July 16, 2008

QSGI Provides Mid-Year Update to Shareholders


HIGHTSTOWN, NJ-July 16, 2008-QSGI, Inc. (OTC:BB QSGI) the only provider of a full suite of information technology services to help corporations better manage IT assets, data center maintenance expenses, and ensure best practices for data security and regulatory compliance, today provided the following mid-year update to shareholders from Marc Sherman, Chairman and Chief Executive Officer:

Dear Fellow Shareholders,

In light of the dramatic transformation that has taken place at QSGI over the past few quarters, we thought it appropriate to provide our investors with a mid-year update focusing on our strategic initiatives, the realignment of our business segments and QSGI’s prospects for the future.

Most recently, we completed the acquisition of Contemporary Computer Services, Inc. (CCSI), an enterprise class IT services provider with a broad array of corporate, educational and government customers. The strategic importance of this acquisition is best illustrated within the context of our mission to advance the repositioning of QSGI into a full service, nationwide data center maintenance and IT services organization. With CCSI’s established base of IT services customers, high recurring revenue and track record for generating positive EBITDA and net income, QSGI has taken an important step forward in realizing its vision. As a result of this acquisition, we have also gained highly skilled professionals who complement or existing Data Center Maintenance capabilities by expanding our services expertise into IT network infrastructure design and maintenance as well as CCSI’s Network Operating Center (NOC), which is a growth platform with recurring revenue and attractive gross margins that we plan to build upon. While we anticipate integration for this acquisition during the next few quarters, its positive effects on our business will be evident from the outset.

In June 2008, we signed on our first customer through our newly-formed strategic alliance with IBM Global Financing (IGF) for on-site auditing and data erasure services. Under the pilot program, announced in April 2008, IGF will offer its customers QSGI’s on-site data audit and erasure services for enterprise storage systems within the data center and distributed computing equipment within the corporate environment. For IBM customers who utilize the service, QSGI will dispatch a team to the customer location to conduct its automated process of audit and erasure of IT equipment, as specified by the client. The increasing interest in having our data security services performed on-site is being driven by legislation to protect the confidentially of personal data that resides on computers. We anticipate that our alliance with IBM will play a role in shortening the selling cycle for our data audit and erasure services, given IBM’s strong name recognition and deep penetration in the marketplace

In tandem with the foregoing strategic initiatives, we continue to win customers for our data center maintenance and data audit and erasure services. Not only can we anticipate our business model becoming less sensitive to economic downturns but, in fact, the opposite can hold true. This is because we save our data center maintenance customers substantial amounts of money, which is especially important in a difficult business environment. Moreover, our data audit and erasure customers can’t afford a security breach, and our ability to remarket the equipment offsets the potential costs—reinforcing the value proposition for our customers in any market environment.

In the latter half of 2007, we were forced to revamp the company to focus entirely on the high margin services side of the business and to downsize the hardware and wholesale remarketing segments Historically, the services side of our business has been escalating at a healthy rate with revenue increases of 34% in 2007 versus 2006 and 60% in 2006 versus 2005. Margins on this business are typically in the mid 60% range. With the acquisition of CCSI, our business is now centered on three key service lines--Data Center Maintenance, Network Services & the Network Operating Center and Data Security & Compliance. Beginning in the third quarter of 2008, we will discuss QSGI’s results along these service lines and believe that in the future our focus on these core business segments will drive strong cash flow, positive EBITDA and top line growth. The financial backing of Victory Park Capital in the form of a $10 million Senior Security Purchase Agreement will accommodate QSGI’s working capital needs and funding for future ac

We are confident that QSGI now has all the proper pieces in place to deliver long-term shareholder value and would like to thank our shareholders for their continued support. We invite you to participate in our next quarterly conference call for investors in August.

Sincerely,

Marc Sherman
Chairman and Chief Executive Officer

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.

About CCSI
CCSI, headquartered in Bohemia, NY, is an enterprise class IT services provider with an extensive list of corporate, educational, and government customers, high recurring IT services revenue and a history of generating positive EBITDA and net income. In addition to providing maintenance services for mainframe and mid-range processors, enterprise class tape storage and peripherals, CCSI also performs network design, implementation, and monthly maintenance services on corporations’ networking infrastructure as well as 24/7 IT monitoring and diagnostics through its North American Network Operating Center (NOC).