As filed with the Securities and Exchange Commission on January 24, 2005
                                                          Registration No. 333 -
================================================================================

                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

                               -------------------

                                    FORM S-8
                             REGISTRATION STATEMENT
                                    UNDER THE
                             SECURITIES ACT OF 1933

                               -------------------

                                DELTATHREE, INC.
             (Exact name of Registrant as specified in its charter)

                   DELAWARE                                 13-4006766
         (State or other jurisdiction                    (I.R.S. Employer
       of incorporation or organization)                Identification No.)

                           75 BROAD STREET, 31ST FLOOR
                            NEW YORK, NEW YORK 10004
                                 (212) 500-4850
                    (Address of Principal Executive Offices)

                   DELTATHREE, INC. 2004 STOCK INCENTIVE PLAN
          DELTATHREE, INC. 2004 NON-EMPLOYEE DIRECTOR STOCK OPTION PLAN
                   DELTATHREE, INC. 1999 STOCK INCENTIVE PLAN
                DELTATHREE, INC. 1999 DIRECTORS COMPENSATION PLAN
                           (Full titles of the plans)

                                  PAUL C. WHITE
                             CHIEF FINANCIAL OFFICER
                                DELTATHREE, INC.
                           75 BROAD STREET, 31ST FLOOR
                            NEW YORK, NEW YORK 10004
                                 (212) 500-4850
    (Name, address, including zip code, and telephone number, including area
                           code, of agent for service)

                               -------------------

                         CALCULATION OF REGISTRATION FEE

<TABLE>
<CAPTION>
==================================================================================================================================
                                                                                               Proposed
                                                                        Proposed Maximum        Maximum
                 Title of                             Amount to be       Offering Price        Aggregate          Amount of
       Securities to be Registered                   Registered (1)        Per Share      Offering Price (2)   Registration Fee
------------------------------------------- --------------------------------------------------------------------------------------
<S>                                                <C>                     <C>                <C>                  <C>
Class A Common Stock, par value $.001 per share    595,448 shares (2)      $3.68 (3)          $2,191,249           $257.91
------------------------------------------- --------------------------------------------------------------------------------------
Class A Common Stock, par value $.001 per share    400,500 shares (4)      $2.85 (5)          $1,141,425           $134.35
------------------------------------------- --------------------------------------------------------------------------------------
Class A Common Stock, par value $.001 per share    115,000 shares (6)      $2.88 (5)           $331,200             $38.98
==================================================================================================================================
</TABLE>

(1) Plus  such  indeterminate  number  of  ordinary  shares  as may be issued to
prevent  dilution  resulting  from  stock  dividends,  stock  splits or  similar
transactions  in accordance  with Rule 416 under the  Securities Act of 1933, as
amended.

(2) Represents  the  registration  of 595,448 shares of common stock,  par value
$.001 per share ("Common  Stock") issuable upon exercise of options reserved for
grant under the  deltathree,  Inc. 2004 Stock  Incentive  Plan ("2004  Incentive
Plan").

(3)  Estimated  solely  for the  purpose of  calculating  the  registration  fee
pursuant to Rule 457(h) and Rule 457(c)  under the  Securities  Act of 1933,  as
amended,  based on the  average  of the high and low sale  prices of the  Common
Stock on the Nasdaq SmallCap Market as of January 21, 2005.

(4)  Represents  the  registration  of 400,500  shares of Common Stock issued or
issuable upon exercise of options  granted under the 2004 Incentive Plan with an
average exercise price per share of $2.85.

(5)  Calculated  based on the  weighted  average  exercise  price of the options
pursuant to Rule 457(c) under the Securities Act of 1933, as amended.

(6)  Represents  the  registration  of 115,000  shares of Common Stock issued or
issuable upon exercise of options granted under the 2004  Non-Employee  Director
Stock Option Plan ("2004 Director Plan") with a weighted  average exercise price
per share of $2.88.

Pursuant to Rule 429 under the Securities  Act of 1933, as amended,  the reoffer
prospectus  contained  herein also relates to shares of Common Stock  previously
registered   under  the   registrant's   Registration   Statement  on  Form  S-8
(Registration No. 333-34156).

================================================================================


<PAGE>

                                EXPLANATORY NOTE

         This  Registration  Statement  on Form S-8  registers  an  aggregate of
1,110,948 shares of common stock, par value $.001 per share, of deltathree, Inc.
("deltathree") for issuance in connection with deltathree's 2004 Stock Incentive
Plan and 2004  Non-Employee  Director  Stock  Option  Plan.  Pursuant to General
Instruction E of Form S-8, the contents of an earlier Registration  Statement on
Form S-8  (Registration No.  333-34156),  filed with the Securities and Exchange
Commission on April 6, 2000 (the  "Previous  S-8"),  relating to an aggregate of
4,000,000  shares of common  stock,  par value $.001 per share,  for issuance in
connection  with  deltathree's  1999 Stock  Incentive  Plan and an  aggregate of
600,000  shares of common  stock,  par value  $.001 per share,  for  issuance in
connection  with  deltathree's  1999  Directors  Compensation  Plan,  are hereby
incorporated by reference herein.

          Pursuant to Rule 429 promulgated  under the Securities Act of 1933, as
amended, in addition to being a new registration  statement for the shares under
the 2004 Stock Incentive Plan and 2004 Non-Employee  Director Stock Option Plan,
this Form S-8 also serves as a post-effective  amendment to the Previous S-8 for
the purposes of adding a combined reoffer prospectus.

         In  accordance  with  the  instructional  Note to Part I of Form S-8 as
promulgated by the Securities and Exchange Commission, the information specified
by Part I of Form S-8 has been omitted from this Registration  Statement on Form
S-8 for offers of Common Stock pursuant to the Plans.  The  Prospectus  filed as
part of this  Registration  Statement has been  prepared in accordance  with the
requirements  of Form  S-3  and  may be used  for  reofferings  and  resales  of
registered shares of Common Stock which have been and/or may hereafter be issued
upon the  exercise of options  which have been and/or may  hereafter  be granted
under any of the Plans.

<PAGE>

REOFFER PROSPECTUS

                                DELTATHREE, INC.

                    1,887,116 SHARES OF CLASS A COMMON STOCK

                         issued or issuable pursuant to

                   DELTATHREE, INC. 2004 STOCK INCENTIVE PLAN
          DELTATHREE, INC. 2004 NON-EMPLOYEE DIRECTOR STOCK OPTION PLAN
                   DELTATHREE, INC. 1999 STOCK INCENTIVE PLAN
                DELTATHREE, INC. 1999 DIRECTORS COMPENSATION PLAN

                                ---------------

         The  Shares of Class A Common  Stock,  par value  $.001 per share  (the
"Common Stock"), offered hereby (the "Shares") are shares which have been or may
in the future be issued upon the exercise of stock  options  which (i) have been
or may in the future be granted under the deltathree,  Inc. 2004 Stock Incentive
Plan and the deltathree,  Inc. 2004  Non-Employee  Director Stock Option Plan or
(ii)  have been  previously  granted  under  the  deltathree,  Inc.  1999  Stock
Incentive  Plan  and the  deltathree,  Inc.  1999  Directors  Compensation  Plan
(collectively,  the "Plans"), to be sold by stockholders of deltathree,  Inc., a
Delaware  corporation  ("deltathree" or the "Company"),  identified  herein (the
"Selling  Stockholders").  The Company will not receive any of the proceeds from
the sale of the  Shares.  Some or all of the Shares may be offered for sale from
time to time by the Selling Stockholders or by pledgees, donees, transferees, or
other  successors in interest.  Such sales may be made on one or more exchanges,
in the  over-the-counter  market,  or  otherwise,  at prices  and on terms  then
prevailing,  or at  prices  related  to the  then-current  market  price,  or in
negotiated  transactions  or  otherwise,  or  by  underwriters  pursuant  to  an
underwriting  agreement  in  customary  form,  or in a  combination  of any such
methods of sale.  The Selling  Stockholders  and any  broker-dealers  (including
underwriters)  who may  participate  in a sale of the Shares may be deemed to be
statutory  underwriters  within the meaning of the  Securities  Act of 1933,  as
amended  (the  "Securities  Act"),  and the  commissions  paid or  discounts  or
concessions  allowed to any of such broker-dealers  (including  underwriters) by
any person,  as well as any profits  received on the resale of the Shares if any
of such broker-dealers  (including underwriters) should purchase any Shares as a
principal,  may be deemed to be underwriting discounts and commissions under the
Securities  Act. All discounts,  commissions or fees incurred in connection with
the sale of the Shares offered  hereby will be paid by the Selling  Stockholders
or by the purchasers of the Shares,  except that the expenses of registering the
Shares and preparing and filing this Prospectus with the Securities and Exchange
Commission (the "Commission"), and of registering or qualifying the Shares under
the blue sky laws of any  jurisdiction  necessary to permit the  distribution as
described in this Prospectus, will be paid by the Company.

         The  Common  Stock is  listed  on The  Nasdaq  SmallCap  Market  System
("Nasdaq")  under the symbol "DDDC." On January 21, 2005, the closing sale price
for the Common Stock of the Company, as reported by Nasdaq, was $3.58.

         THE  COMMON  STOCK  OFFERED  HEREBY  INVOLVES  A HIGH  DEGREE  OF RISK.
PROSPECTIVE INVESTORS SHOULD CONSIDER CAREFULLY THE RISK FACTORS INDICATED UNDER
"RISK FACTORS."

THESE  SECURITIES  HAVE NOT BEEN APPROVED OR  DISAPPROVED  BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES  AUTHORITY NOR HAS THE COMMISSION OR
ANY STATE  SECURITIES  AUTHORITY  PASSED  UPON THE  ACCURACY OR ADEQUACY OF THIS
PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.

                                ---------------

                The date of this Prospectus is January 24, 2005.

                                ---------------


<PAGE>

         No person has been  authorized  in  connection  with any offering  made
hereby to give any  information or to make any  representation  not contained in
this Prospectus,  and, if given or made, such information or representation must
not be relied  upon as having  been  authorized  by the  Company or any  Selling
Stockholder.  This  Prospectus  does  not  constitute  an  offer  to  sell  or a
solicitation  of an offer to buy any security  other than the Shares  offered by
this Prospectus, nor does it constitute an offer to sell or a solicitation of an
offer to buy any  shares of Common  Stock  offered  hereby to any  person in any
jurisdiction  where it is unlawful to make such offer or  solicitation.  Neither
the  delivery  of this  Prospectus  nor any  sale  hereunder  shall,  under  any
circumstances,  create any  implication  that  information  contained  herein is
correct as of any time subsequent to the date hereof.

                                ---------------

                              AVAILABLE INFORMATION

         The Company is subject to certain informational  reporting requirements
of the  Securities  Exchange  Act of 1934 and, in  accordance  therewith,  files
reports, proxy statements and other information with the Securities and Exchange
Commission.  Such  reports,  proxy  statements  and  other  information  can  be
inspected  and  copied at the  public  reference  facilities  maintained  by the
Commission at 450 Fifth Street, N.W., Judiciary Plaza,  Washington,  D.C. 20549.
Copies of such material can be obtained from the Public Reference Section of the
Commission,  450 Fifth Street, N.W., Judiciary Plaza, Washington,  D.C. 20549 at
prescribed  rates.  The Commission  maintains a Web site that contains  reports,
proxy and information  statements and other  information  regarding  registrants
that file  electronically  with the Commission.  The address of the Commission's
Web site is http://www.sec.gov.

         The Company  will  provide  without  charge to each  person,  including
beneficial  owners,  to whom this  Prospectus is delivered,  upon the written or
oral request of such person,  a copy of any and all of the  documents  that have
been or may be incorporated by reference in this Prospectus, other than exhibits
to  such  documents  unless  such  exhibits  are  specifically  incorporated  by
reference  into such  documents.  Requests for such copies should be directed to
Investor Relations, deltathree, Inc., 75 Broad Street, 31st Floor, New York, New
York 10004. The telephone number at this location is (212) 500-4850.

                                ---------------

         "deltathree,"  the deltathree logo and  iConnectHere  are trademarks of
deltathree,  Inc. Other  trademarks and trade names appearing in this prospectus
are the property of their holders.


<PAGE>

                                TABLE OF CONTENTS


PROSPECTUS.....................................................................1
OUR COMPANY....................................................................3
RISK FACTORS...................................................................4
USE OF PROCEEDS...............................................................11
SELLING STOCKHOLDERS..........................................................12
PLAN OF DISTRIBUTION..........................................................14
LEGAL MATTERS.................................................................14
EXPERTS  .....................................................................14
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE...............................14



                                       2
<PAGE>

                                   OUR COMPANY

         We are a provider of  integrated  Voice over Internet  Protocol  (VoIP)
telephony  services.  We were founded in 1996 to capitalize on the growth of the
Internet as a communications  tool by commercially  offering  Internet  Protocol
(IP) telephony  services.  IP telephony is the real time  transmission  of voice
communications  in the  form of  digitized  "packets"  of  information  over the
Internet or a private network, similar to the way in which e-mail and other data
is  transmitted.  Our business  currently  includes:  the  provision of enhanced
Web-based and other  communications  services to individual  consumers under our
iConnectHere   brand  name;  the  provision  of  enhanced  Web-based  and  other
communications services to international resellers, under either their own brand
name, a white-label brand,  and/or our iConnectHere brand name; the provision of
a total  "Hosted  Communications  Solution"  that enables  resellers,  corporate
customers and service  providers to offer private  label  telecommunications  to
their  customer  bases,  and;  the  transmission  of voice and data  traffic for
communications carriers.

         We have built a  privately-managed,  global network using IP technology
and offer our  customers a unique  suite of IP  telephony  products,  including:
PC-to-Phone, Broadband Phone and Phone-to-Phone. We differentiate ourselves from
our  competitors by providing a robust set of value-added  services that enables
us to  effectively  address  the  challenges  that have  traditionally  made the
provision of telecommunications  services difficult. These operations management
tools  include:  account  provisioning;   e-commerce  based  payment  processing
systems;  billing and account  management;  and  customer  care.  We are able to
provide  our  services  at a cost to users  that is  generally  lower  than that
charged by traditional  carriers  because we minimize our network costs by using
efficient packet-switched technology and we generally avoid local access charges
and  by-pass  international  settlement  charges by routing  international  long
distance calls over our privately-managed network.

         Prior to 1999,  our  focus  was to  build a  privately-managed,  global
network  utilizing  IP  technology,  and our  business  primarily  consisted  of
carrying and transmitting traffic for communications  carriers over our network.
Beginning in 1999, we began to diversify  our offerings by layering  enhanced IP
telephony  services over our network.  These enhanced  services were targeted at
consumers and were primarily  accessible  through our consumer Web site.  During
2000,  we began  offering  services on a co-branded  or  private-label  basis to
service  providers  and other  businesses to assist them in  diversifying  their
product  offerings to their customer  bases.  Our  privately-managed  IP network
received   the  Best  Built  Public   Network   Award  for   excellence   in  IP
services/applications  at SUPERCOMM 2000. We were also recognized as the best IP
telephony provider by SmartMoney  magazine and PC World Magazine during 2000. We
were  recognized  for our  innovative  Broadband  Phone  offering  during  2001,
receiving  both  the  TMC  Labs  Innovation   Award,   and  the   Communications
SOLUTIONS(R)  magazine  Product of the Year  Award.  In 2001,  we  continued  to
enhance  our unique  strengths  through  our  pioneering  work with the  Session
Initiation Protocol (SIP), an Internet  Engineering Task Force standard that has
been  embraced by industry  leaders  such as  Microsoft  and the 3rd  Generation
Partnership   Project  (3GPP),   which  is  a  global  cooperation  between  six
organizational  partners who are recognized as the world's major standardization
bodies from the United States,  Europe, China, Japan and Korea. In 2001, we also
announced the launch of our  state-of-the-art  SIP (Session Initiation Protocol)
infrastructure,  and we became one of the first service  providers to have built
an  end-to-end  SIP  network.  Since 2001 we have  continued to leverage our SIP
expertise. These activities included the launch of our SIP-based dialer, and the
addition of new devices, new features and new calling plans to our offerings and
these  efforts  continue to position us as one of the leading  providers of VoIP
services.  We continue to be recognized as an innovative,  effective VoIP leader
as evidenced by such awards as being named as one of New York's Fastest  Growing
Technology  Companies in the Deloitte  Technology  Fast 50 Program in 2004,  and
being named as a VoIP Service Provider Award Winner by TMC's INTERNET  TELEPHONY
Magazine in 2004.


                                       3
<PAGE>

                                  RISK FACTORS

         An investment in the shares being offered by this Prospectus involves a
high degree of risk. In addition to the other  information in this Prospectus or
incorporated  herein by reference,  the following  factors  should be considered
carefully in  evaluating  an investment in the shares of Common Stock offered by
this  Prospectus.   This  Prospectus  contains  and  incorporates  by  reference
forward-looking  statements  within the "safe harbor"  provisions of the Private
Securities Litigation Reform Act of 1995. Reference is made in particular to the
discussion  set forth under  "Management's  Discussion and Analysis of Financial
Condition and Results of Operations" in the Company's Annual Report on Form 10-K
for the fiscal year ended  December 31, 2003 (the "Form 10-K") and the Company's
Quarterly  Reports on Form 10-Q for the quarters ended March 31, 2004,  June 30,
2004 and September 30, 2004, and under "Business" in the Form 10-K, incorporated
in  this  Prospectus  by  reference.   Such  statements  are  based  on  current
expectations that involve a number of uncertainties including those set forth in
the risk  factors  below.  Actual  results  could differ  materially  from those
projected in the forward-looking statements.


RISKS RELATED TO OUR COMPANY

WE HAVE A HISTORY OF LOSSES AND NEGATIVE CASH FLOW AND WE  ANTICIPATE  THEY WILL
CONTINUE.

         We have incurred  significant losses since inception,  and we expect to
continue to incur significant losses for the foreseeable future. We reported net
losses of  approximately  $8.3 million in 2003,  approximately  $12.1 million in
2002,  and  approximately  $35.7  million in 2001.  As of September 30, 2004 and
December 31, 2003, our accumulated deficit was approximately  $150.5 million and
$147.9 million,  respectively.  We generated negative cash flow of approximately
$4.0 million  during 2003 and $7.9  million  during  2002.  As a  percentage  of
revenues,  our net loss was 63.4% in 2003, 93.4% in 2002 and 228.2% in 2001. Our
revenues  may not grow or even  continue at their  current  level.  As a result,
while  we  believe  we  have  sufficient  funds  to  meet  our  working  capital
requirements  for at least the next fiscal  year,  we will need to increase  our
revenues significantly to become profitable.  In order to increase our revenues,
we need to attract and  maintain  customers  to increase the fees we collect for
our  services.  If our  revenues do not  increase as much as we expect or if our
expenses  increase at a greater pace than  revenues,  we may never be profitable
or,  if we  become  profitable,  we may  not be  able  to  sustain  or  increase
profitability on a quarterly or annual basis.

WE WILL NEED ADDITIONAL CAPITAL TO FINANCE OUR OPERATIONS IN THE FUTURE.

         We intend to continue to enhance and expand our network and our product
offerings in order to maintain our competitive  position and meet the increasing
demands for  service  quality,  capacity  and  competitive  pricing.  Also,  the
introduction of new products and/or service will require  significant  marketing
and  promotional  expenses  that we often  incur  before we begin to receive the
related  revenue.  While we believe we have sufficient funds to meet our working
capital  requirements  for at least the next fiscal year,  if our cash flow from
operations is not sufficient to meet our capital expenditure and working capital
requirements,  we  will  need  to  raise  additional  capital  to  continue  our
operations.   Especially  in  light  of  current  economic  conditions  and  the
unfavorable market for telecommunications companies in particular, we may not be
able to raise additional capital, and if we are able to raise additional capital
through  the  issuance  of  additional   equity,  our  current  investors  could
experience  dilution.  If we are unable to obtain additional  capital, we may be
required to reduce the scope of our business or our  anticipated  growth,  which
would reduce our revenues.

WE HAVE A LIMITED OPERATING HISTORY UPON WHICH YOU CAN EVALUATE US.

         We have only a limited  operating  history  upon which you can evaluate
our business and  prospects.  We commenced  operations in June 1996.  You should
consider our prospects in light of the risks,  expenses and  difficulties we may
encounter as an early stage company in the new and rapidly  evolving  market for
IP communications services. These risks include our ability:

      o     to increase  acceptance of our enhanced IP  communications  services
            (including our Hosted Communications  Solution),  thereby increasing
            the number of users of our IP telephony services;

      o     to compete effectively;


                                       4
<PAGE>

      o     to develop new products and keep pace with developing technology.

         In addition, because we expect an increasing percentage of our revenues
to be derived from our enhanced IP communications services (including our Hosted
Communications  Solution),  our past operating  results may not be indicative of
our future results.

WE MAY NOT BE ABLE TO EXPAND OUR REVENUE AND ACHIEVE PROFITABILITY.

         Our business  strategy is to expand our revenue  sources to include the
provision of enhanced IP communications  services to several different  customer
groups.  We can neither  assure you that we will be able to accomplish  this nor
that this strategy  will be  profitable.  Currently,  our revenues are primarily
generated  by sales of enhanced IP  communications  services  through our direct
consumer  offering,  iConnectHere,  and our service  provider and reseller sales
channel  (including sales of our Hosted  Communications  Solution).  Enhanced IP
communications services from these channels generated 92.1%, 60.2%, and 54.8% of
our total  revenues  in 2003,  2002 and 2001,  respectively.  The  provision  of
enhanced IP communications  services has not been profitable to date and may not
be profitable in the future.

         In the future, we intend to generate  increased  revenues from enhanced
IP communications  services,  from multiple sources, many of which are unproven,
including the commercial sale of our Hosted  Communications  Solution. We expect
that our revenues for the  foreseeable  future will be dependent on, among other
factors:

      o     sales of enhanced IP communications services, including sales of our
            Hosted Communications Solution;

      o     acceptance and use of IP telephony;

      o     expansion of service offerings;

      o     traffic levels on our network;

      o     the effect of  competition,  regulatory  environment,  international
            long distance rates and access and transmission costs on our prices;

      o     continued improvement of our global network quality.

         We may not be able to sustain  our  current  revenues  or  successfully
generate  additional  revenues  from  the  sale of  enhanced  IP  communications
services,  including  Hosted  Communications  Solutions or carrier  transmission
services.

WE CANNOT ASSURE YOU THAT A MARKET FOR OUR SERVICES WILL DEVELOP.

         We are  uncertain  whether a market will  develop  for our  enhanced IP
communications  services,  including our Hosted  Communications  Solutions.  Our
market is new and  rapidly  evolving.  Our ability to sell our  services  may be
inhibited by, among other  factors,  the  reluctance of some end users to switch
from traditional  communications  carriers to IP communications  carriers and by
concerns  with the quality of IP  telephony  and the adequacy of security in the
exchange of  information  over the  Internet.  End users in markets  serviced by
recently  deregulated   telecommunications   providers  are  not  familiar  with
obtaining  services from  competitors of these providers and may be reluctant to
use new providers,  such as us. Our ability to increase  revenues depends on the
migration of traditional  telephone  network traffic to our IP network.  We will
need to devote  substantial  resources to educate  customers and end users about
the  benefits of IP  communications  solutions  in general  and our  services in
particular.  If  enterprises  and their  customers do not accept our enhanced IP
communications services as a means of sending and receiving  communications,  we
will not be able to increase our number of paid users or  successfully  generate
revenues in the future.

OUR FUTURE  SUCCESS  DEPENDS ON THE GROWTH IN THE USE OF THE INTERNET AS A MEANS
OF COMMUNICATIONS.

         If the market for IP  communications,  in general,  and our services in
particular,  does not grow at the rate we  anticipate  or at all, we will not be
able to increase our number of users or generate  revenues we anticipate.  To be
successful, IP communications requires validation as an effective, quality means
of communication and as a viable  alternative to traditional  telephone service.
Demand and market acceptance for recently  introduced  services are subject to a
high level of uncertainty. The Internet may not prove to be a viable alternative
to traditional telephone service for reasons including:

      o     inconsistent quality or speed of service;


                                       5
<PAGE>

      o     traffic congestion on the Internet;

      o     potentially inadequate development of the necessary infrastructure;

      o     lack of acceptable security technologies;

      o     lack of timely  development  and  commercialization  of  performance
            improvements; and

      o     unavailability of cost-effective, high-speed access to the Internet.

         If Internet usage grows, the Internet infrastructure may not be able to
support  the  demands  placed  on it by  such  growth,  or  its  performance  or
reliability may decline. In addition, Web sites may from time to time experience
interruptions in their service as a result of outages and other delays occurring
throughout  the  Internet  network  infrastructure.  If these  outages or delays
frequently  occur  in the  future,  Internet  usage,  as  well as  usage  of our
communications portal and our services, could be adversely affected.

POTENTIAL  FLUCTUATIONS IN OUR QUARTERLY FINANCIAL RESULTS MAKE IT DIFFICULT FOR
INVESTORS TO PREDICT OUR FUTURE PERFORMANCE.

         Our  quarterly  operating  results may fluctuate  significantly  in the
future as a result of a  variety  of  factors,  many of which  are  outside  our
control. The factors generally within our control include:

      o     the  rate at  which we are able to  attract  users to  purchase  our
            enhanced   IP   communications   services,   including   our  Hosted
            Communications Solutions;

      o     the amount and timing of expenses to enhance marketing and promotion
            efforts and to expand our infrastructure;

      o     the timing of  announcements  or  introductions  of new or  enhanced
            services by us.

         The factors outside our control include:

      o     the timing of  announcements  or  introductions  of new or  enhanced
            services by our competitors;

      o     technical  difficulties or network  interruptions in the Internet or
            our privately-managed network;

      o     general  economic  and  competitive   conditions   specific  to  our
            industry.

         The  foregoing  factors  also may  create  other  risks  affecting  our
long-term success, as discussed in the other risk factors.

         We  believe  that  quarter-to-quarter  comparisons  of  our  historical
operating  results may not be a good indication of our future  performance,  nor
would our  operating  results for any  particular  quarter be  indicative of our
future operating results.

OUR NETWORK MAY NOT BE ABLE TO ACCOMMODATE OUR CAPACITY NEEDS.

         We expect the volume of traffic we carry over our  network to  increase
significantly as we expand our operations and service offerings. Our network may
not be able to accommodate  this additional  volume.  In order to ensure that we
are able to  handle  additional  traffic,  we may have to enter  into  long-term
agreements for leased capacity.  To the extent that we overestimate our capacity
needs,  we may be  obligated  to pay  for  more  transmission  capacity  than we
actually use, resulting in costs without corresponding revenues.  Conversely, if
we  underestimate  our capacity needs,  we may be required to obtain  additional
transmission  capacity from more expensive sources. If we are unable to maintain
sufficient  capacity  to meet the needs of our users,  our  reputation  could be
damaged and we could lose users.

WE FACE A RISK OF FAILURE OF COMPUTER  AND  COMMUNICATIONS  SYSTEMS  USED IN OUR
BUSINESS.

         Our business  depends on the efficient and  uninterrupted  operation of
our  computer  and  communications  systems as well as those that connect to our
network. We maintain  communications systems primarily in five facilities in New
York, Los Angeles,  Atlanta,  London and  Jerusalem.  Our systems and those that
connect to our network are subject to disruption from natural disasters or other
sources of power loss, communications failure, hardware or software malfunction,
network failures and other events both within and beyond our control. Any system
interruptions that cause our services to be unavailable,  including  significant


                                       6
<PAGE>

or lengthy telephone network failures or difficulties for users in communicating
through our network or portal,  could damage our reputation and result in a loss
of users.

OUR COMPUTER SYSTEMS AND OPERATIONS MAY BE VULNERABLE TO SECURITY BREACHES.

         Our computer  infrastructure  is potentially  vulnerable to physical or
electronic  computer  viruses,  break-ins  and similar  disruptive  problems and
security breaches that could cause interruptions,  delays or loss of services to
our users. We believe that the secure  transmission of confidential  information
over the Internet, such as credit card numbers, is essential in maintaining user
confidence in our services.  We rely on licensed  encryption and  authentication
technology to effect secure transmission of confidential information,  including
credit card numbers. It is possible that advances in computer capabilities,  new
technologies or other developments could result in a compromise or breach of the
technology  we use to protect  user  transaction  data.  A party that is able to
circumvent our security systems could misappropriate  proprietary information or
cause  interruptions in our operations.  Security breaches also could damage our
reputation and expose us to a risk of loss or litigation and possible liability.
Although we have experienced no security breaches to date of which we are aware,
we  cannot  guarantee  you that our  security  measures  will  prevent  security
breaches.

THIRD PARTIES MIGHT INFRINGE UPON OUR PROPRIETARY TECHNOLOGY.

         We  cannot  assure  you that the  steps we have  taken to  protect  our
intellectual  property rights will prevent  misappropriation  of our proprietary
technology.  To protect our rights to our  intellectual  property,  we rely on a
combination   of   trademark   and  patent   law,   trade   secret   protection,
confidentiality   agreements  and  other   contractual   arrangements  with  our
employees, affiliates, strategic partners and others. We may be unable to detect
the unauthorized use of, or take appropriate steps to enforce,  our intellectual
property  rights.  Effective  copyright and trade secret  protection  may not be
available  in every  country in which we offer or intend to offer our  services.
Failure to adequately  protect our  intellectual  property could harm our brand,
devalue our proprietary  content and affect our ability to compete  effectively.
Further,  defending  our  intellectual  property  rights  could  result  in  the
expenditure of significant financial and managerial resources.

OUR SERVICES MAY INFRINGE ON THE INTELLECTUAL PROPERTY RIGHTS OF OTHERS.

         Third  parties  may  assert  claims  that we have  violated a patent or
infringed a copyright,  trademark or other  proprietary right belonging to them.
We incorporate licensed third-party technology in some of our services. In these
license  agreements,  the licensors  have agreed to indemnify us with respect to
any claim by a third party that the licensed  software  infringes  any patent or
other  proprietary  right so long as we have not made  changes  to the  licensed
software. We cannot assure you that these provisions will be adequate to protect
us from infringement  claims. Any infringement  claims, even if not meritorious,
could  result  in  the  expenditure  of  significant  financial  and  managerial
resources.

OPERATING INTERNATIONALLY EXPOSES US TO ADDITIONAL AND UNPREDICTABLE RISKS.

         We intend to continue to enter  additional  markets in Eastern  Europe,
Latin America, Africa and Asia and to expand our existing operations outside the
United  States.   International   operations  are  subject  to  inherent  risks,
including:

      o     potentially weaker protection of intellectual property rights;

      o     political instability;

      o     unexpected changes in regulations and tariffs;

      o     fluctuations in exchange rates;

      o     varying tax consequences; and

      o     uncertain market  acceptance and  difficulties in marketing  efforts
            due to language and cultural differences.


                                       7
<PAGE>

WE HAVE EXPERIENCED LOSSES AS A RESULT OF FRAUD.

         We have experienced  losses due to fraud. While in 2003, we experienced
losses from fraud of less than 1% of our  revenues,  callers  have  obtained our
services  without  rendering  payment by unlawfully using our access numbers and
personal  identification  numbers. While we have implemented anti-fraud measures
in order to control losses relating to these practices,  and these measures have
proven to be effective today, these measures may not in the future be sufficient
to  effectively  limit all of our  exposure  in the future from fraud and future
losses could rise significantly above current levels.

INTENSE  COMPETITION  COULD  REDUCE  OUR  MARKET  SHARE  AND HARM OUR  FINANCIAL
PERFORMANCE.

         Competition  in the market for enhanced IP  communications  services is
becoming  increasingly intense and is expected to increase  significantly in the
future.  The market  for  enhanced  Internet  and IP  communications  is new and
rapidly evolving. We expect that competition from companies both in the Internet
and  telecommunications  industries will increase in the future. Our competitors
include both start-up IP telephony service providers and established traditional
communications  providers.  Many  of  our  existing  competitors  and  potential
competitors have broader portfolios of services,  greater financial,  management
and operational  resources,  greater brand-name  recognition,  larger subscriber
bases and more  experience  than we have. In addition,  many of our IP telephony
competitors use the Internet  instead of a private network to transmit  traffic.
Operating  and  capital  costs  of  these  providers  may  be  less  than  ours,
potentially giving them a competitive advantage over us in terms of pricing.

         We also  compete in the growing  market of discount  telecommunications
services including calling cards, prepaid cards, call-back services, dial-around
or 10-10  calling and collect  calling  services.  In  addition,  some  Internet
service providers have begun to aggressively enhance their real time interactive
communications,  focusing  initially on instant  messaging,  although  some have
begun to provide PC-to-PC, PC-to-phone and/or broadband phone services.

         If we are unable to provide competitive service offerings,  we may lose
existing users and be unable to attract  additional users. In addition,  many of
our competitors,  especially traditional carriers, enjoy economies of scale that
result in a lower cost structure for transmission and related costs, which cause
significant  pricing pressures within the industry.  Although the minutes of use
we sell  are  increasing,  revenues  are not  increasing  at the  same  rate due
primarily  to a decrease  in revenue  per  minute for our  carrier  transmission
services.  In order to remain  competitive  we intend to increase our efforts to
promote our services,  and we cannot be sure that we will be successful in doing
this.

         In  addition  to  these   competitive   factors,   recent  and  pending
deregulation in some of our markets may encourage new entrants. We cannot assure
you that additional  competitors will not enter markets that we plan to serve or
that we will be able to compete effectively.

DECREASING  TELECOMMUNICATIONS  RATES MAY DIMINISH OR ELIMINATE OUR  COMPETITIVE
PRICING ADVANTAGE.

         Decreasing  telecommunications  rates may  diminish  or  eliminate  the
competitive  pricing  advantage  of our  services.  International  and  domestic
telecommunications rates have decreased significantly over the last few years in
most of the  markets  in which we  operate,  and we  anticipate  that rates will
continue  to be reduced in all of the  markets in which we do business or expect
to do business.  Users who select our services to take  advantage of the current
pricing differential between traditional  telecommunications rates and our rates
may  switch  to   traditional   telecommunications   carriers  as  such  pricing
differentials  diminish or disappear,  and we will be unable to use such pricing
differentials to attract new customers in the future.  In addition,  our ability
to market our  carrier  transmission  services  to  telecommunications  carriers
depends upon the  existence of spreads  between the rates  offered by us and the
rates offered by traditional  telecommunications  carriers,  as well as a spread
between the retail and  wholesale  rates  charged by the carriers  from which we
obtain wholesale service.  Continued rate decreases will require us to lower our
rates to remain  competitive  and will  reduce or possibly  eliminate  our gross
profit from our  carrier  transmission  services.  If  telecommunications  rates
continue to decline, we may lose users for our services.


                                       8
<PAGE>

GOVERNMENT  REGULATION AND LEGAL  UNCERTAINTIES  RELATING TO IP TELEPHONY  COULD
HARM OUR BUSINESS.

         Historically,  voice  communications  services  have been  provided  by
regulated  telecommunications  common carriers. We offer voice communications to
the public for  international  and domestic calls using IP telephony,  and we do
not operate as a licensed telecommunications common carrier in any jurisdiction.
Based on specific regulatory classifications and recent regulatory decisions, we
believe we qualify for certain exemptions from telecommunications common carrier
regulation in many of our markets.  However,  the growth of IP telephony has led
to close examination of its regulatory  treatment in many  jurisdictions  making
the legal status of our services  uncertain and subject to change as a result of
future  regulatory  action,  judicial  decisions  or  legislation  in any of the
jurisdictions  in which we  operate.  Established  regulated  telecommunications
carriers have sought and may continue to seek regulatory actions to restrict the
ability of companies such as ours to provide services or to increase the cost of
providing such services. In addition,  our services may be subject to regulation
if  regulators   distinguish   phone-to-  phone   telephony   service  using  IP
technologies  over   privately-managed   networks  such  as  our  services  from
integrated  PC-to-PC and  PC-originated  voice services over the Internet.  Some
regulators may decide to treat the former as regulated  common carrier  services
and the latter as unregulated enhanced or information services.

         Application of new regulatory  restrictions or requirements to us could
increase our costs of doing business and prevent us from delivering our services
through our current arrangements.  In such event, we would consider a variety of
alternative  arrangements  for  providing  our  services,   including  obtaining
appropriate  regulatory   authorizations  for  our  local  network  partners  or
ourselves,  changing  our  service  arrangements  for a  particular  country  or
limiting  our  service  offerings.  Such  regulations  could  limit our  service
offerings, raise our costs and restrict our pricing flexibility, and potentially
limit our ability to compete  effectively.  Further,  regulations and laws which
affect the  growth of the  Internet  could  hinder  our  ability to provide  our
services over the Internet.

WE MAY  NOT BE ABLE  TO  KEEP  PACE  WITH  RAPID  TECHNOLOGICAL  CHANGES  IN THE
COMMUNICATIONS INDUSTRY.

         Our  industry  is  subject  to rapid  technological  change.  We cannot
predict the effect of technological changes on our business. In addition, widely
accepted standards have not yet developed for the technologies we use. We expect
that new  services  and  technologies  will  emerge  in the  market  in which we
compete. These new services and technologies may be superior to the services and
technologies  that we use, or these new  services  may render our  services  and
technologies obsolete.

         To be  successful,  we must  adapt to our  rapidly  changing  market by
continually  improving  and  expanding  the  scope of  services  we offer and by
developing new services and  technologies  to meet customer  needs.  Our success
will depend, in part, on our ability to license leading technologies and respond
to technological  advances and emerging  industry  standards on a cost-effective
and  timely  basis.  We will need to spend  significant  amounts  of  capital to
enhance and expand our services to keep pace with changing technologies.

RISKS RELATED TO OUR RELATIONSHIP WITH ATAREY

ATAREY HAS SIGNIFICANT INFLUENCE ON ALL MATTERS SUBMITTED TO A STOCKHOLDER VOTE

         Atarey  Hasharon  Chevra  Lepituach  Vehashkaot  Benadlan  (1991)  Ltd.
("Atarey") owns  approximately  44% of the voting power and economic interest in
us. As long as Atarey continues to beneficially own a significant  amount of our
shares,  Atarey will be able to exercise  significant  influence  over decisions
affecting us, including:

      o     composition of our board of directors and, through it, our direction
            and policies, including the appointment and removal of officers;

      o     mergers or other business combinations;

      o     acquisitions or dispositions of assets by us;

      o     future issuances of capital stock or other securities by us;

      o     incurrence of debt by us;

      o     amendments,  waivers and modifications to any agreements  between us
            and Atarey;

      o     payment of dividends on our capital stock;

      o     approval of our business plans and general business development.


                                       9
<PAGE>

RISKS RELATED TO OUR COMMON STOCK

A THIRD PARTY MAY BE DETERRED FROM ACQUIRING OUR COMPANY.

         Atarey's  significant  ownership of our company  could delay,  deter or
prevent a third party from  attempting  to acquire  control of us. This may have
the effect of discouraging a third party from making a tender offer or otherwise
attempting to obtain control of us, even though such a change in ownership would
be economically beneficial to us and our stockholders.

VOLATILITY OF OUR STOCK PRICE COULD ADVERSELY AFFECT OUR STOCKHOLDERS.

         Since  trading  commenced  in November  1999,  the market  price of our
common stock has been highly  volatile and may continue to be volatile and could
be subject to wide fluctuations in response to factors such as:

      o     variations in our actual or anticipated  quarterly operating results
            or those of our competitors;

      o     announcements by us or our competitors of technological innovations;

      o     introduction of new products or services by us or our competitors;

      o     changes in financial estimates by securities analysts;

      o     conditions or trends in the Internet industry;

      o     changes in the market valuations of other Internet companies;

      o     announcements by us or our competitors of significant acquisitions;

      o     our entry into strategic partnerships or joint ventures; or

      o     sales of our common stock by Atarey.

         All of these factors are, in whole or part,  beyond our control and may
materially  adversely  affect the market price of our common stock regardless of
our performance.

         Investors  may not be able to resell  their  shares of our common stock
following periods of volatility because of the market's adverse reaction to such
volatility.  In  addition,  the stock  market in  general,  and the  market  for
telecommunications, Internet-related and technology companies in particular, has
been  dramatically  decreased and is extremely  depressed.  We cannot assure you
that our common stock will trade at the same levels of other  telecommunications
or Internet stocks or that telecommunications or Internet stocks in general will
sustain their current market prices.

THE LIQUIDITY OF OUR COMMON STOCK COULD BE ADVERSELY  AFFECTED BY CHANGES IN OUR
NASDAQ LISTING.

         Our common stock is currently listed on the Nasdaq SmallCap Market. The
listing of our common stock was  transferred  from the Nasdaq National Market to
the Nasdaq  SmallCap  Market  effective on September 17, 2002. We currently meet
all criteria for continued  inclusion in the Nasdaq  SmallCap  Market.  However,
based on the volatile  nature of our stock price, we can make no assurances that
we will continue to do so.  Failure to meet these  criteria  could result in our
delisting  from the Nasdaq  SmallCap  Market.  If our shares were to be delisted
from the Nasdaq SmallCap Market,  our shares would continue to trade, if at all,
on the OTC Bulletin Board, upon application by the requisite market makers. This
would  adversely  impact our stock price, as well as the liquidity of the market
for our shares which,  as a result,  would  adversely  affect the ability of our
stockholders to purchase and sell their shares in an orderly manner,  or at all.
Furthermore,  a  delisting  of our  shares  could  damage our  general  business
reputation  and  impair  our  ability  to  raise  additional  funds.  Any of the
foregoing events could have a material adverse effect on our business, financial
condition and operating results.

WE DO NOT INTEND TO PAY DIVIDENDS.

         We have never  declared or paid any cash dividends on our common stock.
We intend to retain any future  earnings to finance our operations and to expand
our  business  and,  therefore,  do not expect to pay any cash  dividends in the
foreseeable future.


                                       10
<PAGE>

                SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS

         This  prospectus  and the documents  incorporated  by reference  herein
contain  forward-looking  statements  within the  meaning of Section  27A of the
Securities Act and Section 21E of the Exchange Act. These  statements  relate to
future events or our future financial performance.  These statements include but
are not limited to statements regarding:  uncertainty of financial estimates and
projections,  the competitive  environment for Internet  telephony,  our limited
operating history, changes of rates of all related telecommunications  services,
the  level  and  rate of  customer  acceptance  of new  products  and  services,
legislation that may affect the Internet telephony industry, rapid technological
changes, as well as other risks referenced from time to time in our filings with
the  Securities  and  Exchange  Commission.  In some  cases,  you  can  identify
forward-looking  statements  by  terminology  such as "may,"  "will,"  "should,"
"expects,"  "anticipates,"  "believes,"  "estimates," "predicts," "potential" or
"continue" or the negative of such terms or other comparable terminology.  These
statements   are  only   predictions   and  involve  known  and  unknown  risks,
uncertainties  and other  factors,  including  the risks  outlined  under  "Risk
Factors"  that  may  cause  our or our  industry's  actual  results,  levels  of
activity,   performance   or   achievements   expressed   or   implied  by  such
forward-looking  statements.  Before  deciding to purchase  our common stock you
should carefully consider the risks described in the "Risk Factors" section,  in
additional  to the  other  information  set  forth  in this  prospectus  and the
documents incorporated by reference herein.


                                 USE OF PROCEEDS

         We will not receive any proceeds  from the sale of shares of our common
stock by the selling stockholders.



                                       11
<PAGE>

                              SELLING STOCKHOLDERS

         The Selling  Stockholders are offering hereby Shares which have been or
may hereafter be acquired by them upon the exercise of options granted under the
Plans. In addition to the persons named below, the Selling  Stockholders include
certain unnamed non-affiliates, each of whom holds less than the lesser of 1,000
shares or one  percent  (1%) of the shares of Common  Stock  issuable  under the
Plans,  and who may use this  Prospectus  for reoffers and resales of up to that
amount of shares. The names of additional Selling Stockholders and the number of
Shares offered hereby by them may be added to this  Prospectus from time to time
by an addendum  or  supplement  to this  Prospectus.  Other  persons who acquire
Shares  from  the  Selling  Stockholders  may  also  be  identified  as  Selling
Stockholders by means of an addendum or supplement to this Prospectus.

         The following table sets forth certain  information with respect to the
Selling Stockholders as of December 31, 2004.

<TABLE>
<CAPTION>
                          Number of
                          Shares                                  Number of              Percentage of
                          Beneficially                            Shares to be           Class to be
                          Owned                Number of          Beneficially           Beneficially
                          Prior to             Shares Being       Owned After            Owned After
Name                      Offering (1)         Offered (2)        Offering (3)           Offering
-------------------------------------------------------------------------------------------------------
<S>                         <C>                <C>                    <C>                      <C>
Noam Bardin (4)             796,304            608,938                187,366                  *

Shimmy Zimels (5)           713,407            648,938                 64,469                  *

Paul C. White (6)           400,000            400,000                      0                  *

Ilan Biran (7)               49,848             49,848                      0                  *

Amir Gera (8)                44,848             44,848                      0                  *

Joshua Maor (9)              70,999             54,848                 16,151                  *

Lior Samuelson (10)          54,848             54,848                      0                  *

Noam Ben-Ozer (11)           24,848             24,848                      0                  *

Total                                        1,887,116
</TABLE>

* Less than 1% of the outstanding Common Stock.

(1)  Includes all shares of Common  Stock owned by the Selling  Stockholder  and
Shares of Common Stock which the Selling  Stockholder  has the right to acquire,
through the exercise of options including those granted under the Plans, whether
or not such right has yet become  exercisable or will become  exercisable within
60 days after December 31, 2004.

(2) Includes certain shares of Common Stock acquired by the Selling  Stockholder
pursuant to the  exercise of options  granted  under the Plans and all shares of
Common Stock which the Selling Stockholder has the right to acquire, through the
exercise of options  granted under the Plans,  whether or not such right has yet
become  exercisable or will become exercisable within 60 days after December 31,
2004.

(3) Includes shares of Common Stock owned by the Selling  Stockholder and Shares
of Common Stock which the Selling Stockholder has the right to acquire,  through


                                       12
<PAGE>

the exercise of options,  other than those  granted  under the Plans,  within 60
days after December 31, 2004. Assumes all shares registered pursuant hereto will
be sold, although there can be no assurance that any of the Selling Stockholders
will  offer  for sale or sell any or all of the  Common  Stock  offered  by them
pursuant to this  Prospectus.  Also assumes that no other shares are acquired or
transferred by the Selling Stockholder.

(4) Includes  555,604  shares which Mr. Bardin has the right to acquire upon the
exercise of options  within 60 days after December 31, 2004. Mr. Bardin has been
Chairman of the Board of Directors of the Company  since April 2002.  Mr. Bardin
served as Chief  Executive  Officer and  President  from July 2000  through June
2002.

(5) Includes  478,937  shares which Mr. Zimels has the right to acquire upon the
exercise of options  within 60 days after December 31, 2004. Mr. Zimels has been
Chief Executive Officer, President and a Director of the Company since June 2002
and prior to that served as Vice  President of  Operations  and Chief  Operating
Officer of the Company beginning in June 1997.

(6)  Includes  248,332  shares which Mr. White has the right to acquire upon the
exercise of options  within 60 days after  December 31, 2004. Mr. White has been
Chief Financial Officer of the Company since September 2000.

(7)  Includes  24,848  shares  which Mr. Biran has the right to acquire upon the
exercise of options within 60 days after December 31, 2004. Mr. Biran has been a
Director of the Company since December 2003.

(8)  Includes  24,848  shares  which Mr. Gera has the right to acquire  upon the
exercise of options  within 60 days after December 31, 2004. Mr. Gera has been a
Director of the Company since June 2001.

(9)  Includes  24,848  shares  which Mr. Maor has the right to acquire  upon the
exercise of options  within 60 days after December 31, 2004. Mr. Maor has been a
Director of the Company since June 2001.

(10) Includes  34,848  shares which Mr.  Samuelson has the right to acquire upon
the exercise of options within 60 days after  December 31, 2004.  Mr.  Samuelson
has been a Director of the Company since August 2001.

(11) Includes 24,848 shares which Mr. Ben-Ozer has the right to acquire upon the
exercise of options  within 60 days after  December 31, 2004.  Mr.  Ben-Ozer has
been a Director of the Company since September 2004.



                                       13
<PAGE>

                              PLAN OF DISTRIBUTION

         The  Shares may be  offered  and sold from time to time by the  Selling
Stockholders,  or by  pledgees,  donees,  transferees  or  other  successors  in
interest.  Such  offers  and  sales may be made from time to time on one or more
exchanges or in the  over-the-counter  market,  or  otherwise,  at prices and on
terms then prevailing or at prices related to the then-current  market price, or
in  negotiated  transactions.  The  Shares  may be  sold  by one or  more of the
following:  (a) a block  trade in which the  broker or  dealer so  engaged  will
attempt to sell the Shares as agent but may position and resell a portion of the
block as principal to facilitate the  transaction;  (b) purchases by a broker or
dealer as principal and resale by such broker or dealer for its account;  (c) an
exchange  distribution  in  accordance  with  the  rules of such  exchange;  (d)
ordinary  brokerage  transactions  and transactions in which the broker solicits
purchasers;  and (e) a  combination  of any such  methods of sale.  In effecting
sales,  brokers or dealers engaged by the Selling  Stockholders  may arrange for
other  brokers or  dealers  to  participate.  Brokers  or  dealers  may  receive
commissions or discounts from Selling Stockholders or from purchasers in amounts
to be negotiated  immediately prior to the sale. Such brokers or dealers and any
other participating brokers or dealers may be deemed to be "underwriters" within
the meaning of the Securities Act in connection with such sales.

         In addition,  any securities  covered by this Prospectus  which qualify
for sale pursuant to Rule 144 or Rule 701  promulgated  under the Securities Act
("Rule  144" or "Rule  701") may be sold under Rule 144 or Rule 701 rather  than
pursuant to this Prospectus.

         The  Company  and the  Selling  Stockholders  may enter into  customary
agreements  concerning  indemnification  and the  provision  of  information  in
connection with the sale of the Shares.

         There is no assurance that any of the Selling  Stockholders  will offer
for sale or sell any or all the Common Stock covered by this Prospectus.

                                  LEGAL MATTERS

         The validity of the issuance of the shares of Common Stock  offered has
been passed  upon for the Company by Mintz,  Levin,  Cohn,  Ferris,  Glovsky and
Popeo, P.C. of New York, New York.

                                     EXPERTS

         The financial  statements  incorporated in this Prospectus by reference
to the Company's Annual Report on Form 10-K for the year ended December 31, 2003
have been so  incorporated  in reliance  upon the report of Brightman  Almagor &
Co., a member firm of Deloitte & Touche Tohmatsu, independent accountants, given
on the authority of said firm as experts in auditing and accounting.

                 INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE

         The SEC allows us to "incorporate by reference" the information we file
with it,  which  means  that we can  disclose  important  information  to you by
referring you to those documents.  The information  incorporated by reference is
considered to be part of this  prospectus and information we file later with the
SEC will automatically update and supersede this information.  We incorporate by
reference  the documents  listed below and any future  filings made with the SEC
under Sections 13(a), 13(c), 14 or 15(d) of the Securities Exchange Act of 1934.
The documents we are  incorporating by reference as of their respective dates of
filing are:

      o     Amendment  No. 1 to Annual  Report on Form 10-K/A for the year ended
            December 31, 2003, filed on April 29, 2004;


                                       14
<PAGE>

      o     Annual  Report on Form 10-K for the year ended  December  31,  2003,
            filed on March 30, 2004;

      o     Quarterly  Report on Form 10-Q for the quarter ended March 31, 2004,
            filed on May 14, 2004;

      o     Quarterly  Report on Form 10-Q for the quarter  ended June 30, 2004,
            filed on August 4, 2004;

      o     Quarterly  Report on Form 10-Q for the quarter  ended  September 30,
            2004, filed on November 4, 2004; and

      o     The  description of our common stock  contained in our  Registration
            Statement  on Form 8-A  filed  with the SEC on  November  23,  1999,
            including  any  amendments  or  reports  filed  for the  purpose  of
            updating that description.

         You may request, orally or in writing, a copy of these documents, which
will be provided to you at no cost, by contacting:

         Investor Relations,  deltathree, Inc., 75 Broad Street, 31st Floor, New
York, New York 10004. Telephone: (212) 500-4850.



                                       15
<PAGE>

                                    PART II

               INFORMATION REQUIRED IN THE REGISTRATION STATEMENT

Item 3.  Incorporation of Certain Documents by Reference.

         The following documents filed by the Registrant with the Commission are
incorporated herein by reference:

      o     Amendment  No. 1 to Annual  Report on Form 10-K/A for the year ended
            December 31, 2003, filed on April 29, 2004;

      o     Annual  Report on Form 10-K for the year ended  December  31,  2003,
            filed on March 30, 2004;

      o     Quarterly  Report on Form 10-Q for the quarter ended March 31, 2004,
            filed on May 14, 2004;

      o     Quarterly  Report on Form 10-Q for the quarter  ended June 30, 2004,
            filed on August 4, 2004;

      o     Quarterly  Report on Form 10-Q for the quarter  ended  September 30,
            2004, filed on November 4, 2004; and

      o     The  description of our common stock  contained in our  Registration
            Statement  on Form 8-A  filed  with the SEC on  November  23,  1999,
            including  any  amendments  or  reports  filed  for the  purpose  of
            updating that description.

         All reports and other documents filed by the Registrant  after the date
hereof  pursuant  to  Sections  13(a),  13(c),  14 and  15(d) of the  Securities
Exchange  Act of 1934 prior to the filing of a  post-effective  amendment  which
indicates that all securities offered hereby have been sold or which deregisters
all securities  then remaining  unsold,  shall be deemed to be  incorporated  by
reference  herein and to be part hereof from the date of filing of such  reports
and documents.

Item 4.  Description of Securities.

         Not applicable.

Item 5.  Interests of Named Experts and Counsel.

         Not applicable.

Item 6.  Indemnification of Directors and Officers.

         Incorporated herein by reference from Registration Statement on Form
         S-3, No. 333-109495.

Item 7.  Exemption from Registration Claimed.

         Not applicable.


                                      II-1
<PAGE>

Item 8.  Exhibits.


EXHIBIT
NUMBER      DESCRIPTION
-------     -----------
4.1*        Restated Certificate of Incorporation of deltathree, Inc.
4.2**       Amendment to Restated  Certificate of  Incorporation  of deltathree,
            Inc.
4.3*        Amended and Restated By-laws of deltathree, Inc.
4.4*        Specimen Certificate of Class A Common Stock.
4.5*        deltathree, Inc. 1999 Stock Incentive Plan
4.6*        deltathree, Inc. 1999 Directors Compensation Plan
4.7         deltathree, Inc. 2004 Stock Incentive Plan
4.8         deltathree, Inc. 2004 Non-Employee Director Stock Option Plan
5.1         Opinion of Mintz,  Levin,  Cohn,  Ferris,  Glovsky  and Popeo,  P.C.
            regarding legality of the shares of common stock being registered
23.1        Consent of Brightman Almagor & Co.
23.2        Consent of Mintz,  Levin,  Cohn,  Ferris,  Glovsky  and Popeo,  P.C.
            (included in Exhibit 5.1 to this Registration Statement on Form S-8)
24.1        Power of Attorney (included on signature page)

----------
*     Incorporated by reference to the Company's  registration statement on Form
      S-1 (Registration No. 333-86503).

**    Incorporated  by reference to the  Company's  annual report on Form 10-K/A
      filed on April 30, 2001.


Item 9.  Undertakings.

(a)      The undersigned Registrant hereby undertakes:

         (1) To file, during any period in which offers or sales are being made,
         a post-effective amendment to this Registration Statement:

                        (i)  To  include  any  prospectus  required  by  Section
                  10(a)(3) of the Securities Act of 1933;

                       (ii) To  reflect  in the  prospectus  any facts or events
                  arising after the effective date of the Registration Statement
                  (or the most recent  post-effective  amendment thereof) which,
                  individually  or in the  aggregate,  represents a  fundamental
                  change  in the  information  set  forth  in  the  Registration
                  Statement.  Notwithstanding  the  foregoing,  any  increase or
                  decrease in volume of securities  offered (if the total dollar
                  value of  securities  offered  would not exceed that which was
                  registered)  and any deviation from the low or high end of the
                  estimated  maximum offering range may be reflected in the form
                  of  prospectus  filed  with the  Commission  pursuant  to Rule
                  424(b)  (Section  230.424(b)  of  this  chapter)  if,  in  the
                  aggregate,  the changes in volume and price  represent no more
                  than a 20% change in the maximum aggregate  offering price set
                  forth in the  "Calculation of  Registration  Fee" table in the
                  effective Registration Statement.


                                      II-2
<PAGE>

                      (iii) To include any material  information with respect to
                  the  plan of  distribution  not  previously  disclosed  in the
                  Registration   Statement  or  any  material   change  to  such
                  information in the Registration Statement;

                  Provided, however, that paragraphs (a)(1)(i) and (a)(1)(ii) do
         not apply if the Registration Statement is on Form S-3 or Form S-8, and
         the information  required to be included in a post-effective  amendment
         by those  paragraphs  is  contained  in periodic  reports  filed by the
         Registrant  pursuant to Section 13 or Section  15(d) of the  Securities
         Exchange  Act of  1934  that  are  incorporated  by  reference  in this
         Registration Statement.

         (2) That,  for the  purpose  of  determining  any  liability  under the
         Securities Act of 1933,  each such  post-effective  amendment  shall be
         deemed to be a new  registration  statement  relating to the securities
         offered therein, and the offering of such securities at that time shall
         be deemed to be the initial bona fide offering thereof.

         (3) To remove from registration by means of a post-effective  amendment
         any of the  securities  being  registered  which  remain  unsold at the
         termination of the offering.

(b)      The  undersigned  Registrant  hereby  undertakes  that, for purposes of
         determining any liability under the Securities Act of 1933, each filing
         of the Registrant's  annual report pursuant to Section 13(a) or Section
         15(d) of the Securities  Exchange Act of 1934 that is  incorporated  by
         reference in this  Registration  Statement  shall be deemed to be a new
         registration  statement relating to the securities offered therein, and
         the offering of such  securities at that time shall be deemed to be the
         initial bona fide offering thereof.

(c)      Insofar as indemnification for liabilities arising under the Securities
         Act of 1933 may be permitted  to  directors,  officers and  controlling
         persons of the  Registrant  pursuant to the  foregoing  provisions,  or
         otherwise,  the  Registrant has been advised that in the opinion of the
         Securities  and Exchange  Commission  such  indemnification  is against
         public policy as expressed in the Act and is, therefore, unenforceable.
         In the event that a claim for indemnification  against such liabilities
         (other than the payment by the Registrant of expenses  incurred or paid
         by a director,  officer or controlling  person of the Registrant in the
         successful  defense of any action,  suit or  proceeding) is asserted by
         such  director,  officer or controlling  person in connection  with the
         securities being registered, the Registrant will, unless in the opinion
         of its counsel the matter has been  settled by  controlling  precedent,
         submit to a court of appropriate jurisdiction the question whether such
         indemnification  by it is against public policy as expressed in the Act
         and will be governed by the final adjudication of such issue.


                                      II-3
<PAGE>

                                   SIGNATURES

         Pursuant  to the  requirements  of the  Securities  Act  of  1933,  the
Registrant certifies that it has reasonable grounds to believe that it meets all
of the requirements for filing on Form S-8 and has duly caused this Registration
Statement  to be  signed  on its  behalf  by  the  undersigned,  thereunto  duly
authorized,  in the  City  New  York  and  State  of New York on the 24th day of
January, 2005.

                                               DELTATHREE, INC.

                                               By: /s/ Paul C. White
                                                   ----------------------------
                                                  Paul C. White
                                                  Chief Financial Officer


                                POWER OF ATTORNEY

         The   registrant  and  each  person  whose   signature   appears  below
constitutes  and  appoints  Shimmy  Zimels  and Paul C.  White  and each of them
singly, his, her or its true and lawful  attorneys-in-fact and agents, with full
power of substitution and resubstitution,  for him, her or it and in his, her or
its name,  place and stead, in any and all capacities,  to sign and file (i) any
and all amendments  (including  post-effective  amendments) to this Registration
Statement,  with  all  exhibits  thereto,  and  other  documents  in  connection
therewith,  with the  Securities  and Exchange  Commission,  granting  unto said
attorneys-in-fact  and agents,  and each of them, full power and authority to do
and perform  each and every act and thing  requisite  or necessary to be done in
and about the  premises,  as fully to all intents and purposes as he, she, or it
might or could do in  person,  hereby  ratifying  and  confirming  all that said
attorneys-in-fact  and  agents  or any of them,  or their or his  substitute  or
substitutes, may lawfully do or cause to be done by virtue hereof.

         Pursuant  to the  requirements  of the  Securities  Act of  1933,  this
Registration  Statement  has  been  signed  by  the  following  persons  in  the
capacities and on the dates indicated.

<TABLE>
<CAPTION>
SIGNATURE                        TITLE                                DATE
---------                        -----                                ----
<S>                              <C>                                  <C>
/s/ Shimmy Zimels                Chief Executive Officer, President   January 21, 2005
------------------------------   and Director
Shimmy Zimels
(Principal Executive Officer)

/s/ Paul C. White                Chief Financial Officer (Principal   January 21, 2005
------------------------------   Accounting and Financial Officer)
Paul C. White

/s/ Noam Bardin                  Chairman of the Board of Directors   January 21, 2005
------------------------------
Noam Bardin

/s/ Ilan Biran                                Director                January 21, 2005
------------------------------
Ilan Biran

/s/ Amir Gera                                 Director                January 21, 2005
------------------------------
Amir Gera

/s/ Noam Ben-Ozer                             Director                 January 21 2005
------------------------------
Noam Ben-Ozer

/s/ Joshua Maor                               Director                January 21, 2005
------------------------------
Joshua Maor

                                              Director                January 21, 2005
------------------------------
Lior Samuelson
</TABLE>


                                      II-4
<PAGE>

                                DELTATHREE, INC.

                          INDEX TO EXHIBITS FILED WITH
                         FORM S-8 REGISTRATION STATEMENT

EXHIBIT
NUMBER      DESCRIPTION
-------     -----------
4.1*        Restated Certificate of Incorporation of deltathree, Inc.
4.2**       Amendment to Restated  Certificate of  Incorporation  of deltathree,
            Inc.
4.3*        Amended and Restated By-laws of deltathree, Inc.
4.4*        Specimen Certificate of Class A Common Stock.
4.5*        deltathree, Inc. 1999 Stock Incentive Plan
4.6*        deltathree, Inc. 1999 Directors Compensation Plan
4.7         deltathree, Inc. 2004 Stock Incentive Plan
4.8         deltathree, Inc. 2004 Non-Employee Director Stock Option Plan
5.1         Opinion of Mintz,  Levin,  Cohn,  Ferris,  Glovsky  and Popeo,  P.C.
            regarding legality of the shares of common stock being registered
23.1        Consent of Brightman Almagor & Co.
23.2        Consent of Mintz,  Levin,  Cohn,  Ferris,  Glovsky  and Popeo,  P.C.
            (included in Exhibit 5.1 to this Registration Statement on Form S-8)
24.1        Power of Attorney (included on signature page)

----------
*    Incorporated by reference to the Company's  registration  statement on Form
     S-1 (Registration No. 333-86503).

**   Incorporated  by reference to the  Company's  annual  report on Form 10-K/A
     filed on April 30, 2001.




                                      II-6
[{"type": "S-8", "sequence": "1", "filename": "v11587_s8.txt", "secsgml_size_bytes": 78160}]
{"company-data": {"conformed-name": "DELTATHREE INC", "cik": "0001086740", "assigned-sic": "4813", "irs-number": "134006766", "state-of-incorporation": "DE", "fiscal-year-end": "1231"}, "filing-values": {"form-type": "S-8", "act": "33", "file-number": "333-122242", "film-number": "05544079"}, "business-address": {"street1": "75 BROAD ST", "street2": "31ST FL", "city": "NEW YORK", "state": "NY", "zip": "10004", "phone": "2125004850"}, "mail-address": {"street1": "75 BROAD ST", "city": "NEW YORK", "state": "NY", "zip": "10004"}, "former-company": {"former-conformed-name": "DELTATHREE COM INC", "date-changed": "19990519"}}
As filed with the Securities and Exchange Commission on January 24, 2005
                                                          Registration No. 333 -
================================================================================

                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

                               -------------------

                                    FORM S-8
                             REGISTRATION STATEMENT
                                    UNDER THE
                             SECURITIES ACT OF 1933

                               -------------------

                                DELTATHREE, INC.
             (Exact name of Registrant as specified in its charter)

                   DELAWARE                                 13-4006766
         (State or other jurisdiction                    (I.R.S. Employer
       of incorporation or organization)                Identification No.)

                           75 BROAD STREET, 31ST FLOOR
                            NEW YORK, NEW YORK 10004
                                 (212) 500-4850
                    (Address of Principal Executive Offices)

                   DELTATHREE, INC. 2004 STOCK INCENTIVE PLAN
          DELTATHREE, INC. 2004 NON-EMPLOYEE DIRECTOR STOCK OPTION PLAN
                   DELTATHREE, INC. 1999 STOCK INCENTIVE PLAN
                DELTATHREE, INC. 1999 DIRECTORS COMPENSATION PLAN
                           (Full titles of the plans)

                                  PAUL C. WHITE
                             CHIEF FINANCIAL OFFICER
                                DELTATHREE, INC.
                           75 BROAD STREET, 31ST FLOOR
                            NEW YORK, NEW YORK 10004
                                 (212) 500-4850
    (Name, address, including zip code, and telephone number, including area
                           code, of agent for service)

                               -------------------

                         CALCULATION OF REGISTRATION FEE
==================================================================================================================================
                                                                                               Proposed
                                                                        Proposed Maximum        Maximum
                 Title of                             Amount to be       Offering Price        Aggregate          Amount of
       Securities to be Registered                   Registered (1)        Per Share      Offering Price (2)   Registration Fee
------------------------------------------- --------------------------------------------------------------------------------------
Class A Common Stock, par value $.001 per share    595,448 shares (2)      $3.68 (3)          $2,191,249           $257.91
------------------------------------------- --------------------------------------------------------------------------------------
Class A Common Stock, par value $.001 per share    400,500 shares (4)      $2.85 (5)          $1,141,425           $134.35
------------------------------------------- --------------------------------------------------------------------------------------
Class A Common Stock, par value $.001 per share    115,000 shares (6)      $2.88 (5)           $331,200             $38.98
==================================================================================================================================
(1) Plus  such  indeterminate  number  of  ordinary  shares  as may be issued to
prevent  dilution  resulting  from  stock  dividends,  stock  splits or  similar
transactions  in accordance  with Rule 416 under the  Securities Act of 1933, as
amended.

(2) Represents  the  registration  of 595,448 shares of common stock,  par value
$.001 per share ("Common  Stock") issuable upon exercise of options reserved for
grant under the  deltathree,  Inc. 2004 Stock  Incentive  Plan ("2004  Incentive
Plan").

(3)  Estimated  solely  for the  purpose of  calculating  the  registration  fee
pursuant to Rule 457(h) and Rule 457(c)  under the  Securities  Act of 1933,  as
amended,  based on the  average  of the high and low sale  prices of the  Common
Stock on the Nasdaq SmallCap Market as of January 21, 2005.

(4)  Represents  the  registration  of 400,500  shares of Common Stock issued or
issuable upon exercise of options  granted under the 2004 Incentive Plan with an
average exercise price per share of $2.85.

(5)  Calculated  based on the  weighted  average  exercise  price of the options
pursuant to Rule 457(c) under the Securities Act of 1933, as amended.

(6)  Represents  the  registration  of 115,000  shares of Common Stock issued or
issuable upon exercise of options granted under the 2004  Non-Employee  Director
Stock Option Plan ("2004 Director Plan") with a weighted  average exercise price
per share of $2.88.

Pursuant to Rule 429 under the Securities  Act of 1933, as amended,  the reoffer
prospectus  contained  herein also relates to shares of Common Stock  previously
registered   under  the   registrant's   Registration   Statement  on  Form  S-8
(Registration No. 333-34156).

================================================================================
EXPLANATORY NOTE

         This  Registration  Statement  on Form S-8  registers  an  aggregate of
1,110,948 shares of common stock, par value $.001 per share, of deltathree, Inc.
("deltathree") for issuance in connection with deltathree's 2004 Stock Incentive
Plan and 2004  Non-Employee  Director  Stock  Option  Plan.  Pursuant to General
Instruction E of Form S-8, the contents of an earlier Registration  Statement on
Form S-8  (Registration No.  333-34156),  filed with the Securities and Exchange
Commission on April 6, 2000 (the  "Previous  S-8"),  relating to an aggregate of
4,000,000  shares of common  stock,  par value $.001 per share,  for issuance in
connection  with  deltathree's  1999 Stock  Incentive  Plan and an  aggregate of
600,000  shares of common  stock,  par value  $.001 per share,  for  issuance in
connection  with  deltathree's  1999  Directors  Compensation  Plan,  are hereby
incorporated by reference herein.

          Pursuant to Rule 429 promulgated  under the Securities Act of 1933, as
amended, in addition to being a new registration  statement for the shares under
the 2004 Stock Incentive Plan and 2004 Non-Employee  Director Stock Option Plan,
this Form S-8 also serves as a post-effective  amendment to the Previous S-8 for
the purposes of adding a combined reoffer prospectus.

         In  accordance  with  the  instructional  Note to Part I of Form S-8 as
promulgated by the Securities and Exchange Commission, the information specified
by Part I of Form S-8 has been omitted from this Registration  Statement on Form
S-8 for offers of Common Stock pursuant to the Plans.  The  Prospectus  filed as
part of this  Registration  Statement has been  prepared in accordance  with the
requirements  of Form  S-3  and  may be used  for  reofferings  and  resales  of
registered shares of Common Stock which have been and/or may hereafter be issued
upon the  exercise of options  which have been and/or may  hereafter  be granted
under any of the Plans.
REOFFER PROSPECTUS

                                DELTATHREE, INC.

                    1,887,116 SHARES OF CLASS A COMMON STOCK

                         issued or issuable pursuant to

                   DELTATHREE, INC. 2004 STOCK INCENTIVE PLAN
          DELTATHREE, INC. 2004 NON-EMPLOYEE DIRECTOR STOCK OPTION PLAN
                   DELTATHREE, INC. 1999 STOCK INCENTIVE PLAN
                DELTATHREE, INC. 1999 DIRECTORS COMPENSATION PLAN

                                ---------------

         The  Shares of Class A Common  Stock,  par value  $.001 per share  (the
"Common Stock"), offered hereby (the "Shares") are shares which have been or may
in the future be issued upon the exercise of stock  options  which (i) have been
or may in the future be granted under the deltathree,  Inc. 2004 Stock Incentive
Plan and the deltathree,  Inc. 2004  Non-Employee  Director Stock Option Plan or
(ii)  have been  previously  granted  under  the  deltathree,  Inc.  1999  Stock
Incentive  Plan  and the  deltathree,  Inc.  1999  Directors  Compensation  Plan
(collectively,  the "Plans"), to be sold by stockholders of deltathree,  Inc., a
Delaware  corporation  ("deltathree" or the "Company"),  identified  herein (the
"Selling  Stockholders").  The Company will not receive any of the proceeds from
the sale of the  Shares.  Some or all of the Shares may be offered for sale from
time to time by the Selling Stockholders or by pledgees, donees, transferees, or
other  successors in interest.  Such sales may be made on one or more exchanges,
in the  over-the-counter  market,  or  otherwise,  at prices  and on terms  then
prevailing,  or at  prices  related  to the  then-current  market  price,  or in
negotiated  transactions  or  otherwise,  or  by  underwriters  pursuant  to  an
underwriting  agreement  in  customary  form,  or in a  combination  of any such
methods of sale.  The Selling  Stockholders  and any  broker-dealers  (including
underwriters)  who may  participate  in a sale of the Shares may be deemed to be
statutory  underwriters  within the meaning of the  Securities  Act of 1933,  as
amended  (the  "Securities  Act"),  and the  commissions  paid or  discounts  or
concessions  allowed to any of such broker-dealers  (including  underwriters) by
any person,  as well as any profits  received on the resale of the Shares if any
of such broker-dealers  (including underwriters) should purchase any Shares as a
principal,  may be deemed to be underwriting discounts and commissions under the
Securities  Act. All discounts,  commissions or fees incurred in connection with
the sale of the Shares offered  hereby will be paid by the Selling  Stockholders
or by the purchasers of the Shares,  except that the expenses of registering the
Shares and preparing and filing this Prospectus with the Securities and Exchange
Commission (the "Commission"), and of registering or qualifying the Shares under
the blue sky laws of any  jurisdiction  necessary to permit the  distribution as
described in this Prospectus, will be paid by the Company.

         The  Common  Stock is  listed  on The  Nasdaq  SmallCap  Market  System
("Nasdaq")  under the symbol "DDDC." On January 21, 2005, the closing sale price
for the Common Stock of the Company, as reported by Nasdaq, was $3.58.

         THE  COMMON  STOCK  OFFERED  HEREBY  INVOLVES  A HIGH  DEGREE  OF RISK.
PROSPECTIVE INVESTORS SHOULD CONSIDER CAREFULLY THE RISK FACTORS INDICATED UNDER
"RISK FACTORS."

THESE  SECURITIES  HAVE NOT BEEN APPROVED OR  DISAPPROVED  BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES  AUTHORITY NOR HAS THE COMMISSION OR
ANY STATE  SECURITIES  AUTHORITY  PASSED  UPON THE  ACCURACY OR ADEQUACY OF THIS
PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.

                                ---------------

                The date of this Prospectus is January 24, 2005.

                                ---------------
No person has been  authorized  in  connection  with any offering  made
hereby to give any  information or to make any  representation  not contained in
this Prospectus,  and, if given or made, such information or representation must
not be relied  upon as having  been  authorized  by the  Company or any  Selling
Stockholder.  This  Prospectus  does  not  constitute  an  offer  to  sell  or a
solicitation  of an offer to buy any security  other than the Shares  offered by
this Prospectus, nor does it constitute an offer to sell or a solicitation of an
offer to buy any  shares of Common  Stock  offered  hereby to any  person in any
jurisdiction  where it is unlawful to make such offer or  solicitation.  Neither
the  delivery  of this  Prospectus  nor any  sale  hereunder  shall,  under  any
circumstances,  create any  implication  that  information  contained  herein is
correct as of any time subsequent to the date hereof.

                                ---------------

                              AVAILABLE INFORMATION

         The Company is subject to certain informational  reporting requirements
of the  Securities  Exchange  Act of 1934 and, in  accordance  therewith,  files
reports, proxy statements and other information with the Securities and Exchange
Commission.  Such  reports,  proxy  statements  and  other  information  can  be
inspected  and  copied at the  public  reference  facilities  maintained  by the
Commission at 450 Fifth Street, N.W., Judiciary Plaza,  Washington,  D.C. 20549.
Copies of such material can be obtained from the Public Reference Section of the
Commission,  450 Fifth Street, N.W., Judiciary Plaza, Washington,  D.C. 20549 at
prescribed  rates.  The Commission  maintains a Web site that contains  reports,
proxy and information  statements and other  information  regarding  registrants
that file  electronically  with the Commission.  The address of the Commission's
Web site is http://www.sec.gov.

         The Company  will  provide  without  charge to each  person,  including
beneficial  owners,  to whom this  Prospectus is delivered,  upon the written or
oral request of such person,  a copy of any and all of the  documents  that have
been or may be incorporated by reference in this Prospectus, other than exhibits
to  such  documents  unless  such  exhibits  are  specifically  incorporated  by
reference  into such  documents.  Requests for such copies should be directed to
Investor Relations, deltathree, Inc., 75 Broad Street, 31st Floor, New York, New
York 10004. The telephone number at this location is (212) 500-4850.

                                ---------------

         "deltathree,"  the deltathree logo and  iConnectHere  are trademarks of
deltathree,  Inc. Other  trademarks and trade names appearing in this prospectus
are the property of their holders.
TABLE OF CONTENTS

PROSPECTUS.....................................................................1
OUR COMPANY....................................................................3
RISK FACTORS...................................................................4
USE OF PROCEEDS...............................................................11
SELLING STOCKHOLDERS..........................................................12
PLAN OF DISTRIBUTION..........................................................14
LEGAL MATTERS.................................................................14
EXPERTS  .....................................................................14
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE...............................14

                                       2
OUR COMPANY

         We are a provider of  integrated  Voice over Internet  Protocol  (VoIP)
telephony  services.  We were founded in 1996 to capitalize on the growth of the
Internet as a communications  tool by commercially  offering  Internet  Protocol
(IP) telephony  services.  IP telephony is the real time  transmission  of voice
communications  in the  form of  digitized  "packets"  of  information  over the
Internet or a private network, similar to the way in which e-mail and other data
is  transmitted.  Our business  currently  includes:  the  provision of enhanced
Web-based and other  communications  services to individual  consumers under our
iConnectHere   brand  name;  the  provision  of  enhanced  Web-based  and  other
communications services to international resellers, under either their own brand
name, a white-label brand,  and/or our iConnectHere brand name; the provision of
a total  "Hosted  Communications  Solution"  that enables  resellers,  corporate
customers and service  providers to offer private  label  telecommunications  to
their  customer  bases,  and;  the  transmission  of voice and data  traffic for
communications carriers.

         We have built a  privately-managed,  global network using IP technology
and offer our  customers a unique  suite of IP  telephony  products,  including:
PC-to-Phone, Broadband Phone and Phone-to-Phone. We differentiate ourselves from
our  competitors by providing a robust set of value-added  services that enables
us to  effectively  address  the  challenges  that have  traditionally  made the
provision of telecommunications  services difficult. These operations management
tools  include:  account  provisioning;   e-commerce  based  payment  processing
systems;  billing and account  management;  and  customer  care.  We are able to
provide  our  services  at a cost to users  that is  generally  lower  than that
charged by traditional  carriers  because we minimize our network costs by using
efficient packet-switched technology and we generally avoid local access charges
and  by-pass  international  settlement  charges by routing  international  long
distance calls over our privately-managed network.

         Prior to 1999,  our  focus  was to  build a  privately-managed,  global
network  utilizing  IP  technology,  and our  business  primarily  consisted  of
carrying and transmitting traffic for communications  carriers over our network.
Beginning in 1999, we began to diversify  our offerings by layering  enhanced IP
telephony  services over our network.  These enhanced  services were targeted at
consumers and were primarily  accessible  through our consumer Web site.  During
2000,  we began  offering  services on a co-branded  or  private-label  basis to
service  providers  and other  businesses to assist them in  diversifying  their
product  offerings to their customer  bases.  Our  privately-managed  IP network
received   the  Best  Built  Public   Network   Award  for   excellence   in  IP
services/applications  at SUPERCOMM 2000. We were also recognized as the best IP
telephony provider by SmartMoney  magazine and PC World Magazine during 2000. We
were  recognized  for our  innovative  Broadband  Phone  offering  during  2001,
receiving  both  the  TMC  Labs  Innovation   Award,   and  the   Communications
SOLUTIONS(R)  magazine  Product of the Year  Award.  In 2001,  we  continued  to
enhance  our unique  strengths  through  our  pioneering  work with the  Session
Initiation Protocol (SIP), an Internet  Engineering Task Force standard that has
been  embraced by industry  leaders  such as  Microsoft  and the 3rd  Generation
Partnership   Project  (3GPP),   which  is  a  global  cooperation  between  six
organizational  partners who are recognized as the world's major standardization
bodies from the United States,  Europe, China, Japan and Korea. In 2001, we also
announced the launch of our  state-of-the-art  SIP (Session Initiation Protocol)
infrastructure,  and we became one of the first service  providers to have built
an  end-to-end  SIP  network.  Since 2001 we have  continued to leverage our SIP
expertise. These activities included the launch of our SIP-based dialer, and the
addition of new devices, new features and new calling plans to our offerings and
these  efforts  continue to position us as one of the leading  providers of VoIP
services.  We continue to be recognized as an innovative,  effective VoIP leader
as evidenced by such awards as being named as one of New York's Fastest  Growing
Technology  Companies in the Deloitte  Technology  Fast 50 Program in 2004,  and
being named as a VoIP Service Provider Award Winner by TMC's INTERNET  TELEPHONY
Magazine in 2004.

                                       3
RISK FACTORS

         An investment in the shares being offered by this Prospectus involves a
high degree of risk. In addition to the other  information in this Prospectus or
incorporated  herein by reference,  the following  factors  should be considered
carefully in  evaluating  an investment in the shares of Common Stock offered by
this  Prospectus.   This  Prospectus  contains  and  incorporates  by  reference
forward-looking  statements  within the "safe harbor"  provisions of the Private
Securities Litigation Reform Act of 1995. Reference is made in particular to the
discussion  set forth under  "Management's  Discussion and Analysis of Financial
Condition and Results of Operations" in the Company's Annual Report on Form 10-K
for the fiscal year ended  December 31, 2003 (the "Form 10-K") and the Company's
Quarterly  Reports on Form 10-Q for the quarters ended March 31, 2004,  June 30,
2004 and September 30, 2004, and under "Business" in the Form 10-K, incorporated
in  this  Prospectus  by  reference.   Such  statements  are  based  on  current
expectations that involve a number of uncertainties including those set forth in
the risk  factors  below.  Actual  results  could differ  materially  from those
projected in the forward-looking statements.

RISKS RELATED TO OUR COMPANY

WE HAVE A HISTORY OF LOSSES AND NEGATIVE CASH FLOW AND WE  ANTICIPATE  THEY WILL
CONTINUE.

         We have incurred  significant losses since inception,  and we expect to
continue to incur significant losses for the foreseeable future. We reported net
losses of  approximately  $8.3 million in 2003,  approximately  $12.1 million in
2002,  and  approximately  $35.7  million in 2001.  As of September 30, 2004 and
December 31, 2003, our accumulated deficit was approximately  $150.5 million and
$147.9 million,  respectively.  We generated negative cash flow of approximately
$4.0 million  during 2003 and $7.9  million  during  2002.  As a  percentage  of
revenues,  our net loss was 63.4% in 2003, 93.4% in 2002 and 228.2% in 2001. Our
revenues  may not grow or even  continue at their  current  level.  As a result,
while  we  believe  we  have  sufficient  funds  to  meet  our  working  capital
requirements  for at least the next fiscal  year,  we will need to increase  our
revenues significantly to become profitable.  In order to increase our revenues,
we need to attract and  maintain  customers  to increase the fees we collect for
our  services.  If our  revenues do not  increase as much as we expect or if our
expenses  increase at a greater pace than  revenues,  we may never be profitable
or,  if we  become  profitable,  we may  not be  able  to  sustain  or  increase
profitability on a quarterly or annual basis.

WE WILL NEED ADDITIONAL CAPITAL TO FINANCE OUR OPERATIONS IN THE FUTURE.

         We intend to continue to enhance and expand our network and our product
offerings in order to maintain our competitive  position and meet the increasing
demands for  service  quality,  capacity  and  competitive  pricing.  Also,  the
introduction of new products and/or service will require  significant  marketing
and  promotional  expenses  that we often  incur  before we begin to receive the
related  revenue.  While we believe we have sufficient funds to meet our working
capital  requirements  for at least the next fiscal year,  if our cash flow from
operations is not sufficient to meet our capital expenditure and working capital
requirements,  we  will  need  to  raise  additional  capital  to  continue  our
operations.   Especially  in  light  of  current  economic  conditions  and  the
unfavorable market for telecommunications companies in particular, we may not be
able to raise additional capital, and if we are able to raise additional capital
through  the  issuance  of  additional   equity,  our  current  investors  could
experience  dilution.  If we are unable to obtain additional  capital, we may be
required to reduce the scope of our business or our  anticipated  growth,  which
would reduce our revenues.

WE HAVE A LIMITED OPERATING HISTORY UPON WHICH YOU CAN EVALUATE US.

         We have only a limited  operating  history  upon which you can evaluate
our business and  prospects.  We commenced  operations in June 1996.  You should
consider our prospects in light of the risks,  expenses and  difficulties we may
encounter as an early stage company in the new and rapidly  evolving  market for
IP communications services. These risks include our ability:

      o     to increase  acceptance of our enhanced IP  communications  services
            (including our Hosted Communications  Solution),  thereby increasing
            the number of users of our IP telephony services;

      o     to compete effectively;

                                       4
o     to develop new products and keep pace with developing technology.

         In addition, because we expect an increasing percentage of our revenues
to be derived from our enhanced IP communications services (including our Hosted
Communications  Solution),  our past operating  results may not be indicative of
our future results.

WE MAY NOT BE ABLE TO EXPAND OUR REVENUE AND ACHIEVE PROFITABILITY.

         Our business  strategy is to expand our revenue  sources to include the
provision of enhanced IP communications  services to several different  customer
groups.  We can neither  assure you that we will be able to accomplish  this nor
that this strategy  will be  profitable.  Currently,  our revenues are primarily
generated  by sales of enhanced IP  communications  services  through our direct
consumer  offering,  iConnectHere,  and our service  provider and reseller sales
channel  (including sales of our Hosted  Communications  Solution).  Enhanced IP
communications services from these channels generated 92.1%, 60.2%, and 54.8% of
our total  revenues  in 2003,  2002 and 2001,  respectively.  The  provision  of
enhanced IP communications  services has not been profitable to date and may not
be profitable in the future.

         In the future, we intend to generate  increased  revenues from enhanced
IP communications  services,  from multiple sources, many of which are unproven,
including the commercial sale of our Hosted  Communications  Solution. We expect
that our revenues for the  foreseeable  future will be dependent on, among other
factors:

      o     sales of enhanced IP communications services, including sales of our
            Hosted Communications Solution;

      o     acceptance and use of IP telephony;

      o     expansion of service offerings;

      o     traffic levels on our network;

      o     the effect of  competition,  regulatory  environment,  international
            long distance rates and access and transmission costs on our prices;

      o     continued improvement of our global network quality.

         We may not be able to sustain  our  current  revenues  or  successfully
generate  additional  revenues  from  the  sale of  enhanced  IP  communications
services,  including  Hosted  Communications  Solutions or carrier  transmission
services.

WE CANNOT ASSURE YOU THAT A MARKET FOR OUR SERVICES WILL DEVELOP.

         We are  uncertain  whether a market will  develop  for our  enhanced IP
communications  services,  including our Hosted  Communications  Solutions.  Our
market is new and  rapidly  evolving.  Our ability to sell our  services  may be
inhibited by, among other  factors,  the  reluctance of some end users to switch
from traditional  communications  carriers to IP communications  carriers and by
concerns  with the quality of IP  telephony  and the adequacy of security in the
exchange of  information  over the  Internet.  End users in markets  serviced by
recently  deregulated   telecommunications   providers  are  not  familiar  with
obtaining  services from  competitors of these providers and may be reluctant to
use new providers,  such as us. Our ability to increase  revenues depends on the
migration of traditional  telephone  network traffic to our IP network.  We will
need to devote  substantial  resources to educate  customers and end users about
the  benefits of IP  communications  solutions  in general  and our  services in
particular.  If  enterprises  and their  customers do not accept our enhanced IP
communications services as a means of sending and receiving  communications,  we
will not be able to increase our number of paid users or  successfully  generate
revenues in the future.

OUR FUTURE  SUCCESS  DEPENDS ON THE GROWTH IN THE USE OF THE INTERNET AS A MEANS
OF COMMUNICATIONS.

         If the market for IP  communications,  in general,  and our services in
particular,  does not grow at the rate we  anticipate  or at all, we will not be
able to increase our number of users or generate  revenues we anticipate.  To be
successful, IP communications requires validation as an effective, quality means
of communication and as a viable  alternative to traditional  telephone service.
Demand and market acceptance for recently  introduced  services are subject to a
high level of uncertainty. The Internet may not prove to be a viable alternative
to traditional telephone service for reasons including:

      o     inconsistent quality or speed of service;

                                       5
o     traffic congestion on the Internet;

      o     potentially inadequate development of the necessary infrastructure;

      o     lack of acceptable security technologies;

      o     lack of timely  development  and  commercialization  of  performance
            improvements; and

      o     unavailability of cost-effective, high-speed access to the Internet.

         If Internet usage grows, the Internet infrastructure may not be able to
support  the  demands  placed  on it by  such  growth,  or  its  performance  or
reliability may decline. In addition, Web sites may from time to time experience
interruptions in their service as a result of outages and other delays occurring
throughout  the  Internet  network  infrastructure.  If these  outages or delays
frequently  occur  in the  future,  Internet  usage,  as  well as  usage  of our
communications portal and our services, could be adversely affected.

POTENTIAL  FLUCTUATIONS IN OUR QUARTERLY FINANCIAL RESULTS MAKE IT DIFFICULT FOR
INVESTORS TO PREDICT OUR FUTURE PERFORMANCE.

         Our  quarterly  operating  results may fluctuate  significantly  in the
future as a result of a  variety  of  factors,  many of which  are  outside  our
control. The factors generally within our control include:

      o     the  rate at  which we are able to  attract  users to  purchase  our
            enhanced   IP   communications   services,   including   our  Hosted
            Communications Solutions;

      o     the amount and timing of expenses to enhance marketing and promotion
            efforts and to expand our infrastructure;

      o     the timing of  announcements  or  introductions  of new or  enhanced
            services by us.

         The factors outside our control include:

      o     the timing of  announcements  or  introductions  of new or  enhanced
            services by our competitors;

      o     technical  difficulties or network  interruptions in the Internet or
            our privately-managed network;

      o     general  economic  and  competitive   conditions   specific  to  our
            industry.

         The  foregoing  factors  also may  create  other  risks  affecting  our
long-term success, as discussed in the other risk factors.

         We  believe  that  quarter-to-quarter  comparisons  of  our  historical
operating  results may not be a good indication of our future  performance,  nor
would our  operating  results for any  particular  quarter be  indicative of our
future operating results.

OUR NETWORK MAY NOT BE ABLE TO ACCOMMODATE OUR CAPACITY NEEDS.

         We expect the volume of traffic we carry over our  network to  increase
significantly as we expand our operations and service offerings. Our network may
not be able to accommodate  this additional  volume.  In order to ensure that we
are able to  handle  additional  traffic,  we may have to enter  into  long-term
agreements for leased capacity.  To the extent that we overestimate our capacity
needs,  we may be  obligated  to pay  for  more  transmission  capacity  than we
actually use, resulting in costs without corresponding revenues.  Conversely, if
we  underestimate  our capacity needs,  we may be required to obtain  additional
transmission  capacity from more expensive sources. If we are unable to maintain
sufficient  capacity  to meet the needs of our users,  our  reputation  could be
damaged and we could lose users.

WE FACE A RISK OF FAILURE OF COMPUTER  AND  COMMUNICATIONS  SYSTEMS  USED IN OUR
BUSINESS.

         Our business  depends on the efficient and  uninterrupted  operation of
our  computer  and  communications  systems as well as those that connect to our
network. We maintain  communications systems primarily in five facilities in New
York, Los Angeles,  Atlanta,  London and  Jerusalem.  Our systems and those that
connect to our network are subject to disruption from natural disasters or other
sources of power loss, communications failure, hardware or software malfunction,
network failures and other events both within and beyond our control. Any system
interruptions that cause our services to be unavailable,  including  significant

                                       6
or lengthy telephone network failures or difficulties for users in communicating
through our network or portal,  could damage our reputation and result in a loss
of users.

OUR COMPUTER SYSTEMS AND OPERATIONS MAY BE VULNERABLE TO SECURITY BREACHES.

         Our computer  infrastructure  is potentially  vulnerable to physical or
electronic  computer  viruses,  break-ins  and similar  disruptive  problems and
security breaches that could cause interruptions,  delays or loss of services to
our users. We believe that the secure  transmission of confidential  information
over the Internet, such as credit card numbers, is essential in maintaining user
confidence in our services.  We rely on licensed  encryption and  authentication
technology to effect secure transmission of confidential information,  including
credit card numbers. It is possible that advances in computer capabilities,  new
technologies or other developments could result in a compromise or breach of the
technology  we use to protect  user  transaction  data.  A party that is able to
circumvent our security systems could misappropriate  proprietary information or
cause  interruptions in our operations.  Security breaches also could damage our
reputation and expose us to a risk of loss or litigation and possible liability.
Although we have experienced no security breaches to date of which we are aware,
we  cannot  guarantee  you that our  security  measures  will  prevent  security
breaches.

THIRD PARTIES MIGHT INFRINGE UPON OUR PROPRIETARY TECHNOLOGY.

         We  cannot  assure  you that the  steps we have  taken to  protect  our
intellectual  property rights will prevent  misappropriation  of our proprietary
technology.  To protect our rights to our  intellectual  property,  we rely on a
combination   of   trademark   and  patent   law,   trade   secret   protection,
confidentiality   agreements  and  other   contractual   arrangements  with  our
employees, affiliates, strategic partners and others. We may be unable to detect
the unauthorized use of, or take appropriate steps to enforce,  our intellectual
property  rights.  Effective  copyright and trade secret  protection  may not be
available  in every  country in which we offer or intend to offer our  services.
Failure to adequately  protect our  intellectual  property could harm our brand,
devalue our proprietary  content and affect our ability to compete  effectively.
Further,  defending  our  intellectual  property  rights  could  result  in  the
expenditure of significant financial and managerial resources.

OUR SERVICES MAY INFRINGE ON THE INTELLECTUAL PROPERTY RIGHTS OF OTHERS.

         Third  parties  may  assert  claims  that we have  violated a patent or
infringed a copyright,  trademark or other  proprietary right belonging to them.
We incorporate licensed third-party technology in some of our services. In these
license  agreements,  the licensors  have agreed to indemnify us with respect to
any claim by a third party that the licensed  software  infringes  any patent or
other  proprietary  right so long as we have not made  changes  to the  licensed
software. We cannot assure you that these provisions will be adequate to protect
us from infringement  claims. Any infringement  claims, even if not meritorious,
could  result  in  the  expenditure  of  significant  financial  and  managerial
resources.

OPERATING INTERNATIONALLY EXPOSES US TO ADDITIONAL AND UNPREDICTABLE RISKS.

         We intend to continue to enter  additional  markets in Eastern  Europe,
Latin America, Africa and Asia and to expand our existing operations outside the
United  States.   International   operations  are  subject  to  inherent  risks,
including:

      o     potentially weaker protection of intellectual property rights;

      o     political instability;

      o     unexpected changes in regulations and tariffs;

      o     fluctuations in exchange rates;

      o     varying tax consequences; and

      o     uncertain market  acceptance and  difficulties in marketing  efforts
            due to language and cultural differences.

                                       7
WE HAVE EXPERIENCED LOSSES AS A RESULT OF FRAUD.

         We have experienced  losses due to fraud. While in 2003, we experienced
losses from fraud of less than 1% of our  revenues,  callers  have  obtained our
services  without  rendering  payment by unlawfully using our access numbers and
personal  identification  numbers. While we have implemented anti-fraud measures
in order to control losses relating to these practices,  and these measures have
proven to be effective today, these measures may not in the future be sufficient
to  effectively  limit all of our  exposure  in the future from fraud and future
losses could rise significantly above current levels.

INTENSE  COMPETITION  COULD  REDUCE  OUR  MARKET  SHARE  AND HARM OUR  FINANCIAL
PERFORMANCE.

         Competition  in the market for enhanced IP  communications  services is
becoming  increasingly intense and is expected to increase  significantly in the
future.  The market  for  enhanced  Internet  and IP  communications  is new and
rapidly evolving. We expect that competition from companies both in the Internet
and  telecommunications  industries will increase in the future. Our competitors
include both start-up IP telephony service providers and established traditional
communications  providers.  Many  of  our  existing  competitors  and  potential
competitors have broader portfolios of services,  greater financial,  management
and operational  resources,  greater brand-name  recognition,  larger subscriber
bases and more  experience  than we have. In addition,  many of our IP telephony
competitors use the Internet  instead of a private network to transmit  traffic.
Operating  and  capital  costs  of  these  providers  may  be  less  than  ours,
potentially giving them a competitive advantage over us in terms of pricing.

         We also  compete in the growing  market of discount  telecommunications
services including calling cards, prepaid cards, call-back services, dial-around
or 10-10  calling and collect  calling  services.  In  addition,  some  Internet
service providers have begun to aggressively enhance their real time interactive
communications,  focusing  initially on instant  messaging,  although  some have
begun to provide PC-to-PC, PC-to-phone and/or broadband phone services.

         If we are unable to provide competitive service offerings,  we may lose
existing users and be unable to attract  additional users. In addition,  many of
our competitors,  especially traditional carriers, enjoy economies of scale that
result in a lower cost structure for transmission and related costs, which cause
significant  pricing pressures within the industry.  Although the minutes of use
we sell  are  increasing,  revenues  are not  increasing  at the  same  rate due
primarily  to a decrease  in revenue  per  minute for our  carrier  transmission
services.  In order to remain  competitive  we intend to increase our efforts to
promote our services,  and we cannot be sure that we will be successful in doing
this.

         In  addition  to  these   competitive   factors,   recent  and  pending
deregulation in some of our markets may encourage new entrants. We cannot assure
you that additional  competitors will not enter markets that we plan to serve or
that we will be able to compete effectively.

DECREASING  TELECOMMUNICATIONS  RATES MAY DIMINISH OR ELIMINATE OUR  COMPETITIVE
PRICING ADVANTAGE.

         Decreasing  telecommunications  rates may  diminish  or  eliminate  the
competitive  pricing  advantage  of our  services.  International  and  domestic
telecommunications rates have decreased significantly over the last few years in
most of the  markets  in which we  operate,  and we  anticipate  that rates will
continue  to be reduced in all of the  markets in which we do business or expect
to do business.  Users who select our services to take  advantage of the current
pricing differential between traditional  telecommunications rates and our rates
may  switch  to   traditional   telecommunications   carriers  as  such  pricing
differentials  diminish or disappear,  and we will be unable to use such pricing
differentials to attract new customers in the future.  In addition,  our ability
to market our  carrier  transmission  services  to  telecommunications  carriers
depends upon the  existence of spreads  between the rates  offered by us and the
rates offered by traditional  telecommunications  carriers,  as well as a spread
between the retail and  wholesale  rates  charged by the carriers  from which we
obtain wholesale service.  Continued rate decreases will require us to lower our
rates to remain  competitive  and will  reduce or possibly  eliminate  our gross
profit from our  carrier  transmission  services.  If  telecommunications  rates
continue to decline, we may lose users for our services.

                                       8
GOVERNMENT  REGULATION AND LEGAL  UNCERTAINTIES  RELATING TO IP TELEPHONY  COULD
HARM OUR BUSINESS.

         Historically,  voice  communications  services  have been  provided  by
regulated  telecommunications  common carriers. We offer voice communications to
the public for  international  and domestic calls using IP telephony,  and we do
not operate as a licensed telecommunications common carrier in any jurisdiction.
Based on specific regulatory classifications and recent regulatory decisions, we
believe we qualify for certain exemptions from telecommunications common carrier
regulation in many of our markets.  However,  the growth of IP telephony has led
to close examination of its regulatory  treatment in many  jurisdictions  making
the legal status of our services  uncertain and subject to change as a result of
future  regulatory  action,  judicial  decisions  or  legislation  in any of the
jurisdictions  in which we  operate.  Established  regulated  telecommunications
carriers have sought and may continue to seek regulatory actions to restrict the
ability of companies such as ours to provide services or to increase the cost of
providing such services. In addition,  our services may be subject to regulation
if  regulators   distinguish   phone-to-  phone   telephony   service  using  IP
technologies  over   privately-managed   networks  such  as  our  services  from
integrated  PC-to-PC and  PC-originated  voice services over the Internet.  Some
regulators may decide to treat the former as regulated  common carrier  services
and the latter as unregulated enhanced or information services.

         Application of new regulatory  restrictions or requirements to us could
increase our costs of doing business and prevent us from delivering our services
through our current arrangements.  In such event, we would consider a variety of
alternative  arrangements  for  providing  our  services,   including  obtaining
appropriate  regulatory   authorizations  for  our  local  network  partners  or
ourselves,  changing  our  service  arrangements  for a  particular  country  or
limiting  our  service  offerings.  Such  regulations  could  limit our  service
offerings, raise our costs and restrict our pricing flexibility, and potentially
limit our ability to compete  effectively.  Further,  regulations and laws which
affect the  growth of the  Internet  could  hinder  our  ability to provide  our
services over the Internet.

WE MAY  NOT BE ABLE  TO  KEEP  PACE  WITH  RAPID  TECHNOLOGICAL  CHANGES  IN THE
COMMUNICATIONS INDUSTRY.

         Our  industry  is  subject  to rapid  technological  change.  We cannot
predict the effect of technological changes on our business. In addition, widely
accepted standards have not yet developed for the technologies we use. We expect
that new  services  and  technologies  will  emerge  in the  market  in which we
compete. These new services and technologies may be superior to the services and
technologies  that we use, or these new  services  may render our  services  and
technologies obsolete.

         To be  successful,  we must  adapt to our  rapidly  changing  market by
continually  improving  and  expanding  the  scope of  services  we offer and by
developing new services and  technologies  to meet customer  needs.  Our success
will depend, in part, on our ability to license leading technologies and respond
to technological  advances and emerging  industry  standards on a cost-effective
and  timely  basis.  We will need to spend  significant  amounts  of  capital to
enhance and expand our services to keep pace with changing technologies.

RISKS RELATED TO OUR RELATIONSHIP WITH ATAREY

ATAREY HAS SIGNIFICANT INFLUENCE ON ALL MATTERS SUBMITTED TO A STOCKHOLDER VOTE

         Atarey  Hasharon  Chevra  Lepituach  Vehashkaot  Benadlan  (1991)  Ltd.
("Atarey") owns  approximately  44% of the voting power and economic interest in
us. As long as Atarey continues to beneficially own a significant  amount of our
shares,  Atarey will be able to exercise  significant  influence  over decisions
affecting us, including:

      o     composition of our board of directors and, through it, our direction
            and policies, including the appointment and removal of officers;

      o     mergers or other business combinations;

      o     acquisitions or dispositions of assets by us;

      o     future issuances of capital stock or other securities by us;

      o     incurrence of debt by us;

      o     amendments,  waivers and modifications to any agreements  between us
            and Atarey;

      o     payment of dividends on our capital stock;

      o     approval of our business plans and general business development.

                                       9
RISKS RELATED TO OUR COMMON STOCK

A THIRD PARTY MAY BE DETERRED FROM ACQUIRING OUR COMPANY.

         Atarey's  significant  ownership of our company  could delay,  deter or
prevent a third party from  attempting  to acquire  control of us. This may have
the effect of discouraging a third party from making a tender offer or otherwise
attempting to obtain control of us, even though such a change in ownership would
be economically beneficial to us and our stockholders.

VOLATILITY OF OUR STOCK PRICE COULD ADVERSELY AFFECT OUR STOCKHOLDERS.

         Since  trading  commenced  in November  1999,  the market  price of our
common stock has been highly  volatile and may continue to be volatile and could
be subject to wide fluctuations in response to factors such as:

      o     variations in our actual or anticipated  quarterly operating results
            or those of our competitors;

      o     announcements by us or our competitors of technological innovations;

      o     introduction of new products or services by us or our competitors;

      o     changes in financial estimates by securities analysts;

      o     conditions or trends in the Internet industry;

      o     changes in the market valuations of other Internet companies;

      o     announcements by us or our competitors of significant acquisitions;

      o     our entry into strategic partnerships or joint ventures; or

      o     sales of our common stock by Atarey.

         All of these factors are, in whole or part,  beyond our control and may
materially  adversely  affect the market price of our common stock regardless of
our performance.

         Investors  may not be able to resell  their  shares of our common stock
following periods of volatility because of the market's adverse reaction to such
volatility.  In  addition,  the stock  market in  general,  and the  market  for
telecommunications, Internet-related and technology companies in particular, has
been  dramatically  decreased and is extremely  depressed.  We cannot assure you
that our common stock will trade at the same levels of other  telecommunications
or Internet stocks or that telecommunications or Internet stocks in general will
sustain their current market prices.

THE LIQUIDITY OF OUR COMMON STOCK COULD BE ADVERSELY  AFFECTED BY CHANGES IN OUR
NASDAQ LISTING.

         Our common stock is currently listed on the Nasdaq SmallCap Market. The
listing of our common stock was  transferred  from the Nasdaq National Market to
the Nasdaq  SmallCap  Market  effective on September 17, 2002. We currently meet
all criteria for continued  inclusion in the Nasdaq  SmallCap  Market.  However,
based on the volatile  nature of our stock price, we can make no assurances that
we will continue to do so.  Failure to meet these  criteria  could result in our
delisting  from the Nasdaq  SmallCap  Market.  If our shares were to be delisted
from the Nasdaq SmallCap Market,  our shares would continue to trade, if at all,
on the OTC Bulletin Board, upon application by the requisite market makers. This
would  adversely  impact our stock price, as well as the liquidity of the market
for our shares which,  as a result,  would  adversely  affect the ability of our
stockholders to purchase and sell their shares in an orderly manner,  or at all.
Furthermore,  a  delisting  of our  shares  could  damage our  general  business
reputation  and  impair  our  ability  to  raise  additional  funds.  Any of the
foregoing events could have a material adverse effect on our business, financial
condition and operating results.

WE DO NOT INTEND TO PAY DIVIDENDS.

         We have never  declared or paid any cash dividends on our common stock.
We intend to retain any future  earnings to finance our operations and to expand
our  business  and,  therefore,  do not expect to pay any cash  dividends in the
foreseeable future.

                                       10
SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS

         This  prospectus  and the documents  incorporated  by reference  herein
contain  forward-looking  statements  within the  meaning of Section  27A of the
Securities Act and Section 21E of the Exchange Act. These  statements  relate to
future events or our future financial performance.  These statements include but
are not limited to statements regarding:  uncertainty of financial estimates and
projections,  the competitive  environment for Internet  telephony,  our limited
operating history, changes of rates of all related telecommunications  services,
the  level  and  rate of  customer  acceptance  of new  products  and  services,
legislation that may affect the Internet telephony industry, rapid technological
changes, as well as other risks referenced from time to time in our filings with
the  Securities  and  Exchange  Commission.  In some  cases,  you  can  identify
forward-looking  statements  by  terminology  such as "may,"  "will,"  "should,"
"expects,"  "anticipates,"  "believes,"  "estimates," "predicts," "potential" or
"continue" or the negative of such terms or other comparable terminology.  These
statements   are  only   predictions   and  involve  known  and  unknown  risks,
uncertainties  and other  factors,  including  the risks  outlined  under  "Risk
Factors"  that  may  cause  our or our  industry's  actual  results,  levels  of
activity,   performance   or   achievements   expressed   or   implied  by  such
forward-looking  statements.  Before  deciding to purchase  our common stock you
should carefully consider the risks described in the "Risk Factors" section,  in
additional  to the  other  information  set  forth  in this  prospectus  and the
documents incorporated by reference herein.

                                 USE OF PROCEEDS

         We will not receive any proceeds  from the sale of shares of our common
stock by the selling stockholders.

                                       11
SELLING STOCKHOLDERS

         The Selling  Stockholders are offering hereby Shares which have been or
may hereafter be acquired by them upon the exercise of options granted under the
Plans. In addition to the persons named below, the Selling  Stockholders include
certain unnamed non-affiliates, each of whom holds less than the lesser of 1,000
shares or one  percent  (1%) of the shares of Common  Stock  issuable  under the
Plans,  and who may use this  Prospectus  for reoffers and resales of up to that
amount of shares. The names of additional Selling Stockholders and the number of
Shares offered hereby by them may be added to this  Prospectus from time to time
by an addendum  or  supplement  to this  Prospectus.  Other  persons who acquire
Shares  from  the  Selling  Stockholders  may  also  be  identified  as  Selling
Stockholders by means of an addendum or supplement to this Prospectus.

         The following table sets forth certain  information with respect to the
Selling Stockholders as of December 31, 2004.
Number of
                          Shares                                  Number of              Percentage of
                          Beneficially                            Shares to be           Class to be
                          Owned                Number of          Beneficially           Beneficially
                          Prior to             Shares Being       Owned After            Owned After
Name                      Offering (1)         Offered (2)        Offering (3)           Offering
-------------------------------------------------------------------------------------------------------
Noam Bardin (4)             796,304            608,938                187,366                  *

Shimmy Zimels (5)           713,407            648,938                 64,469                  *

Paul C. White (6)           400,000            400,000                      0                  *

Ilan Biran (7)               49,848             49,848                      0                  *

Amir Gera (8)                44,848             44,848                      0                  *

Joshua Maor (9)              70,999             54,848                 16,151                  *

Lior Samuelson (10)          54,848             54,848                      0                  *

Noam Ben-Ozer (11)           24,848             24,848                      0                  *

Total                                        1,887,116
* Less than 1% of the outstanding Common Stock.

(1)  Includes all shares of Common  Stock owned by the Selling  Stockholder  and
Shares of Common Stock which the Selling  Stockholder  has the right to acquire,
through the exercise of options including those granted under the Plans, whether
or not such right has yet become  exercisable or will become  exercisable within
60 days after December 31, 2004.

(2) Includes certain shares of Common Stock acquired by the Selling  Stockholder
pursuant to the  exercise of options  granted  under the Plans and all shares of
Common Stock which the Selling Stockholder has the right to acquire, through the
exercise of options  granted under the Plans,  whether or not such right has yet
become  exercisable or will become exercisable within 60 days after December 31,
2004.

(3) Includes shares of Common Stock owned by the Selling  Stockholder and Shares
of Common Stock which the Selling Stockholder has the right to acquire,  through

                                       12
the exercise of options,  other than those  granted  under the Plans,  within 60
days after December 31, 2004. Assumes all shares registered pursuant hereto will
be sold, although there can be no assurance that any of the Selling Stockholders
will  offer  for sale or sell any or all of the  Common  Stock  offered  by them
pursuant to this  Prospectus.  Also assumes that no other shares are acquired or
transferred by the Selling Stockholder.

(4) Includes  555,604  shares which Mr. Bardin has the right to acquire upon the
exercise of options  within 60 days after December 31, 2004. Mr. Bardin has been
Chairman of the Board of Directors of the Company  since April 2002.  Mr. Bardin
served as Chief  Executive  Officer and  President  from July 2000  through June
2002.

(5) Includes  478,937  shares which Mr. Zimels has the right to acquire upon the
exercise of options  within 60 days after December 31, 2004. Mr. Zimels has been
Chief Executive Officer, President and a Director of the Company since June 2002
and prior to that served as Vice  President of  Operations  and Chief  Operating
Officer of the Company beginning in June 1997.

(6)  Includes  248,332  shares which Mr. White has the right to acquire upon the
exercise of options  within 60 days after  December 31, 2004. Mr. White has been
Chief Financial Officer of the Company since September 2000.

(7)  Includes  24,848  shares  which Mr. Biran has the right to acquire upon the
exercise of options within 60 days after December 31, 2004. Mr. Biran has been a
Director of the Company since December 2003.

(8)  Includes  24,848  shares  which Mr. Gera has the right to acquire  upon the
exercise of options  within 60 days after December 31, 2004. Mr. Gera has been a
Director of the Company since June 2001.

(9)  Includes  24,848  shares  which Mr. Maor has the right to acquire  upon the
exercise of options  within 60 days after December 31, 2004. Mr. Maor has been a
Director of the Company since June 2001.

(10) Includes  34,848  shares which Mr.  Samuelson has the right to acquire upon
the exercise of options within 60 days after  December 31, 2004.  Mr.  Samuelson
has been a Director of the Company since August 2001.

(11) Includes 24,848 shares which Mr. Ben-Ozer has the right to acquire upon the
exercise of options  within 60 days after  December 31, 2004.  Mr.  Ben-Ozer has
been a Director of the Company since September 2004.

                                       13
PLAN OF DISTRIBUTION

         The  Shares may be  offered  and sold from time to time by the  Selling
Stockholders,  or by  pledgees,  donees,  transferees  or  other  successors  in
interest.  Such  offers  and  sales may be made from time to time on one or more
exchanges or in the  over-the-counter  market,  or  otherwise,  at prices and on
terms then prevailing or at prices related to the then-current  market price, or
in  negotiated  transactions.  The  Shares  may be  sold  by one or  more of the
following:  (a) a block  trade in which the  broker or  dealer so  engaged  will
attempt to sell the Shares as agent but may position and resell a portion of the
block as principal to facilitate the  transaction;  (b) purchases by a broker or
dealer as principal and resale by such broker or dealer for its account;  (c) an
exchange  distribution  in  accordance  with  the  rules of such  exchange;  (d)
ordinary  brokerage  transactions  and transactions in which the broker solicits
purchasers;  and (e) a  combination  of any such  methods of sale.  In effecting
sales,  brokers or dealers engaged by the Selling  Stockholders  may arrange for
other  brokers or  dealers  to  participate.  Brokers  or  dealers  may  receive
commissions or discounts from Selling Stockholders or from purchasers in amounts
to be negotiated  immediately prior to the sale. Such brokers or dealers and any
other participating brokers or dealers may be deemed to be "underwriters" within
the meaning of the Securities Act in connection with such sales.

         In addition,  any securities  covered by this Prospectus  which qualify
for sale pursuant to Rule 144 or Rule 701  promulgated  under the Securities Act
("Rule  144" or "Rule  701") may be sold under Rule 144 or Rule 701 rather  than
pursuant to this Prospectus.

         The  Company  and the  Selling  Stockholders  may enter into  customary
agreements  concerning  indemnification  and the  provision  of  information  in
connection with the sale of the Shares.

         There is no assurance that any of the Selling  Stockholders  will offer
for sale or sell any or all the Common Stock covered by this Prospectus.

                                  LEGAL MATTERS

         The validity of the issuance of the shares of Common Stock  offered has
been passed  upon for the Company by Mintz,  Levin,  Cohn,  Ferris,  Glovsky and
Popeo, P.C. of New York, New York.

                                     EXPERTS

         The financial  statements  incorporated in this Prospectus by reference
to the Company's Annual Report on Form 10-K for the year ended December 31, 2003
have been so  incorporated  in reliance  upon the report of Brightman  Almagor &
Co., a member firm of Deloitte & Touche Tohmatsu, independent accountants, given
on the authority of said firm as experts in auditing and accounting.

                 INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE

         The SEC allows us to "incorporate by reference" the information we file
with it,  which  means  that we can  disclose  important  information  to you by
referring you to those documents.  The information  incorporated by reference is
considered to be part of this  prospectus and information we file later with the
SEC will automatically update and supersede this information.  We incorporate by
reference  the documents  listed below and any future  filings made with the SEC
under Sections 13(a), 13(c), 14 or 15(d) of the Securities Exchange Act of 1934.
The documents we are  incorporating by reference as of their respective dates of
filing are:

      o     Amendment  No. 1 to Annual  Report on Form 10-K/A for the year ended
            December 31, 2003, filed on April 29, 2004;

                                       14
o     Annual  Report on Form 10-K for the year ended  December  31,  2003,
            filed on March 30, 2004;

      o     Quarterly  Report on Form 10-Q for the quarter ended March 31, 2004,
            filed on May 14, 2004;

      o     Quarterly  Report on Form 10-Q for the quarter  ended June 30, 2004,
            filed on August 4, 2004;

      o     Quarterly  Report on Form 10-Q for the quarter  ended  September 30,
            2004, filed on November 4, 2004; and

      o     The  description of our common stock  contained in our  Registration
            Statement  on Form 8-A  filed  with the SEC on  November  23,  1999,
            including  any  amendments  or  reports  filed  for the  purpose  of
            updating that description.

         You may request, orally or in writing, a copy of these documents, which
will be provided to you at no cost, by contacting:

         Investor Relations,  deltathree, Inc., 75 Broad Street, 31st Floor, New
York, New York 10004. Telephone: (212) 500-4850.

                                       15
PART II

               INFORMATION REQUIRED IN THE REGISTRATION STATEMENT

Item 3.  Incorporation of Certain Documents by Reference.

         The following documents filed by the Registrant with the Commission are
incorporated herein by reference:

      o     Amendment  No. 1 to Annual  Report on Form 10-K/A for the year ended
            December 31, 2003, filed on April 29, 2004;

      o     Annual  Report on Form 10-K for the year ended  December  31,  2003,
            filed on March 30, 2004;

      o     Quarterly  Report on Form 10-Q for the quarter ended March 31, 2004,
            filed on May 14, 2004;

      o     Quarterly  Report on Form 10-Q for the quarter  ended June 30, 2004,
            filed on August 4, 2004;

      o     Quarterly  Report on Form 10-Q for the quarter  ended  September 30,
            2004, filed on November 4, 2004; and

      o     The  description of our common stock  contained in our  Registration
            Statement  on Form 8-A  filed  with the SEC on  November  23,  1999,
            including  any  amendments  or  reports  filed  for the  purpose  of
            updating that description.

         All reports and other documents filed by the Registrant  after the date
hereof  pursuant  to  Sections  13(a),  13(c),  14 and  15(d) of the  Securities
Exchange  Act of 1934 prior to the filing of a  post-effective  amendment  which
indicates that all securities offered hereby have been sold or which deregisters
all securities  then remaining  unsold,  shall be deemed to be  incorporated  by
reference  herein and to be part hereof from the date of filing of such  reports
and documents.

Item 4.  Description of Securities.

         Not applicable.

Item 5.  Interests of Named Experts and Counsel.

         Not applicable.

Item 6.  Indemnification of Directors and Officers.

         Incorporated herein by reference from Registration Statement on Form
         S-3, No. 333-109495.

Item 7.  Exemption from Registration Claimed.

         Not applicable.

                                      II-1
Item 8.  Exhibits.

EXHIBIT
NUMBER      DESCRIPTION
-------     -----------
4.1*        Restated Certificate of Incorporation of deltathree, Inc.
4.2**       Amendment to Restated  Certificate of  Incorporation  of deltathree,
            Inc.
4.3*        Amended and Restated By-laws of deltathree, Inc.
4.4*        Specimen Certificate of Class A Common Stock.
4.5*        deltathree, Inc. 1999 Stock Incentive Plan
4.6*        deltathree, Inc. 1999 Directors Compensation Plan
4.7         deltathree, Inc. 2004 Stock Incentive Plan
4.8         deltathree, Inc. 2004 Non-Employee Director Stock Option Plan
5.1         Opinion of Mintz,  Levin,  Cohn,  Ferris,  Glovsky  and Popeo,  P.C.
            regarding legality of the shares of common stock being registered
23.1        Consent of Brightman Almagor & Co.
23.2        Consent of Mintz,  Levin,  Cohn,  Ferris,  Glovsky  and Popeo,  P.C.
            (included in Exhibit 5.1 to this Registration Statement on Form S-8)
24.1        Power of Attorney (included on signature page)

----------
*     Incorporated by reference to the Company's  registration statement on Form
      S-1 (Registration No. 333-86503).

**    Incorporated  by reference to the  Company's  annual report on Form 10-K/A
      filed on April 30, 2001.

Item 9.  Undertakings.

(a)      The undersigned Registrant hereby undertakes:

         (1) To file, during any period in which offers or sales are being made,
         a post-effective amendment to this Registration Statement:

                        (i)  To  include  any  prospectus  required  by  Section
                  10(a)(3) of the Securities Act of 1933;

                       (ii) To  reflect  in the  prospectus  any facts or events
                  arising after the effective date of the Registration Statement
                  (or the most recent  post-effective  amendment thereof) which,
                  individually  or in the  aggregate,  represents a  fundamental
                  change  in the  information  set  forth  in  the  Registration
                  Statement.  Notwithstanding  the  foregoing,  any  increase or
                  decrease in volume of securities  offered (if the total dollar
                  value of  securities  offered  would not exceed that which was
                  registered)  and any deviation from the low or high end of the
                  estimated  maximum offering range may be reflected in the form
                  of  prospectus  filed  with the  Commission  pursuant  to Rule
                  424(b)  (Section  230.424(b)  of  this  chapter)  if,  in  the
                  aggregate,  the changes in volume and price  represent no more
                  than a 20% change in the maximum aggregate  offering price set
                  forth in the  "Calculation of  Registration  Fee" table in the
                  effective Registration Statement.

                                      II-2
(iii) To include any material  information with respect to
                  the  plan of  distribution  not  previously  disclosed  in the
                  Registration   Statement  or  any  material   change  to  such
                  information in the Registration Statement;

                  Provided, however, that paragraphs (a)(1)(i) and (a)(1)(ii) do
         not apply if the Registration Statement is on Form S-3 or Form S-8, and
         the information  required to be included in a post-effective  amendment
         by those  paragraphs  is  contained  in periodic  reports  filed by the
         Registrant  pursuant to Section 13 or Section  15(d) of the  Securities
         Exchange  Act of  1934  that  are  incorporated  by  reference  in this
         Registration Statement.

         (2) That,  for the  purpose  of  determining  any  liability  under the
         Securities Act of 1933,  each such  post-effective  amendment  shall be
         deemed to be a new  registration  statement  relating to the securities
         offered therein, and the offering of such securities at that time shall
         be deemed to be the initial bona fide offering thereof.

         (3) To remove from registration by means of a post-effective  amendment
         any of the  securities  being  registered  which  remain  unsold at the
         termination of the offering.

(b)      The  undersigned  Registrant  hereby  undertakes  that, for purposes of
         determining any liability under the Securities Act of 1933, each filing
         of the Registrant's  annual report pursuant to Section 13(a) or Section
         15(d) of the Securities  Exchange Act of 1934 that is  incorporated  by
         reference in this  Registration  Statement  shall be deemed to be a new
         registration  statement relating to the securities offered therein, and
         the offering of such  securities at that time shall be deemed to be the
         initial bona fide offering thereof.

(c)      Insofar as indemnification for liabilities arising under the Securities
         Act of 1933 may be permitted  to  directors,  officers and  controlling
         persons of the  Registrant  pursuant to the  foregoing  provisions,  or
         otherwise,  the  Registrant has been advised that in the opinion of the
         Securities  and Exchange  Commission  such  indemnification  is against
         public policy as expressed in the Act and is, therefore, unenforceable.
         In the event that a claim for indemnification  against such liabilities
         (other than the payment by the Registrant of expenses  incurred or paid
         by a director,  officer or controlling  person of the Registrant in the
         successful  defense of any action,  suit or  proceeding) is asserted by
         such  director,  officer or controlling  person in connection  with the
         securities being registered, the Registrant will, unless in the opinion
         of its counsel the matter has been  settled by  controlling  precedent,
         submit to a court of appropriate jurisdiction the question whether such
         indemnification  by it is against public policy as expressed in the Act
         and will be governed by the final adjudication of such issue.

                                      II-3
SIGNATURES

         Pursuant  to the  requirements  of the  Securities  Act  of  1933,  the
Registrant certifies that it has reasonable grounds to believe that it meets all
of the requirements for filing on Form S-8 and has duly caused this Registration
Statement  to be  signed  on its  behalf  by  the  undersigned,  thereunto  duly
authorized,  in the  City  New  York  and  State  of New York on the 24th day of
January, 2005.

                                               DELTATHREE, INC.

                                               By: /s/ Paul C. White
                                                   ----------------------------
                                                  Paul C. White
                                                  Chief Financial Officer

                                POWER OF ATTORNEY

         The   registrant  and  each  person  whose   signature   appears  below
constitutes  and  appoints  Shimmy  Zimels  and Paul C.  White  and each of them
singly, his, her or its true and lawful  attorneys-in-fact and agents, with full
power of substitution and resubstitution,  for him, her or it and in his, her or
its name,  place and stead, in any and all capacities,  to sign and file (i) any
and all amendments  (including  post-effective  amendments) to this Registration
Statement,  with  all  exhibits  thereto,  and  other  documents  in  connection
therewith,  with the  Securities  and Exchange  Commission,  granting  unto said
attorneys-in-fact  and agents,  and each of them, full power and authority to do
and perform  each and every act and thing  requisite  or necessary to be done in
and about the  premises,  as fully to all intents and purposes as he, she, or it
might or could do in  person,  hereby  ratifying  and  confirming  all that said
attorneys-in-fact  and  agents  or any of them,  or their or his  substitute  or
substitutes, may lawfully do or cause to be done by virtue hereof.

         Pursuant  to the  requirements  of the  Securities  Act of  1933,  this
Registration  Statement  has  been  signed  by  the  following  persons  in  the
capacities and on the dates indicated.
SIGNATURE                        TITLE                                DATE
---------                        -----                                ----
/s/ Shimmy Zimels                Chief Executive Officer, President   January 21, 2005
------------------------------   and Director
Shimmy Zimels
(Principal Executive Officer)

/s/ Paul C. White                Chief Financial Officer (Principal   January 21, 2005
------------------------------   Accounting and Financial Officer)
Paul C. White

/s/ Noam Bardin                  Chairman of the Board of Directors   January 21, 2005
------------------------------
Noam Bardin

/s/ Ilan Biran                                Director                January 21, 2005
------------------------------
Ilan Biran

/s/ Amir Gera                                 Director                January 21, 2005
------------------------------
Amir Gera

/s/ Noam Ben-Ozer                             Director                 January 21 2005
------------------------------
Noam Ben-Ozer

/s/ Joshua Maor                               Director                January 21, 2005
------------------------------
Joshua Maor

                                              Director                January 21, 2005
------------------------------
Lior Samuelson
II-4
DELTATHREE, INC.

                          INDEX TO EXHIBITS FILED WITH
                         FORM S-8 REGISTRATION STATEMENT

EXHIBIT
NUMBER      DESCRIPTION
-------     -----------
4.1*        Restated Certificate of Incorporation of deltathree, Inc.
4.2**       Amendment to Restated  Certificate of  Incorporation  of deltathree,
            Inc.
4.3*        Amended and Restated By-laws of deltathree, Inc.
4.4*        Specimen Certificate of Class A Common Stock.
4.5*        deltathree, Inc. 1999 Stock Incentive Plan
4.6*        deltathree, Inc. 1999 Directors Compensation Plan
4.7         deltathree, Inc. 2004 Stock Incentive Plan
4.8         deltathree, Inc. 2004 Non-Employee Director Stock Option Plan
5.1         Opinion of Mintz,  Levin,  Cohn,  Ferris,  Glovsky  and Popeo,  P.C.
            regarding legality of the shares of common stock being registered
23.1        Consent of Brightman Almagor & Co.
23.2        Consent of Mintz,  Levin,  Cohn,  Ferris,  Glovsky  and Popeo,  P.C.
            (included in Exhibit 5.1 to this Registration Statement on Form S-8)
24.1        Power of Attorney (included on signature page)

----------
*    Incorporated by reference to the Company's  registration  statement on Form
     S-1 (Registration No. 333-86503).

**   Incorporated  by reference to the  Company's  annual  report on Form 10-K/A
     filed on April 30, 2001.

                                      II-6