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QSGI Reports 126% Growth

HIGHTSTOWN, N.J. -- QSGI, Inc. (OTCBB: QSGI) the only data security and regulatory compliance provider offering a full suite of life-cycle services for a corporations entire IT platform, today reported financial results for the fourth quarter ended December 31, 2006.

Fourth Quarter 2006 Financial Highlights (year-over-year):

Total revenue increased 10% to $12.6 million

  • Data Security & Compliance revenue increased 37% to $6.7
    million
  • Data Center Maintenance revenue rose 126% to $1.3 million
  • Data Center Hardware revenue decreased 27% to $4.6 million

Gross profit increased 12% to $2.4 million, versus $2.1 million in the fourth quarter of 2005

  • Data Security & Compliance gross profit increased 168% to
    $816,000
  • Data Center Maintenance gross profit rose 123% to $873,000
  • Data Center Hardware gross profit decreased 52% to $680,000

“We generated very strong growth within both our Data Security & Compliance Division, as well as our Data Center Maintenance Division,” stated Marc Sherman, chairman and chief executive of QSGI. “Within the Data Security & Compliance division we focused heavily on strengthening our asset remarketing relationships with the major OEMs, which helped drive the 37 percent growth during the quarter. Although our remarketing business has lower gross margins than our full-suite of data security services, our goal was to rapidly expand this business in order to layer on the higher margin end-user services through these OEM clients over time. At the same time, we added a number of new clients for our full suite of Data Security & Compliance services, including one of the world’s largest retailers; a leading international private bank; a well renowned provider of tobacco products; and a worldwide marketer of specialty skincare merchandise and beauty accessories.”

QSGI