COUNTERPANE CONTINUES MOMENTUM WITH RECORD REVENUE GROWTH; EXPANDS CORE SERVICES FOR A TRULY INTEGRATED MANAGED SECURITY SOLUTION

MOUNTAIN VIEW, Calif., July 15, 2005 - Counterpane Internet Security, Inc., the world's leading protector of networked information and the inventor of outsourced security monitoring, today announced it closed second quarter 2005 with a 68% increase in revenue over second quarter 2004.

Counterpane's seventh quarter of consecutive revenue growth can be attributed to exponential investment by enterprises that need to defend against internal and external security threats, while meeting government and industry compliance mandates.

Growing demand for integrating disparate security technologies drove nearly 60% of Counterpane's customers to subscribe to multiple services. In addition to strong traditional demand for core security monitoring services, Counterpane saw increased adoption of DDoS Protection, Email Scanning, and Log Management capabilities.

The rising number of organizations required to demonstrate compliance with regulations and standards such as SOX, PCI CISP, and ISO17799/BS7799 has generated additional demand for Counterpane's compliance reports and services. Today approximately 65% of Counterpane's customer base now actively benefits from these capabilities. Demonstrating compliance with regulations, coupled with increased recognition of how policy definition and implantation of policy improves the security of network environments, drove demand for Counterpane's Security Consulting, which realized a 200% growth in bookings over second quarter 2004.

"Too many companies are experiencing the consequences of implementing reactive security measures," said Paul Stich, Counterpane's President and CEO. "Only an integrated approach to security provides true visibility into a network environment. Outsourced security monitoring provides the ability for real-time response to malicious, organized, and highly skillful attacks as well as random, accidental, and indiscriminate attacks. Counterpane is committed to delivering a truly integrated managed security solution, at a reasonable cost, through the offering of best-of-breed technologies and strong security expertise, and through consistent expansion of our services."

Counterpane rolled out the following services during the second quarter 2005:

Log Management: simplifies the management of Log Management devices by providing best practice guidance on implementation and operation of the device deployed in enterprises' network. Core features include:

• Aggregation: high speed, unfiltered collection of logs from distributed servers, applications and network devices for consolidation of events into a single SQL database.
• Analysis and Alerting: custom data access capabilities providing analysis of data through specialized views and customizable reporting.
• Management Archives: forwards and stores copies of access and activity as well as configuration changes for long-term storage.

Identity Management: establishes security access control over corporate assets and provides an integrated audit reporting capability for both internal and external auditors. Other features in Counterpane's Identity Management services include:

• Automating forced process controls to strengthen the link between technology and business processes.
• Provisioning and revocation of users
• Maintaining proper user rights over time as their roles, responsibilities, and rights or security network infrastructure changes. Key elements include Integration with HR Systems, User Access Management, Self Service Password Resets, Password Synchronization, and Directory Authentication and Single Sign-on (SSO)

About Counterpane

Counterpane is the world's leading protector of networked information -- the inventor of outsourced security monitoring and the foremost authority on effective mitigation of emerging IT threats. With the most comprehensive view available of global information security events, Counterpane offers customers the earliest possible warning of internal or external threats to their information security and availability, as well as the expert counsel required to successfully mitigate such threats. Counterpane's managed service model and technology products provide information-intensive organizations the security they require to collaborate with ever-increasing numbers of partners, customers, suppliers, investors and government regulators. The company is privately held and headquartered in Mountain View, Calif.

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Counterpane is a trademark of Counterpane Internet Security, Inc. All other companies, brand names or products are trademarks or registered trademarks of their respective companies.