Circadiant Systems Secures $10 Million in Second-Round Funding.

Business/Technology Editors

ALLENTOWN, Pa.--(BUSINESS WIRE)--Sept. 10, 2001

Company to Introduce Product that Will Streamline Optical Testing

and Accelerate Time-to-Market of Components & Networking Gear

Innovative Start-Up to Fill a Critical Gap for Optical Networking;

First Public Demo at NetWorld + Interop

Circadiant Systems, Inc., the company making optical testing simple, today announced it secured $10 million in its second round of private funding led by TL Ventures, in an offering not registered under any securities laws, and unveiled plans to deliver a new class of equipment that will substantially change optical testing. The company will offer optical component and equipment vendors the first consolidated, automated and intelligent testing platform to conduct standard everyday tests. This platform will significantly reduce vendors' development and manufacturing costs while improving their productivity and accelerating the time-to-market of high-quality optical networking gear. With this purpose-built, single box solution, Circadiant fills the gap in optical testing equipment and is positioning itself to seize a significant portion of the testing market, which Frost & Sullivan estimates at $2.3 billion and expects to grow to nearly $4 billion by 2004.

In addition to TL Ventures, EnerTech Capital Partners and PA Early Stage, and all of the first round investors, including Anthelion Capital and angel investor Kal Shastri, also participated in this round. The new capital will help the company accelerate its rapid growth and fuel the development and deployment of its products and services. Circadiant also announced today that it will demonstrate its product at NetWorld+Interop (N+I) in Atlanta (booth # 7056) this week.

Circadiant will soon begin beta testing; regular production is expected to begin in Q401.

"Testing of optical components today is time-consuming and costly. Vendors are losing valuable time to market trying to set up their own test beds and using valuable technical employees to run tests and interpret results," said Shekar Gopalan, industry manager and director of consulting, Test & Measurement, Frost & Sullivan. "The new Circadiant consolidated, intelligent testing system is a unique product designed specifically for optical testing and has the potential to radically decrease testing time and enhance ease of use in R&D and manufacturing applications."

Industry analysts recognize that standardized, automated and scalable testing platforms are critical to reducing costs, improving productivity, and achieving profitability from the build-out of the optical Internet. Today, to perform standard, everyday layers 1, 2 and 3 optical measurements, equipment providers and component manufacturers must rely on the limited functionality and intelligence provided by large, costly general-purpose testing instruments that are connected together through extensive customization. Circadiant's system will be the first purpose-built, consolidated testing solution that offers optical companies a standardized, automated platform. Additionally, Circadiant's system reduces troubleshooting time for both new products and field returns by embedding intelligence that allows engineers to quickly and easily diagnose and isolate faults with precision.

"We have taken a major step forward in enabling optical companies to quickly and effectively develop and deploy quality networking products to the telecommunications industry," said John French, Ph.D., president and chief executive officer, Circadiant Systems. "By providing component and equipment companies with the first testing platform that brings together standardization, consolidation, automation and intelligence, we remove the complexity of testing from the ever-changing R&D and manufacturing process and reduce the cost, time and manpower required for testing."

Michael Burns, venture partner, TL Ventures added, "The standards by which optical companies are measured have changed from a year ago. More than ever companies need to come to market with a sound business model and an innovative solution that solves a real business problem. With the unique vision and innovation of a Bell Labs heritage, and tremendous engineering and design expertise, Circadiant's management team is bringing together these winning components. And, with positive feedback from prospective customers, it's clear this solution will radically change the way people think about testing and allow this company to capture market share. Plus, with the amount of time and energy they've put into examining the business case for this technology, the decision to invest was an easy one for us."

About Circadiant Systems, Inc.

Founded and staffed by a team of distinguished engineers with extensive experience in optical components, networks, protocols and testing and a rich pedigree at Bell Labs, Circadiant Systems (www.circadiant.com) is a privately held venture-funded company based in Allentown, Pennsylvania. The company provides optical component and network equipment makers with a purpose-built, intelligent testing system that significantly reduces development and manufacturing costs while accelerating the time-to-market of high-quality optical networking solutions. To that end, Circadiant Systems has introduced a new class of testing equipment that offers standardization, automation and scalability in a system purpose-built to meet the needs of the current and future optical networking market and is well positioned to capitalize on the multi-billion dollar optical testing industry.

About TL Ventures

TL Ventures is a venture capital firm with over $1.4 billion under management. Focused on investing in category-defining, early-stage companies in information technology, communications and biotechnology, the firm provides portfolio companies with operational, entrepreneurial and financial expertise and a global network of resources and contacts. TL Ventures has offices in Philadelphia, Austin, Dallas and Los Angeles. For more information, visit the company's Web site at http://www.tlventures.com.

About EnerTech Capital Partners

EnerTech is a $285 million private equity firm focused on technology, services and infrastructure investments in the energy, utility and communication markets. Through its extensive network of strategic partners and industry professionals, EnerTech provides financing and domain expertise to enhance the success of the companies in which it invests. For more information, visit the company's Web site at http://www.enertechcapital.com.

About PA Early Stage

PA Early Stage is a family of venture funds that makes investments in seed, start-up and early stage technology-based companies. Headquartered on Safeguard Scientifics' (NYSE:SFE) corporate campus in Wayne, Pa., PA Early Stage has $151.5 million under management and focuses on technology-based companies in the software, IT services, communications, Internet applications, healthcare and life sciences, and financial services arenas. The fund can be found on the Web at www.paearlystage.com.