In connection with the preparation of Amendment No. 4 (the “Amendment”) to the Registration Statement on Form S-4 related to the Agreement and Plan of Merger (the “Merger Agreement”), dated as of October 26, 2005, as amended, by and among Sand Hill IT Security Acquisition Corp. (the “Company”), St. Bernard Software, Inc. (“St. Bernard”) and Sand Hill Merger Corp., the Company, in consultation with its independent registered accounting firm, Hein & Associates LLP (“Hein”), determined that it needed to reclassify certain amounts in its financial statements to report the warrants issued as part of the units in the Company’s initial public offering as a liability. This issue arose as a result of a comment received from the Securities and Exchange Commission in connection with the preparation of the Amendment and Hein based its conclusions upon recent interpretations of the accounting for warrants issued as part of units under Emerging Issues Task Force (“EITF”) No. 00-19, “Accounting for Derivative Financial Instruments Indexed to, and Potentially Settled in, a Company’s Own Stock” (“EITF No. 00-19”).

Under EITF No. 00-19, the fair value of the warrants issued as part of the units sold in the Company’s initial public offering should be reported as a liability. The warrant agreement provides for the Company to register the shares underlying the warrants and is silent as to if a penalty is to be incurred in the absence of the Company’s ability to deliver registered shares to the warrant holders upon warrant exercise. Under EITF No. 00-19, registration of the issuance of the common stock underlying the warrants is not within the Company’s control. As a result, the Company must assume that it could be required to settle the warrants on a net-cash basis, thereby necessitating the treatment of the potential settlement obligation as a liability. Further, EITF No. 00-19 requires the Company to record the potential settlement obligation at each reporting date using the current estimated fair value of the warrants, with any changes being recorded through its statement of operations. The potential settlement obligation will continue to be reported as a liability until such time as the warrants are exercised, expire, or the Company is otherwise able to modify the registration requirements in the warrant agreement to remove the provisions which require this treatment. The fair value of the warrant liability at July 30, 2004 (date of issuance), December 31, 2004, December 31, 2005 and March 31, 2006 was $5,343,000, $5,343,000, $6,419,820 and $7,315,800, respectively. The fair value of the warrants was determined by the trading value of the securities on the last day of each period. Amounts reported as warrant liability expense in the accompanying statement of operations resulting from the change in valuation of the warrant liability was $0, $1,076,820 and $895,980 for 2004, 2005 and the quarterly period ended March 31, 2006, respectively. The Company had previously issued financial statements which did not present the warrant liability. Accordingly, the financial statements contained within the Company’s Form 10-QSB for the period ended March 31, 2006, Form 10-KSB for the fiscal year ended December 31, 2005, Form 10-QSB for the period ended September 30, 2005, Form 10-QSB for the period ended June 30, 2005, Form 10-QSB for the period ended March 31, 2005, Form 10-KSB for the fiscal year ended December 31, 2004 and Form 10-QSB for the period ended September 30, 2004 should no longer be relied upon.

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