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May 15, 2008

QSGI Reports First Quarter 2008 Financial Results

HIGHTSTOWN, NJ-May 15, 2008-QSGI, Inc. (OTC:BB QSGI) the only provider of a full suite of information technology solutions to help corporations better manage IT assets, data center maintenance expenses, and ensure best practices for data security and regulatory compliance, today reported financial results for the three months ended March 31, 2008.

Recent Developments

24.7% increase in revenue within Data Center Maintenance division; added 5 new maintenance accounts while also expanding service contracts within existing accounts
32.3% increase in revenue within Data Security & Compliance division, including a 177% increase in Data Security & Compliance services revenue
Signed agreement to acquire Contemporary Computer Services, Inc., an enterprise class IT services provider with approximately $13.7 million of revenue and $2.1 million of EBITDA in 2007
Signed Memorandum of Understanding with IBM Global Financing to provide on-site data security and compliance services at customer locations

Marc Sherman, chairman and chief executive officer of QSGI, commented, "Events in the first half of 2008 have enabled us to advance our mission of repositioning the company into a full service, nationwide data center maintenance and IT services organization. Our Data Center Maintenance division added 5 new accounts in the first quarter alone, including a number of Fortune 500 clients, as we achieved another quarter of solid double digit revenue growth. Within our Data Security & Compliance Services division, we announced the signing of a Memorandum of Understanding (MOU) with IBM Global Financing (IGF), whereby IGF will offer its customers QSGI's data audit and erasure services. This was an important milestone and validation of our process, and we look forward to working closely with IBM. Overall, we added a number of new clients for our Data Security & Compliance services in the first quarter of 2008, as reflected by a 177% increase in our services revenue. We have been building a solid foundation for the company, and will add another key component of our strategy with the planned acquisition of Contemporary Computer Services, Inc. (CCSI), an enterprise class IT services provider. These developments, combined with the cost-saving measures put into place at year-end 2007, which we continue to implement, along with the continuing growth of our Fortune 1000 customer base, are paving the way for sustained growth and are establishing a path to profitability as we increase the mix of recurring, higher margin IT services."

Mr. Sherman continued, "CCSI is a network management and systems integration company that brings value and growth opportunities to QSGI through its extensive list of customers, high recurring revenue and its track record for generating positive EBITDA and net income. CCSI had revenue of $13.7 million in 2007, up from $11 million in 2006 and generated $2.1 million in EBITDA last year. Through this acquisition, we feel QSGI will have a broader range of IT services to offer our customers along with the addition of highly skilled technicians to provide data maintenance services. We are working to complete this transaction as soon as possible."

"We recognize that our losses in the first quarter were significant, which we attribute to the negative impact from the change in an OEM's third party remarketing policies and lower margins within the Data Security & Compliance division due to weakness in our legacy wholesale remarketing business. Nevertheless, our end-user technology services within both the Data Center Maintenance and Data Security & Compliance segments continue to be strong performers in 2008. With further expense reductions planned, continued organic growth and our pending acquisition of CCSI, we believe we are on the right track as we continue expanding our offering in order to become a more complete, full-service, and nationwide IT services company."

Total revenue for the first quarter of 2008 was $8.2 million, as compared with $9.4 million for the same period in 2007. We attribute the decline in revenue to a $2.9 million decrease in revenue from our Data Center Hardware division reflecting the impact of in this division's performance as a result of the changes in an OEM's third party remarketing policies and the company's recent restructuring of its Data Center Hardware division to support its higher margin Data Center Maintenance services. Gross profit was $1.6 million, compared to gross profit of $2.7 million in the first quarter of 2007. Gross margin for the first quarter of 2008 was 19.2% compared to 28.5% for the same period in 2007. The decline in gross profit and gross margin largely reflect the decline in Data Center Hardware revenue.

Revenue within the Data Security & Compliance division for the first quarter of 2008 increased 32.3% to $5.6 million compared to $4.3 million in the first quarter of 2007. Gross margin within the Data Security & Compliance division decreased to 8.1% from 18.9%, reflecting an increase in lower-margin wholesale remarketing revenue, partially offset by a 177% increase in higher margin end-user, data auditing, erasure and re-marketing work. Revenue within the Data Center Maintenance division increased 24.7% to $1.7 million for the first quarter of 2008, compared to $1.3 million in the first quarter of 2007. Gross margin within the Data Center Maintenance division increased to 66.5% from 64.5% for the same period last year, reflecting increased utilization of the company's field technicians to support multiple contracts. Revenues within the Data Center Hardware division decreased to $883,934 for the first quarter of 2008, compared to $3.8 million for the first quarter of 2007, reflectingthe sudden change in business practice by a major OEM as previously disclosed.

Selling, general and administrative expenses were $2.3 million, versus $2.6 million for the same period last year, reflecting the company's ongoing efforts to reduce expenses across all three of its divisions and, in particular, its Data Center Hardware division. Net loss available to common stockholders for the first quarter of 2008 was $959,709 or $0.03 per share, compared to a net loss of $206,884, or $0.01 per share, for the same period in 2007.

Conference Call
QSGI will host a conference call at 10 a.m. Eastern Time on Friday, May 16, 2008. During the call, Marc Sherman, chairman and chief executive officer, Seth Grossman, president and chief operating officer, and Ed Cummings, chief financial officer, will discuss the Company's quarterly performance and financial results. The telephone number for the conference call is866-334-4934. A live webcast of the call will also be available on the company's website, www.QSGI.com. To listen to the live call online, please visit the site at least 10 minutes early to register, download and install any necessary audio software.

The webcast will be archived on the site, and investors will be able to access an encore recording of the conference call for one week by calling866-245-6755, conference ID #320082. The encore recording will be available two hours after the conference call has concluded.

About QSGI
QSGI provides a full suite of information technology solutions to help corporations and governmental agencies better manage hardware assets, reduce data center maintenance expenses, build best practices for data security and assure regulatory compliance. With a focus on the entire range of IT platforms - from the PC to the mainframe, the services offered by QSGI are specifically designed to reduce total cost of ownership for IT assets and maximize the clients' return on their IT investment.

For enterprise class hardware in the data center, QSGI offers hardware maintenance services, hardware environment planning and consultation, refurbished whole systems, parts, features, upgrades and add-ons. Additionally, for desktop IT assets, servers and SAN products, QSGI offers a range of end-of-life services that include: automated asset auditing, Department of Defense (DOD) level data destruction, documentation for regulatory compliance, hardware refurbishment with worldwide remarketing or proper IT asset recycling. Given the sensitive nature of the company's client relationships, it does not provide the names of its clients. Additional information about the company is available at www.qsgi.com.