Arsenal Digital Solutions Closes $11 Million in Debt Funding

Milestone of Non-Equity Funding Follows Another Year of Extraordinary Success Including Achievement of Positive EBITDA in May 2003

HostReview.com
Tuesday, November 11, 2003; 12:00 AM

CARY, NC—November 11, 2003—Arsenal Digital Solutions (Arsenal), the leading Storage Management Services (SMS) provider and a major revenue enabler to telco, hosting and network service providers, announced today that it has closed a round of non-equity financing totaling $11 million. The new funding is a milestone that validates Arsenal's business model, management team and success in the market. Arsenal achieved positive EBITDA in May of this year. The company has now raised a total of $86 million of equity and debt funding.

Arsenal is the fastest growing provider of data protection and business continuity services in North America. With 24 locations in 18 cities, Arsenal serves, with its partners, more than 800 customers, including many of the Fortune 50. The company delivers its state-of-the-art outsourced storage management services through leading service providers, such as AT&T, NTT/Verio, AboveNet, Terremark Worldwide and Redundant Networks.

"The funding will be a catalyst for market expansion as we continue to execute on our mission to provide the most trusted and cost-effective data protection and business continuity services for our partners and customers," said Steven Horan, senior vice president and CFO of Arsenal. "This funding also reflects the ability not only to grow the top line but to manage the operating cycle as well. We have achieved some significant milestones in revenues, operating income, EBITDA, net income, cash flow, and liquidity over the past two years. Our objectives with this funding were to raise the appropriate level of capital to support our expansion efforts and do so at a cost of capital appropriate for an emerging growth company."

"Arsenal's management team has demonstrated its ability to lead, manage, and grow the company. Arsenal's growth and performance even exceeded our high expectations. It has been consistent in delivering strong financial performance over the last two years," said Brent Keating, manager of Knowledge Based Industries at RBC. "Arsenal has proven its debt worthiness through its track record of customer renewals, new customer demand, its operating performance, and the very strong quality and integrity of its financial information."

Earlier this year, Gartner, Inc. included Arsenal in its first-ever Storage Services Magic Quadrant, a market evaluation of the industry's leading storage services companies(1). Among the 11 vendors assessed in the Magic Quadrant, Arsenal is the only private, venture-backed company. Last month, Arsenal was again named to Deloitte & Touche's prestigious Technology Fast 50 program for North Carolina, a ranking of the 50 fastest-growing technology companies in the state for its triple-digit percentage revenue growth. Arsenal's ranking jumped from number 46 on last year's list to number 20 on the 2003 list.

About Arsenal Digital Solutions
Arsenal Digital Solutions, the leading Storage Management Services (SMS) provider, is focused on driving major revenue for telco, hosting and network service providers through value-added, on-demand storage services. Leveraging its proven services architecture and storage expertise, Arsenal delivers a comprehensive and flexible suite of data protection and business continuity services through its partners to more than 800 customers in 24 data centers in 18 cities. Headquartered in Cary, N.C., and founded in August 1998, Arsenal is a privately held, venture-backed company. For more information on Arsenal, its solutions and services, visit the company web site at www.arsenaldigital.com.

Steve Siegel Arsenal Digital Solutions 919-466-6707 ssiegel@arsenaldigital.com Dave Resnic/Chantal Yang Schwartz Communications, Inc. 781-684-0770 arsenal@schwartz-pr.com