Artisoft, Inc. Releases Results for Fiscal Year 1999; Achieves Fourth Consecutive Quarter of Revenue Growth; CT Group Grows Over 50%; Fueled by TeleVantage Sales in 1999.

CAMBRIDGE, Mass.--(BUSINESS WIRE)--Aug. 5, 1999--

Artisoft(R), Inc. (NASDAQ:ASFT) today reported its financial results for the fiscal year and fourth quarter ended June 30, 1999, which included the company's fourth consecutive quarter of revenue growth.

For the year ended June 30, 1999, Artisoft reported net sales of $22.3 million and a net loss of $1.8 million, or $.12 per share. This compares to net sales of $24.8 million in fiscal year 1998 and a net loss of $2.9 million, or $.20 per share. The results for fiscal year 1998 included restructuring and other one-time charges of $2.4 million.

For the fourth quarter of fiscal 1999, Artisoft reported net sales of $6.1 million, a 20 percent increase from the same quarter a year ago, and a net loss of $620,000, or $.04 per share. These results compare to net sales of $5.1 million and a net loss of $4.3 million, or $.29 per share, for the same quarter a year ago. The results for the fourth quarter of fiscal 1998 included restructuring and other one-time charges of $2.9 million.

The computer telephony (CT) group finished the fourth quarter of fiscal year 1999 with record-setting revenues of $2.3 million. These results represent nearly 100 percent growth compared with CT group revenues of $1.2 million for the same quarter a year ago. In addition, CT group revenues grew 50 percent over fiscal year 1998 to $7.1 million.

"This has been a tremendous year for the company - we achieved four consecutive growth quarters, recorded our best financial results in five years, significantly grew our CT business and won an unprecedented number of product awards," said president and CEO T. Paul Thomas. "I am pleased with the entire company's performance this year, particularly the growth within the CT group. We enter into fiscal year 2000 on a very high note and look forward to extending our growth."

During fiscal year 1999, Artisoft set out and completed several important business initiatives. The year's highlights include:

-- Significant expansion of the domestic and international TeleVantage(R) distribution channel: Today more than 350 value-added resellers, interconnects (telecom dealers) and national resellers sell and support TeleVantage throughout the United States and Canada. Artisoft also extended TeleVantage's international reach with the addition of three new distribution partners: ICG, a value-added Southeast Asian distributor, Olivetti Ricerca, Italy's premier telecommunications provider and Affinity, the leading CT distributor and consulting firm for the Latin American and Caribbean markets.

-- Unprecedented number of product awards: Artisoft's CT products received 12 industry excellence awards; and, TeleVantage was ranked the #1 Product of the Year from CT Magazine, one of the industry's most prestigious sources of CT information. In addition, Dataquest, a leading IT market analyst firm, determined Visual Voice to be the worldwide leader in IVR units shipped during calendar year 1998.(1) This is the 4th year in a row Visual Voice has been named the market share leader by Dataquest.

-- Increased corporate awareness and recognition: Regarded as an industry leader, Artisoft was named to the annual Softletter 100 ranking of the industry's top independent software companies. Chosen through a rigorous screening process that examined distribution channels, pricing, the local computing environment and end-user patterns of use, Artisoft was recognized for product innovation and consistent company growth.

-- Successful investment in CT: Artisoft's commitment to growing its CT business resulted in consistent accelerated growth throughout the entire fiscal year. The company also released two new, highly acclaimed versions of TeleVantage during the year and nearly doubled its employee base, increasing its sales, marketing, development and services infrastructure.

About Artisoft

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. For more information, please call Artisoft at 800-914-9985 or visit http://www.artisoft.com.

Artisoft, TeleVantage, Visual Voice and LANtastic are registered trademarks of Artisoft, Inc. All other company and product names mentioned may be trademarks or registered trademarks of the respective companies with which they are associated.

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

This release may contain forward-looking statements that involve risks and uncertainties. Among the important factors which could cause actual results to differ materially from those in the forward-looking statements are the impact of competitive products and pricing, product demand and market acceptance risks, the presence of competitors with greater financial resources, product development and commercialization risks, costs associated with integration and administration of acquired operations, capacity and supply constraints or difficulties, the results of financing efforts and other factors detailed in the Company's filings with the Securities and Exchange Commission including its recent filings on Forms 10-K and 10-Q.

(1) Source: Dataquest, 1999 IVR Survey, June 1999

-0-

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

ASSETS                                  June 30,   June 30,
                                          1999       1998
Current assets:
 Cash and cash equivalents             $ 16,148    $ 18,514
Receivables:
 Trade accounts, net of
  allowances of $1,356
  and $1,592 in 1999 and
  1998, respectively                      2,267       2,813
 Other receivables                           66         279
Inventories                               1,214         917
Prepaid expenses                            335         283
   Total current assets                  20,030      22,806

Property and equipment                    6,349       5,333
 Less accumulated
  depreciation and amortization          (4,984)     (4,198)
     Net property and equipment           1,365       1,135

Other assets                              1,163       1,567
                                       $ 22,558    $ 25,508

LIABILITIES AND SHAREHOLDERS' EQUITY

Current liabilities:
 Accounts payable                      $  1,229    $  1,407
 Accrued liabilities                      2,466       1,861
 Accrued restructuring costs               --         1,536
 Current portion of
  capital lease obligations                 289         464
     Total current liabilities            3,984       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  28,144,477 shares at
 June 30, 1999 and 27,980,602
 shares at June 30, 1998                    280         279
 Additional paid-in capital              96,870      96,486
 Accumulated deficit                     (8,792)     (7,030)
 Less treasury stock, at cost,
  13,320,500 shares at
  June 30, 1999 and June 30, 1998       (69,784)    (69,784)
     Net shareholders' equity            18,574      19,951
                                       $ 22,558    $ 25,508


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

                                Three Months Ended      Year Ended
                                     June 30,            June 30,
                                  1999      1998     1999      1998
                              (unaudited)(unaudited)

Net sales                        $6,057    $5,092   $22,304   $24,793
Cost of sales                     1,984     1,505     6,855     6,509
   Gross profit                   4,073     3,547    15,449    18,284

Operating expenses:
 Sales and marketing              2,513     2,434     8,778    10,046
 Product development              1,489     1,616     5,385     7,053
 General and administrative         986       726     3,949     3,127
 Write-off of abandoned
  technology                       --         393      --         393
 Restructuring costs                (77)    2,478       (77)    2,040
   Total operating expenses       4,911     7,647    18,035    22,659

Loss from operations               (838)   (4,100)   (2,586)   (4,375)

Other income (expense)              218       (32)      824     1,727

   Loss before income tax expense
    and extraordinary item         (620)   (4,132)   (1,762)   (2,648)

Income tax expense                 --         156      --         156

   Loss before extraordinary
    item                           (620)   (4,288)   (1,762)   (2,804)

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


   Net loss                       $(620)  $(4,288)  $(1,762)  $(2,913)

Net loss per common
 share-basic and diluted          $(.04)    $(.29)    $(.12)    $(.20)

Weighted average common shares
 outstanding-basic and diluted   14,765    14,617    14,720    14,554