Phonetime Inc.
TSX : PHD

Phonetime Inc.

May 21, 2010 17:51 ET

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    - - 0   0   45,944   42,609  
  Intersegment revenue 5,829 8,211 0 0    - - (5,829 ) (8,211 ) 0   0  
  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    - - 0   0   41,480   36,435  
  Intersegment cost of sales 1,150 3,921 4,679 4,290    - - (5,829 ) (8,211 ) 0   0  
  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    - - 0   0   4,464   6,174  
Operating expenses                       5,063   5,366  
EBITDA (1)                       (599 ) 808  
Capital expenditures 12 123 15 30    0 0         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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