Liquid Machines Announces Record Quarterly Growth; Appoints President and CEO Michael Ruffolo to Chairman of Board

Market Wire, August, 2007

Liquid Machines®, Inc., the leader in Enterprise Rights Management (ERM) solutions, today announced that it achieved record growth in the recently-closed fiscal quarter, ending June 30, 2007. As a result of the industry's increased demand for ERM solutions to secure intellectual property and improve compliance controls, Liquid Machines experienced a record quarter-over-quarter sales growth rate of 162%. The company also announced that Michael Ruffolo, its Chief Executive Officer and President, has been elected as the Chairman of Liquid Machines' Board of Directors. Ruffolo succeeds company co-founder Mike Smith, who was recently named the Dean of the Faculty of Arts and Sciences at Harvard University. Smith will remain as a director on the Board.

"2007 is shaping up to be another record year for Liquid Machines," said Ruffolo. "We have added large new customers in both the commercial and public sector markets and have released some key products and solutions -- bringing rights management and information protection to even more organizations. We expect this solid growth to continue as more and more enterprises realize the importance of protecting their critical customer information, personnel data and intellectual property from both external and internal leaks."

"Under Mike's leadership and vision, Liquid Machines continues to deliver on its commitment to customers, partners and shareholders," said Axel Bichara, general partner at Atlas Venture. "The board unanimously voted for Mike's appointment and is confident that he will provide strong leadership and governance to the Board as he expands his role to include Chairman."

Under Ruffolo's leadership, Liquid Machines has continued to experience unprecedented growth and success, achieving a number of company milestones including the following:

--  Signed large customers and partners in both the commercial and
    government sectors, including the largest enterprise sale in the company's
    history.
--  Joined Cisco, EMC, Microsoft and other innovative partners in the
    Secure Information Sharing Architecture (SISA) Alliance to deliver a
    unique, ready-to-deploy solution designed to improve collaboration,
    communication and security within government agencies
    ( http://www.liquidmachines.com/sisa ).
--  Named as a strategic partner to Microsoft's Identity and Access
    Management solutions program.  A partner of Microsoft's since 2004, Liquid
    Machines is integrated into the Information Protection solution extending
    the number of scenarios in which Microsoft Windows Rights Management
    Services (RMS) is used within the enterprise
    ( http://www.microsoft.com/ida ).
--  Announced that Symantec has integrated Liquid Machines' ERM technology
    as part of Symantec's Enterprise Vault content management, archival and
    retrieval system, ensuring that electronic content protected and encrypted
    using Microsoft Windows Rights Management Services (RMS) can be processed
    by Enterprise Vault in a way that complies with eDiscovery regulations and
    policies ( http://www.liquidmachines.com/symantec ).
--  Partnered with SolidWorks to integrate Liquid Machines' ERM
    technologies with SolidWorks' suite of product design and development tools
    to enable customers to securely share design and development data and
    collaborate throughout the development lifecycle, without fear of
    unauthorized usage or data loss ( http://www.liquidmachines.com/solidworks ).
--  Announced that Chico's, a specialty retailer of exclusively designed
    women's clothing, has selected Liquid Machines software to secure and
    control access to some of its most critical and sensitive company
    electronic data ( http://www.liquidmachines.com/chicos ).
--  Named Jeannie Vineyard its new Vice President of Engineering, where
    she will have broad technical and managerial responsibility for all of the
    company's engineering and information technology operations. Vineyard
    brings more than 25 years of software development, outsourcing and quality
    assurance management experience to Liquid Machines
    ( http://www.liquidmachines.com/vineyard ).
--  Received three Global Product Excellence Customer Trust Awards from
    Info Security Products Guide, in the categories of "Document Protection,"
    "Security Solution for Federal" and "Security Solution for Government"
    ( http://www.liquidmachines.com/excellence_awards ).
    

About Liquid Machines

Liquid Machines is the leading provider of Enterprise Rights Management (ERM) solutions that prevent the misuse, modification, loss or theft of intellectual property and sensitive information. By applying access and usage controls with the data, electronic information is persistently protected while at rest, in transit, and in use -- empowering employees to securely collaborate and work with native file formats and applications. Liquid Machines enables global companies in financial services, government, manufacturing, retail, and healthcare industries to protect intellectual property regardless of where it goes, generating robust access and usage reports that demonstrate compliance with privacy and industry regulations. Based in Waltham, Massachusetts, Liquid Machines is privately held and is backed by Atlas Venture, Draper Fisher Jurvetson, Goldman Sachs & Co., and Masthead Venture Partners. For more information on the company and our vision for The Freedom of Security(TM), visit us at www.liquidmachines.com .