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IP-PBX Software Provider Artisoft to Acquire Vertical Networks
[September 27, 2004]

IP-PBX Software Provider Artisoft to Acquire Vertical Networks

Names new CEO, CTO to spearhead continued growth

CAMBRIDGE, Mass., September 27, 2004 – Artisoft®, Inc. (OTC: ASFT), a leading provider of software-based IP-PBX and call center products, today announced it has entered into an agreement to acquire privately held Vertical Networks®, Inc. of Sunnyvale, CA. Vertical Networks is a leading provider of distributed IP-PBX software and communications solutions to large enterprises. With the acquisition, Artisoft will significantly increase its customer base and addressable market, including the addition of several large enterprise customers in the retail, financial services, and healthcare verticals, as well as expand the breadth and scope of its technology and product offerings to include distributed enterprise solutions.

Under the acquisition agreement, Artisoft will pay up to $19 million in cash for Vertical Networks. The acquisition is expected to close within several business days. The closing is subject to Artisoft’s completion of a financing for the acquisition, the approval of Vertical Networks’ shareholders and other customary closing conditions.

The company announced that, following the acquisition, Artisoft Chairman William Y. Tauscher will serve as chairman and chief executive officer (CEO), and Vertical Networks founder Scott K. Pickett will serve as chief technology officer (CTO), of the combined company. Other executives from Artisoft who will continue in their management positions include Duncan Perry, who directs administrative and financial operations as chief financial officer; Christopher Brookins, who leads the development of the TeleVantage® product line as senior vice president of development; and Mel Passarelli, who manages sales and marketing as senior vice president of worldwide sales.


“The acquisition will bring together two fast-growing IP-PBX companies with established product offerings and a significant base of installed customers. Together with the IP telephony expertise and technology assets of the combined companies, and expanded channels for sales, integration and distribution, Artisoft will be well positioned to win customers and increase market share in its targeted vertical markets,” said Tauscher. “We expect our product development and sales and marketing efforts will continue to be market-specific, consistent with our strategy of providing solutions tailored to the needs of different customer segments.”

The combined company will have more than 150 employees. The headquarters will remain in Cambridge, MA with a significant development, sales and marketing presence in Sunnyvale, CA.

Stronger Company, Stronger Solutions
Artisoft expects to continue development and support of both Artisoft’s TeleVantage and Vertical Networks’ InstantOffice® solutions. Artisoft also anticipates combining technology to enhance both products, capitalizing on the unique features of each.

The individual solutions are as follows:

TeleVantage
· Open systems IP-PBX, call center solution and telephony application suite
· Developed for call centers and medium-sized businesses
· More than 5,000 installations deployed

InstantOffice
· Modular integrated IP-PBX communications platform
· Developed for large enterprise customers with remote, multi-site locations in the retail, pharmacy, financial services and healthcare vertical markets
· More than 7,500 systems deployed
· Major customers include CVS/pharmacy, Household International, and Apria Healthcare

“The combined product line strength: targeted applications focused on specific high-growth segments of the IP-PBX market, will be a powerful combination as legacy PBXs are replaced by IP-based solutions,” said Scott K. Pickett. “It’s a key factor in recent aggressive revenue increases for both companies. We also see many distinct opportunities to merge technology to evolve and enhance our products.”

“Customers will be the real beneficiaries of this union as they will benefit from the collective expertise of the development teams and expanded product functionality,” said Christopher Brookins, senior vice president of development. “Leveraging Artisoft’s strength in the mid-market and call center space with Vertical Networks’ leadership in the branch and retail markets will enable us to provide customers with a broad range of customized communications solutions designed to best meet their unique needs.”

Changes to the Management Team
Following the acquisition, William Tauscher will serve as Artisoft’s CEO in addition to serving as chairman. Prior to being named chairman of Artisoft in February 2004, Tauscher built and managed several successful companies including Vanstar Corporation (formerly ComputerLand Corporation) and FoxMeyer Corporation. He also currently serves on the board of directors for various corporations, including Safeway Corporation.

Also following the acquisition, Scott K. Pickett, co-founder and CTO of Vertical Networks, will serve as CTO of the combined company. Pickett is known for leading the development of several industry-first systems and networking products, including multimedia product solutions (802.9), multi-protocol VoIP gateway, integrated communications platform, and PCMCIA Ethernet card. He holds more than 20 patents in converged voice/data products and reconfigurable logic.

About Artisoft
Artisoft, Inc. is a leading provider of software-based IP-PBX and call center products that deliver advanced communications capabilities to small and medium-size businesses, branch offices, and call centers. Artisoft’s innovative software products have consistently garnered industry recognition, winning more than 40 awards for technical excellence. The company distributes its products and services worldwide through a dedicated and growing channel of authorized resellers. For more information, please call 800-914-9985 or visit www.artisoft.com.

About Vertical Networks, Inc.
Vertical Networks, a leader in distributed IP-PBX software and communications solutions for branch offices and stores, delivers customizable solutions to several industries, including financial services, healthcare, publishing, and retail. Customers include: CVS/pharmacy, Household International, Aramark Uniform Services, Boston Globe, and Apria Healthcare. For more information visit: www.vertical.com.


# # #

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

Forward-Looking Statements:
This release contains forward-looking statements based on current expectations or beliefs, as well as a number of assumptions about future events, and these statements are subject to important facts and uncertainties that could cause actual results to differ materially from those described in the forward-looking statements. The forward-looking statements in this release address a variety of subjects, including, without limitation, the position of the combined company in the marketplace, the growth rate and factors contributing thereto of the IP-PBX and related applications market, the rate of replacement of legacy PBX infrastructure with IP-based solutions, the combined company’s strategy, the combined company’s product development and support plans, the expected effects of the pending acquisition, future financial and operating results, benefits and synergies of the pending acquisition and future opportunities for the combined company. All forward-looking statements in this press release about Artisoft assume Artisoft completes the acquisition of Vertical Networks. The following factors, among others, could cause actual results to differ materially from those described in these forward- looking statements: (i) Artisoft may not complete the acquisition of Vertical Networks in the time frame contemplated by this press release or at all, Artisoft may not complete a financing for the acquisition and Vertical Networks’ shareholders may not approve the acquisition, and (ii) we may not successfully integrate Vertical Networks’ operations and employees and realize anticipated synergies, cost savings and other benefits, and (iii) the increasing attractiveness of TeleVantage and InstantOffice versus proprietary PBX and IP-PBX systems, the ability of our North American, International and OEM channels to continue to perform well, the dependency of InstantOffice sales on a small number of end-user customers, the dependency of InstantOffice on a limited number of key suppliers, some of whom provide proprietary hardware and/or software that is critical to the operation of InstantOffice, the availability of additional financing on terms acceptable to the company or at all, risks associated with the company’s strategic transactions and strategic alliances, the impact of competitive products and pricing, the ability of our distributors, resellers and our original equipment manufacturers to market TeleVantage and InstantOffice, and pay us for the products they purchase from us, product demand and market acceptance risks, the presence of competitors with greater financial resources, employee retention risks, product development and commercialization risks, risks and costs associated with any future acquisitions and the integration and administration of any future acquired operations, capacity and supply constraints or difficulties and other factors detailed in the company's filings with the Securities and Exchange Commission including its most recent filings on Form 10-K and Form 10-Q.


For additional information, contact:
Financial Community:
Duncan Perry
Artisoft
617-354-0600 x201
dperry@artisoft.com

Media Community:
Mary Ellen Quinn
Artisoft
617-354-0600 x342
mquinn@artisoft.com

Denise Maudru
Vertical Networks
408-585-3272
denisem@vertical.com

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