |   | 1,227   |  
|Issuance of series A-2 redeemable preferred stock, net of issuance costs                                           |  | 1,651                     |  |        | 16,381                  |   |        |             |   |        |   |        |                                   |  |      |                                  |  |          |                          |  |   |                    |   |  |       |       |   |  |   |    |   |  |   |       |   |  |   |        |   |  |   |        |  
|Record beneficial conversion feature                                                                               |  |                          |  |        | (3,038                  | ) |        |             |   |        |   |        |                                   |  |      |                                  |  |          |                          |  |   |                    |   |  |       |       |   |  |   |    |   |  |   | 3,038  |   |  |   |        |   |  |   | 3,038   |  
|Amortize beneficial conversion feature                                                                             |  |                          |  |        | 3,038                   |   |        |             |   |        |   |        |                                   |  |      |                                  |  |          |                          |  |   |                    |   |  |       |       |   |  |   |    |   |  |   | (3,038 | ) |  |   |        |   |  |   | (3,038  | )
|Issuance of series A preferred stock, net of issuance costs                                                        |  |                          |  |        |                        |   |        | 154          |   |        |   | 1,035   |                                   |  |      |                                  |  |          |                          |  |   | (26                 | ) |  |       |       |   |  |   |    |   |  |   |       |   |  |   |        |   |  |   | 1,009   |  
|Exchange of series A preferred stock for common stock                                                              |  |                          |  |        |                        |   |        | (1,626       | ) |        |   | (11,846 | )                                 |  | 3,077 |                                  |  |          | 123                       |  |   |                    |   |  |       |       |   |  |   |    |   |  |   | 11,723 |   |  |   |        |   |  |   |        |  
|Common stock potentially subject to rescission                                                                     |  |                          |  |        |                        |   |        |             |   |        |   |        |                                   |  |      |                                  |  |          |                          |  |   |                    |   |  |       |       |   |  |   |    |   |  |   | 10,000 |   |  |   |        |   |  |   | 10,000  |  
|Interest on common stock potentially subject to rescission                                                         |  |                          |  |        |                        |   |        |             |   |        |   |        |                                   |  |      |                                  |  |          |                          |  |   |                    |   |  |       |       |   |  |   |    |   |  |   | 500    |   |  |   |        |   |  |   | 500     |  
|Issuance of warrants in connection with issuance of note payable                                                   |  |                          |  |        |                        |   |        |             |   |        |   |        |                                   |  |      |                                  |  |          |                          |  |   |                    |   |  |       |       |   |  |   |    |   |  |   | 94     |   |  |   |        |   |  |   | 94      |  
|Cumulative translation adjustment                                                                                  |  |                          |  |        |                        |   |        |             |   |        |   |        |                                   |  |      |                                  |  |          |                          |  |   |                    |   |  |       |       |   |  |   | (16 | ) |  |   |       |   |  |   |        |   |  |   | (16     | )
|Net loss                                                                                                           |  |                          |  |        |                        |   |        |             |   |        |   |        |                                   |  |      |                                  |  |          |                          |  |   |                    |   |  |       |       |   |  |   |    |   |  |   |       |   |  |   | (20,432 | ) |  |   | (20,432 | )
|                                                                                                                   |  |                           |  |        |                         |   |        |              |   |        |   |         |                                   |  |       |                                  |  |          |                           |  |   |                     |   |  |       |        |   |  |   |     |   |  |   |        |   |  |   |         |   |  |   |         |  
|Balance at December 28, 2003                                                                                       |  | 1,651                     |  | $      | 16,381                  |   |        |             |   |        | $ |        |                                   |  | 6,675 |                                  |  | $        | 267                       |  | $ | 454                 |   |  | $     | (1,627 | ) |  | $ |    |   |  | $ | 87,238 |   |  | $ | (86,393 | ) |  | $ | (61     | )
|                                                                                                                   |  |                           |  |        |                         |   |        |              |   |        |   |         |                                   |  |       |                                  |  |          |                           |  |   |                     |   |  |       |        |   |  |   |     |   |  |   |        |   |  |   |         |   |  |   |         |  

The accompanying notes are an integral part of these consolidated financial statements.



F-6



---

OCCAM NETWORKS, INC. AND SUBSIDIARY

CONSOLIDATED STATEMENTS OF REDEEMABLE PREFERRED STOCK AND STOCKHOLDERS DEFICIT

(In thousands)

Years ended December 28, 2003, December 26, 2004 and December 25, 2005



|                                                                                       |  |                            |  |        |                                   |   |  |              |      |   |        |                       |          |  |                           |     |  |                     |     |  |       |        |   |  |   |        |   |  |   |          |   |  |   |         |  
|-------------------------------------------------------------------------------------- |  | -------------------------- |  | ------ | --------------------------------- | - |  | ------------ | ---- | - | ------ | --------------------- | -------- |  | ------------------------- | --- |  | ------------------- | --- |  | ----- | ------ | - |  | - | ------ | - |  | - | -------- | - |  | - | ------- | -
|                                                                                       |  | Series A-2 Preferred Stock |  |        | Series A-2PreferredStock Warrants |   |  | Common Stock |      |   |        | Deferred Compensation |          |  | AdditionalPaid-in Capital |     |  | Accumulated Deficit |     |  | Total |       
|                                                                                       |  | Shares                     |  | Amount |                                   |   |  | Shares       |      |   | Amount |                       | Warrants |  |                           |     | 
|Balance at December 28, 2003                                                           |  | 1,651                      |  | $      | 16,381                            |   |  | $            |     |   |        | 6,675                 |          |  | $                         | 267 |  | $                   | 454 |  | $     | (1,627 | ) |  | $ | 87,238 |   |  | $ | (86,393  | ) |  | $ | (61     | )
|Exercise of stock options                                                              |  |                           |  |        |                                  |   |  |              |     |   |        | 41                    |          |  |                           | 2   |  |                     |    |  |       |       |   |  |   | 113    |   |  |   |         |   |  |   | 115     |  
|Shares repurchased                                                                     |  |                           |  |        |                                  |   |  |              |     |   |        | (2                    | )        |  |                           |    |  |                     |    |  |       |       |   |  |   |       |   |  |   |         |   |  |   |        |  
|Amortization of deferred stock-based compensation                                      |  |                           |  |        |                                  |   |  |              |     |   |        |                      |          |  |                           |    |  |                     |    |  |       | 852    |   |  |   |       |   |  |   |         |   |  |   | 852     |  
|Reversal of deferred stock-based compensation on forfeiture of stock options           |  |                           |  |        |                                  |   |  |              |     |   |        |                      |          |  |                           |    |  |                     |    |  |       | 142    |   |  |   | (142   | ) |  |   |         |   |  |   |        |  
|Issuance of series A-2, redeemable preferred stock and warrants, net of issuance costs |  | 573                        |  |        | 4,612                             |   |  |              | 515  |   |        |                      |          |  |                           |    |  |                     |    |  |       |       |   |  |   |       |   |  |   |         |   |  |   |        |  
|Record beneficial conversion feature                                                   |  |                           |  |        | (2,893                            | ) |  |              | (480 | ) |        |                      |          |  |                           |    |  |                     |    |  |       |       |   |  |   | 3,373  |   |  |   |         |   |  |   | 3,373   |  
|Amortize beneficial conversion feature                                                 |  |                           |  |        | 2,893                             |   |  |              | 395  |   |        |                      |          |  |                           |    |  |                     |    |  |       |       |   |  |   | (3,288 | ) |  |   |         |   |  |   | (3,288  | )
|Issuance of warrants with long term debt                                               |  |                           |  |        |                                  |   |  |              | 73   |   |        |                      |          |  |                           |    |  |                     | 105 |  |       |       |   |  |   |       |   |  |   |         |   |  |   | 105     |  
|Net loss                                                                               |  |                           |  |        |                                  |   |  |              |     |   |        |                      |          |  |                           |    |  |                     |    |  |       |       |   |  |   |       |   |  |   | (14,989  | ) |  |   | (14,989 | )
|                                                                                       |  |                            |  |        |                                   |   |  |              |      |   |        |                       |          |  |                           |     |  |                     |     |  |       |        |   |  |   |        |   |  |   |          |   |  |   |         |  
|Balance at December 26, 2004                                                           |  | 2,224                      |  | $      | 20,993                            |   |  | $            | 503  |   |        | 6,714                 |          |  | $                         | 269 |  | $                   | 559 |  | $     | (633   | ) |  | $ | 87,294 |   |  | $ | (101,382 | ) |  | $ | (13,893 | )
|                                                                                       |  |                            |  |        |                                   |   |  |              |      |   |        |                       |          |  |                           |     |  |                     |     |  |       |        |   |  |   |        |   |  |   |          |   |  |   |         |  

The accompanying notes are an integral part of these consolidated financial statements.



F-7



---

OCCAM NETWORKS, INC. AND SUBSIDIARY

CONSOLIDATED STATEMENTS OF REDEEMABLE PREFERRED STOCK AND STOCKHOLDERS DEFICIT

(In thousands)

Years ended December 28, 2003, December 26, 2004 and December 25, 2005



|                                                                                                     |  |                            |  |        |                                   |   |  |              |      |          |  |                       |  |   |                           |  |   |                     |  |   |       |   |  |   |        |   |  |   |          |   |  |   |         |  
|---------------------------------------------------------------------------------------------------- |  | -------------------------- |  | ------ | --------------------------------- | - |  | ------------ | ---- | -------- |  | --------------------- |  | - | ------------------------- |  | - | ------------------- |  | - | ----- | - |  | - | ------ | - |  | - | -------- | - |  | - | ------- | -
|                                                                                                     |  | Series A-2 Preferred Stock |  |        | Series A-2PreferredStock Warrants |   |  | Common Stock |      | Warrants |  | Deferred Compensation |  |   | AdditionalPaid-in Capital |  |   | Accumulated Deficit |  |   | Total |  
|                                                                                                     |  | Shares                     |  | Amount |                                   |   |  | Shares       |      | Amount   |  |                       |  |   |                          
|Balance at December 26, 2004                                                                         |  | 2,224                      |  | $      | 20,993                            |   |  | $            | 503  |          |  | 6,714                 |  | $ | 269                       |  | $ | 559                 |  | $ | (633  | ) |  | $ | 87,294 |   |  | $ | (101,382 | ) |  | $ | (13,893 | )
|Issuance of series A-2, redeemable preferred stock net of issuance costs, and conversion of warrants |  | 1,336                      |  |        | 13,876                            |   |  |              | (515 | )        |  |                      |  |   |                          |  |   |                    |  |   |      |   |  |   |       |   |  |   |         |   |  |   |        |  
|Exercise of stock options                                                                            |  |                           |  |        |                                  |   |  |              |     |          |  | 146                   |  |   | 6                         |  |   |                    |  |   |      |   |  |   | 583    |   |  |   |         |   |  |   | 589     |  
|Stock grant to officer, net                                                                          |  |                           |  |        |                                  |   |  |              |     |          |  | 11                    |  |   |                          |  |   |                    |  |   |      |   |  |   | 121    |   |  |   |         |   |  |   | 121     |  
|Amortization of deferred stock-based compensation                                                    |  |                           |  |        |                                  |   |  |              |     |          |  |                      |  |   |                          |  |   |                    |  |   | 605   |   |  |   | (10    | ) |  |   |         |   |  |   | 595     |  
|Record beneficial conversion feature                                                                 |  |                           |  |        | (1,737                            | ) |  |              |     |          |  |                      |  |   |                          |  |   |                    |  |   |      |   |  |   | 1,737  |   |  |   |         |   |  |   | 1,737   |  
|Amortization of beneficial conversion feature                                                        |  |                           |  |        | 1,737                             |   |  |              | 85   |          |  |                      |  |   |                          |  |   |                    |  |   |      |   |  |   | (1,822 | ) |  |   |         |   |  |   | (1,822  | )
|Net loss                                                                                             |  |                           |  |        |                                  |   |  |              |     |          |  |                      |  |   |                          |  |   |                    |  |   |      |   |  |   |       |   |  |   | (7,438   | ) |  |   | (7,438  | )
|                                                                                                     |  |                            |  |        |                                   |   |  |              |      |          |  |                       |  |   |                           |  |   |                     |  |   |       |   |  |   |        |   |  |   |          |   |  |   |         |  
|Balance at December 25, 2005                                                                         |  | 3,560                      |  | $      | 34,869                            |   |  | $            | 73   |          |  | 6,871                 |  | $ | 275                       |  | $ | 559                 |  | $ | (28   | ) |  | $ | 87,903 |   |  | $ | (108,820 | ) |  | $ | (20,111 | )
|                                                                                                     |  |                            |  |        |                                   |   |  |              |      |          |  |                       |  |   |                           |  |   |                     |  |   |       |   |  |   |        |   |  |   |          |   |  |   |         |  

The accompanying notes are an integral part of these consolidated financial statements.



F-8



---

OCCAM NETWORKS, INC. AND SUBSIDIARY

CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)



|                                                                                         |  |                  |         |   |                  |   |         |                  |  |   |        |  
|---------------------------------------------------------------------------------------- |  | ---------------- | ------- | - | ---------------- | - | ------- | ---------------- |  | - | ------ | -
|                                                                                         |  | Year ended       |        
|                                                                                         |  | December 28,2003 |         |   | December 26,2004 |   |         | December 25,2005 | 
|Operating activities                                                                     |  |                  |         |   |                  |   |         |                  |  |   |        |  
|Net loss                                                                                 |  | $                | (20,432 | ) |                  | $ | (14,989 | )                |  | $ | (7,438 | )
|Adjustments to reconcile net loss to net cash used in operating activities:              |  |                  |         |   |                  |   |         |                  |  |   |        |  
|Depreciation and amortization                                                            |  |                  | 2,084   |   |                  |   | 1,296   |                  |  |   | 1,045  |  
|Provision for excess and obsolete inventory                                              |  |                  | 404     |   |                  |   | 389     |                  |  |   | 534    |  
|Non-cash charges relating to stock options and warrants                                  |  |                  | 1,300   |   |                  |   | 936     |                  |  |   | 716    |  
|Writeoff of note receivable                                                              |  |                  |        |   |                  |   |        |                  |  |   | 399    |  
|Changes in operating assets and liabilities:                                             |  |                  |         |   |                  |   |         |                  |  |   |        |  
|Accounts receivable                                                                      |  |                  | (1,346  | ) |                  |   | (2,875  | )                |  |   | (4,186 | )
|Inventory                                                                                |  |                  | (1,862  | ) |                  |   | (4,746  | )                |  |   | 1,629  |  
|Prepaid expenses and other assets                                                        |  |                  | (19     | ) |                  |   | 261     |                  |  |   | (1,310 | )
|Accounts payable                                                                         |  |                  | 1,400   |   |                  |   | 3,276   |                  |  |   | (2,177 | )
|Deferred sales                                                                           |  |                  |        |   |                  |   |        |                  |  |   | 1,600  |  
|Accrued expenses                                                                         |  |                  | (1,030  | ) |                  |   | 953     |                  |  |   | 1,529  |  
|                                                                                         |  |                  |         |   |                  |   |         |                  |  |   |        |  
|Net cash used in operating activities                                                    |  |                  | (19,501 | ) |                  |   | (15,499 | )                |  |   | (7,659 | )
|Investing activities                                                                     |  |                  |         |   |                  |   |         |                  |  |   |        |  
|Purchases of property and equipment                                                      |  |                  | (736    | ) |                  |   | (1,052  | )                |  |   | (1,216 | )
|Restricted cash                                                                          |  |                  | (935    | ) |                  |   | (1,166  | )                |  |   | (1,648 | )
|Sale of India operations                                                                 |  |                  | (539    | ) |                  |   |        |                  |  |   |       |  
|Other assets                                                                             |  |                  |        |   |                  |   | 59      |                  |  |   | 5      |  
|                                                                                         |  |                  |         |   |                  |   |         |                  |  |   |        |  
|Net cash used in investing activities                                                    |  |                  | (2,210  | ) |                  |   | (2,159  | )                |  |   | (2,859 | )
|Financing activities                                                                     |  |                  |         |   |                  |   |         |                  |  |   |        |  
|Proceeds from capital lease obligations and notes payable                                |  |                  | 921     |   |                  |   |        |                  |  |   |       |  
|Payments of capital lease obligations and notes payable                                  |  |                  | (784    | ) |                  |   | (708    | )                |  |   | (758   | )
|Proceeds from issuance of long-term debt attached with common stock warrants             |  |                  |        |   |                  |   | 2,970   |                  |  |   |       |  
|Proceeds from issuance of series A preferred stock, net of issuance costs                |  |                  | 1,035   |   |                  |   |        |                  |  |   |       |  
|Proceeds from issuance of series A-2 preferred stock and warrants, net of issuance costs |  |                  | 16,381  |   |                  |   | 5,127   |                  |  |   | 12,826 |  
|Proceeds from the exercise of stock options                                              |  |                  | 255     |   |                  |   | 115     |                  |  |   | 589    |  
|Repurchase of common stock                                                               |  |                  | (7      | ) |                  |   |        |                  |  |   |       |  
|                                                                                         |  |                  |         |   |                  |   |         |                  |  |   |        |  
|Net cash provided by financing activities                                                |  |                  | 17,801  |   |                  |   | 7,504   |                  |  |   | 12,657 |  
|Net increase (decrease) in cash and cash equivalents                                     |  |                  | (3,910  | ) |                  |   | (10,154 | )                |  |   | 2,139  |  
|Cash and cash equivalents, beginning of period                                           |  |                  | 18,496  |   |                  |   | 14,586  |                  |  |   | 4,432  |  
|                                                                                         |  |                  |         |   |                  |   |         |                  |  |   |        |  
|Cash and cash equivalents, end of period                                                 |  | $                | 14,586  |   |                  | $ | 4,432   |                  |  | $ | 6,571  |  
|                                                                                         |  |                  |         |   |                  |   |         |                  |  |   |        |  

The accompanying notes are an integral part of these consolidated financial statements.



F-9



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OCCAM NETWORKS, INC. AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

December 25, 2005

Note 1. Organization,
Business and Basis of Presentation

Occam Networks, Inc. (the Company) develops, markets and supports innovative broadband
access products designed to enable telecom service providers to offer bundled voice, video and data, or Triple Play, services over both copper and fiber optic networks. The Companys Broadband Loop Carrier (BLC) is an integrated hardware and
software platform that uses Internet Protocol (IP) and Ethernet technologies to increase the capacity of local access networks, enabling the delivery of advanced Triple Play services.

The Company is the successor corporation of the May 2002 merger of Occam Networks, Inc., a private California corporation, with Accelerated Networks,
Inc., a publicly-traded Delaware corporation. Occam Networks was incorporated in California in July 1999. Accelerated was incorporated in California in October 1996 under the name Accelerated Networks, Inc., and was reincorporated in
Delaware in June 2000. The May 2002 merger of these two entities was structured as a reverse merger transaction in which Accelerated Networks succeeded to the business and assets of Occam Networks. In connection with the merger, Accelerated changed
its name to Occam Networks, Inc., a Delaware corporation. Unless the context otherwise requires, references to Occam Networks, Occam or the Company refer to Occam Networks, Inc. as a Delaware corporation and
include the predecessor businesses of Occam, the California corporation, and Accelerated Networks. As required by applicable accounting rules, financial statements, data, and information for periods prior to May 2002 are those of Occam, the
California corporation. Occam, the California corporation, as a predecessor business or corporation, is sometimes referred to as Occam CA.

On February 23, 2006, the Company announced a 1-for-40 reverse stock split which was previously authorized at its annual meeting of stockholders held on June 21, 2005. The record date for the reverse split
was March 10, 2006 and Occam began trading on the NASD Electronic Bulletin Board (OTCBB) on a split-adjusted basis on Monday, March 13, 2006 under the new symbol OCNW.OB As a result of the reverse split, the conversion ratio of
Series A-2 preferred stock was proportionately adjusted, decreasing the number of shares of common stock issuable upon conversion of each share of Series A-2 preferred stock from approximately 90.91 shares of common stock to 2.27273 shares
of common stock. The share information in the accompanying financial statements have been retroactively restated to give effect to the reverse stock split.

From its inception through December 25, 2005, the Company has incurred cumulative net losses of approximately $108.8 million. While the Company believes that its existing cash balances and any cash from operations
will be sufficient to meet its capital and operating requirements through December 2006, it may be required to secure additional funding in the future. Such financing, if available, could take the form of additional equity or debt. To the extent the
Company issues additional equity securities, it could result in substantial dilution to existing stockholders. In addition the terms of any financing whether in the form of debt or equity, could contain restrictive covenants that would limit
managements flexibility. The Company cannot predict whether it will be able to obtain additional financing if necessary. Any failure to obtain financing could have a material adverse effect on the Companys business, financial condition
and results of operations. Also, managements plans to sustain profitability and generate additional cash flows include increasing revenues from new and existing customers, focus on cost reductions, and the launch of additional products.

Fiscal Year 2004 Going Concern

The Companys financial statements for the fiscal year ended December 26, 2004 were prepared on a going concern basis, which contemplates the realization of assets and the satisfaction of liabilities and
commitments in the normal course of business. The realization of assets and the satisfaction of liabilities and commitments in the normal course of business are dependent on, among other things, the Companys ability to operate profitably, to
generate cash flows from operations and the collection of



F-10



---

OCCAM NETWORKS, INC. AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTSContinued

December 25, 2005



receivables to fund its obligations. In the course of its operations, the Company has incurred significant operating losses and negative cash flows since its
inception, and it has funded its operations primarily from the sale of equity securities and debt borrowings. As of December 26, 2004, these factors raised substantial doubt regarding the Companys ability to continue as a going concern. As of
December 26, 2004, the Company had cash and cash equivalents of $4.4 million, working capital of $8.7 million, and had incurred cumulative net losses of approximately $101.4 million.

Note 2. Summary of Significant Accounting Policies

Fiscal Period EndOccam
reports its quarterly results based on a thirteen-week accounting calendar. Accordingly, the period end dates for 2003, 2004 and 2005 were December 28, December 26 and December 25, respectively.

Use of EstimatesThe preparation of financial statements in conformity with accounting principles generally accepted in the United
States of America requires management to make estimates and assumptions that affect the amounts reported in the consolidated financial statements and the accompanying notes. Actual results could differ from those estimates and such differences may
be material to the consolidated financial statements.

Cash EquivalentsCash equivalents consist of investments with
original maturities of three months or less from the date of purchase. Due to the short-term nature of these investments, the carrying amounts of cash equivalents reported in the consolidated balance sheet approximate their fair value.

Restricted CashAt December 25, 2005, restricted cash consists of a $3.6 million of bonds used to support performance
bonds required for RUS funded contracts and $120,000 in certificate of deposit required for a credit line on Companys credit cards.

Financial InstrumentsDue to their short-term nature and relatively stable interest rate environment the carrying values of financial instruments, which include accounts receivable, accounts payable and accrued expenses
approximate fair values at December 26, 2004 and December 25, 2005. The carrying value of notes payable and capital leases approximate fair value as they bear interest commensurate with their risk.

Accounts Receivable and Allowance for Doubtful AccountsTrade accounts receivable are recorded at the invoiced amount and do not bear
interest. The allowance for doubtful accounts is based on the best estimate of the amount of probable credit losses in existing accounts receivable. The allowance for doubtful accounts is determined based on historical write-off experience, current
customer information and other relevant data. Occam reviews the allowance for doubtful accounts quarterly . Past due balances of 90 days and over are reviewed individually for collectibility. Account balances are charged off against the
allowance when management believes it is probable the receivable will not be recovered. As of December 26, 2004 and December 25, 2005, the allowance for doubtful accounts was $22,000 and $40,000, respectively.

InventoriesInventories are goods held for sale in the normal course of business. Inventories are generally stated at standard cost,
which approximates first-in, first-out cost, or market. The inventory balance is segregated between raw materials, work in process (WIP) and finished goods. Raw materials are low-level components, many of which are purchased from
vendors. WIP is partially assembled products. Finished goods are products that are ready to be shipped to end customers at customer premises for installation or trial. Consideration is given to inventory shipped and received near the end of a period
and the transaction is recorded when transfer of title



F-11



---

OCCAM NETWORKS, INC. AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTSContinued

December 25, 2005



occurs. Management regularly evaluates inventory for obsolescence and adjusts to net realizable value based on inventory that is obsolete or in excess of
current demand.

Property and EquipmentProperty and equipment are stated at cost. Expenditures for additions and major
improvements are capitalized; maintenance and repairs are expensed as incurred. Depreciation of property and equipment is computed using the straight-line method over the estimated useful lives of the assets, generally three to five years for
furniture and fixtures, two to three years for computer hardware and two to five years for software. Leasehold improvements are amortized over the shorter of the lease term or the remaining useful economic life. Upon retirement or sale, the cost of
assets disposed of and the related accumulated depreciation are removed from the accounts and any resulting gain or loss is credited or charged to income.

Long-Lived AssetsOccam reviews for the impairment of long-lived assets whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. An
impairment loss would be recognized when estimated future cash flows expected to result from the use of the asset and its eventual disposition is less than its carrying amount. Occam has identified no such impairment losses.

WarrantyThe Company provides standard warranties with the sale of products for up to 5 years from date of shipment. The estimated
cost of providing the product warranty is recorded at the time revenue is recognized. The Company maintains product quality programs and processes, including actively monitoring and evaluating the quality of its suppliers. The Company quantifies and
records an estimate for warranty related costs based on the Companys actual history, projected return and failure rates and current repair costs. A summary of changes in the Companys accrued warranty liability, which is included in
accrued liabilities is as follows (in thousands):



|                                            |  |                  |      |   |                  |   |      |                  |  |   |       |  
|------------------------------------------- |  | ---------------- | ---- | - | ---------------- | - | ---- | ---------------- |  | - | ----- | -
|                                            |  | December 28,2003 |      |   | December 26,2004 |   |      | December 25,2005 | 
|Warranty liability at beginning of the year |  | $                | 267  |   |                  | $ | 331  |                  |  | $ | 675   |  
|Accruals for warranty during the year       |  |                  | 239  |   |                  |   | 497  |                  |  |   | 893   |  
|Warranty utilization                        |  |                  | (175 | ) |                  |   | (153 | )                |  |   | (475  | )
|                                            |  |                  |      |   |                  |   |      |                  |  |   |       |  
|Warranty liability at end of the year       |  | $                | 331  |   |                  | $ | 675  |                  |  | $ | 1,093 |  
|                                            |  |                  |      |   |                  |   |      |                  |  |   |       |  

Revenue RecognitionOccam recognizes revenue when persuasive evidence of a
sales arrangement exists, delivery has occurred or services have been rendered, the buyers price is fixed or determinable and collectability is reasonably assured. Occam provides customer training and post-sales technical support and
maintenance to its customers as needed to assist them in installation or use of its products, and makes provisions for these costs in the period of sale. Occam further warrants its products for periods up to 5 years and records an estimate of
warranty costs when revenue is recognized.

In certain circumstances, Occam enters into arrangements with customers who receive financing
support in the form of long-term low interest rate loans from the United States Department of Agricultures Rural Utilities Service (RUS). The terms of the RUS contracts provide that in certain instances transfer of title of Occams
products does not occur until payment has been received. In these cases, Occam does not recognize revenue until payment has been received, assuming the remaining revenue recognition criteria are met.

Net Loss Per ShareBasic and diluted net loss per share was computed by dividing the net loss attributable to common stockholders for
the period by the weighted average number of shares of common stock outstanding during the period. The calculation of diluted net loss per share gives effect to potential common shares; however, potential common shares are excluded if their effect
is antidilutive. Potential common shares are composed of



F-12



---

OCCAM NETWORKS, INC. AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTSContinued

December 25, 2005



preferred stock, common stock subject to repurchase rights and incremental shares of common stock issuable upon the exercise of stock options and warrants.

Accounting for Stock-Based CompensationOccam accounts for stock option grants to employees and directors in accordance
with Accounting Principles Board (APB) Opinion No. 25, Accounting for Stock Issued to Employees and the disclosure provisions of SFAS No. 123, Accounting for Stock-Based Compensation. Under APB 25, compensation
expense is based on the difference, if any, on the date of grant between the estimated fair value of Occams common stock and the stock option exercise price. Compensation expense is recognized ratably over the stock option vesting period.

The following table illustrates the effect on net loss and net loss per share if Occam had applied the fair value recognition provisions
of SFAS No. 123 (in thousands, except per share data):



|                                                                           |  |                  |         |   |                  |   |         |                  |  |   |        |  
|-------------------------------------------------------------------------- |  | ---------------- | ------- | - | ---------------- | - | ------- | ---------------- |  | - | ------ | -
|                                                                           |  | Year Ended       |        
|                                                                           |  | December 28,2003 |         |   | December 26,2004 |   |         | December 25,2005 | 
|Net loss, as reported:                                                     |  | $                | (20,432 | ) |                  | $ | (14,989 | )                |  | $ | (7,438 | )
|Add: Stock-based compensation, intrinsic value method reported in net loss |  |                  | 1,227   |   |                  |   | 852     |                  |  |   | 595    |  
|Deduct: Pro forma stock-based compensation fair value method               |  |                  | 1,661   |   |                  |   | 1,381   |                  |  |   | 1,643  |  
|                                                                           |  |                  |         |   |                  |   |         |                  |  |   |        |  
|Net loss, pro forma                                                        |  | $                | (20,866 | ) |                  | $ | (15,518 | )                |  | $ | (8,486 | )
|                                                                           |  |                  |         |   |                  |   |         |                  |  |   |        |  
|Basic and diluted loss per share attributable to common stockholders:      |  |                  |         |   |                  |   |         |                  |  |   |        |  
|As reported                                                                |  | $                | (4.36   | ) |                  | $ | (2.73   | )                |  | $ | (1.37  | )
|Pro forma                                                                  |  | $                | (4.44   | ) |                  | $ | (2.81   | )                |  | $ | (1.53  | )

The effects of applying SFAS No. 123 in the above pro forma disclosure are not indicative of
future amounts, and additional awards in future years are anticipated. For purposes of pro forma disclosures, the estimated fair value of the options was amortized ratably over the options vesting period, and the following assumptions were
used:



|                          |  |                  |   |  |                  |   |  |                  |  
|------------------------- |  | ---------------- | - |  | ---------------- | - |  | ---------------- | -
|                          |  | Year Ended       |  
|                          |  | December 28,2003 |   |  | December 26,2004 |   |  | December 25,2005 |  
|Risk-free interest rate   |  | 3.0              | % |  | 4.0              | % |  | 4.0              | %
|Expected lives (in years) |  | 5.0              |   |  | 4.0              |   |  | 4.0              |  
|Dividend Yield            |  | 0.0              | % |  | 0.0              | % |  | 0.0              | %
|Expected volatility       |  | 80.0             | % |  | 80.0             | % |  | 80.0             | %

Warrants issued with notes payable, preferred stock or lines of creditIn
accordance with APB 14, Accounting for Convertible Debt and Debt Issued with Stock Purchase Warrants, the Company allocates the proceeds received between the note payable or preferred stock and warrants based on their relative fair
values. The resulting discount recorded on the note payable is accreted to interest expense over the term of the note. The fair value of warrants issued in connection with lines of credit are recorded as other assets and amortized to interest
expense over the term of the line of credit agreement.

Income TaxesIncome taxes are accounted for using the liability
method. Under this method, deferred tax liabilities and assets are recognized for the expected future tax consequences of temporary differences between



F-13



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OCCAM NETWORKS, INC. AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTSContinued

December 25, 2005



the carrying amounts and the tax bases of assets and liabilities. Deferred tax assets and liabilities are measured using enacted tax rates and laws that will
be in effect when the differences are expected to reverse.

Research and Product DevelopmentResearch and product
development costs are expensed as incurred.

Advertising CostsOccam expenses advertising costs as incurred. Advertising
expense totaled $15,000, $19,000 and $55,000 for the years ended December 28, 2003, December 26, 2004 and December 25, 2005, respectively.

Segment InformationSFAS No. 131, Disclosures about Segments of an Enterprise and Related Information, establishes standards for the way companies report information about operating
segments in annual financial statements and related disclosures about products and services, geographic areas and major customers. Based on the manner in which management analyzes its business, Occam has determined that its business consists of one
operating segment.

Comprehensive LossSFAS No. 130, Reporting Comprehensive Income, establishes
standards for the reporting and display of comprehensive income and its components in a full set of general purpose financial statements. For the years ended December 28, 2003, December 26, 2004 and December 25, 2005, there were
no differences between the Companys net loss and total comprehensive loss.

Principles of ConsolidationThe
consolidated financial statements include the accounts of Occam Networks, Inc. and its wholly-owned subsidiary. All inter-company accounts and transactions have been eliminated in consolidation.

Recent Accounting PronouncementsIn November 2004, the Financial Accounting Standards Board (FASB) issued SFAS
No. 151, Inventory Costsan amendment of ARB No. 43 (SFAS 151), which is the result of its efforts to converge U.S. accounting standards for inventories with International Accounting Standards. SFAS
No. 151 requires idle facility expenses, freight, handling costs and wasted material (spoilage) costs to be recognized as current period charges. It also requires that allocation of fixed production overheads to the cost of conversion be based
on the normal capacity of the production facilities. SFAS No. 151 will be effective for inventory costs incurred during fiscal years beginning after June 15, 2005. The Company does not expect this standard to have a material impact on our
consolidated financial position, results of operations or cash flows.

In December 2004, the FASB issued SFAS No. 123 (revised 2004),
Share-Based Payment (SFAS 123(R)) which requires the measurement of all employee share-based payments to employees, including grants of employee stock options, using a fair-value-based method and the recording of such
expense in our consolidated statements of operations. In March 2005, the SEC released Staff Accounting Bulletin No. 107, Share-Based Payment (SAB No. 107) relating to the adoption of SFAS 123(R). Beginning in
the first quarter of 2006, we will adopt SFAS 123(R) under the modified prospective transition method using the Black-Scholes pricing model. Under the new standard, our estimate of compensation expense will require a number of complex and
subjective assumptions including our stock price volatility, employee exercise patterns (expected life of the options), future forfeitures and related tax effects. During the first quarter of fiscal 2006, we will begin recording the fair value of
our share-based compensation in our consolidated financial statements in accordance with Statement of Financial Accounting Standards No. 123(R), Share-Based Payment (Revised 2004). The Company is currently in the process of
estimating the effect of SFAS No. 123 on its consolidated statement of operations and anticipate that the stock based compensation expense calculated under SFAS No. 123 (revised 2004) will have a material adverse effect on its consolidated
statements of operations.



F-14



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OCCAM NETWORKS, INC. AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTSContinued

December 25, 2005



In October 2005, the FASB issued Financial Statement of Position (FSP) FAS 123(R)-2,
Practical Accommodation to the Application of Grant Date as Defined in FAS 123(R) (FSP 123(R)-2). FSP 123(R)-2 provides guidance on the application of grant date as defined in SFAS No. 123(R). In accordance with this
standard a grant date of an award exists if a) the award is a unilateral grant and b) the key terms and conditions of the award are expected to be communicated to an individual recipient within a relatively short time period from the date of
approval. The Company will adopt this standard when it adopts FAS 123(R) beginning in the first quarter of 2006. The Company does not expect this standard to have a material impact on our consolidated financial position, results of operations or
cash flows.

In November 2005, the FASB issued FSP FAS 123(R)-3, Transition Election Related to Accounting for Tax Effects of
Share-Based Payment Awards (FSP 123(R)-3). FSP 123(R)-3 provides an elective alternative method that establishes a computational component to arrive at the beginning balance of the accumulated paid-in capital pool related to
employee compensation and a simplified method to determine the subsequent impact of the accumulated paid-in capital pool employee awards that are fully vested and outstanding upon the adoption of SFAS No. 123(R). The Company is currently
evaluating this transition method.

In May 2005, the FASB issued SFAS No. 154, Accounting Changes and Error Corrections
(SFAS No. 154). SFAS No. 154 is a replacement of Accounting Principles Board Opinion No. 20 and SFAS No. 3. SFAS No. 154 provides guidance on the accounting for and reporting of accounting changes and error
corrections. It establishes retrospective application as the required method for reporting a change in accounting principle. SFAS No. 154 provides guidance for determining whether retrospective application of a change in accounting principle is
impracticable and for reporting a change when retrospective application is impracticable. SFAS No. 154 also addresses the reporting of a correction of an error by restating previously issued financial statements. SFAS No 154 is effective for
accounting changes and corrections of errors made in fiscal years beginning after December 15, 2005. The Company will apply the requirements of SFAS No. 154 on accounting changes made on or after January 1, 2006.

In February 2006, the FASB issued Statement of Financial Accounting Standards No. 155, Accounting for Certain Hybrid Instruments-an amendment of
FASB Statements No. 133 and 140 (SFAS 155). SFAS 155 allows financial instruments that have embedded derivatives to be accounted for as a whole if the holder elects to account for the whole instrument on a fair value
basis. SFAS 155 eliminates the need to bifurcate the derivative from its host, as previously required under Statement of Financial Accounting Standards No. 133, Accounting for Derivative Instruments and Hedge Accounting
(SFAS 133). SFAS 155 also amends SFAS 133 by establishing a requirement to evaluate interests in securitized financial assets to determine whether they are free standing derivatives or whether they contain embedded
derivatives that require bifurcation. SFAS 155 is effective for all hybrid financial instruments acquired or issued by the Company on or after January 1, 2007. The Company does not anticipate any material impact to its financial condition
or results of operations as a result of the adoption of SFAS 155.

Note 3. Inventories

Inventories consist of the following (in thousands):



|                |  |                  |       |                  |   |      
|--------------- |  | ---------------- | ----- | ---------------- | - | -----
|                |  | December 26,2004 |       | December 25,2005
|Raw materials   |  | $                | 294   |                  | $ | 85   
|Work-in-process |  |                  | 256   |                  |   | 30   
|Finished goods  |  |                  | 6,061 |                  |   | 4,333
|                |  |                  |       |                  |   |      
|                |  | $                | 6,611 |                  | $ | 4,448
|                |  |                  |       |                  |   |      



F-15



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OCCAM NETWORKS, INC. AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTSContinued

December 25, 2005



Note 4. Property and Equipment

The major components of property and equipment are as follows (in thousands):



|                                               |  |                  |        |   |                  |   |        |  
|---------------------------------------------- |  | ---------------- | ------ | - | ---------------- | - | ------ | -
|                                               |  | December 26,2004 |        |   | December 25,2005 |  
|Computer hardware and software                 |  | $                | 6,046  |   |                  | $ | 7,113  |  
|Furniture and fixtures                         |  |                  | 342    |   |                  |   | 223    |  
|Leasehold improvements                         |  |                  | 787    |   |                  |   | 402    |  
|                                               |  |                  |        |   |                  |   |        |  
|                                               |  |                  | 7,175  |   |                  |   | 7,738  |  
|Less accumulated depreciation and amortization |  |                  | (5,483 | ) |                  |   | (5,849 | )
|                                               |  |                  |        |   |                  |   |        |  
|                                               |  | $                | 1,692  |   |                  | $ | 1,889  |  
|                                               |  |                  |        |   |                  |   |        |  

Property and equipment under capital leases had an original cost of $2,244,000 for 2004 and 2005,
and accumulated amortization thereon of $2,119,000 and $2,194,000 at December 26, 2004 and December 25, 2005, respectively.

Note 5. Accrued
Expenses

The major components of accrued expenses are as follows (in thousands):



|                                            |  |                  |       |                  |   |      
|------------------------------------------- |  | ---------------- | ----- | ---------------- | - | -----
|                                            |  | December 26,2004 |       | December 25,2005
|Payroll, paid time off and related accruals |  | $                | 820   |                  | $ | 1,062
|Deferred sales                              |  |                  |      |                  |   | 1,600
|Warranty accruals                           |  |                  | 675   |                  |   | 1,093
|Loss purchase commitments                   |  |                  | 482   |                  |   |     
|Product failure accrual                     |  |                  | 307   |                  |   | 266  
|Royalty accruals                            |  |                  | 340   |                  |   | 343  
|Other accruals                              |  |                  | 706   |                  |   | 495  
|                                            |  |                  |       |                  |   |      
|Total                                       |  | $                | 3,330 |                  | $ | 4,859
|                                            |  |                  |       |                  |   |      

Note 6. Long-Term Debt and Capital Lease Obligations

At December 25, 2005 and December 26, 2004, long term debt and capital lease obligations consisted of the following (amounts in thousands):



|                                                                     |  |                  |       |   |                  |   |        |  
|-------------------------------------------------------------------- |  | ---------------- | ----- | - | ---------------- | - | ------ | -
|                                                                     |  | December 26,2004 |       |   | December 25,2005 |  
|Senior loan and security agreement, net of $178 discount             |  | $                | 2,822 |   |                  | $ | 2,474  |  
|Capital lease line of credit                                         |  |                  | 285   |   |                  |   |       |  
|Revolving line of credit and equipment facility                      |  |                  | 212   |   |                  |   | 83     |  
|Note payable to stockholder                                          |  |                  | 531   |   |                  |   |       |  
|                                                                     |  |                  |       |   |                  |   |        |  
|                                                                     |  |                  | 3,850 |   |                  |   | 2,557  |  
|Less current portion of long-term debt and capital lease obligations |  |                  | (863  | ) |                  |   | (1,233 | )
|                                                                     |  |                  |       |   |                  |   |        |  
|                                                                     |  | $                | 2,987 |   |                  | $ | 1,324  |  
|                                                                     |  |                  |       |   |                  |   |        |  



F-16



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OCCAM NETWORKS, INC. AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTSContinued

December 25, 2005



The maturity of the long-term debt as of December 25, 2005, were as follows (amounts in
thousands):



|                     |  |   |      
|-------------------- |  | - | -----
|For the years ending |  |   |      
|December 31, 2006    |  | $ | 1,233
|December 30, 2007    |  |   | 1,324
|                     |  |   |      
|Total                |  | $ | 2,557
|                     |  |   |      

Senior Loan and Security Agreement

In December 2004 Occam borrowed $3.0 million under a senior loan and security agreement with a specialty finance company. The loan bears interest at
11.95% per annum and matures December 31, 2007. The agreement provides for seven monthly payments of interest followed by 30 equal monthly installments of principal and interest. Obligations under the agreement are collateralized by
substantially all of the Companys assets. In connection with the loan agreement, the Company issued the lender warrants to purchase 41,666 shares of our common stock and 15,000 shares of Series A-2 preferred stock. These warrants were
valued using the Black-Scholes option pricing model and relative fair value of the warrants of $178,000 has been treated as a reduction in the carrying amount of the loan and will be amortized as interest expense using the effective interest method
over the life of the loan. The common warrants have been recorded in additional paid in capital and the preferred stock warrants have been recorded within the mezzanine in the accompanying consolidated balance sheet. The warrant for common stock is
exercisable through December 2011 at an exercise price of $3.60 per share. The warrant for the Series A-2 preferred stock is exercisable through December 2009 at an exercise price of $10.00 per share. The Series A-2 preferred stock is
convertible into common stock at a conversion price of $4.40 per share. At December 25, 2005, the outstanding principal was approximately $2.5 million, net of warrant discount of $178,000, of which approximately $1.1 million was
current. In February of 2006, the company retired this loan in full.

Capital Lease Line of Credit

In December 2000, Occam obtained a capital lease line of credit from a financial institution, which allowed financing of up to $2.0 million for
certain equipment, software, and tenant improvements. The capital lease line of credit bears interest of 14.5% or 17.7% based on the type of asset financed, and is collateralized by the purchased equipment. During the year ended December 25,
2005, the Company paid the outstanding principal of approximately $285,000. As of December 25, 2005, there was no outstanding balance under this capital lease line of credit.

Revolving Line of Credit and Equipment Financing Facility

During June 2003, the Company signed a loan and security agreement with a bank for a revolving line of credit for an amount up to $2.5 million, at a floating interest rate of prime plus .75 percent (8.25% and
6.25% at December 25, 2005, and December 26, 2004, respectively, subject to a floor of 5%) and a 1/2 percent per annum unused line fee, and an equipment financing facility for an amount up to $0.5 million at a floating interest rate
of prime plus one percent, to be repaid in 36 monthly payments of principal plus accrued interest. Both facilities are collateralized by all available assets of the Company, and are subject to certain financial and reporting covenants, including a
minimum quick ratio and maintenance of tangible net worth as defined in the agreement. The revolving line of credit expired in June of 2004. As of December 25, 2005 approximately $83,000 was outstanding under the equipment financing facility,
all of which was current. In February of 2006, the company retired the debt in full.



F-17



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OCCAM NETWORKS, INC. AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTSContinued

December 25, 2005



Notes Payable to a Stockholder

During June 2003, the Company issued a $500,000 unsecured subordinated promissory note payable to an investor. The note bears interest at the prime rate
on the date of issuance (4.0%) and principal and accrued interest is due in June 2006. At December 26, 2004, $31,000 of interest was accrued on the note. In March 2005, this note and accrued interest was converted into 53,479 shares of
Series A-2 preferred stock.

Note 7. Capital Stock and Stockholders Deficit

Series A-2 Preferred Stock

On November 18, 2003, a special committee of the Companys board of directors authorized the sale and issuance of up to 3,000,000 shares of Series A-2 preferred stock. During November and December 2003, the Company entered
into purchase agreements with certain existing and new investors to purchase 1,650,910 shares of Series A-2 preferred stock for $10 per share for gross proceeds of $16.5 million. On March 8, 2004, Occam sold an additional 420,000
shares of Series A-2 preferred stock for gross proceeds of $4,200,000 and issued a warrant to purchase up to an additional 380,000 shares of Series A-2 preferred stock to certain investment funds. The net proceeds from the issuance of
these Series A-2 preferred stock and warrant of $3.85 million, was allocated $515,000 and $3,331,000, based on the estimated relative fair market value of the warrant and the Series A-2 preferred stock, respectively. On April 1,
2004, Occam sold an additional 153,200 shares of the Series A-2 preferred stock raising gross proceeds of $1.5 million. The warrant was reduced to purchase 226,800 of Series A-2 preferred stock in April 2004 as Occam sold an
additional $1.5 million in Series A-2 preferred stock to existing investors in accordance with the terms of the warrant. On April 20, 2005 the warrants were exercised in full for an aggregate purchase price of $2.3 million.

In October 2004, Occams shareholders approved an amendment to Companys Amended and Restated Certificate of Incorporation to
increase the number of preferred stock designated as Series A-2 from 3,000,000 shares to 3,250,000 shares. In March 2005, the number of shares designated as Series A-2 Preferred Stock increased to 4,300,000.

The Series A-2 preferred stock has the following rights and preferences:

ConversionEach share of Series A-2 preferred stock is convertible into shares of the Companys common stock at a conversion
price of $4.40, subject to anti-dilution adjustments, as defined.

All outstanding shares of Series A-2 preferred stock will
automatically convert into common stock upon the written consent of holders of not less than sixty-six and two-thirds percent (66 2/3%) of the then outstanding shares of Series A-2 preferred stock.

During 2003, the Company recorded a beneficial conversion feature (BCF) charge to net loss attributable to common stockholders of $3,038,000
relating to the issuance of the Series A-2 preferred stock. The BCF was calculated using the fair value of the common stock on date of issuance, subtracting the accounting conversion price and then multiplying the resulting amount by the sum of
the number of shares of common stock into which the Series A-2 preferred stock is convertible.

During 2004, the Company recorded a
BCF charge to net loss attributable to common stockholders of $2,893,000 relating to the issuance of the Series A-2 preferred stock. The BCF was calculated using the fair value of the common stock on date of issuance, subtracting the accounting
conversion price and then multiplying the resulting amount by the sum of the number of shares of common stock into which the Series A-2 preferred stock



F-18



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OCCAM NETWORKS, INC. AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTSContinued

December 25, 2005



is convertible. The Company also recorded a BCF on the preferred stock warrant (the warrant BCF) of $480,000 (as an adjustment to the warrant and
additional paid in capital) that is being amortized using the interest method over the life of the warrant. During the year ended December 26, 2004, the Company recorded $395,000 of amortization of the warrant BCF. The warrant BCF of $480,000
was calculated by subtracting the sum of the relative proceeds allocated to the warrant and the exercise price from the fair value of the common stock underlying the warrant.

During 2005, the Company recorded a BCF charge to net loss attributable to common stockholders of $1,737,000 relating to the issuance of the
Series A-2 preferred stock in March 2005. The BCF was calculated using the fair value of the common stock on the dates of issuance, subtracting the accounting conversion price and then multiplying the resulting amount by the sum of the number
of shares of common stock into which the Series A-2 preferred stock is convertible. The company also recorded a BCF on the preferred stock warrant issued to Alta, of $85,000, that was amortized using the interest method over the life of the
warrant.

LiquidationThe Series A-2 preferred stock is entitled to a liquidation preference equal to 150% of the
original purchase price of the Series A-2 preferred, or $15 per share of Series A-2 preferred. The liquidation preference will be payable, prior to any payment to holders of common stock, in connection with any liquidation, dissolution, or
winding up of Occam Networks, whether voluntary or involuntary, including (i) reorganizations, consolidations, mergers, or similar transactions where the Companys stockholders immediately prior to the transaction hold, immediately after
the transaction, less than a majority of the outstanding voting securities of the surviving or successor corporation or its parent or (ii) a sale of all or substantially all of the Companys assets. After payment of the original
Series A-2 liquidation preference, any proceeds remaining available for distribution to stockholders will be distributed to the Series A-2 preferred stock until the holders of the Series A-2 preferred stock have received $30 per share
and then thereafter all remaining amounts will be distributed to the common stockholders. However, to the extent that the liquidation preference payable to the Series A-2 preferred holders would have been greater had they converted their
preferred stock to common stock, the Series A-2 preferred holders are entitled to that larger amount, regardless of whether or not they actually converted.

The liquidation provisions of Series A-2 preferred stock are considered redemption provisions that are not solely within the control of the Company, and therefore the Company has classified the Series A-2
preferred stock outside of stockholders deficit on the accompanying consolidated balance sheet.

DividendsThe
Series A-2 preferred stock is not entitled to receive any preferential dividend, but the Company is required to pay an equivalent dividend on the Series A-2 preferred stock if it declares and pays a dividend on its common stock.

VotingExcept as otherwise required by law, holders of the Companys Series A-2 preferred stock will be
entitled to notice of any stockholders meeting and to vote together with holders of common stock on any matter submitted to stockholders for a vote. Each share of Series A-2 preferred stock will be entitled to a number of votes equal to
the number of shares of common stock then issuable upon conversion thereof.

OtherThe holders of Series A-2
preferred stock have certain participation rights, registration rights and rights to prohibit further indebtedness of the Company.

Certain
investors who have purchased Series A-2 preferred stock are affiliated with members of the Companys board of directors and are also a holder of over 5% of the Companys outstanding securities.



F-19



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OCCAM NETWORKS, INC. AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTSContinued

December 25, 2005



Series A-2 Preferred Stock Warrants

In connection with the issuance of the December 2004 senior loan and security agreement the Company issued warrants to purchase 15,000 shares of
Series A-2 Preferred stock. The warrants have an exercise price of $10 per share and expire on December 17, 2009. All warrants are immediately exercisable.

Common Stock Reserved For Issuance

The following represents the number of common shares
reserved for future issuance (in thousands):



|                                              |  |                  |  |                 
|--------------------------------------------- |  | ---------------- |  | ----------------
|Number of Common Shares Reserved for Issuance |  | December 26,2004 |  | December 25,2005
|Common Warrants                               |  | 85               |  | 60              
|Stock Options                                 |  | 1,535            |  | 1,770           
|Convertible Preferred Stock and Warrants      |  | 7,386            |  | 8,125           
|Employee Stock Purchase Plan                  |  | 107              |  | 105             
|                                              |  |                  |  |                 
|                                              |  | 9,113            |  | 10,060          
|                                              |  |                  |  |                 

Common Stock Warrants

From 2000 to 2004, the Company issued warrants to purchase shares of common stock in connection with the issuance of certain financing arrangements. All
warrants are immediately exercisable. The following table summarizes the warrants outstanding as of December 25, 2005:



|                  |  |                        |       |                                  |       
|----------------- |  | ---------------------- | ----- | -------------------------------- | ------
|Expiration Date   |  | ExercisePrice perShare |       | Number ofSharesUnderlyingWarrant
|December 17, 2011 |  | $                      | 3.60  |                                  | 41,666
|June 16, 2010     |  | $                      | 10.00 |                                  | 12,500
|May 14, 2006      |  | $                      | 19.60 |                                  | 6,269 
|                  |  |                        |       |                                  |       
|                  |  |                        |       |                                  | 60,435
|                  |  |                        |       |                                  |       

Note 8. Stock Options

Stock Options

In April 1997, Accelerated Networks adopted the 1997 Stock Option/Stock
Issuance Plan (1997 Plan), which was replaced by the 2000 Stock Incentive Plan (2000 Plan). The 2000 Plan provides for the issuance of non-qualified or incentive stock options to employees, non-employee members of the board
and consultants. The exercise price per share is not to be less than 85% of the fair market value per share of the Companys common stock on the date of grant. Incentive stock options may be granted at no less than 100% of the fair market value
of the Companys common stock on the date of grant (110% if granted to an employee who owns 10% or more of the common stock). The Board of Directors has the discretion to determine the vesting schedule. Options may be either immediately
exercisable or in installments, but generally vest over a four-year period from the date of grant. In the event the holder ceases to be employed by the Company, all unvested options terminate and all vested installment options may be exercised
within an installment period following termination. In general, options expire ten years from the date of grant and any unvested shares acquired related to the immediately



F-20



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OCCAM NETWORKS, INC. AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTSContinued

December 25, 2005



exercisable options are subject to repurchase by the Company at the original exercise price. At December 25, 2005 and December 26, 2004, no
unvested shares of common stock issued and outstanding under the 2000 Plan were subject to repurchase by the Company.

The 2000 Plan also
provides for shares of common stock to be issued directly through either the immediate purchase of shares or as a bonus for services rendered. The purchase price per share is not to be less than 85% of the fair market value per share of the
Companys common stock on the date of grant. The purchase price, if granted to an employee who owns 10% or more of the common stock, must be granted at no less than 110% of the fair market value of the Companys common stock on the date of
grant. Vesting terms are at the discretion of the Plan Administrators and determined at the date of issuance. In the event the holder ceases to be employed by the Company, any unvested shares are subject to repurchase by the Company at the original
purchase price. To date, no such shares of common stock have been issued under the 2000 Plan.

During 2000, Occam CA adopted the 1999 Plan.
The 1999 Plan provides for the grant of incentive or nonqualified stock options to officers, employees, directors, and independent contractors or agents of Occam CA. The exercise price of options for both the incentive and nonqualified stock options
may not be less than the deemed fair value of the shares on the date of grant. The Board of Directors is authorized to administer the 1999 Plan and establish the stock option terms, including the grant price and vesting period. Options granted to
employees are generally exercisable upon grant; subject to an ongoing repurchase right of the Company matching the vesting period. The options expire ten years after the date of grant and the Company holds a right of first refusal in connection with
any transfer of vested optioned shares. At December 26, 2004, 125 unvested shares of common stock issued and outstanding under the 1999 Plan were subject to repurchase by the Company at the related exercise prices. As of December 25, 2005,
no shares were subject to repurchase. Pursuant to the terms of the merger agreement, no further stock option grants may be made from the 1999 Plan subsequent to the May 14, 2002 merger date.

As of December 25, 2005 there were 2.5 million shares authorized under the Companys stock option plans of which there were 709,000 shares
available under current option plan for future grants. Additional information with respect to the outstanding options as of December 25, 2005 is as follows (shares in thousands):



|                  |  |                     |  |                                                    |        |                      |                      |                     |     |  |   |      
|----------------- |  | ------------------- |  | -------------------------------------------------- | ------ | -------------------- | -------------------- | ------------------- | --- |  | - | -----
|                  |  | Options Outstanding |  |                                                   
|                  |  | Shares              |  | WeightedAverageRemaining ContractualLife (inYears) |        | WeightedAveragePrice |                      | Options Exercisable
|Exercise Prices   |  |                     |  |                                                    | Shares |                      | WeightedAveragePrice
|$2.00 to $3.24    |  | 90                  |  | 6.29                                               |        | $                    | 2.70                 |                     | 80  |  | $ | 2.64 
|$3.60 to $3.80    |  | 306                 |  | 7.34                                               |        | $                    | 3.63                 |                     | 181 |  | $ | 3.62 
|$4.00 to $4.20    |  | 759                 |  | 8.56                                               |        | $                    | 4.11                 |                     | 266 |  | $ | 4.14 
|$4.60 to $14.60   |  | 510                 |  | 8.62                                               |        | $                    | 7.24                 |                     | 149 |  | $ | 6.10 
|$15.20 to $925.00 |  | 105                 |  | 0.60                                               |        | $                    | 78.62                |                     | 105 |  | $ | 78.66
|                  |  |                     |  |                                                    |        |                      |                      |                     |     |  |   |      
|$2.00 to $925.00  |  | 1,770               |  | 7.78                                               |        | $                    | 9.59                 |                     | 781 |  | $ | 14.29
|                  |  |                     |  |                                                    |        |                      |                      |                     |     |  |   |      



F-21



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OCCAM NETWORKS, INC. AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTSContinued

December 25, 2005



A summary of the Companys stock option activity is as follows (shares in thousands):



|                                                             |  |                   |   |                   |                      |                   |        |       |   |                      |   |        |  |       |                      |  |   |      
|------------------------------------------------------------ |  | ----------------- | - | ----------------- | -------------------- | ----------------- | ------ | ----- | - | -------------------- | - | ------ |  | ----- | -------------------- |  | - | -----
|                                                             |  | Year Ended       
|                                                             |  | December 28, 2003 |   | December 26, 2004 |                      | December 25, 2005
|                                                             |  | Shares            |   |                   | WeightedAveragePrice |                   | Shares |       |   | WeightedAveragePrice |   | Shares |  |       | WeightedAveragePrice
|Outstanding at beginning of period                           |  | 889               |   |                   | $                    | 17.60             |        | 1,199 |   |                      | $ | 12.00  |  | 1,521 |                      |  | $ | 10.00
|Granted where exercise price equals fair value on grant date |  | 668               |   |                   | $                    | 4.80              |        | 545   |   |                      | $ | 4.00   |  | 478   |                      |  | $ | 7.32 
|Exercised                                                    |  | (79               | ) |                   | $                    | 3.20              |        | (42   | ) |                      | $ | 2.80   |  | (143  | )                    |  | $ | 4.12 
|Canceled                                                     |  | (279              | ) |                   | $                    | 14.80             |        | (181  | ) |                      | $ | 7.20   |  | (86   | )                    |  | $ | 15.62
|                                                             |  |                   |   |                   |                      |                   |        |       |   |                      |   |        |  |       |                      |  |   |      
|Outstanding at end of period                                 |  | 1,199             |   |                   | $                    | 12.00             |        | 1,521 |   |                      | $ | 10.00  |  | 1,770 |                      |  | $ | 9.59 
|                                                             |  |                   |   |                   |                      |                   |        |       |   |                      |   |        |  |       |                      |  |   |      
|Exercisable at end of period                                 |  | 453               |   |                   | $                    | 24.00             |        | 581   |   |                      | $ | 19.20  |  | 781   |                      |  | $ | 14.29
|                                                             |  |                   |   |                   |                      |                   |        |       |   |                      |   |        |  |       |                      |  |   |      

The weighted-average fair value of options granted to employees for the years ended
December 25, 2005, December 26, 2004, and December 28, 2003 were $9.59, $2.80 and $4.80 per share, respectively.

Deferred
Stock-Based Compensation

In connection with the grant of certain options to purchase common stock to employees during the years
ended December 29, 2002 and December 30, 2001, Occam CA recorded deferred stock-based compensation of approximately $1,564,000 and $6,062,000, respectively, for the aggregate differences between the exercise prices of options at their dates of
grant and the deemed fair value for accounting purposes of the common stock subject to such options. Such amounts are being amortized ratably over the vesting period of the related options. Amortization expense relating to employee stock options for
the years ended December 25, 2005, December 26, 2004 and December 28, 2003, totaled $595,000, $852,000 and $1,227,000, respectively.

During 2000 through 2002, Occam CA issued options to consultants and advisory board members (non-employees). These options generally vested over the service period. As these stock options require future
performance by the recipients, these options are considered variable grants for accounting purposes. The fair value of these options, determined using the Black-Scholes option pricing model, are re-measured each reporting period until such time that
the options become fully vested. The Company recorded expense related to these options to non-employees of $1,000 for the year ended December 28, 2003. No expense was recorded for the years ended 2005 and 2004.

Employee Stock Purchase Plan

In 2000, Accelerated Networks adopted the 2000 Employee Stock Purchase Plan (ESPP). Under the terms of the ESPP, eligible employees may elect to contribute up to 15% of earnings through payroll deductions. The accumulated
deductions are applied to the purchase of common shares on each semi-annual purchase date, as defined. The purchase price per share is equal to 85% of the fair market value on the participants entry date into the offering period or, if lower,
85% of the fair market value on the semi-annual purchase date. Under the terms of the ESPP, 106,500 shares have been reserved for issuance. In April 2001, employee contributions and stock issuances under the ESPP were terminated, but approximately
104,750 common shares continue to be reserved for any re-instatement of the ESPP.



F-22



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OCCAM NETWORKS, INC. AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTSContinued

December 25, 2005



Note 9. Income Taxes

The net effective income tax rate differed from the federal statutory income tax rate as follows:



|                                                  |  |                  |    |  |                  |    |  |                  |   
|------------------------------------------------- |  | ---------------- | -- |  | ---------------- | -- |  | ---------------- | --
|                                                  |  | December 28,2003 |    |  | December 26,2004 |    |  | December 25,2005 |   
|For the year ended                                |  |                  |    |  |                  |    |  |                  |   
|Statutory federal income tax benefit              |  | (34              | )% |  | (34              | )% |  | (34              | )%
|State income tax benefit (net of federal benefit) |  | (6               | )  |  | (6               | )  |  | (6               | ) 
|Other                                             |  | 4                |    |  | 4                |    |  | (20              | ) 
|Valuation allowance                               |  | 36               |    |  | 36               |    |  | 60               |   
|                                                  |  |                  |    |  |                  |    |  |                  |   
|                                                  |  |                 | %  |  |                 | %  |  |                 | % 
|                                                  |  |                  |    |  |                  |    |  |                  |   

The primary components of temporary differences that gave rise to deferred taxes were as follows
(in thousands):



|                                 |  |                  |         |   |                  |   |         |  
|-------------------------------- |  | ---------------- | ------- | - | ---------------- | - | ------- | -
|                                 |  | December 26,2004 |         |   | December 25,2005 |  
|Deferred tax assets:             |  |                  |         |   |                  |   |         |  
|Net operating loss carryforwards |  | $                | 81,989  |   |                  | $ | 86,153  |  
|Tax credit carryforwards         |  |                  | 784     |   |                  |   | 783     |  
|Depreciation and amortization    |  |                  | 17      |   |                  |   | 827     |  
|Other                            |  |                  | 2,343   |   |                  |   | 1,808   |  
|                                 |  |                  |         |   |                  |   |         |  
|                                 |  |                  | 85,133  |   |                  |   | 89,571  |  
|Less: valuation allowance        |  |                  | (85,133 | ) |                  |   | (89,571 | )
|                                 |  |                  |         |   |                  |   |         |  
|Net deferred tax assets          |  | $                |        |   |                  | $ |        |  
|                                 |  |                  |         |   |                  |   |         |  

The change in the Companys deferred tax valuation allowance is as follows:



|                               |  |                              |        |                               |   |                        |  |   |       
|------------------------------ |  | ---------------------------- | ------ | ----------------------------- | - | ---------------------- |  | - | ------
|Description                    |  | Balance atBeginning ofPeriod |        | Addition toValuationAllowance |   | Balance atEnd ofPeriod
|Income tax valuation allowance |  |                              |        |                               |   |                        |  |   |       
|2003                           |  | $                            | 74,869 |                               | $ | 6,252                  |  | $ | 81,121
|2004                           |  | $                            | 81,121 |                               | $ | 4,012                  |  | $ | 85,133
|2005                           |  | $                            | 85,133 |                               | $ | 4,438                  |  | $ | 89,571

The net deferred tax assets have been offset with a full valuation allowance. SFAS No. 109
Accounting for Income Taxes requires that a valuation allowance be established to reduce a deferred tax asset to the extent that it is not more likely than not that the deferred tax asset will be realized. Based on managements
assessment of all available evidence, both positive and negative, the Company has concluded that it is more likely than not that the net deferred tax assets will not be realized.

At December 25, 2005, the Company had net operating loss carryforwards of approximately $227.6 million and $150.2 million to offset
federal and state future taxable income, respectively. The federal and state net operating loss carryforwards will expire in varying amounts beginning in 2011 and 2006, respectively. The availability of the net operating losses to offset future
taxable income may be limited as a result of ownership



F-23



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OCCAM NETWORKS, INC. AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTSContinued

December 25, 2005



changes in 2003 or prior years or the merger with Accelerated Networks in 2002, pursuant to Internal Revenue Code section 382. In addition, utilization of
the net operating loss carryforwards would also be subject to an annual usage limitation, as defined. Net operating loss limitations under section 382 may significantly impact the timing and amount of future income tax obligations, if any. The
amount of such limitation, if any, has not yet been determined.

Note 10. Concentration of Credit Risk and Suppliers, Significant Customers and Segment
Reporting

Financial instruments subjecting the Company to concentrations of credit risk consist primarily of cash and cash equivalents
and trade accounts receivable. The Company maintains its cash and cash equivalents with major financial institutions; at times, such balances with any one financial institution may exceed FDIC insurance limits. The Companys accounts receivable
are derived from revenue earned from customers located primarily in the United States. The Company extends differing levels of credit to customers and generally does not require collateral.

The Company currently relies on a limited number of suppliers to manufacture its products, and does not have a long-term contract with any of these
suppliers. The Company also does not have internal manufacturing capabilities. Management believes that other suppliers could provide similar products on comparable terms.

Net revenue and accounts receivable from significant customers were as follows (in thousands, except percentages):



|           |  |                   |       |                 |    |   |                    |   |                        |  |    |  
|---------- |  | ----------------- | ----- | --------------- | -- | - | ------------------ | - | ---------------------- |  | -- | -
|           |  | December 28, 2003 |      
|           |  | Net Revenue       |       | % of NetRevenue |    |   | AccountsReceivable |   | % ofAccountsReceivable | 
|Customer A |  | $                 | 1,178 |                 | 15 | % |                    | $ | 498                    |  | 21 | %
|Customer B |  | $                 | 1,155 |                 | 14 | % |                    | $ | 723                    |  | 31 | %
|           | 
|           |  | December 26, 2004 |      
|           |  | Net Revenue       |       | % of NetRevenue |    |   | AccountsReceivable |   | % ofAccountsReceivable | 
|Customer A |  | $                 | 2,995 |                 | 17 | % |                    | $ | 856                    |  | 16 | %
|Customer B |  | $                 | 1,997 |                 | 12 | % |                    | $ | 1,762                  |  | 34 | %
|Customer C |  | $                 | 1,941 |                 | 11 | % |                    | $ | 70                     |  | 1  | %
|           | 
|           |  | December 25, 2005 |      
|           |  | Net Revenue       |       | % of NetRevenue |    |   | AccountsReceivable |   | % ofAccountsReceivable | 
|Customer A |  | $                 | 4,306 |                 | 11 | % |                    | $ | 70                     |  | 1  | %
|Customer B |  | $                 | 3,710 |                 | 9  | % |                    | $ | 2,038                  |  | 16 | %

The Company operates in one industry segment providing Ethernet and IP-based loop carrier
platforms for the telecommunications industry. The Companys business operations are principally based in the United States. Net revenue from products exported from the United States was $874,000, $41,000 and $573,000 during 2005, 2004 and
2003, respectively. All of the Companys long-lived assets are located in the United States.



F-24



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OCCAM NETWORKS, INC. AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTSContinued

December 25, 2005



Note 11. Commitments and Contingencies

The Company leases its office facilities and certain equipment under non-cancelable operating lease agreements, which expire at various dates through
2008. Certain operating leases contain escalation clauses with annual base rent adjustments or a cost of living adjustment. Total rent expense for the years ended December 25, 2005, December 26, 2004 and December 28, 2003, was
$778,000, $890,000 and $821,000 respectively. Approximate minimum annual lease commitments under non-cancelable operating leases are as follows (in thousands):



|                             |  |   |    
|---------------------------- |  | - | ---
|Year Ending                  |  |  
|December 31, 2006            |  | $ | 565
|December 30, 2007            |  |   | 104
|December 28, 2008            |  |   | 82 
|                             |  |   |    
|Total minimum lease payments |  | $ | 751
|                             |  |   |    

Purchase Commitments

During 2005, the Company reversed a previously accrued purchase commitment of $482,000 due to one of its former principal manufacturers. As of
December 25, 2005, the Company had open purchase orders with its current contract manufacturer of $8.3 million.

Royalties

The Company licenses certain technology for incorporation into its products. Under the terms of these agreements, royalty payments
will be made based on per-unit sales of certain of the Companys products. Royalty expenses incurred for the years ended December 25, 2005, December 26, 2004 and December 28, 2003 were $0, $272,000 and $348,000 respectively.

Legal Proceedings

IPO Allocation Cases

In June 2001, three putative stockholder class action lawsuits were filed against Accelerated
Networks, certain of its then officers and directors and several investment banks that were underwriters of Accelerated Networks initial public offering. The cases, which have now been consolidated, were filed in the United States District
Court for the Southern District of New York. The Court appointed a lead plaintiff on April 16, 2002, and plaintiffs filed a Consolidated Amended Class Action Complaint (the Complaint) on April 19, 2002. The Complaint was filed
on behalf of investors who purchased Accelerated Networks stock between June 22, 2000 and December 6, 2000 and alleges violations of Sections 11 and 15 of the 1933 Act and Sections 10(b) and 20(a) and Rule 10b-5 of the
1934 Act against one or both of Accelerated Networks and the individual defendants. The claims are based on allegations that the underwriter defendants agreed to allocate stock in Accelerated Networks initial public offering to certain
investors in exchange for excessive and undisclosed commissions and agreements by those investors to make additional purchases in the aftermarket at pre-determined prices. Plaintiffs allege that the prospectus for Accelerated Networks initial
public offering was false and misleading in violation of the securities laws because it did not disclose these arrangements. These lawsuits are part of the massive IPO allocation litigation involving the conduct of underwriters in
allocating shares of successful initial public offerings. The Company believes that over three hundred other companies have been named in more than one thousand similar lawsuits that have been filed by some of the same plaintiffs law firms. In
October 2002, the plaintiffs voluntarily dismissed the individual defendants



F-25



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OCCAM NETWORKS, INC. AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTSContinued

December 25, 2005



without prejudice. On February 19, 2003 a motion to dismiss filed by the issuer defendants was heard and the court dismissed the 10(b), 20(a) and
Rule 10b-5 claims against the Company. On July 31, 2003, the Company agreed, together with over three hundred other companies similarly situated, to settle with the Plaintiffs. A Memorandum of Understanding (MOU), along with a
separate agreement and a performance bond of $1 billion issued by the insurers for these companies is a guarantee, allocated pro rata amongst all issuer companies, to the plaintiffs as part of an overall recovery against all defendants
including the underwriter defendants who are not a signatory to the MOU. Any recovery by the plaintiffs against the underwriter defendants reduces the amount to be paid by the issuer companies. There is a fairness hearing scheduled for
April 24, 2006 to obtain final approval of the settlement by the members of the class of plaintiffs and the court. Occam cannot predict whether such approval will be obtained. The company has not recorded any accrual related to this proposed
settlement because it expects any settlement amounts to be covered by its insurance policies.

Note 12. 401(k) Plan

The Company has defined contribution plans under which employees who are at least 18 years old and have completed 500 hours of service may defer
compensation pursuant to Section 401(k) of the Internal Revenue Code. Participants in the plans may contribute between 1% and 50% of their pay, subject to the limitations placed by the IRS. The Company, at its discretion, may match a portion of
the amounts contributed by the employee. To date, the Company has made no contributions to the 401(k) plan.

Note 13. Net Loss Per Share Attributable to
Common Stockholders

The following table sets forth the computation of basic and diluted net loss per share attributable to common
stockholders (in thousands, except per share data):



|                                                                       |  |                  |         |   |                  |   |         |                  |  |   |        |  
|---------------------------------------------------------------------- |  | ---------------- | ------- | - | ---------------- | - | ------- | ---------------- |  | - | ------ | -
|                                                                       |  | December 28,2003 |         |   | December 26,2004 |   |         | December 25,2005 | 
|Numerator:                                                             |  |                  |         |   |                  |   |         |                  |  |   |        |  
|Net loss attributable to common stockholders                           |  | $                | (22,970 | ) |                  | $ | (18,277 | )                |  | $ | (9,260 | )
|                                                                       |  |                  |         |   |                  |   |         |                  |  |   |        |  
|Denominator:                                                           |  |                  |         |   |                  |   |         |                  |  |   |        |  
|Weighted-average common shares outstanding                             |  |                  | 5,297   |   |                  |   | 6,699   |                  |  |   | 6,759  |  
|Adjustment for common shares issued subject to repurchase              |  |                  | (29     | ) |                  |   | (4      | )                |  |   |       |  
|                                                                       |  |                  |         |   |                  |   |         |                  |  |   |        |  
|Denominator for basic and diluted calculations                         |  |                  | 5,268   |   |                  |   | 6,695   |                  |  |   | 6,759  |  
|                                                                       |  |                  |         |   |                  |   |         |                  |  |   |        |  
|Basic and diluted net loss per share applicable to common stockholders |  | $                | (4.36   | ) |                  | $ | (2.73   | )                |  | $ | (1.37  | )
|                                                                       |  |                  |         |   |                  |   |         |                  |  |   |        |  

Note 14. Supplemental Disclosures of Cash Flow Information (In thousands)



|                                                                             |  |                  |        |                  |   |                  |  |   |    
|---------------------------------------------------------------------------- |  | ---------------- | ------ | ---------------- | - | ---------------- |  | - | ---
|                                                                             |  | December 28,2003 |        | December 26,2004 |   | December 25,2005
|Cash paid during year for interest                                           |  | $                | 211    |                  | $ | 93               |  | $ | 400
|Conversion of common stock potentially subject to rescission to common stock |  |                  | 10,000 |                  |   |                 |  |   |   
|Conversion of series A preferred stock to common stock                       |  |                  | 11,846 |                  |   |                 |  |   |   
|Interest on notes payable                                                    |  | $                |       |                  | $ | 31               |  | $ | 353



F-26



---

OCCAM NETWORKS, INC. AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTSContinued

December 25, 2005



Note 15. Other Charges

During December 2003, the Company sold its India operation to a third party for gross proceeds of approximately $658,000 which approximated book value of the India companys net assets, including cash held in the
India company of $539,000. The purchase price included $50,000 in cash and a note receivable of $608,000 originally due in installments through November 2004. In the third quarter of 2005, the purchaser defaulted on the note and the Company wrote
off the remaining loan balance of $399,000. The India operation performed research and development activities related to the Companys products.

Note 16. Subsequent Events

Payment of Long-Term Debt

On February 17, 2006, the Company paid down the outstanding balance of $2,474,000 of its long term debt to Hercules. On February 28, 2006, the
Company paid down the outstanding balance of $83,000 to Silicon Valley Bank.

Rights Offering

On February 1, 2006, the Company concluded a rights offering made to eligible shareholders of record as of December 26, 2005. Each subscription
right entitled the stockholders to subscribe for and purchase one share of Series A-2 preferred stock for each 2.725 shares of common stock held on the record date. Each share of A-2 preferred stock had a purchase price of $10 and was
convertible into shares of Occams common stock at a conversion price of $4.40, resulting in a conversion ratio of 2.27273 shares of common stock for each share of Series A-2 preferred stock issued. In response to the rights offering, we
received subscriptions to purchase 343,741 shares of Series A-2 preferred stock for an aggregate purchase price of $3.4 million.

Reverse Stock Split

On February 23, 2006, the Company announced a 1-for-40 reverse stock split which was
previously authorized at its annual meeting of stockholders held on June 21, 2005. The record date for the reverse split was March 10, 2006 and Occam began trading on the NASD Electronic Bulletin Board (OTCBB) on a split-adjusted basis on
Monday, March 13, 2006 under the new symbol OCNW.OB As a result of the reverse split, the conversion ratio of Series A-2 preferred stock was proportionately adjusted, decreasing the number of shares of common stock issuable
upon conversion of each share of Series A-2 preferred stock from approximately 90.91 shares of common stock to 2.27273 shares of common stock.



F-27