Executone Information Systems Announces Preliminary First Quarter Results; Preferred Shares Converted into Common Stock in Anticipation of eLottery Separation.

MILFORD, Conn.--(BUSINESS WIRE)--April 14, 1999--

Executone Information Systems, Inc. (Nasdaq NM:XTON), today announced preliminary results for the quarter ended March 31, 1999.

Revenue for the first quarter is expected to be approximately $31.7 million compared to revenue of $33.9 million for the quarter ended March 31, 1998. The Company expects a net loss in the range of $0.05 to $0.07 per share based on approximately 49.4 million shares outstanding.

Executone also announced that in anticipation of the Company's transformation into eLottery, Inc., it has completed the redemption of its outstanding preferred stock by converting it into common stock. With the conversion, the preferred shareholders now own 21% of Executone's common equity or approximately 13 million shares and Executone now has approximately 63 million shares outstanding. This preferred stock was created when Executone purchased eLottery's predecessor company, Unistar Gaming Corp., in 1995.

Stanley J. Kabala, Executone Chairman and Chief Executive Officer, commented, "The results for the first quarter are in-line with our expectations for the quarter and the full year. The conversion of the preferred stock into common stock is a significant milestone in the Board of Directors' plan to separate the core businesses and transform the Company into eLottery, a pure eCommerce company. We continue to make progress on this strategy and are working to complete the separation as soon as possible."

Executone previously announced that it will separate its core telephony and healthcare businesses from its eLottery subsidiary and, at the conclusion of the transaction, Executone Information Systems, Inc. will be renamed eLottery, Inc. The Company has also announced that the Special Committee of its Board of Directors has engaged Wasserstein Perella & Co. to assist in the separation.

Earlier, Executone's Board of Directors announced that it received an offer for the core businesses from a group led by Stanley J. Kabala, Chairman and Chief Executive Officer of Executone, in the range of $70 million. Under the terms of the offer, the separation of the businesses would be accomplished through a transfer of all the assets and employees of the telephony and healthcare businesses to a new company to be privately held by management and selected outside investors. The proceeds of any sale will remain in the public company to help it accelerate the achievement of eLottery's business plans. The sale is subject to several conditions, including financing, negotiation of a definitive agreement and shareholder approval.

eLottery is a web-based retailer of governmental lottery tickets. Using its past experience and market tested and secure products, eLottery is committed to leading the governmental lottery industry into the eCommerce market. As a web-based electronic ticket retailer, the company's electronic tickets can be sold through, and are compatible with, current on-line systems. eLottery has positioned itself to become a leader in the area by helping governmental lotteries address the legal, political and social issues they face as a result of the rapid growth in Internet sales. The Company has developed, installed and processed over 10 million eCommerce lottery ticket sales and transactions. It has operated Internet, Intranet, telephone, communications, accounting, banking, database and other applications and services that facilitate the electronic sale of new and existing lottery products worldwide.

eLottery, Inc. is on the World Wide Web at http://www.elottery.com with demonstration games at http://www.elotteryworld.com.

Executone Information Systems, Inc. develops, markets and supports voice and data communications and information systems. Products and services include telephone systems, voice mail systems, inbound and outbound call center systems, and specialized healthcare communications and workflow management systems. Executone's products and services are sold under the EXECUTONE, INFOSTAR, IDS, LIFESAVER, and INFOSTAR/ILS brand names. Executone is on the World Wide Web at http://www.executone.com.

This news release contains forward-looking statements. Such statements are subject to certain factors, which may cause Executone's plans to differ or results to vary from those expected including the risks associated with the development of new products and the uncertainty of product acceptance, the competitive nature of the Company's industry, rapid technological change, legal uncertainties, the Company's dependence on key personnel, and a variety of risks set forth from time to time in Company filings with the Securities and Exchange Commission.