LAVA Systems, Inc. Acquires UK Software Distributor SCS Consulting Limited

Toronto, ON - 1997-08-18 - LAVA Systems, Inc. (TSE:LVA), Canadian based developer and distributor of information management software announced today that it has agreed to acquire all the outstanding shares of privately owned SCS Consulting, Limited of Southampton, England.

The purchase is to be completed on the basis of a share exchange and is valued at C$12,200,000. LAVA, subject to regulatory approval, will issue an additional 4,864,720 common shares to complete the purchase. LAVA currently has approximately 19.9 million common shares outstanding. Upon completion of the purchase, SCS will become a wholly owned subsidiary of LAVA. LAVA indicated that over time SCS operations will be amalgamated with LAVA's current UK subsidiary.

SCS develops and distributes products used in insurance and financial services industry operations. LAVA Systems will immediately begin distribution of SCS's products through its worldwide partnership network. Peter Hamilton, president and CEO of LAVA Systems Inc. said: "The acquisition of SCS is an important development for LAVA because it provides LAVA with further product focus for a key business sector into which LAVA has already made important inroads."

Robert Terry, SCS's Managing Director added: "Joining LAVA will allow SCS's products to be made available to companies that have operations worldwide through LAVA's rapidly expanding business partner network." Peter Hamilton also indicated that, "The acquisition of SCS dramatically strengthens LAVA's presence in the UK marketplace and provides a significant opportunity to expand into continental Europe." Both executives indicated that LAVA's products would be rapidly integrated to offer full document production and business case management for labour intensive operations such as call centres and insurance policy production.

SCS Consulting Limited had revenues of 3.6 million UK pounds in the twelve month period ended July 31, 1997 with profit before tax of 1.3 million UK pounds. The amalgamation of SCS with LAVA is expected to contribute approximately 10 cents per share to LAVA's 1997/98 fiscal year earning per share.

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