RA'ANANA, Israel -- Emblaze Ltd. (Emblaze or the Group) announces the creation of Emblaze VCON Ltd following the merger of Emblaze Systems, a wholly-owned unit within the Group that provides delivery and management solutions for video over wireless IP networks, and VCON, a leading video communication systems company based in Israel.

Under the terms of the deal, Emblaze Systems will acquire VCON's assets, technologies, products, intellectual property and channel partner relationships while continuing to enhance and leverage its existing business. Emblaze will hold 70% of Emblaze VCON.

The acquisition does not involve any cash and will not impact on Emblaze's cash position, revenue and profit forecasts for the current year. Further, it will not result in any dilution of Emblaze shareholders interests.

The merger creates a new global force in the fast growing market for delivering next generation audio/video applications over IP and 3G wireless networks. Emblaze VCON will operate from Europe, US and Israel, with a total 70 employees. It will deliver significant synergy benefits by bringing together complementary products, technology, applications and distribution networks combining solutions for both the telecom and the enterprise markets.

The acquisition extends Emblaze's business in the fast growing world of video communications over IP, doubling its total addressable market and client base in the telecom arena and extending its reach to the global enterprise sectors selling unique management solutions over IP for medium to large organizations and businesses.

Emblaze is committed to continue VCON's operations with its global client base and partners and further increase the product and technology offering via this merger. The combined client base include the likes of Renault in France,

Italian government, WIND Telecommunications in Italy, Telstra in Australia, Optimus in Portugal, Orange Suisse, Orange Israel, Telekom Austria and many others. VCON's customers will find in Emblaze a dynamic group that understands the developments and the future needs of corporate customers and service providers in the video communication arena.

Emblaze Systems, provides frontline solutions and the backend systems to enable operators to deliver rich media services. These solutions comprise software and servers delivering a wide range of mobile applications for next generation services such as communications based services - rich media messaging, real-time video telephony and various person-to-person services involving rich media (chat, dating and others), entertainment and informational content services - live event broadcasts, on-demand (pull) content, and pushed content updates.

VCON's product portfolio comprises a suite of management systems for enterprise IP solutions including switching and conferencing in both audio and video. The solutions maximize performance over IP networks and facilitate interactive communications between multiple remote users.

Guy Bernstein, chief finance officer of Emblaze, said: "This acquisition is another major step by Emblaze to leverage its world-class IP and wireless technologies for delivering rich content to address new fast growing markets. We are confident that the merged business, spearheaded by Emblaze, will create significant shareholder value."

Emblaze Systems