VALUEx Vail Hidden In Plain View June 15-17, 2011 Barry Pasikov Managing Member Hazelton Capital Partners

Telular Corporation (WRLS) – Background Area of Expertise – M2M wireless monitoring Machines communicate with one another wired/wireless M2M (wireless) Industry Est. $8.4b & growing 22% Fleet, Home healthcare, Utilities, Security Alarms, Tanks Telular focuses on two segments: Security alarms = 22m properties & ~ 15% cell communicator Cellular communicators < 3% in 2007 Est. 26% Households no landline vs. 21% in 2007 25% of market share wireless communicators Tanks ~4-5m market = ~ 200,000 monitored 10% of market share June 15-17, 2011 Vail ValueX

Where Telular Makes It’s Money Break even on units – ASP $140 & GM 30% = $42 Cost to acquire new customer ~ $35 - $40 Dealer pay ARPU $4.10/mo – WRLS pay AT&T $1.60 Dealer fragmented ~ 3,000 & top 5 = 50% / ADT 33% install 570,000 subscribers, ↑80 - 100k/yr & churn ~8-10% Added Fire monitoring & Smartphone app – Nov ‘10 Fire - ARPU $25.50 & GM 50% / App - ARPU $1.90 & 100% TankLink similar business model 20,000 subscribers, ARPU $12.45 & GM ~60% Tanks nascent segment less adopted & less fragmented June 15-17, 2011 Vail ValueX

Industry Key Barriers & Metrics Market Share - Niche industry can’t leverage CapEx Economy of Scale - Years to build subscription base Dealers very sticky if address needs Product line, Fair ASP & ARPU margins – costly switch units Metrics Dealer sell through – # of dealers sold into per quarter ARPU – ↓ of ADT actually increases company ARPU Churn – watch for increase – industry 12-15% Subscription base – watch for slow down in growth June 15-17, 2011 Vail ValueX

Management Creating Shareholder Value?? 2008 1st mover  digital communicator from analog Positive impact on subscription – @ 1 point 100% of sales Oct 2008 expanded into tank monitoring – $3.0m Rev = (20,000 * $12.45 * 12) = $3.0m with GM 60% = $1.8m 2009 repurchase 22% of shares @ $1.97 Market Cap = $37m, Cash = $21m, No debt Nov 2010 ongoing div ($0.40) & special dividend ($1) Special Dividend = 26% yield, Ongoing Dividend = 10.25% Ongoing Dividend = $6m, FCF = $10m  bank $4m cash June 15-17, 2011 Vail ValueX

Key Statistics Company Snapshot Market Capitalization $90 Million Revenue $49 Million Free Cash Flow ~$10 Million FCF Yield 11% Dividend Payment ~$6 Million Dividend Yield 6.67% Cash $9 Million Debt $0 Million Capital Expenditure $0.9 Million Shares Outstanding 15.3 Million June 15-17, 2011 Vail ValueX

Valuation Can Telular get to $180 million Market Cap? Dividend Valuation S&P/DJI div yield ~ 2.0%, Telco ~ 5.5%, Cable ~ 2.0% Value WRLS on 4% - 5% yield  $10 - $8 ($150 - $120m) Contribution from other segments ↑ alarm subscription base & ARPU  ↑ FCF ↑ Fire & Smartphone App Subscriptions  ↑ FCF New products - two-way voice GSM monitoring  ↑ FCF FCF $10  $13, Cash $9  $23, Div $12, EV/FCF = 8x  11x June 15-17, 2011 Vail ValueX

Key Takeaways If you invest in Telular you get: Strong Cash Generation Significant dividend stream Embedded ATM call and put option – Free Template for finding companies “Hidden in plain view” – focus on signals Repurchase 22% of shares – Used a Dutch tender Significant ongoing & special dividend yield June 15-17, 2011 Vail ValueX