1.	Description of Business

Prior to February 1, 2013, Sycamore Networks, Inc. (the “Company”) developed and marketed Intelligent Bandwidth Management solutions for fixed line and mobile network operators worldwide and provided services associated with such products (the “Intelligent Bandwidth Management Business”), and, prior to November 1, 2012, the Company also developed and marketed a mobile broadband optimization solution (the “IQstream Business”). As used in these Notes to the Consolidated Financial Statements, “Sycamore,” “we,” “us,” or “our” refers collectively to the Company and its subsidiaries.

On October 23, 2012, the Company entered into an Asset Purchase and Sale Agreement (the “Asset Sale Agreement”) with Sunrise Acquisition Corp. (now known as Coriant America Inc.), a portfolio company of Marlin Equity Partners (“Buyer”), pursuant to which Buyer agreed to acquire substantially all of the assets (the “Asset Sale”) primarily related to the Intelligent Bandwidth Management Business, including inventory, fixed assets, accounts receivable, intellectual property rights (other than patents and patent applications), contracts, certain real estate leases, the Company’s subsidiaries in Shanghai, the Netherlands and Japan, and certain shared facilities and assets for $18.75 million in cash, subject to a working capital adjustment, and the assumption by Buyer of certain liabilities. The Company’s stockholders authorized the Asset Sale at a Special Meeting of Stockholders held on January 29, 2013 (the “Special Meeting”), and the Asset Sale was completed on January 31, 2013 (the transfer of the Company’s equity interests in its Shanghai subsidiary, which was subject to the receipt of government approval, occurred on March 25, 2013). Upon the closing of the Asset Sale, Buyer acquired substantially all of the Company’s operating assets relating to the Intelligent Bandwidth Management Business, including the Company’s accounts receivable, inventories and prepaid and other assets, and assumed most of the Company’s remaining current liabilities, including substantially all of the Company’s deferred revenue and accrued warranty obligations. On April 22, 2013, the Company commenced litigation against Buyer and certain of its affiliates with respect to certain amounts due under the Asset Sale Agreement (the “Delaware Litigation”). In connection with such litigation, on May 28, 2013, the Company and such parties reached an agreement pursuant to which (1) the Company agreed to dismiss the Delaware Litigation without prejudice, (2) Buyer paid certain undisputed amounts of $1.7 million owed to the Company and (3) the parties agreed to submit the remaining issues relating to amounts in dispute of $1,456,747 to arbitration for resolution by a neutral accountant. The matters in dispute have been resolved by the neutral accountant in favor of the Company in the amount of $1,107,736, which includes reimbursement for a portion of the fees and expenses paid to the neutral accountant. On March 5, 2014, the Company received the $1,107,736 payment. Now that all matters set forth in the Delaware Litigation have been finally resolved, it will be dismissed with prejudice. For additional information concerning this matter, see Note 5, “Commitments and Contingencies.”

In conjunction with the approval of the Asset Sale Agreement, the Company’s Board of Directors (the “Board”) also approved the liquidation and dissolution of the Company (the “Dissolution”) pursuant to a Plan of Complete Liquidation and Dissolution (the “Plan of Dissolution”) following the completion of the Asset Sale. The Plan of Dissolution was also approved by the stockholders at the Special Meeting and, following a review of the Company’s strategic alternatives for all of the Company’s assets and available options for providing value to the Company’s stockholders, the Company filed a certificate of dissolution with the Secretary of State of the State of Delaware (the “Certificate of Dissolution”) on March 7, 2013. For additional information regarding the Dissolution, please see the Company’s Definitive Proxy Statement on Schedule 14A filed with the U.S. Securities and Exchange Commission (the “SEC”) on December 28, 2012 and its Current Report on Form 8-K filed with the SEC on March 8, 2013.

In connection with the filing of the Certificate of Dissolution, on March 7, 2013, the Company closed its stock transfer books and discontinued recording transfers of its common stock, $0.001 par value per share (the “Common Stock”). The Common Stock, and stock certificates evidencing shares of the Common Stock, are no longer assignable or transferable on the Company’s books, other than transfers by will, intestate succession or operation of law. The Company also submitted a request to The NASDAQ Stock Market (“NASDAQ”) to suspend trading of the Common Stock on The NASDAQ Global Select Market effective as of the close of trading on March 7, 2013 and, on March 15, 2013, the Company filed a Form 25 with the SEC to delist its Common Stock, which became effective prior to the opening of trading on March 25, 2013. Since the suspension of trading of the Common Stock on The NASDAQ Global Select Market, shares of our Common Stock held in street name with brokers have been trading in the over-the-counter market on the Pink Sheets, an electronic bulletin board established for unlisted securities.

As a result of the completion of the Asset Sale and the Company’s previously announced halting of further development and marketing in connection with the IQstream Business, the Company no longer has any operating assets or revenue. Since the filing of the Certificate of Dissolution, the Company has been operating in accordance with the Plan of Dissolution, which contemplates an orderly wind down of the Company’s business, including the disposition of the IQstream Business, the sale or monetization of the Company’s other remaining non-cash assets and the satisfaction or settlement of its liabilities and obligations, including contingent liabilities and claims.

On December 20, 2013, the Board approved the termination of the employment of Alan R. Cormier as Sycamore’s President, Chief Executive Officer and Secretary, effective as of that date. David Guerrera, Sycamore’s former Associate Counsel, was appointed President and General Counsel of Sycamore, effective immediately following Mr. Cormier’s departure as President, Chief Executive Officer and Secretary. Anthony Petrillo continues to serve as Sycamore’s Chief Financial Officer. As of January 25, 2014, Mr. Guerrera and Mr. Petrillo are Sycamore’s only remaining employees.

On January 31, 2014, the Company entered into a Patent Sale Agreement (the “Patent Sale Agreement”) with Dragon Intellectual Property, LLC (“Dragon”), pursuant to which the Company agreed to sell to Dragon for $2.0 million a portfolio of 40 patents and two patent applications, each related to the Intelligent Bandwidth Management Business (the “IBM Patents”). The sale of the IBM Patents was completed on February 28, 2014. None of the IBM Patents are related to the IQstream Business, which has a separate portfolio of three United States patents and five United States patent applications (the “IQstream Patent Portfolio”).

The Company’s remaining primary non-cash assets consist of our real estate holdings in Tyngsborough, Massachusetts, our intellectual property and other assets relating to the IQstream Business, our investments in private companies and certain other assets that were not sold to Buyer in the Asset Sale.

Following the filing of the Certificate of Dissolution, in light of the Board’s views as to the prospects for the IQstream Business, the Board determined to terminate all of the remaining IQstream Employees. The Company continues to pursue available options with respect to the assets of the IQstream Business, including a possible sale of the IQstream Patent Portfolio, equipment and other assets of the IQstream Business. The Company also owns approximately 102 acres of undeveloped land located in Tyngsborough, Massachusetts, which it currently is actively marketing for sale. There can be no assurance as to the amount of consideration the Company may be able to obtain for these assets or as to any time frame within which a potential sale or other disposition of these assets might occur.

During the Dissolution period, the Company will continue to pursue the liquidation to cash of its remaining non-cash assets for possible distribution to our stockholders. Subject to uncertainties inherent in the winding up of the Company’s business, we expect to make one or more additional liquidating distributions as promptly as practicable following the liquidation to cash of our non-cash assets and after payment of, or provision for, outstanding claims in accordance with Delaware law. However, the Dissolution process and the payment of any distribution to stockholders involve substantial risks and uncertainties. Accordingly, it is not possible to predict the timing or aggregate amount which will ultimately be distributed to stockholders, and no assurance can be given that the distributions will equal or exceed our estimate of net assets presented in the Statement of Net Assets.