Pretty Good Privacy, Inc. Acquires Lemcom Systems and its Wholly Owned Subsidiary, ViaCrypt

Acquisition Seen as Building Block of PGP as a Corporate Entity

Allows Company to Obtain Control of PGP License

REDWOOD SHORES, Calif.--(BUSINESS WIRE)--July 1, 1996--Pretty Good Privacy, Inc. (PGP), a provider of encryption products used to privately exchange digital information, today announced the company has acquired Lemcom Systems, Inc., Phoenix, Ariz., effective immediately. The acquisition includes Lemcom's wholly owned subsidiary, ViaCrypt, which markets commercial versions of PGP's electronic mail (e-mail) encryption software.

The deal allows PGP to obtain control over existing ViaCrypt licensing agreements. It also allows PGP to ensure products sold with the PGP brand name conform to consistent technical guidelines and deliver a high level of privacy throughout its product family.

"Combining the strengths of these two companies gives PGP a commercial presence immediately, with a current revenue stream and an existing infrastructure to build on," said Tom Steding, president and chief executive officer (CEO), PGP.

"PGP has a core competence in cryptographic technologies, as well as product design and product evolution. Adding ViaCrypt's operations and sales capabilities to the corporate mix, we can accelerate the time to market of PGP's planned commercial business and personal products by six to nine months," he said.

Customers Will Benefit From Acquisition

The ViaCrypt product offerings will fold into forthcoming commercial releases of PGP's product family. Future products will include additional features, functionality and new hash algorithms for stronger digital signatures.

PGP will continue to sell modified versions of ViaCrypt's products. Customers who purchase the ViaCrypt product now will receive free product upgrades to the company's new commercial versions, which are expected to be released this Fall.

All of the 17 Lemcom and ViaCrypt employees will remain at the Phoenix facility.

PGP to Honor Support Contracts with Existing Lemcom Customers

PGP's acquisition also includes a Lemcom business unit for IBM front-end processors. Started in 1976, Lemcom's core business is manufacturing communication controllers which attach to IBM mainframes.

PGP plans to honor Lemcom's existing front-end processor agreements, and expects to continue operations supporting this group from Phoenix.

History of PGP and Lemcom Relationship

Lemcom's ViaCrypt subsidiary markets commercial versions of PGP's encryption software. In the summer of 1993, ViaCrypt licensed the software from PGP creator and privacy rights activist Philip Zimmermann.

By that time, PGP's encryption software had already been available as freeware on the Internet for two years, and had amassed a loyal, global following of millions of users in more than 50 countries who were using it to encrypt their e-mail messages. These early adopters who downloaded the freeware had to tolerate a not-so-user-friendly command line interface.

ViaCrypt began selling personal versions of PGP encryption product in November 1993. A graphical user interface was added in August, 1994, and a business-oriented version was recently released in April, 1996. For the first three quarters of ViaCrypt's fiscal year, just ended June, 1996, PGP product sales accounted for more than $1 million of revenue.

About PGP, Inc.

PGP incorporated in March, 1996 with the mission to become a leading provider of encryption products for secure communications and storage of data. Its original product, Pretty Good Privacy (PGP), was distributed as freeware by Zimmermann in 1991, which, for the first time, allowed individuals to send information without interception.

PGP's e-mail product is now the de facto standard for Internet mail encryption, growing to a rate of 900 downloads of freeware per day from the Massachusetts Institute of Technology (MIT), which is just one of many server sites throughout the country that distribute it.

The company plans to commercialize the PGP family for end users, corporations and original equipment manufacturers (OEMs), providing a full range of encryption solutions for e-mail exchange, telephony and voice communications, data storage, fax, image and video. The company will continue its legacy of PGP freeware distribution.

PGP, Inc. is headquartered in Redwood Shores, Calif., and can be reached at 415.631.1747;;; and PGP's freeware versions can be obtained from the MIT distribution site:

Note to Editors: PGP and Pretty Good are registered trademarks of PGP, Inc. Pretty Good Privacy is a trademark of PGP, Inc.