Table of Contents

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Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

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Table of Contents

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

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

FOR THE QUARTERLY PERIOD ENDED APRIL 30, 2016

¨	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 000-27273

SYCAMORE NETWORKS, INC.

(Exact name of registrant as specified in its charter)

Delaware

04-3410558

(State or other jurisdiction of

incorporation or organization)

(I.R.S. Employer

Identification No.)

300 Brickstone Square, Suite 201

Andover, Massachusetts 01810

(Address of principal executive offices)

(Zip code)

(978) 662-5245

(Registrant’s telephone number, including area code)

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 whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes x No ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes x No ¨

The number of shares outstanding of the registrant’s Common Stock as of June 6, 2016 was 28,882,093.

Sycamore Networks, Inc.


Index		Page No.

Part I.	FINANCIAL INFORMATION		3

Item 1.	Financial Statements (unaudited)		3

	Statement of Net Assets (Liquidation Basis) as of April 30, 2016 and July 31, 2015		3

	Statement of Changes in Net Assets (Liquidation Basis) for the three and nine months ended April 30, 2016 and April 25, 2015		4

	Notes to Financial Statements		5

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations		11

Item 3.	Quantitative and Qualitative Disclosures About Market Risk		15

Item 4.	Controls and Procedures		16

Part II.	OTHER INFORMATION		17

Item 1A.	Risk Factors		17

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds		18

Item 6.	Exhibits		19

Signatures			21

Part I.

Financial Information

Item 1. Financial Statements

Sycamore Networks, Inc.

Statement of Net Assets (Liquidation Basis)

(in thousands, except per share data)


	(unaudited)
	April 30, 2016		July 31, 2015
Assets

Cash and cash equivalents	$	3,993		10,943
Land		—		2,500
Other assets		55		47

Total assets		4,048		13,490


Liabilities and Net Assets

Accrued expenses		—		47
Reserve for estimated costs during the Dissolution period		1,705		1,776
Other liabilities		1,587		1,587

Total liabilities		3,292		3,410


Net assets in liquidation	$	756	$	10,080


Shares outstanding		28,882		28,882

Net assets in liquidation per share	$	0.03	$	0.35

The accompanying notes are an integral part of the financial statements.

Sycamore Networks, Inc.

Statement of Changes in Net Assets (Liquidation Basis)

For the three and nine months ended April 30, 2016 and April 25, 2015

(in thousands)

(unaudited)


	Three months ended April 30, 2016			Nine months Ended April 30, 2016
Net assets in liquidation at beginning of period	$	9,132		$	10,080

Change in estimated realizable value of assets and liabilities:

Liquidating distribution		(8,376	)		(8,376	)
Decrease in estimated costs during the Dissolution period		—			(999	)
Increase in estimated realizable value for other assets		—			4
Decrease in accrued expenses		—			47


Net assets in liquidation as of April 30, 2016	$	756		$	756


	Three months ended April 25, 2015		Nine months ended April 25, 2015
Net assets in liquidation at beginning of period	$	9,573	$	9,496

Change in estimated realizable value of assets and liabilities:

Increase in estimated costs during the Dissolution period		—		6
Increase in estimated realizable value for other assets		11		82


Net assets in liquidation as of April 25, 2015	$	9,584	$	9,584

The accompanying notes are an integral part of the financial statements.

Sycamore Networks, Inc.

Notes To Financial Statements (Unaudited)

1.	Description of Business

Prior to February 1, 2013, Sycamore Networks, Inc. (the “Company” or “Sycamore”) 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”).

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. 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 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 sale or monetization of the Company’s remaining non-cash assets and the satisfaction or settlement of its liabilities and obligations, including contingent liabilities and claims. As of April 30, 2016, the Company had one remaining employee.

“IQstream Patents”) for $0.3 million to Citrix Systems, Inc. Following the sale of the IQstream Patents, the Company has continued to pursue the sale of certain technology and equipment relating to the IQstream Business; however, the Company does not expect to receive any additional material consideration for its remaining IQstream assets.

In accordance with the Purchase and Sale Agreement by and between the Company and Princeton Tyngsborough Commons, LLC (“Tyngsborough Commons”) dated October 10, 2014, and amended on each of February 24, 2015, March 27, 2015, March 30, 2015, July 30, 2015, September 15, 2015, September 30, 2015 and October 9, 2015 (as amended, the “Purchase Agreement”), on December 4, 2015 the Company completed the sale of approximately 102 acres of undeveloped land located in Tyngsborough, Massachusetts to Tyngsborough Commons for a total purchase price of $2.5 million. In accordance with the terms of the Purchase Agreement, all representations and warranties which survived the closing expired on February 29, 2016.

The Company is continuing to pursue the liquidation to cash of its remaining non-cash assets, which primarily consist of the Company’s investment in Tejas Networks India Private Limited, a private company in India that provides optical transport solutions to telecommunications carriers (“Tejas”). In July 2000, the Company made an investment of $2.2 million in Tejas, and it currently owns approximately 5% of the outstanding equity interests in Tejas. The Company is evaluating its available options with respect to its investment in Tejas. The Company currently believes that while it may be possible to realize some value with respect to its investment in Tejas, any present sale of the Company’s Tejas shares would be subject to a discount due to the currently illiquid market for the Tejas shares, among other factors. As a result, and following consideration of potential options that might arise with respect to the Company’s Tejas investment, the Board determined that additional time would be useful to further evaluate whether any potential value that might be realizable from the Tejas investment would exceed the additional costs that would be anticipated to be incurred as a result of extending the Company’s Dissolution period. Accordingly, on February 12, 2016, the Company filed a petition (the “Petition”) in the Delaware Court of Chancery (the “Court of Chancery”) requesting an extension in accordance with the General Corporation Law of the State of Delaware of up to an additional two years of the Company’s wind down period, or such shorter period as the Board deems necessary, to make a final determination with respect to the Company’s Tejas investment, which was granted on February 25, 2016.

Although the Board believes that it may be possible to realize some value with respect to its investment in Tejas, such potential value is presently uncertain and subject to substantial risks and uncertainties that are outside of Sycamore’s control, including risks and uncertainties that arise from or relate to certain agreements and obligations among the shareholders of Tejas. As a result, the Board has determined that it cannot reasonably provide an estimate of the net realizable value of its Tejas investment at this time, and Sycamore has assigned no value to the Tejas shares for the purposes of its Statement of Net Assets. The Company cannot provide any assurance as to when, if ever, the Company will be able to realize any value from its investment in Tejas, or that the amount realized will equal or exceed the amount expected to be incurred as a result of the extension of the Dissolution period.

On April 29, 2016, the Company paid a liquidating cash distribution to stockholders of $0.29 per share of Common Stock, or $8.38 million in the aggregate. The Board declared this liquidating distribution after the Court of Chancery, on February 25, 2016, entered an order extending Sycamore’s corporate existence for an additional period of up to two years, ending on March 7, 2018, or such shorter period as the Board deems necessary, to make a final determination with respect to the Company’s remaining non-cash assets. In accordance with that order, the Court of Chancery affirmed that approximately $3.54 million is sufficient to be retained for anticipated wind down costs and expenses, of which any portion that is not required to cover such wind down costs and expenses may be distributed from time to time to the Company’s stockholders in the discretion of the Board in accordance with its fiduciary duties.

Following a final determination by the Board with respect to the remaining non-cash assets, the Company would expect to make a final liquidating distribution and conclude the Dissolution period. In addition, subject to uncertainties inherent in the winding-down of the Company’s business, the Company may make one or more additional liquidating distributions prior to the conclusion of the Dissolution period 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 of the completion of the Dissolution, the timing of any further distributions to stockholders or the aggregate amount of any such distributions, and no assurance can be given that the distributions will equal or exceed the estimate of net assets presented in the Company’s Statement of Net Assets. The Company will continue to analyze its estimates of liquidation expenses on an ongoing basis, and determine whether further distributions of assets to its stockholders are appropriate at such times.

2.	Basis of Presentation

The accompanying financial data has been prepared by the Company, without audit, pursuant to the rules and regulations of the SEC. Certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America have been condensed or omitted pursuant to such rules and regulations. However, the Company believes that the disclosures are adequate to make the information presented not misleading. The financial statements should be read in conjunction with the financial statements and the notes thereto included in the Company’s Annual Report on Form 10-K for the fiscal year ended July 31, 2015, as filed with the SEC on October 27, 2015.

In the opinion of management, the accompanying financial data reflect all adjustments (consisting of only normal recurring adjustments) necessary for a fair statement of net assets. 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 reported amounts of assets and liabilities at the dates of the financial statements. Actual results could differ from these estimates.

On March 24, 2013, following the Company’s filing of the Certificate of Dissolution, the Company adopted the liquidation basis of accounting. See Note 3 to the financial statements, “Liquidation Basis of Accounting,” for further information regarding the Company’s adoption of the liquidation basis of accounting.

3.	Liquidation Basis of Accounting

Net assets in liquidation were $0.75 million and $10.08 million as of April 30, 2016 and July 31, 2015, respectively, a decrease of $9.33 million. The decrease was primarily due to the Company’s payment of a liquidating distribution to stockholders on April 29, 2016 of approximately $8.38 million.

As of April 30, 2016, total assets consisted of cash and cash equivalents of $3.99 million and other assets of $0.05 million. The decrease in the realizable value of our assets for the three and nine month periods ending April 30, 2016 was primarily due to the Company’s payment of the liquidating distribution on April 29, 2016. Based on the Company’s expectation that we do not expect to receive any additional material consideration for our remaining IQstream assets, we have assigned no value to these assets for purposes of the Statement of Net Assets. In addition, due to the uncertainty surrounding our ability to liquidate our Tejas investment, we have determined that we cannot reasonably provide an estimate of the net realizable value of our Tejas investment at this time and, accordingly, have assigned no value to the Tejas investment for purposes of the Statement of Net Assets.

As of April 30, 2016, liabilities consisted of our reserve for estimated costs during the Dissolution period of $1.7 million and other liabilities of $1.59 million. For additional information concerning other liabilities, see Note 5. “Income Taxes.”

During the three months ended April 30, 2016, the Company reclassified certain amounts among the categories of costs shown in the table below, but did not adjust its estimated settlement amounts of liabilities. During the nine months ended April 30, 2016, the Company adjusted its estimated settlement amounts of liabilities, resulting in a net decrease to net assets of $0.95 million. The adjustments were primarily related to the increase in the reserve for estimated costs of $1.44 million as a result of the extension of the Dissolution period by up to two additional years, offset in part by a decrease in the Company’s previously reserved estimated costs during the Dissolution period of $0.44 million and a decrease in accrued expenses of $0.05 million.

The increase of $1.44 million as a result of the extension of the Dissolution period assumes a final dissolution date of March 7, 2018, and is comprised of estimated compensation and consulting costs of $0.45 million, other expenses associated with wind down activities of $0.41 million, insurance of $0.22 million, and professional fees of $0.36 million. The decrease in the Company’s previously reserved estimated costs during the Dissolution period relates to estimated costs for the period through March 7, 2016, and is comprised of other expenses associated with wind down activities of $0.35 million, compensation and consulting costs of $0.05 million and professional fees of $0.04 million. The decrease in other expenses associated with wind down activities for the period through March 7, 2016 is primarily related to the expiration of the statute of limitations relating to potential tax liabilities in certain state jurisdictions. The decrease in compensation and consulting costs and professional fees for the period through March 7, 2016 is primarily related to a determination that those expenditures are no longer expected to be incurred.

The table below summarizes the reserve for estimated costs during the Dissolution period as of April 30, 2016 and July 31, 2015 (in thousands):


	April 30, 2016		July 31, 2015
Compensation	$	602	$	376
Professional fees		358		568
Other expenses associated with wind down activities		528		646
Insurance		217		186

	$	1,705	$	1,776

These estimated costs will continue to be reviewed periodically and adjusted as appropriate.

As of February 29, 2016, all surviving representations and warranties under the Purchase Agreement had expired without Tyngsborough Commons asserting any indemnification claims against the Company. Accordingly, the Company has not recorded, nor does it expect to record, any liability in connection with those obligations.

4.	Cash Equivalents and Marketable Securities

Cash equivalents are short-term, highly liquid investments with original or remaining maturity dates of three months or less at the date of acquisition. Cash equivalents are carried at cost plus accrued interest, which approximates fair market value. As of April 30, 2016 and July 31, 2015, aggregate cash and cash equivalents consisted of (in thousands):


April 30, 2016:	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Market Value
Cash and cash equivalents	$	3,993	$	—	$	—	$	3,993

Total	$	3,993	$	—	$	—	$	3,993


July 31, 2015:	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Market Value
Cash and cash equivalents	$	10,943	$	—	$	—	$	10,943

Total	$	10,943	$	—	$	—	$	10,943

5.	Income Taxes

The Company is currently open to audit under statutes of limitation by the Internal Revenue Service, various foreign jurisdictions, and state jurisdictions for the fiscal years ended July 31, 2009 through July 31, 2015. However, limited adjustments can be made to federal and state tax returns in earlier years in order to reduce net operating loss carryforwards.

As of April 30, 2016 and July 31, 2015, the Company had a liability of $1.59 million for taxes, interest and penalties for unrecognized tax benefits related to various foreign income tax matters. As of April 30, 2016 and July 31, 2015, the Company had $0.6 million accrued for interest and penalties related to uncertain tax positions. The Company accounts for interest and penalties related to uncertain tax positions as part of its provision for federal, international and state income taxes. This liability is subject to change, perhaps materially.

As a result of having substantial net operating losses over recent years and no current operations, the Company determined that it is more likely than not that our deferred tax assets will not be realized. Therefore, we maintain a valuation allowance on the full amount of our net deferred tax assets.

The occurrence of ownership changes, as defined in Section 382 of the Internal Revenue Code of 1986, as amended (the “Code”), is not controlled by the Company, and could significantly limit the amount of net operating loss carryforwards and research and development credits that can be utilized annually to offset future taxable income. The Company completed an updated Section 382 study for the period April 2006 through July 31, 2011 and the

results of this study showed that no ownership change within the meaning of the Code had occurred from April 2006 through July 31, 2011. The Company has not, however, conducted a Section 382 study for any periods after July 31, 2011 and, accordingly, the Company cannot provide any assurance that an ownership change within the meaning of the Code has not occurred since that date.

6.	Commitments and Contingencies

Guarantees

The Company’s guarantees requiring disclosure consist of its indemnification obligations under the Purchase Agreement, for officers and directors, and for other claims.

Prior to the Asset Sale and the Dissolution, in the normal course of business, the Company agreed to indemnify other parties, including customers, lessors and parties to other transactions with the Company with respect to certain matters. Historically, payments made by the Company under these agreements had not had a material impact on the Company’s operating results or financial position. Furthermore, most of these obligations were assumed by Buyer in connection with the Asset Sale. Accordingly, the Company has not recorded a liability for these agreements as of April 30, 2016 or July 31, 2015, as the Company believes the exposure for any related payments is not material.

We entered into our standard form of indemnification agreement with each of our current and former directors and executive officers, which is in addition to the indemnification provided for in our amended and restated certificate of incorporation, as amended. The Plan of Dissolution also provides that we continue to indemnify such directors and executive officers in accordance with such agreements and our amended and restated certificate of incorporation, as amended. The indemnification agreements, among other things, provide for indemnification of such directors and executive officers for a number of expenses, including attorneys’ fees and other related expenses, as well as certain judgments, fines, penalties and settlement amounts incurred by any such person in any action, suit or proceeding, including any action by or in the right of the Company, arising out of such person’s service as a director or executive officer of the Company or any other company or enterprise to which the person provided services at our request. The Company did not incur any expense under these arrangements during the first nine months of fiscal 2016 or fiscal 2015. Due to the Company’s inability to estimate liabilities in connection with these agreements, if and when they might be incurred, the Company has not recorded any liability for these agreements as of April 30, 2016 or July 31, 2015. During the Dissolution period, we intend to continue to indemnify each of our current and former directors and executive officers to the extent permitted under Delaware law, our amended and restated certificate of incorporation, as amended, and the indemnification agreements. The Company has also continued to maintain directors’ and officers’ insurance coverage since the filing of the Certificate of Dissolution, and intends to maintain such coverage through the end of the Dissolution period and to obtain a tail policy following the completion of the Dissolution.

Other Matters

Prior to April 7, 2016, the Company’s 401(k) was the subject of a scheduled investigation by the U.S. Department of Labor (the “DOL”). On April 7, 2016, the DOL informed the Company that its investigation had concluded and that no further action by the DOL was then contemplated.

7.	Fair Value Measurements

The fair value measurement rules establish a fair value hierarchy which requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. The standard describes three levels of inputs that may be used to measure fair value:


Level 1		Quoted prices in active markets for identical assets or liabilities as of the reporting date. Active markets are those in which transactions for the asset and liability occur in sufficient frequency and volume to provide pricing information on an ongoing basis.


Level 2		Observable inputs other than Level 1 prices, such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities.

Level 3		Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities.

Assets and liabilities of the Company measured at fair value on a recurring basis as of April 30, 2016, are summarized as follows (in thousands):


			Fair Value Measurements at Reporting Date Using
Description	April 30, 2016		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)

Assets
Cash and Cash Equivalents	$	3,993	$	3,993	$	—	$	—

Total assets	$	3,993	$	3,993	$	—	$	—

Cash and Cash Equivalents

Cash and cash equivalents of $3.99 million consisting of money market funds are classified within Level 1 of the fair value hierarchy because they are valued using quoted market prices in active markets.

Assets and liabilities of the Company measured at fair value on a recurring basis as of July 31, 2015, are summarized as follows (in thousands):


			Fair Value Measurements at Reporting Date Using
Description	July 31, 2015		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)

Assets
Cash and Cash Equivalents	$	10,943	$	10,943	$	—	$	—

Total assets	$	10,943	$	10,943	$	—	$	—

Cash and Cash Equivalents

Cash and cash equivalents of $10.94 million consisting of money market funds are classified within Level 1 of the fair value hierarchy because they are valued using quoted market prices in active markets.

8.	Subsequent Events

None.

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

Except for the historical information contained herein, we wish to caution you that certain matters discussed in this report constitute forward-looking statements that involve risks and uncertainties. Our actual results could differ materially from those stated or implied in forward-looking statements due to a number of factors, including, without limitation, those risks and uncertainties discussed under the heading “Risk Factors” contained in our Annual Report on Form 10-K for the fiscal year ended July 31, 2015, as filed with the U.S. Securities and Exchange Commission (“SEC”) on October 27, 2015. The information discussed in this report should be read in conjunction with our Annual Report on Form 10-K and other reports we file from time to time with the SEC. We disclaim any intention or obligation to update or revise any forward-looking statements, whether as a result of new information, future results or otherwise. Forward-looking statements include statements regarding our expectations, beliefs, intentions or strategies regarding the future and can be identified by forward-looking words such as “anticipate,” “believe,” “could,” “estimate,” “expect,” “intend,” “may,” “should,” “will,” and “would” or similar words.

Available Information

Sycamore Networks, Inc. (the “Company”) files annual reports on Form 10-K, quarterly reports on Form 10-Q and current reports on Form 8-K with the SEC. These reports, any amendments to these reports, proxy and information statements and certain other documents the Company files with the SEC are available through the SEC’s website at www.sec.gov or free of charge on the Company’s website as soon as reasonably practicable after the Company files the documents with the SEC. The public may also read and copy these reports and any other materials the Company files with the SEC at the SEC’s Public Reference Room at 100 F Street, NE, Washington, D.C. 20549. You may obtain information on the operation of the Public Reference Room by calling the SEC at 1-800-SEC-0330.

Executive Summary

Prior to February 1, 2013, 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 Management’s Discussion and Analysis, “Sycamore,” “we,” “us,” or “our” refers collectively to the Company and its subsidiaries.

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.

During fiscal year 2014, the Company completed the sale of its patent portfolios. On February 28, 2014, the Company completed the sale of its portfolio of 40 patents and two patent applications related to the Intelligent Bandwidth Management Business (the “IBM Patents”) for $2.0 million to Dragon Intellectual Property, LLC. On May 22, 2014, the Company completed the sale of its portfolio of three United States patents, six United States patent applications and certain foreign patents and patent applications related to the IQstream Business (the “IQstream Patents”) for $0.3 million to Citrix Systems, Inc. Following the sale of the IQstream Patents, the Company has continued to pursue the sale of certain technology and equipment relating to the IQstream Business; however, the Company does not presently expect to receive any additional material consideration for its remaining IQstream assets.

On July 29, 2014, the Company paid a liquidating cash distribution to stockholders of $0.24 per share of Common Stock, or $6.93 million in the aggregate. The Board declared this distribution after the Delaware Court of Chancery (the “Court of Chancery”), on July 2, 2014, granted the Company’s petition for a determination that, among other things, the amount set forth in the petition to be retained by the Company for anticipated wind-down costs and expenses and for contingent and unknown liabilities and other possible charges and expenses was sufficient to be retained pursuant to Section 280(c) of the General Corporation Law of the State of Delaware.

In accordance with the Purchase and Sale Agreement by and between the Company and Princeton Tyngsborough Commons, LLC (“Tyngsborough Commons”) dated October 10, 2014, and amended on each of February 24, 2015, March 27, 2015, March 30, 2015, July 30, 2015, September 15, 2015, September 30, 2015 and October 9, 2015 (as amended, the “Purchase Agreement”), on December 4, 2015 the Company completed the sale of approximately 102 acres of undeveloped land located in Tyngsborough, Massachusetts (the “Tyngsborough Land”) to Tyngsborough Commons for a total purchase price of $2.5 million. In accordance with the terms of the Purchase Agreement, all representations and warranties which survived the closing expired on February 29, 2016.

The Company is continuing to pursue the liquidation to cash of its remaining non-cash assets, which primarily consist of the Company’s investment in Tejas Networks India Private Limited, a private company in India that provides optical transport solutions to telecommunications carriers (“Tejas”). In July 2000, the Company made an investment of $2.2 million in Tejas, and it currently owns approximately 5% of the outstanding equity interests in Tejas. The Company is evaluating its available options with respect to its investment in Tejas. The Company currently believes that while it may be possible to realize some value with respect to its investment in Tejas, any present sale of the Company’s Tejas shares would be subject to a discount due to the currently illiquid market for the Tejas shares, among other factors. As a result, and following consideration of potential options that might arise with respect to the Company’s Tejas investment, the Board determined that additional time would be useful to further evaluate whether any potential value that might be realizable from the Tejas investment would exceed the additional costs that would be anticipated to be incurred as a result of extending the Company’s Dissolution period. Accordingly, on February 12, 2016, the Company filed a petition (the “Petition”) in the Court of Chancery requesting an extension in accordance with the General Corporation Law of the State of Delaware (the “DGCL”) of up to an additional two years of the Company’s wind down period, or such shorter period as the Board deems necessary, to make a final determination with respect to the Company’s Tejas investment, which was granted on February 25, 2016.

On April 29, 2016, the Company paid a liquidating cash distribution to stockholders of $0.29 per share of Common Stock, or $8.38 million in the aggregate. The Board declared this distribution after the Court of Chancery, on February 25, 2016, entered an order extending Sycamore’s corporate existence for an additional period of up to two years, ending on March 7, 2018, or such shorter period as the Board deems necessary, to make a final determination with respect to the Company’s remaining non-cash assets. In accordance with the order, the Court of Chancery affirmed that approximately $3.54 million is sufficient to be retained for anticipated wind down costs and expenses, of which any portion that is not required to cover such wind down costs and expenses may be distributed from time to time to the Company’s stockholders in the discretion of the Board in accordance with its fiduciary duties.

Net Assets in Liquidation and Changes in Net Assets

Net assets in liquidation were $0.75 million and $10.08 million as of April 30, 2016 and July 31, 2015, respectively. The decrease was primarily due to the Company’s payment of a liquidating distribution to stockholders on April 29, 2016, of approximately $8.38 million.

During the three months ended April 30, 2016, the Company reclassified certain amounts among the categories of costs associated with the extension of the Dissolution period, but did not adjust its estimated settlement amounts of liabilities. During the nine months ended April 30, 2016, the Company adjusted its estimated settlement amounts of liabilities, resulting in a net decrease to net assets of $0.95 million. The adjustments were primarily related to the increase in the reserve for estimated costs of $1.44 million as a result of the extension of the Dissolution period by up to two additional years, offset in part by a decrease in the Company’s previously reserved estimated costs the Dissolution period of $0.44 million and a decrease in accrued expenses of $0.05 million.

The increase of $1.44 million as a result of the extension of the Dissolution period presumes a final dissolution date of March 7, 2018, and is comprised of estimated compensation and consulting costs of $0.45 million, other expenses associated with wind down activities of $0.41 million, insurance of $0.22 million, and professional fees of $0.36 million. The decrease in the Company’s previously reserved estimated costs during the Dissolution period relates to estimated costs for the period through March 7, 2016, and is comprised of other expenses associated with wind down activities of $0.35 million, compensation and consulting costs of $0.05 million and professional fees of $0.04 million. The decrease in other expenses associated with wind down activities for the period through March 7, 2016 is primarily related to the expiration of the statute of limitations relating to potential tax liabilities in certain state jurisdictions. The decrease in compensation and consulting costs and professional fees for the period through March 7, 2016 is primarily related to a determination that those expenditures are no longer expected to be incurred.

Based on our current best estimate of the realizable value of the Company’s remaining assets relating to the IQstream Business, we have assigned no value to these assets for purposes of the Statement of Net Assets. In

addition, although the Board believes that it may be possible to realize some value with respect to its investment in Tejas, such potential value is presently uncertain and subject to substantial risks and uncertainties that are outside of Sycamore’s control, including risks and uncertainties that arise from or relate to certain agreements and obligations among the shareholders of Tejas. As a result, the Board has determined that it cannot reasonably provide an estimate of the net realizable value of its Tejas investment at this time, and Sycamore has assigned no value to the Tejas shares for the purposes of its Statement of Net Assets.

On February 25, 2016, the Court of Chancery entered an order extending Sycamore’s corporate existence for an additional period of up to two years, ending on March 7, 2018, or such shorter period as the Board deems necessary, to make a final determination with respect to the Company’s remaining non-cash assets, and affirming that approximately $3.54 million is sufficient to be retained for anticipated wind down costs and expenses, of which any portion that is not required to cover such wind down costs and expenses may be distributed from time to time to the Company’s stockholders in the discretion of the Board in accordance with its fiduciary duties. Following a final determination by the Board with respect to the remaining non-cash assets, the Company would expect to make a final liquidating distribution and conclude the Dissolution period. In addition, subject to uncertainties inherent in the winding-down of the Company’s business, the Company may make one or more additional liquidating distributions prior to the conclusion of the Dissolution period 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 of the completion of the Dissolution, the timing of any further distributions to stockholders or the aggregate amount of any such distributions, and no assurance can be given that the distributions will equal or exceed the estimate of net assets presented in the Company’s Statement of Net Assets.

Critical Accounting Policies and Estimates

Preparation of financial statements requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenue and expenses. Management believes the most complex and sensitive judgments, because of their significance to the financial statements, result primarily from the need to make estimates about the effects of matters that are inherently uncertain. Management’s Discussion and Analysis in the Company’s Annual Report on Form 10-K for the fiscal year ended July 31, 2015 describes the significant accounting estimates and policies used in the preparation of the financial statements. Actual results in these areas could differ from management’s estimates. There have been no significant changes in the Company’s critical accounting policies during the first nine months of fiscal 2016.

Liquidity and Capital Resources

Total cash and cash equivalents were $3.99 million as of April 30, 2016, compared to $10.94 million as of July 31, 2015.

Cash and cash equivalents decreased by $8.63 million during the three months ended April 30, 2016. During the three months ended April 30, 2016, the Company paid $8.38 million to stockholders in a liquidating cash distribution, and also paid $0.25 million in costs related to the Plan of Dissolution.

Cash and cash equivalents decreased by $6.95 million during the nine months ended April 30, 2016. During the nine months ended April 30, 2016, the Company received $2.5 million from the sale of the Tyngsborough Land. During that same period, the Company paid $8.38 million to stockholders in a liquidating cash distribution, and also paid $1.07 million in costs related to the Plan of Dissolution.

On February 25, 2016, the Court of Chancery entered an order extending Sycamore’s corporate existence for an additional period of up to two years, ending on March 7, 2018, or such shorter period as the Board deems necessary, to make a final determination with respect to the Company’s remaining non-cash assets, and affirming that approximately $3.54 million is sufficient to be retained for anticipated wind down costs and expenses, of which any portion that is not required to cover such wind down costs and expenses may be distributed from time to time to the Company’s stockholders in the discretion of the Board in accordance with its fiduciary duties. Following entry of the Court of Chancery’s order, on April 29, 2016, the Company paid a liquidating cash distribution of $0.29 per share of the Company’s Common Stock. Following a final determination by the Board with respect to the remaining non-cash assets, the Company would expect to make a final liquidating distribution and conclude the Dissolution period. 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 of the completion of the

Dissolution, the timing of any further distributions to stockholders or the aggregate amount of any such distributions, and no assurance can be given that the distributions will equal or exceed the estimate of net assets presented in the Company’s Statement of Net Assets.

Our primary source of liquidity comes from our cash and cash equivalents. We believe that our cash and cash equivalents will be sufficient to satisfy our anticipated cash requirements through the end of the Dissolution period. However, the Dissolution process involves substantial risks and uncertainties. Accordingly, the actual amount of cash remaining for distribution to stockholders following completion of the Dissolution could vary significantly from current estimates, and such risks and uncertainties could result in no excess cash available for distribution.

Commitments, Contractual Obligations and Off-Balance Sheet Arrangements

The Company has no material operating leases or inventory or other purchase commitments.

Item 3.

Quantitative and Qualitative Disclosures about Market Risk

Not applicable.

Item 4.

Controls and Procedures

Evaluation of Disclosure Controls and Procedures. Our President and our Principal Financial Officer and Treasurer evaluated the effectiveness of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”)), as of April 30, 2016. Disclosure controls and procedures are designed to ensure that information required to be disclosed by the Company in the reports we file or submit under the Exchange Act is recorded, processed, summarized and reported on a timely basis and that such information is accumulated and communicated to our President and our Principal Financial Officer and Treasurer, as appropriate, to allow timely decisions regarding required disclosure. Based on this evaluation, our President and our Principal Financial Officer and Treasurer concluded that these disclosure controls and procedures are effective and designed to ensure that the information required to be disclosed in our reports filed or submitted under the Exchange Act is recorded, processed, summarized and reported within the requisite time periods.

Limitations on Effectiveness of Controls. Our President and our Principal Financial Officer and Treasurer have concluded that our disclosure controls and procedures and internal controls provide reasonable assurance that the objectives of our control system are met. However, our President and our Principal Financial Officer and Treasurer do not expect that the disclosure controls and procedures or internal controls will prevent all error and/or fraud. A control system, no matter how well designed and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met. Further, the design of a control system must reflect the fact that there are resource constraints, and the benefits of controls must be considered relative to their costs. Due to the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues, errors and instances of fraud, if any, within the company have been or will be detected. These inherent limitations include the realities that judgments in decision making can be faulty and that breakdowns can occur because of simple errors or mistakes. Additionally, controls can be circumvented by the individual acts of some persons, by collusion of two or more people, or by management override of the control. The design of any system is also based in part upon certain assumptions about the likelihood of future events, and there can be no assurances that any design will succeed in achieving its stated goals under all potential future conditions. Because of the inherent limitations in a cost-effective control system, misstatements due to error or fraud may occur and may not be detected.

Changes in Internal Control over Financial Reporting. During the quarter ended April 30, 2016, there was no change in our internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

Part II.

Other Information

Item 1.

Legal Proceedings

•

On February 12, 2016, the Company filed the Petition in the Court of Chancery, requesting an extension in accordance with the DGCL of up to an additional two years of the Company’s wind down period, or such shorter period as the Board deems necessary, to make a final determination with respect to the Company’s Tejas investment. On February 25, 2016, the Court of Chancery entered an order extending Sycamore’s corporate existence for an additional period of up to two years, ending on March 7, 2018, or such shorter period as the Board deems necessary, and affirming that approximately $3.54 million is sufficient to be retained for anticipated wind down costs and expenses, of which any portion that is not required to cover such wind down costs and expenses may be distributed from time to time to the Company’s stockholders in the discretion of the Board in accordance with its fiduciary duties.

•

Item 1A.

Risk Factors

Set forth below and elsewhere in this Quarterly Report on Form 10-Q and in other documents we file with the SEC are descriptions of the risks and uncertainties that could cause our actual results to differ materially from the results contemplated by the forward looking statements contained in this Annual Report on Form 10-Q. In addition to the other information set forth in this Quarterly Report on Form 10-Q, you should carefully consider the risk factors discussed in Part I, “Item 1A. Risk Factors” of our Annual Report on Form 10-K for the fiscal year ended July 31, 2015, as filed with the SEC on October 27, 2015. Additional risks and uncertainties, including risks and uncertainties not presently known to us, or that we currently deem immaterial, could also have an adverse effect on our business, financial condition and/or results of operations.

We cannot predict the timing of the completion of the Dissolution or the timing, amount or nature of any future distributions to our stockholders.

On February 25, 2016, the Court of Chancery entered an order extending Sycamore’s corporate existence for an additional period of up to two years, ending on March 7, 2018, or such shorter period as the Board deems necessary, and affirming that approximately $3.54 million is sufficient to be retained for anticipated wind down costs and expenses, of which any portion that is not required to cover such wind down costs and expenses may be distributed from time to time to the Company’s stockholders in the discretion of the Board in accordance with its fiduciary duties. Following entry of the Court of Chancery’s order, on April 29, 2016 the Company paid a liquidating cash distribution of $0.29 per share of the Company’s Common Stock. No assurances can be made as to additional amounts to be distributed, if any, or the timing of any further liquidating distributions, the amount of which is subject to our covering wind-down costs, charges, expenses and liabilities, as well as our ability to dispose of the Company’s remaining non-cash assets within the two-year extension period.

The completion of the Dissolution and any final liquidating distributions could also be delayed or diminished due to other factors, including, without limitation:

•

if we are unable to liquidate our investment in Tejas, or such liquidation takes longer than expected;

•

if we become a party to any additional lawsuits or other claims asserted by or against us, including any claims or litigation arising in connection with our decision to continue to pursue the Dissolution;

•

if we are unable to resolve any pending or new claims or investigations with creditors or third parties, or if such resolutions take longer than expected; or

•

if we are unable to reduce our public company reporting requirements under the Exchange Act during the Dissolution period.

Any of the foregoing could delay the completion of the Dissolution, or could delay the distribution of or substantially diminish, or eliminate, the amount available for future distribution to our stockholders. As a result of these factors, we may retain for distribution at a later date some or all of the estimated amounts that we expect to distribute to our stockholders as part of the liquidation process.

Item 2.

Unregistered Sales of Equity Securities and Use of Proceeds

The Company has not: (1) publicly announced any programs to repurchase, or repurchased, any shares of Common Stock; or (2) sold, within the last three years, Company securities that were not registered under the Securities Act of 1933, as amended.

Item 6. Exhibits

Exhibits:

(a) List of Exhibits


Number		Exhibit Description

2.1		Plan of Complete Liquidation and Dissolution adopted by the Board of Directors of Sycamore Networks, Inc. on October 22, 2012 (6)

3.1		Amended and Restated Certificate of Incorporation of the Company (1)

3.2		Certificate of Amendment to the Amended and Restated Certificate of Incorporation of the Company (1)

3.3		Certificate of Amendment to the Amended and Restated Certificate of Incorporation of the Company (2)

3.4		Certificate of Amendment to the Amended and Restated Certificate of Incorporation of the Company (4)

3.5		Amended and Restated By-Laws of the Company (3)

4.1		Specimen common stock certificate (5)

4.2		See Exhibits 3.1, 3.2, 3.3, 3.4 and 3.5 for provisions of the Certificate of Incorporation and By-Laws of the Registrant defining the rights of holders of common stock of the Company (1)(2)(3)(4)

4.3		Certificate of Dissolution, as filed by Sycamore Networks, Inc. with the Secretary of State of the State of Delaware on March 7, 2013 (7)

31.1		Certification of Principal Executive Officer pursuant to Rule 13a-14(a) under the Securities Exchange Act of 1934 as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

31.2		Certification of Principal Financial Officer pursuant to Rule 13a-14(a) under the Securities Exchange Act of 1934 as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

32.1		Certification of Principal Executive Officer pursuant to 18 U.S.C. Section 1350 as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

32.2		Certification of Principal Financial Officer pursuant to 18 U.S.C. Section 1350 as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

101.INS		XBRL Instance Document

101.SCH		XBRL Taxonomy Extension Schema Document

101.CAL		XBRL Taxonomy Extension Calculation Linkbase

101.DEF		XBRL Taxonomy Extension Definition Linkbase

101.LAB		XBRL Taxonomy Extension Label Linkbase

101.PRE		XBRL Taxonomy Extension Presentation Linkbase

(1)	Incorporated by reference to Sycamore Networks, Inc.’s Registration Statement on Form S-1 (Registration Statement No. 333-30630) filed with the Securities and Exchange Commission on February 17, 2000.

(2)	Incorporated by reference to Sycamore Networks, Inc.’s Quarterly Report on Form 10-Q for the quarterly period ended January 27, 2001 filed with the Securities and Exchange Commission on March 13, 2001.

(3)	Incorporated by reference to Sycamore Networks, Inc.’s Quarterly Report on Form 10-Q for the quarterly period ended October 27, 2007 filed with the Securities and Exchange Commission on November 28, 2007.

(4)	Incorporated by reference to Sycamore Networks, Inc.’s Current Report on Form 8-K filed with the Securities and Exchange Commission on December 21, 2009.

(5)	Incorporated by reference to Sycamore Networks, Inc.’s Annual Report on Form 10-K for the fiscal year ended July 31, 2010 filed with the Securities and Exchange Commission on September 24, 2010.

(6)	Incorporated by reference to Sycamore Networks, Inc.’s Quarterly Report on Form 10-Q for the quarterly period ended October 27, 2012 filed with the Securities and Exchange Commission on November 29, 2012.

(7)	Incorporated by reference to Sycamore Networks, Inc.’s Current Report on Form 8-K filed with the Securities and Exchange Commission on March 8, 2013.

Signatures

Pursuant to the requirements 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.

Sycamore Networks, Inc.

/s/ Anthony J. Petrillo

Anthony J. Petrillo

Principal Financial Officer and Treasurer

(Duly Authorized Officer and Principal Financial and Accounting Officer)

Dated: June 9, 2016

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SYCAMORE NETWORKS INC 10-Q