Celite Systems Secures $10 Million Second Round Funding from Austin Ventures and Highland Capital Partners.

Business Editors/High-Tech Writers

AUSTIN, Texas--(BUSINESS WIRE)--Aug. 5, 2003

Funding to Support Growth in DSL Headend Product Deployment

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Celite Systems, Inc. (www.celitesystems.com) today announced $10 million second round funding from Austin Ventures and Highland Capital Partners. The funding will be used to support both continued growth in customer lab trials, as well as initial shipments for field deployments of the CSx00 DSL Headend in the U.S. and around the globe. Celite Systems has generated significant customer momentum since its launch in July 2001 and now has lab and field trials in place in the U.S., Latin America, and Europe. With this round, Celite Systems has secured more than $26 million in total funding.

"Austin Ventures is excited about the market opportunity for Celite Systems and their DSL Headend products and technology," said Basil Horangic, partner, Austin Ventures. "We are committed to companies that provide innovative solutions and new ways to attack a problem -- just like Celite Systems enabling DSL providers to profitably deliver broadband to the mass market. We have been impressed with how, in less than 18 months, Celite has moved from product concept to real trials and are, therefore, thrilled to expand our financial commitment to the company."

Celite Systems' DSL Headends can be used by facility-based copper access providers (RBOCs, IOCs and PTTs) and multi-dwelling units (MDUs) to cost effectively deliver broadband services. Through its innovative broadcast DSL -- or BDSL(tm) -- technology, Celite Systems enables pre-wiring of entire neighborhoods for broadband service at speeds faster than or equal to existing offerings. This approach to pre-wiring neighborhoods, coupled with Celite Systems' Zero-Touch(tm) Service Activation, allows carriers to reduce the CAPEX and OPEX associated with provisioning and activating broadband access subscribers by more than 85 percent -- resulting in greater price flexibility to capture additional customers.

Celite Systems DSL Headend most recently was honored at SUPERCOMM with a 2003 SUPERQuest award in Most Promising Network Technology. Celite Systems also won COMNET's 2003 New Product Achievement Award.

"Telephone companies are losing broadband customers to the cable industry at a rate of more than two - to - one," said Sean Dalton, general partner, Highland Capital Partners. "Celite Systems offers the opportunity to close that gap considerably by leveling the playing field, which is why Highland Capital Partners sees Celite Systems as a excellent investment in broadband access."

"Our investors recognize the market opportunity for our BDSL technology and DSL Headend product platform," said Roger Dorf, president and CEO of Celite Systems. "These funds will be used as working capital to enable us to deliver on our core value proposition -- helping DSL providers cost effectively bring broadband to the masses, while improving the installation experience for consumers."

About Celite Systems, Inc.

Celite Systems is changing the game for facility-based service providers, driving rapid and profitable deployment of broadband services to residential subscribers. By pre-wiring entire neighborhoods, the company's outside plant broadband products help service providers bring broadband to every home with only one truck roll. Incorporating novel technology that activates subscribers' broadband services as easy as dial-up, the up front cost of adding new subscribers is dramatically reduced. The company's products work seamlessly with current generation DSL products and are non-disruptive to established services. Celite Systems was founded in July 2001 and received Series A funding in February 2002 from Austin Ventures and Highland Capital Partners. For more information on the company, please visit http://www.celitesystems.com.