BindView Completes SEC Filings for Nasdaq Compliance.

HOUSTON -- BindView Corporation (Nasdaq:BVEWE), a leading provider of policy compliance, vulnerability management and directory administration solutions, today announced that it has filed with the Securities & Exchange Commission its Form 10-Q for the third quarter of 2004. The Company also filed an amended Form 10-K for 2003 and amended Forms 10-Q for the first and second quarters of 2004 to restate previously issued financial statements for the $1.0 million overstatement of revenues from Latin America. The Company believes that these filings meet the compliance requirements of the Nasdaq Marketplace Rules 4310(c)(14), and the Company expects that the "E," which was added to its trading symbol on November 26, 2004, will be removed in due course.

Third Quarter Financial Results

As mentioned above, the Company filed its Form 10-Q for the third quarter of 2004. This report includes the Company's results of operations for the third quarter. Revenues for the third quarter of 2004 were $17.2 million, which was in line with the estimate set forth in the October 28, 2004, press release and conference call. The net loss for the period was $2.6 million, which was $0.4 million higher than the previously issued estimate, due to increased professional fees related to the Company's Sarbanes-Oxley compliance efforts.

Investigation of BindView's Latin American Operations and Restatement of Financial Statements

In October 2004, as a result of information obtained by the Company in its efforts to collect certain receivables from Latin American resellers, the Company's Audit Committee commenced an investigation of the Company's Latin American operations. On December 6, 2004, with the investigation substantially complete, the Audit Committee concluded that due to errors with the transactions described below, the Company would restate its financial statements for the year ended December 31, 2003, and the first two quarters of 2004, and also concluded that those previously issued financial statements should no longer be relied upon. These conclusions were set forth in the Form 8-K dated December 6, 2004, and were discussed with the Company's independent registered public accounting firm. The Audit Committee investigation was completed on December 8, 2004.

In amended filings made today with the Securities & Exchange Commission, the Company's previously issued financial statements for the periods referenced above have been restated to correct for an overstatement of approximately $1.0 million in revenues, involving six transactions in Latin America. As a result, the Company's reported revenues were overstated by $173,000 in the fourth quarter of 2003; $131,000 in the first quarter of 2004; and $698,000 in the second quarter of 2004.

Revenues for the fourth quarter of 2003 were overstated by $173,000 related to a product return, which certain Company personnel in Latin America knew to have occurred within the contractually allowable return period, but which they did not report to the Company's accounting department. If this return had been reported in a timely manner to the Company's accounting department, revenues from this transaction would not have been recognized in the fourth quarter of 2003. Certain personnel in Latin America who knew of the product return also made inaccurate representations as to status of the receivable in response to the on-going collection efforts of the Company's accounting department.

Revenues for the first quarter of 2004 were overstated by $131,000. This was comprised of (i) two separate transactions with a single reseller and an end-user customer for which professional services revenues were overstated by $122,000; and (ii) maintenance revenue of $9,000 on the December 2003 transaction referred to above. The overstatement of professional services revenues resulted from the recording of revenues based on invalid contracts and statements of work that had been submitted to the Company's accounting department by certain personnel in Latin America. These documents, certain of which the Company believes were falsified prior to being submitted to its accounting department, purported to show that the Company had entered into an arrangement with a subsidiary of the reseller to provide services to the end-user customer on behalf of the Company.

Revenues for the second quarter of 2004 were overstated by $698,000, resulting from the recording of three transactions based on invalid documents that had been submitted to the Company's accounting department by certain personnel in its Latin American operations. These documents, which the Company believes were falsified prior to being submitted to its accounting department, included contracts and professional services statements of work and time sheets that purported to show that valid arrangements supporting the underlying transactions had been entered into with third parties. Certain personnel in Latin America also made inaccurate representations as to status of these receivables in response to the on-going collection efforts of the Company's accounting department.

Individuals who the Company believes were culpably involved in these transactions are no longer employed by the Company. The Company has terminated relationships with resellers that it believes may have been culpably involved in these transactions.

As a result of the investigation into the above matters, the Company has determined that it has a "material weakness" with respect to the reporting of revenues from its Latin American operations. In addition to the actions taken with respect to personnel and resellers, as mentioned above, the Company has also designed and implemented new procedures to improve controls to better ensure that revenues are recognized only on transactions that are based on valid arrangements, which meet the Company's revenue recognition criteria. The significant enhancements to these procedures and controls that have been implemented include:

--The Company will obtain signed written representations from each sales and professional services representative, manager, director and vice president prior to finalizing results for a quarterly or annual period and prior to payment of sales commissions or any incentive-based compensation. Generally speaking, these representations will state that to the best of the individual's knowledge, (i) he or she has complied with the Company's Code of Conduct, (ii) the documentation supporting the sales transactions with which he or she was involved is valid, appropriately authorized and complete and (iii) no conditions to any sales transaction have been agreed to with the customer that have not been explicitly stated in the documentation supporting that sales transaction.

--In geographies where the Company has a limited operating history (e.g. Latin America or any other new geography the Company may enter), payment of commissions will be deferred until collection of accounts receivable has occurred.

--The Company is assigning non-sales personnel to communicate directly with foreign resellers and end-user customers regarding past due accounts receivable.

--The Company has made changes to its reporting structure to provide for more direct communication. These changes include sales operations now reporting to the chief operating officer and the head of professional services now reporting directly to non-sales management.

--The Company has implemented more extensive background and reference checks to be performed on all prospective employees.

--The Company has expanded its disclosure committee to include representations from a broader cross section of departments.

--The Company is implementing enhanced, pre-close analytical review procedures to identify emerging changes in our business.

By implementing its planned internal control improvements, the Company expects to remediate this "material weakness." However, if the Company is unable to (a) demonstrate that its internal controls over financial reporting are designed appropriately and operating effectively for a sufficient period of time, (b) assert that its internal controls over financial reporting are effective as of December 31, 2004, (c) complete its evaluation on a timely enough basis for its independent registered public accounting firm to complete their assessment of the Company's internal controls over financial reporting by the due date for the Company's 2004 Annual Report on Form 10-K, the Company will have to report the material weakness in such Form 10-K.

About BindView

BindView Corporation is a leading provider of proactive business policy, IT security and directory management software worldwide. BindView solutions and services enable customers to centralize and automate policy compliance, vulnerability assessment and directory administration across the entire organization. With BindView insight at work(TM), customers benefit from reduced risk and improved operational efficiencies with a verifiable return on investment. More than 20 million licenses have shipped to 5,000 companies worldwide, spanning all major business segments and the public sector. Contact BindView via e-mail at [e-mail] or visit BindView's website at http://www.bindview.com. BindView can also be reached at 1-800-749-8439 or at 1-713-561-4000.

Statements in this news release not based on historical fact are "forward-looking" statements pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Actual results could differ materially because of factors such as the risk factors and other matters described from time to time in BindView's Form 10-K filings, Form 10-Q filings, and other periodic filings with the Securities and Exchange Commission, as well as BindView's ability to successfully implement the remediation measures described above; the time required for large transactions to close; and the general willingness of customers to make investments in information technology.