PEER 1 Network Enterprises, Inc.

PEER 1 Network Enterprises, Inc.

July 20, 2005 19:00 ET

Peer 1 Network Completes US$2.0 Million Financing

VANCOUVER, BRITISH COLUMBIA --(CCNMatthews - July 20, 2005) - Peer 1 Network Enterprises, Inc. (TSX VENTURE:PIX) announced today that it has closed a US$2.0 million loan comprised of secured senior convertible debt, the proceeds of which are to be used to build or acquire a data center in Los Angeles and to complete the build out of the company's new Toronto facility. The loan will be secured by the assets of those new facilities. The loan bears interest at 10% per annum compounded monthly, plus contingent interest in certain circumstances equal to 50% of the aggregate operating profit generated from the new locations during the period ending June 30, 2010. Interest is payable monthly commencing immediately, and blended payments of principal and interest must commence on July 31, 2006. The loan matures on June 30, 2008.

At the option of the lender, the loan is convertible into common shares of Peer 1 at a price of CND$0.40 per share if exercised by July 18, 2007, and CDN$0.46 per share if exercised thereafter. The loan is convertible only until 90 days after the Lender receives any payment of contingent interest.

The lenders consist of Polygon Financial Investments, Inc., a private company controlled by Werner K. Paulus, a director of Peer 1; Sutton Group Financial Services Ltd., a private company controlled by Scott Shaw and Lance Tracey, both directors of Peer 1; and Hampson Equities Ltd., a private company controlled by Geoffrey Hampson, the President and CEO and a director of Peer 1.

As further consideration for the loan, Peer 1 issued 3,100,000 warrants to the lenders, pro rata to their respective percentage of the loan, each warrant entitling the holder to purchase one common share of Peer 1 at a per share price of CDN$0.40 until July 18, 2007.

About Peer 1 Network

Peer 1 Network, the first Internet infrastructure provider to offer a 100% uptime guarantee, delivers leading-edge server colocation, IP network and customer support solutions to performance-hungry customers worldwide. Since its inception in 1999, the company has grown to 12 state-of-the-art data centers and 17 points of presence across North America and Europe, all connected by Peer 1's world class IP network. Peer 1 serves customers who range from gaming to VoIP, to enterprise. The company's headquarters are located in Vancouver, Canada and the stock is traded on the TSX Venture exchange under the symbol PIX. In 2004 Peer 1 acquired ServerBeach Ltd, a self-managed dedicated server company. For more information visit

Statements in this release relating to matters that are not historical fact are forward-looking statements based on current expectations, forecasts and assumptions that involve risks and uncertainties that could cause actual outcomes and results to differ materially. Factors that could cause or contribute to such differences include, but are not limited to, general economic conditions, changes in technology, reliance on third party manufacturing, managing rapid growth, global sales risks, limited intellectual property protection and other risks and uncertainties described in Peer 1's public filings with securities regulatory authorities.

The TSX Venture Exchange does not accept responsibility for the adequacy or accuracy of this release.

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