Calipso, Inc. Signs Agreement and Plan of Merger With Knowledge Foundations, Inc.

Business Editors

POWAY, Calif.--(BUSINESS WIRE)--Aug. 11, 2000

Calipso, Inc. (OTCBB:CPSJ) and Knowledge Foundations, Inc. ("KFI") announced today that Calipso has executed an Agreement and Plan of Merger (the "Merger Agreement") with Knowledge Foundations, Inc.

Pursuant to the Merger Agreement, CPSJ will issue 33,918,400 shares of its 144-restricted common stock in exchange for 100% of KFI's outstanding common stock. The merger will be a tax-free reorganization accounted for as a purchase whereby CPSJ will be the surviving corporation and change its name to Knowledge Foundations, Inc. The merger is subject to regulatory review, stockholder notification and the satisfaction of other customary conditions. Holders of a majority of CPSJ's shares have already voted in favor of the transaction. The merger is anticipated to close September 12, 2000.

KFI holds the rights to a breakthrough technology for "knowledge-based computing" software. More detailed information about KFI's technology and its applications is expected on merger approval.

CPSJ plans to file with the Securities and Exchange Commission ("SEC") a Definitive Information Statement in connection with the merger and mail the Definitive Information Statement to its stockholders of record. The Definitive Information Statement will contain important information about CPSJ, KFI, the merger, and related matters that should be considered by stockholders before making any decision regarding the merger and related transactions. Stockholders of CPSJ are urged to read the Definitive Information Statement when it is filed and any other relevant documents filed with the SEC. Once it is filed with the SEC, the Definitive Information Statement and other documents will be available free of charge on the SEC's web site at www.sec.gov. In addition to the Definitive Information Statement, CPSJ files annual, quarterly and special reports and other information with the SEC that are also available free of charge at the SEC's web site.

Safe Harbor Statement: The statements in this press release regarding the expected date of closing of the merger, benefits of the merger, tax and accounting treatment of the merger, future opportunities, and any other effect, result or aspect of the proposed transaction, and any other statements which are not historical facts, are forward looking statements. Such statements involve risks and uncertainties including, but not limited to, costs and difficulties related to the integration of acquired businesses, costs, delays, and any other difficulties related to the merger, failure of the parties to satisfy closing conditions, risks and effects of legal and administrative proceedings and governmental regulation, future financial and operational results, competition, general economic conditions, and the ability to manage and continue growth. Should one or more of these risks or uncertainties materialize, or should underlying assumptions prove incorrect, actual outcomes may vary materially from those indicated. We undertake no obligation to revise or update such statements to reflect current events or circumstances after the date hereof or to reflect the occurrence of unanticipated events.