Phonetime Inc.: 2010 First Quarter Financial Results and Update on Disposition of Retail Business

MISSISSAUGA, ONTARIO--(Marketwire - May 21, 2010) - Phonetime Inc. (TSX:PHD) announced that it will be filing today its consolidated financial results for the first quarter ended March 31, 2010.

A summary of the 2010 consolidated financial results are set forth below.

Three month periods ended		Network		Consumer		Corporate			Eliminations				Consolidated
March 31		2010	2009	2010	2009	2010		2009	2010		2009		2010		2009
		[$000's]	[$000's]	[$000's]	[$000's]	[$000's]		[$000's]	[$000's]		[$000's]		[$000's]		[$000's]
Operating revenues
	External revenue	38,525	35,830	7,419	6,779		-	-					45,944		42,609
	Intersegment revenue	5,829	8,211				-	-	(5,829	)	(8,211	)
		44,354	44,041	7,419	6,779		-	-	(5,829	)	(8,211	)	45,944		42,609
Cost of sales
	External cost of sales	40,791	35,500	689	935		-	-					41,480		36,435
	Intersegment cost of sales	1,150	3,921	4,679	4,290		-	-	(5,829	)	(8,211	)
		41,941	39,421	5,368	5,225		-	-	(5,829	)	(8,211	)	41,480		36,435
Gross margin		2,413	4,620	2,051	1,554		-	-					4,464		6,174
Operating expenses													5,063		5,366
EBITDA ⁽¹⁾													(599	)	808
Capital expenditures		12	123	15	30								27		153
Total assets		26,333	28,773	5,138	5,143	1,2	00	3,888	(154	)	(5,066	)	32,517		32,738
Goodwill and Intangible assets		13,780	14,814	1,164	1,164		-	-					14,944		15,978
						EBITDA (from above)							(599	)	808
						Amortization							575		519
						Operating income (loss)							(1,174	)	289
						Financing costs							191		161
						Income (loss) before income taxes							(1,365	)	128
						Income taxes							(20	)	289
						Net income (loss) for the period							(1,345	)	(161	)

(1) Earnings Before Interest, Taxes, Depreciation and Amortization ("EBITDA") is a measure that does not have any standardized meaning prescribed by GAAP and is therefore unlikely to be comparable to similar measures presented by other issuers; EBITDA is defined by the Company as operating revenues less operating expenses and foreign exchange gains or losses but before stock compensation costs.

Update on Retail Business

As previously announced, the Company is seeking to dispose of its Consumer Operations. The Company has held discussions with a number of parties and expects to reach a conclusion to those discussions in the near term. The contemplated transaction is intended to provide the Company with cash that will be used to reduce its debt and to provide additional working capital as the Company focuses its efforts on growing its Network Business.

"We are pleased with the progress being made streamlining the Company." said Gary Clifford, Chairman and Interim Chief Executive Officer. "We still have a lot of work to do and the continued support of our customers, suppliers, employees, shareholders and other stakeholders is appreciated".

About Phonetime Inc.

Phonetime is an international telecommunications Network carrier. Phonetime provides long- distance services to major telephone carriers around the world. In 2009, Phonetime carried in excess of 5 billion minutes for customers. Phonetime's common shares trade on the Toronto Stock Exchange under the symbol PHD. More information can be found at the Company's website, [ www.phonetime.com ].

Caution Regarding Forward Looking Information:

This press release contains forward-looking statements, which may be identified by words like "expects", "anticipates", "plans", "intends", "indicates" or similar expressions. These statements are not a guarantee of future performance and are inherently subject to risks and uncertainties. Phonetime's actual results could differ materially from those currently anticipated due to a number of factors set forth in reports and other documents filed by the Company with Canadian securities regulatory authorities from time to time.

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Phonetime Inc.: 2010 First Quarter Financial Results and Update on Disposition of Retail Business