GTC Telecom Seeks to More Than Double Revenue Base, Substantially Expand Independent Distributor Sales Network and Diversify into Nutritional Products via Letter of Intent to Merge with The Health Network

COSTA MESA, Calif. & HAMPTON, Va.--(BUSINESS WIRE)--GTC Telecom Corp. (OTC BB: GTCC), a nationwide provider of wireless, long distance and business process outsourcing services, announced today it has entered into a letter of intent to merge with The Health Network, Inc., a privately-held company based in Hampton, Virginia.

The transaction will substantially increase and diversify GTC’s existing revenue base. The Health Network would bring to GTC its proven, successful independent distributor sales network of nearly 30,000 individuals worldwide, who will be able to add GTC’s discount wireless and long distance services to their suite of product offerings. Further, the resulting entity would benefit by leveraging GTC’s Perfexa business process outsourcing capabilities to support the The Health Network’s growing call center and IT support needs.

The companies have an agreement in principal that contemplates The Health Network owning approximately 78% of the “pre-money” equity of the combined entity and GTC owning approximately 22% of the “pre-money” equity of the combined entity. The combination also contemplates the conversion of existing GTC debt holders into common stock prior to closing. It is anticipated that the combined entity would have annualized revenues in excess of $15 million.

The Health Network, Inc. Summary P&L Statement (Unaudited)
	2006 (1st 10 mo’s of ‘06 annualized)	2005	2004
Gross receipts	$ 8.8 M	$ 6.9 M	$ 5.2 M
Gross profit	$ 3.1 M	$ 2.5 M	$ 1.3 M
Pre-tax income	$0.74 M	$0.03 M	($ 1.2) M

Eric A. Clemons, GTC's President, stated, "We have found a great match of business models, in a structure and at a valuation that makes great sense for both companies. The Health Network brings a proven track record in network marketing, as borne out by several years of strong and incrementally growing sales of nutritional supplements in a competitive marketplace. We anticipate that the superior benefits of GTC’s wireless and long distance service will be an attractive complement to the services and products which The Health Network has successfully marketed. Additionally, our Perfexa business process outsourcing unit based in India provides an ideal platform for the growing infrastructure needs of the combined companies.”

The Health Network is a network marketing company. Through its subsidiaries, particularly Xooma Worldwide and Health Thru Nutrition, and via its 30,000 independent distributors, The Health Network markets a full line of nutritional products along with a number of specially formulated packs to meet specific health needs of its customers. A leading product line is based around the Company’s Xtreme X2O™ water additive, which helps to both purify as well as enhance the minerals in drinking water.

Ron R. Howell, President and CEO of The Health Network, commented, “As we have explored the possibilities of this combination with GTC it became clear that strong marketing and a proven independent sales channel were the glue that could successfully unite telecom services and health supplements in a very powerful way. We are very excited to leverage our respective strengths in health products, marketing, telecom services and business process outsourcing in a publicly-traded entity. We believe the GTC/THN combination has the potential to deliver tremendous value to the combined entity's shareholders.”

The Health Network was acquired by Mr. Howell in 2003. He has over thirty years of diverse business and leadership experience, the last 11 years in the networking marketing industry. He earned his Bachelor's Degree in Management from the University of Maryland and an MBA from the Sellinger School of Business and Management at Loyola College in Baltimore, Maryland.

The transaction is subject to approval by GTC’s shareholders and other customary conditions.

About GTC Telecom Corp.

Founded in 1997, GTC Telecom Corp. and its subsidiaries provide wireless, long-distance, and international telecommunication services throughout the United States, as well as Business Process Outsourcing services from its Perfexa business unit in India. For more information, visit www.gtctelecom.com www.gtcwireless.com, www.perfexa.com, or www.shinewireless.com.

About The Health Network, Inc.

Founded in 2000, The Health Network, Inc. and its subsidiaries market and distribute a proprietary line of natural health and nutritional products through a direct sales force of approximately 30,000 members in the United States, Canada and Australia. For more information, visit www.xoomaworldwide.com.

This release may contain forward-looking statements that are subject to certain risks and uncertainties that could cause actual results to differ materially from those projected. This release should be read in conjunction with the Company's annual report on Form 10-KSB and its quarterly and periodic reports on Form 10-QSB and 8-K. The Company's results may vary significantly from quarter to quarter and will depend, among other factors, on product launches and market acceptance, and distribution agreements. Except as expressly required by federal securities laws, the Company undertakes no obligation to update any of the forward-looking statements contained herein.