On May 18, 2007, Zanett, Inc. (the "Company"), together with its wholly-owned subsidiaries, Zanett Commercial Solutions, Inc. ("ZCS") and Paragon Dynamics, Inc. ("PDI" and together with the Company and ZCS, the "Borrowers"), entered into a First Amendment and Modification to Loan and Security Agreement and Other Loan Documents (the "Amendment") with LaSalle Bank National Association ("LaSalle"). The Amendment amends certain terms of the Loan and Securities Agreement dated December 21, 2006 between LaSalle and the Borrowers (the "Loan Agreement") and the Subordination Agreement dated December 21, 2006 between Bruno Guazzoni and LaSalle.

The Amendment limits the maximum revolving credit borrowings under the Loan Agreement to a principal amount of $8 million. The Amendment also modifies the fixed charge coverage ratio test and the senior debt ratio test required by the Loan Agreement. As amended, the Loan Agreement requires the Borrowers to maintain a fixed charge coverage ratio of not less than 1.0 to 1.0 for the three month period ending on December 31, 2006, not less than 0.77 to 1.0 for the six month period ending on March 31, 2007, not less than 0.76 to 1.0 for the nine month period ending on June 30, 2007, and not less than 1.1 to 1.0 for the twelve month period ending on September 30, 2007 and each twelve month period ending on the last day of each fiscal quarter thereafter. As amended, the Loan Agreement also requires the Borrowers to maintain a senior debt ratio of not greater than 3.0 to 1.0 for the three month period ending on December 31, 2006, not greater than 4.30 to 1.0 for the six month period ending March 31, 2007, not greater than 4.25 to 1.0 for the nine month period ending on June 30, 2007, not greater than 2.75 to 1.0 for the twelve month period ending on September 30, 2007, and not greater than 2.5 to 1.0 for the twelve month period ending on December 31, 2007 and each twelve month period ending on the last day of each fiscal quarter thereafter. As amended, the Loan Agreement also requires the Borrowers to maintain EBITDA of not less than $150,000 for the calendar month of May 2007, not less than $160,000 for the calendar month of June 2007, not less than $175,000 for the calendar month of July 2007, and not less than $180,000 for the calendar month of August and for each calendar month thereafter. The Amendment waives the EBITDA covenants for calendar months February, March, and April 2007.

The Amendment makes LIBOR rate borrowing unavailable under the Loan Agreement and changes the interest rate for Prime Rate borrowings under the Loan Agreement to the Prime Rate plus one percent. If the Borrowers meet the financial covenants contained in the original Loan Agreement (including the fixed charge coverage ratio test, the senior debt ratio test, and the monthly EBITDA requirements), and no Event of Default (as defined in the Loan Agreement) has occurred, LaSalle shall notify the Borrowers that future borrowings will bear interest based on the LIBOR rate in accordance with the Loan Agreement or at the Prime Rate plus zero percent.

The Amendment also contains certain representations, warranties, and covenants by the Borrowers and Bruno Guazzoni regarding the outstanding line of credit and loan extended by Mr. Guazzoni to the Borrowers.

As consideration for LaSalle entering into the Amendment, the Borrowers agreed to pay LaSalle an Amendment Fee of $10,000.

About Zanett, Inc

Zanett is an information technology ("IT") company that provides customized, mission-critical IT solutions to Fortune 500 corporations, mid-market companies, and classified government agencies involved in Homeland Defense and Homeland Security. The Company operates in two segments: Government Solutions and Commercial Solutions.

The Government Solutions segment specializes in providing advanced software and satellite engineering services with domain area expertise in the realm of classified geospatial data exploitation and representation as well as IT infrastructure related to Homeland Defense and Homeland Security.

The Commercial Solutions segment provides Management Consulting services and delivers custom business solutions that integrate and implement Oracle's full suite of product offerings - Oracle, JD Edwards, PeopleSoft, Seibel, together with associated Oracle Fusion technologies. A wide range of delivery expertise is provided to clients, including Managed Services, Business Intelligence, Web and Portal Development, and Middleware Technologies.

Zanett also provides full infrastructure and application hosting, utilizing both local resources and international resources, remote and onsite DBA support, all on a 24x7 basis.

Zanett currently employees over 210 people nationwide and is headquartered in New York City, with offices in Boston, Cincinnati, Detroit, Indianapolis, Jacksonville, Philippines, and Denver. Founded in 2000, Zanett is listed on the NASDAQ Capital Market under the symbol ZANE.

Contact:
BPC Financial Marketing for Zanett
John Baldissera
Tel: 800-368-1217

Certain statements in this news release regarding projected results of operations or, projected results of financial plans or future strategies and initiatives, including, but not limited to, projections of revenue, projections of profitability, any and all future expectation, and plans for future activities may and should be regarded as "forward-looking statements" within the meaning of the Securities Litigation Reform Act. These statements involve, among other things, known and unknown risks, uncertainties and other factors that may cause Zanett, Inc.'s actual results, levels of activity, performance or achievements to be materially different from any future results, levels of activity, performance or achievements expressed or implied by such forward-looking statements. Zanett currently is considering, but in reality may or may not in the future implement any or all of the items and issues listed in any planned budget or strategic initiative, due to, among other things, known and unknown risks, uncertainties and other factors.

Circumstances do change, and if and when the landscape changes, Zanett shall endeavor to remain as flexible as possible, and adjust its strategy accordingly. Zanett, Inc. undertakes no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events, change in strategy, or otherwise. The abovementioned listing of risks and uncertainties is not inclusive. For a more detailed discussion of some, but not all, of the risks and uncertainties that may affect Zanett, Inc., see Zanett, Inc.'s filings with the Securities and Exchange Commission, including its Annual Report on Form 10-KSB, as amended, for the year ended December 31, 2006 and its Quarterly Report on Form 10-QSB for the quarter ended March 31 2005, June 30, 2005 and September 31, 2005.

Neither Zanett, Inc. nor Zanett Oracle Solutions is a part of, a division of, nor a subsidiary of, nor in any other manner connected with, Oracle, Inc, and no implication is made what-so-ever to suggest as such.