Fusion Executiive Summary FUSION TELECOMMUNIC

Fusion Executiive Summary

FUSION TELECOMMUNICATIONS INTERNATIONAL, INC.

420 Lexington Avenue, Suite 1718

New York, NY 10170

www.fusiontel.com

INVESTMENT HIGHLIGHTS

EXECUTIVE SUMMARY

MAY 2012

Fusion is an Emerging Leader in Cloud

Communications and Cloud Delivered Services, one

of the Fastest Growth Areas in the

Telecommunications Market Estimated at $3.2

billion and Growing at 36% per Year.

Shift to Focus on Delivering Unified

Communications Services to Business Customers

Promises to Grow Recurring Revenue as a Portion

of Total Revenues, to Increase Margins and to

Bring Multi-Year Service Contracts.

High Industry Valuation Multiples in excess of 30x

EBITDA for Cloud-Based Telephony Companies

Suggest Strong Increases in Fusion Valuation and

Share Appreciation.

GNYHA Agreement Names Fusion as the Exclusive

Provider of Cloud-base Communications and Other

Cloud Information and Security Services to the

Greater New York Hospital Association’s +15,000

Members Throughout the US.

Focus on Delivering Vertically-Oriented Cloud-

based Solutions to Large Vertical Markets

Including Healthcare, Transportation and

Education Provides Competitive Advantage, Large

Enterprise Sales and Partnership Opportunities.

Recently Announced Acquisition Expected to

Produce Approximately +$5 million in positive

EBITDA on $74 million in Consolidated Revenues

within 2012 Upon Integration and Bring Expanded

Infrastructure.

Acquisition of Other Communications or Cloud

Service Companies May Leverage the High

Valuation Multiples of Cloud-Based Carriers like

Fusion.

Use of Commercial Software and Product

Platforms and Partnerships with Established

Vertical and System Integration Partners Lowers

Need for Capex and Speeds Time to Market.

Unique Reach into Corporations, Institutions and

Government through Strong Board of Directors

and Management Team.

The Company

Fusion Telecommunications International, Inc. (OTCBB: FSNN), a Delaware corporation, is a

provider of Internet Protocol (“IP”) based digital voice and data communications services and

cloud services to carriers and corporations worldwide.

Fusion was formed in 1997 and commenced operations in 1998, as a provider of domestic and

international telecommunication service to carriers, corporations and consumers. The Company

completed its Initial Public Offering in February 2005. In 2009, Fusion sold its consumer services

business segment in order to more fully focus its efforts on its higher volume carrier services and

higher margin corporate services business segments.

Our Business

Our business addresses two major segments of the communications market: Carrier Services and

Corporate Services.

Our Carrier Services are sold to other communications service providers throughout the world,

including U.S. based carriers wishing to terminate transmission of telephone services to

international destinations and foreign carriers wishing to terminate in the U.S. and throughout

the world. We also purchase domestic and international termination services from many of our

carrier customers. We currently have over 270 carrier customers and vendors.

Our Corporate Services segment provides a rapidly growing portfolio of

telecommunications’, cloud communications’ and cloud services to small and medium

sized businesses and to large enterprises. These services include local, long distance, and

international Voice over Internet Protocol (“VoIP”) services; broadband Internet access; private

line circuits; virtual private network services; audio and web conference calling; fax services, and

other enhanced communications services and features. These communications services are

enhanced and sold with a rich array of cloud-based products including Infrastructure-as-a-

Service (IaaS); Software-as-a-Service (SaaS) and Platform-as-a-Service (PaaS). Our entire offering

is provided within a highly secure framework protecting our customers’ service and information.

This spectrum of cloud communication and cloud services, called Unified Communication-as-a-

Service (UCaaS), allows us to deliver voice, data, applications and Internet access services over a

single facility, while providing service quality and reliability comparable to that of the historical

circuit-switched service providers. We currently serve corporate users in 30 states.

Fusion’s product offerings are designed to capitalize on the rapid growth of cloud-based voice

and information services which replaces on-premise equipment based on traditional circuit

switched technology including PBX’s and servers with remote services delivered over the

internet. Customers switch from legacy, equipment-based communication and information

services to cloud based services to take advantage of lower cost of ownership, lower exposure to

obsolescence, materially reducing management responsibility and maintenance responsibility,

take advantage of a larger range of services and applications available from the cloud, scale as

their businesses grow (or contract) without hardware changeouts, and to achieve greater

reliability. We are aggressively introducing a broad suite of cloud services, particularly

focusing on select, large vertical markets, which address industry-specific customer needs

and are not easily duplicated by competitors. These cloud communications and cloud-based

information services are being developed primarily through major partners who seek access to

the Company’s expertise and its distribution channels.

The Market

Fusion believes that the telecommunications market is at an inflection point as customers

ranging from small to enterprise sized switch from premise based equipment to cloud based

services. Through this Unified Communications approach, network management and security;

voice and telephony; messaging and presence; conferencing; and applications are delivered

through a single facility and managed through the cloud. The transformation offers cloud based

telephony companies the ability to gain share rapidly as customers choose new vendors in the

sector and offer to increase the average revenue per user (ARPU) by offering an expanding

number of communications, communications and security “Apps” and to generate higher overall

margins. According to a recent research report, cloud-based telephony services are growing at

36% per year and represent a $3.2 billion market. Cloud based information services for one of

Fusion’s target markets, healthcare, is projected by BCC to grow to $17.5 billion by 2016 with

50% of that growth coming from cloud computing.

The market for cloud communications and cloud services, Unified Communications as a Service,

is significantly more attractive than the traditional model based on hardware sales. Unified

Communications offers a financial model based on high margin recurring revenue and large,

multi year sales.

2201_010612_1a

FUSION TELECOMMUNICATIONS INTERNATIONAL, INC.

420 Lexington Avenue, Suite 1718

New York, NY 10170

www.fusiontel.com

MANAGEMENT AND BOARD

EXECUTIVE SUMMARY

MAY 2012

The Executive Management of Fusion consists of:

Marvin S. Rosen, Chairman of the Board: Mr. Marvin Rosen co-

founded the Company in 1997 and has served as the Chairman

of our Board of Directors since November 2004. He formerly

served as a name partner at Greenberg Traurig, Finance

Chairman under President Clinton and Chairman of the Florida

Housing Finance Agency. Currently, he serves on the Board of

Directors of the Robert F. Kennedy Memorial. Mr. Rosen

served on the Board of Directors of Terremark Worldwide, Inc

until its acquisition in 2011 by Verizon.

Matthew D. Rosen, CEO and Director: Mr. Matthew Rosen has

served as a Director since May 2005 and has been our Chief

Executive Officer since March of 2006. Formerly President of

the Northwest and New England Operations for Expanets, a

$1.3 billion nationwide roll-up of voice and data networking

companies; an investment banker in Merrill Lynch’s corporate

finance department, where he worked on over $1 billion of

debt, equity and M&A transactions; and the Director of

Operations for Oxford Health Plans, a $4 billion healthcare

company, where he worked on developing and executing

turnaround strategies.

Gordon Hutchins, Jr., President, Chief Operating Officer, and

Acting Chief Financial Officer: Mr. Hutchins serves as President

and Chief Operating Officer and as Acting Chief Financial

Officer. He has served as President and Chief Executive Officer

of SwissFone, Inc., a $100 million telecommunications carrier;

President and Chief Executive Officer of STAR

Telecommunications, Inc., an $800 million international

telecommunications carrier.

Jan Sarro, Executive Vice President - Corporate Services: Ms.

Sarro serves as Executive Vice President – Corporate Services.

Formerly President of the Americas for Viatel, a global,

facilities-based carrier where she grew annual carrier

revenues from $20 million to $160 million in under two years,

and built a $140 million sales organization to market Internet

access, corporate networks and international voice services to

multinational corporations in the United States and Latin

America. She also held senior executive marketing and sales

management positions at Argo Communications, FTC

Communications, TRT Communications, and WorldCom.

The Board of Directors of Fusion consists of:

Marvin S. Rosen (Chairman): see above

Matthew D. Rosen: see above

E. Alan Brumberger: Formerly Managing Director Drexel

Burnham, Managing Director of Shearson American Express,

and President and CEO of Shearson’s international Investment

Banking business

Philip D. Turits (Treasurer): Former Treasurer of Larry Stuart,

CEO of Continental Chemical Company

Michael J. Del Giudice: Board member of Con Edison and

former board member of Barnes and Noble; Formerly Chief of

Staff for Mario Cuomo and General Partner at Lazard Freres

Julius Erving: Formerly board member of Saks, Willtel, Darden

Restaurants, Sports Authority, NBC and member of NBA

William Rubin: President of the Rubin Group, a prominent,

Florida based lobbying firm; Formerly Assistant Insurance

Commissioner and Treasurer of the State of Florida, advisor to

many large companies, primarily advising health care

companies doing business in Florida.

Paul C. O’Brien: Former President and Chairman of New

England Telephone (Nynex), Advisor to Sovereign Bank

Larry Blum: Former Senior Partner of the Florida Region of

Marcum LLP (Marcum Rachlin), Managing Partner of Rachlin

LLP, litigation advisor and member of the Florida Bar.

The Advisory Board of Fusion consists of:

John H. Sununu: Former three term Governor of New

Hampshire, Chief of Staff for President Bush and Counselor to

the President

Fred Salerno: Board member of CBS, Viacom, Popular Inc.,

Intercontinental Exchange and Akamai, Former Vice Chairman

and CFO for Verizon.

Jack Rosen: CEO of Rosen Partners, Hudson Institute Board

Member, Chairman of the American Jewish Congress

Fusion’s Strategy

Our strategy is to continue to grow our existing Carrier Services business, which today comprises

95% of our revenue while accelerating the growth of our Corporate Services business to ensure

that an increasing portion of our total revenues is derived from the higher margin, more

stable and largely recurring Corporate Services business segment. We believe that the

Carrier Services business supports the growth of the Corporate Services business by providing

enhanced service offerings for our corporate customers, by lowering the overall cost basis of the

communication infrastructure shared by the Corporate Services business and by strengthening

our relationships with key service providers and carriers throughout the world.

Growth in the Carrier Service business will be driven by expanding the number of international

carriers with whom we interconnect; expanding sales to non-traditional carriers, including cable

television providers, Internet search engine companies, and large IP telephone companies; and by

expanding current carrier relationships to maximize the traffic received from and sent to them.

We intend to generate substantial growth in the Corporate Services segment to make the revenues

and margins from this segment a more significant portion of our total revenues and margins. The

expansion of the Corporate Services business will come from both organic growth and

acquisitions. Organic growth will be delivered from a combination of expanding the number and

types of services available and sold to our current customers and by customizing our product and

service offerings to address the needs of target large sectors. We believe that there is

substantial opportunity to gain market share, to increase the size of our average sale and to

sell a broad range of our products by focusing on offering highly targeted product and

service solutions to these large sectors including healthcare, transportation and education.

Our strong entry into these markets also leverages our experience and relationships to provide a

competitive advantage and offers the opportunity to create sector specific partnerships with

incumbent cloud service providers in each sector. Such larger sales to enterprise customers

typically have lower churn rates and provide substantial opportunities for adding additional

services to a core communications offering. Targeted, “bolt-on” acquisitions are also seen as

part of our core strategy, expanding our customer base and providing new prospective

customers for our growing portfolio of cloud services; potentially adding products and services to

our own; and increasing the scale of our operations while leveraging our existing infrastructure

and costs. Such acquisitions may be consummated at lower valuation multiples than would be

accorded to Fusion, thus effectively lowering the cost of the acquisition.

Recent Events

The growth strategy of Fusion in terms of both large sale organic growth and growth through

acquisition has been evidenced by two recent, announced events.

In January, 2012, Fusion announced that it had entered into an exclusive agreement for cloud

services and communications solutions with the group purchasing organizations (“GPOs”) of the

Greater New York Hospital Association (GNYHA). Fusion and the GPOs will offer the more than

+15,000 GPO members in healthcare and other vertical markets a full range of cloud

services, including cloud computing, disaster recovery, storage and security. Through this

agreement, Fusion may also provide GNYHA members hosted voice and data solutions that

include a full complement of advanced service features, unified communications and presence,

Internet and other broadband data services, as well as a comprehensive portfolio of leading edge

hardware designed to meet the specific needs of the healthcare industry. These services may be

offered directly by Fusion or in partnership with major hardware, software and systems

integration partners.

In January, 2012, Fusion announced that it had entered into purchase agreements to acquire the

business currently operated by Network Billing Systems, LLC and Interconnect Systems Group II

LLC (collectively, “NBS”). The aggregate purchase price for the NBS acquisition transaction is $20

million. NBS currently provides voice (including VoIP) and data telecommunications services, as

well as a wide variety of managed and cloud-based telecommunications services, to small and

medium sized companies. NBS has approximately 5,000 customers and for FY 2011 generated

(unaudited) revenues of approximately $26.8 million and over $3 million in net income

(unaudited). The Company expects that as a result of the acquisition of NBS, it will, on a

consolidated basis, generate positive EBITDA. In addition to the financial benefits which are

foreseen to accrue from the acquisition, Fusion believes this acquisition will accelerate its organic

growth plans and provide a compelling platform for future acquisitions.

Competition

Fusion competes with both larger and more established competitors as well as new market

entrants. These include traditional carriers (AT&T, Verizon and Windstream), cable companies

(Comcast), focused IP Telephony companies (8x8, West IP Communications, RingCentral,

M5/Shoretel) and IP network hardware and software providers (Cisco, Broadview). The market is

highly fragmented with no single market participant having more than 5% of the market.

2201_010612_1a

FUSION TELECOMMUNICATIONS INTERNATIONAL, INC.

420 Lexington Avenue, Suite 1718

New York, NY 10170

www.fusiontel.com

VALUATIONS

Anticipating the growth in the market, valuations for focused IP communications companies have been established at above market and forward

looking levels as evidenced in both the public and private market. The Enterprise Value of 8x8 (NASDAQ: EGHT) was recently 2.99x revenue and 26.99x

EBITDA. In recent M&A transactions, one of the leading providers of cloud-based telephony, M5 Networks was acquired by Shoretel, a traditional facilities-

based telephony provider, for 3.3x revenue and 45.7x EBITDA. Another provider of cloud-based telephony, Smoothstone IP Communications, was acquired

by West Communications for 3.1x revenue and 38x EBITDA. The Company believes that should such forward looking valuation levels be accorded to

Fusion, the Company may gain the ability to leverage its high valuation in acquiring smaller companies at significantly lower valuations and to arbitrage the

difference between its own valuation and that of the acquired company.