Phitek Secures $6M Capital Catalyst for Expansion

PRESS RELEASE FOR IMMEDIATE PUBLICATION

Phitek Secures $6 Million Capital Catalyst for Expansion
TMT Ventures Provides Phitek With Capital For Global Growth

Auckland, 3 November 2005 – New Zealand-based global leader in advanced audio technology solutions Phitek Systems Limited today announced that it had successfully completed a $6 million capital raising through TMT Ventures.

The new capital will be applied to Phitek’s rapid expansion into global markets as well as new product development. In recent months Phitek has opened new sales offices in Taiwan and Japan, and also successfully launched at two world electronic trade fairs a premium range of ANR™(Active Noise Rejection) headphones which have already received interest from major consumer electronics companies.

Mark Donaldson, CEO of Phitek Systems says that the capital raising with TMT Ventures, which includes follow-on investment by K One W One, represents a watershed event and will allow the company to pursue several significant global opportunities for its leading audio technology.

“Phitek is poised to take advantage of major market opportunities it has worked on creating over the last few years. The additional $6 million provides the catalyst for Phitek to accelerate its competitive advantage as a technology leader in advanced audio and consumer electronics solutions,” says Donaldson.

“Combined with a strong team including some of New Zealand’s best engineers, technologists, and a management team with international experience, as well as continuing support from our shareholders, Phitek is well placed to achieve rapid sales growth and revenue over the next 12 months.”

Donaldson also says that since Phitek’s initial market entry into the aviation sector with its SmartJack™ product which is now in more than 20,000 seats on the world’s leading airlines, the company has diversified its technology into other product offerings.

“Over the last year Phitek has leveraged its audio technologies and extended its product range in both components (integrated circuits) as well as turnkey products including its range of noise cancellation headphones, FM transmitters and wireless devices for the premium consumer electronics market,” says Donaldson.

Gavin Lonergan, investment director for TMT Ventures says that opportunity to raise capital for Phitek was ideal because it met all the right investment criteria for a successful global technology company.

“We’ve followed Phitek for some time now. Mark Donaldson and his team have demonstrated they have truly world-class technologies, and a well thought-out plan for entering what is a very significant international market in consumer electronics,” says Lonergan.

“TMT believes that the convergence of technologies into entertainment devices is creating huge consumer demand for premium audio products and Phitek’s solutions meet that demand. We’re very excited about the customers Phitek is engaged with and the opportunities that lie ahead.”

Phitek is the 14th investment made by TMT since it was established in 2000. TMT has NZ$103 million for investment into the technology sector with its investors including Telecom New Zealand, Alcatel, Lucent and Marconi along with financial investors and the New Zealand government’s Venture Investment Fund (VIF).

ENDS

About Phitek Systems Limited
Established in 2003 by founder and chief executive, Mark Donaldson, Phitek has developed a range of world-class audio enhancement solutions based around its proprietary Active Noise Rejection (ANR™), Virtual Surround Sound (V3D™), and psycho-acoustic Low Frequency Extension (LFX™) technologies.
Phitek Systems is a leader in the development of advanced analogue and digital signal processing technologies for audio enhancement and noise reduction. Phitek’s avionic systems are employed by a number of the world’s largest and most successful airlines including Lufthansa, British Airways, Emirates and Singapore Airlines. Phitek also manufactures headphones and flat panel speaker products for global consumer brands. The company’s headquarters is located in Auckland New Zealand with operating offices and production facilities located in Hong Kong, Taiwan, Japan, and Shenzhen.

For more information about Phitek Systems Limited please visit www.phitek.com

About Direct Capital and TMT Ventures

Direct Capital was established in 1994 and is New Zealand’s leading private equity firm with four investment programmes and $350 million under management, including TMT Ventures, investing across all stages of capital funding from start-ups to buyouts. With 13 investment professionals, Direct Capital has invested over $190 million into more than 40 companies.

Managed by TMT Management, a joint venture between Auckland based Direct Capital Private Equity Limited and Boston based Advent International, TMT Ventures is a corporate venture programme with NZ$103 million under management from investors that include Telecom New Zealand, Alcatel, Lucent and Marconi and a number of financial investors. TMT Management is also a manager of the New Zealand government’s Venture Investment Fund. TMT invests in the telecommunications, media and technology sectors of New Zealand and Australia.

For further information please visit our website: www.directcapital.co.nz

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