Sand Video Enters Video Compression Market with Next Gen H.264 Codec Technology, Proven Management Team and $8 Million

Innovative Approach Enables Real-Time Semiconductor Implementation of H.264 Codec

ANDOVER, MA ‚ November 4, 2002 ‚ Sand Video, Inc. announced its entry in the video compression market with the closing of $8 million of private equity financing. Sand Video is a fabless semiconductor manufacturer building real-time video compression technology based on the emerging H.264/MPEG-4 part 10 video compression standard. Sand Video was founded in January 2001 by veterans of the digital imaging and semiconductor industries with a proven entrepreneurial track record. Peter Besen, president and CEO, and Don Shulsinger, executive vice president, sales and marketing, were co-founders of LaserData and Pixel Magic, the latter of which was acquired by Oak Technology and subsequently became the Oak Technology Imaging Division.

"H.264 offers a 2x-3x coding gain over current standards and will enable significant improvement to commercial and consumer digital video applications including Hard Disk and DVD recorders, cable and satellite television, videoconferencing and many others" said Besen. "The issue with H.264 is how to deal with the complexity of the algorithm in a real-time silicon codec targeted at standard and high definition consumer video applications. The team of people we've brought together at Sand Video has solved that problem in a very novel and proprietary way, and we're already in advanced discussions with a number of major players in the video industry."

Sand Video has staked out a leadership position in the development of semiconductor based H.264 technology. Because of the complexity of H.264, simple upgrades to existing MPEG architectures are not possible. Instead, the new standard requires a completely new architecture to fully realize its performance benefits. Sand Video's implementation of H.264 provides the full compression benefit of the standard without sacrificing image quality while maintaining complete backwards compatibility with existing MPEG standards.

The company's early and substantial progress in H.264 development, in addition to confidence in the experienced management team allowed Sand Video to secure an $8 million equity investment led by Baker Capital, including Navigator Technology Ventures and a number of private investors from the CommonAngels of Boston. Sand Video intends to use the money to expand its product development and sales and marketing efforts.

Industry analyst groups, such as IDC, Dataquest, CIBC and In-Stat predict the market for such video compression devices will top 200 million units and $2.3 billion by 2005.

About Sand Video, Inc.: Sand Video is a fabless semiconductor manufacturer focused on developing and marketing superior next generation, standards-based semiconductor video compression technology for a broad range of video applications. Sand Video is a privately held, venture-backed company based in Andover, Mass. For more information on Sand Video, visit www.sandvideo.com.

About Baker Capital: Baker Capital is a private equity firm with more than $1.5 billion under management, focused on communications technology investments. Portfolio investments include network applications, equipment and service providers. For more information visit www.bakercapital.com.

About Navigator Technology Ventures: Navigator Technology Ventures, an affiliate of Draper Laboratory of Cambridge, MA is an early-stage, technology venture capital firm that seeks to fund technology rich start-ups. With the assistance of Draper Laboratory, NTV invests in unique, highly proprietary technologies. For more information visit www.ntven.com

About CommonAngels: Named after Boston's historic public meeting grounds, CommonAngels is a group of 50 leading private investors and three dozen limited partners in a co-investment fund. CommonAngels' members and limited partners have founded, co-founded or run high-tech companies. For more information visit www.commonangels.com

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