Phonetime Inc.
TSX VENTURE : PHD

Phonetime Inc.

May 27, 2005 16:53 ET

Phonetime Releases Q1 Results

MISSISSAUGA, ONTARIO--(CCNMatthews - May 27, 2005) -

Company Maintains its Focus on Gross Profits

Phonetime Inc. (TSX VENTURE:PHD), a leading Canadian supplier of long distance telecommunication services, today released its consolidated financial results for the quarter ending March 30, 2005.

In this past quarter Phonetime generated revenue of $3.8 million with a gross profit of $1.37 million providing a gross margin of 36%, sustaining the same gross margin increases the Company achieved in 2004. On a consolidated basis, however, the Company had a net loss of $141,000 for the period, including $198,000 in amortization. On a segmented basis, the Company earned $45,000 on $3.5 million in revenue in its pre-paid long distance business unit, however, Call Select, the Company's 1+ Equal Access business unit, lost $114,000 on revenue of $597,000 and Phonetime spent $71,700 on unrecoverable corporate expenses. Inter-segment eliminations of $303,000 in the quarter accounted for the difference between the revenues of the individual business units and the consolidated total revenue. During this past quarter, Phonetime also eliminated its long term debt.

In terms of material subsequent events, On May 9, 2005 Phonetime purchased the assets of BeeTel Communications Inc. for cash. In the process, the Company acquired 3,000 new postpaid customers for Call Select, increasing Call Select's customer base by 20% to 18,000. For the past few years, BeeTel has provided 1+ Equal Access and Dial Around long distance services to the British Columbia's Indo-Canadian community. In conjunction with the asset acquisition, Call Select also entered into a sales agency agreement with Airtel Communications, a new company operated by the management of BeeTel, which will market 1+ Equal Access and Dial Around long distance services to the Indo-Canadian community across Canada on behalf of Call Select.

About Phonetime

Phonetime operates one of Canada's largest private long-distance networks for Retail and Wholesale Long Distance traffic, with points-of-presence in 24 major urban areas, with plans to expand, and markets its own branded pre-paid calling cards (Nuvo, Bravo, Chit Chat, Eureka, Hot and Call Value) across the country. The Company also provides phone cards to over 4,000 retail outlets, including Petro-Canada, Shell Canada, and Business Depot/Staples. With its billion minute global buying power, Phonetime delivers highly competitive prices, quality connections and exceptional customer service. Licensed as a Class A, International Carrier by the CRTC, Phonetime has offices in Toronto, Vancouver and Montreal.

About Call Select

Call Select was established by Phonetime and a group of experienced telecommunications executives (who hold 20% of the equity) in 2004, to deliver 1+ Equal Access and Dial Around long distance services to ethnic markets in Canada. Call Select represents a logical diversification for Phonetime from primarily offering pre-paid telecommunications products to providing a wide range of new products and services, primarily in the higher margin, longer term, post-paid market.

Additional information about Phonetime and Call Select and the services is available on the websites: http://www.phonetime.com, http://www.dialnsave.ca, and http://www.callselect.ca.

Note: This news release may contain forward-looking information. Actual future results may differ materially. All figures are in Canadian dollars. The risks, uncertainties, and other factors that could influence actual results are described in the Company's annual report to shareholders.

The TSX Venture Exchange has not approved nor disapproved the information contained herein.

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