Pilot Network Services Receives Notice of Redemption of Preferred Stock And Of Failure to Comply With Additional Nasdaq Listing Requirements

Apr 26, 2001, 01:00 ET from Pilot Network Services, Inc.

    ALAMEDA, Calif., April 26 /PRNewswire/ --
 Pilot Network Services, Inc.(R) (Nasdaq:   PILT), the first provider of highly
 secure, subscription-based e-business services, today announced that it has
 been notified by Nasdaq that Pilot currently fails to comply with Nasdaq's
 independent director and audit committee composition requirements.
     Due to previously announced resignations of two independent directors,
 Pilot is no longer in compliance with Nasdaq Marketplace Rules 4350(c) and
 4350(d)(2), which relate to independent director and audit committee
 composition requirements.
     Pilot's failure to comply with Nasdaq's independent director and audit
 committee composition requirements is scheduled to be addressed at an oral
 hearing before a Nasdaq Listing Qualifications Panel on May 11, 2001.  Pilot's
 previously announced non-compliance with Nasdaq's net tangible asset
 requirement will be addressed at the same hearing.  There can be no assurance
 that the decision of the Nasdaq Listing Qualifications Panel will be favorable
 to Pilot.
     Pilot also announced that it was notified today by Marshall Capital
 Management, Inc. that Marshall Capital claims that a mandatory redemption
 event has occurred under the terms of Pilot's outstanding Series A Preferred
 Stock.  Marshall Capital claims that the mandatory redemption event is the
 failure of the Company to pay to Marshall Capital a cash dividend on the
 Series A Preferred Stock.
     Pilot intends to contest the right of Marshall Capital to claim that the
 failure to pay a dividend in the Company's current financial circumstances
 constitutes a redemption event.  However, as previously announced, if Pilot's
 securities are delisted by the Nasdaq a mandatory redemption event would occur
 at that time.
 
     About Pilot Network Services, Inc.
     Pilot Network Services, Inc. is the first provider of highly secure,
 subscription-based e-business services.  As the Security Utility(TM) pioneer,
 Pilot enables secure e-business for companies of all sizes in every industry
 by providing a wide range of services with built-in security to protect
 enterprise networks. Pilot protected e-business services include secure
 hosting, Internet access and gateways, and extranet/VPN services.  Customers
 can choose options including encryption, authentication, access control, virus
 scanning, and web filtering.  Pilot provides the highest level of protection
 available today by connecting businesses to the Internet through Pilot
 Security Centers.  Protection from hackers, viruses, and other threats is
 built into the Pilot network with an advanced, distributed security
 architecture called the Pilot Heuristic Defense Infrastructure(TM) (HDI(TM)).
 The Pilot HDI combines the most advanced technology with 24 x 7 monitoring by
 security engineers to continually evolve and proactively defend Pilot clients'
 e-business interactions against attack.  Pilot can be reached at 888-40-PILOT
 or online at www.pilot.net and info@pilot.net.
 
 

SOURCE Pilot Network Services, Inc.
    ALAMEDA, Calif., April 26 /PRNewswire/ --
 Pilot Network Services, Inc.(R) (Nasdaq:   PILT), the first provider of highly
 secure, subscription-based e-business services, today announced that it has
 been notified by Nasdaq that Pilot currently fails to comply with Nasdaq's
 independent director and audit committee composition requirements.
     Due to previously announced resignations of two independent directors,
 Pilot is no longer in compliance with Nasdaq Marketplace Rules 4350(c) and
 4350(d)(2), which relate to independent director and audit committee
 composition requirements.
     Pilot's failure to comply with Nasdaq's independent director and audit
 committee composition requirements is scheduled to be addressed at an oral
 hearing before a Nasdaq Listing Qualifications Panel on May 11, 2001.  Pilot's
 previously announced non-compliance with Nasdaq's net tangible asset
 requirement will be addressed at the same hearing.  There can be no assurance
 that the decision of the Nasdaq Listing Qualifications Panel will be favorable
 to Pilot.
     Pilot also announced that it was notified today by Marshall Capital
 Management, Inc. that Marshall Capital claims that a mandatory redemption
 event has occurred under the terms of Pilot's outstanding Series A Preferred
 Stock.  Marshall Capital claims that the mandatory redemption event is the
 failure of the Company to pay to Marshall Capital a cash dividend on the
 Series A Preferred Stock.
     Pilot intends to contest the right of Marshall Capital to claim that the
 failure to pay a dividend in the Company's current financial circumstances
 constitutes a redemption event.  However, as previously announced, if Pilot's
 securities are delisted by the Nasdaq a mandatory redemption event would occur
 at that time.
 
     About Pilot Network Services, Inc.
     Pilot Network Services, Inc. is the first provider of highly secure,
 subscription-based e-business services.  As the Security Utility(TM) pioneer,
 Pilot enables secure e-business for companies of all sizes in every industry
 by providing a wide range of services with built-in security to protect
 enterprise networks. Pilot protected e-business services include secure
 hosting, Internet access and gateways, and extranet/VPN services.  Customers
 can choose options including encryption, authentication, access control, virus
 scanning, and web filtering.  Pilot provides the highest level of protection
 available today by connecting businesses to the Internet through Pilot
 Security Centers.  Protection from hackers, viruses, and other threats is
 built into the Pilot network with an advanced, distributed security
 architecture called the Pilot Heuristic Defense Infrastructure(TM) (HDI(TM)).
 The Pilot HDI combines the most advanced technology with 24 x 7 monitoring by
 security engineers to continually evolve and proactively defend Pilot clients'
 e-business interactions against attack.  Pilot can be reached at 888-40-PILOT
 or online at www.pilot.net and info@pilot.net.
 
 SOURCE  Pilot Network Services, Inc.