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The loss from continuing operations for the quarter was $2.2 million or $0.07 per share compared to a loss the in prior year of $158,000 or $0.01 per share. The net loss for the quarter was $2.9 million or $0.09 per share, compared to a net loss in the prior year of $4.8 million or $0.17 per share.

As at March 31, 2010, the Company had a working capital deficiency excluding discontinued operations of $6.7 million [including cash and cash equivalents, plus restricted cash totaling $1.3 million] compared to a working capital deficiency excluding discontinued operations of $4.6 million at December 31, 2009. Current assets excluding discontinued operations decreased by $1.7 million and current liabilities excluding discontinued operations increased by $440,000. The decrease in current assets was primarily due to a decrease in restricted cash and inventory offset by an increase in accounts receivable. The increase in current liabilities is due to increased accounts payable and accrued liabilities.

Financial Covenant Update

The Company has a demand line of credit, with a maximum availability of $1.747 million excluding certain variable interest entities ["VIEs"]. The amount of bank indebtedness outstanding at March 31, 2010 was $1.697 million [December 31, 2009 - $1.773 million] excluding certain VIEs, and it was $1.838 million [December 31, 2009 - $1.948 million] including certain VIEs. Effective December 31, 2009, the Company completed the sale of its 51% share interest in Sterne including repayment of an intercompany loan for total proceeds of €887,000 or approximately $1.333 million. Proceeds of $1.333 million are recorded on the balance sheet as restricted cash at December 31, 2009 and have been used to reduce bank indebtedness by $275,000 and for general corporate purposes. Proceeds from the April 16, 2010 sale of Milton, net of transaction costs, have also been used to reduce debt obligations.

The Company signed a forbearance agreement with its Bank on September 30, 2009 and subsequently amended it on a number of occasions with an amended expiry date of May 30, 2010. Under the terms of the forbearance agreement, additional general covenants have been placed on the Company. The forbearance agreement did not waive prior breaches of the financial and general covenants and the Company continues to be in breach of its covenants with the Bank. In particular, the Company did not achieve its December 31, 2008 earnings before interest, taxes and depreciation, fixed charge coverage and funded debt to earnings before interest, taxes and depreciation covenants or its March 31, 2009, June 30, 2009, September 30, 2009, December 31, 2009, and March 31, 2010 fixed charge coverage covenant.

The only financial covenant in place subsequent to December 31, 2008 is the fixed charge coverage covenant. However, pursuant to the terms of the forbearance agreement as amended, the Bank has agreed that a failure to achieve this covenant shall not constitute a terminating event during the period of the forbearance agreement. The Company is in breach of certain general covenants it was obligated to satisfy pursuant to waiver agreements entered into by the Company with its Bank based on its September 30, 2008 and subsequent interim monthly results. The covenant violations provide the Bank with the right to demand repayment of their indebtedness. To the extent any residual funds from the sale of Leewood and Richmond are released from escrow, the Company has agreed to apply these funds against bank indebtedness.

Subsequent to March 31, 2010 the Company directed proceeds released from the escrow associated with the sale of the majority of the assets of Leewood and Richmond in the amount of US$335,000 in permanent reduction of bank indebtedness.

Outlook:

In order to strengthen the Company's balance sheet, address its liquidity requirements and the requirements of its lenders, the Company has completed and announced a number of transactions for the sale of certain subsidiaries and operating assets.

Subject to the closing of the sale to 3M, MTI Global plans to use the proceeds of the Sale Transaction and the proceeds of the sale of Milton, to repay all its outstanding debt and to complete a special distribution by way of a return of capital to shareholders, currently expected to be between $0.225 and $0.325 per common share ["Special Distribution"]. Further information regarding the special distribution will be made available once details have been finalized. Following the Polyfab sale to 3M and the proposed Special Distribution, it is expected that the Company will have total assets of less than $5 million [the assets comprised primarily of cash subject to the escrow agreement] and no operating business.

About MTI Global:

MTI Global Inc. (TSX:MTI) designs, develops and manufactures custom-engineered products using silicone and other cellular materials. The Company serves a variety of specialty markets focused on Aerospace and Fabricated Products. The Company designs and fabricates energy management systems from a variety of flexible, cellular materials. MTI's primary market is aerospace. Secondary markets include sporting goods, automotive, industrial, institutional, and electronics. MTI's head office and Canadian manufacturing operations are located in Mississauga, Ontario, with a contract manufacturer venture in Ensenada, Mexico. The Company's website is [ www.mtiglobalinc.com ].

The foregoing press release contains forward-looking statements and is subject to important risks and uncertainties. These forward-looking statements relate to anticipated or assumed events or results including, without limitation, the Company's outlook, proposed use of sale proceeds and business strategy, direction, plans and objectives. These forward-looking statements can be identified as such because of the context of the statements and often include words or phrases such as "will", "plans", "intends", "expects", "may", "pursues", "proposed", "continues" or words or phrases of a similar nature. Although MTI Global Inc. believes that the expectations reflected in any forward-looking statements are reasonable, the results or events predicted in these statements may differ materially from actual results or events. Forward looking statements are based on estimates and assumptions derived from past experience, historical trends, current conditions and expected future developments. Many factors could cause results or events to differ from current expectations, including risks associated with the failure to complete the propose sale of the Company's aerospace business, the amount of any adjustments to the purchase price for and the total costs to complete the sale of the aerospace business, potential enforcement proceedings initiated by the Company's creditors, the impact of price and product competition, general industry and market conditions and growth rates and reliance on key customers. For additional information with respect to these and other factors, see the reports filed by MTI Global Inc. with the applicable securities regulatory authorities at [ www.sedar.com ]. MTI Global Inc. disclaims any intention or obligation to update or revise any forward-looking statements, except as required by applicable law.

Financial Statements Follow

			MTI Global Inc.
Unaudited Interim Consolidated Balance Sheets
	As at		As at
	March 31, 2010		December 31, 2009
(In thousands of Canadian dollars)	$		$
ASSETS
Current
Cash and cash equivalents	528		681
Restricted cash	821		1,969
Accounts receivable	3,378		2,971
Income taxes recoverable	16		95
Inventories	3,181		3,805
Prepaid expenses and deposits	269		354
Assets of discontinued operations	2,482		3,077
	10,675		12,952
Property, plant and equipment, net	2,529		2,713
Asset held for sale	396		410
Goodwill	6,729		6,729
Deferred development costs, net	5,084		5,529
	25,413		28,333
LIABILITIES AND SHAREHOLDERS' EQUITY
Liabilities
Bank indebtedness	1,838		1,948
Accounts payable and accrued expenses	5,622		5,072
Subordinated debt	7,419		7,419
Liabilities of discontinued operations	548		595
	15,427		15,034
Commitments and contingencies
Shareholders' equity
Share capital	55,700		55,700
Contributed surplus	2,119		2,103
Accumulated other comprehensive loss	(1,970	)	(1,509	)
Deficit	(45,863	)	(42,995	)
	9,986		13,299
	25,413		28,333

MTI Global Inc.

Unaudited Interim Consolidated Statements of Deficit

Three months ended			Three months ended
March 31, 2010			March 31, 2009
(In thousands of Canadian dollars)	$		$
Deficit, beginning of period	(42,995	)	(32,292	)
Cumulative effect of adopting new accounting standards	—		(158	)
Net loss for the period	(2,868	)	(4,775	)
Deficit, end of period	(45,863	)	(37,225	)

MTI Global Inc.

Uaudited Interim Consolidated Statements of Operations

Three months ended				Three months ended
(In thousands of Canadian dollars,		March 31, 2010		March 31, 2009
except per share amounts)		$		$
Sales		5,728		9,956
Cost of sales		4,514		6,514
Gross margin		1,214		3,442
Operating expenses
Plant and laboratory		276		465
Sales and marketing		518		655
Administrative		1,215		1,358
Restructuring costs		677		706
Foreign exchange loss (gain)		241		(241	)
		2,927		2,943
Operating income (loss) before the following items		(1,713	)	499
Amortization of property, plant and equipment		4		5
Amortization of deferred development costs		245		361
		249		366
Income (loss) before other items		(1,962	)	133
Other items
	Interest on subordinated debt	233		220
	Other interest expense	30		71
		263		291
Loss from continuing operations, net of tax		(2,225	)	(158	)
Loss from discontinued operations, net of tax		(643	)	(4,617	)
Net loss for the period		(2,868	)	(4,775	)
Net loss per share, basic, diluted
Continuing operations		(0.07	)	(0.01	)
Discontinued operations		(0.02	)	(0.16	)
Basic and diluted		(0.09	)	(0.17	)

MTI Global Inc.

Unaudited Interim Consolidated Statements of Comprehensive Loss

	Three months ended		Three months ended
	March 31, 2010		March 31, 2009
(In thousands of Canadian dollars)	$		$
Net loss for the period	(2,868	)	(4,775	)
Other comprehensive income (loss)
Net change in cumulative translation adjustment	(461	)	646
	(461	)	646
Comprehensive loss	(3,329	)	(4,129	)

MTI Global Inc.

Unaudited Interim Consolidated Statements of Cash Flows

		Three months ended		Three months ended
		March 31, 2010		March 31, 2009
(In thousands of Canadian dollars)		$		$
OPERATING ACTIVITIES
Loss from continuing operations, net of tax		(2,225	)	(158	)
Add items not involving cash
	Amortization	327		424
	Unrealized foreign exchange loss	160		76
	Stock-based compensation expense	16		23
	Net change in non-cash working capital balances	813		183
Cash provided by (used in) operating activities		(909	)	548
INVESTING ACTIVITIES
Deferred development costs capitalized		(60	)	(45	)
Cash used in investing activities		(60	)	(45	)
FINANCING ACTIVITIES
Decrease in short-term investment		—		109
Decrease in bank indebtedness		(105	)	(70	)
Decrease in restricted cash		1,132		15
Cash provided by financing activities		1,027		54
Foreign exchange on cash and cash equivalents		(43	)	72
Cash provided by continuing operations		15		629
Cash provided by (used in) discontinued operations		(168	)	253
Net increase (decrease) in cash during the period		(153	)	882
Cash and cash equivalents, beginning of period		681		1,704
Cash and cash equivalents, end of period		528		2,586
Supplemental cash flow information
Interest paid		269		294
Income taxes recovered		(78	)	—

Contributing Sources

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