Monday November 22, 2004

Esphion raises $4 Million to fund on going international expansion

New Zealand – 22 November 2004 – Esphion, one of the leading developers of proactive security solutions for mission critical IP networks, today announced it had successfully completed a $4 million capital raising from two of New Zealand’s leading technology investors: No 8 Ventures and TMT Ventures.

With a growing customer base in Asia Pacific, the new capital will be used to expand the company’s operations in Asia and establish an initial presence in North America where discussion are already well underway with a number of large Service Providers and complementary Security solutions vendors.

Over the last 12 months Esphion has focused on establishing a strong market presence for its proactive security solutions in Hong Kong, Australia and New Zealand – working closely with some of the regions largest broadband providers, managed service providers and enterprises including PCCW, Alcatel, Telecom NZ, WebCentral and Sony.

Industry demand for a proactive security layer that can respond in real-time as traffic traverses the network is growing quickly and the completion of this capital round means we are in a strong position to ensure we take full advantage of this emerging market opportunity” said Greg Cross Chief Executive of Esphion

The investment was led by No 8 Ventures and included follow-on investment by TMT Ventures, an investor in the company since 2002. No 8 Ventures and TMT are also managers of the New Zealand Government’s Venture Investment Fund (VIF) and the investment in Esphion brings the number of investments made by VIF managers since 2003 to 15 and is the fourth in which VIF managers have co-invested.

We're very excited to be working with Esphion as they embark on their next phase of international expansion” said Mark Edwards No 8 Ventures partner. This is an exciting and expanding international market niche. We were particularly impressed by the strength of Esphion’s management team all of whom have a strong track record of international experience”

As a result of the investment Mark Edwards of No 8 Ventures will join Esphion’s board of directors.

Gavin Lonergan, investment director for TMT commented: “It is a great to see a company that we have worked with over the last two years, gear up for the next stage of its international expansion. Esphion has successfully leveraged our investment partners Telecom NZ and Alcatel in achieving the successes it has enjoyed so far and we are sure that this will be a major factor in their ongoing development”

With the increasing deployment of mission critical applications on IP networks Esphion’s ability to respond in real time and detect, diagnose and mitigate potential threats - as and where they emerge - represents substantial savings in network operating costs and best practice protection against loss of service levels and revenues generated using the network. By providing the equivalent of a virtual network engineer Esphion is well positioned to capitalize on one of the fastest growing sectors in the IT industry.

For further information:
Greg Cross, Chief Executive, Esphion Limited, +64 21 417 799
Mark Edwards Managing Partner, No 8 Ventures Limited, +64 21 613 012
Gavin Lonergan, Investment Director, TMT Management Limited, +64 21 277 2482

About Esphion
Esphion provides proactive security solutions to protect and enhance the value of mission critical IP networks from threats that can emerge as traffic traverses the network. Esphion’s industry leading neural network analysis platform extracts signatures ‘on the fly’ that can be tightly integrated with existing security solutions to provide a real-time security solution. Esphion currently has sales offices and resellers in Hong Kong, China, Taiwan, Singapore, Australia, New Zealand and the United Kingdom. For further information please visit: www.esphion.com

About No 8 Ventures
No 8 Ventures is a New Zealand venture capital firm, which invests in early stage technology companies with the potential to become large and international. No 8 Ventures was founded in 1998 by Jenny Morel and now has over $60M under management. No 8 Ventures is investing in Esphion from its No 2 Fund and the funds it manages for the New Zealand Government’s Venture Investment Fund. For further information please visit: www.no8ventures.co.nz

About Direct Capital and TMT Ventures
Direct Capital was established in 1994 and is New Zealand’s leading private equity firm with four investment programmes, including TMT Ventures, investing across all stages of capital funding from start-ups to buyouts. With 14 investment professionals, Direct Capital has invested over $150 million into more than 35 companies.

Managed by TMT Management, a joint venture between Auckland-based Direct Capital Private Equity Limited and Boston based Advent International, TMT Ventures is a corporate venture programme with NZ$103 million under management from investors that include Telecom New Zealand, Alcatel, Lucent and Marconi and a number of financial investors. TMT Management is also a manager of the New Zealand government’s Venture Investment Fund. TMT invests in the telecommunications, media and technology sectors of New Zealand and Australia. For further information please visit: www.directcapital.co.nz

Further Information:

Greg Cross
CEO, Esphion
Tel: 09 414 4746
Mobile: 021 417799
Email: gcross@esphion.com
Web: www.esphion.com