800.234.2175 www.perimeterusa.com   QUARTERLY UPDATE - Q2 2006 Dear Perimeter Friend, With 550 new clients added and a 43% increase in revenue over the same period last year, I am very excited to announce that we have just completed another record quarter. While I provided details at our Third Annual Client Conference held in New York City, I wanted to take a few moments to update you on what's new with us in Q2. We acquired our third company this year -- ANE Technologies. Located in Des Moines, Iowa. ANE provides Intrusion Prevention, Penetration and Vulnerability Testing, Website Design and Hosting to community banks in the Midwest. With this acquisition, our eighth in the past two years, we will now have a meaningful physical presence in the Midwest. With over 50 services, it is often time to review some of our more mature services and focus on enhancing each of these services. The first service we have enhanced is our Anti-SPAM service, which must continue to evolve as spammers find new techniques. Specifically, we added a fourth intelligence layer to Perimeter's previous 3-layered approach which allows for learning. Now, the end-user will have the ability to communicate with this new filter -- letting us know if an email is or is not SPAM. With this additional intelligence, our Anti-SPAM service will be continuously improving. For further information on this enhanced service, contact your Perimeter account representative or call 800.234.2175. In Q3, you will see significant enhancements to the reporting of our Web Content Filtering, Patch Management, Desktop Anti-Virus and Mailsafe Secure Messaging services. As you will notice, our newsletter content has been given a face-lift. The changes in the newsletter have moved from being focused primarily on statistics to now being more content focused on changes that directly impact our clients. We hope you enjoy our new newsletter format and continue to look for other improvements as we strive to better serve our clients. Finally, we would like to thank everyone who attended our Third Annual Client Conference on July 17 – 18 at the Roosevelt Hotel in New York City. We had a great time and hope that you all did as well. We look forward to you all joining us at our next year's client conference. Wishing you all the best, Brad Miller CEO, Perimeter Internetworking   Perimeter strives to stay on top of the market trends in security and is constantly altering its product and service suite to meet the needs of our customer base. When we look to add a new product or service or enhance an existing one, Perimeter always keeps the customer requests in mind. One of the best ways for Perimeter to ensure that we are meeting customer demands is through our feature request system. Perimeter has enabled access to our feature request system through the Viewpoint Web portal in efforts to allow customers to seamlessly submit requests for new product offerings. These requests are reviewed weekly by our product management team for submission into future product launches. The following are just some of the products that have benefited from customer feedback. Your input is greatly appreciated! Updated Services: Email Content Filtering: Due to high customer demand Perimeter is currently developing the ability to perform inspection of email attachments. Spam Filtering: Perimeter's addition of Sentient Profiling, based upon the principles of Bayesian (ba´ ze-en) filtering, enables us to look at the entirety of the email (Source, Headers, Subject, Body, HTML Code, word pairs, phrases – even colors) to determine if an email is SPAM or not. The end result is a higher percentage of SPAM caught and less in your inbox. Web Content Filtering: Perimeter is currently adding advanced reporting capabilities that will give subscribers better insight into user activity. In addition, Perimeter added two new premium groups (productivity and bandwidth) as add-on options for customers. New Services: Phishing and Pharming Protection: In addition to the numerous service enhancements, Perimeter answered customer concerns on the rising data theft in community banking sites with our Phishing and Pharming service suites. Customers can now leverage Perimeter's 24x7 Operations and Internet "honey pots" as an early warning system to stop attacks against your organization. For information about these or any of our other services, please contact your account manager or call us at 800-234-2175. The Sales Team closed 763 contracts which included new client contracts as well as additional contracts for existing clients. In Q2 we have added a new partner to Perimeter's Partner program.   The Bankers' Bank of Kentucky (BBKY) was chartered in 1988 and has been serving community banks for over 17 years. BBKY is the only locally-owned correspondent bank in Kentucky. BBKY provides all of the services of a large, regional correspondent bank but, with superior service and more competitive pricing. Therefore, BBKY can focus their efforts on what matters most to their community bank customers: quality correspondent bank services from a provider that will not compete for the bank's customers. For more information on The Bankers' Bank of Kentucy, visit www. bbky.com Join us every month as we continue our free webinar series. Each webinar will last 45-60 minutes. For more information about our upcoming webinars, please visit our website. Click Here for More Information   As we continue to grow our client base we increase our employment team accordingly. Each of our departments continues to expand and below you will find an update from the Vice Presidents of our departments. Deployment Group Update from Chuck Lynskey, VP of the Deployment Group The first and second quarter of 2006 have introduced a record number of new clients and infrastructure growth. To facilitate that growth, the Deployment Group continues to add new staff and improve our processes. Melissa Houck joined the Raleigh team as a Deployment Project Manager, Jr. in June of 2006. Melissa works with Craig Gill, Deployment Project Manager, in our Raleigh, NC office and we are excited to have her on our team and look forward to her contributions. Over the next month, we are moving forward on a few initiatives as we continuously look to streamline the Deployment process. One effort underway is to introduce our Viewpoint portal during the initial stages of Deployment. The goal is to place Deployment related forms and guidelines on the portal - available for download at the client's convenience. We will also include links to Webinars for training and service updates. These changes are due in part to feedback we have received from our clients. As always, we thank you for the continued opportunity to earn your trust each and every day and look forward to a very productive 3rd quarter. Engineering Update from Bill Knight, VP of Engineering Perimeter has added two new DNS server farms. One DNS load balanced server farm is located in each of our primary data centers (CT, NC). This will allow for customers to have their DNS records hosted in a fully redundant diverse environment.  In addition, Perimeter has also completed upgrades to our Spam Filtering: Whitelist Blacklist User sync Per user notification and/or admin notification for: banned attachment virus block spam block On/off spam deletion Setting of drop threshold Hourly reporting updates for spam, virus, phishing Coming soon: Perimeter will add a full mesh ring architecture that will increase the network redundancy of our Stamford, CT, Charlotte, NC and Raleigh, NC data centers.  New enhancements to our Anti-SPAM that will add quarantine functionality. Sales Team Update from Kathleen Roberge, Sr. VP of Sales Perimeter sales and marketing teams closed the first half of the year on a very successful note. Perimeter closed 763 contracts and added 550 new clients. This has exceeded Quarter 1 and Quarter 2 revenue forecasts by 130%. We are very excited about the amount of growth we have experienced the first half of the year! We would like to welcome all of our new clients who have joined the Perimeter family and we would also like to thank all of our existing clients who continue to support us by adding new services. Service Operations Center (SOC) Update from Gail Beauchemin, VP of the Command Center Robert McKernie, Sr. VP of Operations, & Jason McGinnis, VP of Security Operations This has been a very busy quarter for the Client Services Organization (CSO) with the ongoing integration efforts of our Seattle and Salt Lake City support centers. Preparations are being made to accommodate the customer's support call and monitoring in the Milford, CT Command Center. We look forward to working with the additional customer base. We have had a great deal of success increasing the skill sets and knowledge on both our primary Command Centers and Security Operations teams with our extensive cross training program. This initiative is designed to build stronger teams by combining the skills and talent across our support centers. As a result of this undertaking, we have strengthened our off-hour support by consolidating into the Raleigh office, which has lead to many new opportunities for our staff. There were quite a few system integration projects that we undertook this quarter, but the most significant was the integration and installation of the enhanced Call Center features of the ShoreTel phone system across the Command Centers and Regional Support centers. This gives us the ability to route calls more efficiently, minimizing the hold times. Additionally, the expanded reporting functionality of this new system provides more granular visibility into call volumes and trends, maximizing our ability to adapt our staffing capacity to best meet the needs of our customers. We can now take advantage of the more powerful monitoring functionality that comes with this system in training our new hires. Trainees will be able to listen to experienced analysts handling live customer calls giving trainees live customer service training. Finally, we have a new and improved Command Center fax number that you should be using going forward. Please direct your faxes to 203-651-1300. Once again, we would like to thank all of you who have taken the time to send us your feedback by responding to our surveys. We value each one of your opinions as we continually strive to improve our service to you. Customer Management Team Update from Maureen Kaplan, VP of Sales Management With the acquisition of Breakwater (Seattle) and ANE Technologies (Iowa) and Red Cliff Solutions (Utah), the Accounts Management Team has a greater reach into our client base than ever before. Our goal for this quarter has been to share our program with these new clients while sharing new Viewpoint reporting portal features to existing clients. We continue to focus our energy on developing stronger relationships with our customers while acting as a communication resource between our clients and the rest of the company. We are excited about the new opportunities to share our services to our clients, and welcome any suggestions on improving our communication to customers. Thank you for your continued interest in Perimeter Internetworking. What do you think? Let us know what you think about our newsletter by clicking here. We value your feedback.       Quarterly Service Highlight           Viewpoint Access Portal           This quarter we would like to hightlight our Viewpoint Access Portal which enables our clients to access real time account information. We've engineered Viewpoint to provide our clients with on-demand reporting for all constituents including management, technical personnel and regulators, providing each group with relevant information specific to their requirements and technical understanding. In addition to the security reports, clients can also view employee productivity and performance usage.         To learn more about our Viewpoint Access Portal, listen to our pre-recorded webinar (appr. 20 mins.) . Click Here To Listen Now       For information about these or any of our other services, please contact your account manager or call us at 800-234-2175.