PlcOxford & Cambridge Club

21 May 2014

CSS INVESTOR PRESENTATION

“To become the world leader in supplying optical chips to the active optical networking market”

The Future is Optical

The world is moving to optical communications that is replacing electrical communication because copper lines are limited in transmitting high speed signals, over medium to long distances.Optical communication will dominate the line communication market in the near and far future.The problem companies are facing is how to make the translation between electrical and optical signals a low cost solution.

OTX breakthrough solution: “Optical Chips”The translators (TOSA and ROSA) are made in a “silicon chip production” fashion, making it:• Low cost• Easy to assemble• Widely spread

With OTX optical “chips” manufacturers can make low cost:• HDMI active optical cables• USB3.0 active optical cables• Any other fast communication line connection

OTX provides low-cost optical solutions for mass market

Optical Communications

OTX makes “translation” units available to mass market

High speed cable

Electrical signals

Electronic equipment (PC, TV, etc.)

Standard interface (PCI-X, USB3, HDMI etc.)

Electronic equipment (PC, Server etc.)

Standard interface (PCI-X, USB3, HDMI etc.)

“Higher Speed and longer distances”

High speed cableElectronic equipment (PC, TV, etc.)

Standard interface (PCI-X, USB3, HDMI etc.)

Electronic equipment (PC, Server etc.)

Standard interface (PCI-X, USB3, HDMI etc.)

Optical signals

Electrical to Optical (TOSA) and Optical to Electrical (ROSA) translation unit

Electrical to Optical (TOSA) and Optical to Electrical (ROSA) translation unit

OTX was founded in March 2007. Its mission to create a new Production Platform for the assembly and manufacture of integrated Optical Circuits used in implementing active optical networks. To use this Production Platform to make smaller, simpler and cheaper “optical chips” consisting of lasers and photodetectors for active optical applications. The R&D phase lasted five years. The OTX Production Platform technology was completed and the optical chips it made passed all the tests for telecoms application.In 2014 we started integration process by engaging with Chinese optical cable manufacturers to refine OTX translators to facilitate their production process.

Background to the Company

Accomplishments to Date1. OTX has validated the proper functioning optical chips produced by its proprietaryplatform. Chips have been subjected to conventional heat, stress, vibration tests and passed them all with no exceptions (2011-12). Even qualifying for use in telecom infrastructure.

2. OTX has completed its R&D Production Platform line in Israel (2012-13). Consists of two automated machines that make the laser-emitter chips and photodetector chips respectively, operated by one PC.

– Theoretical upper limit for one machine is 3,600 chips per hour– 1 machine operating 10 hours/day for 30 days can manufacture 1 million chips per month – Cost of one machine < US$ 5,000 dollars– No limit on scalability, just add add 1 PC every 4 machines

3. Throughout OTX has maintained IP policy of patenting the uTOSA/uROSA specific geometries and layout (one patent awarded on chip design in 2012); combined with a strict trade secrecy policy over the OTX Production Platform designs, its methods and construction.

4. In 2013 OTX market approach focused on singlemode Active Optical Cables and we have integrated our two chips in a stand alone “translator” component for ease of assembly by HDMI and USB cable manufacturers. The so called OTX micro-OTR (or uOTR).

2 Chips into 1 ComponentTwo Active Optical Cable chips made with OTX Production Platform:• microTOSA a singlemode 1310nm standard (Fabry Perot) laser-emitter • microROSA a singlemode 1310nm photo-detector

picture of a Laser/Detector (magnified)

• OTX Optical “Translator” ComponentPackaged component for use in new Active Optical HDMI Cablesmicro OTR + (microTOSA + microROSA + electronics )

Offered as a single integrated component to manufacturers of new active optical cables.

Width: 0.5mmWidth: 2mm

Laser/Detector Single Mode Fiber(125 micron)

Current VCSEL based Multi-mode Active Optical USB 3.0 Cable

Multimode Fiber

Laser DiodePhotodetector

IC (Electronics)

OTX uOTR + Singlemode

Fiber Optic Cable

Current Solution vs. uOTR

uOTR AdvantagesOTX uOTR Current Solution

Fiber Type Singlemode Multimode

Laser Type Low-cost Fabry-Perot VCSEL

Wavelength 1310nm 850nm

Fiber Cost 2xSinglemode

Distance 0-10 Km 50m-100m (decreases as bandwidth increase)

Electronics Simple Requires EDC

Cable Assembly Simple Complex

Size 0.5mm x 3mm Much larger

OTX uOTR deliver superior performance compared with multimode active cable for a lower price.

uOTR Cost AnalysisCurrent Industry Cost EstimatesBased on assembly of discrete optical components (not integrated optical circuits) using currently available technology the Company’s estimated Bill Of Materials (BOM) costs plus labour per uOTR (single-mode 5G 1310nm optical TOSA/ROSA chip pair) is approximately $2.50

OTX Cost Breakdown:

uOTR BOM Units Manufactured 1M 10M 100M

Micro-TOSA-SM-1310-5bps Silicon 0.11 0.09 0.08

Laser Diode 0.38 0.34 0.27TOTAL 0.49 0.43 0.35

Micro-ROSA-SM-1310-5bps Silicon 0.11 0.09 0.08

Photo Detector 0.38 0.34 0.27TOTAL 0.49 0.43 0.35

uOTR Package Cost ($) 0.98 0.86 0.70

Investment and Growth Plan

2012 2013 2014 2015 2016 2017

HDMIuOTR

PCIxuOTR

OTX Product Development:

5G 10G ?

uTOSAuROSA

OTXMachine

1G

USBuOTR

US$ (M) Investment Sales Gross Profit

2014 1 .5 -2015 10 21 102016 25 228 1142017 - 467 257

OTX Investment and Growth:

Offer OTX uOTR package that integrates micro-TOSA/micro-ROSA chips with attendant electronics in a single “translator” component to cable manufacturers.

1. Engage with customers in China for defining detailed specifications and form fit factors for OTX uOTR

2. Recruit COO to prepare the Production Line in Israel3. Expand offer to other Chinese customers 4. Commission Technology And Market Assessment Study5. Recruit CEO to lead expansion6. Prepare for M&A or for financing to precede M&A presentations7. Expand operations set-up Technical Distribution network (China, South

Korea, Taiwan)8. Introduce the OTX company in Israel to strategic optical hardware

vendors whose products can benefit from OTX chips and components

2014-2015 Business Plan

OTX has significant intellectual property, all of which is documented. The IP is summarised below:

IP Portfolio

3. OTHER IPProprietary Software

1) Factory Management software2) Machine control software3) Automated testing software4) QA management software

Other Proprietary Hardware1) uOTR Casing2) AOC Cable assembly tool

2. OTX CHIP PATENTSuTOSA/uROSA architecture design patent awarded

Number: IL2011/000522Description: Layout and design of chip Date Published: January 2012 PCT Jurisdiction: Europe , USA , China , Brasil , South Africa , Israel

(NEW in 2014) uROSA chip design Date: expected filing date spring/summer 2014Jurisdictions: Israel, International PCT

1. OTX PRODUCTION PLATFORM IPTrade secrets cover the OTX Platform (these are not described in any detail anywhere except in papers at the Company). -Design of the automated machine -Chip assembly process documentation.-Unit testing apparatus and process -Substrate preparation process -Laser bar spec and preparation process -Input-tray design (for both lasers and detectors)-Fiber alignment mechanism and process

USB 3.0 Future

Until recently Ethernet cables dominated the Local Area Networks (LANs) and USB cables is dominating the peripherals interconnect for many years. • Started with USB 1.0-10Mbps , USB 2.0-480Mbps , USB 3.0-5000Mbps , USB 3.1-

10,000Mbps.• USB deliver both Power and Communication on the same cable. USB is supported by all

Electronics products in the market. • USB 1.0 and 2.0 where limited to few meters. But USB 3.0 standard is no longer distance

limited which makes it superior over Ethernet. Therefore position the USB as the dominating interface in the years to come.

Conclusion• USB 3.0 and it successors will dominate the interconnect.• 5Gbps and higher bandwidth require optical fibers for distances more then few

meters. (Optical Fiber are cheaper then Copper for more then few meters applications)

• Current Optical cables are using multimode fibers which are more easy to assemble but suffer from poor performance when bandwidth/distance increase.

Optical Connectivity Market“Structured Cabling Market which includes copper and fiber in telecomm and IT sectors is to exceed $8 billion by 2015 “2013 Structured Cabling Technology &Market Assessment by Bishop&Associates

The global structured cabling market has been characterized by its stable growth over the past several years, with the market growing at a compound annual growth rate of 6.8% to reach $5.6 billion in 2011. The structured cabling market to exceed $8 billion by 2015. The US still dominates this market, China and the Asia Pacific region show the most growth potential over the next five years.The ongoing battle between copper and fiber systems continues to persist.

These are the companies that are the current optical cable manufacturers and potential customers• Optical Cable manufacturers HITACHI, CORNING, AVAGO, FINISTAR, VIA• Optical Cable vendors NXP, SILICON IMAGE, STMICRO, TRANSWITCH These are the companies that are current optical vendors and potential active optical vendors:• Electronics chips manufacturing INTEL, MARVELL, BROADCOM, MELLANOX• Telecom equipment vendors CISCO, JUNIPER, ALCATEL, ERICSSON• Electronics component assemblers FOXCONN, FLEXTRONICS• Big IT & electronics consumer brands APPLE, SAMSUNG, LG, MS-NOKIA

Company Financials (Audited)

Management & BoardChairman of the Board & CEO - Eli Ben Oliel

Board Member - Dr Avi Strum

Board Member - Guido Branca

COO (PHd in Optics – will join soon)

Head of Sales WW – Michael “Miki” Halperin

CFO – TBA