Press Release

FOR IMMEDIATE RELEASE

DIGITAL RIVER REPORTS RECORD SALES FOR THIRD QUARTER
AND NINE MONTHS

MINNEAPOLIS, Oct. 20 -- In its first disclosure of quarterly results since its initial public offering in August, Digital River, Inc., (Nasdaq:DRIV) today reported more than an eightfold increase in third-quarter sales from the third quarter last year, and a 65-percent increase from this year's second quarter.

Digital River's sales were $5,758,000 for the quarter ended Sept. 30, 1998, compared with $683,000 in the third quarter of 1997. The company's net loss for this year's third quarter was $3,940,000, or 26 cents per share, compared with a net loss of $922,000, or 11 cents per share, in the same period last year.

For the nine months ended Sept. 30, 1998, sales were $11,504,000, more than a tenfold increase from $1,144,000 in the first nine months of 1997. The net loss was $9,292,000, or 74 cents per share, this year vs. a net loss of $2,098,000, or 30 cents per share for the first nine months of 1997.

Said CEO Joel Ronning: "Digital River is the leading provider of electronic commerce outsourcing solutions for the sale of software over the Internet. We believe that we have become the market leader in one of the most compelling shifts of retail sales to the Internet -- the digital download of software products directly to the desktop.

"Our business strategy of pursuing outsourcing relationships with software publishers and online retailers is proving to be successful, and we continue to aggressively add new clients and grow sales off of our existing sites. During the quarter, an additional 187 software publishers and 416 online retailers have chosen to outsource with Digital River, bringing our total number of clients to 2,071. With these contracts we added more than 8,000 products to our vast product library, giving us more than 131,000 total products - 24,000 of which are software applications."

Perry Steiner, president, said, "The power of Digital River's network continues to increase. We are unique because we manage Web stores on behalf of our clients and sell our publishers' products through our network of retailers. As an enabler, we have the opportunity to grow our sales in two ways - by increasing sales through our existing client base and through adding new publisher and retailing clients. The combination of publishers and retailers in the Digital River network creates a compounding effect.

"We have processed transactions for 213,000 unique consumers through Sept. 30, with 40 percent of the consumers coming in the third quarter, and our consumer database continues to grow rapidly." "We are making investments in infrastructure and new product initiatives that will further leverage the market leadership position we have in software deliver over the Internet," Ronning added. "Industry analyst Jupiter Communications has said that it expects online software sales to reach $2.3 billion by the year 2002 as software sales migrate to the Internet. Digital River is well positioned to exploit this market opportunity."

Digital River, based in Minneapolis, offers the world's largest online database of software products. The company has contracted with more than 2,000 software publishers and online retailers to provide its proprietary technology for Internet delivery of more than 131,000 software and other digital products. Tech Squared Inc. (OTC Bulletin Board:TSQD) controls 19 percent of Digital River's common stock. For more information, visit the Digital River Web site at http://www.digitalriver.com.

Except for the historical information contained herein, this press release contains forward-looking statements, including statements containing the words, "believes," "anticipates," "expects" and similar words. Such forward-looking statements involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of the Company, or industry results, to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. Such factors include, among others: the Company's limited operating history and variability of operating results; market acceptance of electronic software delivery; the Company's ability to maintain relationships with software publishers and online retailers; competition in the electronic commerce market; and other risk factors referenced in the Company's public filings with the Securities and Exchange Commission.

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