iS3 Inc. Secures Series B Round of Funding

Menlo Ventures Leads $9.1 Million Investment

Cupertino, Calif. – September 16, 2003 – iS3 Inc. (i-s-cubed), a global provider of security management solutions for financial and enterprise applications, today announced the closing of $9.1 million in its Series B round of equity funding. The round was led by Menlo Ventures and also included participation from some of Silicon Valley’s premier venture capital firms, including BV Capital, Asset Management, and existing investors. The current $9.1 million Series B funding brings the total equity investment to date in iS3 to more than $11 million.

iS3 will utilize the funds to expand the company’s product lines and strategic technology partnerships and further build its operations and sales functions. Founded in June 2000, iS3 develops unique server-based solutions that manage the security content for devices and client applications in distributed network environments. Current applications for the banking and financial services industry include automatic teller machine (ATM) and point of sale (POS) terminal encryption key and client application management, as well as broader enterprise encryption key and device management applications.

“The funding syndication that came together to support iS3 represents an ideal combination of top tier venture capital firms from Silicon Valley and Europe,” said Joerg Ferchau, president and CEO. “The strength of this group and its partners will have a significant impact on iS3’s goals for growth and profitability. Our unique solutions, strategic partnerships, and strong financial backing will allow iS3 to become a global industry leader. “iS3 offers a compelling security solution for today’s vulnerable financial industry,” said Sonja Hoel, managing director of Menlo Ventures. “iS3 captured our attention with its innovative technology, market readiness and team of seasoned industry talent. The combination of industry-driven mandates and strategic partnerships ideally positions iS3 for a tremendous market opportunity. The company is poised to become the leader in its market space.”

“BV Capital is pleased to add iS3 to our investment portfolio,” said Thomas Gieselmann, general partner at BV Capital. “iS3 targets a critical segment of financial industry security, and is well positioned to capitalize on the rapidly growing security management market with its innovative solutions.” “iS3 hit our investment sweet spot,” said Skip Fleshman, principal at Asset Management Company. “The company has a strong, technology-based competitive advantage that addresses a growing, demand-driven market. Having spent many years in the industry, the management team is seasoned and acutely aware of the market needs.”

About Menlo Ventures
Menlo Ventures provides long-term capital and management support to early stage and emerging growth companies. The firm looks for combinations of management, market opportunity, products or services that create the potential for an exceptional rate of return. Since its inception in 1976, Menlo Ventures has organized and managed nine venture funds with combined capital of $2.7 billion. Menlo has invested in over 270 companies since it’s founding. For more information, please visit www.menloventures.com.

About BV Capital
BV Capital is an independent venture capital fund with international investors such as Bertelsmann AG, AOL Time Warner, Stanford University and Mayfield Fund. It is the successor to Bertelsmann Ventures, LP, and has offices in San Francisco, California; Hamburg, Germany and Paris, France. The four founding members of the firm have extensive experience in the Internet, electronic media and telecommunications industries. BV Capital primarily focuses on early stage investments in the media, communications, infrastructure, enabling technologies and wireless application markets. In 2000 the Wall Street Journal named BV Capital as one of the most influential technology financiers on either side of the Atlantic. For more information, visit www.bvcapital.com.

About Asset Management Company
Asset Management is a leading Silicon Valley venture capital firm, one of the first founded on the West Coast of the United States. Since 1965, the company has been on the cutting edge, identifying the best ideas and the best people in the information technology and life sciences sectors. Specializing in seed and early stage funding, Asset Management has built a history of being ahead for nearly four decades. More information about Asset Management can be found at www.assetman.com.

About iS3
iS3 develops and markets advanced security management solutions for the global financial industry. iS3’s innovative solutions centrally manage and control cryptographic content for devices and applications used in financial, enterprise and wireless transactions. iS3 solutions offer: reduced cost of operations, improved security, and a centralized platform approach to security management. Professional services for 3DES migration, security assessments, and architecture are also available. More information about iS3 can be found on the web at www.iscubed.com.




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