txp corporation

BEACON EQUITY RESEARCHAnalyst: Victor Sula, Ph.D.Initial Report September 9th, 2008

TXP Corporation1299 Commerce DriveRichardson, TX 75081 USA

Phone: 214.575.9300Fax: 214.575.9314

Web: www.txpcorp.comEmail: [email protected]

Company IntroductionTXP Corporation (TXPO) is an Original Design Manufacturer (ODM) for the telecommunications and global electronics industry, supporting original equipment manufacturers, contract manufacturers and new technology inno-vators. Services generally include: electrical design of the product; design and fabrication of the printed circuit board; development of the material supply chain for required parts; manufacture of a small number of prototype boards; development of procedures and protocol for testing the assembled boards; manufacture of another small set of printed circuit boards (referred to as a pilot production) to effectively confirm the manufacturing process; and the transfer of all product-build data into a production environment.

TXP generated revenues of approximately $11 million in 2007, up from $8.2 million in 2006. The Company has three business units: Prototyping Solutions, ONT Solutions and Retrofit Solutions. Its Prototyping Solutions unit provides pre-manufacturing services that help electronics OEMs bring products to mar-

Market Data

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Please carefully read the risks and disclaimer section at the end of this report.

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OTC BB: TXPO$0.30$0.52

Speculative Buy117M

$35.1M27,466

Analyst: Victor Sula, Ph.D.Initial Report September 9th, 2008

TXP Corporation (OTC BB: TXPO) 2

ket faster and more cost-effectively. The Company’s ONT Solutions segment develops and markets, via an ODM model, carrier-class optical network terminals that seamlessly interoperate with major OEM customer optical line terminals deployed by carriers worldwide. TXP’s Retrofit Solutions unit provides custom-engineered kits used by Incumbent Local Exchange Carriers (ILECs) to upgrade local access networks at a fraction of the cost of deploying new remote outside plant cabinets.

In August 2008, TXP announced its intent to merge with Cambridge Industry Group (CIG), a privately held OEM supplier of FTTH (fiber-to-the-home) customer premise equipment (CPE). The merger creates the world’s largest ODM and services business focused on FTTH CPE and is expected to close before year-end. CIG gener-ated revenues of approximately $10.2 million in 2007, up significantly from $1.9 million in 2006.

Favourable telecom and IT industry outlook

The Company is building a business at the convergence of the telecom and IT industries. Both industries are poised for strong long-term growth. According to the Telecommunications Industry Association (TIA), global telecom spending exceeded $2.9 trillion in 2006 and is forecast to grow 10% annually to $4.2 trillion in 2010. IDC estimated worldwide IT spending at $1.2 trillion in 2006 and predicts 6% annual growth to $1.5 trillion by 2010.

Growing demand for ONT and retrofit solutions

Infonetics estimates the current size of the global GPON (Gigabit Passive Optical Network) ONT (Optical Net-work Terminl) market at approximately $350 million to $400 million and predicts the market will grow to $750 million by 2009 as GPON begins to overtake broadband PON (BPON) as the preferred PON technology for larger incumbent carrier deployments. TXP is on the leading edge of the transition to fiber optics and already has the solutions needed to address this emerging market. Major ONT suppliers such as Alcatel-Lucent, Erics-son, Motorola and Tellabs are limiting or discontinuing in-house production of ONT units in an effort to combat margin erosion and developing external supply sources such as TXP for the next generation of ONTs. With units offering proven interoperability across 16 platforms, TXP is poised to benefit from this expected supply shift.

With regard to remote communications retrofit solutions, there are more than 400,000 remote terminals deployed in North America alone, and nearly every major carrier has announced some form of access infrastructure up-grade, suggesting a significant and rapidly growing market for TXP’s retrofit solutions.

Business model leveraging original design manufacturing expertise

TXP is an original design manufacturer that helps electronics companies accelerate the time to market for new products. The Company focuses on design and supply chain solutions that assist with new product develop-ment. Its services include printed circuit board layout, signal integrity analysis, prototyping and quick-turn electronic assembly, new product introduction, pilot production, material supply chain development and the transfer of product-build data into production.

Investment Highlights


Analyst: Victor Sula, Ph.D.Initial ReportSeptember 9th, 2008

TXP Corporation (OTC BB: TXPO)

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Strong revenue growth

Following 34% revenue growth in 2007, TXP reported more modest growth in the first six months of 2008 mainly due to a weak economy and the termination of several one-time projects. However, the Company was approved by four additional carriers to provide retrofit solutions last quarter and TXP has other potential new relation-ships in the pipeline that will help it maintain a strong growth rate going forward. In addtion, TXP has begun shipping ONT equipment for use in BPL gateways to a leading equipment manufacturer. Both developments are expected to enhance near-term growth prospects.

Cambridge Industry Group merger enhances ONT revenue opportunities

The potential merger with Cambridge Industry Group (CIG) will bring together two leading independent sup-pliers of passive optical network terminal solutions to create the world’s largest ODM and services business focused on fiber-in-the-home customer premise equipment (FTTH CPE).

The merger will enable the combined businesses to emerge as cost leaders in the FTTH access market as a result of greater efficiencies realized by consolidating their supply chains in China. The combined entity will also be better equipped to support sales, marketing and customer service. The merger is expected to close before year-end.

Proven management team

The Company is led by accomplished entrepreneurs with solid backgrounds in the telecom and electronics in-dustries, high-tech product development and volume manufacturing.

TXP’s founder and CEO, Michael Shores, has been involved in successful launches of new high-tech products in the consumer, medical, military, networking and telecommunications markets. Prior to founding TXP in late 2001, Mr. Shores helped establish a New Product Introduction (NPI) center for Flextronics in Richardson, Texas, and then went on to help launch the company’s photonics division.


CFO Chris Ryan has more than 20 years experience in the telecom sector. Prior to joining TXP, Mr. Ryan was an executive at Tellabs where he led the financial activities of the broadband products division. Before that he was CFO of Chiaro Networks Inc. a de-veloper of infrastructure-class IP routing platforms and CFO at Xtera Communications. He also held key positions in various di-visions of Alcatel.

Marketing VP Paul Forzisi is a 24-year veteran of telecommunica-tions, having spent the last 18 years selling and marketing tele-communications network equipment. Prior to TXP, Mr. Forzisi was the vice president of marketing and product management for White Rock Networks. Need to add others. Joel, Chris, Paul.



VP of ONT Development Joel Futterman formerly served as director of R&D for Siemens Communications. His 23 years of development experience includes class 5 Central Office product lines, access technologies as well as fiber-to-the-home products.

TXP has three primary business units: Prototyping Solutions, ONT Solutions and Retrofit Solutions.

Prototyping Solutions unit

TXP’s prototyping services help Original Equipment Manufacturers (OEM), Original Design Manufacturers (ODM) and Contract Manufacturers (CM) reduce costs associated with taking new products from concept to mass production. The Company helps customers validate the functionality of new products, improve product manufacturability and accelerate time-to-market. TXP has already gained wide-spread industry recognition as an important player in pre-manufacturing services.


Business Units Overview

Global Supply Chain Management

Product Design and Engineering

OEMsElectricalDesign

ComponentSupply ChainDevelopment

PCB LayoutPhase I

DFM

Quick-turn/Prototype

Phase II DFMPreproduction

VolumeManufacturing

PrintedCircuitBoards

Backplanes

PrintedCircuit BoardAssemblies

Cables

MemoryModules

OpticalModules

Enclosures

Final SystemAssemblyand Test

Direct OrderFulfillment

After-MarketProduct

Service andSupport

Wireless

Com

putin

g

Wireline

EnterpriseComputing and

Storage

Personal and Business

Computing

Multimedia

Industrial and Semiconductor

Systems

Defense and Aerospace

Medical

Automotive

Com

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OEMs andTheir Customers

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TXPO´s Prototyping Solutions

Source: SEC Filings



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Components, subassemblies and finished products manufactured by TXP’s Prototyping Solutions unit incor-porate advanced interconnect, miniaturization and packaging technologies such as surface mount technology (SMT), multi-chip modules (MCM), ball grid array (BGA) and micro BGAs, as well as chip scale packaging (CSPs). The Company’s expertise in manufacturing prototypes extends across a broad array of products rang-ing from high-volume PC motherboards to advanced communication and networking cards. This business unit also provides services ranging from PCB layout and low volume prototyping to Design for Manufacturability (DFM) and supply chain management. Advanced assembly processes are combine with innovative techniques and highly skilled personnel to optimize the development of new advanced assembly technologies.

TXP’s Prototyping Solutions unit contributed 78% of the Company’s 2007 revenue. Its major customers include U.S.-based OEMs and engineering teams of international OEMs. Typically, these OEMs are electronic systems companies in the telecom, IT or military and consumer electronics businesses.

In its five-year history, the Prototyping Solutions unit has served more than 100 discrete customers – many repeatedly – and continues to grow its customer base at double-digit rates. Repeat customers include Alcatel (now Alcatel-Lucent), AMX, Avanex, Enfora, Ericsson, Greenlee, Harris, HP, Motorola, Tellabs and Texas Instru-ments.

ONT Solutions unit

In December 2006, TXP created a new business unit which focuses primarily on the development and sale of Optical Network Terminals (ONT) and related accessories. TXP’s ONT solutions address the rapidly expanding market for carrier-class PON (Passive Optical Networks) terminal equipment. TXP’s technology terminates the PON at the home or business location and enables integrated voice, video and high-speed Internet access.


TXP’s Prototyping Solutions revenues, $ Mn

Source: SEC Filings



All of the major carriers are committed to delivering “fiber-to-the-home” and new “triple-play” services bring-ing integrated voice, video and data to the home at true broadband speeds. The Company’s ONT Solutions busi-ness unit is well-positioned to become a major player in this high-growth market.

Unlike previous generations of CPE such as DSL modems and home routers, ONTs and fiber-fed integrated home gateways remain under the full management of the service provider and within the operator’s network domain. This market is global and growing rapidly because carrier-class CPE is tied closely to the business vi-ability of ILECs. Even in markets where competition is modest (e.g., Korea and Japan), government sponsorship of broadband infrastructure upgrades remains a significant growth driver.

TXP develops and markets a family of broadband and gigabyte ONT products for systems vendors and telecom service providers. Its ONT Solutions customers include manufacturers who resell TXP’s ONT products under their own brands, as well as service providers interested in purchasing direct from the manufacturer to take ad-vantage of better pricing. Over the next few years, we expect current ONT suppliers – Alcatel-Lucent, Ericsson, Motorola and Tellabs – to reduce in-house manufacturing as ONTs become increasingly commoditized. These players have already begun to pursue external sources for the next generation of ONTs. With products offering proven interoperability across 16 platforms, TXP is well-positioned to capitalize on this expected supply shift.

Cambridge Industry Group merger

In August 2008, TXP announced its intent to merge with Cambridge Industry Group (CIG), a privately held sup-plier of FTTH (fiber-to-the-home) Customer Premise Equipment (CPE) based in Shanghai, China. The merger brings together two of the industry’s leading independent suppliers and forms the world’s largest ODM and services business focused on FTTH CPE.


TXP ONT Solutions revenues, $ Mn

Source: SEC Filings



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The combined company will offer the industry’s largest family of ONT solutions, supporting a broad array of both indoor and outdoor PON ONTs, as well as residential gateways for the worldwide market. The consolida-tion of R&D and customer service resources will enable the combined entity to better serve its global customer base while continuing to develop next generation FTTH CPE products.

In addition, the merger will create a new cost leader in the highly competitive FTTH access market, supporting the transition to aggregated supply of GPON CPE. The combined entity will realize cost savings by consolidat-ing its supply chain in China and will be better equipped to support worldwide sales, marketing and customer service efforts.

Retrofit Solutions unit

TXP’s Retrofit Solutions unit develops and sells retrofit kits, enabling a wide variety of new generation telecom platforms to easily fit into existing outside plant cabinets. The Company’s kits offer a cost-effective alternative for Incumbent Local Exchange Carriers (ILEC) that will no longer need to spend huge amounts ot replace old remote cabinets with new ones. The total cost of TXP’s retrofit solution is 60% to 75% less than the cost of a new cabinet installation.

The business unit’s customers are telecom OEMs whose products are already deployed in an ILEC’s local access network and housed in remote cabinets. Some 250,000 such cabinets have been deployed throughout the past 30 years, and approximatley 20,000 new cabinets are deployed each year by ILECs. A problem arises in that there has been little standardization of cabinet size across manufacturers. As a result, retrofit solutions are unavailable for major upgrades, necessitating costly and time-consuming “forklift” replacements. TXP’s Retrofit Solutions unit has developed kits that allow the reuse of most cabinent types. Although TXP’s kits are sometimes sold di-rectly to ILECs, more often they are delivered to the ILEC by the OEM along with its platform.

TXP’s Retrofit Solutions unit is both an engineering services business and a products business and represented approximately 13% of 2007 revenues.


TXP’s Retrofit Solutions revenues, $ Mn

Source: SEC Filings



Telecommunication and IT industries

Technological advances have generated three mega-trends in telecommunications and IT industries that have fundamentally changed the ways people communicate:

• shift from analog to digital technology;

• shift from wired to wireless platforms; and

• shift from narrowband to broadband services.

According to the Telecommunications Industry Association (TIA), global telecom spending exceeded $2.9 tril-lion in 2006 and will grow 10% annually to $4.2 trillion in 2010. IDC estimated worldwide end-users spent $1.2 trillion on information technology in 2006 and will increase IT spending 6% annually to $1.5 trillion by 2010.

According to IDC, the majority of the growth will come from emerging economies, particularly Asia-Pacific, Latin America and Eastern Europe. Growth in the manufacturing, banking, health care, communications and media segments will outpace overall market growth.

TIA estimates that the U.S. telecom industry will grow 7.2% annually to $1.3 trillion in 2011, compared with an average rate of 10% outside the United States. Domestic growth will accelerate to 9.3% in 2008 from 8.3% in 2007, partly due to spending on network upgrades and a government spectrum auction.


Industry Outlook

Global telecom spending, $ trillion

Sources: http://www.tiaonline.org/media/2004_TIA_Industry_Outlook.pdf, http://www.tiaonline.org/business/media/press_releases/2006/PR06-14.cfm.http://www.idc.com/getdoc.jsp?containerId=202600

Global IT spending, $ trillion



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Internet usage

Continued growth in the number of Internet users is expanding the customer base for IP-based services. The number of Internet users already exceeds 1 billion worldwide. As of September 30, 2007, there were 1.2 billion Internet users, according to Internet World Stats.

The number of Internet users worldwide is expected to reach 2 billion by 2011.

Broadband usage

Internet telephony is essentially a broadband phenomenon. Increasing broadband penetration rates facilitate the rapid deployment of voice, video and data IP services. Broadband is often called high-speed Internet because of its high data transmission rates. The number of broadband connections worldwide is rising steadily as more users tap high speed technologies for peer-to-peer (P2P) file sharing systems, music and games downloading, video-on-demand and conference calls.

At the end of the first quarter of 2007, there were an estimated 300 million broadband subscribers worldwide. Over the past year, the number of broadband subscribers in the OECD countries has increased 24% to 221 mil-lion (June 2007). For every 100 OECD residents, 18.8 have broadband subscriptions, up from 15.1 one year ago. The strongest per capita subscriber growth rates were in Ireland, Germany, Sweden, Australia, Norway, Den-mark and Luxembourg. Each of these countries added more than five subscribers per 100 residents in 2007.

According to Gartner Group, worldwide consumer broadband connections will grow from 323 million in 2007 to 499 million in 2012. Some 18% of households worldwide were using a broadband connection in 2007. By 2012, this percentage is expected to climb to 25%. Five countries had household penetration rates exceeding 60% in 2007. The number is expected to grow to 17 countries by 2012.1


Industry Outlook

Global IT spending, $ trillion

Internet Usage

Source: www.internetworldstats.com/stats.htm

http://biz.yahoo.com/bw/080724/20080724005341.html?.v=1




TXP target markets

While there is relatively little research regarding the three core markets served by TXP, reasonable estimates can be derived based on adjacent markets and/or simple assumptions about demand drivers and pricing.

TXP’s Prototyping Solutions business competes in the “quick turn” segment of the broader Electronics Manufac-turing Services (EMS) market, which is valued at approximately $150 billion. The quick turn segment represents 10% to 20% of the total market, or between $15 billion and $30 billion in annual sales.

In contrast to the prototyping market, much information is available about the market for passive optical net-working (PON) and FTTP equipment. For example, market research firm Infonetics recently estimated the global GPON ONT market at between $350 million and $400 million, and expects the market to grow to $750 million by 2009 as gigabyte PON (GPON) begins to overtake broadband PON (BPON) as the preferred PON technology for larger incumbent carrier deployments. TXP expects the overall GPON market to grow to $3.5 billion by 2011.

While there are no estimates available regarding the dollar value of the remote communications retrofit solu-tions market, there are more than 250,000 remote terminals deployed in North America alone; nearly every major carrier has announced some form of access infrastructure upgrade, suggesting a significant and rapidly growing North American retrofit market.

Historic results

Following 34% growth in 2007, TXP recorded more modest growth in the first six months of 2008, mainly due to a weaker economy and the termination of several one-time projects.

Revenue growth in the first six months of 2008 reflects a strong performance by the Retrofit Solutions and ONT business units. The Company was approved by four additional carriers to provide retrofit solutions during the second quarter and other approvals are in the pipeline that should fuel longer-term growth. In addition, TXP recently began shipping ONT equipment for use in BPL gateways to a leading equipment manufacturer. Both developments are expected to enhance the Company’s near-term growth prospects.

TXP’s gross and operating margins declined in the first six months of 2008 because of changes in the product mix and higher personnel costs due to increased employee headcount.

TXP’s net loss for the first half of 2008 was approximately $10.1 million, compared to a net loss of approximately $1.8 million, for the same period in 2007. This year’s net loss included a non-cash charge of approximately $5.7 million and expenses of approximately $1.3 million for the early extinguishment of debt.

Financial Analysis



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Liquidity

As of June 30, 2008, TXP had cash and cash equivalents of $536,000. The Company’s main sources of liquidity are cash on hand, cash generated from sales of products and services and cash provided from financing activities. During the first six months of 2008, TXP consumed $3.9 million in operations and generated $4.4 million from financing activities. The Company issued $3 million in convertible debentures to YA Global, offset by fees of $670,000 to secure the transaction. Proceeds from drawdowns on its line of credit totaled $2.3 million and were offset by payments on loans and capital lease obligations of $169,000.


Income statement, $.

Source: SEC Filings

Balance sheet, $

Source: SEC Filings




The Company will likely need to raise additional financing to fund its ongoing operations. Several financing options are being considered, including the issuance of debt or equity securities, the exercise of warrants issued to investors in conjunction with previous private offerings, and other arrangements with strategic partners.

If no additional funding is secured, TXP plans to reduce employee headcount and put its remaining engineers to work on pure ODM projects. In this scenario, the Company runs the risk of losing its foothold in the ONT market and not being able to capitalize on business opportunities when the market reaches critical mass.

On August 20, 2008, TXP entered into an agreement with Yorkville Advisors LLC, pursuant to which the Com-pany agreed to redeem, without a redemption premium, all outstanding convertible notes, convertible deben-tures and term loans issued to Yorkville in an amount equal to the outstanding principal amount of the debt plus accrued and unpaid interest. As part of the agreement, the Company is required to pay Yorkville $7.5 million following the close of a financing of up to $15.0 million, which must be completed within 100 days from the date of the agreement.

During the second quarter of 2008, TXP reported 6% year-over-year revenue growth despite weakness in many of its markets. The Retrofit Solutions and ONT Solutions units accounted for the majority of revenue growth and TXP expects these divisions to represent an increasing percentage of revenues going forward.

TXP’s retrofit solutions enable carriers to cost-effectively upgrade local access networks at costs 60% to 75% less than new cabinet installations. Moreover, with approvals from four additional carriers in the second quarter and other new relationships in the pipeline, the Company anticipates double-digit future revenue growth for this segment.

In addition, the Company is shipping ONT equipment for use in BPL gateways to a leading equipment manufac-turer who plans to integrate TXP’s terminal into its product. TXP also introduced a new standards-compliant RF return capable ONT during the quarter, which works using the current three-wavelength protocol rather than requiring a fourth wavelength. This creates a time advantage for telecoms that can’t wait for the new standard to be implemented. The Company has reported significant interest in the new technology, which was introduced at the June 2008 NXTcomm conference in Las Vegas.

The merger with Cambridge Industry Group will further enhance the Company’s ONT product offerings and create cost savings from synergies and economies of scale. Cambridge Industry Group generated revenues of approximately $10.2 million in 2007, up from $1.9 million in 2006.

Strong outlooks for the IT and telecomm markets and the industry’s shift to fiber optics should create additional growth opportunities for the Company. TXP is on the leading edge of the transition to fiber optics and has already developed its solutions for addressing this emerging market. Alcatel-Lucent, Ericsson, Motorola and Tellabs will likely discontinue their own ONT businesses and turn to external sources such as TXP for the next generation of ONTs.

Outlook and Valuation



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We forecast TXP’s revenues at $13.8 million in 2008 and $27 million in 2009. We also anticipate the Company will begin to turn profitable soon after the Cambridge Industry Group merger. TXP’s CEO Michael Shores com-mented in a recent Dallas Morning News article that his goal is to turn the combined entity profitable within two quarters following the merger.

In addition, we expect the Company to seek external financing to fund its operations and pending acquisitions. As of August 14, 2008, the Company had 117 million shares outstanding. By 2009, we expect the fully diluted share count to approach 180 million.

Peer comparison

Our peer group consists of small-cap companies competing in the communications and IT segments. The aver-age Price/Sales multiple for this peer group is 1.3 times revenues and several peer companies trade at Price/Sales multiples exceeding 2.6 times revenues. At present, TXP is valued in line with our peer group but we think TXP warrants a higher valuation due to its above average revenue growth and its strong position in the retrofit and ONT solutions markets.

Outlook and Valuation

Revenue and earnings forecast $

Source: Analyst estimates




We think TXPO should be valued at a 3.5 times forward P/S multiple. We multiply our 3.5 times forward P/S multiple by our $27 million 2009 revenue estimate and divide the resulting amount by 180 million shares to ob-tain our $0.52 target price. We are initiating coverage of TXPO with a Speculative Buy rating and a $0.52 price target.

History of losses and negative operating cash flows

In 2006, 2007 and the first six months of 2008, TXP generated significant losses, negative operating cash flows and had a working capital deficit. While the Company reported strong revenue growth, there is no assurance that it will turn profitable anytime soon. As a result, TXP may experience liquidity and cash flow problems.

External financing required to continue operations

The Company needs to raise additional financing to operate its ONT business unit. TXP is considering several financing options, including the issuance of debt or equity securities, the exercise of warrants issued to investors in conjunction with previous private offerings, and other arrangements with strategic partners. If no additional funding is secured, TXP will be forced to reduce employee headcount and refocus on pure ODM work.

LT Debt

Source: Reuters

Investment Risks



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Dilution risk

As of August 14, 2008, there were 117 million shares outstanding. As a result of the existing convertble deben-tures, issued warrants and plans to aquire Cambridge Industry Group, we expect the fully diluted share count to increase to 180 million in 2009.

Ability to manage and integrate acquisitions

TXP relies on acquisitions to accelerate revenue growth and obtain cost savings from synergies and economies of scale. Expenses are incurred for acquisition due diligence and for negotiations with potential takeover targets; funding must be obtained to complete acquisitions. In addition, much management time is consumed integrat-ing acquired companies and combining operations to create future cost savings. There is no assurance that TXP will succeed in any of these activities or that shareholders will benefit from the Company’s acquisitions.

Margin erosion

Industry consolidation, price competition and the migration of operating facilities to developing countries are compressing gross and operating margins. TXP reported a slight decline in gross margins during the second quarter, which nearly offset economy of scale benefits. Going forward, we expect volume growth to create ef-ficiencies, which will enable TXP to report improvements in margins.

Investment Risks



Management

Mr. Shores, TXP’s founder, is an accomplished entrepreneur with a background in high-tech product development and volume manu-facturing. He began his career in the investment banking arena with Merrill Lynch, Lehman Brothers and Bear Stearns. Over the past de-cade, he has been involved in the successful launch of new high-tech products in the consumer, medical, military, networking and telecom-munications markets. Prior to founding TXP in late 2001, Mr. Shores helped establish a New Product Introduction (NPI) center for Flex-tronics in Richardson, Texas, and then went on to help launch their photonics division. He serves on the board and is a founding member of the Texas-Israel Chamber of Commerce. Mr. Shores has a Bachelor of Arts in business from the University of Arkansas

Mr. Ryan’s career spans more than 20 years and encompasses a broad range of finance-related activities, which include building and imple-menting business and accounting systems, arranging financing, profit forecasting, budgeting, M&A activities and supervision of business units in the telecom sector. Immediately prior to joining TXP, Mr. Ryan was an executive at Tellabs where he led the financial activi-ties of the broadband products division. Prior to that, Mr. Ryan was CFO of Chiaro Networks Inc. a developer of infrastructure-class IP routing platforms. From 2000 to 2004, he served as CFO at Xtera Com-munications. For more than 12 years, Mr. Ryan held key positions in various divisions of Alcatel. Mr. Ryan has a BS in business administra-tion from Francis Marion College in South Carolina and an MBA from Wake Forest University in Winston-Salem, North Carolina..

Dr. Wong founded CIG in 2005 and successfully positioned the busi-ness with tier one telecom equipment vendors, increasing annual rev-enues to moe than $10 million in 2007 and recording profits in every quarter. To date, CIG’s innovative full GPON ONT portfolio has been deployed with more than 100,000 units around the world, and has been qualified by more than 10 world-class telecom carriers. Prior to CIG, Dr. Wong founded and served as CEO of Photonic Bridges, a business he launched in 2000 and expanded to more than 400 em-ployees by year-end 2004, including R&D engineering, sales market-ing, and manufacturing management. Under his leadership, Photonic Bridges implemented a new value-added OEM/ODM business model, developed more customer-driven carrier class metro optical transmis-sion product, and successfully completed its merger and acquisition with the telecom subsidiary of Siemens AG (now Nokia Siemens Net-works). As part of Siemens global R&D, Photonic Bridges continues to supply a full optical transmission product portfolio for Siemens’

Michael C. ShoresPresident & Chief Executive Officer


Chris RyanChief Financial Officer

Gerald G. Wong, Ph.D.,CEO of Cambridge Industry Group



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global market. Dr. Wong brings more than 20 years of successful ex-ecutive management experience in the global telecom industry and a long, distinguished career at AT&T and Lucent Technologies. He has held a number of executive positions in the United States, Europe and Asia Pacific. Dr. Wong’s last role at Lucent Technologies was as vice president of its Optical Networking Group, with worldwide responsi-bility for the R&D and marketing of Lucent’s optical network products and a multi-billion dollar sales base. Dr. Wong holds a Ph.D. in electri-cal engineering from the Massachusetts Institute of Technology.

Mr. Forzisi is a 24 year veteran of telecommunications, having spent the last 18 years selling and marketing telecommunications network equipment. Prior to TXP, Mr. Forzisi was the vice president of market-ing and product management for White Rock Networks. During his career, Mr. Forzisi has been extensively focused on bringing the lat-est access network technologies to market, working for companies to develop strong product portfolios in next-generation metro and last-mile architectures such as ADC, AFC, TelStrat, and W&G. Mr. Forzisi began his career at Telstra, Australia’s leading telecom service pro-vider. He is a graduate of the Institute of Technology in Sydney.

Mr. Futterman has a long history in telecommunications product de-velopment. Before joining TXP, he was director of R&D for Siemens Communications. His 23 years of development experience includes class 5 Central Office product lines, access technologies as well as fiber-to-the-home products. Mr. Futterman has expertise in the devel-opment of products for both U.S. and worldwide carriers. He has a B.S. in Electrical Engineering from the University of Florida and an MBA from Rollins College, Orlando, Florida.

Paul ForzisiVice President Marketing

Joel Z. FuttermanVice President ONT Development



DisclaimerDO NOT BASE ANY INVESTMENT DECISION UPON ANY MATERIALS FOUND ON THIS REPORT. We are not registered as a securities broker-dealer or an investment adviser either with the U.S. Securities and Exchange Commission (the “SEC”) or with any state securities regulatory authority. We are neither licensed nor qualified to provide investment advice.

The information contained in our report should be viewed as commercial advertisement and is not intended to be investment advice. The report is not provided to any particular individual with a view toward their individual circumstances. The information contained in our report is not an offer to buy or sell securities. We distribute opinions, comments and information free of charge exclusively to individuals who wish to receive them.

Our newsletter and website have been prepared for informational purposes only and are not intended to be used as a complete source of information on any particular company. An individual should never invest in the securities of any of the companies profiled based solely on information contained in our report. Individuals should assume that all information contained in the report about profiled companies is not trustworthy unless verified by their own independent research.

Any individual who chooses to invest in any securities should do so with caution. Investing in securities is speculative and carries a high degree of risk; you may lose some or all of the money that is invested. Always research your own investments and consult with a registered investment advisor or licensed stock broker before investing.

The report is a service of BlueWave Advisors, LLC, a financial public relations firm that has been compensated by the companies profiled. All direct and third party compensa-tion received has been disclosed within each individual profile in accordance with section 17(b) of the Securities Act of 1933. This compensation constitutes a conflict of interest as to our ability to remain objective in our communication regarding the profiled companies. BlueWave Advisors, LLC, and/or its affiliated will hold, buy, and sell securities in the companies profiled. When compensated in shares, all readers should be aware that is our policy to liquidate all shares immediately. We reserve the right to buy or sell the shares of any the companies mentioned in any materials we produce at any time. This compensation constitutes a conflict of interest as to our ability to remain objective in our communication regarding the profiled companies. BeaconEquity.com is a Web site wholly-owned by BlueWave Advisors, LLC. BlueWave Advisors, LLC has been compensated six thousand dollars from TXP Corp. as a marketing budget to manage a comprehensive investor awareness program including the creation and distribution of this report as well as other investor relations efforts.

Information contained in our report will contain “forward looking statements” as defined under Section 27A of the Securities Act of 1933 and Section 21B of the Securities Ex-change Act of 1934. Subscribers are cautioned not to place undue reliance upon these forward looking statements. These forward looking statements are subject to a number of known and unknown risks and uncertainties outside of our control that could cause actual operations or results to differ materially from those anticipated. Factors that could affect performance include, but are not limited to, those factors that are discussed in each profiled company’s most recent reports or registration statements filed with the SEC. You should consider these factors in evaluating the forward looking statements included in the report and not place undue reliance upon such statements.

We are committed to providing factual information on the companies that are profiled. However, we do not provide any assurance as to the accuracy or completeness of the information provided, including information regarding a profiled company’s plans or ability to effect any planned or proposed actions. We have no first-hand knowledge of any profiled company’s operations and therefore cannot comment on their capabilities, intent, resources, nor experience and we make no attempt to do so. Statistical information, dollar amounts, and market size data was provided by the subject company and related sources which we believe to be reliable.

To the fullest extent of the law, we will not be liable to any person or entity for the quality, accuracy, completeness, reliability, or timeliness of the information provided in the report, or for any direct, indirect, consequential, incidental, special or punitive damages that may arise out of the use of information we provide to any person or entity (includ-ing, but not limited to, lost profits, loss of opportunities, trading losses, and damages that may result from any inaccuracy or incompleteness of this information).

We encourage you to invest carefully and read investment information available at the websites of the SEC at http://www.sec.gov and FINRA at http://www.finra.org.

All decisions are made solely by the analyst and independent of outside parties or influence.

I, Victor Sula, Ph.D, the author of this report, certify that the material and views presented herein represent my personal opinion regarding the content and securities included in this report. In no way has my opinion been influenced by outside parties, nor has my compensation been either directly or indirectly tied to the performance of any security listed. I certify that I do not currently own, nor will own and shares or securities in any of the companies featured in this report.

Victor Sula, Ph.D. - Senior Analyst

Victor Sula, Ph.D. has held the position of Senior Analyst with several independent investment research firms since 2004. Prior to 2004, Mr. Sula held Senior Financial Consul-tant positions within the World Bank sponsored Agency for Restructuring and Enterprise Assistance and TACIS sponsored Center for Productivity and Competitiveness of Moldova, where he was involved in corporate reorganization and liquidation. He is also employed as Associate Professor at the Academy of Economic Studies of Moldova. Mr. Sula earned his Ph.D. degree in 2001 and bachelor’s degree in Finance in 1997 from the Academy of Economic Studies of Moldova. Mr. Sula is currently a level III candidate in the CFA program.

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