The residential and SOHO communications service markets are characterized by a demand for cost-efficient and feature-added communications services.

Voice-over-Internet-Protocol, or VoIP, is a technology that can be used instead of the traditional phone network for the delivery of voice-based communications services. VoIP technology translates voice into data packets, transmits the packets over data networks, including the Internet, and converts the data packets into voice at the destination. Unlike traditional phone networks, VoIP does not use dedicated circuits for each phone call; instead, the same VoIP network can be shared by multiple users for voice, data and video simultaneously.

The VoIP industry has grown dramatically from the early days of calls made through personal computers. Technology research firm Jupiter Research reports that the number of users of VoIP telephony services has grown to approximately 3 million in the United States in 2005 and projects that there will be approximately 27 millions users in the United States by 2009.

Prepaid long distance services, such as those available via debit and rechargeable calling cards, are well established and used throughout the world. Industry research indicates that in the United States, prepaid long distance services are most frequently used by businesses seeking to control employee communications expense and immigrants and members of ethnic communities seeking to keep in touch with family members and friends located in their country of origin.

Most currently available VoIP services require a combination of an adaptor, modem and/or router and often require cable companies and other service providers to engage in varying degrees of rewiring in the customer location in order for the VoIP service to be accessible throughout such location. The Company’s broadband phone, however, is plugged directly into a customer’s Internet router, without use of an adaptor or additional hardware, and does not require any complex rewiring.

The Company’s broadband phone may be used in rooms other than those with an Internet connection by carrying the wireless handset from room to room in the same manner as traditional cordless phones. The Company’s multi-handset design allows customers to add additional handsets to their system and situate extensions in other rooms without any rewiring.

The Company’s VoIP phone/service bundle can easily be installed by customers requires no installation appointments with the cable company or other service provider and provides services at what are among the lowest rates currently available.

The Company’s phones that are bundled with long distance service are marketed in the United States under the brand “Pay N’ Talk.” Prepaid long distance service on these phones is accessible, on demand, with the press of the LDS (Long Distance Service) auto-key on the handset dial pad. This process provides the user with an immediate and seamless connection to prepaid long distance services provided by IDT. As a promotion, the Company provides a specified number of initial minutes of long distance service at no additional charge to the customer as part of the phone/service bundle.

For the period from its inception through June 30, 2005, the Company has incurred aggregate net losses in its development stage, and had an accumulated deficit of $195.3 thousand as of June 30, 2005.

The Company expects its losses to increase during the short term as it transitions from development stage to commercial operations and initiates distribution of its phone/service bundles.