Artisoft, Inc. Announces Results For The First Quarter Of Fiscal 1997


(TUCSON, AZ -- October 16, 1996) --

Artisoft, Inc. (Nasdaq: ASFT) announced today financial results for the first quarter of fiscal 1997 ended September 30, 1996. The company reported net sales of $11.1 million, and a loss of $2.2 million or $.15 per share, before giving effect to certain one-time charges. The one-time charges totaled approximately $.08 per share in severance and other expenses relating to an organizational realignment accomplished during the quarter. These results compare to net sales of $15.0 million and net income of $464,000, or $.03 per share, for the first quarter of fiscal 1996.

William C. Keiper, Artisoft's chairman and chief executive officer, said "Net sales were lower due principally to a reduction in distribution channel inventories of $3 million, and a slower than anticipated transition to version 7.0 of the company's award-winning LANtastic networking product released in June 1996. Distribution channel inventories were reduced to reflect the slower transition to the LANtastic 7.0 product, and to anticipate stocking for new communications software products to be introduced by the company and sold through distribution channels. We believe that the timing of the product transition from LANtastic 6.0 to 7.0 met seasonal market softness, not only in Europe, but also in the United States. In addition, because of the inclusion of several more advanced communications software features in LANtastic 7.0, resellers have indicated a desire for more training on the product. The company has completed a comprehensive CD training tool, and is conducting hands-on regional training in 12 locations around the U.S. during October. In addition, more than 40 product reviews either have been or are expected to be published by the end of December. Since the latter part of September, the sell-through for LANtastic 7.0 in the U.S. distribution channel has improved."

"The organizational realignment was designed to focus additional resources on PC communications and computer telephony development efforts. These resources are intended to produce not only standalone products in the PC communications and computer telephony area, but also to support Artisoft's recently announced plans to integrate strategic communications and telephony technologies into LANtastic. Finally, the realignment was implemented in order to reduce overall company costs," Keiper added.

Artisoft leads the industry in providing easy-to-use, affordable networking, PC communications and computer telephony solutions for small business. Chosen by nearly five million users worldwide to connect and share computer resources, Artisoft solutions include the award-winning LANtastic family of networking products, and the family of remote communication products, including INSYNC(r) CoSession Remote(tm) and ModemShare(tm). Dedicated to the development of easy-to-use tools and applications for Windows telephony, Artisoft's computer telephony solutions include Visual Voice(r) and Visual Fax(r) . The company maintains nine offices outside the United States, and distributes its products in more than 100 countries.

For more information, contact Artisoft, Inc. at 2202 N. Forbes Blvd., Tucson, AZ 85745. Sales Consultation Center 800/233-5564. Corporate 520/670-7100. Fax 520/670-7101. World Wide Web home page http://www.artisoft.com. Recent Artisoft press releases are available at no charge through PR Newswire's Company News On-Call fax-on-demand system; call 800/758-5804 and enter company number 107158.

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"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.


Artisoft, Inc. and Subsidiaries

CONSOLIDATED BALANCE SHEETS

(in thousands, except share amounts)


						September 30,   June 30,

ASSETS				                   1996          1996	

				                (unaudited)

Current assets:

     Cash and cash equivalents			$15,852	       	$15,325

     Short-term investments		              -	              -

     Receivables:

          Trade accounts, net			 13,364		 16,768

          Income taxes			            706		  1,635

          Notes and other		            875		  1,405

     Inventories			          3,432		  2,998

     Prepaid expenses			          1,410		    906

     Deferred income taxes		          6,296		  4,426

	Total current assets	    	         41,935		 43,463



Property and equipment			         14,215		 13,690

     Less accumulated depreciation		 (6,672)	 (6,166)	

Net property and equipment		          7,543	          7,524



Long-term deferred income taxes		          3,141	          3,141

Other assets				          3,452	          3,584

				        	$56,071		$57,712



LIABILITIES AND SHAREHOLDERS' EQUITY



Current liabilities:

     Accounts payable			       $  4,175	       $  3,333

     Accrued liabilities		          3,659	          2,640

     Income taxes payable		            450		    577

     Current portion of capital...                   79	             85

     ...lease obligations

	Total current liabilities                 8,363	          6,635



Capital lease obligations,                           76		     96

  net of current portion



Commitments and Contingencies		              -	              -



Shareholders' equity:

     Common stock, $.01 par value.  Authorized 

	50,000,000 shares; issued  27,766,167 

	shares at March 31, 1996 and 

	27,671,680 at June 30, 1995	            278	            278

     Additional paid-in capital			 96,112		 96,075

     Retained earnings				 20,922		 24,308

     Less treasury stock, at cost, 

	13,287,500 shares		        (69,680)	(69,680)

	Total shareholders' equity		 47,632		 50,981

						$56,071		$57,712


Artisoft, Inc. and Subsidiaries

CONSOLIDATED STATEMENTS OF OPERATIONS

Three Months Ended September 30, 1996 and 1995

(in thousands, except per share amounts)


					    	    Three Months Ended

						       September 30,     

						   1996	           1995

								



Net sales					$ 11,120	$ 14,980

Cost of sales				           3,930           5,548

     Gross margin			           7,190           9,432

Operating expenses:

     Marketing and sales			   7,005           6,412

     Product development			   2,390           1,253 

     General and administrative		           1,438           1,357

     Restructuring Charge		           1,805               -

	Total operating expenses		  12,638           9,022



	Income (loss) from operations		  (5,448)            410



Other income, net			             192             339



	Income (loss) before income taxes	  (5,256)            749



Income tax (benefit) expense		          (1,871)            285



     Net income (loss)				$ (3,385)       $    464



Net income (loss) per common and

     equivalent share				$   (.23)       $    .03



Shares used in per share calculation		  14,524          14,853