Phonetime Inc.

Phonetime Inc.

April 30, 2007 08:00 ET

Phonetime Releases 2006 Audited Financial Statements

New Wholesale Business & Call Select Increases Revenue 38%

MISSISSAUGA, ONTARIO--(CCNMatthews - April 30, 2007) - Phonetime Inc. (TSX VENTURE:PHD)(PINK SHEETS:PHOEF). Phonetime, a diversified Canadian supplier of long distance telecommunication services, announced the release of its audited financial statements and MD&A for the year ended December 31, 2006. The year marked significant over-all improvement in virtually all aspects of the business.

Highlights include:

- A 38% increase in revenue to $24.3 million in 2006 vs. $17.6 million in 2005.

- An 86% increase in revenue in the fourth quarter of 2006 to $9.1 million vs. $4.9 million in the fourth quarter of 2005.

- Revenues increased quarter over quarter during 2006 and continued in 2007

- Gross Profit of $8.1 million in 2006 vs. $6.6 million in 2005 - an increase of 23%.

- Net Earnings of $760,000 in 2006 compared to $102,000 in 2005 - an increase of 645%.

- A significant improvement in the Working Capital ratio, which rose to 1.9:1 from 1.3:1 in 2005.

- A substantial increase of $3.4 million in cash and equivalents over last year for a total of $3.7 million

In 2006, the Company successfully launched a new international wholesale long distance subsidiary, which generated over $3.5 million of revenue in its first six weeks of operations. This is a high revenue/lower margin business, which could lower the costs of the Company's other business segments leading to greater profits and higher revenues in the coming years.

During the year, the Company purchased the minority 20% shareholding of Call Select, Phonetime's 1+ equal access long distance subsidiary, from Call-Select's management team. As a result, 100% of Call Select's revenue will now accrue to the Company. Call Select continued its rapid growth and was profitable in 2006.

Phonetime continued expanding its Canadian network; extending its reach to 40 metropolitan markets to cover approximately 85% of Canada's population. The Canadian network was further expanded to enable the Company to process 3 billion minutes of long distance traffic making it one of the largest private networks in the country. In addition, the Company established more points-of-presence (POPs) in North America, London (England) and Frankfurt (Germany) - with additional POPs in Europe and Asia to be launched in 2007.

In 2006, the Company deployed its proprietary quality-based routing and scalable software to ensure network efficiency, improve reliability and provide superior customer service for its wholesale business. This enables us to meet each customer's specific requirements and expectations on a real-time basis.

Wayne Silver, President & CEO commented on the 2006 results, "We are very satisfied with our many achievements in 2006. Management entered the year with a clear vision of what was needed to significantly increase revenue and profit over the long term. This included growing our network to accommodate our diverse portfolio of telecommunications services by expanding our wholesale long distance business and growing Call Select through expansion of its existing direct marketing programs plus the acquisition of competitive 1+ equal access companies."

Phonetime's Chairman & CFO, Rodney Franklin added, "Revenue increased in each quarter of 2006 and this trend is continuing in each successive month in 2007. In the first four months of 2007, our revenue has already exceeded last year's total revenue. Our Balance Sheet is strong, and we have already built the infrastructure to process an additional 5 billion international minutes using up to 100,000 ports which provides us the requisite capacity to generate annual sales revenue of up to $100 million. Our fourth quarter equity financing of US$4 million will help us execute our growth strategy with a view to increasing revenue and profits"

About Phonetime

Established in 1994, Phonetime is a leading Canadian supplier of International Long Distance telecommunication services. Phonetime Inc is publicly traded, listed on the Toronto Venture Exchange (TSX VENTURE:PHD). Licensed in Canada as a Class A International Carrier by the CRTC, Phonetime operates one of Canada's largest and most advanced private telecommunications networks in Canada. Phonetime has facilities in North America and Europe and Canada where it has 40 points-of-presence covering most major metropolitan areas, effectively offering on-net service to approximately 85% of Canada's population.

Phonetime's balanced portfolio of services includes retail products for individual consumers and businesses as well as wholesale long distance call delivery to large and small domestic and international carriers, offering both pre-paid and post-paid services. This balance enables Phonetime to maximize revenue from the utilization of available capacity and to minimize costs through volume.

Caution Regarding Forward Looking Information:

This press release contains forward-looking statements within the meaning of securities laws, including the "safe harbour" provisions of the Ontario Securities Act and the United States Private Securities Litigation Reform Act of 1995. Forward-looking information is often, but not always, identified by the use of words such as "anticipate", "believe", "expect", "plan", "intend", "forecast", "target", "project", "may", "will", "should", "could", "estimate", "predict" or similar words suggesting future outcomes or language suggesting an outlook.

Forward-looking statements and information are based on current beliefs as well as assumptions made by and information currently available to Phonetime concerning anticipated financial performance, business prospects, strategies and regulatory developments. Although management considers these assumptions to be reasonable based on information currently available to it, they may prove to be incorrect.

By their very nature, forward-looking statements involve inherent risks and uncertainties, both general and specific, and risks that predictions, forecasts, projections and other forward-looking statements will not be achieved. We caution readers not to place undue reliance on these statements as a number of important factors could cause the actual results to differ materially from the beliefs, plans, objectives, expectations and anticipations, estimates and intentions expressed in such forward-looking statements. These factors include, but are not limited to: incorrect assessments of value when making acquisitions; increases in debt service charges; fluctuations in foreign currency and exchange rates; inadequate insurance coverage; changes in tax laws; and Phonetime's ability to access external sources of debt and equity capital.

The foregoing list of factors that may affect future results is not exhaustive. When relying on our forward-looking statements to make decisions, investors and others should carefully consider the foregoing factors and other uncertainties and potential events. Furthermore, the forward-looking statements contained in this press release are made as of the date of this press release, and Phonetime does not undertake any obligation to up-date publicly or to revise any of the included forward-looking statements, whether as a result of new information, future events or otherwise. The forward-looking statements contained in this press release are expressly qualified by this cautionary statement.

The TSX Venture Exchange has neither approved nor disapproved the contents of the press release.

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