July 12, 2004
Commtouch Successfully Closes Previously Announced Private Placement

MOUNTAIN VIEW, Calif.--(BUSINESS WIRE)--July 12, 2004--Commtouch (Nasdaq:CTCHC), the innovator of anti-spam solutions featuring Recurrent Pattern Detection (RPD)(TM) technology, was pleased to announce that after achieving all closing conditions relating to the previously announced private placement of May 18, 2004, it successfully closed the private placement and received $3.9 million dollars from the participating investors.

The company anticipates that, with the receipt of the $3.9 million funding and filing today of a Form 6-K with the SEC reflecting the change in shareholders' equity as a result of this financing, it will meet the first criterion for continued Nasdaq listing on The SmallCap Market, as detailed in the company's press release of June 29, 2004.

"We view the closing of this round, along with the continued growth of our anti-spam business during the second quarter, as further validation of our go-to-market strategy," noted Gideon Mantel, CEO of Commtouch. "We will dedicate a portion of this funding to enhancing marketing and sales efforts in our push towards capturing greater market share."

The company also announced that, as of today's date, it has 42,494,607 ordinary shares outstanding.

About Commtouch

Commtouch Software Ltd. is a global developer and provider of proprietary anti-spam solutions featuring Recurrent Pattern Detection (RPD) technology. Its mission is to protect and preserve the integrity of the world's most important communications tool -- email. The company's core technologies reflect its 13 years of experience as a leading vendor of email software applications and provider of global messaging services. Commtouch's patent-pending technologies are employed in solutions that are sold through channels and resellers. In addition, Commtouch anti-spam technologies are incorporated in software applications of security and messaging OEMs. Commtouch is headquartered in Netanya, Israel and its subsidiary, Commtouch Inc., is based in Mountain View, CA. The company was founded in 1991 and has been publicly traded since 1999 (Nasdaq:CTCHC - News). To learn more about Commtouch visit http://www.commtouch.com

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