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Funding to Complete Customer Trials and Deliver Engineering
Prototypes of the first DiversityPlus™ CDMA Handset Antenna Diversity Chipset

CLINTON, N.J. – (July 7, 2003) – Magnolia Broadband, Inc., a fab-less semiconductor company and innovator of radio frequency (RF) solutions for the cellular industry, today announced the close of a $6 million C round of financing to support the completion of customer evaluation and delivery of the company’s DiversityPlus™ based RFIC chipset starting in the fourth quarter of 2003. Magnolia is the first company offering to improve both transmission and reception capabilities in mobile terminals using dual antenna inputs and outputs to create more robust signals through its diversity algorithm processing. Cell phones powered by DiversityPlus™ will have longer battery life and enable carriers to improve coverage and data through-put, as well as serve twice as many subscribers with the same infrastructure.

The round was led by SCP Private Equity Partners and included DFJ Gotham Ventures, ECentury Capital, Selway Partners and others. This financing brings the total equity investment in Magnolia to approximately $15 million since April 2001.

“SCP and Selway are excited to be leading this round of financing, which will pave the way to commercialization of Magnolia’s revolutionary antenna diversity technology,” said Yaron Eitan, Partner at SCP Private Equity Partners and CEO of Selway Partners. “We are encouraged by the very positive reception the company’s technology has been garnering in the marketplace, and we expect this to culminate in substantive market acceptance in the near future.”

"We chose to increase our ownership in Magnolia because we've been impressed with the team's accomplishments and believe that Magnolia's diversity solution can become an industry standard," according to Danny Schultz, Managing Partner of Draper Fisher Jurvetson Gotham Ventures in New York.

“ECentury Capital is pleased to continue to support Magnolia. The company has made great strides with its novel and powerful antenna diversity technology, and is poised to address successfully the painful problems associated with network capacity and coverage,” said Jim Broder, Principal at ECentury Capital.

Substantial Opportunity

To meet the increasing subscriber demands, implementation of DiversityPlus™ will provide substantial savings to the carrier relative to expensive network upgrades that can be phased in as needs grow. Designed to deliver the next generation of performance to the wireless carriers, DiversityPlus™ technology in the mobile terminal does not require any change to the network or to wireless standards.

“The Magnolia team appreciates the support provided by our investors,” said Haim Harel, president and CEO of Magnolia. “The past year has been very gratifying as a number of very large customers have been able to quantify the benefits of DiversityPlus™ technology. We look forward to increasing our presence with other carriers.”

Evaluation Trials

Over the next 3 months, Magnolia will be completing field trials with leading wireless service providers in Asia and the United States. Based on the success of these trials and the availability of engineering samples of its DiversityPlus™ chipsets, the Company expects to announce agreements with mobile terminal manufacturers to integrate the chipsets into commercial handsets in the near future.

About Magnolia Broadband

Since its inception in early 2001, Magnolia has been pioneering the development of antenna diversity technology that incorporates both transmit and receive signals in the wireless terminals. As a fab-less semiconductor company, Magnolia is integrating its DiversityPlus™ technology in RF chipset products that the wireless carriers can use in the mobile terminals. For more information, go to www.magnoliabroadband.com.

About Draper Fisher Jurvetson Gotham Ventures

Draper Fisher Jurvetson Gotham Ventures (DFJ Gotham) is a $100 million early-stage, venture capital fund focusing on IT infrastructure, broadband and wireless communications, network security and storage technology, enterprise software and other emerging technology sectors. DFJ Gotham concentrates on opportunities in the greater New York area and looks for breakthrough solutions to fundamental needs in fast growing markets. As a Draper Fisher Jurvetson affiliate fund, DFJ Gotham shares the knowledge and resources of over 12 DFJ-network funds, which have over $3 billion under management and over 350 portfolio companies. For more information about DFJ Gotham please visit www.dfjgotham.com.

About ECentury Capital

ECentury Capital is a $90 million balanced-staged venture capital fund that makes investments throughout the eastern United States in distinctive technology companies that solve real business problems. We give our portfolio companies the power to accelerate their businesses into global markets by leveraging our active, institutional partners Hitachi, Mitsubishi, Allied Capital and Rothschild. More information on ECentury Capital can be found at www.ecenturycaptial.com

About SCP Private Equity Partners

SCP Private Equity Partners ("SCP") is a diversified private equity investment firm with $800 million under management focused on making mid and late stage venture investments in rapidly growing infrastructure technology companies. A number of these companies are positioned to capitalize on the convergence of the IT and security markets. SCP supports its investment portfolio with a rich base of strategic, operating and financial expertise and an extensive networking capacity to access capital, recruit management and facilitate favorable strategic alliances. Areas of particular focus in which SCP has made investments include peer-to-peer technologies, IT services, wireless technologies, streaming media, content management, e- learning, and application integration. Additional information on SCP and a summary of representative investments can be found at www.scppartners.com

About Selway Partners

Selway Partners LLC is a holding and operating company that builds and funds a select number of promising projects within the information technology and telecommunication markets. Selway provides strategic and operational management, technology expertise, and capital at the earliest stages, thus adding maximum value when it's needed most. Additional information on Selway Partners can be found at www.selway.com

Magnolia Contact information

Joseph Dans
Director of Accounts
Fusion Public Relations
570 Seventh Avenue
NY, NY 10018
(212) 651-4215

John H. Moon
Senior Vice President, Corporate Development
Magnolia Broadband, Inc.
64 Old Highway 22, 3rd Floor
Clinton, New Jersey 08809



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