<DOCUMENT>
<TYPE>EX-99.2
<SEQUENCE>3
<FILENAME>fs8031ex992.txt
<DESCRIPTION>EXHIBIT 99.2
<TEXT>
                                                                    Exhibit 99.2

                            FIBERSTARS, INCORPORATED

                            MODERATOR: JOHN DAVENPORT
                                NOVEMBER 14, 2006
                                   10:30 AM CT


Operator:             Good morning. My name is Kristi and I will be your
                      conference operator today. At this time I would like to
                      welcome everyone to the third quarter results conference
                      call.

                      All lines have been placed on mute to prevent any
                      background noise. After the speakers' remarks there will
                      be a question and answer session. If you'd like to ask a
                      question during this time simply press star then the
                      number 1 on your telephone keypad.

                      Thank you. Mr. Davenport you may begin your conference.

John Davenport:       Thank you Kristi. Welcome to Fiberstars third quarter 2006
                      earnings call. With me is Bob Connors, our CFO, Ted des
                      Enfants our VP and General Manager of Commercial Sales. In
                      today's call we'll discuss the Q3 numbers and provide a
                      brief update with a view of the call lasting about an
                      hour.

                      I'll open with a few comments. Bob will then address the
                      numbers and then Ted will provide a review of key
                      accounts. Then we'll open it up for questions.

                      But first I'd like to remind you that forward looking
                      statements made on this conference call are pursuant to
                      the Safe Harbor provision of the Private Securities
                      Litigation Reform Act of 1995. Such forward looking
                      statements include statements regarding our outlook for
                      the fourth quarter of 2006, goals and business outlook for
                      2007 and thereafter, future EFO sales, enhancements to
                      EFO, our revenue, and DARPA funding.

<PAGE>

                      Investors are cautioned that all forward looking
                      statements involve risks and uncertainties. Actual results
                      may differ materially from the results predicted. Factors
                      that could cause actual results to materially differ from
                      the forward looking statements in this presentation are
                      set forth in our most recent annual report on Form 10K for
                      the year ended December 31, 2005.

                      These forward looking statements speak only as of the date
                      hereof. We disclaim any intentions or obligation to update
                      or revise any forward looking statement.

                      First, concerning our Q3 2006 financial results. I'm
                      pleased to announce that third quarter sales versus
                      Fiberstars EFO at $1.3 million were about three times
                      sales for the same quarter 2005 and 43% higher than Q2
                      2006 - another record quarter for EFO sales.

                      Total net sales for the third quarter at $6.8 million were
                      an 11% decrease over Q3 2005. This was the result of
                      continued erosion of our TFO products - traditional
                      products - partially offset by the higher EFO sales.

                      The third quarter loss at $2.1 million was comparable to
                      the loss in Q3 2005. Components contributing to the loss
                      as discussed in previous calls are SEC related expenses
                      due to FASB 123R compliance, expenses associated with
                      compliance with Sarbanes Oxley, and lower margins. Margins
                      are expected to improve as our manufacturing restructuring
                      is completed in Q4.

                                        2
<PAGE>

                      An important part of the strong EFO showing in Q3 was due
                      to a successful second phase of the Department of Defense
                      Navy ship installation. I'm pleased to report that we're
                      making excellent progress on the third phase which we
                      expect to be completed in Q4.

                      We've developed a number of new products as a result of
                      that work that should also find commercial application
                      much like the EFO ICE product which emerged - earlier from
                      the work.

                      Descriptions of DOD ship install products which include
                      several new EFO metal halide version and EFO LED berth
                      light and efficient LED globe lights are included in a
                      recent presentation given last week at the Pacific Growth
                      Equities Technology conference. That presentation is
                      posted on our website.

                      Another important element of the quarter was partial
                      shipment of a large order specified through our UK office
                      for interior lighting in the Grand Mosque in AbuDhabi,
                      also described in the posted presentation.

                      Fiberstars other energy efficient lighting products also
                      sells well in the quarter. Commercial LED sales were over
                      a half a million dollars. While EFO using a metal halide
                      source is the most efficient way of making white light
                      LEDs are the most efficient way of making colored light.
                      That's because LEDs make pure colors directly, not by
                      subtraction as with most other sources. In 2007 we plan to
                      add Fiberstars LEDs to EFO as a second energy efficient
                      product category.

                                        3
<PAGE>

                      Sales of our new WPC controller pool products which reduce
                      power consumption at the pump heater and light also did
                      well, exceeding $150,000 in the third quarter. This is the
                      first year for that line of products.

                      Q4 activity is also encouraging, particularly in foothold
                      accounts, Whole Food markets, with our first stores in the
                      northwest region and Albertson's with more than 30
                      Albertson's locations expected to have been ordered by
                      year's end.

                      The increased activity is both in EFO down lights and EFO
                      ICE which Ted will discuss in more detail in a few
                      minutes.

                      As a result of the continued increase we're seeing in EFO
                      we expect to see both the quarter over quarter growth as
                      well as year over year growth in EFO sales to continue in
                      Q4. We expect sales to fall within our $4 to $6 million
                      forecast range for EFO for the year, most likely between
                      $4 and $5 million.

                      Given the number of chains testing EFO down lights and EFO
                      ICE we expect to see that steady growth continue in 2007.
                      LED sales are also expected to grow. We're forecasting EFO
                      LED combined sales to be between $8 and $12 million for
                      2007.

                      While we're also forecasting continued erosion of our TFO
                      or traditional fiber optics business we expect to see the
                      business as a whole to grow in 2007. To better handle that
                      growth we've made two important additions to the
                      Fiberstars team. Keith Johnson who is a senior sales
                      account manager based in Los Angeles will be able to
                      devote more attention to the important California market
                      and Eric Hilliard our new Chief Operational Officer an "A"
                      player, an expert in lean Six Sigma principles who was
                      formally aerospace business manager for Saint Gobain and
                      before that operations manager for Goodrich Aerospace.

                                        4
<PAGE>

                      Ted will talk about Keith's role in more detail. Eric's
                      role is to position the business to handle the uptake in
                      EFO while achieving improved margins. That's exactly what
                      he did successfully in his previous position for Saint
                      Gobain.

                      I'd like to turn it over to Bob now for a closer look at
                      the numbers. After that Ted will address our progress in
                      EFO.

Bob Connors:          Thanks John. EFO sales in Q3 were $1,346,000, nearly three
                      times $454,000 that we achieved in Q3 of 2005. EFO sales
                      include sales form US commercial, the Navy, and also from
                      Europe.

                      Sequentially they were up 43% over the previous quarter.
                      Total sales were $6,808,000, overall down 11% Q3 of last
                      year mainly due to a slowdown in the traditional fiber
                      optic business which was somewhat expected, offset by
                      higher EFO sales.

                      Gross profit at $2,036,000 was 30% - with a 30% gross
                      profit margin compared to $2,958,000 or a 39% gross profit
                      margin last year. Margins are lower due to short term
                      barriers in completing our overall operations
                      restructuring that we began at the beginning of the year
                      and won't be completed until Q4 with full rationalization
                      happening at the beginning of 2007.

                      Total expenses were lower due to lower restructuring
                      expenses this quarter and the quarter this year compared
                      to the third quarter of last year. The net effect was a
                      loss of $2,125,000 or 19 cents per share which compares to
                      $2,074,000 or 25 cents per share for Q3 of last year.

                                        5
<PAGE>

                      Looking at the year to date numbers EFO sales came in at
                      $2,547,000 - more than two times the $1,220,000 in EFO
                      sales we had year to date as of 2005. Again, this includes
                      commercial sales, Navy milestones, and European business
                      as well.

                      Total sales were $19,845,000, down 10% from last year
                      again due to the erosion in the traditional fiber optic
                      business both in pools and commercial and offset by higher
                      EFO business.

                      Gross profit year to date is $5,966,000 or 30% gross
                      profit margin compared to $8,423,000 or 38% gross profit
                      margin year to date last year. Margins are down again for
                      the same reasons that I discussed in Q3 with the
                      rationalization taking place during Q4 finalized by the
                      beginning of 2007.

                      Expenses are higher due to higher Sarbanes Oxley costs
                      this year. We had none of those costs last year. We also
                      have options expenses this year. The total of those adding
                      in the order of $1 million of expense line. The net effect
                      was a loss of $6,866,000 or 60 cents per share which
                      compares to a loss of $3,887,000 or 50 cents per share
                      last year.

                      I'll also note as we did in the press release that we had
                      LED sales in Q3 of $555,000 and year to date LED sales
                      were $1,542,000.

                      Looking briefly at the balance sheet cash utilization in
                      Q3 was $600,000, considerably less than the H1 cash
                      utilization which was on the order of $6 million. Cash
                      plus short term investments stands at $17.9 million at the
                      end of the quarter. Cash utilization so far this year is
                      $6.7 million year to date and we're on track to use on the
                      order of $8 million in 2006.

                                        6
<PAGE>

                      Accounts receivable are down due to collections in Q3.
                      Inventory is flat leaving us with net assets at about $33
                      million compared to $38 million in net assets at the same
                      point - at the end of the year in 2005.

                      Looking at the forecast then in Q4 as John said we expect
                      EFO sales to show sequential growth and finish the year in
                      the range of $4 to $5 million. We expect further erosion
                      of TFO in line with what we've seen so far this year and
                      we expect a loss also in line comparable to what we've
                      seen in the quarters so far this year.

                      In 2007 we expect the combined total of EFO and LED sales
                      to be between $8 and $12 million with $10 million being
                      the most probable. This assumes some growth in the LED
                      sales during the year and we feel that it's a conservative
                      number to go for.

                      We expect further erosion of TFO in the 10 to 15% range
                      during next year and overall we expect cash utilization
                      which we're measuring by using EBITDA and also excluding
                      the option expense to be in the range of $0 to $4 million
                      which is about half or possibly less than half of what we
                      use or expect to use in 2006.

                      John, I'm going to turn that back over to you with that.

John Davenport:       Thanks Bob. Now I'd like to turn it over to Ted for an
                      update on EFO. Ted?

                                        7
<PAGE>

Ted des Enfants:      Thanks John. Good afternoon everyone. Today I want to
                      discuss our foothold account progress. I'll talk about
                      some of the new accounts that we have using EFO then we
                      thought we'd quantify the sales opportunity within our
                      customers testing EFO.

                      I will also talk about the process we use for evaluating
                      our progress with the customers and lastly talk a little
                      bit about our newest member of the EFO sales team. After
                      that I'll turn it back over to you John for Q&A.

                      First foothold accounts. Over 80% of the US sales efforts
                      are focused on selling to national accounts. Our strategy
                      is to develop early adopters that we call foothold
                      accounts specifically targeting the leaders in their
                      market. Our goal is to broaden applications within the
                      accounts as well as using them as examples to the industry
                      to show that the EFO products work.

                      Fiberstars foothold accounts for supermarkets are Whole
                      Foods and Albertson's.

                      We're continuing to broaden applications within Whole
                      Foods. For example the Chicago store ordered earlier last
                      week is our largest Whole Foods order to date for EFO
                      accent lighting. Whole Foods has also requested that we
                      supply three of their new stores with EFO ICE.

                      Whole Foods merchandising and accent lighting strategy has
                      proven to be an example of profitability and leadership
                      that is being widely adopted among the supermarket
                      industry. In fact it was Whole Foods' success that
                      convinced Albertson's that EFO worked for seafood.
                      Albertson's, another leader in the supermarket industry is
                      also progressing very well, both in the number of stores
                      now using EFO which this year will exceed 30 stores, but
                      also that we are seeing the first stores ordering EFO for
                      a second department, exactly the same pattern we saw at
                      Whole Foods.

                                        8
<PAGE>

                      These foothold accounts have helped us demonstrate EFO's
                      tremendous energy saving capability to other supermarket
                      chains. As a result we have received EFO orders for four
                      new supermarket chains - BI-LO, Redner's, Harris Teeter
                      and Bi-Right.

                      We also expect to ship to the W Hotel's flagship location
                      this quarter and see our first Dillard stores in Q1 of
                      2007, both leaders in their category, making them perfect
                      candidates to become foothold accounts that we'll plan
                      marketing and web testimonial to be based around. This is
                      a real breakthrough as we now enter two very distinct
                      market segments, hospitality and clothing retail.

                      One of the most exciting recent developments is with the
                      Walgreen's chain. Walgreen's has asked us to equip their
                      16 stores on Long Island with EFO-ICE. The payback for
                      these locations is about two years without considering
                      utility rebates. The rebate offered by LIPA brings the
                      payback to 1.2 years, another great leader in their
                      industry. We are very pleased to start shipping EFO-ICE to
                      Walgreen's.

                      We are also very pleased with our progress with the Navy.
                      The Navy makes a great foothold account for the commercial
                      shipping sector. We expect Fiberstars' products to be
                      specified on Navy ships in 2008.

                      Commercial lighting projects generally specified through
                      rep agencies are also a very important part of our
                      business. While they do a significant amount of project
                      work in the US, the majority of the work in Europe is
                      project based. A few examples of the European business
                      includes the Grand Mosque at $400,000 of EFO in Abu Dhabi
                      which was partially shipped in Q3 and will be completed in
                      Q4, a European clothing store utilizing EFO, and a bridge
                      in the UK that utilized LEDs for energy and maintenance
                      savings.

                                        9
<PAGE>

                      There's always a lot of interest about our customer tests.
                      So we thought we would quantify the current test we have
                      under way for EFO accent and down lighting along with
                      EFO-ICE. The 20 chains using or testing EFO accent and
                      down lighting represent a potential market of about 15,000
                      locations.

                      We also have 15 chains testing EFO-ICE with about 20,000
                      locations combined. This represents a $1 billion
                      opportunity for EFO. About 30% of these accounts represent
                      80% of the opportunity or about $800 million. With only a
                      1.5% success rate in these accounts, this would translate
                      to $12 million in sales for EFO and EFO-ICE. While we
                      expect to achieve far greater than 1.5% over time, we
                      believe that a 1.5% penetration within these accounts is
                      entirely reasonable in 2007, given where we are in the
                      decision-making process in these accounts.

                      Speaking of the decision-making process, I thought I'd
                      describe the Six Sigma methodology that we use for
                      evaluating our progress with customers. We put each
                      customer into one of seven tollgates. Each tollgate
                      represents a percentage of closure within each account. As
                      each tollgate threshold is met we move closer to a
                      completed project or rollout. We use this simple
                      methodology to assist us in prioritizing our time,
                      allowing us to focus our limited resources on customers
                      that will have the greatest impact.

                      And lastly I'm very pleased to announce our newest member
                      of the EFO sales team, Keith Johnson. Keith brings over 20
                      years of experience from the lighting industry, most
                      recently leading national accounts for Kim Lighting an $80
                      million division of Hubble Lighting. Prior to Kim Lighting
                      Keith worked GE Lighting and Cooper Lighting. Keith is
                      based in LA where he will lead our efforts for the
                      national accounts based on the West Coast.

                                       10
<PAGE>

                      In conclusion, I have three things I'd like to highlight
                      today. We have seen an uptick in EFO activity and that is
                      very encouraging. We have a great sales team, especially
                      with the addition of Keith Johnson and achieved a little
                      plan for 2007. This is the combination that will make 2007
                      a great year for EFO.

                      And with that I'll turn it back over to you, John.

John Davenport:       Thank you, Ted. Now we'll open it up for questions and
                      answers.

Operator:             At this time I would like to remind everyone in order to
                      ask a question please press star 1 on your telephone
                      keypad. We'll pause for just a moment to compile the Q&A
                      roster.

                      Our first question comes from the line of Lenny Brecken.

Lenny Brecken:        Guys, first of all, Ted, excellent explanation of the
                      sales channel. John, you know, from Ted's comments first
                      of all Walgreen's is particularly encouraging and, you
                      know, the opportunity is obviously extremely attractive.
                      However the only issue that I've had the last couple of
                      quarters is meeting expectations. What has the hire of the
                      COO and any other organizational changes or approach to
                      the forecasting of the business what has changed to make
                      it more accurate? Thank you.

                                       11
<PAGE>

John Davenport:       Thanks, Lenny. I'd love to address that question. First
                      I'm really pleased with our new COO. He did a great job in
                      his last assignment, as I said, at Saint Gobain. He
                      started out with a $9 million business that was failing
                      and came in, got their operation under control, got their
                      costs under control and left with a $40 million business
                      that was very, very healthy and is making money for Saint
                      Gobain. So that's what we want Eric to do for us precisely
                      that.

                      And he has - he's really a seasoned professional. He has
                      an open charter to do what it takes to transform - to help
                      transform Fiberstars which really has been kind of a job
                      shop into a business where we can have free flow and be a
                      lean enterprise, which is really how you make money at -
                      in the lighting business. So that's a very important
                      departure.

                      A second thing that we've done is the way that we are
                      looking at accounts. We've got tests ongoing into
                      accounts. We're very careful in terms of the way we put
                      tests in. We don't put tests everywhere we get a request.
                      We take a look at the opportunity and make sure that our
                      resources are focused on the right 30% of those chains
                      that will give us a chance really at getting the kind of
                      rollout that we want to see, so that's changed.

                      Plus the methodology, we have a - Ted sketched what we're
                      doing. It's really a derivative of Six Sigma. Both Ted and
                      I were exposed to it at GE Lighting, where we go in and we
                      talk about where we are with each customer. The customers
                      that we're really talking about delivering in 2007 are
                      typically 5 or greater on that schedule. Some are at the 7
                      level, which is the - which is basically waiting for a PO.
                      Our foothold accounts are like that. So the approach that
                      we're taking is much more focused on accounts.

Lenny Brecken:        John.

                                       12
<PAGE>

John Davenport:       Yes.

Lenny Brecken:        Just let me interrupt for a second. Does that mean - I
                      mean Ted used the top down approach in terms of creating
                      the forecast for next year. And you're discussing account
                      by account.

John Davenport:       Yes.

Lenny Brecken:        Did you use both to formulate that? I mean did you look at
                      what the...

John Davenport:       Yes.

Lenny Brecken:        What, I'm sorry, go ahead.

John Davenport:       Yeah...

Lenny Brecken:        Top down and bottom down approach to account...

John Davenport:       Yes.

Lenny Brecken:        By-account saying what I can do in each account
                      realistically rather than going through the potential in
                      each account which, you know, in the next year is
                      unrealistic.

John Davenport:       Absolutely.

Lenny Brecken:        Okay.

                                       13
<PAGE>

John Davenport:       Absolutely. We did exactly that. We did both approaches.
                      We did that for a sanity check actually because they both
                      should come out in roughly the right range. However our
                      focus is bottoms up in 2007, where we have specific
                      individuals in each account that we deal with and where
                      we're bringing the process along. So that's a change.

                      The third thing is that we're trying to forecast a
                      conservative range for EFO, realizing that there is time
                      that customers need to get comfortable with the product,
                      that it before they're willing to roll it out on a larger
                      basis.

                      For example, with Walgreen's we've been in test with them
                      for several months. And it was the results of that test
                      combined with the Albertson's study that convinced them
                      that they couldn't pass up the energy savings. So we're
                      beginning to work with them on a larger basis.

                      So those are three major things that have changed. Ted has
                      talked about sales force. We're adding Keith in
                      California. Keith is really a terrific addition. He was
                      Kim's leading sales guy basically. And we have not had the
                      coverage that we're going to need in 2007 in California.
                      California is the 5th largest economy. We've got to have
                      someone really based there to take advantage of the
                      opportunity and they're very energy conscious, probably
                      the most energy conscious state. But we've got that
                      covered now. So that's...

Lenny Brecken:        John, what you - all right, one last question on that same
                      point. What - you gave a range of like 1.5 to 2.5 which is
                      still below the range for the fourth quarter, up
                      sequentially for EFO. What visibility do you have on that
                      number? How much business has to be closed in the last
                      month or, you know, just help me understand so that we
                      don't go through another nightmare again in missing the
                      numbers again?

                                       14
<PAGE>

John Davenport:       Well I feel good about meeting the numbers that we talked
                      about. We're actually further along in the quarter than we
                      were in Q3 at this time.

Lenny Brecken:        That's a very good...

John Davenport:       So...

Lenny Brecken:        Yeah.

John Davenport:       That's the key thing.

Lenny Brecken:        Right

John Davenport:       And that's the key thing. It's not going to be...

Lenny Brecken:        That's good to hear.

John Davenport:       (Unintelligible) number, right.

Lenny Brecken:        Right. Good to hear. I'll follow up with a question or
                      two. I'll get back in the queue. Thanks.

John Davenport:       Thank you.

Lenny Brecken:        Thanks,

(Lenny Brecken):      Okay.

Operator:             Your next question comes from the line of Bill Gibson.

                                       15
<PAGE>

William Gibson:       Yeah, John, Wal-Mart put out a press release yesterday
                      sort of about, you know, feel good green press release.
                      But they talked about after all of their testing of
                      rolling out in their new stores LED freezer case lighting.
                      I know they've been testing your product as well. Are you
                      still in the running for business there? Or why did they
                      choose LED or EFO?

John Davenport:       Well I can't tell you what's in Wal-Mart's mind, okay. But
                      we did see the press release. And let me just tell you
                      what's going on. We have an ongoing test with Wal-Mart, so
                      they are testing EFO, and specifically because the energy
                      efficiency of EFO is actually dramatically more than LED.
                      So they've told us we're in the running in spite of the
                      press releases.

                      The - I guess the second point is others, for example,
                      Walgreen's who have tested LEDs, have chosen EFO. And the
                      reason has to do with the payback period and the energy
                      savings that you can get with EFO-ICE. We're starting with
                      about half of the energy, so we're saving twice the energy
                      up front over LEDs. Plus we don't put heat in the case,
                      and that's really important. Heat in the case uses up a
                      lot of energy. Just fundamental thermodynamics tells you
                      that if you put a heater in your freezer case your bill is
                      going to be bigger next month than it was this month.

William Gibson:       And if I remember the Albertson's study, is that about
                      roughly 80% energy savings when you combine the two?

John Davenport:       It was 67% for the Albertson's study, so roughly about
                      70%. Now that's against state of the art fluorescent bulb.
                      We did Brookshire's store recently. That number was 82%
                      and that's just what you typically find out there. And
                      those stores are really quite energy efficient from a
                      fluorescent point of view. So over 80% is what we expect
                      to find in the field.

                                       16
<PAGE>

William Gibson:       And then just one last question on your core business,
                      would the core of the old business have been profitable in
                      the third quarter without the moving expenses or without
                      the cost of EFO? Or has that slipped into the red with
                      weakness?

John Davenport:       Bob?

Bob Connors:          Yes, certainly though pool business, which is the biggest
                      part of the legacy business, is - would have been
                      profitable. Commercial side is smaller and is kind of an
                      add-on now to the EFO business to some extent. So that
                      probably would not have been, but the pool business, which
                      is still nearly half of our overall business, would have
                      been.

William Gibson:       Good. Thanks Bob.

Operator:             Our next question comes from the line of Mario Cibelli.

Mario Cibelli:        Yes, hi. A couple of questions -- there's another chains
                      that we experimented with in Long Island, correct? It -
                      there's - this is the second one?

Ted des Enfants:      Several.

John Davenport:       Yes, but there was another one. Pathmark is another chain
                      that we're working with.

Mario Cibelli:        Okay. And I'm wondering, are these all in the testing
                      phase still or you have any people that have decided to go
                      no further at this point or...

                                       17
<PAGE>

John Davenport:       No. The - Pathmark is -- we were talking about our
                      tollgate process -- is about midway in our tollgate
                      process. We passed all of the performance tests and now we
                      need to get in the queue for their outlay of capital
                      dollars. And that's where we are with Pathmark. That -
                      they haven't made a decision yet. They're still in the
                      testing phase and that test is ongoing.

Mario Cibelli:        And when did Walgreen's implement?

John Davenport:       Walgreen's has really been signaling us their intent for
                      the last couple of weeks. But in the last few days they
                      actually - they've actually said, "This is official. Do it
                      guys."

Ted des Enfants:      We've been testing with Walgreen's for...

John Davenport:       Oh yes, for months.

Ted des Enfants:      ...about nine months.

John Davenport:       Right. And,

Ted des Enfants:      Oh, so you've been testing or nine months. Sorry. (I mean)
                      what did they say "Do it guys," the other day - what
                      did...

John Davenport:       They're saying - what they did was they identified 15
                      stores that they want us to convert to EFO-ICE based on a
                      successful test in a store in Chicago.

Mario Cibelli:        Sorry, I - again, I'm sorry if I'm confused. There were -
                      the test that was in Chicago -- there's another task that
                      - in Long Island? I...

                                       18
<PAGE>

John Davenport:       Oh, no, no. There's a - the test store is that we started
                      with was in the Chicago area. There's a 16...

Mario Cibelli:        Okay.

John Davenport:       ...stores in Long Island that they identified because of
                      the very quick payback on the high energy cost of their
                      stores in Long Island.

Mario Cibelli:        And so that is something that is currently being tested or
                      yet to be installed?

Ted des Enfants:      Yet to be installed.

John Davenport:       Yet to be installed. That - this is new news.

Mario Cibelli:        Okay, well, how would you handle a situation where you
                      actually really, you know, pulled down a very big order
                      and did a - a national account. I mean - and you would
                      sort of would have another problem, which is, you know,
                      ramping production? How would you handle this at point, if
                      you actually, you know, in one order sort of pulled down
                      this much that you might have forecast for all of next
                      year say?

John Davenport:       Well that'd be a wonderful thing. We're looking forward to
                      that problem. However, on a longer range, this is
                      precisely what (Eric's) job is going to be -- to make sure
                      that we meet customer expectations. And in fact, (Eric) is
                      onboard, because I want to ensure that we're going to do
                      that. But in a shorter-term basis, we can respond to a
                      large order. The reality is that a chain won't instantly
                      convert their stores overnight -- that they'll be four or
                      five or six stores maybe at the most in a month's time.

                                       19
<PAGE>

                      With that kind of a level and with our partners helping us
                      to do the installations, we could certainly handle that.
                      And as I said, we're scaling up even for larger
                      expectations if we had several chains.

Mario Cibelli:        In doing that based on the number of accounts you're
                      talking to and - I assume? And at some type of rate that
                      you've had historically?

John Davenport:       That's right.

Ted des Enfants:      Absolutely.

John Davenport:       That's right.

Ted des Enfants:      Where they fall on the tollgate process we described.

Mario Cibelli:        And how about -- and I forget if we talked about this in
                      the past -- a level of revenue or you - the break even or,
                      you know, on EFO? Have you given out a number like that in
                      the past?

John Davenport:       Yes. We - we're saying for 2007 that we'll be kind of cash
                      neutral with - between $0 and $4 million use of cash in
                      2007, which would be EBITDA plus removing the options
                      expense, which is also a non-cash expense. That would be
                      our goal for 2007. 2008 would grow from there. We would
                      become a...

Mario Cibelli:        I always think about isolating EFO independently because
                      you do have other, you know, profitable business in there
                      that would allow you to get to the $0 to $4 million EBITDA
                      loss.

                                       20
<PAGE>

Bob Connors:          Yes, we haven't really scaled the EFO business yet, so the
                      margins and profitability wouldn't be there next year. But
                      certainly we're looking for cash - close to cash
                      neutrality next year overall.

Mario Cibelli:        Okay.

John Davenport:       And of course that's important. We're trying to moderate
                      our use of cash so that we don't have to come back to the
                      investment community -- certainly not this year or next
                      year. Hopefully if we come back and will be - it will
                      because the uptake is so large that we've got to fund it.

Mario Cibelli:        All right, and I'm just, you know, that press release from
                      Wal-Mart seemed pretty clear. So I'm unsure of, you know,
                      when you're saying that you'd - the press release makes it
                      sound like they've decided to go...

John Davenport:       (Unintelligible).

Mario Cibelli:        ...technology or...

                      ...turn it over to Ted here to give you one comment
                      from...

Ted des Enfants:      Really what the press release doesn't say is that their
                      commitment to our for LEDs for GELcore is a one-year
                      commitment. They still have EFO-ICE under consideration.
                      In fact we have a review scheduled with Wal-Mart in the
                      near future that we'll be reviewing the test with them. So
                      the two technologies are vastly different in terms of, as
                      John described, an energy savings, whereas my belief - my
                      understanding is that GELcore's been testing with Wal-Mart
                      for about three years. And we've been testing with them
                      for just about - just under a year now. So I think with
                      that sort of time, we still feel we have a shot there.

                                       21
<PAGE>

John Davenport:       Well they think we do.

Ted des Enfants:      Yes.

John Davenport:       Okay? So we're going from feedback from the customer,
                      which is how we operate.

Ted des Enfants:      And then, you know, like John said, looking at Walgreen's,
                      who looked at both technologies and decided to use
                      EFO-ICE, that's a great indicator for us.

John Davenport:       Right. Thank you.

Mario Cibelli:        Thank you.

Operator:             Your next question is from the line of (Eric Goldstein).

Eric Goldstein:       Hey. Good morning guys.

John Davenport:       Good morning, (Eric).

Ted des Enfants:      Good morning, (Eric).

Eric Goldstein:       Couple questions -- I didn't understand the answer on
                      Pathmark. Is that on Long Island? Is that still a
                      possibility or what's happening with that?

John Davenport:       Yes, absolutely. It's still a possibility.

Eric Goldstein:       What's taking so long? Why isn't that happening?

                                       22
<PAGE>

John Davenport:       Ted?

Ted des Enfants:      Its - we're basically - as John said, we're basically
                      through the field testing acceptance. It's now - it's a
                      matter of getting the project into their capital budget.
                      And basically they, like most of our clients, have told us
                      they prioritize the budgeting based around paybacks. So
                      we're, I have to believe, high on the priority list, but
                      it's just a matter of getting them to make a decision.

John Davenport:       So we're - we still have a couple more steps to go in that
                      process, but that has not - we're still working with them.
                      It takes time.

Eric Goldstein:       All right. And then the Walgreen's -- did you say how big
                      that would be and - in terms of dollars and a when would
                      you start to deliver the product?

John Davenport:       Yes.

Eric Goldstein:       Is this a fourth quarter thing or a first quarter thing?

Ted des Enfants:      Just started evaluating the auditing of the location, so
                      we haven't compiled all the data yet but we - 16 locations
                      is very likely to be a good amount of revenue for us.
                      We're excited.

John Davenport:       Yes. We're going to probably begin that installation in
                      Q4. That's our target. So of course we listen to the
                      customer, but they're anxious to get moving on the energy
                      savings.

Eric Goldstein:       Okay.

                                       23
<PAGE>

John Davenport:       (Unintelligible).

Eric Goldstein:       How many dollars per store is that?

John Davenport:       The - of course the - a drugstores are relatively small.

Ted des Enfants:      They have as many as 25 door, you know, as compared to
                      about 100 doors pf a grocery store, but they vary. They
                      vary by locations so as I said, we're still auditing the
                      stores right now.

John Davenport:       Of course at Walgreen's is a fairly large chain. How many
                      stores are there in Walgreen's?

Ted des Enfants:      Walgreen's has 5500 locations.

John Davenport:       Yes. So obviously this is a significant opportunity.

Ted des Enfants:      And they made this decision based on a 500-store proposal
                      we delivered to them.

John Davenport:       Right.

Eric Goldstein:       Okay, and then I'm just - what - at this point - I mean I
                      think your guidance for next year -- $8 to $12 million --
                      basically is a double or a triple in sales. So what gives
                      you your confidence that next year is really going to kind
                      of be the breakthrough year?

John Davenport:       Yes, we went over that.

Eric Goldstein:       Okay.

                                       24
<PAGE>

John Davenport:       The - we now have 35 chains testing EFO down lights and
                      EFO-ICE. We basically have that -- except for a few cases
                      here -- really not sold much EFO-ICE this year. I believe
                      EFO-ICE will start to take up more significantly in 2007.

                      We have however been with these customers for quite a
                      while -- Many of these chains -- are pretty far along on
                      the decision process. We expect to see more foothold
                      accounts or more adopters that'll be like Whole Foods and
                      Albertson's in 2007. And so we feel also that we've got -
                      we've pretty well targeted the 30% of those customers that
                      can deliver 80% of the opportunity. And that's where we're
                      spending our time. We've added a salesperson in an area
                      that really has been undercovered, and that's California.
                      So we feel that we're positioned to deliver on this.

Eric Goldstein:       Okay. So the cash burn for next year -- you're saying, you
                      know, you'll be either flat from a cash flow point of view
                      to a use of potentially $4 million?

John Davenport:       That's correct.

Eric Goldstein:       And is the difference in that just a strictly the - if you
                      come in at the high end of your revenue range versus
                      coming into the low end?

John Davenport:       Yes. The simple answer to that is yes.

Eric Goldstein:       Okay. And then is there a point or is there any point in
                      time when the customer, you know, becomes concerned about
                      your cash position or, you know, if you continue...

                                       25
<PAGE>

John Davenport:       We're trying to avoid that by being conservative in cash.
                      Bob, what would we have, you know, rough idea of cash at
                      say the end of 2007, you know, given our cash position
                      now?

Bob Connors:          Well depending upon where we come out and we would be
                      somewhere in the range of $15 million to $11/12 million
                      dollars at the low end.

Eric Goldstein:       By the end of next year?

Bob Connors:          Yes.

John Davenport:       Right.

Eric Goldstein:       Okay.

John Davenport:       Which should be a reasonable cash position.

Eric Goldstein:       Okay. Are you going to put press releases out on any of
                      these things? I mean, Walgreen's and the (mosque) and, you
                      know, the Albertson's store? I mean do you have plans to
                      actually make a...

John Davenport:       Yes, we have plans...

Eric Goldstein:       ...official announcement?

John Davenport:       ....for an official announcement. We'll see those as we go
                      forward.

Eric Goldstein:       Okay, great. Thank you.

Operator:             Our next question is from the line of Robert Smith.

                                       26
<PAGE>

Robert Smith:         Good morning. I would like some clarification of the - I'm
                      not going to say inability, but the short fall of bringing
                      EFO more into public recognitions so to speak through -
                      (in both) industry and more (common) people.

                      I mean, basically - saw an article in the - I think the
                      Wall Street Journal a while back touching upon energy
                      saving and lighting. And there was absolutely no mention
                      of EFO, so I find that kind of disturbing. And I'm
                      wondering what you guys are trying to do to elevate the
                      level of awareness of EFO both industry and in the general
                      population?

John Davenport:       Excellent question, Bob. And let me just say that a couple
                      of days before you saw that article, which I read as well,
                      we won a Wall Street Journal award for our EFO technology.
                      And we were very pleased to be a winner and we're named in
                      the Journal specifically.

Robert Smith:         But  the guy who wrote the article wasn't aware of it.
                      So...

John Davenport:       Exactly, so we were disappointed. Now, we have since
                      talked to the guy who wrote that article when we received
                      the award at the Wall Street Journal dinner.

                      So we're working on that. We also - I speak with reporters
                      all the time. I have had two major dinners and dates where
                      I've talked both on the west coast and the east coast.

                      I do that at least three times a year. However, that's not
                      enough. And we've begun a more concerted effort that Ted's
                      going to say a word or two about, if you would, Ted, for
                      2007.

                                       27
<PAGE>

Ted des Enfants:      We're really focused on getting the awareness out for EFO.
                      As a matter of fact, this week's Supermarket News, there's
                      going to be an article about EFO and EFO ICE as well as
                      comparing the two technologies between LEDs and ours,
                      which is very exciting.

                      Talking about the customers that we've worked with. It'll
                      be a several page spread. And last month, visual
                      merchandising and store design probably not commonly read
                      amongst Wall Street but very commonly read amongst
                      retailers in the lighting business, and any business
                      retailing product a great byline for EFO.

                      So as we have more wins, we're going to build upon these
                      wins with testimonials and press and really Antenna has
                      done a great job for us and we need to continue to do our
                      part to bring them wins they can highlight to get press
                      off.

John Davenport:       But our goal, our goal, Bob, is to get more in the papers
                      that you and others; the common person reads.

Ted des Enfants:      The Journal, the Times and USA Today would be three to
                      start, right?

Robert Smith:         So what makes Walgreen's so smart and Wal-Mart so dumb?

John Davenport:       Well, that's a good question. Okay. The - my answer to
                      that question is simply dollars.

                      The dollars that you can save by using EFO ICE, especially
                      in a place like Long Island, where the utility rates are,
                      like, 18 cents or something like that per kilowatt hour is
                      just enormous.

                                       28
<PAGE>

                      Why would you want to save only half of that or a third of
                      that or 10% of it? So dollars are the reason I think that
                      makes Walgreen's so smart.

                      They did an analysis as Ted alluded to, both systems. They
                      had them in their stores and looked at them.

                      They liked the way EFO looked. And that, coupled with the
                      savings made it a natural choice for them. Wal-Mart, I
                      can't tell you what their thinking is except that they've
                      had a, you know, a long term relationship with GE and I
                      love GE; still have some GE stock.

                      So I'm hoping (unintelligible) does a good job moving
                      forward. But the - and I think that this is partially a
                      result of that relationship.

                      If you read other stories, you'll see that it's more about
                      compact fluorescent bulbs in Wal-Mart rather than LEDs in
                      terms of making the real impact in energy savings. So
                      that's all speculation.

Robert Smith:         But, I mean, Wal-Mart is a fantastic supermarket operator.
                      I mean, what...?

John Davenport:       Absolutely, and that's why we are in spite, we are told,
                      you know, you'll see press releases and such, but we're
                      still evaluating it. We're evaluating it because we can't
                      turn away from the energy story that you told us about.
                      And so we're still in their process.

Robert Smith:         Okay. So alright. So how about the questions of critical
                      mass and tipping point? I mean, what has to happen to - it
                      seems that you have the product being in the right place
                      at the right time.

                      Why aren't a lot more people beating a path to your door
                      so to speak?

                                       29
<PAGE>

John Davenport:       That's a good question. I wish we knew the complete answer
                      to that question. I can just tell you, and I can show you
                      historical data on MR16s and other products, a compact
                      fluorescent that - and another favorite product of mine,
                      xenon headlights for cars.

                      All of these lighting products took time to develop. We're
                      in the buildup phase. And it's hard to know - at what
                      point you've built the base to the point where you've gone
                      from the early adopter phase to the phase where the
                      skeptics say oh yeah, this is the standard way of - this
                      is the right way of doing things.

                      Some people call it the tipping point. Our forecast for
                      2007 doesn't assume that happens. That's the conservative
                      approach we're taking.

Robert Smith:         Well, you have these studies - you have the SoCal study.
                      You have others. I mean, why doesn't that have better
                      currency, so to speak?

John Davenport:       I heard a talk the other day in which they asked how many
                      people does it take to change a light bulb. And the answer
                      was only one. Thomas Edison, and it takes 129 years.

                      We still have half the market. Half of this market is the
                      inefficient hot wire in a bottle that Tom did a great job
                      on when he was going against gas lamps, but really doesn't
                      make much sense now.

                      Regulations are helping drive change. And they're becoming
                      much more important in 2000 - they have become much more
                      important in 2006 and that importance is spreading in 2007
                      as well as incentive.

                                       30
<PAGE>

                      So I think that that will help nudge this process along.
                      But I wish I knew why lighting people were more
                      conservative, for example, than software people. That's
                      just how it is.

Robert Smith:         What are we going to see at Light Fair next May?

John Davenport:       Lots of new, interesting products. You're going to see
                      some of the ship install stuff. You're going to see
                      instant light at Light Fair in May.

                      And that's really exciting to us, because it'll take our
                      products to a whole new level. That's one of the things
                      that has been limiting our applications. We haven't been
                      able to go into the residential market because of that.

                      We'll be able to sell residential lighting, for example,
                      and also some commercial lighting in conference rooms and
                      so forth or flipping the switch on and off happens all the
                      time.

Robert Smith:         And is the R&D development program still moving ahead
                      based on your timeline?

John Davenport:       Absolutely. We have funding ongoing in 2007 to help with
                      that effort. We provide, of course, we do some funding,
                      self funding.

                      But the government has continued that funding in 2007,
                      which we're very grateful for.

Robert Smith:         And are you on the same timeline as you have been?

John Davenport:       Sure.

                                       31
<PAGE>

Robert Smith:         Okay. All right. Thanks.

Operator:             Our next question comes from the line of (Chris Ryder).

Chris Ryder:          Hi.

John Davenport:       Hi, Chris.

Chris Ryder:          Couple questions on the Walgreen's situation. You have a
                      purchase order for 16 stores. Was it based on the two-year
                      payback or did it require the rebate to get it down to 1.2
                      before Walgreen's said yes?

John Davenport:       Ted?

Ted des Enfants:      It was based on a two-year payback. And I think - I'm sure
                      that the incentives make it all that much more appealing
                      to them, but I think that our being around a two-year
                      payback was all it took.

Chris Ryder:          So in your 500 store proposal, how many of those 500
                      stores met that two-year payback requirement?

Ted des Enfants:      I believe all of them. I don't really have all the
                      information in front of me right now, of the 500; a
                      percentage.

John Davenport:       I would say some of them are a little longer and some of
                      them are a little less depending upon which part of the
                      country you're talking about.

                      Ohio has, you know, say, an 8 cent or 9 cent a kilowatt
                      rate. You've got New York City at 13 or 14; I've forgotten
                      the number.

                                       32
<PAGE>

Ted des Enfants:      New York City more like 20. Long Island 16, and you know,
                      Boston 14-1/2.

John Davenport:       Yeah. So it depends. Some of them will be a little bit
                      better. Maybe, you know, less than two years, some will be
                      a little bit more.

                      But the average payback was coming in around two years.

Chris Ryder:          Do you contemplate that the 484 stores that weren't
                      selected will eventually get outfitted with EFO ICE?

John Davenport:       We're working towards that. That's our goal, of course.

Chris Ryder:          Absolutely. So then just help me understand why they chose
                      only 16.

John Davenport:       It's just how you start out. For example, when we went
                      with Whole Foods Market, their focus is the problem
                      children, and they view that electricity rate in Long
                      Island, they've got to do something about it.

                      They're just bleeding to death in terms of just spending
                      money on electricity. They'd rather spend it on
                      advertising and other things, or discounts on food or
                      whatever.

                      The Whole Foods Market identified seafood as their area
                      that they had to do something about, and we went in the
                      seafood departments first. We'll see, I believe, growth
                      going forward.

Chris Ryder:          There's been some talk in the previous quarterly
                      conference call that when you deployed your first
                      installation at W, you would have some both installation
                      experience as well as some real time savings experience.

                                       33
<PAGE>

                      Has the W deployment started and what are your
                      expectations for the W franchise overall?

Ted des Enfants:      The Ws is asking us to look at their entire chain
                      completely for energy savings. And that's a second
                      question first.

                      Your first question is that we expect to begin the W
                      installation in December.

John Davenport:       Right. That's what they've told us.

Ted des Enfants:      And the RFP potential for W deployment?

John Davenport:       It's significant.

Ted des Enfants:      Significant. Not only to W, but the entire Starwood chain.

Chris Ryder:          Okay. And then the last question is a couple quarters ago,
                      we talked about the B of A building, and that you were
                      part of the opportunity set, but you hadn't actually been
                      awarded any purchase orders.

Ted des Enfants:      As no one has been awarded purchase orders, it is still a
                      very broad-brushed spec. We are specified with EFO in a
                      limited application right now on every floor.

                      But we're obviously working very hard to try to increase
                      that for - to get much more. But no one has a firm spec
                      right now. No orders have been placed for lighting yet at
                      Bank of America.

                                       34
<PAGE>

Chris Ryder:          Okay. And then just one last one. In your $8 million to
                      $12 million guidance, you mentioned a 1.5% hit rate. Is
                      there any kind of expectation as to if something does go
                      right or something does go wrong what upside, downside if
                      you were going to be as narrow as $8 to $12 million, could
                      it be - should we be thinking in a range of like, $5 to
                      $30, or is that too wide of a range?

John Davenport:       We'd love to see $30, but we obviously, and by bringing
                      (Eric) on board is a response to this, is to be able to
                      respond to the upside.

                      We feel on the lower side of that number that that number
                      is sufficiently low that we're going to hit that number.

                      So one more - we have time for one more question.

Operator:             Your last question is from the line of (Jeff Diecidue).

Jeff Diecidue:        Yes, hi, Jeff Diecidue.

John Davenport:       Hi Jeff.

Jeff Diecidue:        How are you? Would it be fair to say that the hiring of
                      the COO seems to be timed with what you're seeing as a
                      potential inflection point in the EFO business,
                      particularly in light of the Walgreen's deal?

John Davenport:       Yeah. That's exactly right. I can't forecast that, but I -
                      the last thing on earth that I want to have is Fiberstars
                      not be positioned to respond.

                                       35
<PAGE>

Jeff Diecidue:        It would seem then that your larger customers,
                      particularly Wal-Mart or Walgreen's and even a PathMark
                      would want to make sure that you have a good operations
                      guy in there to manufacture and produce on time and on
                      schedule, etcetera.

John Davenport:       Absolutely. Absolutely. You're thinking just the way we're
                      thinking.

Jeff Diecidue:        Now, on the Wal-Mart press release that some people had
                      discussed, I'm a little confused by some of the commentary
                      about the release, because I didn't read it as knocking
                      you guys out.

                      In fact, it reads to me that they have some experimental
                      stores. They decided to use some LED lights for some of
                      their newer stores and the experimental stores.

                      But they also say at the end of that one paragraph that
                      other energy efficient lighting opportunities continue to
                      be monitored at the experimental source.

                      You know, Wal-Mart has - go ahead. I'm sorry.

John Davenport:       That's exactly right. And that's the way we were told to
                      read it.

Jeff Diecidue:        Well, I mean, that's what it says. It's not a question of
                      being told to read it. That's what it says. I mean, it
                      seems to me that wouldn't it be fair also to say that
                      Wal-Mart obviously uses a lot of different sources for -
                      whether it be lights, you know, toys, whatever, they're
                      using some LED lights in some of their - but they're also
                      using your lights or looking to use your lights.

John Davenport:       Exactly right.

                                       36
<PAGE>

Jeff Diecidue:        Okay. I just wanted some clarification, because that's
                      what it sounded like to me, and I just was a little
                      curious by why the questioning was somewhat, you know,
                      down beat on it when it seemed to me that Wal-Mart has not
                      foreclosed any opportunities to you.

John Davenport:       Exactly. We're encouraged by that. I mean, very
                      encouraged. Thank you very much, everyone for your
                      participation in the call.

                      And on behalf of the folks here at Fiberstars for your
                      thoughtful questions and of course your continued support.
                      Thank you.

Operator:             Thank you. This concludes your conference. You may now
                      disconnect.

                                       END

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