Phonetime Inc.
TSX : PHD

Phonetime Inc.

September 22, 2010 08:17 ET

Phonetime Completes $2.32 Million Equity Issuance and Extends Forbearance With Its Senior Lender

PICKERING, ONTARIO--(Marketwire - Sept. 22, 2010) - Phonetime Inc. (TSX:PHD) announced today that it has completed the issuance of $2.32 Million in Units comprised of common shares and warrants, and has extended its forbearance with its senior lender through April 2011.

Issuance of Common Stock Units

The Company issued 33,160,068 Units, each comprised of one common share, one common share purchase warrant exercisable at $0.07 per common share for six months and one common share purchase warrant exercisable at $0.09 per common share for a period of one year. The Units were issued, primarily, in exchange for the conversion of outstanding debt. The equity issuance was approved by a majority of disinterested shareholders at the Company's annual and special meeting of shareholders held on August 31, 2010.

Extension of Forbearance with Senior Lender

The Company has been in violation of its covenants with its senior lender since 2008. The Company has extended its forbearance with its senior lender through April 2011. In conjunction with the forbearance, the Company has agreed that the maximum borrowing under its credit facility would be reduced to $2.5 Million, that the interest rate under the facility would be reduced to prime plus 6%, and that monitoring fees would be reduced to $5,000 per month.

"Phonetime now has a single business focus, selling long distance minutes to carrier's globally." said Gary Clifford, Chairman and Interim CEO. "The continued support of our shareholders, employees, suppliers, customers and partners is greatly appreciated."

About Phonetime Inc.

Phonetime is an international telecommunications network carrier. Phonetime provides long-distance services to major telephone carriers around the world. 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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