Artisoft, Inc. Completes Acquisition of Vertical Networks, Announces $27.5 Million Financing; Acquisition Unites Two IP-PBX Providers to Create Significant Market Presence.

CAMBRIDGE, Mass. -- Artisoft (R), Inc. (OTC: ASFT), a leading provider of software-based IP-PBX and call center products, announced today that it has closed the acquisition of privately held, Sunnyvale, CA-based Vertical Networks (R), Inc., a leading provider of distributed IP-PBX software and communications solutions to large enterprises. Simultaneous with the acquisition, the company also announced the closing of a $27.5 million financing, led by Boston-based private equity firm M/C Venture Partners. Approximately $22.5 million of that amount funded yesterday, and Artisoft expects to receive the remaining $5.0 million of funding within the next week. Artisoft will pay up to $19 million in cash for Vertical Networks, and a portion of the proceeds of the financing will be used to finance the acquisition.

With the acquisition, Artisoft significantly increases 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 expands the breadth and scope of its technology and product offering to include distributed large enterprise solutions.

As previously announced, related to the acquisition, Artisoft Chairman William Tauscher will serve as Chairman and Chief Executive Officer, and Vertical Networks founder Scott K. Pickett will serve as Chief Technology Officer. The combined company will now have more than 150 employees. The headquarters will remain in Cambridge, MA with a significant development, sales and marketing presence in Sunnyvale, CA.

"The transaction represents a transformational event for this company, marking its emergence as one of the largest IP-PBX software providers in the enterprise VoIP marketplace with a robust product set, large installed customer base, and now strong financial backing and balance sheet metrics. With the transaction closed, we are focused on two fronts: integrating the organizations and executing our strategy to grow market share by focusing on specific industry verticals and integrating our products with a wide range of enterprise applications that live in those verticals," said Tauscher.

Artisoft will continue development and support of both TeleVantage (R), Artisoft's open systems IP-PBX and call center solution, and InstantOffice (R), Vertical Networks' modular integrated IP-PBX communications platform developed for large enterprise customers with remote, multi-site locations. Artisoft anticipates combining technology to enhance both products, capitalizing on the unique features of each.

ThinkEquity Partners LLC acted as sole advisor and agent to the company.

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 http://www.artisoft.com.

About Vertical Networks

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 http://www.vertical.com.

About M/C Venture Partners

M/C Venture Partners has long been recognized as one of the most active venture capital investors in the emerging communications and IT industries. The firm has invested in early-stage companies across these segments for over 20 years. The firm manages over $1 billion in assets, including the nation's largest state and corporate pension funds, prominent university endowments, private trusts, and strategic financial institutions. The firm has offices in Boston, San Francisco and London. For more information, visit http://www.mcventurepartners.com.

About ThinkEquity Partners LLC

ThinkEquity Partners LLC is a research-centric investment banking firm dedicated to providing focused insight, capital, and corporate finance and advisory services to institutional investors and corporate clients in the economy's key growth sectors, including technology, healthcare/biotechnology, media/education, and business/consumer services. For more information about ThinkEquity Partners LLC, please visit http://www.thinkequity.com. Member NASD and SIPC.

Artisoft, TeleVantage, Vertical Networks and InstantOffice are registered trademarks of Artisoft, 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 acquisition, future financial and operating results, benefits and synergies of the acquisition and future opportunities for the combined company. The following factors, among others, could cause actual results to differ materially from those described in these forward- looking statements: (i) we may not successfully integrate Vertical Networks' operations and employees and realize anticipated synergies, cost savings and other benefits, and we may not receive the remaining $5.0 million of financing, and (ii) 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.