CYNET Completes Phase Two Financing

CYNET, an application service provider of convergent communications solutions, is closing the second phase of its financing plans with a $2.15 million investment. In conjunction with the financing, CYNET's existing equity partners converted $5.6 million of previous mezzanine debt into equity.

The financing consisted of a $2.15 million investment made by a syndicate of institutional investors led by the Augustine Fund, L.P., an affiliate of Augustine Capital Management of Chicago. In addition to providing the new funding, Augustine converted its existing mezzanine debt instrument, a $1.6 million convertible note, into Series E Preferred Stock and Series F Preferred Stock. Parallel with Augustine's investment, Houston Economic Opportunity Fund, II L.P. (HEOF), whose general partner is Enron Investment Partners, a wholly owned subsidiary of Enron Corp., converted $4.0 million in existing mezzanine debt instruments into Series D Preferred Stock. The Augustine and HEOF repositioning moves a total of $5.6 million from mezzanine debt to equity.

"The purpose of the financing is to reduce debt and improve our working capital position," says R. Greg Smith, Vice President and CFO. "We will be using a portion of the proceeds to retire some of the existing dividends and notes payable, reduce accounts payable, with the balance going to general working capital," adds Smith.

For further details, visit www.cynetinc.com.