Activities To Reduce Annual Operating Expenses Significantly Through The Divestiture of Non-Core Business; Company Improves Balance Sheet Through Conversion of Debt and Receipt of Additional Capital

ORLANDO, Fla.–(BUSINESS WIRE)–VoIP, Inc. (OTC Bulletin Board: VOII), a leading provider of Voice over Internet Protocol (VoIP) communications solutions for service providers, resellers and consumers, announced today that it has completed the first phase of its restructuring, streamlining operations, reducing its overall level of indebtedness and raising additional capital. The initiatives are expected to improve the Company’s balance sheet and enhance operating results. The Company will continue to pursue initiatives to increase efficiency.

The Company announced that it has terminated its Marketing and Distribution Agreement with Phone House, Inc., under which it was responsible for the wholesale distribution, marketing and selling of prepaid telephone calling cards by Phone House, Inc., under license from the Company. This business was based in the southern California area, was non-core to its VoIP business and consistently produced losses. The Company anticipates that by terminating this business it will reduce annual operating expenses significantly.

The Company also entered into an agreement with certain investors where they converted approximately $7 million in debentures into common stock, and separately raised $2.3 million via a private placement, providing working capital for the continued development and marketing of its VoiceOne suite of services.

“We believe these initiatives have positioned the Company well to capitalize on the many promising opportunities available for our unique VoIP technology offerings,” said Anthony J. Cataldo VoIP, Inc.’s Chairman and Chief Executive Officer. “Interest in our innovative VoIP technology platform Click4Me has been increasing rapidly, as demonstrated by the interest in our technology by leading Internet companies, and the use of our patented Click-To-Call technology in high-profile entertainment programming. We remain confident that the combination of our improved financial position along with growing interest from leading companies in our Click-To-Call technology and services will support strong future growth.”

About VoIP, Inc.

VoIP, Inc. is a leading provider of turnkey Voice over Internet Protocol (VoIP) communications solutions for service providers, resellers and consumers worldwide. The company is also a certified Competitive Local Exchange Carrier (CLEC) and Inter Exchange Carrier (IXC). Through its wholly owned subsidiary, VoiceOne Communications, LLC, the Company provides a comprehensive portfolio of advanced telecommunications technologies, enhanced services, broadband products, and fulfillment services to the VoIP and related communications industries. Current and targeted customers include IXCs, CLECs, Internet Telephony and Conventional Telephony Service Providers (ISPs and ITSPs), cable operators and other VoIP Service Providers in the United States and countries around the world. The Company enables these customers to expand their product/service offerings by providing VoIP’s nationwide Multi-Protocol Label Switching (MPLS) and other services such as voice termination/origination, e911 emergency call service for VoIP, CALEA, Broadband Voice, IP Centrex and other advanced communications services and technologies. For information on VoIP, Inc. please visit the company’s web site: http://www.voipinc.com.