SOMERSET, N.J. – August 26, 2003 – Netilla Networks, Inc., a leading provider of SSL VPN and secure application access management solutions, today announced that Masthead Venture Partners, LLC has become its latest investor. Masthead, a premier venture capital firm focused on information technology security investments, has led a $2 million second-tranche investment to complete Netilla’s Series C financing, for a total of $8 million in this round.

Netilla announced $6 million in Series C first-tranche financing May 19. Earlier investors included Ascend Venture Group; Mid-Atlantic Venture Funds; Early Stage Enterprises, LP; NJTC Venture Fund; and the Telecommunications Development Fund. All participated in Netilla’s Series A and Series B financings. The Masthead investment brings Netilla’s total institutional financing to $19 million.

“Masthead’s decision to invest highlights not only the appeal of the SSL VPN market, but also our status as a leader within this segment,” said Reggie Best, president and chief executive of Netilla Networks. “Netilla already serves 350 customers in three global regions through its network of channel partners, integrators and resellers. This financing will allow us to consolidate the unique value we bring to the market: the ability to provide the most versatile, secure, browser-based remote access to any corporate resource or application.”

“We are excited that we could participate in this tech industry bright spot through our investment in Netilla,” said Dan Flatley, a Masthead partner. “In researching this market, we discovered that Netilla is the only SSL VPN supplier that combines the versatility of remote access to any application with an innovative and powerful policy enforcement mechanism that tightly restricts application access to authorized users.”

SSL VPNs (for secure sockets layer-based virtual private networks) are experiencing rapid growth because they provide highly secure remote access to enterprise applications and data to authorized users via standard Web browsers. The technology eliminates the need to download specialized client software onto a user’s PC, allowing authorized users to access enterprise resources from anywhere, using standard Web browsers. Because of the technology’s flexibility, ease of use and stringent security, leading industry analysts predict that SSL VPNs will comprise a $1 billion market by 2006.

Market research firm In-Stat/MDR earlier this year identified Netilla as one of the top SSL VPN vendors in terms of both unit shipments and revenues during 2002 (“Tunneling Through the Flames: An Analysis of the Firewall and VPN Market,” April 2003). “Our research demonstrated that Netilla has emerged as one of the leading players in this rapidly growing market space,” said analyst Jaclynn Bumback, author of the report. “The real value for SSL VPNs is in offering remote access to a large number of users – typically at less expense and with greater manageability than IPSec-based VPNs entail.”

Since shipping its first product in July 2001, Netilla has generated an impressive and diverse roster of more than 350 customers, including Commonwealth Health Corp., Saint Barnabas Health Care Center, the Canadian Institutes of Health Research, The United Way of Delaware, Herr Foods Inc., Deborah Heart and Lung Center, Reed Exhibitions, Philadelphia Stock Exchange, the Dutch Government Ministry of Transportation, Virtua Health and Johnson Matthey.

The Netilla Security Platform Release 4.0 combines secure remote access to the broadest range of applications with comprehensive user authentication and policy capabilities. With Release 4, Netilla added two important new capabilities to its browser-based VPN: secure access to enterprise intranet-based Web applications via HTTP reverse proxy, and application synchronization via the unique Netilla Virtual Adapter, which allows users to connect any local desktop application to central servers through an encrypted SSL tunnel. These new features augment Netilla’s longstanding ability to provide clientless remote access to centralized client/server and legacy applications running on mainframe, UNIX, Linux and Microsoft Windows servers.