FTG Farmstead Telephone Grp.

Farmstead Telephone Group, Inc. Reports Year-End and Fourth Quarter 2004 Results EAST HARTFORD, Conn., March 31 /PRNewswire-FirstCall/ -- Farmstead Telephone Group, Inc. (AMEX:FTG) announced operating results for the year and fourth quarter ended December 31, 2004. For the year ended December 31, 2004 revenues were $12,344,000, 17 percent below revenues of $14,909,000 reported for 2003. The Company reported a net loss for the year of $1,424,000, or $(0.43) per share, compared with a net loss of $709,000, or $(0.21) per share, in 2003. Fourth quarter 2004 revenues were $2,711,000, 16 percent below revenues of $3,240,000 reported for the fourth quarter of 2003. For the quarter, the Company reported a net loss of $494,000 or $(0.16) per share, compared with a net loss of $283,000, or $(0.09) per share, for the fourth quarter of 2003. The Company attributed these results to continued sales price erosion and some loss of market share as competition has intensified, particularly in the sale of parts and systems to larger companies; an undersized sales force; and a still cautious telecom equipment spending environment. During the fourth quarter, the Company increased its operating expenses as it began to execute the first elements of its broad turnaround strategy. During 2005, the Company continued to hire new executive management personnel and grow its sales force nationwide. Jean-Marc Stiegemeier, Farmstead's President and CEO commented, "The fourth quarter of 2004 represented a period of change and the setting of a new course that we believe will grow the Company's revenues significantly in 2005, and return the Company to profitability. During the fourth quarter, the Company defined its "turnaround plan" and began executing its preliminary stages. These actions included implementing the initial elements of a strategic redirection, which is principally based upon building a larger and more highly qualified sales force, and diversifying the Company's product offerings and targeted customers on a national basis. The business strategy embraces the transition to a full communications solutions provider by becoming less dependent on parts sales and developing more sources of recurring revenues, such as through installation and maintenance services. We are expanding our product offerings beyond traditional voice communications products by offering Internet Protocol, or IP products, and soon will be introducing a unique Network Services offering. We plan to expand our customer base and revenues by targeting the small to medium-sized (under 200 employees) business market ("SMB"). "We believe that the results of these initial efforts will have a profound impact on the Company's revenue growth and return it to profitability in 2005. We also believe the telecommunications industry is in the early stages of a paradigm shift that, in fact, is providing an opportunity for the Company. We have set our new course, and as a team we are excited with its prospects and the value it will provide our shareholders." In March 2005, Farmstead entered into an alliance with Avaya designed to generate incremental SMB revenues. The Company believes that this is the fastest growing segment of the telecommunications systems and services business. On March 1, 2005, Farmstead also launched an SMB program targeting this customer base and, in March 2005 hired an additional 23 experienced sales professionals that have been deployed in 12 states and 22 cities nationally. The Company intends to hire additional sales professionals during 2005 to meet its 2005 SMB revenue expectations. About Farmstead Farmstead Telephone Group, Inc. is an Avaya Inc. Gold Business Partner, selling, installing and maintaining both new and refurbished Avaya business communications products nationwide. Further information about Farmstead Telephone may be found at http://www.farmstead.com/. Farmstead Telephone Group, Inc. Financial Highlights Quarter Ended December 31, Year Ended December 31, 2004 2003 2004 2003 Revenues $2,711,000 $3,240,000 $12,344,000 $14,909,000 Net Loss (494,000) (283,000) (1,424,000) (709,000) Basic and Diluted Net Loss Per Share $(.16) $(.09) $(.43) $(.21) Basic and Diluted Weighted Average Shares Outstanding: 3,322,182 3,311,601 3,316,794 3,305,439 We are interested in your feedback and comments. To respond to questions from our management team, click here: http://www.b2i.us/sendFeedBack.asp?B=1042&RL=7853&S=12204 To add yourself to our email distribution list, click here: http://www.b2i.us/frame.asp?BzID=1042&to=ea&Nav=1&S=0&L=1 This release contains forward-looking statements that involve risks and uncertainties. In addition to historical information, investors should consider carefully the risks associated with an investment in the Company's securities as previously outlined by the Company in its prior filings with the Securities and Exchange Commission. CONTACT: Robert G. LaVigne, CFO Farmstead Telephone Group, Inc. Voice: 860-610-6002 Fax: 860-610-6001 DATASOURCE: Farmstead Telephone Group, Inc. CONTACT: Robert G. LaVigne, CFO of Farmstead Telephone Group, Inc., +1-860-610-6002 Web site: http://www.farmstead.com/

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