EBIZ Enterprises Secures $7.1 Million Financing.

SCOTTSDALE, Ariz.--(BUSINESS WIRE)--Aug. 26, 1999--

EBIZ Enterprises, Inc. (OTC BB:EBIZ), a leading manufacturer and e-commerce distributor of value-priced computer systems announced today that it has completed the placement of a $7.1 million convertible debt facility with J.E. Matthew, L.L.C.

"We are pleased to have completed this funding which, we believe, will provide a solid capital base to facilitate growth of our operation, particularly our Linux based manufacturing division," said Jeffrey Rassas, the chief executive officer of EBIZ.

"We believe that this funding will enhance our ability to attract other capital, both debt and equity, in the near-term," added Stephen Herman, the president of EBIZ.

A spokesperson for J.E. Matthew stated, "We are very excited to provide financing for this young and exciting company as they capture what we see as an explosive and dynamic market opportunity."

The facility provided for the issuance of a Subordinated Convertible Debenture and Warrant. The Debenture is convertible into shares of EBIZ's common stock over an 18 month period. EBIZ has the right to redeem for cash any portion of the Debenture tendered if the conversion price is less than acceptable.

About EBIZ and The Linux Store

EBIZ Enterprises Inc., is a manufacturer and e-commerce distributor of computer systems that are Accelerating the Alternatives(TM) in personal and business computing.

These alternatives include their nationally recognized Element-L Systems(TM) (Linux-based, Internet-ready, multimedia workstations and servers), PIA (Debian-Linux based Personal Internet Appliance) and M2 Systems(TM) (Windows-based, Internet-ready multimedia PC's) which continue to re-define the low-cost pricing landscape.

These systems are distributed through strategic partnerships with key online players, including egghead.com (Nasdaq:EGGS); onsale.com (Nasdaq:ONSL); Yahoo.com (Nasdaq:YHOO) and others, as well as the company's web sites, thelinuxstore.com and ebizmart.com.

Thelinuxstore.com offers "Everything Linux" (TM), including notebook PCs, workstations, servers and Beowulf Supercomputer Clusters at the lowest possible price. The Linux Store is the value leader in the Linux market, furthering the vision of Linux being a low-cost, high performance alternative to conventional computing solutions.

About Linux

Linux is an open source operating system that was developed in 1991 by Linus Torvalds. It is fast becoming the alternative of choice for organizations looking for an alternative to the Microsoft dominance in operating systems. Linux is noted for its extremely low maintenance cost and stability. The Linux platform is known as a "non-crashing" operating system.

Users of Microsoft operating systems are quickly choosing the Linux alternative as a way to manage spiraling costs. Red Hat (Nasdaq:RHAT) one of the largest Linux distributions recently went public with a great deal of success, further supporting the emerging new Linux community.

The statements in this press release may contain forward looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Exchange Act of 1934 and are subject to the safe harbor created by these sections. Actual results could differ materially from those described herein as a result of certain factors and circumstances.