Citadel Technology Reports Fiscal 1999 Sales of $4,440,000, for a 175% Increase in Sales Over Prior Fiscal Year.

DALLAS, Texas--(BUSINESS WIRE)--Aug. 13, 1999--

Citadel Reports Preliminary Consolidated Revenues

for First Quarter of Fiscal 2000 of $1,650,000

Citadel Technology, Inc. (OTCBB: CITN) today announced financial results for the fiscal year ended February 28, 1999.

Revenues for fiscal year 1999 were up 175% to approximately $4,440,000 from $1,613,000 reported for the prior fiscal year. The Company reported a net loss for the year of $6,750,000, or $.26 per share, after a write down of software assets and non-recurring charges totaling approximately $2,245,000, compared to a net loss of $3,523,000, or $.21 per share for the prior year.

Citadel also reported preliminary consolidated revenues of approximately $1,650,000 for its fiscal quarter ended May 31, 1999. Consolidated revenues for the first quarter included revenues from the Company's Internet subsidiary, How2HQ.com.

Pro forma revenues were approximately $9,900,000 for the first quarter ended May 31, 1999 (assuming the first quarter How2HQ.com acquisitions were effective as of March 1, 1999), compared to $1,076,000 reported in last year's first fiscal quarter. On a consolidated basis, the companies' estimated total revenues for fiscal 2000 are anticipated to exceed $40 million. However, results for Citadel's future periods may not include revenues from the Internet subsidiary because the ownership level of Citadel will decrease below 50% as a result of acquisitions, private placements and an initial public offering of How2HQ.com shares, although Citadel will continue to own 17,000,000 shares (after the four-for-one stock split effective in July 1999) following the spin-off described below.

"We are pleased with our results for fiscal 1999 and the first quarter of fiscal 2000 and the progress we have made for our shareholders over the past year and this year," commented Steven B. Solomon, President and Chief Executive Officer of Citadel Technology. "Our goal is to maximize value for our shareholders, as evidenced by How2HQ.com, our Internet subsidiary. We have completed three acquisitions in the first half of fiscal 2000 while assembling a strong management team and board of directors for How2HQ.com."

Mr. Solomon continued, "Citadel now owns a substantial position in How2HQ.com, which we believe will substantially increase the asset value for Citadel shareholders."

Recent highlights for Citadel Technology include the following:

- The Company announced the beta release of WinShield Secure PC,

the Company's next generation desktop security and configuration

tool in June 1999. This product contains powerful Internet

security features that provide Internet filtering and blocking to

allow the administrator to specify the Internet protocols and web

sites that are available for users of the protected computer.

Please see our June 21, 1999 press release for further

information.

- In fiscal 1999 and the first quarter of this fiscal year, Citadel

received several awards for its products and performance,

including:

- Citadel's selection for a Winning on Windows award in April 1999

by Microsoft Corp. and CMP Media as one of the fastest growing

independent software vendors for Windows (See our press release

from April 1999); and

- Citadel's selection in December 1998 to join the Schools 2000

Program created by Microsoft, MCI/Worldcom, HP, and Dell and 15

other technology companies. The Schools 2000 Program is designed

to integrate "best-of-breed" products to create the educational

computer system of the future, incorporating the visions of what

leading technology companies foresee as the design and

configuration of network and desktop computing in schools across

the world in the 21 century.

- In fiscal 1999, Washington Mutual, Inc., the sixth largest bank

in the US, deployed the Company's WinShield and NetOFF products

to secure their networks and desktops. IBM Global Services, Inc.

selected Citadel to insure computer security for Washington

Mutual. Citadel issued an enterprise site license to Washington

Mutual, for the WinShield and NetOFF security suite, with an

initial order in excess of $1 million. Citadel's security

solution was chosen over a number of competitive products

evaluated by IBM Global Services because it combined features and

services designed to meet all of the customer's needs. The

combination of NetOFF and WinShield provided Washington Mutual

with the ability to lock down desktop configuration settings,

secure unattended workstations, control access to applications

and directories, prevent the use of unauthorized CDs, and prevent

the unauthorized renaming and deleting of folders and files.

Mr. Solomon noted that management, legal counsel and outside auditors continue to work to prepare and file with the Securities and Exchange Commission the documents required by the SEC to complete the spin off dividend to Citadel shareholders. The Company currently intends to distribute the dividend shares in connection with How2HQ.com's initial public offering. How2HQ.com recently completed three acquisitions (2-Lane Media Inc., the Forward Companies and BPG Worldwide) as to which information is required to be included in the SEC filings. While this has delayed the process, management believes that the acquisitions will greatly strengthen How2HQ.com.

In its Form 10-KSB for the fiscal year ended February 28, 1999, Citadel announced that How2HQ.com had closed a $15.8 million private placement of its common shares through the first quarter of fiscal 2000 (ended May 31, 1999) at prices up to $10 per share. The shares have not been registered under the Securities Act of 1933 and may not be offered or sold in the United States absent registration or an exemption from applicable registration requirements.

Citadel Technology, Inc. is a developer and marketer of computer software products including security and management utilities for networks and personal computers. The Company's products are designed to secure and manage personal computers (PCs) and local area networks (LANs) and enable network administrators to more efficiently manage the networks. Company products are designed to reduce client costs, improve the accuracy of client information, maintain the operation of the network, secure the network from fraud or unauthorized use, and generally enable the administrator to devote more time to improving service to the network rather than focusing on operational details.

For more information on Citadel Technology and its products, please visit the Company's homepage at http://www.citadel.com. For information on purchasing products, contact the Company directly by writing or calling: Citadel Technology, 3811 Turtle Creek Blvd., Suite 600, Dallas, Texas 75219; phone [phone]; fax [phone]. For media or investor relations contact: The Investor Relations Group at 212.664.8489.

Forward-Looking Statements: This news release contains forward-looking statements, which involve risks and uncertainties. Accordingly, no assurance can be given that the actual events and results will not be materially different than the anticipated results described in the forward-looking statement. There are a number of important factors that could cause actual results to differ materially from those expressed in any forward-looking statements made by the Company. These factors include the Company's and its subsidiary's success in integrating the business and operations of acquired companies; timing and delays related to distribution of an information statement based on compliance with SEC requirements; no assurances of an initial public offering based on market conditions and suitable underwriters; uncertainty relating to NASDAQ listing; implementation of Internet strategies; the activities of new or existing competitors; the ability to attract and retain employees and strategic partners; adoption of the Internet as a medium of commerce, communications and education; application of state unclaimed property or escheat laws; transition of selling and distribution methods, the availability of capital on terms acceptable to the Company; general economic conditions; the market for the network software products; software development costs and litigation costs. Investors are also directed to consider other risks and uncertainties discussed in documents filed by the company with the Securities and Exchange Commission.

The Company undertakes no obligation to publicly release the result of any revisions to these forward-looking statements, which may be made to reflect events or circumstances after the date hereof or to reflect the occurrence of unanticipated events.