The complaint, filed in the United States District Court for the District of New Jersey, seeks both compensatory and punitive damages and includes the following claims:

• Misappropriation of trade secrets
• Fraud
• Unfair competition
• Breach of contract
• Breach of fiduciary duties

The relationship between Net2Phone/ADIR and Cisco had its inception in mid-2000. According to the complaint, Net2Phone created ADIR and Cisco entered into a strategic alliance agreement with ADIR under which they would jointly develop "a product that would make ADIR's voice-over software compatible with Cisco's hardware products, and ultimately produce a highly marketable system for internet voice-over communication." The complaint further alleges that "Cisco had seriously misrepresented the basis on which the entire Net2Phone-ADIR-Cisco relationship was founded."

Net2Phone and ADIR have retained Skadden, Arps, Slate Meagher & Flom LLP and Bartlit, Beck, Herman, Palenchar and Scott to represent the companies in this action.

"Both Net2Phone and ADIR made extraordinary efforts to maximize our synergies with Cisco, however we were unable to resolve issues in a manner that would be beneficial to us and our shareholders," said Stephen Greenberg, CEO of Net2Phone. "We have been in intense discussions with Cisco to try to come to a resolution, and hope to continue to work towards a solution. We hope to bring this matter to closure as quickly as possible, and will not allow it to be a distraction to our core businesses."

ADIR intends to continue to explore means of further reducing its cash utilization through additional cost cutting measures and will continue to size itself for the opportunities in the marketplace.

About Net2Phone
Founded in 1995, Net2Phone is a leading provider of voice services over IP networks to consumers, businesses and carriers worldwide. With millions of users around the world, Net2Phone enables toll-quality calls between computers, telephones, and broadband devices utilizing IP networks. Recognized as the first company to bridge the Internet with the public switched telephone network, Net2Phone has routed billions of minutes of traffic over its award-winning network. Traded on the Nasdaq under the symbol NTOP, Net2Phone's strategic partners and investors include Liberty Media Corporation, AT&T Corporation, and IDT Corporation. For more information about Net2Phone's products and services, please visit www.net2phone.com.

About ADIR Technologies
ADIR Technologies, Inc. offers proven, carrier-scale VoIP management software and complete VoIP solutions for telecommunications, Internet, wireless, broadband and next generation service providers and enterprises worldwide. ADIR's technology is based on the proven, industry-leading VoIP network that Net2Phone has been operating since 1995, a network that currently handles millions of VoIP calls per day. In August of 2001, ADIR expanded its set of exceptional VoIP offerings when it acquired NetSpeak Corporation of Boca Raton, Florida. Today, ADIR prides itself on creating a company that offers one-stop shopping to services providers seeking the building blocks to build reliable, scalable, manageable, and always-available VoIP networks. More information about ADIR can be found at www.ADIRtech.com

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