Phonetime Inc. Announces Record Profitable Results for 2001: Confirms Positive Outlook for 2002.

Business Editors

MISSISSAUGA, Ontario--(BUSINESS WIRE)--May 16, 2002

Phonetime(TM) Inc. (CDNX: YPO)

Shares Issued and Outstanding: 42,123,283

At a time when the telecommunications industry has experienced sharp declines, Phonetime Inc. today announced record sales and strong profitability for 2001.

Fiscal 2001 was the first full year Phonetime reported as of December 31. The results for 2000 are therefore for 10 months to 2001's 12 months. Where appropriate, percentage comparisons have been annualized.

-- Sales in 2001 were $20,584,259 versus $12,449,164 in 2000, an increase of
65%.

-- Gross Margin in 2001 was 26% versus a negative margin in 2000.

-- EBITDA reached $1,835,141 in 2001, a significant increase over the
($4,082,252) posted in 2000.

-- Net income was $735,048 for 2001, versus a loss of ($4,972,374) in 2000, an
average monthly profit of $61,000 versus a monthly running loss of ($500,000)
the previous year.

-- Earnings per share rose to $0.017 compared to a loss of ($0.143) in the
previous period.

"This impressive performance was accomplished in the context of both a dramatically slower economy and a major slowdown in the telecommunications industry," said Wayne Silver, President & CEO. "Many of our competitors suffered reduced sales, losses, and severe reductions in share valuation, some companies disappeared altogether. We took advantage of these market conditions to build our Network faster and acquire new switches at a fraction of our original budget. This strategy has translated into higher margins with lower fixed overheads. As our sales grow each quarter the profits continue to flow right to our bottom line. We expect to continue increasing revenues, profitability, and market share for 2002, with sales in the 1st Quarter already over 20% ahead of last year"

Mr. Silver added. "Management has focused on improving the Balance Sheet and reducing our debt load. We believe that we have created significant value within our operations. Clearly, now is the time to focus on making the market aware of our accomplishments and driving shareholder return."

Selected financial information
---------------------------------------------------------------
                                        Expressed in Canadian $
---------------------------------------------------------------
                                  Twelve months      Ten months
                                          ended           ended
                                  Dec. 31, 2001   Dec. 31, 2000
---------------------------------------------------------------
Sales                               $20,584,259     $12,449,164
Gross Margin                                26%             N/A
EBITDA                                1,835,141    ($4,082,252)
Net earnings                           $735,048    ($4,972,374)
Basic E.P.S.                             $0.017        ($0.143)
---------------------------------------------------------------

Phonetime is one of Canada's fastest growing telecommunications companies, with traffic volume of more than 50 million minutes per month and growing. The company has built one of Canada's largest private networks into 21 cities with plans to add up to 11 more cities by the end of 2003. Phonetime's retail and wholesale telecommunications services incorporate state-of-the-art VoIP based technology for commercial applications, high-capacity switching platforms, and an international carrier network. Phonetime also operates a multilingual, customer service, call centre and sells its own branded pre-paid cards in addition to providing phone cards to over 2,000 retail outlets, including Real Canadian Superstores, Business Depot/Staples, and Future Shop. Licensed as a Class A, International Carrier by the CRTC, the company currently has offices in Toronto, Vancouver, and Montreal.

FOR FURTHER INFORMATION PLEASE CONTACT:

Wayne Silver

President & CEO

Phonetime(TM) Inc.

TEL: [phone] ext. 304

FAX: [phone]

[e-mail]

Richard Mellon

Investor Relations

Phonetime(TM) Inc.

TEL: [phone] ext. 353

FAX: [phone]

[e-mail]

W. Daniel Mothersill

Managing Partner

Ciris International Inc.

TEL: [phone]

FAX: [phone]

[e-mail]

The Canadian Venture Exchange has not reviewed and does not accept responsibility for the adequacy or accuracy of this release.