Exhibit 99.1
PRESS RELEASE
FOR IMMEDIATE RELEASE
***VERTEX INTERACTIVE ANNOUNCES PROFITABLE
FISCAL THIRD QUARTER RESULTS ***
South Plainfield, New Jersey (August 23, 2004) - Vertex
Interactive, Inc. (OTCBB:VETX), a leading provider of software
technology for order fulfillment and warehouse management, today
announced operating results for the fiscal third quarter ended
June 30, 2004.
Third Quarter Financial Results
For the fiscal third quarter ended June 30, 2004, Vertex announces a
net profit of $588,464 or $0.01 per share compared to a net loss of
$840,000 or $0.02 per share in the same period last year and a net
loss of $186,000 in the preceding quarter. Results announced include
the impact of $1,042,739 of extraordinary gains recognized from the
settlement of claims in the quarter.
Operating revenues were $706,000, compared with $518,000 in the
fiscal second quarter ended March 31, 2004 and $1 million for
the same period last year.
Gross margin improved significantly to 52% from 38% for the same
quarter last year due to an increase in high margin software
sales.
Operating losses were substantially reduced to $188,000 (or
breakeven on a per share basis) a substantial improvement over
the $594,000 (or $.02 per share) loss for the same period last
year and a sequential improvement over the $262,000 loss in the
previous quarter. Selling & Administrative expenses fell 43%
to $520,000 from $909,000 million last year. (Included in the
$504,000 of operating expenses for the current quarter is
approximately $100,000 of expenses relating to the filing of a
Registration Statement on Form S-1, which was filed to register
shares underlying the issuance of $3,000,000 of convertible
notes subscribed for by the NIR Group.)
In addition, the Company had $567,000 in cash, cash equivalents
and restricted cash at June 30, 2004.
Other Highlights
Funding
* $3,000,000 of convertible debentures were sold. The last
tranche of this funding, $750,000, was received on August
12, 2004
New Business
* During the quarter the Company completed installation in
China of the previously announced $300,000 follow on order
for one of the largest technology companies in the world.
* Pipeline activity increase significantly during the period.
New Products
* In July, we announced Release 4.0 of our eWMS Warehouse
Management Solution incorporating our event management
tool, the Spontaneous Event Engine or SEE product.
* Also in July, we announced the Release 3.0 of our Linux
Order Fulfillment System.
Management
* Our management has been strengthened by the addition of Jim
Kanaley as Vice President, Sales, a 15 year veteran from
Cisco Systems and Juniper Networks, among others.
Commenting on the results, Nicholas Toms, CEO, said, " We
are gratified to be able to finally report a profitable quarter
on the back of a sequential revenue increase. The recent $3
million of new capital raised in conjunction with the agreement
by MidMark to convert approximately $7.2 million of debt into
new equity is having a powerful effect in enabling the Company
to stabilize the balance sheet and our business. Nonetheless
during the long slow down, we managed to continue our new
product development program which has resulted in a wide array
of new product announcements over the past few months which are
being well received in the marketplace. Expect movement in this
vein in the near future. The addition of Jim Kanaley, with his
wealth of experience from Cisco and Juniper Networks, among
others will strengthen our tem and product offerings. "
About Vertex Interactive
Vertex Interactive is an international provider of supply chain
management technologies. Vertex offers a comprehensive range of
software systems and tools, from point solutions, to integrated
end-to-end hardware and software solutions, for enterprise-wide
and collaborative supply chain optimization.
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Safe Harbor
Certain statements contained herein may be forward-looking in
nature and are therefore subject to risks and uncertainties that
could cause actual results to differ materially. The Company's
recent acquisition history, progress toward completing the
integration of its acquisitions, history of operating losses,
current expense levels compared with its sales, and the state
of development of its product portfolio, coupled with the overall
economic and competitive operating environments pose a number
of risks investors should take into consideration in connection
with assessing our financial and operating results. A more
detailed discussion of these and other important risk factors
can be found in the documents filed with the Securities and
Exchange Commission on forms 10-K and 10-Q. Towards the end
of each fiscal quarter, Vertex Interactive will have a 'Quiet
Period' when Vertex Interactive and its representatives will
not comment concerning previously published financial
expectations, and we disclaim any obligation to update during
the Quiet Period. The public should not rely on previously
published expectations during the Quiet Period. Investors
should not expect that these forward-looking statements will be
updated or supplemented as a result of changing circumstances
or otherwise, and Vertex Interactive disavows and disclaims any
obligation to do so.
Contact: Investor Relations 908-756-2000
VERTEX INTERACTIVE, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
ASSETS
June 30, September 30,
2004 2003
(Unaudited)
------------ -------------
CURRENT ASSETS:
Cash and cash equivalents, $ 164,654 $ 25,265
Restricted Cash - short-term 225,000 -
Accounts receivable, less
allowance for doubtful accounts
of $456,358 at June 30, 2004
and September 30, 2003 198,225 639,208
Inventories, net of valuation allowance 414,231 537,337
Prepaid expenses and other current assets 22,921 20,103
------------ -----------
Total current assets 1,025,031 1,221,913
Equipment and improvements, net of
accumulated depreciation and
amortization of $1,351,779 at
June 30, 2004 and $1,320,152
at September 30, 2003 38,602 70,249
Capitalized software costs, net of accumulated
amortization of $318,331 at June 30, 2004 and
$231,513 at September 30, 2003 28,938 115,756
Restricted cash - long-term 193,750 -
Deferred financing costs,
net of accumulated amortization of $26,250 550,745 -
Other assets 111,270 111,273
------------ ------------
Total assets $ 1,948,336 $ 1,519,191
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See notes to condensed consolidated financial statements.
VERTEX INTERACTIVE, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
LIABILITIES AND STOCKHOLDERS' DEFICIENCY
June 30, September 30,
2004 2003
------------- -------------
(Unaudited)
CURRENT LIABILITIES:
Notes payable - unrelated parties $1,227,500 $ 1,869,236
Notes payable - related parties 4,233,187 4,095,848
Convertible notes payable - related parties 2,294,324 2,294,324
Accounts payable 3,800,769 4,533,875
Net liabilities associated with subsidiaries
in liquidation 7,572,880 8,511,077
Payroll and related benefits accrual 2,063,721 2,622,354
Litigation related accruals 3,655,323 4,077,665
Other accrued expenses and liabilities 5,153,916 4,870,759
Deferred revenue 386,251 305,243
------------- -----------
Total current liabilities 30,387,871 33,180,381
Long term convertible notes payable -
unrelated parties 2,250,000 0
------------- -----------
Total liabilities 32,637,871 33,180,381
------------- -----------
COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS' DEFICIENCY:
Series A preferred stock, par value
$.01 per share; 2,000,000 shares authorized,
1,356,852 shares issued and outstanding
($10,000,000 aggregate liquidation preference) 13,569 13,569
Series B preferred stock, par value $0.01 per
share; 1,000 shares authorized, 1,000 shares
issued and outstanding($1,000,000 aggregate
liquidation preference) 10 10
Series C preferred stock, par value
$0.01 per share; 10,000 shares authorized,
997 shares issued and outstanding ($997,000
aggregate liquidation preference) 10 10
Common stock, par value $.005 per share;
75,000,000 shares authorized; 48,201,978
shares issued and outstanding 241,011 241,011
Additional paid-in capital 155,778,295 155,364,295
Unearned income (400,000) (400,000)
Accumulated deficit (184,588,430) (184,332,055)
Accumulated other comprehensive loss (1,666,760) (2,480,790)
Less: Treasury stock, 87,712 shares of
common stock (at cost) (67,240) (67,240)
------------- -------------
Total stockholders' deficiency (30,689,535) (31,661,190)
------------- -------------
Total liabilities and stockholders' deficiency $ 1,948,336 $ 1,519,191
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See notes to condensed consolidated financial statements.