VoIP, Inc., 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."