Lineo Receives $20 Million Investment

Strategic Embedded Industry Powerhouse Investors Include Sun Microsystems and Hitachi, Ltd.

SALT LAKE CITY — August 20, 2001 — Lineo®, Inc., the leading innovator in embedded systems and real-time computing, today announced the closing of a strategic investment round of $20 million, bringing the overall investment total in Lineo to $57 million.

“Investments by embedded industry powerhouses like Sun Microsystems and Hitachi demonstrate confidence in the continued success of Lineo's core business - combining open source and proprietary software and solutions,” said Bryan Sparks, CEO and chairman of Lineo, Inc. “To our knowledge, we are the only embedded Linux company that has recently received significant strategic investments. Our Q2 revenues place Lineo in the lead among embedded Linux companies.”

“Lineo and Sun share the goal of providing products and services built on open standards that offer rapid time-to-market and stability,” said Brian Sutphin, vice president of Strategic Investments for Sun Microsystems. “Lineo is addressing a key embedded systems market, and Sun is pleased to support Lineo's development of highly-available, real-time solutions for
that emerging market.”

Strategic investment dollars in this round of financing came from:

• Sun Microsystems www.sun.com
• Hitachi, Ltd. http://global.hitachi.com
• Canopy Group www.canopy.com
• Egan Managed Capital www.egancapital.com

Investment dollars received from this round are targeted at the continuing development of Lineo's market leading embedded tools, hard real-time embedded Linux, DSP support and vertical market solutions.

About Lineo, Inc.
Lineo®, Inc. provides Linux-based embedded systems real-time solutions that include software, hardware reference designs and professional services. Lineo's solutions allow OEMs to create devices and systems that interact with the Internet while helping OEMs to reduce system requirements, per-unit costs and time-to-market. The company's key product lines include: Embedix™ (embedded Linux system software), uClinux™ (embedded Linux for MMU-less processors), SecureEdge™ (Linux-based Internet appliances including VPN Internet routers, network attached storage and firewalls), RTXC™ (general purpose and DSP real-time operating system), BeaconSuite™ (x86 development toolkit)and RTXC™ Quadros™ (a real-time operating system for multi-processor devices). Contact Lineo at www.lineo.com, via e-mail to info@lineo.com or by calling (801) 426-5001.

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