August 29, 2001 - San Francisco, CA - Xandros Corporation today announced that it has signed a strategic licensing agreement with Corel Corporation, giving it access to Corel's Linux desktop OS and related technologies. The newly formed company will focus on developing the desktop and server markets with assistance from its founding parent, Linux Global Partners.

Xandros has secured a $10 million capital commitment from NY-based Linux Global Partners, a Linux-specific investment company with financial holdings in several key desktop application companies. The new company will be headquartered in Ottawa, Canada and has already retained a majority of the original software architects of the award-winning Corel Linux operating system.

"Xandros combines the best of open source technologies with a corporate attention to completeness, usability, and support to benefit the end user," said Michael A. Bego, president of Xandros. "We believe Xandros has all the elements necessary to deliver an outstanding desktop experience to customers," Bego added.

Bego explained that the resulting combination of technology and usability would provide an easy-to-install and easy-to-use solution. This positions Xandros as a viable alternative to the Windows operating system and also marks the first end-to-end Linux desktop that will better meet the needs of its current users as well as potential users.

The Xandros distribution is scheduled for release in the coming months and retail for a fraction of the cost of the comparable Windows OS and applications. Bego said that the software will ship with a full suite of productivity tools, ISP providers, and the variety of drivers, and applications that users need and expect. In addition, Xandros officials see great promise in that the applications contained within the Linux Global Partners' portfolio companies currently ship with 62 percent of the Linux computers sold today and have significant recognition with users.

"For the past three years, before Linux was a common name, we were identifying and financially supporting the leading Linux desktop application companies in development," said Wm. J. Roseman, co-chairman of Linux Global Partners. "We are now working to incorporate our portfolio companies into the Xandros OS which will provide a complete desktop application for Linux."

"Today's announcement represents the start of a new chapter for Corel's Linux desktop and fulfills a promise Corel made earlier this year when we announced our intention to spin off the Linux distribution component of our business," said Rene Schmidt, chief technology officer at Corel Corporation. " We are pleased to entrust this technology to a company which is fully dedicated to delivering an end-to-end solution to customers.

We believe this decision is in the best interests of customers and shareholders since it allows Xandros to carry the technology forward and, in turn, allows Corel to maintain its singular focus on an aggressive new growth strategy announced in January of this year."

Under the terms of the deal, Corel will receive an undisclosed amount of cash along with a 5 percent equity stake in Xandros and a 2 percent equity stake in Linux Global Partners. Xandros will have unlimited rights of use to the Corel Linux desktop OS and related technologies for a period of eighteen months.

About Xandros

Xandros is creating a desktop solution that will combine the best of open source technologies with a corporate attention to completeness, usability, and support. It is based on v3.0 of the award-winning Corel Linux OS and represents the next step in the evolution of the desktop. Furthermore, Xandros will be unveiling server and enterprise management solutions in 2002.

Based in Ottawa, the Xandros team includes the world-renowned developers and architects of the award-winning Corel Linux OS. The first release of Xandros' desktop will come in early 2002. Xandros is inheriting a sizeable user base from Corel Linux OS from which it plans on significantly expanding its market presence. Xandros is currently developing its direct and indirect distribution channels for corporate, government, home, and educational users worldwide.