Cortelco Systems Puerto Rico Reports Fiscal Year 2004 Results and Expects to Achieve Profitability in Fiscal 2005

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.,

[phone]



Web site:  http://www.cortelcopr.com/ 

Copyright