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Technology Stocks : Net2Phone Inc-(NTOP) -- Ignore unavailable to you. Want to Upgrade?

To: .com who wrote (156)	7/31/1999 11:11:00 AM
From: Anthony@Pacific	Read Replies (2) \| Respond to of 1556

NTOP<-----------------Expect Huge losses to be announce every quarter for the next several years...Not from a growing busines sbut from an enrichment of the top Insiders!! ReaD ON: The market for our services has been extremely competitive. Many companies offer products and services like ours, and many of these companies have a substantial presence in this market. Current product offerings include VocalTec Communications' Internet Phone, QuarterDeck's WebPhone and Microsoft's NetMeeting. XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXx In addition, a number of large telecommunications providers and equipment manufacturers, such as Alcatel, Cisco, Lucent, Northern Telecom and Dialogic (which has entered into an agreement to be acquired by Intel), have announced that they intend to offer similar products. We expect these products to allow live voice communications over the Internet between parties using a personal computer and a telephone and between two parties using telephones. Cisco Systems has also taken further steps by recently acquiring companies that produce devices that help Internet service providers carry voice over the Internet while maintaining traditional phone usage and infrastructure. Other competitors of ours, such as ICG Communications, IPVoice.com, ITXC, RSL Communications (through its Delta Three subsidiary) and VIP Calling, route voice traffic worldwide over the Internet. In addition, major long distance providers, such as AT&T, Deutsche Telekom, MCI WorldCom and Qwest Communications, as well as other major companies such as Motorola and Intel, have all entered or plan to enter the market for carrying voice over the Internet. These companies are larger than we are and have substantially greater financial, distribution and marketing resources than we do. We may not be able to compete successfully in this market. XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX The use of the Internet as a commercial marketplace is at an early stage of development. Demand and market acceptance for recently introduced products and services over the Internet are still uncertain. We cannot predict whether customers will be willing to shift their traditional activities online. The Internet may not prove to be a viable commercial marketplace for a number of reasons, including: . concerns about security; . Internet congestion; . inconsistent service; and . lack of cost-effective, high-speed access. xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx

To: .com who wrote (156)	7/31/1999 11:16:00 AM
From: Anthony@Pacific	Read Replies (3) \| Respond to of 1556

NTOP<---------ONE OF THE WORST CASES OF SHAREHOLDER DILUTION AND FORWARD LOSSES IVE EVER SEEN!!!!!!!!!!!!!!!!!!!!!! NTOP<------------WARNS EVERYONE THAT THEY INTEND TO SUBSTANTIALLY DILUTE and DUMP shares in the Market!!!!!!!!!!!!!!!!!!!! The sale of a substantial number of shares of our common stock after this offering may affect our stock price. The market price of our common stock could decline as a result of sales of substantial amounts of common stock in the public market after the closing of this offering or the perception that substantial sales could occur. These sales also might make it difficult for us to sell equity securities in the future at a time and at a price that we deem appropriate. XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX <TABLE> <S> <C> <C> Assumed initial public offering price per share................. $13.00 Net tangible book value per share at April 30, 1999 .......... $0.53 Increase per share attributable to new investors.............. 1.29 ----- Pro forma net tangible book value per share after this offering............................ 1.82 ------ Dilution per share to new investors............................. ( A negative $11.18 ) xxXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX We will recognize significant charges relating to non-cash executive compensation expense in the current fiscal quarter ending July 31, 1999 and on an ongoing basis. In connection with 5,040,000 options granted with an exercise price of $3.33 per share on May 17, 1999, including options granted to IDT employees, we will recognize approximately $41 million of non-cash charges over the vesting period of these options. We will recognize a charge of $13 million in the current quarter, $10 million during fiscal 2000, $10 million during fiscal 2001 and $8 million during fiscal 2002. We also plan to grant options to purchase approximately 2,503,500 shares of our common stock to our employees, consultants and others prior to the closing of this offering, which will have an exercise price equal to the initial offering price, together with additional options to purchase 168,000 shares of our common stock at an exercise price of $3.33 per share, and which will result in additional non-cash compensation charges. In addition, in connection with the 460,000 options granted to our President with an exercise price of $3.33 per share, we will recognize approximately $3.6 million of non-cash charges over the vesting period of these options. We will recognize a charge of $1.2 million during the current quarter, $800,000 during fiscal 2000, $800,000 during fiscal 2001 and $800,000 during fiscal 2002. In connection with the remaining 460,000 options granted to our President with an exercise price equal to the lower of our initial offering price or $11.00 per share, we will recognize a compensation charge if our initial offering price is more than $11.00 per share. The non-cash compensation charge will be equal to the excess of our initial offering price over $11.00 multiplied by the 460,000 shares and will be amortized over the three-year vesting period of the options. In May 1999 the Company issued 3,140,000 shares of Series A convertible preferred stock which is convertible into 9,420,000 shares of Class A stock at $3.33 per share. The Series A convertible preferred stock contains beneficial conversion features. The total value of the beneficial conversion feature approximates $75 million. For accounting purposes the value of the beneficial conversion features was limited to the amount of proceeds allocated to the Series A convertible preferred stock. The Company will record a reduction in net income available to common stockholders in the quarter ending July 31, 1999 of approximately $29.3 million. In connection with the issuance of the Series A convertible preferred stock, we issued warrants to purchase 272,400 shares of common stock at an exercise price of $3.33 per share. The fair value of warrants on the date of issuance was $2.1 million. The fair value of the warrants will be recorded as an increase to additional paid in capital and a decrease to the carrying value of the Series A convertible preferred stock. The decrease in the carrying value of the Series A convertible preferred stock will be accreted, with a corresponding reduction of additional paid-in capital, over the period to the initial redemption date in May 2006. In connection with this offering, the Series A convertible preferred stock will be converted in Class A stock. At that time, the balance of the unamortized discount will be recorded as a reduction of the amount of income available for common shareholders. 18 <PAGE> In connection with our distribution and marketing agreement with ICQ, we issued a warrant to America Online to purchase up to 3% of our outstanding capital stock on a fully-diluted basis. This warrant will vest in 1% increments upon the achievement of each of three incremental thresholds of revenue generated under the agreement during the first four years that the warrant is outstanding. The per share exercise price under the warrant will be equal to the lesser of 80% of the price per share in this offering, or $450 million divided by the number of our fully-diluted shares on the initial exercise date. If one or more of the revenue thresholds set forth in the warrant are achieved, we will recognize additional non-cash charges in an amount equal to the value of the warrant, as determined at the time that these thresholds are met. XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX This deal is dead before it even gets going!!