Farmstead Telephone Group Reports Profitable Second Quarter, First Half 1999 - Company Financial Information

Cambridge Telcom Report, August 16, 1999

Farmstead Telephone Group, Inc. (ASE:FTG, FTG.WS, FTG.WS.A, FTG.WS.B) Monday announced profitable operating results for the quarter and six months ended June 30, 1999.

For the three months ended June 30, 1999, the Company reported net income of $118,000 ($.04 per share). This compares to net income of $198,000 ($.05 per share) for the same quarter of 1998. For the six months ended June 30, 1999, the Company reported net income of $21,000 ($.01 per share). This compares to net income of $5,000 (less than one-half cent per share) for the same six-month period of 1998.

Revenues for the second quarter totaled $7,118,000, approximating last year's $7,133,000 second quarter revenues, while revenues for the six months ended June 30, 1999 totaled $13,446,000, up 5% from last year's $12,753,000 six-month period. End user sales and service revenues increased by 15% quarter-over-quarter, and by 12% year-over-year. This was due principally to the start-up of a call center sales operation, which offset the discontinuance of the Company's dealer sales channel at the end of February, and higher equipment installation and rental revenues.

George J. Taylor, Jr., Chairman and Chief Executive Officer of Farmstead Telephone, commented, "The first half of 1999 has afforded Farmstead many opportunities and challenges. Year-to-date revenues increased over last year as a result of new sales offices and our call center operation. However, earnings were affected by the Company's ongoing investment in the additional personnel, infrastructure, and other overhead costs necessary to expand our sales offices and repair and refurbishing capabilities in order to meet the demands of Lucent Technologies' Authorized Remarketing Supplier, Authorized Refurbisher and Classic Fulfillment Center programs."

Farmstead Telephone Group, Inc., is an Authorized Dealer for new Lucent Technologies business communications products and an Authorized Refurbisher of Classic Lucent equipment. General information about Farmstead Telephone may be found on the World Wide Web at http://www.farmstead.com.

                 Farmstead Telephone Group, Inc.
                      Financial Highlights
                           (unaudited)

                          Quarter Ended          Six Months Ended
                             June 30                 June 30
                         1999       1998        1999       1998
Revenues             $7,118,000 $7,133,000 $13,446,000 $12,753,000

Net income (loss):
Continuing operations $ 118,000 $  267,000 $    21,000 $   232,000
Discontinued operations      --    (69,000)         --    (227,000)
                     ---------- ---------- ----------- -----------
                     $  118,000 $  198,000 $    21,000 $     5,000
                     ========== ========== =========== ===========

Diluted net income (loss) per share:
Continuing operations      $ .04      $ .07      $ .01      $ .06
Discontinued operations       --       (.02)        --       (.06)
                             .04        .05        .01         --
                             ===        ===        ===        ===
Diluted weighted average
 shares outstanding    3,274,000  3,629,000  3,276,000  3,781,000