American Fiber Systems Closes Business Expansion Equity Round Led by North Atlantic Capital.

Business Editors/High-Tech Writers

ROCHESTER, N.Y.--(BUSINESS WIRE)--Aug. 28, 2003

Today, privately held American Fiber Systems, Inc. (www.americamfibersystems.com) announced that it has closed an additional $6 million equity round. North Atlantic Capital of Portland, Maine led the round, which included previous investor partners Sierra Ventures and Lucent Venture Partners. Mark J. Morrissette, Managing Director of North Atlantic Capital will join the AFS Board of Directors.

"As a result of AFS' ability to execute its business plan in the wake of the most challenging years that the telecom sector has ever known, we were able to attract interest for further expansion of our networks on an optical last mile basis into select buildings. This investment will further advance our ongoing expansion of our portfolio of products and services that we can make available to our customers, including metropolitan wide transport services," said Dave Rusin; CEO of American Fiber Systems. "The capital assures our continued expansion of our plan in leveraging our dense optical fiber metropolitan networks in driving additional recurring revenues."

"AFS has a healthy balance sheet, with no long term debt," said Gita Ramachandran, Chief Financial Officer; "Our network capital expense is behind us as we have achieved full deployment across our customer-demand based markets." Ramachandran continued, "Our emphasis on a go forward basis is threefold (1) continue to enhance recurring revenue streams through new customer additions, (2) maintain our discipline of IRR thresholds on carrier or large Enterprise deals, and lastly; (3) return not just a profit to our investors but an economic value added profit."

"We are delighted to have North Atlantic Capital as an investor. North Atlantic Capital is highly selective when and where they place their capital to work. We are gratified with the fact that North Atlantic Capital have entrusted funds with us along with Sierra Ventures and Lucent Venture Partners," said Rusin. "Perhaps as we put a few more quarters of back-to-back growth under our belts, we can begin to consider the public equity markets for a possible IPO."

"All of us at North Atlantic Capital believe AFS is extremely well positioned in a market that appears poised for significant growth. We are looking forward to being a part of the team, and helping in any way we can," said Mark Morrissette, Managing Director of North Atlantic Capital. "AFS has built an exceptional, experienced management team with proven track records in metropolitan communications and dark fiber networks. AFS has done and outstanding job husbanding resources since the telecom bubble burst. This is a team committed to protecting and growing shareholder value while delivering a first-rate product to their customers. We believe outright ownership of underlying metropolitan optical fiber hard assets will be a tremendous asset for AFS throughout this expansion phase."

"Our continued focus will be on providing redundant, diverse optical connectivity to ensure common carriers, ISPs and large Enterprise customers that their voice, data, images or video are truly transcending a local optical network that is owned by the operator," added Rusin. "We have successfully enabled many broadband applications in support of Enterprise wide business continuity, real-time data storage and disaster recovery. The value of redundant, diverse end-to-end all-optical facilities and services connectivity is a competitive, security and cost benefit for the Chief Information Officer."

AFS is offering three Ethernet based services. Virtual Private Line Service (EVPL) will provide point-to-point connectivity between diverse locations. Virtual Private LAN Service (EVLAN) will provide point to multipoint, or any point to any point connectivity across multiple, diverse locations. Ethernet Internet Access (EIA) will provide connections to the Internet backbone. All three services are being offered with bandwidth rates starting at 10 Mbps up to GIG-E, with the customer able to choose their specific, custom bandwidth rate. Bill Ciminelli, the AFS Vice President of Network Development and Services states "The opportunity for AFS to offer Ethernet service is being driven by the growing demand for bandwidth in metropolitan markets nationwide, the lack of real fiber based access for significant percentage of non-residential real estate in our markets and the cost advantages that can be realized by AFS's customers with AFS's Ethernet based carrier class service."

About American Fiber Systems, Inc.

American Fiber Systems is a metropolitan fiber optic network infrastructure and wholesale transport services provider, dedicated to enabling carriers and large Enterprises to profit from the burgeoning, all-optic broadband communications independent of the Incumbent Local Exchange Carrier (ILEC). We design, build, operate and maintain high-capacity, high-bandwidth fiber-optic networks, constructed on full-spectrum optical fiber and completely connected to a city's most important points of communications presence: ILEC and CLEC central offices and wire centers; ISP and ASP facilities; Interexchange "carrier hotels;" Wireless providers and cable company head ends, and Fortune 1000 companies.

AFS has fully operational dense optical fiber networks deployed in Cleveland, Kansas City, Minneapolis/St. Paul, Nashville and Salt Lake City. The networks comprise 245+ route miles and 76,000+ fiber miles addressing over 12,000+ on-net/near-net buildings.

About North Atlantic Capital

North Atlantic Capital is a late-stage private equity firm focused on investment opportunities between $2 million and $10 million. Established in 1986, North Atlantic manages a pool of capital in excess of $150 million, investing in high growth companies throughout the eastern United States in a variety of industries. North Atlantic is a proactive investor, providing its portfolio companies with complimentary consulting services as well as executive education programs at leading business schools. For further information, call [phone] or visit www.NorthAtlanticCapital.com.

About Sierra Ventures

Sierra Ventures is a $1.1 billion venture capital organization headquartered in Menlo Park, California (www.sierraventures.com). Established in 1982, the firm invests in early stage and emerging growth technology companies with a special focus in three areas: networking and telecommunications, mission critical enterprise software and Internet infrastructure. Since its founding in 1982, Sierra Ventures has successfully invested in numerous early stage technology companies including ConvergeNet (purchased by Dell), Evolve Software (NASD: EVLV), Intuit (NASD: INTU), MicroMuse (NASD: MUSE), OnLink (purchased by Siebel), Quinta (purchased by Seagate), StrataCom (purchased by Cisco), and Vina Technology (purchased by Larscom). For further information, visit: www.SierraVentures.com.

About Lucent Venture Partners

Lucent Venture Partners is the venture capital subsidiary of Lucent Technologies with offices in Murray Hill, New Jersey. Formed in 1998,the group invests in early-stage technology companies in high-growth communications areas such as optical, data and wireless networking, semiconductors, communications software, professional services and e-commerce. Lucent Venture Partners also brings the unique visibility to facilitate business relationships between its portfolio companies and Lucent's operating units. For further information, visit: www.LucentVenturePartners.com.