St. Bernard Software Reports Second Quarter 2007 Financial Results

Market Wire, August, 2007

St. Bernard Software, Inc. (OTCBB: SBSW), a global provider of security appliances and on-demand solutions, including secure content management, archiving and collaboration, today announced its financial results for the second quarter ended June 30, 2007.

Second Quarter Summary

The second quarter was very difficult as we continued to execute our new strategy and associated transition plan. Although we had better than industry average growth in our core iPrism product line, we experienced a several month delay in preparing our new LivePrism product line to effectively compete in medium and large customer opportunities. This delay negatively impacted our sales plan and caused the company to be cash constrained. We also experienced disruption in employee productivity as we implemented the next phase in our company restructuring and expense reduction plans. The cumulative result was a weaker than expected second quarter, a very low cash balance to operate the company, and a slow start to our third quarter.

Through this difficult period in the company's transition we did continue to execute to our new strategy and made progress towards our new goals. Following are a few positive highlights for the quarter:

--  iPrism experienced 13.5% year-over-year billings growth
--  LivePrism acquired 202 new customers in the first six months of 2007
--  Hired new VP Marketing to spearhead global marketing efforts
--  Joined Jamcracker Delivery Network
--  Secured new $4 Million credit facility with Silicon Valley Bank
--  iPrism® and LivePrism(TM) named Winners of the 2007 Global Product
    Excellence Awards by Info Security Products Guide
    

Financial Results

Revenue in the second quarter was $5.0 million, in line with the $4.6 to $5.2 million guidance previously provided. Subscription revenue from iPrism and LivePrism was $3.6 million in the second quarter. GAAP net loss was $(4.7) million, or $(0.32) per share for the second quarter compared to $(1.2) million, or $(0.12) loss per share reported for the second quarter of 2006. The company cautioned that the review by the company's independent auditors of the second quarter financial statements contained in this release was not completed at the time of this release, and so, the financial statements that will be filed with the company's Quarterly Report on Form 10-QSB may differ.

Divestiture of Legacy Open File Manager(TM) Product

In conjunction with our new strategy to focus the company on network based secure content management solutions, the company signed a definitive agreement on August 13th to sell our legacy Open File Manager product line to EVault. The value of the transaction is $6.875M in cash and is expected to close in August 2007. The proceeds of this sale will provide critically important funding for St. Bernard to support growth of our core iPrism and LivePrism products and continue the execution of our company strategy. We believe that Seagate is an excellent organization that will provide great value to our Open File Manager customers and partners.

Third Quarter Business Outlook

Mr. Rossi said, "We believe that we will continue to achieve solid sales growth and excellent customer retention in our iPrism and LivePrism product lines. In combination with our sales growth, the expense restructuring in Q2'07 will move our business toward a cash flow positive position. We currently expect our Q3 2007 revenue to range from $4.2 to $4.8 million. As a reminder, the company divested its UpdateEXPERT product line early in the first quarter of 2007 and also divested the Open File Manager product line in August 2007. Our guidance reflects the impact of these divestitures."

Conference Call Information

What: St. Bernard's Second Quarter 2007 Financial Results Conference Call

When: Tuesday, August 14th at 1:30pm PT (4:30 pm ET)

Dial In Number: 800-257-3401 (US and Canada) 303-205-0033 (International) Company name, 'St. Bernard'

Webcast: To listen to the live Webcast, use the following link: http://www.vcall.com/IC/CEPage.asp?ID=119614

Or, log onto www.stbernard.com under the Investor Relations section.

Web Replay: 30 days

Call Replay: A replay of the conference call will be available at www.stbernard.com in the Investor Relations area of the site starting two hours after the call through Tuesday, May 22, 2007 at 11:59 pm PT

Replay Number: 800-405-2236 or 303-590-3000 (International) and enter the pass code: 11094529#

For the conference call, please dial-in five minutes in advance to ensure a proper connection. Questions and answers will be taken only from participants on the line. For the Webcast, please allow 15 minutes to register, download and install any necessary software.

About St. Bernard

St. Bernard Software, Inc. (OTCBB: SBSW) is a global provider of security appliances and hosted solutions, including secure content management, archiving and collaboration. The company's award-winning products deliver innovative security solutions that offer the best combination of ease-of-use, performance and value. Established in 1995 with headquarters in San Diego, CA and international offices in the United Kingdom and the Netherlands, St. Bernard sells and supports its products directly and through solution partners worldwide. For more information, please visit www.stbernard.com .