Cortelco Systems Puerto Rico Reports Fiscal Year 2004 Results and Expects to Achieve Profitability in Fiscal 2005 CAGUAS, Puerto Rico, Nov. 4 /PRNewswire-FirstCall/ -- Cortelco Systems Puerto Rico, Inc. (OTC:CPROF.OB) (BULLETIN BOARD: CPROF.OB) ("CSPR"), a leading Value- Added-Reseller (VAR) of Voice-Over-Internet-Protocol (VOIP) Communications Solutions in Puerto Rico, reported financial results for the fourth quarter and fiscal year ended July 31, 2004. Revenues for the quarter were $1,911,000, compared to $2,156,000 for the same period last year. Net revenues decreased 5.2% to $7.3 million in fiscal year 2004 from $7.7 million in fiscal year 2003. The decrease in revenues of $0.4 million in 2004 was mainly the result of the discontinuance of our cellular reseller business that was $0.6 million less than the previous year, while our main communication systems business actually increased by $0.2 million in comparison to the previous year. Gross profit increased 20% to $1.2 million in fiscal year 2004 from $1.0 million in fiscal year 2003. The cost of revenues included $950,000 for inventory obsolescence charges in fiscal year 2004 and $1.2 million in fiscal year 2003. In addition to the inventory charges, CSPR also wrote off $200,000 of doubtful accounts and recorded a $382,000 charge to reduce the carrying value of goodwill in fiscal year 2004. Net loss for the twelve months ended July 31, 2004, was $1,494,000 or ($1.11) per common share, an improvement of $255,000 from a net loss of $1,749,000 or ($1.45) per share in the prior-year period. "During the past two quarters, we have taken actions necessary to enhance our ability to generate a profit for the next fiscal year," said Robert Schnabl, CSPR President and CEO. "During the past year, CSPR was able to generate a profit from operations of $38,000, excluding the effect of account write-offs totaling $1,532,000 for inventory, bad debt and goodwill. Although a number of factors could impact results, we remain optimistic regarding our potential for profitability during the upcoming fiscal year. With increased emphasis on better customer service, increased technical training and aggressive accounts receivable collection efforts, we expect not only to reverse last year's slight decline in revenue, but to realize a moderate increase in revenue along with improved financial results." About Cortelco Systems Puerto Rico Cortelco Systems Puerto Rico, Inc. is a value-added reseller of voice and data communications systems and services in Puerto Rico and throughout the Caribbean and Latin America. To find out more information about Cortelco Systems Puerto Rico, please contact investor relations at the main corporate number (787) 758-0000. Note: This press release may contain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements involve risks and uncertainties, including technical and competitive factors, which could cause the Company's results and the timing of certain events to differ materially from those discussed in the forward-looking statements. Such risks are detailed in Cortelco Systems Puerto Rico's most recent Form 10-KSB filing with the Securities and Exchange Commission. DATASOURCE: Cortelco Systems Puerto Rico, Inc. CONTACT: Investor Relations, Cortelco Systems Puerto Rico, Inc., +1-787-758-0000 Web site: http://www.cortelcopr.com/

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