Audiotech Healthcare Corporation (AUD:TSX Venture Exchange) is pleased to announce its operating results for the 3 months ended December 31, 2006. This press release should be read in conjunction with the corporation's financial statements for the 3 month period ended December 31, 2005.

Results of Operations

For the 3 months ended December 31, 2005, revenues were $801,030, compared to $1,013716 during the first quarter of fiscal 2005. Revenues from the company's Canadian operations were $567,878, while the U.S. operations contributed revenues of $233,152. Canadian sales revenues were impacted primarily by an unfavorable product mix which favored lower-end hearing-aid models. The Canadian clinic operations sold and fitted a total of 433 hearing aids during the quarter compared to 463 during the same quarter in fiscal 2005, 365 in fiscal 2004, and 304 in fiscal 2003. The U.S. operations continued to be effected by the strength of the Canadian dollar and the loss of a key referring physician who passed away in fiscal 2005.

Gross margins (sales less materials & freight costs) for the first quarter of fiscal 2006 remained considerably above the long-term average. Gross margins were 68.3% as compared to 59.7% during the same quarter a year ago, and compared to 68.6% during the fourth quarter. Management is particularly encouraged by the strong operating margin performance over the latest quarter as it was not originally anticipated that the extraordinarily high margins of the fourth quarter of fiscal 2005 would be repeated. We are optimistic that these margins will result in stronger earnings as revenues return to expected levels.

As forecasted, other direct clinic costs (direct costs excluding materials and freight) during the quarter decreased by 10.6% due to a significant reduction in selling expenses and salaries & benefits. Direct clinic costs of $425,335 during the quarter compare with $ 475,805 during the quarter ended December 31, 2004, and $498,675 for the prior quarter. Management expects that direct clinic costs will stabilize at or near this level in upcoming quarters excluding the effect on the cost structure in the event of a new clinic opening or acquisition, or new hirings.

General and administrative expenses declined by 2.2% during the quarter compared to the same quarter a year earlier to $111,051.

As a result of the strong margin performance and reductions in key operating and overhead costs, Audiotech is pleased to report income from operations (income before the amortization of the debenture discount) of $10,522, operating cash flow of $34,436, and net earnings of $4,147 for the first quarter of fiscal 2006. This marks the ninth consecutive quarter of profitability for Audiotech.

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 ($14,084 for the same quarter in fiscal 2005).

While the company remained cash low positive and profitable for the quarter, revenues, cash flow, and earnings for the period were below management's expectations. During its quarterly operations review, management identified several key performance drivers with room for improvement. The average monthly hearing aid fittings for the period from October 1, 2005, to February 28, 2005, was within 2.5% of the typical fiscal 2005 monthly production. The average revenue per hearing aid has improved subsequent to the year end and is expected to return to more historic levels in March 2006. Accordingly, management expects improved revenue, cash flow, and earnings performance in subsequent quarters.

Details of all expenses can be found in the unaudited interim consolidated financial statements for the 3 month period ended December 31, 2005.

Statement of Income

* 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.

** there were no material extraordinary or unusual items, gains or loses on discontinued operations, etc. for any of the reporting periods.

There have been no material changes outside the general course of business that account for the fluctuation or changes in the financial results reported from period to period in the chart above, except as follows. As mentioned in previous filings, the company has and will continue to be affected by the increase in value of the Canadian dollar relative to the U.S. dollar over the past three years. The effect of the strength of the Canadian dollar has been to reduce reported revenues (in Canadian dollars) from the corporation's U.S- based operations upon consolidation.

Summary of Quarterly Results

Revenues and net income for the last eight fiscal quarters were as follows:

* there were no material extraordinary or unusual items, gains or loses on discontinued operations, etc. for any of the reporting periods.

Liquidity and Debt Repayment

As at December 31, 2005, Audiotech had a cash balance of $378,680 and positive working capital of $215,899.

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 funding 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.

Details of all long-term debt and capital lease obligations as well as debt repayments and other financial commitments due during the next 5 years are disclosed in the notes to the consolidated financial statements for the period (see Note 3 and 4).

A total of $52,676 in long-term debt obligations were repaid during the quarter ended December 31, 2005.

Capital Resources

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 financial statements for the period ended December 31, 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 in the ordinary course of its business as it acquires, expands, and opens new clinics.

A total of $29,184 in capital purchases were made during the first quarter of fiscal 2006. These purchased were financed from cash flow and working capital.

Transactions with Related Parties

As detailed in note 8 of the consolidated financial statements for the period ended December 31, 2005, entitled "Related Party Transactions," Audiotech had, in the normal course of business, several non-material transactions with related parties during the quarter:

A total of $1,026 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 sales from HearingDepot.com during the fiscal 2005 ($726 for the quarter ended December 31, 2004).

A total of $7,841 in rent was paid to Sherwood Real Estate Corp., a company controlled by a director of the company during the quarter ($9,286 for the quarter ended December 31, 2004).

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 ongoing 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 every day 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 MD&A, however, negotiations are active and ongoing with respect to several potential transactions.

Outstanding Share Capital>

As at December 31, 2005, Audiotech had 13,654,825 common shares issued and outstanding with a book value of $1,705,340. No common shares were issued during the quarter.

Subsequent to the end of the quarter, 425,000 held in escrow were cancelled, thereby reducing the number of shares issued and outstanding to 13,229,825.

As at December 31, 2005, there were 700,000 options to acquire common shares outstanding. On February 2, 2006, 50,000 options to acquire common shares at $0.35 expired, leaving 650,000 options with a weighted average exercise price of $0.20 (range of $.16 to $0.28) outstanding.

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.