Phonetime Inc.
TSX : PHD

Phonetime Inc.

March 31, 2011 08:54 ET

Phonetime Inc.: 2010 Financial Results

Significant Progress Is Being Made With Phonetime's Turnaround

AJAX, ONTARIO--(Marketwire - March 31, 2011) - Phonetime Inc. (TSX:PHD) announced its financial results for the year ended December 31, 2010. In 2010, Phonetime achieved $3.0 million of Income before undernoted on revenue of $143 million compared to earning $1.5 million in 2009 on revenue of $168.1 million (see table below).

During 2010, the Company narrowed its business focus and now exclusively focuses on wholesale telecommunications traffic over its network. In 2010, Phonetime raised $3.2 million in equity, reduced its liabilities by $10.4 million and completed 2010 with $1.8 million in cash reserves.

Operating results:

($000s) December 31,   December 31,  
  2010   2009  
Revenue $ 143,013   $ 168,140  
Cost of Revenue $ 134,029   $ 158,181  
  $ 8,984   $ 9,959  
Operating expenses (note 13) $ 5,963   $ 8,510  
Income before undernoted $ 3,021   $ 1,449  
   
Corporate expenses $ 1,341   $ 1,178  
Severance expense $ 1,003   $ -  
Depreciation of property, plant and equipment $ 814   $ 710  
Amortization of intangible assets $ 1,032   $ 1,085  
Interest and debt costs $ 846   $ 679  
Stock-based compensation $ 226   $ 413  
Stock issued for services $ -   $ 125  
Recovery due to misappropriation $ -   $ (150 )
  $ 5,262   $ 4,040  
   
Loss before incomes taxes and discontinued operations $ (2,241 ) $ (2,591 )
Income taxes - current $ 106   $ 273  
Income taxes - future income tax $ -   $ (436 )
  $ 106   $ (163 )
Loss before discontinued operations $ (2,347 ) $ (2,427 )
Discontinued operations (net of tax of Nil) (note 7) $ (1,287 ) $ (765 )
Net loss and comprehensive loss for the year $ (3,634 ) $ (3,192 )

"2010 was a challenging year at Phonetime. We made many difficult decisions as we refocused our efforts to ensure sustained success in 2011 and beyond." said Gary Clifford, Chairman and CEO. "In 2011, we expect to extend or replace our existing bank debt facility and to raise equity, this will allow Phonetime to move forward with its plans to grow revenue and profits in 2011."

The Company's annual financial statements together with its Management Discussion and Analysis can be found on www.sedar.com. Investors are reminded to read all public filings of any Company before making an investment decision.

In 2010, Phonetime's board of directors made the decision to focus on its largest value creation opportunity for shareholders and exited all other business opportunities. Below is management's progress report:

Objective   Action
     
Increase equity   Added $3 Million equity in 2010
     
Reduce liabilities   Reduced liabilities by $10 Million in 2010
     
Refinance debt   Extended senior debt facility through April 30th, 2011 Extended junior subordinated debt through 2013
Paid off subordinated debt and capital leases in 2010
     
Exit non-strategic assets   Completed (August 30th, 2010)
     
Maintain revenue levels for 2010   Achieved 85% of 2009 revenue Eliminated non-contributing margin revenue
     
Right size staff   Staff reduced to 45 from 138 in December 2009
     
Restore profitability in 2010   Margins 6.3% in 2010 compared to 5.9% in 2009
Income from operations, prior to Corporate and Severance costs was $3.0 million compared to $1.5 million in 2009 Net loss before income taxes and discontinued operations was $2.2 million compared to $2.6 million in 2009 Net loss was $3.6 million compared to $3.2 million in 2009
     
Strengthen Board of Directors   New slate of directors put in place in August 2010

About Phonetime Inc.

Phonetime handles the completion of long distance telecommunications around the world. In 2010, Phonetime completed 720 million phone calls with duration of over 4 billion minutes in 2010. Phonetime is a best in class provider of outsourced telecommunication services. Phonetime's common shares are traded 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. See www.sedar.com which contains all securities filings.

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