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Employment

Deltathree Updates Nasdaq

NEW YORK -- deltathree, Inc. (NASDAQ:DDDC) , a leading provider of hosted Voice over Internet Protocol (VoIP) solutions worldwide, is issuing a press release update in accordance with Nasdaq Marketplace Rules.

As previously disclosed in the proxy statement for the 2006 Annual Stockholders' Meeting of deltathree, Inc. (the "Company"), two members of the Company's Board of Directors did not stand for re-election at the Company's annual meeting held on September 8, 2006. One of the two directors also served as a member of the Board's audit committee. Due to this event, the audit committee currently has only two members, each of whom have served on the audit committee for several years.

On September 8, 2006, the Company notified The Nasdaq Stock Market ("Nasdaq") that it is no longer in compliance with Nasdaq Marketplace Rule 4350(d)(2) which requires an issuer's audit committee to have at least three members, each of whom satisfy certain criteria. At that time, the Company was expecting the Board to appoint to the audit committee Noam Bardin, an independent director and current Chairman of the Board. Mr. Bardin satisfies all of the criteria to serve on the audit committee as prescribed by Nasdaq Marketplace Rule 4350(d)(2) except for the requirement prohibiting a member of the audit committee from receiving any consulting, advisory, or other compensatory fee from the Company. As previously reported in a Current Report on Form 8-K filed on January 25, 2006, Mr. Bardin has been providing consulting services to the Company for work that the Company expected to have been completed by September 2006. The Company now expects Mr. Bardin's consulting services and related work to be completed by the end of October, and the Company expects the resulting consulting fees paid, or to be paid, to Mr. Bardin to be less than an aggregate of $60,000. Upon completion of the work and related consulting services and all payments related thereto, the Company expects Mr. Bardin to satisfy the Nasdaq criteria for audit committee membership. If the Board appoints Mr. Bardin to the audit committee, Mr. Bardin will not be able to receive any additional consulting fees from the Company once he becomes a member of the audit committee.

deltathree Inc. (Nasdaq: DDDC)

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