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TLCO News Teleconnect, Inc 10Q Filing Reports Significant Financial Improvements; Gross Profit as Percentage of Sales Up 103% from 16.8% (2004) to 34.1% (2005) For Nine Month Period Ending June 30, 2005 As Cost of Goods Sold Decreased 33%

Teleconnect, Inc's, recent 10Q filing for the nine-month period ending June 30, 2005 reporting an increase in Gross Profit as a percentage of sales of 103%, up from 16.8% (2004) to 34.1% (2005). For the three-month period ending June 30, 2005, the company reported a 59.6% increase in Gross Profit as a percentage of sales from 21.8% (2004) to 34.8%(2005).

Cost of goods sold decreased 33% to $2,673,000 during the nine months ended June, 2005 from $3,974,000 during the same period in 2004. Cost of goods sold as a percentage of sales for the nine month period ended June 30, 2005 decreased 17.3% from 83.2% (2004) to 65.9% (2005). For the three-month period ended June, 2005, the cost of goods sold decreased 32% to $768,000 (2005) from $1,136,000 (2004). The cost of goods sold as a percentage of sales for the three month period ended June 30, 2005 decreased 13.0% from 78.2% (2004) to 65.2% (2005).

Significantly, the selling, general and administrative expenses decreased 22% to $675,000 during the three months ended June 30, 2005 as compared to $868,000 for the comparable period in 2004. The decrease is due primarily to the additional cost cutting measures instituted by management earlier in the year.

Teleconnect Inc. Executive Vice-President, Herman de Haas explains, "These reported results - indicate that the strategy adopted by management last year continues to have a positive impact on the bottom line of the Company. The acquisition of Teleconnect in 2002 brought unexpected problems, however I am happy to report all of the major problems have been resolved-. Within the coming months, we will be announcing a number of new distribution agreements, in addition to the launch of new services which will bring additional revenues to the Company. Management continues to diversify the company's portfolio into rapidly growing areas of new technologies, along with expansion of the Company's geographical reach. Our final objective is a profitable return on rapidly growing operations to create and build shareholder value."

About Teleconnect Inc:

Teleconnect Inc., Inc. through its wholly owned subsidiary Teleconnect Comunicaciones S.A., a Spanish telecommunications company, is a major player in the prepaid telecoms industry in Spain. Teleconnect, Inc. is traded on a U.S. stock exchange, the Over The Counter Bulletin Board (OTCBB:TLCO). Teleconnect provides commercial and residential users in Spain with a very competitive array of prepaid services. www.teleconnect.es

Forward Looking Statements:

Except for the historical information contained herein, the statements in this press release are forward-looking statements that involve risks and uncertainties. Potential risks and uncertainties include, without limitation, continued competitive pressures in the marketplace; the effect competitive and economic factors and the Company's reaction to them may have on consumer and business buying decisions with respect to the Company's products; the ability of the Company to make timely delivery of new products and successful technological innovations to the marketplace; the continued availability of certain components and services essential to the Company's business currently obtained by the Company from sole or limited sources. More information on potential factors that could affect the Company's financial results is included from time to time in the Company's public reports filed with the SEC.