Phonetime Named in $1.78 Million Lawsuit

PICKERING, ONTARIO--(Marketwire - Jan. 14, 2011) - Phonetime Inc. (TSX:PHD) (the "Company") announced today that L.D.S. Sales Ltd. and Eisaiken Communications Inc. (collectively, the "Claimants"), entities owned by a long-distance customer recruiting agent, have filed a claim in the British Columbia Supreme Court alleging that the Company has breached certain terms of agreements executed by the Claimants relating to sales commission. The damages alleged in the claim amount to $1.78 million. The Company is reviewing the matter with legal counsel and believes that claim is without merit.

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.