Application Security, Inc. Secures Seed Funding; Financing Will Enable Expansion of Security Product Portfolio to Prevent Hacker Attacks.

Business Editors/High-Tech Writers

NEW YORK--(BUSINESS WIRE)--March 24, 2003

Application Security, Inc., a manufacturer of software for securing business infrastructures from application level attacks, today announced it has completed a seed funding round, co-led by Kodiak Venture Partners and Early Stage Enterprises. The funds will be used for product and market development.

"This funding will enable us to expand our efforts in developing and marketing security products that will lead the industry in providing businesses with unprecedented degrees of protection at the application level," said Application Security President and CEO, Jack Hembrough. "In today's uncertain times, with applications increasingly at risk, the necessity for such capabilities cannot be understated."

Application Security's technologies are aimed at addressing the growing threat of hacker attacks on business application software. Although such applications are as critical to business operations as traditional infrastructure elements, there have been few tools for defending them. In contrast, a myriad of firewalls, intrusion detection systems, and anti-virus gateways are available to protect against attacks on traditional infrastructure elements. Hackers now are trying to circumvent these infrastructure protections by penetrating networks through applications and using tactics ranging from rudimentary password guessing to sophisticated SQL injection attacks. Moreover, 70 percent of attacks are "internal" -- generated by authorized users, including employees, customers, suppliers and other business partners with access to the applications. Application Security creates tools that provide the high levels of security required to protect against such attacks.

"This investment emphasizes the strategic importance and strong differentiation of Application Security's technology," said Ilan Carmi, Partner at Kodiak Venture Partners. "The security market segment is strong and growing overall, and the availability of technology that eliminates the ever-present danger of business applications being hacked is mission-critical. With this funding we are indicating our commitment to providing the kind of early financing and hands-on technical and business guidance that will accelerate Application Security's leadership position in this promising market segment."

The company is currently delivering the AppDetective and DbEncrypt product lines to a broad spectrum of customers, including Fortune 1000 companies in the financial, healthcare, aerospace, and manufacturing industries as well as government agencies. AppDetective is an application vulnerability assessment software tool that provides users with the ability to discover and perform security tests against mission-critical applications from a hacker's point-of-view. DbEncrypt is a database encryption software package that enables users to encrypt columns and rows within Oracle and Microsoft SQL Server databases. A third product line, AppRadar, is now in development and will provide a real-time security solution enabling organizations to thwart application-specific attacks and malicious behavior. In the future, these product lines will be brought together under a unified management station, AppConsole.

"We are impressed with Application Security's product offering and demonstrated ability to execute," said Jim Millar, Partner at Early Stage Enterprises. "The company's strong management team, customer base, and established partnerships provide a solid foundation for the company's bright future."

Application Security, Inc. was founded by Aaron Newman, the co-author of the Oracle Security Handbook, and Eric Gonzales, former product marketing manager at Internet Security Systems. Ilan Carmi of Kodiak Venture Partners and Jim Millar of Early Stage Enterprises will join Hembrough and co-founder Newman, the company's Chief Technology Officer, on the Application Security Board of Directors.

Products are available directly from Application Security in the US, and through a network of authorized resellers globally.

About Application Security, Inc.

Application Security, Inc. is an organization dedicated to the security, defense, and protection of the application layer. Solutions are provided to proactively secure (penetration testing/vulnerability assessment), actively defend/monitor (intrusion detection), and protect (encryption) your most critical applications including database, groupware, application, and web servers. Free evaluation versions of products are available for download at www.appsecinc.com.

About Kodiak Venture Partners

Kodiak Venture Partners is a Waltham, Massachusetts-based venture capital firm focused on seed and early stage investments in emerging communications/IT, semiconductor and software companies. With a focus in the eastern regions of the U.S. and Canada, Kodiak Venture Partners builds relationships with entrepreneurs seeking accelerated market success. Kodiak's investment partners are successful high-technology business entrepreneurs who take a high-impact, hands-on approach to forming, operating, building and funding market leaders. For more information, visit www.kodiakvp.com.

About Early Stage Enterprises, LP

Early Stage Enterprises, based in Skillman, N.J., is a private venture capital fund that provides capital and guidance to early stage, high growth technology companies in the Mid-Atlantic region. Partners of Early Stage Enterprises collectively have over fifty years of early stage investment experience and have worked with over 100 early stage companies. Early Stage Enterprises is a licensed Small Business Investment Company. For more information, visit www.esevc.com.