Edgar Filing: SORRENTO NETWORKS CORP

Section 240.14a-101 Schedule 14A.
Information required in proxy statement.
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240.14a-12

Sorrento Networks Corporation
..................................................................
(Name of Registrant as Specified In Its Charter)

..................................................................
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[Logo of Sorrento Networks]

July 29, 2002

NOTICE OF DEAR FELLOW SHAREHOLDERS:
ANNUAL
MEETING AND We cordially invite you to attend the Meeting of the Shareholders of Sorrento
PROXY STATEMENT Networks Corporation (the 'Company') to be held at 10:00 a.m. on Wednesday,
August 28, 2002, at the San Diego Marriott Del Mar, 11966 El Camino Real, San
WEDNESDAY Diego, California.
AUGUST 28, 2002
AT 10:00 A.M. The purposes of this meeting are the election of directors and ratification of
SAN DIEGO the appointment of the independent accountants. Following the meeting, we will
MARRIOTT DEL MAR also review the status of the Company's business at the meeting. These matters
11966 are more fully described in the accompanying Notice of Annual Meeting and Proxy
EL CAMINO REAL Statement, which we encourage you to read carefully.
SAN DIEGO
CALIFORNIA A continental breakfast will be available prior to the meeting beginning at 9:00
am. The Company's senior management will be available to talk with shareholders
before the meeting. Following the formal meeting, management will review the
Company's accomplishments during the past year, update shareholders on its plans
for the future, and respond to shareholder's questions.

Meeting participants can also take a company tour, with live product
demonstrations, between 1 and 3 pm at the Company's headquarters, located at 9990
Mesa Rim Road, San Diego, California which is approximately 8 miles from the
Marriott. Directions will be available at the meeting.

The Board of Directors recommends that Shareholders vote in favor of each
proposal. At the last meeting, over 84% of the outstanding shares were
represented at the Annual Meeting. We encourage all Shareholders to participate
by voting their shares by Proxy, whether or not they plan to attend the meeting,
as soon as possible. This year you may vote over the Internet, by telephone, or
by mailing a traditional proxy card. If you do attend the Annual Meeting, you may
revoke your proxy at that time and vote in person, if you wish, even if you have
previously returned your proxy.

If you have questions about the proposals or voting your shares, please call Mary
Lay, V. P. Finance, at the Company (858) 909-3445.

Sincerely,

PHILLIP W. ARNESON
PHILLIP W. ARNESON
Chairman and Chief Executive Officer

[Logo of Sorrento Networks]

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NOTICE OF ANNUAL MEETING
OF SHAREHOLDERS
---------------------------------------

To be held on August 28, 2002

Notice is hereby given that the Annual Meeting of Shareholders (the 'Annual
Meeting') of Sorrento Networks Corporation (the 'Company') will be held at the
San Diego Marriott Del Mar, 11966 El Camino Real, San Diego, California,
on August 28, 2002 at 10:00 a.m., for the following purposes:

1. To elect five directors who will hold office for one-year
terms ending at the next Annual Meeting of Shareholders or
until their successors have been duly elected and
qualified.

2. To ratify the appointment of BDO Seidman, LLP as the firm
of independent auditors for the year ended January 31,
2003.

3. To consider and take action upon such other business as may
properly come before the Annual Meeting or any adjournment
thereof.

Only shareholders of record at the close of business on July 1, 2002 will be
entitled to notice of and to vote at the Annual Meeting or any adjournment
thereof.

It is important that your shares be represented at the Annual Meeting.
Whether or not you plan to attend the Annual Meeting, please vote as soon as
possible. This year you may vote over the Internet, as well as by telephone or
by mailing a traditional proxy card. Your proxy may be revoked at any time prior
to the vote at the annual meeting by following the procedures set forth in the
accompanying Proxy Statement.

By Order of the Board of Directors

PHILLIP W. ARNESON
PHILLIP W. ARNESON
Chairman of the Board

San Diego, California
July 27, 2002

SORRENTO NETWORKS CORPORATION
9990 MESA RIM ROAD
SAN DIEGO, CALIFORNIA 92121

------------------------
PROXY STATEMENT
------------------------

ANNUAL MEETING OF SHAREHOLDERS TO BE HELD AUGUST 28, 2002

GENERAL INFORMATION

This Proxy Statement is being furnished to shareholders of Sorrento Networks
Corporation, a New Jersey corporation, in connection with the solicitation of
proxies by our Board of Directors for use at our Annual Meeting of Shareholders
(the 'Annual Meeting') to be held at the San Diego Marriott Del Mar, 11966 El
Camino Real, San Diego, California, on August 28, 2002 at 10:00 a.m., and any
adjournments or postponements thereof, pursuant to the Notice of Meeting. The
approximate date on which this Proxy Statement is first being sent to
shareholders is July 29, 2002.

WHO CAN VOTE

Only holders of record of our common stock, par value $0.30 per share, at
the close of business on July 1, 2002, are entitled to vote at the Annual
Meeting. As of July 1, 2002, we had outstanding and entitled to vote 15,370,394
shares of common stock. The 8,888 shares of common stock in our treasury on that
date will not be voted.

HOW YOU CAN VOTE BY PROXY

If you are a registered stockholder (you hold your stock in your own name),
you may vote by one of the following methods:

PROXY CARD, by completing and mailing the enclosed proxy card;

TELEPHONE VOTING, by dialing 1-800-PROXIES and following the enclosed
instructions for telephone voting;

VIA THE INTERNET, by going to the web address HTTP://WWW.AMSTOCK.COM
and following the enclosed instructions for Internet voting.

If you are a registered voter, you can simplify your voting and save the
company expense by voting via the Internet or calling the toll-free number
listed on the proxy card. A control number, located on the proxy card, is
designated to verify a stockholder's identity and allow the stockholder to vote
the shares and confirm that the voting instructions have been recorded properly.
If you vote via the Internet or by telephone, please do not return a signed
proxy card.

If you return your signed proxy card or use the telephone or Internet voting
before the Annual Meeting, we will vote your shares as you direct. You have
three choices on each matter to be voted upon. For the election of directors,
you may vote for (1) all of the nominees, (2) none of the nominees, or (3) all
of the nominees except those you designate. See 'Proposal 1 -- Election of
Directors.' For each of the other items, you may vote 'FOR', 'AGAINST,' or
'ABSTAIN' from voting.

If you do not specify on your proxy card or through internet or telephone
prompts how you want to vote your shares, we will vote them 'for' the election
of director nominees and 'for' ratification of the independent auditors.

If your shares are held in 'street name' (through a broker or other
nominee), you must provide instructions on voting to your nominee holder. If you
wish to vote in person at the meeting, you must obtain from the record holder a
legal proxy issued in your name. You will need to contact your broker or other
nominee to determine whether you will be able to vote electronically via the
Internet or by telephone.

HOW YOU MAY REVOKE OR CHANGE YOUR VOTE

You can revoke your proxy at any time before it is voted at the Annual
Meeting by:

(1) Sending written notice of revocation to the Secretary; or

(2) Submitting another proper proxy with a more recent date than that of
the proxy first given by (i) following the Internet voting
instructions, or (ii) following the telephone voting instructions,
or (iii) by signing and returning a proxy card to the Company; or

(3) Attending the Annual Meeting and voting in person.

Another person at the meeting may also represent you if you execute a proper
proxy designating that person.

Any notice of revocation that is delivered at the Annual Meeting should be
hand delivered to the Inspector of Election at or before the taking of the vote.
A shareholder may be requested to present such documents as shall be reasonably
requested for the purpose of establishing such shareholder's identity.

QUORUM, VOTING REQUIREMENTS AND EFFECT OF ABSTENTIONS AND NON-VOTES

At the Annual Meeting, an Inspector of Election will determine the presence
of a quorum and tabulate the results of the voting by the shareholders. The
holders of one-third of the outstanding shares of common stock that are entitled
to vote at the Meeting must be present in person or by proxy in order to have
the quorum that is necessary for the transaction of business at the Annual
Meeting. The Inspectors will treat properly executed proxies marked 'abstain' or
required to be treated as 'non-votes' as present for purposes of determining
whether there is a quorum at the Annual Meeting. Broker 'non-votes' occur when a
broker or nominee holding shares for a beneficial owner returns a proxy but does
not have the authority to vote on a particular proposal.

The five nominees for director who receive the highest number of affirmative
votes will be elected to serve as directors until the next annual meeting of the
shareholders of the Company or until their successors are duly elected and
qualified. All other matters will require the approval of a majority of the
votes cast by the holders of common stock in person or by proxy at the Annual
Meeting. Abstentions and non-votes will have the same effect as a vote against
any proposal other than the election of directors.

COSTS OF SOLICITATION

We will bear the cost of preparing, printing, and mailing material in
connection with this solicitation of proxies. In addition to mailing material,
certain of our employees may make solicitations personally, by telephone, and by
fax. We are required to reimburse brokerage firms, banks, and others for their
reasonable out-of-pocket expenses, including clerical expenses, related to
forwarding proxy material to beneficial owners of stock or otherwise in
connection with this solicitation of proxies.

ANNUAL REPORT

The Company's Annual Report on Form 10-K for the fiscal year ended
January 31, 2002, containing audited financial statements for such year, and the
Quarterly Report on Form 10-Q for April 30, 2002 are enclosed with this Proxy
Statement. This Proxy Statement and the enclosed Proxy are being sent to our
shareholders on or about July 29, 2002.

IN ORDER THAT YOUR SHARES MAY BE REPRESENTED AT THIS MEETING, YOU ARE
REQUESTED TO PLEASE SIGN, DATE AND MAIL THE PROXY PROMPTLY.

PROPOSAL 1
ELECTION OF DIRECTORS

At the Annual Meeting, five directors will be elected to serve for one-year
terms expiring on the date of the Annual Meeting of Shareholders the following
year. Each director elected will continue in office until a successor has been
elected or until resignation or removal in the manner provided by our By-Laws.
The names of the nominees for the Board of Directors are listed below. Shares
represented by a properly executed proxy in the accompanying form will be voted
for such nominees. However, discretionary authority is reserved to vote such
shares in the best judgment of the persons named in the event that any person or
persons other than the nominees listed below are to be voted on at the meeting
due to the unavailability of any nominee so listed.

NOMINEES FOR ONE-YEAR TERMS

THE BOARD OF DIRECTORS RECOMMENDS THAT THE SHAREHOLDERS VOTE TO ELECT THE
FOLLOWING NOMINEES TO SERVE ON THE BOARD OF DIRECTORS.

Phillip W. Arneson, 65, has been our Chairman and Chief Executive Officer of
the Company since March 2002. He previously served as our President and Chief
Operating Officer from October 2001 until his appointment as Chairman and Chief
Executive Officer. He also has served as one of our directors since October 2000
and currently serves on the Meret Communications, Inc. and Sorrento Networks,
Inc. Boards of Directors. From 1996 to 2001, Mr. Arneson held the position of
Executive Vice President for privately held Frandsen Corporation, a diversified
financial and manufacturing company where he was responsible for growing the
enterprise through acquisitions, internal growth, and strategic partnerships.
Additionally, he served as President of two of its operating companies.
Mr. Arneson has served several public and private technology companies in
executive management, holding positions as Chief Executive Officer, President
and Group Vice President as well as having extensive experience as a director of
such companies. From 1982 to 1986, he served as Executive Vice President of
Allied Signal's Electronic Sector and as Chief Executive Officer of its
subsidiary, Amphenol Corp. In 1986, Mr. Arneson's technology group garnered the
prestigious IR-100 award for the development of an integrated fiber optics phase
modulator. Mr. Arneson holds a B.S. in Electrical Engineering from the
University of Minnesota's Institute of Technology.

Donne F. Fisher, 64, has served as one of our directors since November 2001
and is chairman of our Audit Committee. Mr. Fisher is currently President of
Fisher Capital Partners, Ltd., a private venture capital and investment company
he founded in 1991. From 1982 to 1996, Mr. Fisher held various executive officer
positions with Tele-Communications, Inc. ('TCI') and its subsidiaries including
Executive Vice President and Treasurer. He was a TCI director from 1980 until
1999 when TCI merged into AT&T Corporation. Since his retirement in 1996, Mr.
Fisher has been a consultant to TCI (now AT&T Broadband). Mr. Fisher also serves
as a director of Liberty Media Corporation, a former subsidiary of AT&T, and
General Communications, Inc., a diversified telecommunications provider.

Robert L. Hibbard, 50, has served as one of our directors since November
2001 and is chairman of our compensation committee. Mr. Hibbard is an attorney
and management consultant in private practice in which he handles a wide variety
of commercial matters including technology licensing and the structuring of
merger and acquisitions transactions. From 1997 to 1999, Mr. Hibbard was Chief
Executive Officer of Kim Technologies International, Inc., a privately held
developer of electromechanical 'super' capacitors for wireless applications.
From 1994 to 1997, Mr. Hibbard was Vice President and General Counsel at Allied
Signal Engines, and from 1987 to 1994, Assistant General Counsel at Allied
Signal Aerospace.

Gary M. Parsons, 52, has served on our Board of Directors since October
2000. Since 1996, Mr. Parsons has held the position of Chairman of the Board for
Motient Corporation, a wireless data firm, and XM Satellite Radio Holdings,
Inc., and in October 2001 was named Chairman and Chief Executive Officer of
Mobile Satellite Ventures, LLP. On January 10, 2002, Motient filed a voluntary
bankruptcy petition in connection with a prearranged restructuring of its debt
and emerged from bankruptcy on May 1, 2002. From 1990 to 1996, Mr. Parsons held
a number of executive positions at MCI Communications, Inc., including Executive
Vice President, Chief Executive Officer of MCImetro,

Inc., and President of MCI's Southern Division. From 1984 to 1990, Mr. Parsons
held the responsibilities of Executive Vice President at Telecom*USA, a
fiber-optic and long distance venture subsequently acquired by MCI. Mr. Parsons
holds a B.S. in Electrical and Computer Engineering from Clemson University and
a MBA from the University of South Carolina.

Larry J. Matthews, 74, was a co-founder of Zytec Corporation, a manufacturer
of high performance electronics for the telecommunications and computer
industries. Mr. Matthews served as an officer and director of Zytec which grew
from a start-up operation to a public company with revenues exceeding $250
million annually during his tenure. In 1992, Zytec won the National Baldridge
Quality Award. A public offering of Zytec was completed in 1994. In 1997, Zytec
merged with Computer Products Corporation to form Artesyn Technologies (ATSN,
NASDAQ). Mr. Matthews currently serves on Artesyn's board as a director. He also
serves on the Board of Veritec, Inc. (VRTC.OB, OTC BB), a seller of
microprocessor-based encoding and decoding systems products. From January 1999
to June 2000, Mr. Matthews served as Veritec's Acting President and Chief
Executive Officer. Mr. Matthews holds a Bachelor of Engineering degree from Iowa
State University, and serves on the boards of several privately held companies.

INFORMATION CONCERNING THE BOARD

The Board of Directors met six times in fiscal 2002.

The Board of Directors has an Audit Committee, which met five times during
fiscal 2002, and a Compensation Committee, which met once during fiscal 2002. No
committee member attended fewer than 75% of the meetings.

The Compensation Committee is responsible for reviewing the compensation and
benefits of the Company's executive officers, making recommendations to the
Board of Directors concerning compensation and benefits for such executive
officers, reviewing overall company-wide compensation plans and administering
the Company's stock option plans. Messrs. Fisher, Hibbard and Arneson currently
serve on the Compensation Committee.

The Audit Committee is responsible for providing independent, objective
oversight of our accounting functions and internal controls. The Audit Committee
reviews our financial statements, meets with our independent accountants to
review our internal controls and financial management practices and examines all
agreements or other transactions between us and our directors and officers
(other than those compensation functions assigned to the Compensation Committee)
to determine whether such agreements or transactions are fair to our
shareholders. The Audit Committee is comprised of independent directors, and
acts under a written charter first adopted and approved by the Board of
Directors in June 2000, a copy of which is attached to this Proxy Statement as
Exhibit A. Each member of the Audit Committee is independent as defined by the
Nasdaq Stock Market listing Standards. Mr. Fisher currently chairs the Audit
Committee and Messrs. Hibbard and Parsons currently serve on the Audit
Committee. Mr. Matthews will be nominated to join the Audit Committee. The
report by the Audit Committee for the year ended January 31, 2002, as submitted
by the then members of the Audit Committee, follows:

AUDIT COMMITTEE REPORT

The following report of the Audit Committee does not constitute soliciting
material and should not be deemed filed or incorporated by reference into any
other company filing under the Securities Act of 1933 or the Securities Exchange
Act of 1934, except to the extent the company specifically incorporates this
Report by reference therein.

The Audit Committee met and consulted with the Company's independent
accountants in person and by telephone regarding the following:

the plan for, and the independent accountants' report on, each audit of
the Company's financial statements;

the Company's financial disclosure documents, including all financial
statements and reports filed with the SEC and sent to shareholders;

reviewing the Company's accounting practices, principles, controls and
methodologies;

significant developments in accounting and SEC rules;

the adequacy of the Company's internal controls and the performance of
its' accounting personnel.

The Audit Committee is responsible for overseeing and monitoring the quality
of the Company's accounting and auditing practices as well as recommending to
the Board that the Company's financial statements be included in the annual
report. Management is responsible for planning and conducting audits and
ensuring that the Company's financial statements are prepared in accordance with
accounting principals generally accepted in the United States of America.

In this context, the Audit Committee has met and held discussions with
management and BDO Seidman, LLP, the Company's independent accountants for
fiscal 2002. Management has represented to the Committee that the Company's
financial statements were prepared in accordance with accounting principals
generally accepted in the United States of America, and the Committee has
reviewed and discussed the consolidated financial statements and other such
matters deemed relevant and appropriate with management and the independent
accountants. In addition, the Committee has met with the independent accountants
and discussed the scope and results of the audit for fiscal 2002 and the matters
required to be discussed by Statement on Auditing Standards No. 61,
'Communication with Audit Committees'.

Further, the Audit Committee has received the written disclosures from BDO
Seidman, as required by Independence Standards Board No. 1 'Independence
Discussions with Audit Committees', and has discussed with BDO Seidman their
independence from management. The Committee has also reviewed the fees received
by the independent accountants for services related to fiscal 2002 and
determined that no material amounts were paid for non-audit related services and
such amounts were compatible with the maintenance of BDO Seidman's independence
in the conduct of its auditing function.

Based on the reviews and discussions described above, the Audit Committee
recommended to the Board, and the Board has approved that the audited financial
statements be included in the Company's Annual Report on Form 10-K for the year
ended January 31, 2002, for filing with the Securities and Exchange Commission.
The Committee also has recommended, subject to stockholder ratification, the
selection of BDO Seidman, LLP as the Company's independent accountants for the
fiscal year ending January 31, 2003.

The Committee has also confirmed there have been no new circumstances or
developments since their respective appointments to the Audit Committee that
would impair any member's ability to act independently.

The Audit Committee
Donne F. Fisher, Chairman
Gary M. Parsons
Robert L. Hibbard

AUDIT AND NON-AUDIT FEES

The following table presents fees for professional audit services rendered
by BDO Seidman, LLP for the audit of the Company's annual financial statements
for fiscal 2002, and fees billed for other services rendered by BDO Seidman, LLP
during fiscal 2002:

Audit fees(a)............................................... $140,574
Other fees(b)............................................... 52,280
Tax matters................................................. 4,806
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Total................................................... $197,660
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--------

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(a) Includes fees incurred for quarterly reviews conducted under Statement of
Auditing Standards No. 71 and the Company's audited financial statements.

(b) Other fees consist principally of audits and reviews of stand alone
financial reports of the Company's subsidiaries, reviews of draft public
offering documents of a subsidiary which were not filed, review of all
public filings that incorporate by reference or accompany the Company's
audited financial statements and a single purpose audit of a subsidiary's
revenue from a product line required for compliance with a purchase
agreement.

All non-audit services were reviewed with the Audit Committee, which
concluded that the provision of such services by BDO Seidman, LLP was compatible
with the maintenance of that firm's independence in the conduct of its auditing
function.

DIRECTOR COMPENSATION

Each director who is not an employee of the Company or its subsidiaries
receives $1,000 for each Board of Directors or committee meeting attended.
Directors who serve as the chairman of a committee receive an additional $500
for each committee meeting attended. All directors are reimbursed for expenses
incurred in attending Board of Directors and committee meetings. Directors who
are employees of the Company or its subsidiaries receive no additional
compensation or options for serving on the Board of Directors or any committee.

The Automatic Option Grant Program was established for Directors of the
Corporation based upon service and re-election to the Board. Under the Plan,
Directors receive a Non-Statutory Option to purchase 35,000 shares of Common
Stock upon their initial election or appointment to the Board, provided that
individual has not previously been in the employ of the Corporation or any
Parent or Subsidiary nor has that individual received a prior option grant from
the Corporation. These shares vest upon the completion of one year of service
measured from the grant date.

Directors who are re-elected to the Board receive an automatic grant of
25,000 shares of Common stock, provided that such individual has served a period
of at least six months as a Director. There is no limit as to the number of such
25,000 share option grants any one non-employee Board member can receive. These
grants vest in one installment based upon the completion of one year of service
as measured from the grant date. All shares are subject to repurchase by the
Company upon the Optionee's cessation of Board service prior to the vesting at
the same price originally granted.

SECURITY OWNERSHIP OF CERTAIN
BENEFICIAL OWNERS AND MANAGEMENT

The following table sets forth certain information as of July 1, 2002,
regarding the ownership of the Common Stock by (i) each Director and nominee for
Director of the Company; (ii) each of the present executive officers named in
the Executive Officer section following; (iii) each of the directors not
standing for election at this Annual Meeting of Shareholders; (iv) each of the
executive officers named in the Summary Compensation Table, following; (v) each
person known to the Company to beneficially own 5% or more of Common Stock; and
(vi) all Directors and executive officers of the Company as a group. Except as
indicated, all persons named as beneficial owners of Common Stock have sole
voting and investment power with respect to the shares indicated as beneficially
owned by them. All persons named have an address at c/o Sorrento Networks
Corporation, 9990 Mesa Rim Road, San Diego, California 92121, unless otherwise
indicated.

COMMON STOCK
-------------------------
NUMBER OF PERCENTAGE OF
NAME OF BENEFICIAL OWNER(A) SHARES OUSTANDING(O)
--------------------------- ------ -------------

Phillip W. Arneson(B)....................................... 261,667 1.7%
Donne F. Fisher(C).......................................... 35,000 *
Robert L. Hibbard(D)........................................ 35,000 *
Gary M. Parsons(E).......................................... 36,667 *
Xin Cheng Ph.D.(F).......................................... 525,735 3.3
Joe R. Armstrong(G)......................................... 125,125 *
Richard L. Jacobson(H)...................................... 161,856 1.0
Sunil Rajadhyksha(I)........................................ 27,707 *
Qila, LLC(J) ............................................... 1,364,549 8.2
15332 Antioch Street
Pacific Palisades, CA 90272
All Directors, Nominees and Executive Officers as a Group... 1,208,757 7.9

---------

* Less than 1%

(A) All information with respect to beneficial ownership of the shares is based
upon filings made by the respective beneficial owners with the Securities
and Exchange Commission or information provided by such beneficial owners
to the Company.

(B) Includes exercisable options held by Mr. Arneson to acquire shares of
common stock and 5,000 shares of common stock purchased in June 2002.

(C) Includes options to acquire 35,000 shares of common stock held by Mr.
Fisher that are exercisable within 60 days. Any shares received upon
exercise of these options prior to the November 20, 2002 vesting date are
subject to repurchase by the Company. On March 7, 2000, Mr. Fisher was
granted options to acquire 100,000 shares of our Sorrento subsidiary's
common stock at $5.45 under its option plan for his services as an advisor
to it. Pursuant to an outstanding conversion offer, Mr. Fisher may elect to
convert the Sorrento subsidiary options into options to acquire our common
stock at a ratio of 3.9 for 1. Mr. Fisher is President of Fisher Capital
Partners which holds 183,486 shares of our Sorrento subsidiary's Series A
Convertible Preferred Stock. Mr. Fisher is a director of Liberty Media
Corporation which owns an 72% economic interest representing a 94% voting
interest in UnitedGlobalCom, Inc. ('UGC'). Belmarken Holding, B.V., an
indirect subsidiary of UGC, holds 3,027,523 shares of our Sorrento
subsidiary's Series A Convertible Preferred Stock. Liberty Media also holds
convertible debt of United Pan-Europe Communications, N.V., a subsidiary of
UGC, which it has agreed to exchange for additional shares in UGC.

(footnotes continued on next page)

(footnotes continued from previous page)

(D) Includes options to acquire 35,000 shares of common stock held by Mr.
Hibbard that are exercisable within 60 days. Any shares received by Mr.
Hibbard upon exercise of these options, prior to the November 13, 2002
vesting date, are subject to repurchase by the Company.

(E) Includes exercisable options held by Mr. Parsons to acquire 36,667 shares
of common stock.

(F) Includes exercisable options held by Dr. Cheng to acquire shares of common
stock and exercisable options to acquire 51,486 shares of common stock held
as custodian or trustee for minor children, as to which beneficial
ownership is disclaimed. On March 7, 2000, Dr. Cheng was granted options to
acquire 5,000,000 shares of our Sorrento subsidiary's common stock at $5.45
as the Chairman, CEO and founder of our Sorrento subsidiary. Pursuant to an
outstanding conversion offer, Dr. Cheng may elect to convert the Sorrento
subsidiary options into options to acquire our common stock at a ratio of
3.9 for 1.

(G) Includes options to acquire 122,125 shares of common stock held by Mr.
Armstrong that become exercisable within 60 days and 3,000 shares of common
stock purchased in June 2002.

(H) Includes exercisable options held by Mr. Jacobson to acquire 150,000 shares
of common stock and 3,166 options that become exercisable within 60 days.

(I) Includes options to acquire 18,958 shares of common stock held by Mr.
Rajadhyksha that become exercisable within 60 days. On March 7, 2000, Mr.
Rajadhyksha was granted an option to acquire 400,000 shares of our Sorrento
subsidiary's common stock at $5.45 per share under its option plan for his
services as a consultant. Pursuant to an outstanding conversion offer, Mr.
Rajadhyksha may elect to convert the Sorrento subsidiary options into
options to acquire our common stock at a ratio of 3.9 for 1.

(J) Represents holdings reported by Qila, LLC and RII Partners, Inc. on January
14, 2002 on Form 13-D, 'General Statement of Beneficial Ownership'.
Includes exercisable options to acquire 757,387 shares of common stock held
by R II Partners, Inc., exercisable options to acquire 350,001 shares of
common stock held by RT Investments, Inc., 25,334 shares held by the Par
and Sharon Chadha Family Trust, and 6,527 shares held by the RRC Pension
Trust. Mr. and Mrs. Chadha disclaim ownership in all these shares.

(O) For each beneficial owner, the 'Percentage of Outstanding' equals each
owner's actual holdings of shares plus shares represented by unexercised
options and warrants held, divided by total shares outstanding of the
Company at July 1, 2002, of 15,370,394 plus the unexercised options and
warrants detailed above of the referenced holder only. In other words,
individual percentages of the listed holders will not add to the group
total because the calculations are made separately for each holder.

EXECUTIVE OFFICERS AND DIRECTORS

As of the date of this Proxy Statement, our executive officers and directors
are:

NAME AGE POSITION
---- --- --------

Phillip W. Arneson*.......................... 65 Chief Executive Officer, President and
Chairman of the Board
Donne F. Fisher*............................. 64 Director
Robert L. Hibbard*........................... 50 Director
Gary M. Parsons*............................. 52 Director
Joe R. Armstrong............................. 53 Chief Financial Officer
Richard L. Jacobson.......................... 59 Sr. Vice President, Legal and Secretary
Sunil Rajadhyksha............................ 48 President, Meret Communications, Inc.

---------

* See biographies in Proposal 1 -- Election of Directors

Joe R. Armstrong has served as our Chief Financial Officer since January
2001. He brings over 25 years of corporate finance, investor relations,
treasury, legal and management experience to us, having

spent 15 years with State Of The Art, a leading provider of accounting software.
As chief financial officer, vice president, finance and secretary of State Of
The Art, he managed two rounds of venture capital financing, the company's
initial public offering and several significant acquisitions and mergers. Prior
to joining us, Mr. Armstrong most recently served as CFO for The Bohlin Company.
Previously, he was director of marketing finance and financial planning for MAI
Basic Four Corporation and a certified public accountant for Vicenti, Lloyd and
Stutzman, a regional public accounting firm. Mr. Armstrong holds both bachelors
and masters degrees in business from Utah State University.

Richard L. Jacobson has been our Senior Vice President, Legal and Secretary
since July 2000. Mr. Jacobson was a partner with the law firm of Fulbright &
Jaworski, LLP from 1990 to 2000 where his practice consisted primarily of
securities litigation and SEC enforcement matters. Prior to joining Fulbright in
1988 he was in private practice in Palo Alto, California, from 1986 to 1988, and
in Washington, D.C., from 1980 to 1986. From 1977 to 1979, Mr. Jacobson worked
for the SEC, where he was a member of the Trial Unit in the Enforcement Division
and served as Special Counsel to the Chairman. He served as a law clerk for
Ninth Circuit Judge Walter Ely from 1970 to 1971 and then clerked for Associate
United States Supreme Court Justice William O. Douglas from 1971 to 1972. Mr.
Jacobson holds a J.D. from the University of Southern California and a S.B. from
the University of Chicago.

Sunil Rajadhyksha has served as President and Chief Operating Officer of our
Meret Optical business unit since January 2002. From October 2000 to January
2002, he served as Meret's Technology Director. From 1997 to September 2000, Mr.
Rajadhyksha provided engineering and software design services to us as a
consultant including embedded and network management software projects both
directly and through a private company, Codec Corporation, which he founded in
1997. He is currently a director of Codec. Mr. Rajadhyksha was the founder and
managing director of Software Exports Pvt. Ltd., a foreign private software
development company from 1996 to 2000. He was a director of Codec Communications
Pvt. Ltd., a foreign private software development company, which he founded in
1991, from January 1991 to April 2002, and also of Embedded Resource Pvt. Ltd.,
a foreign private software development company specializing in embedded
software, which he founded in 1998. Mr. Rajadhyksha has over twenty years of
technical and management experience in networking software, hardware and
telecommunications. Mr. Rajadhyksha holds a B.S. from University of Pune in
telecommunications and electronics and a M.S.E.E. from Illinois Institute of
Technology.

OTHER KEY MANAGEMENT

As of the date of this Proxy Statement, the management team of our Sorrento
Subsidiary includes:

NAME AGE POSITION
---- --- --------

Darin Clause.......................... 33 Vice President, Strategic Sales
Subrata Datta......................... 39 Vice President, Engineering
Demetri Elias, Ph.D. ................. 58 Vice President, Marketing
Susan Hamlin.......................... 39 Vice President, Sales (North America)
Jin-Yi Pan, Ph.D. .................... 42 Vice President, Systems Architecture
Marc Thurman.......................... 52 Vice President, Operations
Li-Ran Wu............................. 49 Vice President, Management Software
Jeff Phillips......................... 32 Vice President, Corporate Development

Darin Clause has served as our Vice President, Strategic Sales since
September 2000 and joined us in December 1999 as Director, Sales Development.
Prior to joining us, Mr. Clause was employed with Pirelli as a Senior Product
Manager from 1996 to 1999, where he was responsible for implementation of indoor
cabling and connectivity business lines for the CATV, CLEC, Utility and IXC
markets and multiple channels. From 1994 to 1996, Mr. Clause was a Project and
Sales Engineer for Sumitomo Electric Lightwave, where he was responsible for
fiber optic passive component sales. Mr. Clause holds a B.S. in Mechanical
Engineering from Clemson University.

Subrata Datta has served as Sorrento's Vice President of Engineering since
November 2000 and joined Sorrento upon our acquisition of Distributed Systems
International, Inc. in 1996. From 1996 to 1999 he was responsible for all
engineering development for the LAN adapter and hub/switch products.

Prior to joining Sorrento, Mr. Datta helped develop the ANSI FDDI and FDDI-II
standards and design network components and system-level products for DSI. Prior
to DSI, Mr. Datta had extensive design experience while working at AT&T Bell
Laboratories on the 3B20 Duplex computer system, based on highly fault tolerant
architectures, high-reliability and stringent up-time requirements. Before
working for AT&T Bell Laboratories, Mr. Datta worked for IBM's Yorktown Research
Center where he focused on FDDI development for their RS6000 workstation
systems. Mr. Datta holds a M.S. and B.S. in Electrical Engineering from the
Cooper Union School of Engineering.

Demetri Elias, Ph.D. has served as Sorrento's Vice President, Marketing
since October 2000 and joined Sorrento in April 2000 as Director, Product Line
Management. Prior to joining Sorrento, Dr. Elias was with Nortel Networks, a
leading optical equipment developer, for over 22 years holding positions in
research and development, consulting, product management and marketing. In his
most recent Nortel Networks assignments he served as Director, Product Line
Management and Director, Strategic Marketing on optical networking products. Dr.
Elias holds a Ph.D. in Electrical Engineering from McGill University, Montreal,
Canada.

Susan Hamlin has served as Sorrento's Vice President, Sales (North America)
since September 2000 and joined Sorrento in November 1999 as Regional Vice
President of Sales and currently serves on Sorrento Networks, Inc. Board of
Directors. Ms. Hamlin is also responsible for Sorrento's customer service group.
During her tenure at Pirelli Cables and Systems, Ms. Hamlin was Director of
Sales from 1998 to 1999 and responsible for overseeing sales to CATV, CLEC,
Utility and IXC markets. From 1997 to 1998, Ms. Hamlin was National Sales
Manager -- Distribution at Pirelli where she established and implemented
Pirelli's sales efforts into the distribution and OEM markets. From 1985 to
1996, Ms. Hamlin held a succession of sales and marketing management positions
with AT&T/Lucent Technologies where she was responsible for strategic planning,
market development and sales to the Regional Bell Operating Companies. Ms.
Hamlin holds a B.S. in Management Information Systems from Bradley University in
Peoria, Illinois and completed executive management programs at Harvard
University and the Wharton School of Business.

Jin-Yi Pan, Ph.D., has served as the Vice President, System Architecture, of
Sorrento since February 2000. From 1996 to 1999, Dr. Pan was a senior research
engineer at Nokia Research Center, the corporate research arm of Nokia
Corporation responsible for developing networking system architectures,
equipment and software. From 1993 to 1996, Dr. Pan served as a researcher at
Bell Communications Research, or Bellcore, the research center created to
service the regional bell operating companies in the areas of software,
networking standards and architecture. At Bellcore, he participated in the
development of network system architecture and protection scheme for MONET, the
government funded national optical networking consortium. Dr. Pan holds a Ph.D.
in Electrical Engineering from the City University of New York and a B.S. in
Optics from Zhejiang University, China.

Marc Thurman has served as our Vice President, Operations since April 2001
and serves on the Sorrento Networks, Inc. Board of Directors. Mr. Thurman
oversees our manufacturing and operations, supply chain management, and quality
assurance functions. He brings to us nearly 25 years of manufacturing
operations, supply chain management and quality assurance experience on leading
edge technologies and products for the computer and telecommunication markets.
Mr. Thurman's previous experience includes service since 1971, in various
functions at Packard Bell NEC, ComCrypt Systems, IDEA Courier, Inc., Sidereal
Corporation, Intel Corporation, RTE Corporation, and Western Electric. In his
most recent position, Mr. Thurman had manufacturing responsibilities including
internal production, contract manufacturing (EMS) and third party manufacturing
(TPM), supporting revenues of $2 billion. Mr. Thurman holds a B.S. in Electrical
Engineering from Oregon State University as well as an M.B.A. degree from
University of Portland.

Li-Ran Wu has served as our Vice President, Management Software since
November 2000 and joined Sorrento in October 1999. Before joining Sorrento, Mr.
Wu was a senior consultant and Lead Systems Engineer at Hitachi Telecom where he
developed second-generation SONET equipment to complement WDM and OXC products
within the OTN. He also developed the WDM information model that was published
in 1998. Prior to working at Hitachi, Mr. Wu was with Nortel Networks, Racal
Datacom and Taiwan Telecom. While at Nortel he developed a SONET UPSR-based
communication

messaging protocol. Mr. Wu holds an M.S. in Electrical Engineering from North
Carolina State University and a B.S. in Computer Science from Chiao Tung
University. He has also completed work on his doctoral thesis at the Georgia
Institute of Technology.

Jeff Phillips has served as our Vice President, Corporate Development since
January 2001. From 1995 to 2000, Mr. Phillips was a Vice President at US Bancorp
where he focused on financing for telecom related technology concerns and
advisory assignments. Prior to joining US Bancorp, Mr. Phillips was a financial
analyst/strategist with Hillebrand GmbH, a European investment group. Mr.
Phillips began his career as a floor trader at the London International
Financial and Futures and Options Exchange (LIFFE) where he focused on Deutsche
Mark denominated financial derivatives. Mr. Phillips holds a B.A. in Economics
from the University of California at Berkeley.

CERTAIN TRANSACTIONS

On March 3, 2000, our Sorrento subsidiary completed a sale of 8,596,333
shares of its Series A Convertible Preferred Stock to a group of investors
receiving net proceeds of approximately $46.6 million. Anderson Weinroth Capital
Corp. ('AW') received a placement fee of $1,950,000 paid through the issuance of
an additional 357,799 shares of the Series A stock.

The purchasers of more than $60,000 of these securities, include, among
others, the following present and former officers and directors and entities
affiliated with them:

NUMBER OF TOTAL
PURCHASER SHARES CONSIDERATION
--------- ------ -------------

Anderson Weinroth & Co., LP................................. 275,230 $ 1,500,000
Sorrento Holdings, LLC...................................... 1,192,661 6,500,000
Anderson Weinroth Capital Corporation....................... 357,799 1,950,000
Belmarken Holding B.V....................................... 3,027,523 16,500,000
Fisher Capital Partners..................................... 183,486 1,000,000
Virgo Cap, Inc.............................................. 91,744 500,000
Renn Zaphiropolous.......................................... 45,872 250,000

The purchase of shares by Anderson Weinroth & Co. LP and Sorrento Holdings,
LLC was pursuant to a previously contracted right of participation. Rohit
Phansalkar, who was a director at the time and later became Osicom's Chairman
and Chief Executive Officer, was a partner or a member of these purchasers. In
addition, Mr. Phansalkar was a partner of AW and one of Osicom's directors when
AW received the 357,799 shares in payment of the placement fee.

Belmarken Holding B.V. ('Belmarken') is an indirect subsidiary of United
GlobalCom, Inc. ('UGC'). Donne F. Fisher, one of our current directors, is a
director of Liberty Media Corporation which owns an 72% economic interest
representing a 94% voting interest in UGC and holds convertible debt of a
subsidiary of United Pan-Europe Communications, N.V. ('UPC'), a subsidiary of
UGC, which it has agreed to exchange for additional shares in UPC. Mr. Fisher is
the President and beneficial owner of Fisher Capital Partners. Mr. Fisher was
not one of our directors nor a director of Liberty Media when this stock
placement occurred.

Oren G. Shaffer, a then director of our Sorrento subsidiary, is a
stockholder of Virgo Cap, Inc. Renn Zaphiropoulos was one Osicom's directors as
well as a director of our Sorrento subsidiary when this stock placement
occurred.

Two of our customers are subsidiaries of UPC, which is the parent of
Belmarken, a holder of our Sorrento subsidiary's Series A shares, and indirect
subsidiaries of UGC. During fiscal 2002 we made sales of $2,076,000, including
deferred revenue, to these customers and these customers had outstanding
receivables of $1,632,000 at January 31, 2002. During the three months ended
April 30, 2002 we had sales of $74,000, to these customers. These customers had
outstanding receivables of $1,652,000 as of April 30, 2002. Mr. Fisher is a
director of Liberty who is a shareholder of UGC and debt holder in one of its
indirect subsidiaries. Mr. Fisher was not one of our directors when we made
these sales and extended credit to these customers, however, indirect
subsidiaries of UGC continue to be among our customers.

During July 2000 Osicom agreed to loan $300,000 for three years at the
applicable federal rate provided for in Internal Revenue Code Section 1274 to
Mr. Jacobson in connection with accepting employment as our Senior Vice
President, Legal. This is a full recourse loan and Mr. Jacobson has pledged his
options to acquire our common stock and any options he may receive from any of
our subsidiaries as collateral. During the year ended January 31, 2001 we
advanced the $300,000 for which the interest rate is 6.6%. Accrued and unpaid
interest on this loan at January 31, 2002 was $16,450.

During June 2000, the Osicom Board of Directors entered into various
agreements with Par Chadha, our former CEO and Chairman, which, among other
matters, provides for payments of $250,000 per year for three years of
consulting services and loans by us for the exercise of previously granted
options to acquire 1,178,500 options at prices varying from $7.03 to $49.25 per
share. Mr. Chadha contends that as the members of Osicom's Board of Directors at
the time of his resignation ceased to represent more than 50% of the Board in
October 2000, all payments for consulting services were accelerated and no
future consulting services are required. During October 2000, Mr. Chadha
exercised 71,112 options, applying the $500,000 accelerated payment to the
exercise. In addition, he exercised 507,388 options for which we are
contractually obligated to loan the $5,034,000 due on the exercise. During
September 2001, Mr. Chadha notified us that he does not have any obligations
under the agreements. We have notified him that we do not agree with his
interpretation of his repayment obligations under the terms of the agreements.

During December 2001, the Company entered into an agreement with Mr. Chadha
whereby the 507,388 option exercise was rescinded. Mr. Chadha returned the
507,388 shares to us for cancellation and we cancelled the receivable due from
him and restored the original option agreements. In June 2002, the Company filed
with the Superior Court of California, County of Los Angeles a Complaint for
Declaratory Relief regarding the interpretation of the agreement. Also in June
Mr. Chadha filed a lawsuit against the Company in the Superior Court of
California, County of Los Angeles, seeking declaratory relief with respect to
the interpretation of his separation agreement and in addition, alleging breach
of contract with respect to his option exercise rights and fraud in connection
with his rescission agreement. Should Mr. Chadha prevail in Court, in addition
to any other relief that may be granted, the Company may be required to issue
him 1,178,500 shares of the Company's stock for no consideration. The Company
plans to vigorously protect its rights in this matter and disputes the
allegations made by Mr. Chadha in his complaint.

In April 2002, our former Chairman and CEO, Dr. Xin Cheng, filed a claim in
arbitration seeking, among other things, payment of $500,000 and acceleration of
the vesting of options pursuant to alleged contractual obligations of our
Sorrento subsidiary. The Company is vigorously disputing these claims.

EXECUTIVE COMPENSATION

PLEASE REFER TO THE FOLLOWING ITEM IN THE ENCLOSED REPORT ON FORM 10K WHICH
IS INCORPORATED BY REFERENCE IN THIS PROXY STATEMENT: ANNUAL REPORT PURSUANT TO
SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934 -- PART III -- ITEM
11 EXECUTIVE COMPENSATION.

COMPLIANCE WITH SECTION 16(A) OF THE EXCHANGE ACT

Section 16(a) of the Securities Exchange Act of 1934 requires the Company's
directors and executive officers and person who own more than ten percent of a
registered class of the Company's equity securities to file reports of
beneficial ownership and changes in beneficial ownership with the Securities and
Exchange Commission. The rules promulgated by the Commission under Section 16(a)
of the Exchange Act require those persons to furnish the Company with copies of
all reports filed with the Commission pursuant to Section 16(a).

Based solely upon a review of Forms 3, Forms 4 and Forms 5 and amendments
thereto furnished to us pursuant to Rule 16(a)(3)(e) during the year ended
January 31, 2002, and written representations of certain of our directors and
officers that no Forms 4 were required to be filed, we believe that all
directors, executive officers and beneficial owners of more than 10% of the
Common Stock have filed with the Commission on a timely basis all reports
required to be filed under Section 16(a) of the Exchange Act.

COMPENSATION COMMITTEE REPORT

The following report shall not be deemed incorporated by reference by any
general statement incorporating by reference this proxy statement into any
filing under the Securities Act of 1933 or under the Securities Exchange Act of
1934, except to the extent the Company specifically incorporates this
information by reference, and shall not otherwise be deemed filed under such
Acts.

The Compensation Committee is presently comprised of Donne F. Fisher, Robert
L. Hibbard and Phillip W. Arneson . The Compensation Committee reviews,
recommends and approves changes to our compensation and benefits policies and
programs, makes recommendations to the Board for options granted under our plans
and is responsible for reviewing and approving the compensation for executive
officers and certain senior management of the Company. A majority of the
Committee are neither employees nor former employees of the Company nor are they
eligible to participate in any of the Company's executive compensation programs.
Mr. Arneson does not participate in meetings of the Committee concerning his
compensation package.

We have developed and are developing compensation programs designed to
reflect our performance and to be competitive in the marketplace. In designing
compensation programs, we attempt to reflect both value created for shareholders
while supporting our strategic goals. The goals of our short-term and long-term
compensation programs are to:

Attract, retain and motivate a high caliber executive leadership team
and employee group;

Competitive base salaries in keeping with a philosophy of career
continuity;

Align executive compensation with shareholder interests;

Support our short-term and long-term strategic goal and objectives;

Promote our value and reward individuals for outstanding contributions
to our success.

The nature of our business requires a technologically innovative personnel
team to make a long-term commitment to our Company's growth. Accordingly, we
grant incentive awards primarily in the form of stock options with view towards
long-term corporate performance. These awards may not fluctuate as much as
year-to-year financial results. Under our programs, a substantial portion of
senior executives' potential compensation depends on increases in shareholder
value.

We pay for performance on the basis of an individual's level of
responsibility. For this purpose, performance means both individual and
corporate performance. Individual performance includes the ability to put our
business plans into effect and to react to unanticipated events. We base
compensation decisions for all employees, including the executive officers on
this criteria.

Our executive compensation is based upon three components, base salary,
short-term incentive awards and long-term incentives, which are intended to meet
our compensation program goals.

BASE SALARY

In keeping with the long-term and highly technical nature of our business,
we take a long-term approach to management development. This career-oriented
philosophy requires a competitive base salary. We base our salary structure on
competitive positioning (comparing our salary structure with salaries paid by
comparable companies), our own business performance, and general economic
factors, and increases in the individual's responsibilities, whether through
promotions or otherwise. Specific weights are not given to these factors, but
competitive positioning is the most important factor. Within the comparable
salary ranges, we determine individual senior management salaries based on
individual performance, level of responsibility, and experience.

SHORT-TERM INCENTIVE AWARDS

Our short-term incentive awards are discretionary. When deemed appropriate,
they are designed to reflect the officer's contribution to the overall success
of the organization and also consider the long-range impact of near-term
decisions and contributions. Any award an executive receives depends on his/her
individual performance and level of responsibility. Both objective and
subjective measures are

considered. These include, but are not limited to: sales, profit margins,
operating expense, net income, working capital, individual initiative, business
judgment, technical expertise and operational excellence.

In consideration of the company's financial position, no bonuses were paid
during fiscal 2002. We are currently reviewing our short-term rewards
programming with the intent to formalize an annual process under the leadership
of the Compensation Committee.

LONG-TERM INCENTIVE AWARDS

Long-term incentive awards are intended to develop and retain strong
management through share ownership and incentive awards that recognize future
performance. At present, stock options are the only long term incentive granted
to executive officers and all our employees. The Committee believes that a
significant portion of senior management's compensation should depend on value
created for the shareholders. Options are an excellent way to accomplish this
because they tie management's interests directly to the shareholders' interests.

The number of options granted to senior management is based on individual
performance and level of responsibility. For this purpose, the Committee
measures performance the same way as described above for short-term awards.
Option grants must be sufficient in size to provide a strong incentive for
executives to work for long-term business interests and become significant
owners of the Company.

PERFORMANCE GRAPH

The following graph shows a comparison of cumulative total returns for an
investment in the Common Stock of the Corporations, the NASDAQ
Telecommunications Index and the S&P 500 Index. These indices are included for
comparative purposes only and do not necessarily reflect management's opinion
that such indices are an appropriate measure of the relative performance of the
stock involved, and are not intended to forecast or be indicative of possible
future performance of our Common Stock.

[LINE GRAPH]

1997 1998 1999 2000 2001 2002
---- ---- ---- ---- ---- ----

Sorrento Networks Corp.............. $100 $ 48.89 $ 47.79 $146.84 $ 80.00 $ 10.61
S&P 500 Index....................... 100 124.69 162.77 177.38 173.76 143.76
Nasdaq Telecom Index................ 100 148.67 264.12 446.65 253.73 94.12

This graph shall not be deemed incorporated by reference by any general
statement incorporating by reference this proxy statement into any filing under
the Securities Act of 1933 or under the Securities Exchange Act of 1934, except
to the extent that the Company specifically incorporates this graph by
reference, and shall not otherwise be deemed filed under such Acts.

PROPOSAL 2
RATIFICATION OF THE
SELECTION OF INDEPENDENT AUDITORS

The selection of independent auditors to examine our financial statements
for the fiscal year ending January 31, 2003, which will be sent or made
available to shareholders and filed with the Securities and Exchange Commission,
is to be submitted to the meeting for ratification. BDO Seidman, LLP has been
selected by the Board of Directors upon recommendation by the Audit Committee to
examine such financial statements. Although ratification by the shareholders is
not required by law, the Board of Directors believes that shareholders should be
given this opportunity to express their views on the subject. While not binding
on the Board of Directors, the failure of the shareholders to ratify the
appointment of BDO Seidman, LLP as the Company's independent auditors would be
considered by the Board in determining whether to continue the engagement of BDO
Seidman, LLP. A member of BDO Seidman, LLP will be present at the Annual Meeting
and will be available to respond to appropriate questions and will have the
opportunity to make a statement.

THE BOARD OF DIRECTORS RECOMMENDS THAT THE SHAREHOLDERS VOTE FOR THE
RATIFICATION OF BDO SEIDMAN, LLP AS OUR INDEPENDENT AUDITORS.

OTHER BUSINESS

It is not anticipated that any other matters will be brought before the
Annual Meeting for action. If any such other matters shall properly come before
the Annual Meeting, however, it is intended that the persons authorized under
the proxies may, in the absence of instructions to the contrary, vote or act
thereon in accordance with their best judgment.

SHAREHOLDER PROPOSALS

Pursuant to Rule 14a-8 under the Exchange Act, shareholders of the Company
may present proper proposals for inclusion in the Company's proxy statement and
for consideration at the next annual meeting by submitting their proposals to
the Company in a timely manner. Any shareholder of the Company who wishes to
present a proposal for the inclusion in the proxy statement for action at our
next Annual Meeting of Shareholders must comply with the Company's By-Laws and
the rules and regulations of the Commission then in effect. To be considered for
inclusion in next year's proxy statement, such a proposal must be mailed to the
Company at its principal executive offices at 9990 Mesa Rim Road, San Diego,
California 92121, Attention: Corporate Secretary, and must be received by the
Company on or before March 31, 2003.

IMPORTANT

TO ASSURE YOUR REPRESENTATION AND A QUORUM FOR THE TRANSACTION OF BUSINESS
AT THE ANNUAL MEETING, THE COMPANY URGES YOU TO PLEASE COMPLETE, SIGN, DATE AND
RETURN THE ENCLOSED PROXY CARD PROMPTLY.

Item 11, Executive Compensation, from our Annual Report on Form 10-K for the
year ended January 31, 2002 is incorporated by reference in this Proxy
Statement. A copy of that Report is being mailed with this Proxy Statement.

EXHIBIT A

CHARTER OF THE AUDIT COMMITTEE
OF THE BOARD OF DIRECTORS
OF SORRENTO NETWORKS CORPORATION

I. AUDIT COMMITTEE PURPOSE

The Audit Committee is appointed by the Board of Directors to assist the
Board in fulfilling its oversight responsibilities. The Audit Committee's
primary duties and responsibilities are to:

Monitor the integrity of the Company's financial reporting process and
systems of internal controls regarding finance, accounting, and legal
compliance.

Monitor the independence and performance of the Company's independent
auditors and internal auditing department.

Provide an avenue of communication among the independent auditors,
management, the internal auditing department, and the Board of
Directors.

The Audit Committee has the authority to conduct any investigation
appropriate to fulfilling its responsibilities, and it has direct access to the
independent auditors as well as anyone in the organization. The Audit Committee
has the ability to retain, at the Company's expense, special legal, accounting,
or other consultants or experts it deems necessary in the performance of its
duties.

II. AUDIT COMMITTEE COMPOSITION AND MEETINGS

Audit Committee members shall meet the requirements of the Nasdaq Stock
Market. The Audit Committee shall be comprised of three or more directors as
determined by the Board, each of whom shall be independent non-employee
directors, free from any relationship that would interfere with the exercise of
his or her independent judgment. Each member of the Committee shall have a basic
understanding of finance and accounting and be able to read and understand
fundamental financial statements, and at least one member of the Committee shall
have accounting or related financial management expertise.

Audit Committee members shall be appointed by the Board. If an audit
committee Chair is not designated or present, the members of the Committee may
designate a Chair by majority vote of the Committee membership.

The Committee shall meet at least four times annually, or more frequently as
circumstances dictate. The Audit Committee Chair shall prepare and/or approve an
agenda in advance of each meeting. The Committee should meet privately in
executive session at least annually with management, the director of the
internal auditing department, the independent auditors, and as a committee to
discuss any matters that the Committee or each of these groups believe should be
discussed. In addition, the Committee, or at least its Chair, should communicate
with management and the independent auditors quarterly to review the Company's
financial statements and significant findings based upon the auditors limited
review procedures.

III. AUDIT COMMITTEE RESPONSIBILITIES AND DUTIES

REVIEW PROCEDURES

1. Review and reassess the adequacy of this Charter at least annually.
Submit the charter to the Board of Directors for approval and have
the document published at least every three years in accordance with
SEC regulations.

2. Review the Company's annual audited financial statements prior to
filing or distribution. Review should include discussion with
management and independent auditors of significant issues regarding
accounting principles, practices, and judgments.

3. In consultation with the management, the independent auditors, and
the internal auditors, consider the integrity of the Company's
financial reporting processes and controls. Discuss significant
financial risk exposures and the steps management has taken to
monitor, control, and report such exposures. Review significant
findings prepared by the independent auditors and the internal
auditing department together with management's responses.

A-1

4. Review with financial management and the independent auditors the
Company's quarterly financial results prior to the release of
earnings and/or the Company's quarterly financial statements prior to
filing or distribution. Discuss any significant changes to the
Company's accounting principles and any items required to be
communicated by the independent auditors in accordance with SAS 61.
The Chair of the Committee may represent the entire Audit Committee
for purposes of this review.

INDEPENDENT AUDITORS

1. The independent auditors are ultimately accountable to the Audit
Committee and the Board of Directors. The Audit Committee shall
review the independence and performance of the auditors and annually
recommend to the Board of Directors the appointment of the
independent auditors or approve any discharge of auditors when
circumstances warrant.

2. Approve the fees and other significant compensation to be paid to the
independent auditors.

3. On an annual basis, the Committee should review and discuss with the
independent auditors all significant relationships they have with the
Company that could impair the auditor's independence.

4. Review the independent auditors audit plan -- discuss scope,
staffing, locations, reliance upon management, and internal audit and
general audit approach.

5. Prior to releasing the year-end earnings, discuss the results of the
audit with the independent auditors. Discuss certain matters required
to be communicated to audit committees in accordance with AICPA SAS
61.

6. Consider the independent auditors' judgments about the quality and
appropriateness of the Company's accounting principles as applied in
its financial reporting.

INTERNAL AUDIT DEPARTMENT AND LEGAL COMPLIANCE

1. Review the budget, plan, changes in plan, activities, organizational
structure, and qualifications of the internal audit department, as
needed.

2. Review the appointment, performance, and replacement of the senior
internal audit executive.

3. Review significant reports prepared by the internal audit department
together with management's response and follow-up to these reports.

4. On at least an annual basis, review with the Company's counsel, any
legal matters that could have a significant impact on the
organization's financial statements, the Company's compliance with
applicable laws and regulations, and inquiries received from
regulators or governmental agencies.

OTHER AUDIT COMMITTEE RESPONSIBILITIES

1. Annually prepare a report to shareholders as required by the
Securities and Exchange Commission. The report should be included in
the Company's annual proxy statement.

2. Perform any other activities consistent with this Charter, the
Company's by-laws, and governing law, as the Committee or the Board
deems necessary or appropriate.

3. Maintain minutes of meetings and periodically report to the Board of
Directors on significant results of the foregoing activities.

OTHER OPTIONAL CHARTER DISCLOSURES

1. Establish, review, and update periodically a Code of Ethical Conduct
and ensure that management has established a system to enforce this
Code.

2. Periodically perform self-assessment of audit committee performance.

3. Review financial and accounting personnel succession planning within
the Company.

4. Annually review policies and procedures as well as audit results
associated with directors' and officers' expense accounts and
prerequisites. Annually review a summary of directors and officers
related party transactions and potential conflicts of interest.

A-2

[Logo of Sorrento Networks]

[Recycle Logo]

Appendix 1

SORRENTO NETWORKS CORPORATION

9990 MESA RIM ROAD, SAN DIEGO, CA 92121

THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS

The undersigned hereby appoints Mary Lay as Proxy, with the power to appoint a
substitute and hereby authorizes her to represent and to vote, as designated on
the reverse side of this card, all the shares of common stock of Sorrento
Networks Corporation (the "Company") held of record by the undersigned as of
July 1, 2002, at the annual meeting of shareholders to be held on August 28,
2002 or any adjournment thereof.

(CONTINUED AND TO BE SIGNED ON REVERSE SIDE.)

Please date, sign and mail your
proxy card back as soon as possible!

Annual Meeting of Shareholders
SORRENTO NETWORKS CORPORATION

August 28, 2002

Please Detach and Mail in the Envelope Provided

A [X] Please mark your [
votes as in this
example.

FOR all nominees WITHHOLD
listed at right (except AUTHORITY
as marked to the to vote for all nominees
contrary at right) listed at right

1. To elect the [ ] [ ] Nominees:
Board of Directors Phillip W. Arneson
of five (5) persons Donne F. Fisher
to serve until the Robert L. Hibbard
next Annual Meeting of Shareholders or until a Gary M. Parsons
successor is duly elected and qualified Larry J. Matthews

(INSTRUCTION: To withhold authority to vote for any
individual nominee, put a line through that nominee's
name at right.)

FOR AGAINST ABSTAIN

2. Proposal to ratify the selection of BDO Seidman, [ ] [ ] [ ]
LLP as the Company's independent auditors for
fiscal year 2003

3. In their discretion, the proxies are authorized to vote upon such other
business as may properly come before the meeting or any adjournment or
postponement thereof as to which discretionary authority may be granted.

THIS PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED IN THE MANNER DIRECTED HEREIN
BY THE UNDERSIGNED STOCKHOLDER. IF NO DIRECTION IS MADE, THIS PROXY WILL BE
VOTED FOR PROPOSALS 1 AND 2. THIS PROXY ALSO CONFERS DISCRETIONARY AUTHORITY
WITH RESPECT TO ANY BUSINESS AS MAY PROPERLY COME BEFORE THE MEETING OR ANY
ADJOURNMENT OR POSTPONEMENT THEREOF AS TO WHICH DISCRETIONARY AUTHORITY MAY BE
GRANTED.

PLEASE MARK, SIGN, AND DATE AND PROMPTLY RETURN THE PROXY CARD.

Signature: ______________________ _________________________ Date: ________, 2002
SIGNATURE IF HELD JOINTLY

NOTE: Please sign exactly as name appears. When shares are held by joint
tenants, both should sign. When signing as an attorney, as an
executor, as administrator, trustee or guardian, please give full
title as such. If a corporation, please sign in full corporate name by
president or other authorized officer. If a partnership, please sign in
partnership name by an authorized signer.

Appendix 2

SORRENTO NETWORKS CORPORATION

9990 MESA RIM ROAD, SAN DIEGO, CA 92121

THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS

(CONTINUED AND TO BE SIGNED ON REVERSE SIDE.)

ANNUAL MEETING OF SHAREHOLDERS OF

SORRENTO NETWORKS CORPORATION

August 28, 2002

Co. # _____________ Acct. # ______________________

PROXY VOTING INSTRUCTIONS

TO VOTE BY MAIL
----------------
Please date, sign and mail your proxy card in the envelope provided as soon as
possible.

TO VOTE BY TELEPHONE (TOUCH-TONE PHONE ONLY)
--------------------------------------------
Please call toll-free 1-800-PROXIES and follow the instructions. Have your
control number and the proxy card available when you call.

TO VOTE BY INTERNET
-------------------
Please access the web page at "www.voteproxy.com" and follow the on-screen
instructions. Have your control number available when you access the web page.

_____________________________
YOUR CONTROL NUMBER IS --
_____________________________

Please Detach and Mail in the Envelope Provided

A [X] Please mark your [
votes as in this
example.

FOR all nominees WITHHOLD
listed at right (except AUTHORITY
as marked to the to vote for all nominees
contrary at right) listed at right

(INSTRUCTION: To withhold authority to vote for any
individual nominee, put a line through that nominee's
name at right.)

FOR AGAINST ABSTAIN

2. Proposal to ratify the selection of BDO Seidman, [ ] [ ] [ ]
LLP as the Company's independent auditors for
fiscal year 2003

PLEASE MARK, SIGN, AND DATE AND PROMPTLY RETURN THE PROXY CARD.

Signature: ______________________ _________________________ Date: ________, 2002
SIGNATURE IF HELD JOINTLY