Issue of Equity

SQS Software Quality Systems AG

11 January 2011

SQS Software Quality Systems AG ("SQS" or the 'Company')

Issue of Equity

SQS, the global leader in independent software testing and quality management services, is pleased to confirm that, as a result of the performance of its subsidiary Validate in the first two years post acquisition, the Company has issued 367,053 new SQS ordinary €1 shares (the "New Ordinary Shares") to the vendors of Validate pursuant to the Validate acquisition agreement.

The Company announced the acquisition of Validate, a software testing and quality management business in Sweden, on 11 June 2008 for a consideration of up to SEK 153.3 million (€16.4 million). Initial consideration of SEK 68.1 million (€7.3 million) was paid on completion with the remainder becoming payable in a combination of cash and new SQS shares (total consideration split 25% cash / 75% shares) subject to the achievement of specific earn out targets.

The New Ordinary Shares are subject to lock-in provisions for six months from 7 January 2011. After this period, each recipient will be permitted to dispose of up to 25% of his / her holding of New Ordinary Shares. Disposals of further 25% tranches will be permitted at the end of each of the three subsequent six month periods.

Application will be made for the New Ordinary Shares to be admitted to trading on AIM ("Admission") and dealings are expected to commence on 18 January 2011.

Following Admission, SQS will have 27,630,472 Ordinary Shares in issue.

The issue of a further 234,552 new SQS shares in relation to the earn-out due to the vendors of VeriSoft and of 28,265 new SQS shares in relation to an employee share option programme are expected to be announced over the coming weeks.

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11 January 2011