SOUTH PLAINFIELD, N.J., Aug. 23, 2004 (PRIMEZONE) -- 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 and Administrative expenses fell 43% to $520,000 from $909,000 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 million of convertible notes subscribed for by the NIR Group.)
In addition, the Company had $567,000 in cash, cash equivalents and restricted cash on June 30, 2004.
Other Highlights
Funding
$3 million 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.
Pipe line activity increased significantly during the period.
New Products
In July, Vertex announced Release 4.0 of its eWMS Warehouse Management Solution incorporating our event management tool, the Spontaneous Event Engine or SEE product.
Also in July, the company announced the Release 3.0 of its Linux Order-Fulfillment System.
Management
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 team 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.
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 the company's 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 the company disclaims 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.
VERTEX INTERACTIVE, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
June 30, September 30,
2004 2003
(Unaudited)
---------- ----------
ASSETS
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
========== ==========
See notes to condensed consolidated financial statements.
VERTEX INTERACTIVE, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
June 30, September 30,
2004 2003
------------- -------------
(Unaudited)
LIABILITIES AND STOCKHOLDERS'
DEFICIENCY
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
============= =============
See notes to condensed consolidated financial statements.
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