ITS Networks 10Q Filing Reports Improvements over Previous Year

MADRID, Spain - Feb. 23, 2005 - ITS Networks Inc (OTCBB: ITST) filed its 10Q for the quarter ending December 31, 2004, reflecting continual operational improvement with emphasis on cost reductions.
ITS Networks, Inc., recent 10Q filing for the first fiscal quarter ending December 31, 2004 reporting a slight decrease of 1.5% in total revenues down from US$1,533,000 to US$1,510,000 in the same period 2003. It is significant to note that the 2003 figure represents total sales including the postpaid fixed line business while the 2004 figure represents recurring prepaid sales. In addition, during this reporting period the Company reduced its Cost of Goods Sold by 32 % from US$ 1,457,000 equalling 95.0% of total sales to US$ 988,000 equalling 65.4% of total sales due to its successful restructuring and renegotiation with its Telecom carriers. As a result of the improvement of the carrier costs the Gross Profit of the Company went up from 5.0% to 34.6% of sales.

ITS Executive Vice-President, Herman de Haas explained, "The results we have reported indicate that the measures adopted by management over the last fiscal year are taking effect on the bottom line of the Company, bringing Teleconnect closer to a nearly breakeven monthly EBITDA position. We definitely left the period of cost restructuring and reduction behind us. Today, the Company is ready for 'multiplying the success'. Our focus in 2005 is the increase of recurring revenues through the launch of new services which contribute directly to the bottom line. Our objective is a healthy, profitable return on rapidly growing operations to increase shareholder value."

About ITS Networks:

ITS Networks, 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. ITS Networks, Inc. is traded on a U.S. stock exchange, the Over The Counter Bulletin Board (OTCBB). ITS Networks 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

Source: ITS Networks

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