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TWST: Can we begin with an introduction and historical sketch of VocalTec (Nasdaq:VOCL)?

Dr. Ganor: VocalTec is credited for pioneering or kick-starting the VoIP (voice over IP) industry back in February 1995 when the company introduced its first VoIP product Internet Phone. Since then the company introduced a whole series of VoIP industry landmark products, including the first Gateway and the first Gatekeeper. The company has grown to become a key player in that still nascent, yet important industry. VoIP is synonymous with “Packetized Telephony,” providing an advanced alternative technology to the traditional public switched telephone network or PSTN, replacing the infrastructure of existing and green field switch deployments. Packetized Telephony uses technology that digitizes, compresses and sends voice over data networks and then decodes it back on the other side so you and I can hear it. The advantages of such technology include a significant reduction in both cap ex – capital expenditure - and op ex -operational expenditure. An additional key advantage is the ability to easily introduce enhanced and new services on top of VoIP platforms, which are more open and flexible than traditional PSTN technology machines.

TWST: Can you elaborate on VocalTec’s position in this space?

Dr. Ganor: VocalTec equipment carried about 10 billion minutes in 2001. VocalTec has a footprint in over 100 countries, hundreds of cities and thousands of locations around the world. Six continents and nearly every major country in the world has carriers making business using VocalTec equipment. Our market is totally focused on the carriers, whether ILCs, CLEC, PTTs or others. We are headquartered is in Israel with 14 offices worldwide including the United States, Japan, China, Hong Kong, Singapore, Germany, France, Sweden, Spain and Italy. We recently opened an office in India, which has just deregulated and is becoming an important telecom market. Every emerging deregulating market is a potential target for VoIP because new competitive carriers see VoIP as their key for a solution that is quicker to deploy and less expensive to maintain. VocalTec is a NASDAQ traded company (symbol: VOCL). Our entire sector has been hammered since the downfall of the stock market and the telecom space in particular. However people don’t really do sufficient due diligence and homework to understand that VoIP, especially in difficult economic times, is becoming a preferred choice. For example, a large European voice carrier made a strategic decision in February/March 2002 to freeze TDM deployment budgets due to high costs, budget limitations and existing large debt. The only growth choice for them was to use VoIP, which immediately culminated in serious orders to VocalTec. The poor economy and poor telecom situation impacted us somewhat positively, although we also face other areas where a total freezing of cap ex had a negative affect on us. The future looks quite promising. We are sensing some positive signs, but they are not yet strong enough for me to come on in a bullish way and say that the downturn is over and we are now growing fantastically well again.