Telenetics Improves Its Net Tangible Assets in Advance of the Upcoming Nasdaq Listing Qualifications Panel Hearing

Business Wire, July 31, 2001

Business Editors

LAKE FOREST, Calif.--(BUSINESS WIRE)--July 31, 2001

Telenetics Corp., (Nasdaq:TLNT), a wired and wireless data transmission and network access products provider, today announced that as a result of second quarter performance, the company is now substantially closer to complying with the $2 million minimum net tangible assets requirement for continued listing on Nasdaq.

Telenetics' latest Form 10-KSB for the fiscal year ended Dec. 31, 2000 reflected net tangible assets of approximately $254,000. Telenetics expects that it will report on its upcoming Form 10-QSB for the quarter ended June 30, 2001 net tangible assets of approximately $1.75 million.

Commenting on this positive development, Shala Shashani, the Chairman and Chief Executive Officer of Telenetics stated: "The significant steps taken to reduce our short-term debt and accounts payable as well as our record sales of over $6 million during the last quarter, have improved our balance sheet. We are improving our manufacturing capacity and gross margins. We remain committed and are steadily progressing towards, accomplishing our stated goal of becoming profitable. We believe that our strong second quarter performance in combination with significant business prospects will be sufficient to evidence Telenetics' ability to regain and to maintain in the long-run compliance with all Nasdaq continued listing criteria."

According to the National Association of Securities Dealers Inc.'s ("NASD") Marketplace Rule 4310(c)(2)(B), as part of continued listing requirements, Telenetics must be in compliance with one of the following net tangible assets/market capitalization/net income requirements, along with a minimum bid price of $1 to maintain its listing on Nasdaq: (i) net tangible assets of $2 million, (ii) market capitalization of at least $35 million, or (iii) net income of at least $750,000 for two of the last three fiscal years.

On July 24, 2001 the Nasdaq Listing Qualifications Department (the "Staff") informed Telenetics that the company's failure to comply with the net tangible assets/market capitalization/net income requirement for continued listing set forth in the NASD Marketplace Rule 4310(c)(2)(B) will be considered by the Nasdaq Listing Qualifications Panel (the "Panel") at the upcoming oral hearing scheduled to take place on Thursday, Aug. 23, 2001.

Telenetics has requested an oral hearing before the Panel to appeal the Staff's earlier determination to delist Telenetics' securities as a result of the company's failure to comply with the Nasdaq continued listing requirement for a $1 minimum bid price. Pursuant to the NASD Rule 4820(a), Telenetics' securities will continue trading on the Nasdaq SmallCap Market pending the Panel's decision. There can be no assurance that the Panel will grant Telenetics' request for continued listing.

About Telenetics

Based in Lake Forest, Telenetics is a leader in the design, production and distribution of wired and wireless data transmission and network access products and customer-specific communications products for customers worldwide. Telenetics offers a wide range of industrial grade modems and wireless products, systems and services for connecting its customers to end-point devices such as meters, remote terminal units, traffic and industrial controllers and remote sensors.

Telenetics also provides high-speed communications products for complex data networks used by financial institutions, air traffic control systems and public and private wireless network operators. The company is developing an advanced wireless data network enabling a wide range of customers to reliably and economically communicate through the Internet with their remote devices. Additional information may be obtained at www.telenetics.com.

Safe Harbor Statement under the Private Securities Litigation Reform Act of 1995

This release may contain forward-looking statements that involve risks and uncertainties. Important factors, which could cause actual operating results to differ materially from those in the forward-looking statements, include, without limitation, risks that Telenetics will be successful in its request for continued listing, risks that if such delisting occurs Telenetics' stock price may decline and the trading volume may decrease and risks that Telenetics' revenues or profit margins may not be at levels necessary to allow Telenetics to become profitable by the end of Fiscal 2001 or ever. Other risks are detailed in filings with the Securities and Exchange Commission made from time to time by Telenetics, including Amendment No. 1 to Telenetics' Form 10-KSB for the fiscal year ended Dec. 31, 2000 and Telenetics' Form 10-KSB for the quarter ended March 31, 2001. Telenetics undertakes no obligation to release publicly any revisions to any forward-looking statements to reflect events or circumstances after the date hereof to reflect the occurrence of unanticipated events.