KAMLOOPS, B.C. - Audiotech Healthcare Corporation (AUD:TSX Venture Exchange) is pleased to report its operating results for the third quarter of fiscal 2005.

The third quarter of fiscal 2005 was highlighted by numerous corporate activities aimed at moving the company forward in its next stage of growth, including negotiations with respect to a number of potential acquisitions and mergers, and discussions exploring possible joint ventures related to roll-out the new regional hearing & balance center concept in other U.S. locations.

During the quarter, management had to make a difficult decision to cancel the proposed acquisition of a 25% equity stake in the Lobe Purchasing Group Inc. Despite lengthy negotiations and the best efforts of both parties, unforeseen complexities in the introduction of Audiotech's clinics to the Lobe purchasing network created a risk profile that management could not accept under the framework of the original deal.

While the company is not yet in a position to announce the completion of a definitive agreement with respect to any other acquisition or new clinic opening, strong progress was made during the quarter on both fronts and management hopes to be in a position to make such announcements shortly as negotiations and plans progress.

On a clinic operations front, business volume was generally strong during the quarter, resulting in a modest operating profit, despite significant non-recurring costs associated with the opening of the new Hearing & Balance Center in Idaho.

Statement of Income - Quarterly Data (Unaudited)

	3 Months Ended June 30			9 Months Ended June 30
	2005	2004	2003	2005	2004	2002
Canadian Revenues	$ 607,413	$ 629,278	$ 436,184	$ 1,910,115	$ 1,578,851	$ 1,252,489
U.S. Revenues	321,098	336,676	383,466	988,185	958,064	1,066,834
Total Revenues	$ 928,511	$ 965,954	$ 819,650	$ 2,898,300	$ 2,536,915	$ 2,319,323
Operating Cash Flow*	44,066	34,444	105,052	171,291	129,991	66,625
Net Earnings **	2,470	1,955	87,207	65,999	44,835	9,379
EPS (basic & fully-diluted)	0.0002	0.0002	0.0065	0.0049	0.0036	0.0007

* Operating cash flow is a non-GAAP measure that includes net earnings and non-cash expenses such as amortization. While management believes this number to be an important measure of corporate activity used in the industry in which the company operates, it cannot be assured that operating cash flow, as reported, is directly comparable to operating cash flow as reported by peer companies in the industry since there is no universally accepted means of its calculation. Audiotech's calculation of operating cash flow is done in the manner believed to be consistent with the most accepted means of calculation in the industry and the accounting profession as a whole.

During the 3 months ended June 30, 2005, revenues were $928,511. Revenues from the company's Canadian operations were $607,413, while the U.S. operations contributed revenues of $321,098. Revenues in both geographic regions were slightly below expectations and slightly off of the record pace of recent quarters. It is important to note that the comparison quarter in fiscal 2004 was unusually strong. Notwithstanding this, Canadian revenues were impacted modestly by the termination of one audiologist staff position and increased competition in the Alberta market. U.S. operations were impacted by major road construction adjacent to the new Hearing & Balance Center in Idaho Falls and loss of a key referring physician in that clinic's service area. Management is confident that the effects of these situations will be short-term.

For the nine month period ended June 30, 2005, revenues were $2,898,300, up 14.2% over the $2,536,915 posted during the same 3 quarters of fiscal 2004. Revenues in Canada surged 21.0% during this period. The U.S. operations posted revenue growth of 4.6% despite the roughly 10% devaluation of the U.S. dollar over the past year as compared to the Canadian dollar in which corporate consolidated revenues are measured.

As a result of a shift in revenue mix in the U.S. operations favoring more specialty hearing and balance diagnostic services as opposed to the sale and fitting of hearing aids, and the impact of newly negotiated discounts with hearing aid manufacturers, gross margins as a percentage of sales remained well above historical averages during the third quarter of fiscal 2005. In fact, gross margins increased slightly to 67.1%, up from the 66.6% posted during the previous quarter. Gross margins were also well ahead of the 58.5% posted during the third quarter of fiscal 2004. For the year to date, gross margins as a percentage of sales were 64.4% compared to 59.7% during the first nine months of fiscal 2004.

Direct clinic costs of $482,195 for the third quarter were up about 6% over the previous quarter primarily as a result of increased amortization costs on new equipment, non-recurring moving costs, and additional marketing costs associated with the opening on the new Hearing & Balance Center in Idaho Falls. Management expects that direct clinic costs will decline from this level in upcoming quarters excluding the effect on the cost structure in the event of a new clinic opening or acquisition.

General and administrative expenses also increased from $104,794 for the third quarter of fiscal 2004 to $127,938 as a result primarily of the interest costs associated with the financing for the new Hearing & Balance Center and an increase in professional fees.

Audiotech is pleased to report income from operations (income before the amortization of the debenture discount) of $13,315 or $0.001 per share for the quarter ended June 30, 2005. After the amortization of the debenture discount, net earnings were $2,470 or $0.0002 per share. Operating cash flow reached $44,066 compared to $34,444 during the same quarter in fiscal 2004.

For the nine months ended June 30, 2005, net earnings were $105,649 or $0.008 per share before the deduction of amortization of the debenture discount, and $65,999 or $0.0049 after this deduction.

During fiscal 2004, Audiotech adopted new accounting policies with respect to the valuation of stock-based compensation for all stock-based payments to non-employees as well as direct employee awards of stock. The valuation of this compensation is recorded using the fair value method. In accordance with this method, the convertible debentures issued in April 2004 were assigned both an equity and debt component. The equity component of the convertible debentures was estimated using the Black-Scholes model for convertible securities/options valuation and is based on the average volatility of Audiotech's stock price, the average exercise price of the debenture conversion over their life, and a risk-free interest rate of 2.46%. The equity component, which amounted to $176,000, was recorded as other paid in capital on the balance sheet and amortized over the 3 year term of the debentures. During the third quarter fiscal 2005 a total of $10,845 in amortization related to the debenture discount was recorded on the statement of income, thereby reducing net earnings by the same amount ($39,650 for the 9 months ended June 30, 2005).

Details of all expenses can be found in the unaudited interim consolidated financial statements for the 9 months ended June 30, 2005.

As at June 30, 2005, Audiotech had a cash balance of $464,851, including term deposits in the amount of $15,962.

Management is confident that the company's working capital position is sufficient to meet its growth objectives. Investments have and will continue to be made in new and additional equipment and will be financed from existing working capital, capital leases, or through funding arrangements with key hearing aid suppliers as appropriate under the circumstances. It is anticipated that equity financing will be undertaken in fiscal 2005 or early in fiscal 2006 to accelerate the company's debt retirement goals to reduce future interest costs.

Debt repayments and other financial commitments due during the next 5 years are disclosed in the notes to the consolidated interim financial statements for the period.

The Corporation's capital assets consist of various hearing diagnostic equipment, computer and office equipment, leasehold improvements, and land and building as detailed in the notes to the consolidated interim financial statements for the period ended June 30, 2005 (see note 2), as well as the goodwill in acquired and developed clinics. The company intends to make additional investments in capital assets during the remainder of fiscal 2005 in the ordinary course of its business as it acquires, expands, and opens new clinics. Such purchases are expected to be financed out of existing cash reserves and/or capital leases where favorable rates and terms can be negotiated.

During the third quarter ended June 30, 2005, a total of $33,466 in new equipment was acquired, bringing the total capital purchases to date in fiscal 2005 (including the new Hearing & Balance Center in Idaho Falls) to $441,586.

As at June 30, 2005, Audiotech had 13,654,825 common shares issued and outstanding with a book value of $1,705,340. As at September 30, 2004, Audiotech had 13,329,825 common shares outstanding with a book value of $1,635,840.

No common shares were issued during the third quarter ended June 30, 2005.

During the second quarter, a total of 325,000 common shares were issued. 225,000 common shares were issued upon the exercise of stock options by the corporation's president, Osvaldo (Ozzie) Iadarola, at a price of $0.22 per share. 100,000 common shares were issued to third parties on March 1, 2005 upon the conversion of $20,000 in convertible debentures at $0.20 per share.

No common shares were issued during the first quarter ended December 31, 2004.

As at June 30, 2005, there were 700,000 options to acquire common shares outstanding. The average exercise price of these options was $0.21 (range from $0.16 to $0.35 per share).

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.