VoIP Inc acquires WGN, Inc.

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VoIP Inc acquires WGN, Inc.

VoIP, Inc., who recently acquired VoIP Americas, is back on it's VoIP company shopping spree by announcing that it has entered into an Asset Purchase Agreement to acquire the assets and properties utilized by WQN, Inc.  in its voice-over-Internet business. The acquired business will operate as a wholly owned subsidiary of VoIP, Inc. VoIP, Inc. seems to be "scooping" up VoIP wholesale/termination companies that are at least turning a profit, though I forget now how well VoIP Americas was doing before it was purchased. Keep your eye on VoIP, Inc.

Under the Asset Purchase Agreement, VoIP, Inc. will issue a $3,700,000 Convertible Note, 1,250,000 shares of Common Stock and a warrant to purchase 5,000,000 shares of Common Stock for nominal value. The Convertible Note will convert automatically to Convertible Preferred Stock at the time such stock is authorized by the Company. Details of the agreement and the transaction are contained in a Form 8-K filed today by VoIP, Inc.
WQN revenues in the first quarter of 2005 were $7.6 million, a significant increase over $2.0 million in the first quarter of 2004. Wholesale telephony revenue increased to $5.1 million compared to $16,000 in the same period a year ago. Retail telephony revenue was $2.5 million, up from $2.0 million in the first quarter of 2004. Revenues of the acquired business during 2004 were $15.2 million.

WQN is an international IP telephony company. It carries international long distance calls over its enhanced services platform through one of two methods: over its own Internet network, which involves transmission through our Internet gateways, and over its network of leased traditional long distance telephone lines. All of WQN's calls are made from phone-to-phone over its networks. The voice quality of an Internet carried call is virtually the same as an international telephone call carried over a traditional telephone line. WQN focuses on the international long distance market, with particular emphasis on the calling patterns between the United States and various countries. Its virtual calling cards may be used to call from the United States to other countries, to call from other countries to the United States, or to call between countries outside the United States.

WQN Products and services are also sold through a network of over 90 private distributors. Through this network the Company estimates that their services are sold through over 10,000 retail outlets of which more than 5,000 retail outlets are located in Southern California.
"The WQN, Inc. acquisition provides VoIP, Inc. with 60,000 retail customers using various VoIP complementary and unique products and services," said Steven Ivester, CEO of VoIP, Inc. "We are excited to be able to transition their technology and applications to our VoiceOne Network. With the move to our network and operation we expect to immediately realize increased margins and greater international presence. Once WQN is fully integrated into VoIP, Inc., we expect to recognize a material increase in annual revenue from the WQN acquisition based on their current sales."

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