Arel Communications & Software Finalizes Acquisition of W2COM, A Leading US Distance Learning Provider.

YAVNE, Israel--(BUSINESS WIRE)--Aug. 10, 2000

Arel Closes Deal to Acquire Substantially all of the Assets of W2COM 

Arel Communications and Software Ltd. (Nasdaq:ARLCF), the world's leading provider of end-to-end Interactive Distance Learning (IDL) systems, today announced that it has finalized its acquisition of W2COM, LLC, a privately held limited liability company, based in Dayton, Ohio, and a major provider of Interactive Videoconferencing, Data & Network Integration Services and Distance Learning Services.

The formation of this new company further strengthens Arel's strategic penetration into the Distance Learning market by significantly enlarging Arel's sales and marketing force, and providing new and enhanced services in addition to it's current offering of best-of-breed interactive technologies.

Under the terms of the agreement, Arel acquired substantially all of the assets of W2COM in exchange for 3,681,818 newly issued ordinary shares of Arel out of 14,536,672 outstanding shares (including certain options and warrant), in addition to $2.25 million in cash. The Arel shares issued at the closing are subject to an eighteen month lock-up period.

"We are extremely pleased to have finalized the acquisition of W2COM, which will ensure that our newly formed company makes a dramatic impact on the e-learning market in North America," stated Izhak Gross, Chief Executive Officer of Arel Communications and Software. "With a major presence in 12 locations across the USA, W2COM enables Arel to continue its rapid expansion into many different markets and extend its offering by providing high quality content and services in key areas such as: business-to-business, healthcare and K-12 education," added Mr. Gross. "This acquisition significantly increases Arel's marketing, sales and technology force, and will ensure that Arel continues to deliver high-quality leading solutions and services to our customers. The synergy created by the merging of these two companies will ensure that Arel continues to offer more services and new technologies in the future." Mitchell Jones, founder and Chief Executive Officer of W2COM, stated "By bringing Arel's world class e-Learning solutions to our extensive nationwide customer base and combining the knowledge capital and depth of experience of both our workforces, we believe that this transaction will propel the new joint company to the forefront of the e-learning markets." Mr. Jones added, "Our mission is to provide comprehensive learning solutions that enable organizations to improve their business results by providing cost effective rapid knowledge transfer, using synchronous and asynchronous methods through Internet-based e-learning. We now have the tools, services, technologies and manpower to provide the best end-to-end solution to the Corporate, Education, Enterprise Training and Healthcare market segments."

About W2COM

W2COM is an applications-driven communications provider of Interactive Video, Data & Network Integration Services, and Distance Learning Services. W2COM provides comprehensive sole-source communications solutions to Education, Business-to-Business and Healthcare companies worldwide. The company is headquartered in Dayton, Ohio and has locations in Cincinnati, Columbus, Cleveland, OH; Grand Rapids and Detroit, MI; Indianapolis, IN; Chicago, IL; St. Louis, MO; Minneapolis, MN; Dallas, TX; and Oklahoma City, OK. For more information, please call W2COM at 877/4W2COM4 or visit the company's web site at www.w2com.com.

About Arel Communications and Software Ltd.

Arel Communications and Software, Ltd., Yavne, Israel and its Atlanta-based U.S. subsidiary, Arel Communications and Software, Inc., (www.arel.net) market the IDEAL family of interactive distance learning and e-Training products, including its innovative PC-based Spotlight application. IDEAL is a fully integrated, enterprise-wide, scalable e-Training solution that delivers live, interactive training and corporate communications. Arel Spotlight is a browser-based application that offers both on-line (synchronous) and off-line (asynchronous) learning on a single platform. Powered by Arel's IDEAL engine, the Spotlight is the ultimate end-to-end e-learning system, integrating authoring and management tools, interactive delivery, evaluation, analysis, tracking and reporting.

Arel IDEAL(TM) and Arel Spotlight(TM) are trademarks of Arel Communications and Software. All other trade names are the properties of their respective owners.

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 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.