Cambridge, Mass. (February 23, 2005) --Vertical Communications (ASFT.OB), a leading provider of next-generation, IP-based phone systems for small, large and distributed businesses, announced today that it is postponing reporting its consolidated financial results and delaying the filing of its Form 10-Q for the fiscal second quarter ended December 31, 2004.

The delay arises from the company’s current inability to complete the financial closing process for operations acquired from Vertical Networks, Inc. of Sunnyvale, California on September 28, 2004. However, Vertical Communications approximates that the financial closing process will be completed within the next 15 days. The company plans to announce results for the fiscal second quarter as quickly as possible thereafter.

The two primary factors that were responsible for the delay in the financial closing process were the impact of specific contracts acquired in September on the revenue recognition policy of the company, and its application to transactions during the period, and the time required to complete a third party valuation of the assets acquired.


The company is moving quickly and carefully to address these matters, report its consolidated results and file its Form 10-Q as soon as is practicable. However, the company is not able at this time to determine a certain date by which it expects to file its Form 10-Q for the fiscal second quarter.

For the reasons described above, the company is unable at this time to report consolidated financial results for its fiscal second quarter.