Net2Phone Inc. –

HACKENSACK, N.J. – Net2Phone Inc., developer of a technology that allows users to make inexpensive telephone calls over the Internet, went public July 29, offering 5.4 million shares. The company’s stock priced at $15, above its $12 to $14 filing range.

Hambrecht & Quist, BT Alex. Brown and Wit Capital Corp. underwrote the initial public offering, which left 47.52 million shares outstanding.

There were no selling shareholders. IDT Corp., SOFTBANK Technology Ventures IV, America Online Inc. and GE Capital Equity Investments Inc. were venture backers.

Net2Phone’s Internet telephony services allow users to call individuals and businesses using personal computers or telephones. The company uses its expertise in this area to integrate live voice capabilities onto the Web.

The estimated $81 million earned in the offering will be used to pay ICQ Inc., a subsidiary of America Online, for Net2Phone’s distribution and marketing agreement; to pay NBC, a subsidiary of General Electric, for the purchase of television advertising; to develop and maintain strategic Internet relationships; for research and development; and for upgrading and expanding the company’s network.

The company has never been profitable since its inception in January 1996, losing $3.5 million in the fiscal year ended July 31, 1998.

Howard Jonas, chairman and chief executive of IDT, was named to the company’s board of directors in October 1997, followed in May by James Courter, president of IDT, and in June by Gary Rieschel, managing director of SOFTBANK Ventures.

Net2Phone – Selected Financial

(in thousands, except per share data)

January 2, 1996 (inception) Nine Months Ended

to July 31, Year Ended July 31, March 30,

1996 1997 1998 1998 1999

Revenue – 2,652 12,006 7,954 22,203

Net loss -508 -1,698 -3,545 -674 -2,906

Net loss per share -0.02 -0.06 -0.12 -0.02 -0.09