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Terrace Tech Boosts Email Protection Appliance with Commtouch Technology

Real-time Spam Blocking and Zero-Hour Virus Outbreak Protection are Latest Tools for Korean Mail Security Leader

Mountain View, Calif. and Seoul -- Korea's leading anti-spam vendor, Terrace Technologies Inc., announced today that it has integrated Commtouch’s (Nasdaq: CTCH) Zero-Hour™ virus protection and real-time spam blocking capabilities into its SpamWatcher e-mail protection solution.

Terrace Tech selected Commtouch technology because of its superior detection rate and low number of errors, or false positives, after spending several months testing various anti-spam solutions. Because Commtouch's Recurrent Pattern Detection™ engine is language-independent, it gives Terrace Tech an edge over other, content filter-based spam blockers.

Terrace Tech's SpamWatcher appliance protects e-mail from spam, viruses, and worms, while securing the mail server and preventing internal information leaks. SpamWatcher boasts high success and accuracy rates. The company's top performance has attracted most of the Internet Service Provider and telecom carrier customers in Korea, and enterprise customers such as Samsung Group, LG Electronics, Hyundai Motors, among many others.

Commtouch's RPD™ engine offers real time spam blocking and Zero-Hour virus protection without having to rely on specific signature or content-based filters. As such, harmful and unwanted messages are blocked as soon as they appear -- long before traditional anti-virus signatures or spam-blocking rules become available.

"The Commtouch anti-spam technology met and exceeded all of our expectations," Seungyong Ji, Terrace Tech's Executive Vice President, said. "The solution is the best fit for our customers, especially since it proves most effective in screening email containing double-byte Asian language characters. Commtouch also offers protection against all the latest trends in spamming, such as image-based spam, that other filters can't catch."

Commtouch Vice President of Business Development Ronni Zehavi said: "Our business development focus on the Asia-Pacific market is bearing fruit; this noteworthy alliance with Terrace Tech marks Commtouch's fifth OEM agreement signed in the region in less than a year and we are confident it won't be the last. Activity in this region will be an important component of Commtouch’s growth for 2007.”

About Terrace Tech
Terrace Technologies Inc. aims to play a vital role in providing Korea and Japan with an Internet-based technological edge, and has positioned itself as Korea's leader in Internet messaging and e-mail security solutions in just six years since its incorporation. Terrace Tech comes to the market with rich know-how, gained by developing, building, and operating Korea's first Internet-based e-mail system. As E-mail use in Korea increased dramatically, Terrace developed the Mail Transfer Agent (MTA) to handle large volumes e-mail traffic with speed and stability. For its e-mail customers, Terrace Tech's SpamWatcher solution protects 50 million mailboxes and transacts 7 billion messages every month. For more information, see: www.terracetech.com.

About Commtouch
Commtouch Software Ltd. (NASDAQ: CTCH) is dedicated to protecting and preserving the integrity of the world's most important communications tool -- email. Commtouch has over 15 years of experience developing messaging software and is a global developer and provider of proprietary anti-spam and Zero-Hour virus protection solutions. Using core technologies including RPD (Recurrent Pattern Detection™), the Commtouch Detection Center analyzes billions of email messages per month to identify new spam and malware outbreaks within minutes of their introduction into the Internet. Integrated by more than 40 OEM partners, Commtouch technology protects thousands of organizations, with over 50 million users in over 100 countries. Commtouch is headquartered in Netanya, Israel, and has a subsidiary in Mountain View, CA. For more information, see: www.commtouch.com, including the Commtouch online lab detailing spam statistics and charts.

This press release contains forward-looking statements, including projections about our business, within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. For example, statements in the future tense, and statements including words such as "expect," "plan," "estimate," "anticipate," or "believe" are forward-looking statements. These statements are based on information available to us at the time of the release; we assume no obligation to update any of them. The statements in this release are not guarantees of future performance and actual results could differ materially from our current expectations as a result of numerous factors, including business conditions and growth or deterioration in the Internet market, commerce and the general economy, both domestic as well as international; fewer than expected new-partner relationships; competitive factors, including pricing pressures; technological developments, and products offered by competitors; the ability of our OEM partners to successfully penetrate markets with products integrated with Commtouch technology; a slower than expected acceptance rate for real time AV solutions in general and the Commtouch Zero-Hour(TM) Virus Protection product in particular; availability of qualified staff for expansion; technological difficulties and resource constraints encountered in developing new products; and the failure of Commtouch to meet The Nasdaq Capital Market's listing standards in the future, as well as those risks described in the text of this press release and the company's Annual Reports on Form 20-F and reports on Form 6-K, which are available through www.sec.gov.

Recurrent Pattern Detection, RPD and Zero-Hour are trademarks, and Commtouch is a registered trademark, of Commtouch Software Ltd. U.S. Patent No. 6,330,590 is owned by Commtouch.

Contact:
Rebecca Steinberg Herson
US: +650-864-2112
Int’l: +972-9-863-6877
rebeccah@commtouch.com