Somerset, N.J., January 16, 2001

Netilla(sm) Networks, Inc. (www.netilla.com), the service company that supplies secure Web access to office applications through solution providers, today announced the closing of a $6.5-million Series A round of financing from a group of investors led by Bethlehem, Pa.-based Mid-Atlantic Venture Funds (MAVF) and Washington, D.C.-based Telecommunications Development Fund (TDF). Joining them in the round were: Ascend Venture Group, LLC; Bencas Capital, LLC; Early Stage Enterprises (ESE), LP; Fleet Development Ventures, LLC; The Hatch Group; NJTC Venture Fund; Tarantella, Inc.; and private investors.

Netilla Networks originally planned to raise $4.5 million in its first institutional round. However, due to strong interest from the investment community, particularly from Ascend and ESE, the round became oversubscribed.

Said Netilla Networks CEO and Cofounder Reginald (Reggie) Best: "While we were satisfied with reaching our initial goal, we welcomed the opportunity to accommodate the firms who discovered us later in the process and to add the additional investment and intellectual capital to our team."

Best, who previously cofounded two other successful technology start-ups that were later acquired, noted that the funding will be used to launch the Netilla Virtual Office(sm) service, which is currently in beta testing. The service is a Web virtual private network (VPN) alternative that allows business users at off-site work locations to securely access files, e-mail, and other shared software applications residing on their office networks via a browser. The company is developing a network of systems integrators, value-added resellers and other solution providers as its distribution channel.

Best added that MAVF and TDF were chosen to lead the round because they not only supply capital, but also provide their portfolio companies with invaluable insight and strategic counsel. He noted that MAVF CEO Frederick J. Beste III has joined the company's board of directors, as have Charles Ross of TDF, Charles Crockett of Ascend, Kef Kasdin of ESE and private investor John G. Englesson.

MAVF's Beste noted, "Netilla Networks offered us an exceptionally capable and open-minded management team, as well as a well-thought-out value proposition. We consider ourselves a partner and we expect to do whatever we can to support the company's move toward market leadership."

"We target innovative technologies and services that expand communications options for business," said Charles Ross, a TDF principal. "Netilla Virtual Office service satisfies the increasing remote-access needs of businesses today. Competitive and operational efficiencies will be driven by an organization's ability to connect remote users - employees in branch offices, strategic partners, clients, vendors, telecommuters, and temporary workers - securely and affordably to the company network, its data and business-critical applications," he continued, noting that TDF is an early adopter of Netilla Virtual Office service.

About Mid-Atlantic Venture Funds
Founded in 1984, Mid-Atlantic Venture Funds is a venture capital investor in early-stage, high-growth technology-oriented businesses. It currently manages approximately $200 million with current investment interests in communications and networking infrastructure, Internet-enabled technologies and services, and health-care information technology. For more information, go to www.mavf.com.

About Telecommunications Development Fund
Based in Washington, D.C, Telecommunications Development Fund combines telecommunications and management expertise with venture capital to grow promising seed and early-stage companies into telecommunications industry leaders. For more information on TDF, go to www.tdfund.com.

About Ascend Venture Group, LLC Manhattan-based Ascend Venture Group, LLC, is a venture capital firm which funds early-stage businesses that leverage emerging technologies. Ascend and its principals have invested in 21 such companies to date. For more information, go to www.ascendventures.com.

About Bencas Capital LLC
Bencas Capital LLC, based in Gladstone, N.J., is a venture capital firm investing across all technology industries and various stages of company development. For more information, go to www.bencas.com.

About Early Stage Enterprises, LP
Early Stage Enterprises, LP, based in Skillman, N.J., is a private venture-capital fund that provides capital and guidance to early-stage companies in the Mid-Atlantic region. It currently has $44 million to invest and is a licensed Small Business Investment Company. For more information, go to www.esevc.com.

About Fleet Development Ventures, LLC
Fleet Development Ventures (FDV) LLC is a private equity investor, which provides capital to emerging growth companies. FDV is a division of FleetBoston Financial's Community Banking Group and an affiliate of BancBoston Capital, which has roughly $300 million invested in more than 75 technology companies worldwide. For more information, go to www.fleet.com/about_inthecommunity_fleetdevelopmentventures_3.asp.

About The Hatch Group
The Hatch Group LLC was formed in the fall of 1999 to provide capital and advisory services to early-stage technology companies. The group's portfolio companies represent the telecommunications infrastructure, communications services, Internet business and information management markets. The Hatch Group is headquartered in Gaithersburg, Md. For more information, go to www.thehatchgroup.com.

About NJTC Venture Fund
The NJTC Venture Fund invests in high-growth private companies in the seed, start-up and early-stage phases. The fund typically invests in early-stage, New Jersey-based companies participating in a variety of industries, including software, communications, biotec, photonics, healthcare and electronics. For more information, go to www.njtc.org/venturefund.

About Tarantella Inc. Tarantella, Inc.
A wholly owned subsidiary of The Santa Cruz Operation, Inc., provides Web-enabling software technology connecting clients, server-based applications, and networks. The Santa Cruz, Ca.-based company is licensing technology to Netilla Networks for use in the Netilla Virtual Office service and will participate in co-marketing programs to inform its integrator and VAR channels about the service. For more information, go to www.tarantella.com.