Funding Secured By Merlin

Burnaby, BC - August 29, 2001 - Merlin Software Technologies International, Inc. (OTCBB: MLSW) today announced that SDS Merchant Fund, LP continues to fund its ongoing operations. SDS Merchant Fund is a private equity fund based in Connecticut that specializes in providing financing to growing small to mid-capitalization companies. SDS Merchant Fund has provided Merlin with funds totaling more than $758,000 to date including $298,000 received in connection with the convertible debenture, which closed August 18, 2000.

Steve Derby, Fund Manager of SDS Merchant Fund, stated, "SDS remains enthusiastic about the innovative products, as well as the management, of Merlin. Recently developed new products, as well as the recent additions to management, appear promising. As with most SDS Merchant Fund investments, we anticipate continuing our interest in Merlin over an extended period of time."

"Steve Derby and SDS Capital Partners have been extremely supportive," said Robert Heller, President and CEO of MERLIN. "This additional commitment to Merlin, coming as it does at a time when capital markets and the high tech sector are as weak as they are, is a tremendous endorsement of our strategic direction and the ability of our team, at all levels, to execute."

Merlin is launching its EssentialServer product on September 5, 2001. EssentialServer is targeted at the data storage, backup and recovery needs of small to medium-sized enterprises. International Data Corporation estimates the appliance server market will grow at a compounded annual rate of more than 56%, reaching $31.4 billion in revenue by 2005. Of this figure, it is estimated that network attached storage will account for approximately 55%, or $17.27 billion.

About MERLIN Software Technologies International, Inc.

Merlin Software Technologies International, Inc. (OTCBB: MLSW) develops technology solutions for small to medium-sized enterprises. Merlin has developed widely used applications such as PerfectBackUP+ 7.0 and CommunicadoFAX 4.0 for Microsoft Windows, Apple Macintosh, Netware, RedHat, and other versions of Linux and Unix. Merlin is leveraging these products to deliver new and more powerful network attached solutions to its customers.

Merlin recently announced EssentialServer, a new line of network attached storage appliances that meet the needs of small to medium-sized enterprises, with 1-100 employees. EssentialServer addresses the two biggest challenges in managing a company's information, scaling data storage capacity as digital files grow, and protecting a business from financial and legal disaster that arises from the loss of important information. EssentialServer is a perfect fit for a small business, regional office, or corporate department.

Merlin has offices in Burnaby, British Columbia and Seattle, Washington. Website: http://www.merlintechnologies.com/

For more information, contact:

Randy Halischuk Director, Investor Relations MERLIN Software Technologies International, Inc. Tel: (604) 320-7227 Toll Free: (877) 988-7227 Email: ir@merlintechnologies.com

Sarah Jane Ormerod Director, Corporate and Marketing Communications MERLIN Software Technologies International, Inc. Tel: (604) 320-7227 Toll Free: (877) 988-7227 Email: sjormerod@merlinsoftech.com

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