YAKC Yak Communications

Contribution Margin Increases while New Business Investments Continue Yak Communications Inc. (NASDAQ:YAKC), a provider of telecommunication services to residential and business customers, today announced financial results for its second fiscal quarter ended December 31, 2005. Net earnings for the second quarter of fiscal 2006 were $1.0 million or $0.07 per diluted share, compared with net earnings of $1.3 million, or $0.10 per diluted share, for the second quarter of fiscal 2005. Net earnings for the six-months ended December 31, 2005 were $1.2 million, or $0.09 per diluted share, compared with net earnings of $2.6 million, or $0.21 per diluted share, for the six months ended December 31, 2004. Net revenues were $24 million for the second quarter of fiscal 2006, as compared to net revenues of $24.2 million for the second quarter of fiscal 2005. Net revenues for the six-months ended December 31, 2005 were $47.5 million, up from $45.4 million for the same period in the prior year. Contribution margin improved in the second quarter to 39.9% from 39.5% when compared to the second quarter of fiscal 2005. For the six-months ended December 31, 2005, contribution margin improved to 39.4% from 37.4% for the same period in the prior year. Improved margins were primarily due to network efficiencies gained by bringing a greater portion of traffic onto the Company's network. As Yak continues to launch its VoIP offering, margin is being negatively affected. During the second quarter of fiscal 2006, Yak handled 291 million minutes of traffic on net, serving approximately 900,000 customers monthly. "We are pleased with our results for the second quarter of fiscal 2006, as we continued to execute according to our internal plans and strategy," said Charles Zwebner, President and Chief Executive Officer. "Our contribution margins are improving as we direct more traffic on to our network. We continue to generate cash from our consolidated operations. We are deploying the cash flows from our core business to market Yak's dial around and 1+ products to Hispanic communities across the United States, and to market and broaden our product offerings into VoIP." "During the quarter, we launched two VoIP products, yakFor Free and yakToAnyone, and subsequently during January 2006, we launched yakUnlimited. At December 31, 2005, we had experienced over 13,000 downloads of yakForFree with over 500 consumers upgrading to yakToAnyone. We also have more than 700 yakBasic customers and 700 yakUnlimited customers using our system. We are excited about the initial consumer acceptance of our new products and the response to our marketing strategies, and look forward to substantially increasing those marketing efforts during calendar/fiscal 2006 as well as maximizing growth and shareholder value," concluded Zwebner. About Yak Communications Inc. Yak Communications Inc. (the "Company") (NASDAQ:YAKC) is an Integrated Communications Provider (ICP) offering a full array of long distance (1+, toll free and dial-around), local lines, travel cards, cellular long distance, data services, and voice services (VoIP) to residential and small businesses in North America over high speed internet access. Yak currently serves approximately 900,000 customers for its traditional telecom services. For more information, visit http://www.yak.com Forward Looking Statements: Statements contained in this news release, which are not strictly historical are forward looking within the meaning of the safe harbor clause of the Private Securities Litigation Reform Act of 1995. The Company makes these statements based on information available to it as of the date of this news release and assumes no responsibility to update or revise such forward-looking statements. Editors and investors are cautioned that forward-looking statements invoke risk and uncertainties that may cause the Company's actual results to differ materially from such forward-looking statements. Words such as "projects", "believe", "anticipates", "estimate", "plans", "expect", "intends", and similar words and expressions are intended to identify forward-looking statements and are based on our current expectations, assumptions, and estimates about us and our industry. In addition, any statements that refer to expectations, projections or other characterizations of future events or circumstances are forward-looking statements. Although the Company believes that such forward-looking statements are reasonable, we cannot assure you that such expectations will prove to be correct. Our actual results could differ materially from those anticipated in such forward-looking statements as a result of several factors, risks and uncertainties. These factors, risks and uncertainties include, without limitation, the results of the audit and review processes performed by the Company's independent auditors with respect to any restatement of the Company's historic financial statements, the Company's success in integrating the operations of any newly-acquired businesses, and associated reduction in costs, the successful implementation of its business plans including growth of existing product offerings, strategic acquisitions and development of broadband telephony products, the successful integration of new management team members, continued and increased demand for its services, the successful deployment of new equipment and realization of material savings there from, competition from larger and/or more experienced telecommunications providers, its ability to continue to develop its markets, general economic conditions, changes in governmental regulation, and other factors that may be more fully described in the Company's literature and periodic filings with the Securities and Exchange Commission. You are urged to carefully review and consider these disclosures, which describe certain factors that affect our business. Yak Communications Inc. (NASDAQ:YAKC)