i2Telecom International, Inc. Announces the Completion of Debt Restructuring

$5.5 Million of Promissory Notes are Converted Into Preferred Stock of Wholly-Owned Subsidiary

Monday August 3, 2009, 8:00 am EDT

ATLANTA--(BUSINESS WIRE)--i2Telecom International, Inc. ("i2Telecom") (OTCBB:ITUI - News), a leading developer of award-winning patented and innovative high-quality mobile applications and services announced today that it has completed the exchange of approximately $5.5 million of its Promissory Notes, which includes all accrued interest and related fees, into preferred stock (the "IP Subsidiary Preferred Stock") of its wholly-owned subsidiary i2Telecom IP Holdings, Inc., (the "IP Subsidiary").

In accordance with the requirement from a recent financing of the Company’s Series F Convertible Preferred Stock, it was necessary to exchange a minimum of eighty-five percent (85 percent) of the approximate $6.3 million in total related debt securities. The balance of approximately $800,000 of remaining debt has either been retired or is about to be retired in the form of cash payments.

In connection with the creation of IP Subsidiary, substantially all of the Company’s intellectual property was transferred to IP Subsidiary, with the Company owning all of the common stock of IP Subsidiary. The IP Subsidiary Preferred Stock provides for an accruing dividend of 12 percent per annum, and a special dividend for up to two years in the event that the IP Subsidiary Preferred Stock has not been redeemed.

"I am pleased to report this very significant event", stated Paul Arena, Chairman and Chief Financial Officer of i2Telecom. "I believe that this action taken on behalf of the Company and its shareholders underscores the level of confidence that our larger investors have placed in the value of our management, operational capabilities and our growing intellectual property portfolio."

About i2Telecom International, Inc.

Incorporated in 1988 and the core business founded in 2002, i2Telecom International, Inc. is a leading developer of award-winning patented and innovative high-quality mobile applications products and services that employ best-of-breed VoIP technology and use a combination of the Company's own services network and the Internet to deliver high-quality phone calls, streaming video and text chat to customers on a global scale. i2Telecom International provides its VoiceStick®, MyGlobalTalk™, Digital Portal communications and microgateway adapters for VoIP long-distance and other enhanced communication services to its subscribers. Its patent pending services technology platform is compliant with the Session Initiation Protocol ("SIP") telecommunications industry standard. For additional information visit www.i2telecom.com or www.voicestick.com or www.myglobaltalk.com or call 404-567-4750.

SAFE HARBOR Statement under the Private Securities Litigation Reform Act. With the exception of the historical information contained in this release, the matters described herein contain forward-looking statements that involve risk and uncertainties that may individually or mutually impact the matters herein described, including, but not limited to, product acceptance, economic, competitive, governmental, results of litigation, technological and/or other factors which are outside the control of the company. Actual results and developments may differ materially from those contemplated by these statements depending on such factors as changes in general economic conditions and financial or equity markets, technological changes, and other business risk factors. i2Telecom® does not assume, and expressly disclaims, any obligation to update these forward-looking statements.

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