Electronic Tele-Communications, Inc. (ETC) today reported a second quarter 2001 loss of $723,791 or $0.29 per Class A share on sales of $1,214,925 compared to second quarter 2000 earnings of $217,500 or $0.09 per Class A share on sales of $3,369,368. Sales for the first six months of 2001 were $2,886,750, compared to 2000 six month sales of $6,465,780. Losses for the first six months of 2001 were $1,431,040 or $0.57 per Class A Share, compared to earnings of $294,178 or $0.12 for the first six months of 2000.

Commenting on the 2001 results, ETC President Dean Danner said, "We are in the midst of an industry wide downturn that has not only devastated our sales, but those of some of the largest telecommunications equipment suppliers in the industry. This downturn began last year, and deepened steadily through the first half of 2001. OEM sales of new and/or upgraded telecommunications voice facilities and services have slowed dramatically, thus impacting ETC's sales of voice platforms. In addition, a surplus of used equipment on the market from failed competitive carriers has further depressed sales of new voice platforms. Our customers have continued to delay the purchase of new voice platforms, choosing to wait for the economy to improve.

We are continuing our efforts to offset the sales shortfall, and have implemented a series of cost reductions during the quarter. Although the impact of these reductions was not felt immediately, they are expected to amount to approximately $1,700,000 per year in savings. Further reductions are being implemented. Among the changes we have made so far are extended layoffs, significant staff reductions, the closing of our Pleasanton facility, and the sale/lease back of our Waukesha facility in July to eliminate bank borrowings.

At the same, we are continuing our development of applications for our Windows based Emcee system that can work in both the emerging IP (Internet Protocol) and soft switch markets as well as traditional telephone switch markets. It is vital that ETC be ready with as many applications as possible on the Emcee system when the economy and telecommunications markets recover." Danner said.

Electronic Tele-Communications is a supplier of Voice Application Processing Platforms to domestic and foreign telephone utilities and of messaging systems to the commercial market. ETC's equipment, compatible with most telephone systems, provides a wide range of audio information and call handling services via telephone networks, computer networks, and the Internet. ETC, with corporate headquarters in Waukesha, Wisconsin also has operations in Norcross, Georgia.

Certain statements in this press release which are not historical facts are "forward-looking" statements as defined in the Private Securities Litigation Reform Act of 1995. Any "forward-looking" statements are provided in compliance with the "Safe Harbor" provision of the Private Securities Litigation Reform Act of 1995. "Forward-looking" statements involve a number of risks and uncertainties including, but not limited to, technology changes, backlog, acquisitions, status of the economy, governmental regulations, sources of supply, expense structure, product mix, major customers, level of order flow, competition, litigation, and other risk factors detailed in the Company's filings with the Securities and Exchange Commission. Investors are encouraged to consider the risks and uncertainties included in those filings.