Arel Announces a $1.6 Million Contract for Deploying Arel's Integrated Conferencing Platform with One of Canada's Largest Retailers.

Business Editors/High-Tech Writers

ATLANTA--(BUSINESS WIRE)--Jan. 13, 2004

Arel Communications and Software (Nasdaq:ARLC)

-- Arel's Trend-Setting, Interactive Voice, Video and Data IP

Communication Technology Platform Continues to Gain Momentum

as the Choice Solution for Large-Scale Training and

Collaboration Retail Applications

Arel Communications and Software (Nasdaq:ARLC), technology leader in universal voice, video and data communication for interactive conferencing/collaboration and training applications, today announced that its Integrated Conferencing Platform(TM) (ICP) has been selected as the real-time conferencing and collaboration solution for one of Canada's largest retailers. The Canadian retailer will use Arel's advanced ICP technology to provide voice, video and data collaboration tools for educational and training services to more than 100,000 full-time and part-time employees.

"Being selected as the preferred solution for large-scale deployment of interactive training and conferencing applications by one of Canada's largest retailers follows on the heals of our recent win with The Kroger Company, whose initial deployment is to over one hundred Fred Meyer division multi-departmental stores," said Philippe Szwarc, CEO of Arel. "We are very pleased to see the growing demand for Arel's ICP technology in the retail sector. Our cost-effective and flexible platform for the secure delivery of voice, video, and data Web conferencing is easily optimized to enable retail, grocery and pharmaceutical distributors to improve productivity and gain operational efficiencies. By providing live and on-demand corporate training and collaboration capabilities nationwide to geographically dispersed employees working in distribution centers, merchandising and point-of-sale locations, retailers can improve their margins by increasing sales and lowering operating costs."

Arel's ICP technology, will allow the Canadian food distributor's employees to participate in interactive training and conferencing sessions on topics such as health and beauty, produce, sales strategies and customer service. Session participants from any store location throughout Canada can interact live with a presenter. Real-time sessions can be fully recorded and played back at any time as an on-demand event on a PC. Archives of participant interactions through live polling and testing are recorded in a centralized database for evaluation and assessment.

About Arel's Integrated Conferencing Platform Universal Conferencing Capabilities:

Arel's advanced architecture for converged IP networks provides universal voice, video and data Web communication for interactive training and conferencing/collaboration applications. The company's unique "unified media" technology enables synchronized real-time voice, video and data Web communication. In addition to providing universal capabilities across media types, ICP provides seamless interoperability with existing video conferencing, satellite-based distance training solutions and PSTN networks, protecting customers' previous infrastructure investments while offering a migration path towards IP convergence and new forms of collaboration. ICP provides a flexible user interface and extensive tools for rich-media content creation and distribution. ICP is also interoperable with other vendor solutions for the Content Distribution Network.

About Arel Communications and Software:

Arel Communications and Software is a technology leader in interactive Web communication, providing enterprises a universal conferencing solution architected from the ground up for synchronized, real-time voice, video and data communication. Designed to be an integral component of a company's overall IT strategy, Arel's scaleable, secure, and network friendly Integrated Conferencing Platform (ICP) is an on-premises software based solution that provides seamless integration with existing corporate network and knowledge base infrastructures. ICP conferencing/collaboration and training applications facilitate corporate communications, distance learning, customer relationship management, and other key marketing, business and R&D functions by allowing today's geographically dispersed teams to collaborate from anywhere through desktop systems, laptops or even wireless devices via Internet, Intranet or PSTN connections. www.arelcom.com.

Certain statements made herein that are not historical are forward-looking within the meaning of the Private Securities Litigation Reform Act of 1995. The words "estimate," "project," "intend," "expect," "believe," "hopeful" and similar expressions are intended to identify forward-looking statements. These forward-looking statements involve known and unknown risks and uncertainties. Many factors could cause the actual results, performance or achievements of the Company to be materially different from any future results, performance or achievements that may be expressed or implied by such forward-looking statements, including, among others, changes in general economic and business conditions, inability to maintain market acceptance to the Company's products, inability to timely develop and introduce new technologies, products and applications, rapid changes in the market for the Company's products, loss of market share and pressure on prices resulting from competition, introduction of competing products by other companies, inability to manage growth and expansion, loss of key partners, inability to attract and retain qualified personnel, inability to protect the Company's proprietary technology and risks associated with the Company's international operations and its location in Israel. For additional information regarding these and other risks and uncertainties associated with the Company's business, reference is made to the Company's reports filed from time-to-time with the Securities and Exchange Commission.

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