Features - Financial Plays Of The Week:

NeoScale SECURES $12 MILLION IN SECOND ROUND FUNDING

NeoScale Systems Inc, a leading provider of enterprise storage security solutions for the networked storage and data storage management markets, announced recently that it has secured $12 million in second round equity funding led by Sevin Rosen Funds with strong participation from current investors. These investments bring NeoScale's total financing to $25.5 million from top tier venture capitalists Bay Partners, Lightspeed Venture Partners, and Sevin Rosen Funds. The company is also announcing the appointment of industry veteran John McGraw as president, CEO and chairman of the board.

New security threats are being introduced as enterprises seek greater storage capacity, accessibility and availability. NeoScale is the first company to offer a family of scalable storage security appliances that cost-effectively deliver protection designed specifically for primary and secondary storage infrastructures.

"This funding demonstrates the growing significance of storage security as a market segment," said Jamie Gruener, senior analyst, the Yankee Group. "Storage, security and business continuity continue to be top of mind for many enterprises' spending priorities in 2003. Networked storage, storage consolidation, managed services, tape media, and remote storage have data access threats not fully addressed by the industry -- prompting enterprises to consider ways to implement storage-centric security on an application by application basis. This is conducive to an appliance approach provided by NeoScale today -- shipping dedicated storage security products for both protecting network storage and backup media."

The funds will be used to accelerate sales, channel and marketing programs, as well as expand the company's technology, product and market development efforts. Aseem Vaid, co-founder and previous CEO, is now Chief Technology Officer and will guide the overall technical vision and strategic product initiatives for NeoScale. In addition, Nick Sturiale, partner at Sevin Rosen Funds, will join NeoScale's board of directors.

"NeoScale Systems has delivered groundbreaking products that address stored data access and confidentiality," said Nick Sturiale. "We're excited about this investment in this emerging storage security market requirement."

"We are pleased that NeoScale's accomplishments have attracted John McGraw to take the helm. John will play a key role in driving the company's business strategy and further establishing the company as the leader in enterprise storage security," said Barry Eggers, general partner at Lightspeed Venture Partners.

John McGraw brings to NeoScale more than 25 years of senior executive management experience in the Silicon Valley. John was formerly CEO and remains on the board at Nishan Systems, where he was instrumental in taking Nishan to their next stage of growth in IP storage networking. Previously, he was president and CEO of LightLogic Corporation -- a leading optical component manufacturer which was acquired by Intel in 2001. Prior to that, he was a senior vice president and general manager of the Electronics Group of Raychem Corporation -- a $900 million OEM business. John has a BS and MS in Mechanical Engineering from Cornell University and an MBA from the MIT Sloan School of Business.

"NeoScale's business addresses the two most important technology considerations for IT managers today -- extending and protecting storage resources and information," said John McGraw. "I look forward to helping NeoScale capture this tremendous opportunity."

About NeoScale

Founded in June 2000, NeoScale Systems Inc is a leading provider of enterprise storage security solutions that provide robust data protection for networked and distributed storage. NeoScale CryptoStor is a family of wire-speed, policy-based storage security appliances that delivers network storage and media privacy. NeoScale's solutions lower the cost of protecting highly accessible, distributed storage infrastructures, while also enabling greater efficiencies for the management of storage capacity, consolidation, continuity and availability. For more information, visit http://www.neoscale.com.

Contact: Jennifer Leggio, 408-395-3600, or jennifer@dovetailpr.com.