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Shoreline Closes $10.75 Million Round of Funding

Prominent VC Kathryn Gould Joins Board of Directors
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SUNNYVALE, CA, January 22, 2003 - Shoreline Communications, a pioneer in the development of enterprise-class IP PBX systems, today announced that it has secured an additional $10.75 million of financing. Previous investors participated in this round, including Crosspoint Venture Partners, Lehman Brothers, Foundation Capital, JP Morgan and FocusVentures . In addition, prominent venture capitalist Kathryn Gould, general partner at Foundation Capital, has joined Shoreline's Board of Directors, which also includes leading VCs Seth Neiman, managing partner at Crosspoint Venture Partners, and Brian Paul, vice president from Lehman Brothers.

A bright spot in the technology market, VoIP is estimated to grow 37% in 2002 according to market research firm InfoTech. It is expected to reach $3 billion, from its current $950 million, by 2006. "The VoIP market is clearly taking off, and Shoreline is growing even faster than the market with a 70% revenue increase from Q1 to Q4 '02," said Thomas T. van Overbeek, Shoreline's president and CEO. "This current round of funding, coupled with our strong revenue growth, will allow us to continue our expansion in the VoIP arena. Plus, Kathryn Gould's extensive expertise will augment Shoreline's positive future."

As a founding partner of Foundation Capital, Gould has a wealth of experience working with entrepreneurs to create market-leading companies. With a primary focus on investing in the Telecom, Networking and Enterprise Software sectors, she is currently on the boards of several companies and has previously served on the boards of many successful companies. Regularly recognized as one of the most accomplished venture capitalists, Gould was most recently featured on Forbes Magazine's "Midas List" of Tech's Best Venture Investors. Prior to founding Foundation Capital in 1995, she was a General Partner from 1989 onwards with Merrill, Pickard, Anderson & Eyre.

"I am very excited to be part of Shoreline, a pioneer in VoIP that has been making enterprise-class IP voice communications a reality for more than six years ," said Gould. "As a new user of the Shoreline system at Foundation Capital, I've personally joined the ranks of Shoreline's passionate customers. The Shoreline phone system truly surpasses other solutions in the market with its ease of use in the Personal Call Manager, and the IT guys love the exceptional management and reliability of the system. Shoreline has the right product, the right channel, the right team and a huge growing market to exploit. Based on all of my time in the venture business, I see this company as clearly on the road to success."

About Shoreline Communications

Shoreline Communications Inc. has been shipping IP phone systems since October 1998, with more than 71,000 IP voice stations installed. The award-winning Shoreline IP Voice Communications System is a platform based on Shoreline's Distributed Internet Voice Architecture, designed to meet enterprise requirements for scalability, reliability, and manageability. In addition, the Shoreline system provides both a rich set of integrated voice services as well as standards-based interfaces to 3 rd party voice applications that enhance personal and organizational productivity. For more information, visit www.goshoreline.com or call 1-877-80SHORE.