Financial: Artisoft, Inc. Releases Results for the Third Quarter of Fiscal 1999; Achieves Third Quarter of Consecutive Growth - News Briefs

Edge: Work-Group Computing Report, April 26, 1999

Artisoft, Inc. (NASDAQ:ASFT) reported net sales of $5.8 million and a net

loss of $580,000, or $.04 per share, for the third quarter of fiscal year

1999, ended March 31, 1999. These results compare to net sales of $5.4

million and a net loss of $230,000 or $.02 per share, for the prior

quarter ended December 31, 1998. During the third quarter of fiscal year

1998, the company reported net sales of $6.2 million and a net loss of

$162,000, or $.01 per share.

The computer telephony (CT) group revenues increased to finish the third

quarter of fiscal year 1999 with reported revenues of $1.9 million,

reaching a new high in quarterly revenues. These results represent 70%

growth compared with reported computer telephony group revenues of $1.1

million for the same quarter a year ago.

"This has been an outstanding quarter for Artisoft - it marks the first

time in five years that the company has achieved three consecutive growth

quarters," said president and CEO T. Paul Thomas. "I am pleased to see

that the entire company experienced growth this quarter. The significant

growth within the CT group re-affirms that our business strategy is on

target; and the increase in our customer base proves TeleVantage's

viability as an ideal CT solution for small- and mid-sized businesses."

Artisoft accomplished several important business goals during the third

quarter, including significant expansion to the TeleVantage distribution

channel. Artisoft's network of North American VARs has grown to include

more than 250 dealers who currently use and sell TeleVantage -- enabling

Artisoft to increase its visibility to small- and mid-sized business (SMB)

owners. Recently, Artisoft also signed a partnership agreement with ICG

Corporation, increasing its international reach throughout Southeast Asia.

Noted as an industry leader, TeleVantage received the "Best of Show" award

from Computer Telephony Magazine, its 11th product excellence award since

its market debut last March. Selected as the best business telephony

solution by a panel of industry experts, TeleVantage was recognized for

its rich features and superior reliability.

Artisoft, Inc. (NASDAQ:ASFT) of Cambridge, Mass., is a recognized leader

in providing easy-to-use, affordable computer telephony and communications

software solutions for small-to medium-sized businesses. Artisoft's

innovative software products have received more than 100 industry awards

including "Product of the Year", "Best of Show" and "Editors' Choice" by

PC Magazine, VARBusiness, CT Magazine and CTI Magazine among others. The

company distributes its products in more than 100 countries around the

world. http://www.artisoft.com.

                Artisoft, Inc. and Subsidiaries
                  CONSOLIDATED BALANCE SHEETS
           (in thousands, except per share amounts)

ASSETS                                      March 31,    June 30,
                                              1999         1998
                                           (unaudited)
Current assets:
 Cash and cash equivalents                    $17,183    $18,514
 Receivables:
  Trade accounts, net                           1,879      2,813
  Other receivables                               143        279
 Inventories                                    1,169        917
 Prepaid expenses                                 367        283
Total current assets                           20,741     22,806

Property and equipment                          6,024      5,333
 Less accumulated depreciation and
  amortization                                 (4,763)    (4,198)
Net property and equipment                      1,261      1,135

Other assets                                    1,148      1,567
                                              $23,150    $25,508

LIABILITIES AND SHAREHOLDERS' EQUITY

Current liabilities:
 Accounts payable                              $1,348     $1,598
 Accrued liabilities                            2,019      1,670
 Accrued restructuring costs                      285      1,536
 Current portion of capital lease
  obligations                                     401        464
Total current liabilities                       4,053      5,268

Capital lease obligations, net of
 current portion                                   --        289

Commitments and contingencies                      --         --

Shareholders' equity:
 Preferred stock, $1.00  par value
  Authorized 11,433,600 shares; none issued        --         --
 Common stock, $.01 par value.  Authorized
  50,000,000 shares; issued 28,076,311
  shares at December 31, 1998 and 27,980,602
  shares at June 30, 1998                         280        279
 Additional paid-in capital                    96,773     96,486
 Accumulated deficit                           (8,172)    (7,030)
 Less treasury stock, at cost, 13,320,500
 shares at December 31, 1998 and June 30, 1998(69,784)   (69,784)
Total shareholders' equity                     19,097     19,951
                                              $23,150    $25,508


                Artisoft, Inc. and Subsidiaries
             CONSOLIDATED STATEMENTS OF OPERATIONS
           (in thousands, except per share amounts)

                           Three Months Ended   Six Months Ended
                                March 31,           March 31,
                             1999      1998     1999      1998
                              (unaudited)         (unaudited)

Net Sales                   $5,751    $6,215   $16,247   $19,701
Cost of sales                1,907     1,659     4,871     4,964
  Gross profit               3,844     4,556    11,376    14,737

Operating Expenses:
 Sales and marketing         2,121     2,582     6,265     7,612
 Product development         1,455     1,823     3,896     5,437
 General and administrative  1,035       747     2,963     2,402
 Restructuring cost           --        (175)     --        (439)
Total operating expenses     4,611     4,977    13,124    15,012

Income (loss) from operations (767)     (421)   (1,748)     (275)

Other income, net              187       259       606     1,758

  Income (loss) before
   extraordinary item         (580)     (162)   (1,142)    1,483

  Extraordinary loss from
   early extinguishment of debt,
   net of $0 income tax benefit   --    --        --        (109)

  Net income (loss)          $(580)    $(162)  $(1,142)   $1,374

Net income (loss) per common
 share -basic and diluted    $(.04)    $(.01)    $(.08)     $.09

Weighted average common shares
 outstanding:
  Basic                     14,764    14,539    14,705    14,529
  Diluted                   14,764    14,539    14,705    14,576