FTG Farmstead Telephone Grp.

Farmstead Telephone Group, Inc. Reports Second Quarter 2004 Results EAST HARTFORD, Conn., Aug. 11 /PRNewswire-FirstCall/ -- Farmstead Telephone Group, Inc. (AMEX:FTG) announced operating results for the second quarter and six months ended June 30, 2004. For the quarter ended June 30, 2004, revenues were $2,889,000, 25% below revenues of $3,870,000 reported for 2003. The net loss for the quarter was $414,000, or $(0.12) per share, compared to a net loss of $132,000, or $(0.04) per share, in 2003. For the six months ended June 30, 2004, revenues were $6,295,000, 25% below revenues of $8,374,000 reported for 2003. The net loss for the six months was $755,000, or $(0.23) per share, compared to a net loss of $277,000, or $(0.08) per share, in 2003. George J. Taylor, Jr., Chairman and CEO of Farmstead Telephone, commented, "Our 2004 results continue to reflect several dynamics affecting our marketplace in general and Farmstead in particular. First, there is increased competition in the market areas that we serve, and this has led to continued sales price erosion and some loss of market share. Second, our sales force has undergone significant turnover in the last two years, and the productivity ramp-up of new salespersons has taken longer than expected. Third, we continue to believe that corporations are still cautious about capital equipment spending. Although there have been some signs of improvement in our industry as evidenced by improved operating results from some of the key manufacturers, and increased sales quotation activities, our overall order flow has been below our expectations." Mr. Taylor continued, "Our primary focus continues to be on strategies to increase revenues while continuing close controls over operating expenses. To this end we are looking to hire additional sales persons and to further expand our product offerings. However, there is currently no clear indication that sales levels will significantly increase in the near term and, in fact, they could continue to decline. We are also currently seeking out business partners interested in merging with the company, as well as investment banking relationships to assist in obtaining capital to finance any mergers/acquisitions. With continuing softness in our order flow, growth through external means may be the quickest way for the Company to bolster revenues and operating results and achieve a more diverse product offering for our customers." About Farmstead Farmstead Telephone Group, Inc. is an Avaya Inc. Gold Business Partner, selling 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 Financial Highlights Quarter ended June 30, Six months ended June 30, 2004 2003 2004 2003 Revenues $2,889,000 $3,870,000 $6,295,000 $8,374,000 Net Loss (414,000) (132,000) (755,000) (277,000) Basic and Diluted Net Loss Per Share $(0.12) $(0.04) $(0.23) $(0.08) Weighted Average Shares Outstanding: Basic 3,315,638 3,304,732 3,314,152 3,301,861 Diluted 3,350,533 3,333,711 3,357,253 3,318,754 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: George Taylor, Jr., Chairman and Chief Executive Officer Farmstead Telephone Group, Inc. Voice: 860-610-6006 Fax: 860-610-6001 DATASOURCE: Farmstead Telephone Group, Inc. CONTACT: George Taylor, Jr., Chairman and Chief Executive Officer, Farmstead Telephone Group, Inc., +1-860-610-6006 Web site: http://www.farmstead.com/

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