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Xfone Inc

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Radio discussion by Francis Gaskins

(April 2, 2004)

SUMMARY
Xfone, Inc. provides mainly international voice and data communications through its subsidiary Swiftnet, Ltd. Swiftnet was acquired by Xfone in 2000.

Xfone has a record of growth, net profit and positive cash flow for the past three years due to a high level of automation, no debt, low overhead and the outsourcing of sales to resellers in the $12 billion United Kingdom telecommunications market

Recently, Xfone announced the completion of a major round of financing transactions, which started earlier this year for $2.7 million in new equity capital for the company. The financing included the purchase of 936,667 shares of common stock in addition to 'A' and 'B' warrants for each share of stock purchased. The financing has given Xfone a stronger cash position to continue and expand its business development strategies.

Address: Britannia House, 960 High Road, London, United Kingdom N12 9RY
Telephone: 011.44.845.1087777
Web Site: http://www.xfone.com
State or other jurisdiction of incorporation or organization: Nevada
Independent Public Accountants: Chaifetz and Schreiber, P.C.
Investor contact: Guy Nissenson, 011-44-20-84469494, guy@xfone.com;
Or PortfolioPR, Jerry Cahn, Dahlia Bailey, 212-736-9442
jcahn@portfoliopr.com, dbailey@portfoliopr.com

2003 $12.9 MILLION REVENUE % breakdown
Telephone services: 60%
Messaging services, including facsimile, nodal and e-mail related services: 10%
Calling cards, 0800 and pin access: 30%

GEOGRAPHIC MARKETS
Xfone's primary geographic market is the United Kingdom, which collectively is responsible for 90% of  revenues.

Xfone's foreign markets generate 10% of the revenues.

TELECOMMUNICATIONS SERVICES
Xfone provides the following telecommunication services:

Indirect Telephone Service:
Xfone take calls originated by customers and routes them to different destinations via telephone services provided by other carriers or through the use of their own platform.

PIN access using 0800 Free Numbers:
Using 0800 free numbers and PIN access codes for client identification, Xfone customers can call from almost any phone, including British Telecom pay phones, to access Xfone's platform and make calls to any destination.

Mobile access using 0800 Free Fumbers:
Similar service to Xfone's PIN access service but uses mobile telephone devices.

Email to Facsimile Service:
Xfone's Email2Fax service allows customers with an Internet Email account to send facsimiles at a discounted  cost.

Print to Facsimile Service:
Similar to Xfone's Email2Fax service           

Facsimile to Email or Cyber Number:
Allows the user to receive facsimile messages directly to an email address

Facsimile Broadcast:
Enables business customers to quickly send thousands of facsimiles to various destinations.

Nodal Services:
Enables business customers to use a small platform located in their respective country, to establish their  own messaging services within that country delivery.

Auracall:
A service that was introduced in March 2002, permits any individual with a British Telecom line to make international calls at a lower cost and without prepayment for setting up an account with another carrier.

International Toll Free Calling Card Service:
Xfone began offering international toll free calling card service during  June 2002 from the United States, Canada, France, Germany, Greece, Israel, Chile, Columbia, Japan, Thailand, Hong Kong, Indonesia,  Australia, New Zealand, Belgium, Netherlands, Austria, Italy, Switzerland, Spain, Poland, Hungary, Ireland, Norway, Philippines, South Korea and Sweden. We also offer Story Telecom Ltd.'s branded calling cards.

Internet Based Customer Service and Billing Interface:
In June 2002, Xfone completed the creation of its Internet based customer service and billing interface at www.xfone.com, which includes on-line registration, full account control, and payment and billing functions and information retrieval.

Carrier Pre-Select Service:
In October 2003, Xfone initiated its carrier pre-select service. With this service, Xfone instruct its carrier, British Telecom, to route the customer's telephone number to Swiftnet, which allows customers to route their telephone calls through a carrier without dialing a special 4 digit access code and without our having to program a switchboard.

XFONE PLATFORMS
Xfone has developed proprietary systems for automation, customer service and reseller integration. The system in place to service resellers allows for complete branding and is among the best in the United Kingdom.

• Telsis Switch that enables Xfone to interconnect with other telephone carriers
• Calling cards and prepay platforms that enable Xfone to use voice prompts and to accept pin numbers
• Messaging platform that manages facsimile broadcasts and messaging applications.

Xfone's Switch:

Xfone has its own switch which connects to other telephone operators, to transfer long distance voice and data communications services. The more established large telephone operators typically provide a better quality of communications, such as better sound, less interference, and less sudden disconnections; however, the large telephone operators are more expensive compared with small telephone operators which have lower cost prices, but typically less service quality in these areas.

Xfone's current switch is expandable to double its current capacity without any significant increase in overhead cost.

CUSTOMERS
Xfone has four major types of customers:

Residential:
Residential customers either must dial 1XXX or acquire a box that dials automatically.

Commercial:
Smaller businesses are treated the same as residential customers. Larger businesses have the need for a PBX unit (Private Branch Exchange Unit), which is a centralized switchboard.  Xfone programs the PBX Unit of its customers to routed calls to us Xfone directly, and to save the customer the need to an access code.

Government Agencies:
Includes the United Nations World Economic Forum, the Argentine Embassy, and the Israeli Embassy.

Resellers:
Includes VSAT, Story Telecom, Auracall, and Worldnet WorldNet and VSAT.  Xfone provides them with  telephone and messaging services for a wholesale price. For WorldNet, Xfone also supplies the billing system.  Xfone currently has 20 active resellers and 21 active agents.

(Xfone's subsidiary, Swiftnet, owns a 40% interest in Story Telecom)

During 2003, two customers that accounted for more than 10% of Xfone's revenues: (a) its affiliate, Story Telecom, which 36% of total revenues; and (b) British Telecom represented approximately 18% of total revenues. Collectively, the United Kingdom accounts for at least 85% of revenues. Xfone does not  anticipate than any other customers will account for more than 10% of revenues during 2004.

GROWTH PLAN
Xfone's growth plan includes continuous growth in the United Kingdom and possible growth in new markets through acquisitions and establishment of companies. Internal growth will be accomplished by presenting existing and potential customers with its existing solid list of robust telecommunications services. Xfone's growth plan includes accelerating resellers and agents recruitment, promoting additional services, maximizing the use of its existing state of the art equipment, purchasing new equipment and technology, attempting to negotiate lower rates with carriers, upgrading there database, and creating new marketing initiatives.

Recruitment:
Xfone plans to accelerate its program of recruiting resellers and agents during 2004 using advertising, direct mail and additional account managers as the reseller base increases.

New Products:
Swiftnet Dial Direct -- a new service where residential and small business clients can immediately have access to low cost international calls without setting up an account, prepayment, or the purchase of a calling card.

Wholesale line rental -- beginning in April 2004, Xfone will be able to take over British Telecom's BT line, which is the telephone line supplied by British Telecom that connects the client with the national telephone network. Xfone will purchase the BT line at wholesale rates and then resell the line to clients. This gives XFone complete control of the client, who only has one place to go to order additional lines and services, as well as calls.  This will also give Xfone the opportunity to offer bundled packages which for a fixed amount per month will offer line rental, a mobile phone handset, and inclusive mobile and fixed line minutes.

Broadband Internet connection -- Beginning in April 2004, Xfone will be offering a Swiftnet branded broadband Internet connection to existing residential and business clients.

New Software:
New software to supply SMS broadcasting to mobile phones is being developed by a specialized software house. SMS broadcasting allows the simultaneous sending of a text message to several thousand recipients. Xfpme plans to supply SMS broadcasting to its reseller and client base in May 2004.

New Marketing Initiatives:
Xfone will be seeking partnerships with charities and groups or entities with a loyal client or supporter base, providing that they have a minimum of 1000 supporters. Xfone will initially target over 1000 soccer clubs located in the United Kingdom to offer affinity deals, where supporters receive low cost telephone calls and the clubs receive a monthly percentage of the call revenue.

New Equipment:
Xfone intends to continue the use of its current state of the art telecommunications equipment to efficiently support its customer base. Xfone's current switch is expandable to double its current capacity without any significant increase in overhead cost.

DIRECTORS AND MANAGEMENT
(Ages as of February 23, 2004)

Abraham Keinan (54), Chairman of the Board of Directors since inception. Abraham Keinan founded Swiftnet, Ltd., Xfone's subsidiary, in February 1990. From 1991 to October 2003, Mr. Keinan was Swiftnet's Managing Director. In or about January 2002, Mr. Keinan became a Director of Auracall, Ltd. In 1975, Mr. Keinan received a Bachelor of Science Degree in Mechanical Engineering from Ben-Gurion University, Beer-Sheeva - Israel.

Guy Nissenson (29), President, Chief Executive Officer since inception.

Dr. Eyal Harish, member of the Board of Directors since December 19, 2002. From 1980 to present, Dr. Harish has been in his own private practice in Israel as a dentist. Prior to becoming a dentist, from 1974 to 1980, Dr. Harish was an Administration Manager with Consortium Holdings, an Israel based communication company. Dr. Harish is the brother-in-law of Mr. Keinan, Chairman of the Board.

Shemer Schwartz, member of the Board of Directors since December 19, 2002. From March 2003 to present, Mr. Schwartz has been the co-founder and research and development expert of XIV Ltd., a data storage start up company located in Tel-Aviv, Israel. From November 2001 to March 2003, Mr. Schwartz has been an Application Team Leader of RF Waves, an Israel based high technology company in the field of wireless communication. From 1996 to 2001, Mr. Schwartz was a Captain in the Research and Development Center of the Israeli Defense Forces Intelligence. In July 1995, Mr. Schwartz received a BSc degree in Physics and Mathematics from the Hebrew University in Jerusalem. In September 2003, Mr. Schwartz received an MSc degree in Computer science from the Tel-Aviv University in Tel-Aviv, Israel.

Significant Employees:

Mrs. Bosmat Houston (41), Research and Development Manager since inception. She joined Swiftnet, Ltd., in September 1991 as its Research and Development Manager. Mrs. Houston received a Bachelor of Science Degree in Computer Science from the Technion - Institution of Technology, Haifa - Israel in 1986.

Bryan Franks (60), Marketing Manager of Swiftnet, Ltd's Partner Division since April 2001. As our Marketing Manager, he has been responsible for recruiting and managing Swiftnet's resellers and agents. In May 2003, Mr. Franks became Swiftnet's Director of Sales and Marketing. From April 1998 to April 2001, Mr. Franks was employed as a Director of Sales and Marketing with Specialist DIY, Ltd., an import and distributor of a do it yourself products firm located in Manchester, United Kingdom.

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