Audiotech Healthcare Corporation (AUD:TSX Venture Exchange) is pleased to announce its operating results for the second quarter of fiscal 2006. The company had net earnings of $101,969 or $0.0076 cent per share.

This press release should be read in conjunction with the corporation's financial statements and management's discussion and analysis thereof for the six-month period ended March 31, 2006.

Results of operations

Overall revenues reached $972,977 for the quarter, up from $956,073 during the same quarter in the prior fiscal year. Revenues from the company's Canadian operations jumped to $686,718, while the U.S. operations contributed revenues of $305,024. The reported revenues from Audiotech's U.S. operations continued to be negatively impacted by the strength of the Canadian dollar, however, U.S. revenues still rose 22.8 per cent over the revenues reported during the prior quarter. Canadian revenues rose 20.9 per cent over the first quarter. Total sales for the six months ended March 31, 2006, were $1,774,007.

Gross margins (sales less materials and freight costs) remained well in excess of historical averages for the third consecutive quarter. Gross margins were 68.6 per cent compared with 68.3 per cent during the first quarter and 66.4 per cent during the second quarter of fiscal 2005. Gross margins were positively impacted by a continuing favourable sales mix. The strong improvement in operating margins is more apparent when comparing the data for the six months ended March 31, 2006, with the corresponding period a year earlier. Year-to-date gross margins were 68.4 per cent compared with only 63.1 per cent during the first two quarters of fiscal 2005. Early indications for the third quarter of fiscal 2006 suggest that the company will continue to benefit from these strong operating margins as sales of higher-end hearing aids have strengthened in Canada.

Other direct clinic costs (direct costs excluding materials and freight) during the quarter remained below the levels reported for the corresponding quarter last year due primarily to a decrease in clinic overhead costs. Direct clinic costs of $443,090 during the quarter compare with $453,674 during the quarter ended March 31, 2005, a reduction of 2.3 per cent. For the six months ended March 31, 2006, other direct clinic costs totalled $868,425, a 6.6-per-cent reduction over the comparable period last year.

General and administrative expenses increased slightly from $108,942 during the second quarter of the prior fiscal year to $115,600 in the current quarter due primarily to a small increase in professional fees. General and administrative expenses rose 1.9 per cent for the six months ended March 31, 2006, compared with the same period in fiscal 2005 for the same reason.

As a result of the strong margin performance and reductions in overall costs, Audiotech had income from operations (income before the amortization of the debenture discount) of $108,344, operating cash flow of $135,340 and net earnings of $101,969 (0.76 cent per share) for the second quarter of fiscal 2006. This represents increases of 45.4 per cent, 51.4 per cent and 70.5 per cent, respectively.

For the six months ended March 31, 2006, operating cash flow totalled $169,776, an increase of 33.4 per cent. Net earnings were $106,116 or 0.78 cent per share, up 67 per cent. Both the Canadian and U.S. operations were profitable for the first half of fiscal 2006.

During the quarter, a total of $6,375 in amortization related to the debenture discount was recorded on the statement of income, thereby reducing net earnings by the same amount ($14,721 for the same quarter in fiscal 2005).

Management's outlook for the latter half of fiscal 2006 remains favourable. Early indications for the third quarter suggest solid sales and a continuation of the strong operating margins that contributed to the significant operating profit in the second quarter.

Details of all expenses can be found in the unaudited interim consolidated financial statements for the six-month period ended March 31, 2006.

STATEMENT OF INCOME -- QUARTERLY DATA

                       3 Months ended March 31     6 Months ended March 31
                          2006          2005          2006          2005
Canadian revenues     $ 686,718     $ 651,043    $ 1,254,596   $ 1,302,696 
U.S. revenues           286,259       304,861        519,411       666,924
                      ---------     ---------    -----------   -----------
Total revenues        $ 972,977     $ 955,904    $ 1,774,007   $ 1,969,620 
Operating cash flow     135,340        89,254        169,776       127,056
Net earnings            101,969        59,120        106,116        62,831
EPS*                     0.0076        0.0044         0.0078        0.0047

*(basic and fully diluted)

Liquidity

As at March 31, 2006, Audiotech had a cash balance of $489,843 and positive working capital of $296,325. Management is confident that the company's working capital position is sufficient to meet its needs. Investments have and will continue to be made in new and additional equipment as new clinics are opened or upgraded, and will be financed from existing working capital, capital leases or through financing arrangements with key hearing aid suppliers as appropriate under the circumstances. It is the company's intention to undertake an equity financing in fiscal 2006 to accelerate the company's debt retirement goals to reduce future interest costs.

A total of $49,318 in long-term debt obligations were repaid during the quarter ended March 31, 2006, bringing the total repaid to date in fiscal 2006 to $101,994.

Capital resources

The corporation's capital assets consist of various hearing diagnostic equipment, computer and office equipment, leasehold improvements, land and buildings, as well as the goodwill in acquired and developed clinics. The company intends to make additional investments in capital assets during the ordinary course of its business as it acquires, expands and opens new clinics.

A total of $15,977 in capital purchases were made during the second quarter of fiscal 2006 ($45,161 for the six months ended March 31, 2006). These purchased were financed from cash flow and working capital.

Transactions with related parties

Audiotech had, in the normal course of business, several non-material transactions with related parties during the quarter.

A total of $1,451 was paid to MediaWave Communications Corp., an Internet service company controlled by a director of the company, in connection with website design and hosting services, and royalties on revenues derived from HearingDepot.com and HearingCenterOnline.com. ($1,742 for the six months ended March 31, 2005).

A total of $21,256 in rent was paid to Sherwood Real Estate Corp., a company controlled by a director of the company, during the quarter ($16,504 for the six months ended March 31, 2005).

These transactions were in the normal course of operations and were measured at the exchange amount, which is the amount of consideration established and agreed to by the related parties. Such consideration was no more than that would have otherwise been paid by the corporation to purchase similar products and services from third parties.

Proposed transactions

At any given time, the corporation is in active and continuing negotiations with respect to various acquisition, merger and joint venture opportunities as well as negotiations pertaining to the potential opening of new clinics. Management regards such negotiations as a part of its everyday operations and accordingly, until a letter or intent is completed or it is deemed that there is a strong likelihood of a transaction proceeding, such negotiations are not generally announced. As of the date of this document, there are no pending proposed transactions of a material nature that have not been disclosed in this management's discussion and analysis, however, negotiations are active and continuing with respect to several potential transactions.

Additional information

Additional information relating to the company is on SEDAR at www.sedar.com.

The company's shares are listed and posted for trading on Tier 1 of the TSX Venture exchange under the symbol "AUD." For more information on the company, contact Osvaldo (Ozzie) Iadarola, President & CEO, at (250) 372-5847, or Doren Quinton of QIS Capital, investor relations, at (250) 376-8989, or visit the company's website at www.audiotech.org.

AUDIOTECH HEALTHCARE CORPORATION
First Bank Building
760-175 Second Avenue
Kamloops, B.C. V2C 5W1
Phone: (250) 372-5847
Fax: (250) 372-3859
Email: info@audiotech.org

Except for historical information contained herein this document contains forward-looking statements. These statements contain known and unknown risks and uncertainties that may cause the company's actual results or outcomes to be materially different from those anticipated and discussed herein.