XFONE Reports Record Revenue for Fiscal Year 2004 and Marks Fifth Consecutive Year of Growth and Profitability New U.S. and Israeli Subsidiaries Expected to Contribute Measurably to 2005 Growth; 2005 Expected to Be Yet Another Record Year LONDON, April 1 /PRNewswire-FirstCall/ -- XFONE, Inc. (OTC:XFNE) (BULLETIN BOARD: XFNE) ("XFONE" or "the Company"), a provider of international voice and data communications services, announced that late yesterday afternoon it filed its annual report on Form 10K-SB with the U.S. Securities and Exchange Commission reflecting financial results for the fiscal year ended December 31, 2004. Fiscal Year 2004 Financial Highlights (translated into U.S. dollars for convenience): * Revenues increased 55% to (pound)11,330,116 (US$21,867,124) from (pound)7,282,181 (US$14,054,609). * Due largely to expenses associated with the acquisition of eXpeTel in Jackson, Mississippi, and the build-out of the Company's new "018" international long distance operations in Israel, net income declined to (pound)39,874 (US$76,957) from (pound)421,445 (US$813,389). 2004 marked the fifth consecutive year of net profitability for XFONE, Inc. * Diluted earnings per share in 2004 were (pound)0.005 (US$0.009) compared to (pound)0.08 (US$0.154) in 2003. As of December 31, 2004, the Company had approximately (pound)3 million (US$5.9 million) in cash and accounts receivables and stockholders' equity of approximately (pound)2.2 million (US$4.3 million). Operational Highlights for 2004: * XFONE initiated its international expansion strategy, successfully expanding operations from the United Kingdom into both the United States and Israel. Currently, the Company serves customers located in 75 countries across Europe, Australia, North America, South America, Asia and Africa. * The Company entered the world's largest telecommunications market -- the United States -- when it negotiated the acquisition of eXpeTel Communications, a licensed telecom service provider based in Jackson, Mississippi. On March 10, 2005, the Company consummated the acquisition of and officially merged eXpeTel into its wholly owned U.S. subsidiary, XFONE USA, Inc. * In December 2004, XFONE successfully launched its international carrier business in Israel's growing telecommunications market through its majority owned subsidiary, XFONE Communication Ltd., which recently changed its name in March 2005 to XFONE 018 Ltd. Following only two and half months of operations, XFONE 018 reported that it was on pace to exceed three million call minutes per month and had logged approximately 30,000 registered and unregistered new customers. * XFONE's United Kingdom telecommunications operations, Swiftnet Ltd., the largest contributor to the Company's revenues during 2004, continued to produce strong financial results, achieving 35% year-over-year revenue growth. Guy Nissenson, Company President and Chief Executive Officer, stated, "Without question, 2004 was a defining year for XFONE, one characterized by international expansion and thoughtful execution of several key growth strategies. As a result of our success in establishing operations in three competitive and active user markets of telecommunications services -- the United Kingdom, the United States and Israel -- XFONE is firmly poised to deliver our sixth consecutive year of growth and profitability. Therefore, based on our current revenue run rate and without giving consideration to possible future acquisitions, I'm pleased to confirm that we remain confident that our financial performance in 2005 will reflect yet another year of record-breaking achievements." XFONE, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENT OF OPERATIONS (Audited) Years Ended Years Ended December 31, December 31, 2004 2003 2004 2003 In pounds Convenience translation into U.S.$ Revenues 11,330,116 7,282,181 $21,867,124 $14,054,609 Cost of revenues (7,991,375) (4,468,420) (15,423,354) (8,624,051) Gross profit 3,338,741 2,813,761 6,443,770 5,430,559 Operating expenses: Research and development (25,945) (44,553) (50,074) (85,987) Marketing and selling (1,626,288) (1,091,012) (3,138,736) (2,105,653) General and administrative (1,573,726) (1,011,829) (3,037,291) (1,952,830) Total operating expenses (3,225,959) (2,147,394) (6,226,101) (4,144,470) Operating profit 112,782 666,367 217,669 1,286,088 Financing expenses -- net (83,403) (44,283) (160,968) (85,466) Other income 21,128 15,817 40,777 30,527 Income before taxes 50,507 637,901 97,479 1,231,149 Equity in income of affiliated co. 20,885 -- 40,308 -- Income before taxes 71,392 637,901 137,787 1,231,149 Taxes on income (31,518) (216,456) (60,830) (417,760) Net income 39,874 421,445 $76,957 $813,389 Earnings Per Share: Basic 0.007 0.080 $0.013 $0.154 Diluted 0.005 0.080 $0.009 $0.154 About XFONE, Inc. A U.S.-domiciled corporation, XFONE is an international voice and data communications services provider with operations in the United Kingdom, the United States and Israel, and offers a wide range of services which include: international and long distance telephone services, prepaid calling cards; cellular services; VoIP services; reselling opportunities; and email and fax broadcasting services. The Company serves customers in 75 countries across Europe, Australia, North America, South America, Asia and Africa. Safe Harbor Statement under the Private Securities Litigation Reform Act of 1995: All information set forth in this news release, except historical and factual information, represents forward-looking statements. This includes all statements about the company's plans, beliefs, estimates and expectations. These statements are based on current estimates and projections, which involve certain risks and uncertainties that could cause actual results to differ materially from those in the forward-looking statements. These risks and uncertainties include issues related to the ability to: rapidly change technology and evolving standards in the industries in which the Company and its subsidiaries operate; obtain sufficient funding to continue operations; maintain adequate cash flow; profitably exploit new business; license and sign new agreements; and the unpredictable nature of consumer preferences; and other factors set forth in the Company's most recently filed annual report and registration statement. Readers are cautioned not to place undue reliance on these forward-looking statements, which reflect management's analysis only as of the date hereof. The Company undertakes no obligation to publicly revise these forward-looking statements to reflect events or circumstances that arise after the date hereof. Readers should carefully review the risks and uncertainties described in other documents that the Company files from time to time with the Securities and Exchange Commission, including the Registration Statement effective on November 12, 2004. FOR MORE INFORMATION, PLEASE CONTACT Stephanie Noiseux, Elite Financial Communications Group 407-585-1080 or via email at DATASOURCE: XFONE, Inc. CONTACT: Stephanie Noiseux, Elite Financial Communications Group, +1-407-585-1080, or , for XFONE, Inc. Web site: http://www.xfone.com/

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