Target Technologies announces 58% increase in revenues.

WILMINGTON, N.C.--(BUSINESS WIRE)--Oct. 16, 1995--Target Technologies Inc. (NASDAQ:CFON) today announced that revenues increased 58% to $556,630 for the three months ended Aug. 31, 1995 ("2nd Quarter 1996") as compared to $353,054 for the three months ended May 31, 1995 ("1st Quarter 1996").

Results of operations for 2nd Quarter 1996 produced a net loss of $753,169 ($.17 per share) compared to a net loss of $1,814,134 ($.42 per share) for 1st Quarter 1996.

The primary reasons for the improvement in operational results were the 58% increase in revenues, a gross profit percentage increase from 10% to 20% and a $1,000,000 decrease in selling expenses.

Selling expenses for 2nd Quarter 1996 were approximately $400,000 while selling expenses were over $1,400,000 in 1st Quarter 1996, primarily due to the nationwide advertising and awareness campaign in March, April and May of this year.

Mr. Paul Albritton, Target's Chief Financial Officer, stated "Since we are still in the early stages of the commercialization of C-Phone, non-variable manufacturing costs per unit continue to be relatively high at the current production volume. As volume continues to increase, the Company's gross profit margin should continue to improve significantly."

Mr. Daniel Flohr, Target's Chief Executive Officer, stated, "As our increasing reseller base exposes the capabilities of C-Phone to more and more potential users, we are seeing increased pilot orders and, more significantly, more and larger orders resulting from previous pilot installations. In addition, we are negotiating several foreign distribution arrangements which could have a significant impact upon future revenues."

On Oct. 11, 1995, Target announced that TRW, as prime contractor, will begin shipping Target's C-Phone to fulfill a portion of an $11.4 million, five year ID/IQ contract vehicle for desktop video teleconferencing (DVTC) awarded by the U.S. Army. The contract will extend to all branches of the Department of Defense (DOD) and is believed to be the single largest DVTC award in history.

According to TRW, C-Phone, a PC-based desktop video conferencing system, represented more than 40 percent of the contract configuration baseline stipulated in the solicitation. C-Phone equipment will be used for (1) all high speed ISDN based point-to-point teleconferencing for stand-alone PCs, (2) all workgroup video conferencing on local area networks sharing wide area resources including ISDN lines and H.320 CODECs, and (3) all high quality broadband desktop video teleconferencing for local area network (LAN) workgroups. All of these C-Phone solutions integrate standards based T.120 collaborative computing and shared white board tools.

Target Technologies is the manufacturer of C-Phone, a desktop videoconferencing system which brings live, full-motion color video to networked PCs. -0-

                          TARGET TECHNOLOGIES INC.
                       Summary Financial Information

                                   3 Months Ended,

                               Aug. 31,          May 31,
                                 1995             1995

Net sales                   $   556,630      $  353,054
Gross profit                $   113,061          34,522
Selling, general and
 administrative expense         680,852       1,712,573
Research, development and
 engineering expense            291,658         264,915
Operating loss                 (859,449)     (1,942,966)
Interest expense                 (1,196)         (1,402)
Interest income                 107,476         130,234
Loss before income taxes       (753,169)     (1,814,134)
Income taxes                      --               --
Net loss                       (753,169)     (1,814,134)
Per share                         (0.17)          (0.42)
Shares outstanding            4,347,293        4,347,293

                          Aug. 31,       May 31,      Feb. 28,
                            1995          1995          1995

Cash & investments        6,213,039    7,457,268     9,131,987
Other current assets      1,297,096    1,168,488     1,036,815
Total assets              7,940,836    9,044,048    10,570,521
Current liabilities         629,026      976,133       683,339
Total liabilities           648,567      999,510       710,949
Shareholders equity       7,292,269    8,045,438     9,859,572

As the Company's revenues for the three months ended Aug. 31, 1995 were all related to its C-Phone product line while the revenues for the three months ended Aug. 31, 1994 were primarily related to its phased out modem product line, any comparison between these periods offers only limited analytical value.

                               3 Months Ended August 31,

                                 1995             1994

Net sales                   $   556,630      $  155,537
Gross profit                $   113,061        (159,403)
Selling, general and
 administrative expense         680,852         234,669
Research, development and
 engineering expense            291,658         312,977
Operating loss                 (859,449)       (707,049)
Interest expense                 (1,196)       (932,557)
Interest income                 107,476           8,820
Loss before income taxes       (753,169)     (1,630,786)
Income taxes                      --               --
Net loss                       (753,169)     (1,630,786)
Per share                         (0.17)          (0.66)
Shares outstanding (1)        4,347,293        2,456,040

(1) The increase in shares outstanding reflects the issuance of
additional shares in the Company's initial public offering in
August of 1994.

CONTACT: Target Technologies Inc., Wilmington

Paul H. Albritton, 910/395-6100