IBASIS INC, S-1/A, 2000-03-08

IBASIS INC
S-1/A, 2000-03-08
BUSINESS SERVICES, NEC

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AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON MARCH 8, 2000

REGISTRATION NO. 333-96535
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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AMENDMENT NO. 2

FORM S-1

REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
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IBASIS, INC.

(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
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<S> <C> <C>
DELAWARE 4813 04-3332534
(STATE OR OTHER JURISDICTION OF (PRIMARY STANDARD INDUSTRIAL (I.R.S. EMPLOYER
INCORPORATION OR ORGANIZATION) CLASSIFICATION CODE NUMBERS) IDENTIFICATION NO.)
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20 SECOND AVENUE
BURLINGTON, MASSACHUSETTS 01803
(781) 505-7500
(ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE, OF
REGISTRANT'S PRINCIPAL EXECUTIVE OFFICES)
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OFER GNEEZY
PRESIDENT AND CHIEF EXECUTIVE OFFICER
IBASIS, INC.
20 SECOND AVENUE
BURLINGTON, MASSACHUSETTS 01803
(781) 505-7500
(NAME, ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE,
OF AGENT FOR SERVICE)
--------------------------

COPIES TO:

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<S> <C>
DAVID L. ENGEL, ESQ. J. VAUGHAN CURTIS, ESQ.
JOHAN V. BRIGHAM, ESQ. ALSTON & BIRD LLP
BINGHAM DANA LLP ONE ATLANTIC CENTER
150 FEDERAL STREET 1201 WEST PEACHTREE STREET
BOSTON, MASSACHUSETTS 02110 ATLANTA, GEORGIA 30309
(617) 951-8000 (404) 881-7000
FACSIMILE NO. (617) 951-8736 FACSIMILE NO. (404) 881-7777
</TABLE>

APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: As soon as
practicable after the effective date of this Registration Statement.

If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933 check the following box. / /

If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. / /_____________________

If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier registration statement for the same
offering. / /___________________________________________________________________

If this Form is a post-effective amendment filed pursuant to Rule 462(d)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier registration statement for the same
offering. / /___________________________________________________________________

If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. / /

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THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF
THE SECURITIES ACT OF 1933, AS AMENDED, OR UNTIL THE REGISTRATION STATEMENT
SHALL BECOME EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID
SECTION 8(A), MAY DETERMINE.

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THE INFORMATION CONTAINED IN THIS PROSPECTUS IS NOT COMPLETE AND MAY BE CHANGED.
WE MAY NOT SELL THESE SECURITIES UNTIL THE REGISTRATION STATEMENT FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION IS EFFECTIVE. THIS PROSPECTUS IS NOT AN OFFER
TO SELL SECURITIES, AND WE ARE NOT SOLICITING OFFERS TO BUY THESE SECURITIES IN
ANY STATE WHERE THE OFFER OR SALE IS NOT PERMITTED.
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SUBJECT TO COMPLETION, DATED MARCH 8, 2000

[LOGO]

3,500,000 SHARES

COMMON STOCK

iBasis, Inc. is offering 2,030,085 shares of its common stock and selling
stockholders are offering 1,469,915 shares of common stock. Our common stock is
traded on the Nasdaq National Market under the symbol "IBAS." The last reported
sale price of our common stock on the Nasdaq National Market on March 6, 2000
was $79.375 per share.

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INVESTING IN OUR COMMON STOCK INVOLVES RISKS.
SEE "RISK FACTORS" BEGINNING ON PAGE 6.

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<CAPTION>
PER SHARE TOTAL
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<S> <C> <C>
Public Offering Price....................................... $ $
Underwriting Discounts and Commissions...................... $ $
Proceeds to iBasis ......................................... $ $
Proceeds to the Selling Stockholders........................ $ $
</TABLE>

THE SECURITIES AND EXCHANGE COMMISSION AND STATE SECURITIES REGULATORS HAVE
NOT APPROVED OR DISAPPROVED THESE SECURITIES, OR DETERMINED IF THIS PROSPECTUS
IS TRUTHFUL OR COMPLETE. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL
OFFENSE.

Certain of the selling stockholders and iBasis have granted the underwriters
a 30-day option to purchase up to an additional 525,000 shares of common stock
in the aggregate to cover over-allotments. FleetBoston Robertson Stephens Inc.
expects to deliver the shares of common stock to purchasers on , 2000.

Concurrently with this offering, we are offering $150 million aggregate
principal amount of % Convertible Subordinated Notes due 2005, under a
separate prospectus. Neither completion of this common stock offering nor
completion of the concurrent note offering is contingent upon completion of the
other.

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

ROBERTSON STEPHENS

CHASE H&Q
U.S. BANCORP PIPER JAFFRAY
DAIN RAUSCHER WESSELS

THE DATE OF THIS PROSPECTUS IS , 2000.
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[Outside Front Gate]

(Frames with stylized "iBasis" logo, text and graphics. The text summarizes
the Company's business as a provider of high quality International
Internet-based communication services of telecommunications carriers.)

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[Inside Front Gate]

(Under the heading "iTrac-Interactive Traffic Revenue Analysis Center" appear
text, bar-graphs and pictures of iBasis's Global Network Operations Center
facilities. The text indicates that through iTrac and the Global Network
Operations Center iBasis is able to manage their networks and deliver
consistently high quality network services.)

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[Inside Front Cover]

(Two frames with images and text. The first frame, entitled "The iBasis
Solution," contains a diagram depicting how the Internet may be used to
provide carriers Internet-based service opportunities as calls are routed
through carriers' networks and the Internet to end users. The second frame,
entitled "the iBasis Network," contains a world map, marked to show the
location of Internet branch offices, Internet central offices and locations
where iBasis has peering arrangements.)
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YOU SHOULD RELY ONLY ON THE INFORMATION CONTAINED IN THIS PROSPECTUS. WE
HAVE NOT AUTHORIZED ANYONE TO PROVIDE YOU WITH INFORMATION DIFFERENT FROM THAT
CONTAINED IN THIS PROSPECTUS. WE ARE OFFERING TO SELL, AND SEEKING OFFERS TO
BUY, SHARES OF COMMON STOCK ONLY IN JURISDICTIONS WHERE OFFERS AND SALES ARE
PERMITTED. THE INFORMATION CONTAINED IN THIS PROSPECTUS IS ACCURATE ONLY AS OF
THE DATE OF THIS PROSPECTUS, REGARDLESS OF THE TIME OF DELIVERY OF THIS
PROSPECTUS OR OF ANY SALE OF OUR COMMON STOCK.

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TABLE OF CONTENTS

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PAGE
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Summary..................................................... 2
Risk Factors................................................ 6
Forward-Looking Statements.................................. 17
Use of Proceeds............................................. 18
Dividend Policy............................................. 18
Price Range of Common Stock................................. 18
Concurrent Offering of Convertible Notes.................... 19
Capitalization.............................................. 19
Dilution.................................................... 20
Selected Consolidated Financial Data........................ 21
Management's Discussion and Analysis of Financial Condition
and Results of Operations................................. 23
Business.................................................... 34
Management.................................................. 48
Certain Transactions........................................ 57
Principal and Selling Stockholders.......................... 60
Description of Capital Stock................................ 64
Shares Eligible for Future Sale............................. 67
Underwriting................................................ 69
Legal Matters............................................... 71
Experts..................................................... 71
Where You Can Find More Information......................... 71
Index to Consolidated Financial Statements.................. F-1
</TABLE>

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IBASIS-SM- and the IBASIS logos are trademarks and service marks of iBasis.
VIP Calling-Registered Trademark- is a registered trademark of iBasis, and
Assured Quality Routing-SM- and Broadbandit-SM- are service marks of iBasis.
This prospectus contains other trade names, trademarks and service marks of
iBasis and of other companies.

1
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SUMMARY

THE FOLLOWING SUMMARY HIGHLIGHTS INFORMATION CONTAINED ELSEWHERE IN THIS
PROSPECTUS. YOU SHOULD READ THE ENTIRE PROSPECTUS, INCLUDING "RISK FACTORS" AND
OUR CONSOLIDATED FINANCIAL STATEMENTS AND RELATED NOTES APPEARING ELSEWHERE IN
THIS PROSPECTUS, BEFORE DECIDING TO INVEST IN OUR COMMON STOCK.

IBASIS

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Our Business............ We are a leading provider of high quality Internet telephony
services that enable telecommunications carriers and other
communications service providers to offer international
voice, fax and other value-added applications over the
Internet. By outsourcing international communications
services to us, our customers are able to lower costs,
generate new revenue and extend their business into
Internet-based services quickly, while maintaining service
quality comparable to that of traditional voice networks.
Substantially all of our revenue to date has come from fees
we charge our customers to carry voice and fax traffic over
the iBasis Network, our international telecommunications
network. We have not been profitable since inception, and
there can be no assurance that we will ever be profitable.
We provide telecommunications carriers and other
communications service providers with access to the iBasis
Network through "Internet branch offices" strategically
located in major cities in North America, Asia, Latin
America, Europe and Africa. Internet branch offices are
composed of gateways, which digitize, compress and packetize
voice and fax transmissions at both the originating and
terminating points and enable calls to be routed via the
Internet. Our services provide the following key benefits to
our customers:
- HIGH QUALITY VOICE AND FAX TRANSMISSIONS. Our proprietary
technology, which includes our global network operations
center and proprietary Assured Quality Routing software,
enables us to effectively monitor and route voice and fax
traffic in ways that ensure consistently high quality.
- INTERNATIONAL HIGH-CAPACITY NETWORK. Our network consists
of more than 3,200 lines deployed internationally through
our relationships with communications service providers
around the world. During our fourth quarter ended
December 31, 1999, we transported approximately 63.8
million minutes of traffic over the iBasis Network.
- COST-EFFECTIVE SOLUTIONS. We use the Internet's highly
efficient technology to deliver international voice and fax
traffic and other value-added applications at costs lower
than those of traditional networks.
- FLEXIBLE BACK OFFICE SOLUTION THAT FACILITATES NEW
SERVICES AND EFFECTIVE BUSINESS MANAGEMENT. Our back office
systems allow us to provide timely statistics and
integrated billing that enable communications service
providers to offer new services more readily and manage
their business more efficiently.
- EASE OF DEPLOYMENT AND TIME TO MARKET. Using our services
requires no special equipment or technical expertise on the
part of the carrier. Our customers can complete calls to
any country on our network without having to establish
separate contracts with local service providers in each
country.
- OPEN, SCALEABLE ARCHITECTURE DESIGNED FOR NEW
SERVICES. Our network architecture is scaleable, which
allows us to increase capacity in efficient increments,
and is based on industry standards, which allows for fast
and efficient deployment of call completion and other
value-added services.
</TABLE>

2
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Our Market.............. According to International Data Corporation, a market
research firm, the market for worldwide Internet telephony
is projected to grow from $0.5 billion in 1999, to $18.7
billion in 2004, approximately half of which would be
generated by new services, including voice-enabled
e-commerce and other enhanced services such as unified
communications. Wholesale worldwide Internet telephony,
including wholesale international Internet telephony, is
expected to grow to $2.0 billion by the same date. In
addition, International Data Corporation projects that
international Internet telephony will comprise $17.3 billion
of the total $18.7 billion market in 2004. Our Internet
telephony services enable telecommunications carriers and
other communications service providers to utilize the
technologies and efficiencies of the Internet to cut costs
and offer new services in order to add and retain customers.
Our Customers........... We provide services to both established and emerging
international telecommunications carriers and communications
service providers. As of December 31, 1999, our customers
included many of the highest volume U.S.-based international
long distance telecommunications carriers.
Overseas we have developed relationships with established
national carriers and emerging service providers that have
the local market expertise and relationships to build strong
businesses. These carriers and other service providers
terminate calls for us in their local jurisdictions for a
fee, and in some cases, send calls that originate in those
locations over the iBasis Network to their final
destination.
Our Strategy............ Our goal is to be the leading provider of high quality
Internet-based communications services by continuing to
build on our Internet telephony expertise, by targeting
high-volume communications service providers, by providing
high quality services, by focusing on the international
market and by expanding our geographic presence. We also
intend to introduce new services that communications service
providers can offer over our network or their own networks,
which we believe will increase our customer base.
</TABLE>

iBasis, Inc. is a Delaware corporation organized in 1996. We changed our
name to iBasis, Inc. from VIP Calling, Inc. in July 1999. Our principal
executive offices are located at 20 Second Avenue in Burlington, Massachusetts
and our telephone number is (781) 505-7500. Our website is located at
www.ibasis.net. Information contained on our website should not be considered a
part of this prospectus.

RECENT DEVELOPMENTS

Since our initial public offering in November 1999, we have announced
several developments:

- On December 6, 1999, we announced that we would begin offering Internet
telephony hosting services on the iBasis Network. These services will
provide customers with access to a turnkey solution that enables them to
quickly begin offering voice, fax, pre-paid calling and other value-added
Internet telephony services in our international markets with minimal
capital investment.

- On January 19, 2000, we announced that we will be offering service level
agreements to our international customers, which guarantee customers
sending calls over our network call completion rates equivalent to or
better than those provided by alternative networks, including the
public-switched telephone network.

- On February 3, 2000, we announced our intention to deploy Cisco Systems'
uOne-TM- application on the iBasis Network, thereby allowing
communications service providers to provide unified communications
services to their end-user customers over our network.

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THE OFFERING

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COMMON STOCK OFFERED BY IBASIS.............................. 2,030,085 shares
COMMON STOCK OFFERED BY SELLING STOCKHOLDERS................ 1,469,915 shares
COMMON STOCK TO BE OUTSTANDING AFTER THIS OFFERING.......... 33,672,813 shares (1)
USE OF PROCEEDS............................................. For general corporate and working
capital purposes. See "Use of
Proceeds."
NASDAQ NATIONAL MARKET SYMBOL............................... IBAS
</TABLE>

CONCURRENT OFFERING OF CONVERTIBLE NOTES

We are offering in a separate and concurrent public offering $150 million
aggregate principal amount, $172.5 million aggregate principal amount if the
underwriters' over-allotment option is exercised in full, of % Convertible
Subordinated Notes due 2005. Initially, shares of common stock will be
issuable upon conversion of the notes, assuming no exercise of the
over-allotment option for the notes by the underwriters. Neither completion of
this common stock offering nor completion of the concurrent note offering is
contingent upon completion of the other.

SUMMARY CONSOLIDATED FINANCIAL DATA

Listed below is our consolidated statements of operations data for the years
ended December 31, 1997, 1998 and 1999. You will also find our consolidated
balance sheet data as of December 31, 1999. You should read this information in
conjunction with our consolidated financial statements and related notes
appearing elsewhere in this prospectus. See "Management's Discussion and
Analysis of Financial Condition and Results of Operations."

"Pro Forma" data reflects the sale, as of December 31, 1999, of the
2,030,085 shares of common stock offered by iBasis in this offering at an
assumed public offering price of $79.375 per share and after deducting the
estimated underwriting discounts and commissions and our estimated offering
expenses. The "Pro Forma" data does not reflect the sale of the convertible
notes in the concurrent note offering.

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<CAPTION>
YEARS ENDED
DECEMBER 31,
---------------------------------
1997 1998 1999
--------- --------- ---------
(IN THOUSANDS, EXCEPT PER SHARE
DATA)
<S> <C> <C> <C>
STATEMENTS OF OPERATIONS DATA:
Net revenue................................................. $ 127 $ 1,978 $ 19,417
Total operating expenses.................................... 1,074 7,824 41,049
Loss from operations........................................ (947) (5,846) (21,632)
Net loss.................................................... (926) (5,727) (21,087)
Net loss applicable to common stockholders.................. (926) (5,946) (22,107)
Basic and diluted net loss per share........................ $ (0.15) $ (0.99) $ (2.29)
Basic and diluted weighted average common shares
outstanding (2)........................................... 6,006 6,023 9,655
Pro forma basic and diluted net loss
per share (2) (3)......................................... $ (0.44) $ (0.89)
Pro forma basic and diluted weighted average common shares
outstanding (2) (3)....................................... 13,068 23,681
</TABLE>

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DECEMBER 31, 1999
--------------------
ACTUAL PRO FORMA
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(IN THOUSANDS)
<S> <C> <C>
BALANCE SHEET DATA:
Cash and cash equivalents................................... $123,666 $276,953
Working capital............................................. 115,154 268,441
Total assets................................................ 153,473 306,760
Capital lease obligations, net of current portion........... 11,689 11,689
Total stockholders' equity.................................. 126,904 280,190
</TABLE>

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(1) This number does not include:

- 58,125 shares of common stock issuable to our warrant holders for $1.00
per share under warrants outstanding at December 31, 1999; and

- 2,947,725 shares of common stock issuable upon the exercise of stock
options outstanding at December 31, 1999, at a weighted average exercise
price of $4.37 per share.

(2) Computed on the basis described in Note 1(d) of the notes to our
consolidated financial statements appearing elsewhere in this prospectus.

(3) Adjusted to give effect to the conversion of all shares of preferred stock,
Class A and Class B common stock from the date of original issuance. Also
includes the 2,030,085 additional shares outstanding upon the completion of
this offering.

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RISK FACTORS

ANY INVESTMENT IN OUR SHARES OF COMMON STOCK INVOLVES A HIGH DEGREE OF RISK.
YOU SHOULD CAREFULLY CONSIDER THE RISKS DESCRIBED BELOW, WHICH WE BELIEVE ARE
ALL THE MATERIAL RISKS TO OUR BUSINESS, TOGETHER WITH THE INFORMATION CONTAINED
ELSEWHERE IN THE PROSPECTUS, BEFORE YOU MAKE A DECISION ON INVESTING IN OUR
COMPANY.

RISKS RELATED TO OUR OPERATIONS

WE HAVE A LIMITED OPERATING HISTORY UPON WHICH TO BASE YOUR INVESTMENT DECISION,
AND YOU MAY INACCURATELY ASSESS OUR PROSPECTS FOR SUCCESS.

We were incorporated in August 1996 and first began to offer commercial
services in May 1997. Due to our limited operating history, it is difficult for
us to predict future results of operations. Moreover, we cannot be sure that we
have accurately identified all of the risks to our business, especially because
we use new, and in many cases, unproven technologies and provide new services.
As a result, our past results and rates of growth may not be a meaningful
indicator of our future results of operations. Also, your assessment of the
prospects for our success may prove inaccurate.

WE HAVE A HISTORY OF OPERATING LOSSES, ANTICIPATE LOSSES FOR THE FORESEEABLE
FUTURE AND MAY NEVER BECOME PROFITABLE.

We incurred net losses of $21.1 million during fiscal 1999. As of
December 31, 1999, we had an accumulated deficit of $27.8 million. We expect to
continue incurring operating losses and negative cash flows as we incur
significant operating expenses and make capital investments in our business. Our
future profitability will depend on our being able to deliver calls over our
network at a cost to us that is less than what we are able to charge for our
calls. Our costs to deliver calls are dependent on a number of factors,
including the countries to which we direct calls and whether we are able to use
the Internet, rather than another component of our network or more expensive
back-up networks, to deliver calls. The prices that we are able to charge to
deliver calls over our network vary, based primarily on the prices currently
prevailing in the international long distance carrier market to specific
countries. While we are currently able to terminate a substantial number of the
calls carried over our network profitably on an operating basis, we have been
unable to operate our entire network profitably on an operating basis for
sustained periods of time. We may not ever generate sufficient revenues, or
reduce costs, to permit us to achieve profitability. Even if we do become
profitable, we may not sustain or increase profitability on a quarterly or
annual basis in the future. See "Selected Consolidated Financial Data" and
"Management's Discussion and Analysis of Financial Condition and Results of
Operations" for detailed information on our history of losses and anticipation
of continued losses.

FLUCTUATIONS IN OUR QUARTERLY RESULTS OF OPERATIONS THAT RESULT FROM VARIOUS
FACTORS INHERENT IN OUR BUSINESS MAY CAUSE THE MARKET PRICE OF OUR COMMON STOCK
TO FALL.

Our revenue and results of operations have fluctuated and may continue to
fluctuate significantly from quarter to quarter in the future due to a number of
factors, many of which are not in our control, including, among others:

- the amount of traffic we are able to sell to our customers, and their
decisions on whether to route traffic over our network;

- pricing pressure in the international long distance market;

- the percentage of traffic that we are able to carry over the Internet, or
over our dedicated international private circuit lines, rather than over
the more costly traditional public-switched telephone network;

- loss of arbitrage opportunities resulting from declines in international
settlement rates or tariffs;

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- our ability to negotiate changes in the termination fees charged by our
local providers when our margins deteriorate;

- capital expenditures required to expand or upgrade our network;

- changes in call volume among the countries to which we complete calls;

- technical difficulties or failures of our network systems or third-party
delays in expansion or provisioning system problems;

- our ability to offer value-added services that are appealing to the
market; and

- currency fluctuations in countries where we operate.

Because of these factors, you should not rely on quarter-to-quarter
comparisons of our results of operations as an indication of our future
performance. It is possible that, in future periods, our results of operations
will be significantly lower than the estimates of public market analysts and
investors. Such a discrepancy could cause the price of our common stock to
decline significantly. See "Management's Discussion and Analysis of Financial
Condition and Results of Operations."

WE MAY NEVER GENERATE SUFFICIENT REVENUE TO ATTAIN PROFITABILITY IF
TELECOMMUNICATIONS CARRIERS AND OTHER COMMUNICATIONS SERVICE PROVIDERS ARE
RELUCTANT TO USE OUR SERVICES OR DO NOT USE OUR SERVICES, INCLUDING ANY NEW
SERVICES, IN SUFFICIENT VOLUME.

If the market for Internet telephony and new services does not develop as we
expect, or develops more slowly than expected, our business, financial condition
and results of operations will be materially and adversely affected.

Our customers may be reluctant to use our services for a number of reasons,
including:

- perceptions that the quality of voice transmitted over the Internet is
low;

- perceptions that Internet telephony is unreliable; and

- our inability to deliver traffic over the Internet with significant cost
advantages.

The growth of our business depends on carriers and other communications
service providers generating an increased volume of international voice and fax
traffic and selecting our network to carry at least some of this traffic. If the
volume of international voice and fax traffic fails to increase, or decreases,
and these third-parties do not employ our network, our ability to become
profitable will be materially and adversely affected.

On February 3, 2000, we announced our intention to deploy Cisco Systems'
uOne-TM- application on the iBasis Network, thereby allowing communications
service providers to provide unified communications services to their end-user
customers over our network. We cannot assure you that communications service
providers and their end-user customers will be receptive to, and subscribe for,
any unified communications services we are able to offer, or any other
additional services we elect to deploy on our network. Any perceived problems
with the reliability or functionality of any new services that we offer could
discourage communications service providers from offering these services to
their customers. In addition, the development of new services, such as unified
communications, may require substantial capital expenditures to be made well in
advance of generating any revenue from such services or demonstrating any market
acceptance of such services. If carriers and communications service providers do
not employ our network to offer any new services to their customers, or if their
customers do not subscribe for the services when offered, our results of
operations will be materially adversely affected.

We cannot assure you that end-users will continue to purchase services from
our customers or that our customers will maintain a demand for our services.

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WE MAY FACE QUALITY AND CAPACITY PROBLEMS OVER OUR NETWORK UPON FAILURES BY
THIRD PARTIES.

VENDORS. We rely upon third-party vendors to provide us with the equipment
and software that we use to transfer and translate calls from traditional voice
networks to the Internet, and vice versa. For example, we purchase substantially
all of our Internet telephony equipment from Cisco Systems. We cannot assure you
that we will be able to continue purchasing such equipment and software from
Cisco on acceptable terms, if at all. If we become unable to purchase from Cisco
the equipment needed to maintain and expand our network as currently configured,
we may not be able to maintain or expand our network to accommodate growth and
we may consequently be unable to grow revenues sufficiently to become
profitable.

PARTIES THAT MAINTAIN PHONE AND DATA LINES. Our business model depends on
the availability of the Internet to transmit voice and fax calls, and to provide
other value-added services. Third parties maintain, and in many cases own, the
traditional voice networks as well as data networks and other components that
comprise the Internet. Some of these third parties are national telephone
companies. They may increase their charges for using these lines at any time and
decrease our profitability. They may also fail to properly maintain their lines
and disrupt our ability to provide service to our customers. Any failure by
these third parties to maintain these lines and networks that leads to a
material disruption of our ability to complete calls over the Internet could
discourage our customers from using our network, which could have the effect of
delaying or preventing our ability to become profitable.

LOCAL COMMUNICATIONS SERVICE PROVIDERS. We maintain relationships with
local communications service providers in many countries, some of whom own the
equipment that translates voice to data in that country. We rely upon these
third parties to both provide lines over which we complete calls and to increase
their capacity when necessary as the volume of our traffic increases. There is a
risk that these third parties may be slow, or fail, to provide lines, which
would affect our ability to complete calls to those destinations. We cannot
assure you that we will be able to continue our relationships with these local
service providers on acceptable terms, if at all. Because we rely upon entering
into relationships with local service providers to expand into additional
countries, we cannot assure you that we will be able to increase the number of
countries to which we provide service. We also may not be able to enter into
relationships with enough overseas local service providers to handle increases
in the volume of calls that we receive from our customers. Finally, any
technical difficulties that these providers suffer would affect our ability to
transmit calls to the countries that those providers help serve.

STRATEGIC RELATIONSHIPS. We depend in part on our strategic relationships
to expand our distribution channels and develop and market our services. In
particular, we depend in large part on our joint marketing and product
development efforts with Cisco Systems to achieve market acceptance and brand
recognition in certain markets. Cisco or other strategic relationship partners
may choose not to renew existing arrangements on commercially acceptable terms,
if at all. In general, if we lose this key strategic relationship, or if we fail
to develop new relationships in the future, our ability to expand the scope and
capacity of our network, and to maintain state-of-the-art technology, would be
materially adversely affected.

WE MAY NOT BE ABLE TO SUCCEED IN THE INTENSELY COMPETITIVE MARKET FOR OUR
SERVICES.

The market for Internet voice, fax and other value-added services is
extremely competitive and will likely become more competitive. Internet protocol
and Internet telephony service providers, such as GRIC Communications and ITXC
Corp., route traffic to destinations worldwide and compete directly with us.
Also, Internet telephony service providers, such as Net2Phone, that presently
focus on retail customers may in the future enter our market and compete with
us. In addition, major telecommunications carriers, such as AT&T, Deutsche
Telekom, MCI WorldCom and Qwest

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Communications, have all entered or announced plans to enter the Internet
telephony market. Many of these companies are larger than we are and have
substantially greater managerial and financial resources than we do. Intense
competition in our markets can be expected to continue to put downward pressure
on prices and adversely affect our profitability. We cannot assure you that we
will be able to compete successfully against our competitors and we may lose
customers or fail to grow our business as a result of this competition.

WE ARE SUBJECT TO DOWNWARD PRICING PRESSURES AND A CONTINUING NEED TO
RENEGOTIATE OVERSEAS RATES WHICH COULD DELAY OR PREVENT OUR PROFITABILITY.

As a result of numerous factors, including increased competition and global
deregulation of telecommunications services, prices for international long
distance calls have been decreasing. This downward trend of prices to end-users
has caused us to lower the prices we charge communications service providers for
call completion on our network. If this downward pricing pressure continues, we
cannot assure you that we will be able to offer Internet telephony services at
costs lower than, or competitive with, the traditional voice network services
with which we compete. Moreover, in order for us to lower our prices, we have to
renegotiate rates with our overseas local service providers who complete calls
for us. We may not be able to renegotiate these terms favorably enough, or fast
enough, to allow us to continue to offer services in a particular country. The
continued downward pressure on prices and our failure to renegotiate favorable
terms in a particular country would have a material adverse effect on our
ability to operate our network and business profitably. See "Business--Industry
Overview."

A VARIETY OF RISKS ASSOCIATED WITH OUR INTERNATIONAL OPERATIONS COULD MATERIALLY
ADVERSELY AFFECT OUR BUSINESS.

Because we provide substantially all of our services internationally, we are
subject to additional risks related to operating in foreign countries. These
risks include:

- unexpected changes in tariffs, trade barriers and regulatory requirements
relating to Internet access or Internet telephony;

- economic weakness, including inflation, or political instability in
particular foreign economies and markets;

- difficulty in collecting accounts receivable;

- foreign taxes; and

- foreign currency fluctuations, which could result in increased operating
expenses and reduced revenues.

These and other risks associated with our international operations may
materially adversely affect our ability to attain or maintain profitable
operations.

During the fiscal year ended December 31, 1999, 49% of our revenue was
generated by delivering calls to Asian countries, 18% of our revenue was
generated by delivering calls to Middle Eastern countries, and 22% of our
revenue was generated by delivering calls to Latin America. Many countries in
these geographic regions have experienced political and economic instability
over the past decade. Repeated political or economic instability in countries to
which we deliver substantial volumes of traffic could lead to difficulties in
completing calls through our regional service providers or decreased call volume
to such countries.

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IF WE ARE NOT ABLE TO KEEP UP WITH RAPID TECHNOLOGICAL CHANGE IN A
COST-EFFECTIVE WAY, THE RELATIVE QUALITY OF OUR SERVICES COULD SUFFER.

The technology upon which our services depend is changing rapidly.
Significant technological changes could render the equipment which we use
obsolete, and competitors may begin to offer new services that we are unable to
offer. We must adapt to our rapidly changing market by continually improving the
responsiveness, reliability, services and features of our network and by
developing new features and applications to meet customer needs. If we are
unable to successfully respond to these developments or do not respond in a
cost-effective way, we may not be able to offer competitive services.

WE MAY NOT BE ABLE TO EXPAND AND UPGRADE OUR NETWORK ADEQUATELY TO ACCOMMODATE
ANY FUTURE GROWTH.

Our business requires that we handle a large number of international calls
simultaneously. As we expand our operations, we expect to handle significantly
more calls. We will need to expand and upgrade our hardware and software to
accommodate such increased traffic. If we do not expand and upgrade quickly
enough, we will not have sufficient capacity to handle the traffic and our
operating performance would suffer. Consequently, we could develop a negative
reputation with our customers and lose business.

IF WE FAIL TO MANAGE OUR GROWTH, WE COULD LOSE CUSTOMERS.

We have grown rapidly to date and expect to continue to grow rapidly. In
order to increase the number of our customers and the size of our operations, we
will need to improve our administrative, accounting, operating systems and
controls. We may need to redesign several internal systems. Our attention to
these matters may distract us from other aspects of our business. Moreover,
failure to implement new systems and controls may hamper our ability to provide
services to customers and may impair the quality of our services which could
result in the loss of customers.

OUR REVENUE WOULD DECLINE SIGNIFICANTLY IF WE LOSE ONE OR MORE OF OUR MOST
SIGNIFICANT CUSTOMERS.

We generate much of our revenue from a limited number of customers. During
the fiscal year ended December 31, 1999, three customers, World Access Telecom
Group, MCI WorldCom and WorldxChange Communications, accounted for approximately
29% of our net revenue. Customers may discontinue their use of our services at
any time, and without notice. Therefore, in any given quarter, we would lose a
significant amount of revenue if we lost one or more major customers.

WE DEPEND ON OUR KEY PERSONNEL AND MAY HAVE DIFFICULTY ATTRACTING AND RETAINING
THE SKILLED EMPLOYEES WE NEED TO EXECUTE OUR GROWTH PLANS.

WE DEPEND HEAVILY ON OUR KEY MANAGEMENT. Our future success will depend, in
large part, on the continued service of our key management and technical
personnel, including Ofer Gneezy, our President and Chief Executive Officer,
Gordon VanderBrug, our Executive Vice President, Michael Hughes, our Chief
Financial Officer, John Henson, our Vice President, Engineering & Operations and
Charles Giambalvo, our Senior Vice President of Worldwide Sales. If any of these
individuals is unable or unwilling to continue in their present positions, our
business, financial condition and results of operations would suffer. We do not
carry key person life insurance on our personnel. While each of the individuals
named above has entered into an employment agreement with us, these agreements
do not ensure their continued employment with us.

WE WILL NEED TO ATTRACT SKILLED PERSONNEL TO EXECUTE OUR GROWTH PLANS. Our
future success will depend, in large part, on our ability to attract, retain and
motivate highly skilled employees, particularly engineering and technical
personnel. Competition for such employees in our industry is intense. We have
from time to time in the past experienced, and we expect to continue to
experience in the future,

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difficulty in hiring and retaining employees with appropriate qualifications. We
may not be able to retain our employees or attract, assimilate or retain other
highly qualified employees in the future. If we do not succeed in attracting and
retaining skilled personnel, we may not be able to grow at a sufficient rate to
attain profitable operations.

A FAILURE TO OBTAIN NECESSARY ADDITIONAL CAPITAL IN THE FUTURE ON ACCEPTABLE
TERMS COULD PREVENT US FROM EXECUTING OUR BUSINESS PLAN.

We expect to need additional capital in the future to fund our operations,
finance investments in equipment and corporate infrastructure, expand our
network, increase the range of services we offer and respond to competitive
pressures and perceived opportunities. Cash flow from operations, cash on hand
and funds from this offering may not be sufficient to cover our operating
expenses and capital investment needs. We cannot assure you that additional
financing will be available on terms acceptable to us, if at all. A failure to
obtain additional funding could prevent us from making expenditures that are
needed to allow us to grow or maintain our operations.

If we raise additional funds by selling equity securities, the relative
equity ownership of our existing investors could be diluted or the new investors
could obtain terms more favorable than previous investors. If we raise
additional funds through debt financing, we could incur significant borrowing
costs. The failure to obtain additional financing when required could result in
us being unable to grow as required to attain profitable operations.

IF WE ARE UNABLE TO PROTECT OUR INTELLECTUAL PROPERTY, OUR COMPETITIVE POSITION
WOULD BE ADVERSELY AFFECTED.

We rely on trademark and copyright law, trade secret protection and
confidentiality and/or license agreements with our employees, customers,
partners and others to protect our intellectual property. Despite our
precautions, however, unauthorized third parties may copy our services or
reverse engineer or obtain and use information that we regard as proprietary.
End-user license provisions protecting against unauthorized use, copying,
transfer and disclosure of any licensed program may be unenforceable under the
laws of certain jurisdictions and foreign countries. While we do not have any
patents pending, we may seek to patent certain software or equipment in the
future. We do not know if any of our future patent applications will be issued
with the scope of the claims we seek, if at all. In addition, the laws of some
foreign countries do not protect proprietary rights to the same extent as do the
laws of the United States. Our means of protecting our proprietary rights in the
United States or abroad may not be adequate and third parties may infringe or
misappropriate our copyrights, trademarks and similar proprietary rights. If we
fail to protect our intellectual property and proprietary rights, our business,
financial condition and results of operations would suffer.

We believe that we do not infringe upon the proprietary rights of any third
party, and no third party has asserted a patent infringement claim against us.
It is possible, however, that such a claim might be asserted successfully
against us in the future. Our ability to provide our services depends on our
freedom to operate. That is, we must ensure that we do not infringe upon the
proprietary rights of others or have licensed all such rights. We have not
requested or obtained an opinion from counsel as to whether our services
infringe upon the intellectual property rights of any third parties. A party
making an infringement claim could secure a substantial monetary award or obtain
injunctive relief which could effectively block our ability to provide services
in the United States or abroad.

If any of these risks materialize, we could be forced to suspend operations,
to pay significant amounts to defend our rights, and a substantial amount of the
attention of our management may be diverted from our ongoing business, each of
which could materially adversely affect our ability to attain or maintain
profitability.

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We rely on a variety of technology, primarily software, that we license from
third parties. Continued use of this technology by us may require that we
purchase new or additional licenses from third parties. There can be no
assurances that we can obtain those third-party licenses needed for our business
or that the third party technology licenses that we do have will continue to be
available to us on commercially reasonable terms or at all. The loss or
inability to maintain or obtain upgrades to any of these technology licenses
could result in delays or breakdowns in our ability to continue developing and
providing our services or to enhance and upgrade our services.

WE MAY UNDERTAKE STRATEGIC ACQUISITIONS IN THE FUTURE AND ANY DIFFICULTIES FROM
INTEGRATING SUCH ACQUISITIONS COULD DAMAGE OUR ABILITY TO ATTAIN OR MAINTAIN
PROFITABILITY.

We may acquire businesses and technologies that complement or augment our
existing businesses, services and technologies. Integrating any newly acquired
businesses or technologies could be expensive and time-consuming. We may not be
able to integrate any acquired business successfully. Moreover, we may need to
raise additional funds through public or private debt or equity financing to
acquire any businesses, which may result in dilution for stockholders and the
incurrence of indebtedness. We may not be able to operate acquired businesses
profitably or otherwise implement our growth strategy successfully.

YEAR 2000 PROBLEMS COULD RESULT IN DISRUPTIONS OF OUR BUSINESS.

Many currently installed computer systems and software products only accept
two digits to identify the year in any date. Therefore, the year 2000 will
appear as "00," which the system might consider to be the year 1900 rather than
the year 2000. While we have not experienced disruptions as a result of year
2000 issues to date, as yet unidentified problems could arise and result in
system failures, delays or miscalculations causing disruptions to our
operations.

The failure of our network or of any systems maintained by third parties to
be year 2000 compliant could:

- cause a complete disruption of our Internet telephony services to any or
all countries;

- cause a disruption of our billing cycles;

- cause us to incur significant expenses to remedy any problems;

- impose unmanageable burdens on our technical support staff; and

- cause customers or partners to be dissatisfied with our network and
services.

For a more detailed discussion on the impact of the year 2000 on our
business, please see "Management's Discussion and Analysis of Financial
Condition and Results of Operations--Year 2000 Readiness."

RISKS RELATED TO THE INTERNET AND INTERNET TELEPHONY INDUSTRY

IF THE INTERNET DOES NOT CONTINUE TO GROW AS A MEDIUM FOR VOICE AND FAX
COMMUNICATIONS, OUR BUSINESS WILL SUFFER.

The technology that allows voice and fax communications over the Internet,
and the delivery of other value-added services, is still in its early stages of
development. Historically, the sound quality of calls placed over the Internet
was poor. As the Internet telephony industry has grown, sound quality has
improved, but the technology requires further refinement. Additionally, as a
result of the Internet's capacity constraints, callers could experience delays,
errors in transmissions or other interruptions in service. Transmitting
telephone calls over the Internet must also be accepted as an alternative to
traditional voice and fax service by communications service providers. Because
the Internet telephony market is new and evolving, predicting the size of this
market and its growth rate is difficult. If our

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market fails to develop, then we will be unable to grow our customer base and
our results of operations will be adversely affected.

IF THE INTERNET INFRASTRUCTURE IS NOT ADEQUATELY MAINTAINED, WE MAY BE UNABLE TO
MAINTAIN THE QUALITY OF OUR SERVICES AND PROVIDE THEM IN A TIMELY AND CONSISTENT
MANNER.

Our future success will depend upon the maintenance of the Internet
infrastructure, including a reliable network backbone with the necessary speed,
data capacity and security for providing reliability and timely Internet access
and services. To the extent that the Internet continues to experience increased
numbers of users, frequency of use or bandwith requirements, the Internet may
become congested and be unable to support the demands placed on it and its
performance or reliability may decline thereby impairing our ability to complete
calls using the Internet at consistently high quality. The Internet has
experienced a variety of outages and other delays as a result of failures of
portions of its infrastructure or otherwise. Any future outages or delays could
adversely affect our ability to complete calls. Moreover, critical issues
concerning the commercial use of the Internet, including security, cost, ease of
use and access, intellectual property ownership and other legal liability
issues, remain unresolved and could materially and adversely affect both the
growth of Internet usage generally and our business in particular.

WE CANNOT BE CERTAIN THAT OUR ABILITY TO PROVIDE OUR COMMUNICATIONS SERVICES
USING THE INTERNET WILL NOT BE ADVERSELY AFFECTED BY COMPUTER VANDALISM.

Recently, computer vandals have caused certain leading Internet sites to
shut down temporarily and have materially affected the performance of the
Internet during key business hours by bombarding targeted sites with numerous
false requests for data. While we do not operate any websites like those
recently affected, we do rely on the Internet to deliver our international
communications services. If the overall performance of the Internet is seriously
downgraded by such website attacks or other acts of computer vandalism, our
ability to deliver our communication services over the Internet could be
adversely impacted, which could cause us to have to increase the amount of
traffic we have to carry over alternative networks, including the more costly
public-switched telephone network. In addition, traditional business
interruption insurance may not cover losses we could incur because of any such
disruption of the Internet. While some insurers are beginning to offer insurance
products purporting to cover these losses, we do not have any of this insurance
at this time.

INTERNATIONAL GOVERNMENTAL REGULATION AND LEGAL UNCERTAINTIES COULD LIMIT OUR
ABILITY TO PROVIDE OUR SERVICES OR MAKE THEM MORE EXPENSIVE.

The regulatory treatment of Internet telephony outside of the United States
varies widely from country to country. A number of countries currently prohibit
or limit competition in the provision of traditional voice telephony services.
Some countries prohibit, limit or regulate how companies provide Internet
telephony. Some countries have indicated they will evaluate proposed Internet
telephony service on a case-by-case basis and determine whether to regulate it
as a voice service or as another telecommunications service, and in doing so
potentially imposing settlement rates on Internet telephony providers. Finally,
many countries have not yet addressed Internet telephony in their legislation or
regulations. Increased regulation of the Internet and/or Internet telephony
providers, or the prohibition of Internet telephony in one or more countries,
could limit our ability to provide our services or make them more expensive.

In addition, as we make our services available in foreign countries, and as
we work to enable sales by our customers to end-users in foreign countries, such
countries may claim that we are required to qualify to do business in that
particular country, that we are otherwise subject to regulation, including
requirements to obtain authorization, or that we are prohibited in all cases
from conducting our business in that foreign country. Our failure to qualify as
a foreign corporation in a jurisdiction in which we are required to do so or to
comply with foreign laws and regulations could seriously restrict

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our ability to provide services in such jurisdiction, or limit our ability to
enforce contacts in that jurisdiction. Our customers also currently are, or in
the future may become, subject to these same requirements. We cannot assure you
that our customers are currently in compliance with any such requirements or
that they will be able to continue to comply with any such requirements. The
failure of our customers to comply with applicable laws and regulations could
prevent us from being able to conduct business with them. Additionally, it is
possible that laws may be applied by the United States and/or other countries to
transport services provided over the Internet, including laws governing:

- sales and other taxes;

- user privacy;

- pricing controls;

- characteristics and quality of products and services;

- consumer protection;

- cross-border commerce, including laws that would impose tariffs, duties
and other import restrictions;

- copyright, trademark and patent infringement; and

- claims based on the nature and content of Internet materials, including
defamation, negligence and the failure to meet necessary obligations.

If foreign governments or other bodies begin to regulate or prohibit
Internet telephony, this regulation could have a material adverse effect on our
ability to attain or maintain profitability.

WE MAY BE REQUIRED TO SUSPEND OR DISCONTINUE OUR OPERATIONS IN ISRAEL WHICH
WOULD PREVENT US FROM GENERATING REVENUE BY COMPLETING CALLS TO THAT COUNTRY.

On October 6, 1999, our Israeli operations manager received a letter from
the Israel Ministry of Communications alleging that our termination in Israel of
international calls placed with calling cards from outside Israel and carried
over the Internet, as described on our website, constituted the unauthorized
provision of telecommunications services under Israeli law. This letter stated
that we must immediately cease to supply these services. We and our Israeli
telecommunications counsel initiated discussions with the Ministry of
Communications, however the Ministry has not pursued this matter further. As of
the date of this prospectus, we are unable to predict whether we will be forced
to suspend or discontinue operations in Israel as a result of this action by the
Ministry of Communications. We believe that we have valid defenses to the claims
made in the letter and we have continued to terminate calls in Israel. In the
event that we are unable to prevail in our discussions with the Ministry of
Communications, we may be forced to suspend or permanently discontinue our
operations in Israel. If we are required to suspend or permanently discontinue
our operations in Israel, we will no longer be able to generate revenue from the
termination of international traffic in Israel and our ability to increase our
net revenue and achieve profitability will be adversely affected. For the period
from inception, August 2, 1996, to December 31, 1996 and the years ended
December 31, 1997, 1998 and 1999, we generated net revenue from our operations
in Israel of approximately $0, $0, $261,000, and $2.2 million, respectively.

THE TELECOMMUNICATIONS INDUSTRY IS SUBJECT TO DOMESTIC GOVERNMENTAL
REGULATION AND LEGAL UNCERTAINTIES WHICH COULD PREVENT US FROM EXECUTING OUR
BUSINESS PLAN.

While the Federal Communications Commission has tentatively decided that
information service providers, including Internet telephony providers, are not
telecommunications carriers for regulatory purposes, various companies have
challenged that decision. Congress is dissatisfied with the conclusions of the
FCC and the FCC could impose greater or lesser regulation on our industry. The
FCC is

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currently considering, for example, whether to impose surcharges or other
regulations upon certain providers of Internet telephony, primarily those that,
unlike us, provide Internet telephony services to end-users located within the
United States.

Aspects of our operations may be, or become, subject to state or federal
regulations governing universal service funding, disclosure of confidential
communications and copyright and excise taxes. We cannot assure you that
government agencies will not increasingly regulate Internet-related services.
Increased regulation of the Internet may slow its growth. This regulation may
also negatively impact the cost of doing business over the Internet and
materially adversely affect our ability to attain or maintain profitability.

RISKS RELATED TO THE OFFERING

THE MARKET PRICE OF OUR SHARES MAY EXPERIENCE EXTREME PRICE AND VOLUME
FLUCTUATIONS FOR REASONS OVER WHICH WE HAVE LITTLE CONTROL.

The stock market has, from time to time, experienced, and is likely to
continue to experience, extreme price and volume fluctuations. Prices of
securities of Internet-related companies have been especially volatile and have
often fluctuated for reasons that are unrelated to the operating performance of
the affected companies. The market price of shares of our common stock has
fluctuated greatly since our initial public offering and could continue to
fluctuate due to a variety of factors. In the past, companies that have
experienced volatility in the market price of their stock have been the objects
of securities class action litigation. If we were the object of securities
class action litigation, it could result in substantial costs and a diversion of
our management's attention and resources. For more information on the market
price of shares of our common stock, see "Price Range of Common Stock."

AFTER THIS OFFERING, OUR EXECUTIVE OFFICERS, DIRECTORS AND PRINCIPAL
STOCKHOLDERS WILL STILL OWN A MAJORITY OF OUR VOTING STOCK AND WILL BE ABLE TO
EXERT SIGNIFICANT INFLUENCE OVER DECISIONS REQUIRING A STOCKHOLDER VOTE.

We anticipate that our executive officers, directors and principal
stockholders and their affiliates will, in the aggregate, beneficially own
approximately 57% of our outstanding common stock following the completion of
this offering, assuming no exercise of options outstanding as of December 31,
1999, no exercise of the underwriters' over-allotment option and no conversion
of any of our % Convertible Subordinated Notes due 2005 that are being
offered in the concurrent note offering. As a result, our executive officers,
directors and principal stockholders will be able to exercise significant
control over all matters requiring approval by our stockholders, including the
election of directors and approval of mergers and other significant corporate
transactions. This concentration of ownership may also have the effect of
delaying or preventing a change in control that might otherwise benefit our
stockholders.

PROVISIONS OF OUR GOVERNING DOCUMENTS AND DELAWARE LAW COULD DISCOURAGE
ACQUISITION PROPOSALS OR DELAY A CHANGE IN CONTROL.

Our certificate of incorporation and by-laws contain anti-takeover
provisions, including those listed below, that could make it more difficult for
a third party to acquire control of our company, even if that change in control
would be beneficial to stockholders:

- our board of directors has the authority to issue common stock and
preferred stock, and to determine the price, rights and preferences of any
new series of preferred stock, without stockholder approval;

- our board of directors is divided into three classes, each serving
three-year terms;

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- stockholders need a supermajority of votes to amend key provisions of our
certificate of incorporation and by-laws;

- there are limitations on who can call special meetings of stockholders;

- stockholders may not take action by written consent; and

- stockholders must provide specified advance notice to nominate directors
or submit stockholder proposals.

In addition, provisions of Delaware law and our stock option plan may also
discourage, delay or prevent a change of control of our company or unsolicited
acquisition proposals.

SUBSTANTIAL LEVERAGE AND DEBT SERVICE OBLIGATIONS MAY ADVERSELY AFFECT OUR CASH
FLOW.

Concurrently with this offering, we anticipate offering convertible
subordinated notes in an aggregate principal amount of $150 million, or
$172.5 million if the over-allotment option granted to the underwriters in
connection with the note offering is exercised in full. Completion of the note
offering will increase our ratio of debt to equity (expressed as a percentage)
from approximately 12.7% to approximately 59.3% as of December 31, 1999 on a pro
forma basis giving effect to the sale of the notes and the sale of
2,030,085 shares of common stock offered hereby at an assumed offering price of
$79.375, assuming no exercise of the underwriters' over-allotment option. As a
result of this indebtedness, our principal and interest payment obligations will
increase substantially. There is the possibility that we may be unable to
generate cash sufficient to pay the principal of, interest on and other amounts
due in respect of our indebtedness when due. We may also obtain additional
long-term debt and working capital lines of credit to meet future financing
needs. There can be no assurance that additional financing arrangements will be
available on commercially reasonable terms or at all.

Our substantial leverage could have significant negative consequences,
including:

- increasing our vulnerability to general adverse economic and industry
conditions;

- limiting our ability to obtain additional financing;

- requiring the dedication of a substantial portion of our expected cash
flow from operations to service our indebtedness, thereby reducing the
amount of our expected cash flow available for other purposes, including
capital expenditures;

- limiting our flexibility in planning for, or reacting to, changes in our
business and the industry in which we compete; and

- placing us at a possible competitive disadvantage vis-a-vis less leveraged
competitors and competitors that have better access to capital resources.

OUR BUSINESS COULD BE HURT IF MANAGEMENT USES OUR PROCEEDS FROM THIS OFFERING
INEFFECTIVELY.

Our management will have flexibility in applying the net proceeds of this
offering. We intend to use the proceeds of this offering for general corporate
purposes, including capital expenditures to be made in connection with the
deployment of new services. These purposes could also include strategic
acquisitions or investments, international expansion, technical upgrades of
internal systems and other working capital requirements. We expect to spend a
significant portion of the net proceeds of this offering on capital equipment
purchases necessary to deploy new services. There can be no assurance that these
services will be accepted by our customers, or that we will be able to generate
sufficient revenue from such services to justify such capital expenditures. The
failure of our management to apply the proceeds of this offering effectively
could have a material adverse effect on our business, results of operations and
financial conditions. See "Use of Proceeds" and "Management's Discussion and

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Analysis of Financial Condition and Results of Operations" for a more detailed
description of how management intends to apply the proceeds of this offering.

STOCKHOLDERS MAY SELL SHARES OF OUR COMMON STOCK IN A MANNER THAT NEGATIVELY
AFFECTS THE PRICE OF OUR COMMON STOCK.

If any of our stockholders sell a substantial number of shares of common
stock after the offering, those sales could adversely affect the market price of
our common stock and could impair our ability to raise capital through the sale
of equity securities. Upon the completion of this offering, we will have
33,672,813 shares of common stock outstanding. In addition, as of December 31,
1999, we had reserved for issuance 5,493,875 shares of common stock issuable
upon exercise of stock options and 58,125 shares of common stock issuable upon
exercise of outstanding warrants. The 3,500,000 shares sold in this offering
will be freely transferable without restriction under the Securities Act, unless
they are acquired by "affiliates" of ours as that term is used under the
Securities Act. Of the remaining 30,142,728 shares, 2,850,751 shares will be
freely transferable without restriction under the Securities Act, unless they
are held by our "affiliates" and will be available for public sale upon
expiration of the "lock-up" agreements described in "Underwriting."

INVESTORS IN THIS OFFERING WILL SUFFER IMMEDIATE AND SUBSTANTIAL DILUTION.

The public offering price of the common stock in this offering is
substantially higher than the value of our assets minus our liabilities after
giving effect to this offering. In addition, although investors in this offering
will have contributed $161,138,000, assuming a public offering price of $79.375,
or 49.4% of the total capital invested in our company from inception to the
completion of this offering, they will own only 6.0% of outstanding common stock
after this offering. This is because we expect that some elements of our market
value will not originate from measurable transactions. Therefore, there is not a
corresponding rise in "book" or historical cost accounting value for our rise in
expected market value. Examples of these elements include the perceived value
associated with our strategic relationships, perceived growth prospects of the
Internet telephony market and our perceived competitive position within that
market. If you are purchasing shares in this offering, you will incur immediate
and substantial dilution of $71.06 in net tangible book value per share of
common stock from the public offering price of $79.375. To the extent
outstanding stock options and warrants are exercised, you will suffer further
dilution. See "Dilution."

FORWARD-LOOKING STATEMENTS

This prospectus contains "forward-looking statements" within the meaning of
Section 27A of the Securities Act and Section 21E of the Exchange Act. We intend
the forward-looking statements to be covered by the safe harbor for
forward-looking statements in these sections. These forward-looking statements
include, without limitation, statements about our market opportunity,
strategies, competition, expected activities and investments as we pursue our
business plan, and the adequacy of our available cash resources. These
forward-looking statements are usually accompanied by words such as "believe,"
"anticipate," "plan," "seek," "expect," "intend" and similar expressions. The
forward-looking information is based on various factors and was derived using
numerous assumptions. Our actual results could be materially different or worse
from those expressed or implied by these forward-looking statements as a result
of various factors, including the risk factors described above and elsewhere in
this prospectus.

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USE OF PROCEEDS

We expect to receive net proceeds of $153,286,787 from the sale of 2,030,085
shares of common stock by iBasis in this offering, or $184,624,402 if the
underwriters' over-allotment option is exercised in full, assuming a public
offering price of $79.375 per share and after deducting underwriting discounts
and commissions and the estimated offering expenses payable by us. We intend to
use the proceeds of this offering for general corporate and working capital
purposes, including the purchase of capital equipment in connection with the
deployment of new services. We will not receive any of the proceeds from the
sale of common stock by the selling stockholders.

In addition, we may use a portion of the net proceeds of this offering to
acquire or invest in businesses, products, services or technologies
complementary to our current business, through mergers, acquisitions, joint
ventures or otherwise. However, we have no specific agreements or commitments
with respect to these transactions. Accordingly, our management will retain
broad discretion as to the allocation of the net proceeds of this offering. We
intend to invest the net proceeds of this offering in short-term,
interest-bearing investment grade securities pending the above uses.

The principal purposes of this offering are to:

- increase available working capital; and

- increase our visibility in the marketplace.

We believe that the net proceeds of the offering and cash balances will be
sufficient to meet our working capital and capital expenditure requirements for
at least the next twelve months.

DIVIDEND POLICY

We have never declared or paid cash dividends on our capital stock and do
not anticipate paying any dividends in the foreseeable future. We currently
intend to retain future earnings, if any, to operate and expand our business.
Furthermore, our existing loan agreement prohibits the payment of dividends.

PRICE RANGE OF COMMON STOCK

Our common stock began trading publicly on the Nasdaq National Market on
November 10, 1999 and is traded under the symbol "IBAS." The following table
shows the range of the high and low per share bid prices of the common stock, as
reported by the Nasdaq National Market for the period indicated.

<TABLE>
<CAPTION>
HIGH LOW
-------- --------
<S> <C> <C>
Fourth Quarter ended December 31, 1999 (from November 10,
1999)..................................................... $42.31 $24.13
First Quarter ended March 31, 2000 (through March 6,
2000)..................................................... $93.06 $28.25
</TABLE>

On March 6, 2000, the closing price of the common stock on the Nasdaq
National Market was $79.375 per share, the high and low bid prices were
approximately $80.75 and $60.00 and there were approximately 120 holders of
record of the common stock.

18
<PAGE>
CONCURRENT OFFERING OF CONVERTIBLE NOTES

We plan to offer in a separate and concurrent public offering $150 million
aggregate principal amount, $172.5 million if the underwriters' over-allotment
option is exercised in full, of % convertible subordinated notes due 2005.
Initially, shares of common stock will be issuable upon conversion of the
notes, assuming no exercise of the over-allotment option by the underwriters.
Neither completion of this common stock offering nor completion of the
concurrent note offering is contingent upon completion of the other.

CAPITALIZATION

The following table sets forth our capitalization as of December 31, 1999:

- on an actual basis; and

- on a pro forma basis to give effect to the sale of 2,030,085 shares of
common stock by iBasis in this offering at an assumed public offering
price of $79.375 per share.

This table should be read in conjunction with our consolidated financial
statements and related notes appearing elsewhere in this prospectus.

<TABLE>
<CAPTION>
DECEMBER 31, 1999
------------------------
ACTUAL PRO FORMA
----------- ----------
<S> <C> <C>
(IN THOUSANDS, EXCEPT
PER SHARE DATA)
Capital lease obligations, net of current portion........... $ 11,689 $ 11,689
-------- ----------
Stockholders' equity (deficit):
Common stock, $0.001 par value per share; 85,000,000
shares authorized,
31,642,728 issued and outstanding, actual; 33,672,813
shares issued and outstanding, pro forma................ 32 34
Additional paid-in capital.................................. 156,888 310,172
Deferred compensation....................................... (2,201) (2,201)
Accumulated deficit......................................... (27,815) (27,815)
-------- ----------
Total stockholders' equity.............................. 126,904 280,190
-------- ----------
Total capitalization.................................. $138,593 $ 291,879
======== ==========
</TABLE>

The common stock to be outstanding after this offering is based on
31,642,728 shares outstanding as of December 31, 1999 and excludes:

- 3,005,850 shares of common stock issuable upon the exercise of outstanding
stock options and warrants outstanding at December 31, 1999 at a weighted
average exercise price of $4.31 per share;

- 2,531,150 additional shares of common stock reserved for issuance under
our stock incentive plan. See "Management--1997 Stock Incentive Plan;" and

- additional shares of common stock that will initially be issuable
upon the conversion the % Convertible Subordinated Notes due 2005
offered in our concurrent note offering. Neither completion of this common
stock offering nor completion of the convertible note offering is
contingent upon completion of the other.

19
<PAGE>
DILUTION

As of December 31, 1999, we had a net tangible book value of $126.9 million,
or $4.01 per share of common stock. Net tangible book value per share before the
offering is determined by dividing our net tangible book value, total tangible
assets less total liabilities, by the total number of shares of common stock
outstanding at December 31, 1999. After taking into account the sale of shares
offered hereby by us at an assumed public offering price of $79.375 per share
and after deducting the underwriting discounts and commissions and estimated
offering expenses payable by us, the adjusted pro forma net tangible book value
as of December 31, 1999 would have been $280.2 million, or $8.32 per share.
Based on the foregoing, there would be an immediate increase in pro forma net
tangible book value to existing stockholders of $4.31 per share and an immediate
dilution of $71.06 per share to new investors. The following table illustrates
this per share dilution:

<TABLE>
<S> <C> <C>
Public offering price per share............................. $79.375
Net tangible book value per share as of December 31,
1999.................................................... $4.01
Pro forma increase per share attributable to new
investors............................................... $4.31
-----
Pro forma net tangible book value per share after this
offering.................................................. $ 8.32
-------
Pro forma dilution per share to new investors............... $ 71.06
=======
</TABLE>

The following table summarizes, on a pro forma basis as of December 31,
1999, after giving effect to the number of shares of common stock purchased from
us, the total consideration paid to us and the average price per share paid by
the existing stockholders and by new investors purchasing shares of common stock
in this offering:

<TABLE>
<CAPTION>
SHARES PURCHASED TOTAL CONSIDERATION AVERAGE
--------------------- ----------------------- PRICE
NUMBER PERCENT AMOUNT PERCENT PER SHARE
---------- -------- ------------ -------- ---------
<S> <C> <C> <C> <C> <C>
Existing stockholders..................... 31,642,728 94.0% $165,099,590 50.6% $ 5.22
New investors............................. 2,030,085 6.0 161,137,997 49.4 $79.375
---------- ----- ------------ ------
Total............................... 33,672,813 100.0% $326,237,587 100.0%
========== ===== ============ ======
</TABLE>

As of December 31, 1999, there were options outstanding to purchase a total
of 2,947,725 shares of common stock, at a weighted average exercise price of
$4.37 per share and 2,531,150 additional shares reserved for future grants and
issuances under our stock incentive plan. Additionally, at December 31, 1999,
there were outstanding warrants to purchase a total of 58,125 shares of common
stock at a weighted average exercise price of $1.00 per share. To the extent
that any of these options or warrants are exercised, there will be further
dilution to new investors. See "Management--1997 Stock Incentive Plan" and
"Description of Capital Stock--Common Stock Warrants."

If we complete the concurrent note offering, and some or all of the notes
are converted into common stock, there will be further dilution to new
investors.

20
<PAGE>
SELECTED CONSOLIDATED FINANCIAL DATA

The following historical selected consolidated financial data should be read
in conjunction with our consolidated financial statements and related notes,
"Management's Discussion and Analysis of Financial Condition and Results of
Operations," and other financial information appearing elsewhere in this
prospectus. The consolidated statements of operations data set forth below for
the period from inception, August 2, 1996, to December 31, 1996, are derived
from, and qualified by reference to, our consolidated financial statements which
have been audited by Arthur Andersen LLP, independent public accountants but are
not included in this prospectus. The consolidated statements of operations data
set forth below for the years ended December 31, 1997, 1998 and 1999, and the
consolidated balance sheet data at December 31, 1998 and 1999 are derived from,
and qualified by reference to, our consolidated financial statements which have
been audited by Arthur Andersen LLP, together with their report thereon,
included elsewhere in this prospectus.

<TABLE>
<CAPTION>
PERIOD FROM INCEPTION
(AUGUST 2, 1996)
TO DECEMBER 31, YEAR ENDED DECEMBER 31,
--------------------- ------------------------------
1996 1997 1998 1999
--------------------- -------- -------- --------
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C>
CONSOLIDATED STATEMENTS OF OPERATIONS DATA:
Net revenue.................................... $ -- $ 127 $ 1,978 $ 19,417
Operating expenses:
Data communications and telecommunications..... -- 187 2,730 21,007
Research and development....................... 76 317 1,674 6,183
Selling and marketing.......................... -- 97 1,160 5,568
General and administrative..................... -- 454 1,365 5,309
Depreciation and amortization.................. -- 19 364 2,997
Loss (gain) on disposal of property and
equipment.................................... -- -- 531 (15)
------ ------ ------- --------
Total operating expenses..................... 76 1,074 7,824 41,049
Loss from operations......................... (76) (947) (5,846) (21,632)
------ ------ ------- --------
Interest income................................ -- 17 179 1,329
Interest expense............................... -- (4) (53) (836)
Other income (expense), net.................... -- 8 (7) 3
Minority interest in loss of joint venture..... -- -- -- 49
------ ------ ------- --------
Net loss..................................... (76) (926) (5,727) (21,087)
Accretion of dividends on redeemable
convertible preferred stock.................. -- -- (219) (1,020)
------ ------ ------- --------
Net loss applicable to common stockholders... $ (76) $ (926) $(5,946) $(22,107)
====== ====== ======= ========
Pro forma net loss applicable to common
stockholders................................. $(5,727) $(21,087)
======= ========
Basic and diluted net loss per share applicable
to common stockholders....................... $(0.01) $(0.15) $ (0.99) $ (2.29)
====== ====== ======= ========
Basic and diluted weighted average common
shares outstanding (1)....................... 6,000 6,006 6,023 9,655
Pro forma basic and diluted net loss per
share (1)(2)................................. $ (0.44) $ (0.89)
======= ========
Pro forma basic and diluted weighted average
common shares outstanding (1)(2)............. 13,068 23,681
</TABLE>

21
<PAGE>

<TABLE>
<CAPTION>
DECEMBER 31,
-------------------
1998 1999
-------- --------
(IN THOUSANDS)
<S> <C> <C>
CONSOLIDATED BALANCE SHEET DATA:
Cash and cash equivalents................................... $ 7,399 $123,666
Working capital............................................. 4,241 115,154
Total assets................................................ 12,772 153,473
Capital lease obligations, net of current portion........... 213 11,689
Redeemable convertible preferred stock...................... 10,719 --
Total stockholders' (deficit) equity........................ (2,697) 126,904
</TABLE>

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

(1) Computed on the basis described in Note 1(d) of the notes to our
consolidated financial statements appearing elsewhere in this prospectus.

(2) Adjusted to give effect to the conversion of all shares of preferred stock,
Class A and Class B Common Stock from the date of original issuance. Also
includes the 2,030,085 additional shares outstanding upon the completion of
this offering, but not the shares of common stock issuable upon conversion
of the notes in the concurrent note offering.

22
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS

THE FOLLOWING DISCUSSION SHOULD BE READ IN CONJUNCTION WITH OUR CONSOLIDATED
FINANCIAL STATEMENTS AND RELATED NOTES APPEARING ELSEWHERE IN THIS PROSPECTUS.
THE FOLLOWING DISCUSSION CONTAINS FORWARD-LOOKING STATEMENTS. OUR ACTUAL RESULTS
MAY DIFFER SIGNIFICANTLY FROM THOSE PROJECTED IN THE FORWARD-LOOKING STATEMENTS.
FACTORS THAT MIGHT CAUSE FUTURE RESULTS TO DIFFER MATERIALLY FROM THOSE
PROJECTED IN THE FORWARD-LOOKING STATEMENTS INCLUDE, BUT ARE NOT LIMITED TO,
THOSE DISCUSSED IN "RISK FACTORS" AND ELSEWHERE IN THIS PROSPECTUS.

OVERVIEW

We are a provider of international voice and fax call completion services,
and other value-added services using the Internet. We were incorporated in
August 1996 and commenced commercial operations in May 1997. We first recorded
revenue from the sale of equipment in May 1997, and first recorded revenue from
the sale of voice and fax services over our network in January 1998. In
July 1999, we changed our name from "VIP Calling, Inc." to "iBasis, Inc." In
November 1999, we completed our initial public offering and issued 7,820,000
shares of common stock, which resulted in total net proceeds to us of
approximately $114.7 million. During the period from inception to the
commencement of substantial scale commercial operations in the first quarter of
1998, our operating activities were focused primarily upon:

- assembling an experienced management team;

- obtaining additional financing;

- testing available gateway technologies and evaluating gateway vendors;

- developing relationships with local service providers in overseas
destinations;

- developing and testing our proprietary software, Assured Quality Routing,
including developing quality measurements and thresholds; and

- providing gateway vendors technical support and analysis.

Since the first quarter of 1998, we have been principally involved in the
following operating activities:

- increasing the capacity of and improving our network by deploying
additional equipment and enhancing our global network operations center;

- increasing the number of countries to which we provide service over our
network by entering into arrangements with local service providers at
various destinations;

- refining our proprietary software applications to enable us to offer high
quality international voice and fax call completion services, and other
value-added services; and

- increasing our sales and marketing efforts to increase the traffic over
our network.

Since January 1998, we have derived substantially all of our revenue from
the provision of international voice and fax call completion services over our
network. In order to complete voice or fax calls to a particular destination, we
are required to enter into arrangements with local service providers that have
the ability to route the calls to their eventual destinations. This process
typically involves several steps, including the search for a local service
provider, the negotiation of terms with this provider, and upon reaching terms,
establishing connections from the local service provider to the Internet and the
local phone company. At the same time, our carrier sales department begins to
sell the newly contracted destination to our carrier customers. The entire
process, from the beginning of

23
<PAGE>
the search for a local service provider to the commencement of commercial
traffic, can take several months.

To date, we have not been able to handle traffic over our network for
sustained periods at a cost less than the revenue we derive from completing such
traffic. In part, this has resulted from the costs associated with using
traditional circuit-switched voice networks for back-up and the completion of
calls to destinations where our network does not have sufficient capacity. We
are deploying systems and strengthening operating procedures intended to
significantly reduce the negative impact of that traffic, however, there can be
no assurance that such systems and procedures will prove effective. We believe
that if we are able to generate sufficient volumes of traffic and develop
sufficient capacity over our network, economies of scale will result that will
permit us to complete voice and fax calls, and deliver other value-added
services, on a profitable basis.

Since our inception in August 1996, we have experienced operating losses in
each quarterly and annual period and negative cash flows from operations in each
quarter since we commenced offering services over our network in January 1998.
As of December 31, 1999, we had an accumulated deficit of approximately
$27.8 million. The profit potential of our business is unproven, and our limited
operating history makes an evaluation of our company and our prospects
difficult. We may not generate revenue sufficient to achieve profitability or,
if we achieve profitability, we might not sustain profitability.

Since our initial public offering in November 1999, we have announced
several developments:

RESULTS OF OPERATIONS

YEAR ENDED DECEMBER 31, 1999 COMPARED TO YEAR ENDED DECEMBER 31, 1998

NET REVENUE. Our primary source of revenue is the fees that we receive from
customers for completing calls over our network. This revenue is dependent on
the volume of voice and fax traffic carried over the network, which is measured
in minutes. We charge our customers fees per minute of traffic that are
dependent on the length and destination of the call and recognize this revenue
in the period in which the call is completed. We also derive a limited amount of
revenue from the sale of equipment to our customers. Most of these equipment
sales are financed by us by offsetting termination fees otherwise payable to
local service providers against the equipment purchase price until the full
purchase price has been paid.

Our net revenue increased by $17.4 million to $19.4 million in the year
ended December 31, 1999 from $2.0 million in the year ended December 31, 1998.
This increase was primarily driven by an increase in revenue from voice and fax
call completion services to $19.0 million in 1999 from $1.7 million in 1998. The
increase in voice and fax call completion services net revenue resulted from an
increase in the amount of traffic carried over our network to 156.5 million
minutes in 1999 from 12.1 million minutes in 1998. Net revenue from the sale of
equipment increased to $435,000 in 1999 from $273,000 in 1998.

24
<PAGE>
DATA COMMUNICATIONS AND TELECOMMUNICATIONS EXPENSES. Data communications
and telecommunications expenses are comprised primarily of termination fees,
purchased minutes, equipment expense and other expenses associated with data
communications and telecommunications. Termination fees are paid to local
service providers to terminate calls received from our network. This traffic is
measured in minutes, and the per minute rates charged for terminating calls are
negotiated with the local service provider and included in our contract with our
local service provider. Should competition cause a decrease in our prices and,
as a result our profit margins, our contracts with our providers typically
provide us with the right to renegotiate the per minute termination fees.
Purchased minutes are fees we pay to other telecommunications carriers for
completing calls over the public circuit-switched network to destinations
outside of our network, and as a back-up to our network when our proprietary
Assured Quality Routing software indicates that either these lines are needed to
maintain the quality of our services or our capacity to a particular destination
has been exceeded. The amount of these fees depends on the volume of voice and
fax traffic carried over the public circuit-switched network, which is also
measured in minutes of traffic. The per minute rate charge for purchased minutes
is negotiated with public circuit-switched network carriers for each destination
served. The primary direct expenses that we incur in selling our equipment are
those incurred to purchase the component parts of our equipment from a variety
of vendors. These expenses are recorded when the equipment is installed and
operational. The expenses vary on the basis of the number of units to be
completed and delivered in a particular period, and will increase as equipment
sales increase. Other data communication and telecommunications expenses include
charges for Internet access at our Internet branch offices, fees for the fiber
optic connections between our Internet branch offices and our customers and/or
suppliers, facilities charges for overseas Internet access and phone lines to
the primary telecommunications carriers in particular countries, and charges for
the limited number of dedicated international private line circuits we use.

Data communications and telecommunications expenses increased by
$18.3 million to $21.0 million in 1999 from $2.7 million in 1998. The increase
in data communications and telecommunications expense was driven by the increase
in traffic described above, as termination fees increased to $8.5 million in
1999 from $579,000 in 1998, and purchased minutes increased to $7.7 million in
1999 from $921,000 in 1998. Equipment expenses directly related to equipment
sales increased to $437,000 in 1999 from $217,000 in 1998. Other data
communications and telecommunications expenses, including Internet access,
public circuit-switched network access, and international private line charges,
increased to $4.4 million in 1999 from $1.0 million in 1998. As a percentage of
total revenue, data communications and telecommunications expenses decreased to
108% in 1999 from 138% in 1998. We expect termination fee expense and purchased
minute expense to increase as our net revenue increases. We also expect other
data communications and telecommunications expenses to increase as we enter into
new relationships with local service providers in international destinations and
as we add capacity to our network.

RESEARCH AND DEVELOPMENT EXPENSES. Research and development expenses
include the expenses of developing, operating, supporting and expanding our
international and domestic network, expenses associated with improving and
operating our global network operations center, salary, and payroll taxes and
benefits paid for employees directly involved in the development and operation
of our global network operations center and the rest of our network. Also
included in this category are research and development expenses that consist
primarily of expenses incurred in enhancing, developing, updating and supporting
our network and our proprietary software applications.

Research and development expenses increased by $4.5 million to $6.2 million
in 1999 from $1.7 million in 1998. This increase in research and development
expenses is due principally to the increase in personnel within the group to 62
at the end of 1999 from 20 at the end of 1998. As a percentage of total revenue,
research and development expenses decreased to 32% in 1999 from 85% in 1998. We
expect that research and development expense will continue to increase as we
expand the

25
<PAGE>
coverage of our network, increase the number of our service offerings and
increase the functionality of our network.

SELLING AND MARKETING EXPENSES. Selling and marketing expenses include
expenses relating to the salaries, payroll taxes, benefits and commissions that
we pay for sales personnel and the expenses associated with the development and
implementation of our promotion and marketing campaigns, including expenses
relating to our outside public relations firm and industry analysts. Selling and
marketing expenses increased by $4.4 million to $5.6 million in 1999 from
$1.2 million in 1998. This increase is attributable to an increase in the number
of personnel employed in selling and marketing to 47 at the end of 1999 from
eight at the end of 1998, and increased marketing expenses, particularly in
connection with a public relations campaign we initiated in October 1998. As a
percentage of total revenue, selling and marketing expenses decreased to 29% in
1999 from 59% in 1998. We anticipate that selling and marketing expenses will
increase in the future as we expand our domestic and international sales force,
hire additional marketing personnel and increase expenditures for promotion and
marketing.

GENERAL AND ADMINISTRATIVE EXPENSES. General and administrative expenses
include salary, payroll tax and benefit expenses and related costs for general
corporate functions, including executive management, administration, facilities,
information technology and human resources. General and administrative expenses
increased by $3.9 million to $5.3 million in 1999 from $1.4 million in 1998.
General and administrative expenses increased primarily due to an increase in
the number of employees to 38 at the end of 1999 from six at the end of 1998, an
increase in consulting and professional fees, and an increase in our allowance
for doubtful accounts. As a percentage of total revenue, general and
administrative expenses decreased to 27% in 1999 from 69% in 1998. We expect
that general and administrative expenses will increase in the future as we hire
additional personnel and incur additional costs related to the growth of our
business and operations. In addition, we expect to expand our facilities and
incur associated expenses to support our anticipated growth.

DEPRECIATION AND AMORTIZATION EXPENSES. Depreciation and amortization
expenses increased by $2.6 million to $3.0 million in 1999 from $364,000 in
1998. This increase primarily resulted from additional purchases of capital
equipment and software that were needed to support our expanding network. As a
percentage of total revenue, depreciation and amortization expense decreased to
15% in 1999 from 18% in 1998.

INTEREST INCOME AND INTEREST EXPENSE. Interest expense is primarily
comprised of interest paid on the various capital leases pursuant to which we
have financed a substantial majority of the hardware components of our network.
Interest income is primarily composed of income earned on our cash and cash
equivalents. Interest income increased by $1.1 million to $1.3 million in 1999
from $179,000 in 1998. This increase was primarily attributable to increased
interest earnings on our cash and cash equivalents, which increased by
$116.3 million from $7.4 million as a result of our initial public offering,
which was completed in November 1999. Interest expense increased by $783,000 to
$836,000 in 1999 from $53,000 in 1998. This increase was attributable to
interest paid on capital equipment financing.

YEAR ENDED DECEMBER 31, 1998 COMPARED TO YEAR ENDED DECEMBER 31, 1997

NET REVENUE. Our net revenue increased by $1.9 million to $2.0 million in
the year ended December 31, 1998 from $127,000 in the year ended December 31,
1997. This increase was primarily driven by an increase in net revenue from
voice and fax services to $1.7 million in 1998 from no net revenue in 1997, as
we did not begin carrying voice and fax call completion services on our network
until January 1998, and in 1998, we carried 12.1 million minutes. In addition,
equipment sales increased to $273,000 in 1998 from $107,000 in 1997.

26
<PAGE>
DATA COMMUNICATIONS AND TELECOMMUNICATIONS EXPENSES. Data communications
and telecommunications expenses increased by $2.5 million to $2.7 million in
1998 from $187,000 in 1997. The increase in data communications and
telecommunications expense was driven by the increase in traffic described
above. Termination fees increased to $579,000 in 1998 from no fees in 1997. We
did not incur termination fees in 1997 because we did not carry traffic during
that period. Purchased minutes expense increased to $921,000 in 1998 from
$12,000 in 1997. Equipment expenses directly related to equipment sales
increased to $217,000 in 1998 from $82,000 in 1997. Other data communications
and telecommunications expenses, including Internet access, telco access, and
international private line charges, increased to $1.0 million in 1998 from
$93,000 in 1997. As a percentage of total revenues, data communications and
telecommunications expenses decreased to 138% in 1998 from 146% in 1997.

RESEARCH AND DEVELOPMENT EXPENSES. Research and development expenses
increased by $1.4 million to approximately $1.7 million in 1998 from $318,000 in
1997. This increase in research and development expenses is due principally to
the hiring of additional personnel, from three at December 31, 1997 to 20 at
December 31, 1998. As a percentage of total revenue, research and development
expenses decreased to 85% in 1998 from 250% in 1997.

SELLING AND MARKETING EXPENSES. Selling and marketing expenses increased by
approximately $1.1 million to approximately $1.2 million in 1998 from $98,000 in
1997. This increase is attributable to an increase in the number of personnel
employed in selling and marketing to eight at December 31, 1998 from two at
December 31, 1997, increased travel expenses related to the domestic and
overseas sales efforts which began in 1998, and increased marketing expenses,
particularly in connection with a public relations campaign we initiated in
October 1998.

GENERAL AND ADMINISTRATIVE EXPENSES. General and administrative expenses
increased by $912,000 to $1.4 million in 1998 from $454,000 in 1997. General and
administrative expenses increased primarily due to an increase in the number of
employees to six at December 31, 1998 from two at December 31, 1997, an increase
in professional fees, and an increase in our allowance for doubtful accounts. As
a percentage of total revenue, general and administrative expenses decreased to
69% in 1998 from 356% in 1997.

DEPRECIATION AND AMORTIZATION EXPENSES. Depreciation and amortization
expenses increased by $345,000 to $364,000 in 1998 from $19,000 in 1997. This
increase primarily resulted from additional purchases of capital equipment and
software that were needed to support our expanding network. As a percentage of
total revenue, depreciation and amortization expense increased to 18% in 1998
from 15% in 1997.

INTEREST INCOME, INTEREST EXPENSE AND LOSS ON DISPOSAL OF ASSETS. Interest
income increased by $162,000 to $179,000 in 1998 from $17,000 in 1997. This
increase was primarily attributable to increased interest earnings on our cash
and cash equivalents. Interest expense increased by $49,000 to $53,000 in 1998
from $4,000 in 1997. This increase was attributable to interest paid on capital
equipment financing. Loss on disposal was $531,000 in 1998. No loss on disposal
was recorded in 1997. This loss was attributable to the write-off and disposal
of all of our former network equipment, which we replaced with Cisco Systems'
hardware during the course of 1998.

YEAR ENDED DECEMBER 31, 1997 COMPARED TO YEAR ENDED DECEMBER 31, 1996

RESEARCH AND DEVELOPMENT EXPENSES. Research and development expenses
increased by $242,000 to approximately $318,000 in 1997 from $76,000 in 1996.
The increase in research and development expenses is due principally to the
development of our network as we prepared to commence operations.

We were incorporated in August 1996 and commenced commercial operations in
May 1997. As of December 31, 1997, we were still in our development stage and
had not generated any revenue from operations. Accordingly, we believe that
year-to-year comparisons of the results of operations for the years ended
December 31, 1996 and 1997 are not meaningful and should not be relied upon as
an indication of future performance.

27
<PAGE>
UNAUDITED QUARTERLY OPERATING RESULTS

The following tables set forth certain unaudited quarterly operating results
for each of our six fiscal quarters in the 18-month period ended December 31,
1999, certain financial data expressed as a percentage of net revenue, and
certain other operating data. The financial information set forth below has been
derived from unaudited consolidated financial statements that, in management's
opinion, reflect all adjustments, consisting only of normal recurring
adjustments, necessary for a fair presentation of the quarterly information. The
operating results for any quarter are not necessarily indicative of the results
to be expected for any future period.

<TABLE>
<CAPTION>
THREE MONTHS ENDED
------------------------------------------------------------------
SEPT. 30, DEC. 31, MARCH 31, JUNE 30, SEPT. 30, DEC. 31,
1998 1998 1999 1999 1999 1999
--------- -------- --------- -------- --------- --------
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C>
Net revenue............................ $ 387 $ 1,405 $ 2,414 $ 3,623 $ 5,780 $ 7,600
Operating expenses:
Data communications and
telecommunications................. 663 1,491 2,586 4,029 6,204 8,188
Research and development............. 454 651 865 1,317 1,837 2,164
Selling and marketing................ 303 492 837 1,210 1,534 1,987
General and administrative........... 316 624 611 887 1,470 2,341
Depreciation and amortization........ 95 152 233 632 1,024 1,108
Loss (gain) on disposal of property
and equipment...................... -- 531 -- (15) -- --
------- ------- ------- ------- ------- -------
Total operating expenses......... 1,831 3,941 5,132 8,060 12,069 15,788
------- ------- ------- ------- ------- -------
Loss from operations............. (1,444) (2,536) (2,718) (4,437) (6,289) (8,188)
Interest income........................ 51 103 53 31 220 1,025
Interest expense....................... (19) (6) (60) (169) (217) (390)
Other income expense, net.............. -- -- (2) (1) 6 --
Minority interest in loss of joint
venture.............................. -- -- 49 -- -- --
------- ------- ------- ------- ------- -------
Net loss......................... $(1,412) $(2,439) $(2,678) $(4,576) $(6,280) $(7,553)
======= ======= ======= ======= ======= =======
</TABLE>

<TABLE>
<CAPTION>
THREE MONTHS ENDED
------------------------------------------------------------------
SEPT. 30, DEC. 31, MARCH 31, JUNE 30, SEPT. 30, DEC. 31,
1998 1998 1999 1999 1999 1999
--------- -------- --------- -------- --------- --------
<S> <C> <C> <C> <C> <C> <C>
Net revenue.............................. 100.0% 100.0% 100.0% 100.0% 100.0% 100.0%
Operating expenses:
Data communications and
telecommunications................... 171.3 106.1 107.1 111.2 107.3 107.7
Research and development............... 117.3 46.3 35.8 36.4 31.8 28.5
Selling and marketing.................. 78.2 35.0 34.7 33.4 26.5 26.1
General and administrative............. 81.7 44.5 25.3 24.4 25.4 30.8
Depreciation and amortization.......... 24.5 10.8 9.7 17.4 17.7 14.6
Loss (gain) on disposal of property and
equipment............................ 0.0 37.8 0.0 (0.4) 0.0 0.0
------ ------ ------ ------ ------ ------
Total operating expenses........... 473.0 280.5 212.6 222.4 208.7 207.7
------ ------ ------ ------ ------ ------
Loss from operations............... (373.0) (180.5) (112.6) (122.4) (108.7) (107.7)
------ ------ ------ ------ ------ ------
Interest income (expense), net........... 8.1 6.9 (0.2) (3.9) 0.0 8.4
Other expense, net....................... 0.0 0.0 (0.1) 0.0 0.0 0.0
Minority interest in loss of joint
venture................................ 0.0 0.0 2.0 0.0 0.0 0.0
------ ------ ------ ------ ------ ------
Net loss........................... (364.9)% (173.6)% (110.9)% (126.3)% (108.7)% (99.3)%
====== ====== ====== ====== ====== ======
</TABLE>

28
<PAGE>
Our operating results have fluctuated greatly during the period since
inception, and in the period since we began offering commercial scale services
in June 1998. We expect that our operating results will continue to fluctuate
based on a number of factors, including:

- the amount of traffic we are able to sell to our customers, and their
decisions on whether to route traffic over our network;

- pricing pressure in the international long distance market;

- the percentage of traffic that we are able to carry over the Internet or
over our dedicated international private circuit lines, rather than over
the more costly traditional public-switched telephone network;

- loss of arbitrage opportunities resulting from declines in international
settlement rates or tariffs;

- our ability to negotiate changes in the termination fees charged by our
local providers when margins deteriorate;

- capital expenditures required to expand or upgrade our network;

- changes in call volume among the countries to which we complete calls;

- technical difficulties or failures of our network systems or third-party
delays in expansion or provisioning system problems;

- our ability to offer value-added services that are appealing to the
market; and

- currency fluctuations in countries where we operate.

The telecommunications services market experiences different pricing
pressures for traffic to different destinations. The level of pressure depends
on the regulatory status of Internet telephony in the terminating country,
competition from other carriers to the country, and technological advances
allowing for higher utilization of existing capacity. The rate to each country
differs greatly, so completing calls in different countries yields varying
levels of revenue per minute of traffic. Our revenue per minute will fluctuate
as our mix of traffic among the countries to which we complete calls changes. In
developing our network, we have targeted potential partners in countries that we
believe offer the highest revenue per minute for terminating traffic.

In addition, we have no fixed purchase commitments from our communications
service provider customers, and any customer could decide to route its traffic
over alternative networks practically instantly. Accordingly, it is difficult
for us to accurately project the amount of traffic we will be able to sell in
any future period. Furthermore, because we have derived a significant portion of
our revenue to date from a small number of customers, the loss of one or more
major customers could have a material adverse effect on our business, financial
condition and results of operations. In addition, we depend on local service
providers to terminate calls in our overseas destinations. The loss of a
relationship with one or more of these service providers could result in us
being unable to provide call completion to that country. See "Risk
Factors--Risks Related to Our Operations."

LIQUIDITY AND CAPITAL RESOURCES

Our principal capital and liquidity needs historically have related to the
development of our network infrastructure, our sales and marketing activities,
research and development expenses, and general capital needs. Our capital needs
have been met, in large part, from the net proceeds from our initial public
offering and the sale of our Class B common stock and preferred stock. As we
placed greater emphasis on expanding our network infrastructure, we have also
sought to meet our capital needs through vendor capital leases and other
equipment financings. We have also established a line of credit with a bank.

Net cash provided by financing activities was $2.9 million for the year
ended December 31, 1997, $11.6 million for the year ended December 31, 1998, and
$139.0 million for the year ended

29
<PAGE>
December 31, 1999. These amounts are primarily attributable to the net proceeds
from our initial public offering and the issuance of Class B common stock and
preferred stock.

Net cash used in operating activities was $666,000 for the year ended
December 31, 1997, $2.1 million for the year ended December 31, 1998, and
$16.7 million for the year ended December 31, 1999. Cash used in operating
activities for all periods resulted from net losses and increases in accounts
receivable, which were partially offset by increases in accounts payable and
accrued liabilities.

Net cash used in investing activities was $511,000 for the year ended
December 31, 1997, $3.8 million for the year ended December 31, 1998, and
$6.0 million for the year ended December 31, 1999. Cash used in investing
activities was primarily related to purchases of equipment.

The continued development and expansion of our sales and marketing efforts
and network infrastructure, as well as the further development or the possible
acquisition of new services, are expected to require substantial cash
expenditures. In addition, our existing operations are not currently profitable
on a stand-alone basis. As a result, we expect to continue to incur operating
losses and negative cash flows from operations for the foreseeable future. We
have budgeted our future capital requirements based on current estimates of our
future revenue and with a view to current competitive factors and the domestic
and international regulatory environment pertaining to our business. We cannot
be certain that actual revenue will be in line with management's expectations or
that expenditures will not be significantly higher than anticipated. In
addition, there can be no assurance that we will be able to meet our strategic
objectives or that we will have access to adequate capital resources on a timely
basis, or at all, or that such capital will be available on terms that are
acceptable to us. We may consider potential acquisitions or other strategic
arrangements that may fit our strategic plan. Any such acquisitions or strategic
arrangements likely would require additional equity or debt financing, which may
result in dilution.

CLASS B COMMON STOCK AND PREFERRED STOCK FINANCINGS. In February, March and
April 1997, we issued and sold 1,500,000 shares of our Class B common stock to
our founders and a number of independent investors in a transaction that
resulted in gross proceeds of $500,000.

In October, November and December 1997, and March and June 1998, subject to
commitments made in 1997, we issued and sold an aggregate of 1,250,000 shares of
Series A preferred stock to a number of new independent investors, our founders
and certain of our other existing stockholders in a transaction that resulted in
gross proceeds of $3.75 million.

On August 26, 1998, we issued and sold 6,562,500 shares of Series B
preferred stock to a number of new independent investors, our founders and
certain of our other existing shareholders in a transaction that resulted in
gross proceeds of $10.5 million.

In July 1999, we issued and sold an aggregate of 5,744,103 shares of
Series C preferred stock to a number of new independent investors, our founders
and certain of our other existing shareholders in a transaction that resulted in
gross proceeds of $25.1 million.

INITIAL PUBLIC OFFERING. In November 1999, we completed our initial public
offering and issued 7,820,000 shares of common stock, which resulted in total
net proceeds to us of $114.7 million.

Upon the completion of our initial public offering, all outstanding shares
of our preferred stock and Class B common stock automatically converted into the
following number of shares of Class A common stock:

<TABLE>
<CAPTION>
NUMBER OF SHARES OF
CLASS A COMMON STOCK
--------------------
<S> <C>
Series A preferred stock................................. 3,750,000
Series B preferred stock................................. 6,562,500
Series C preferred stock................................. 5,744,103
Class B common stock..................................... 1,500,000
</TABLE>

30
<PAGE>
Subsequently, all outstanding shares of Class A common stock converted into
23,738,353 shares of common stock.

EQUIPMENT LEASING AND FINANCING. We lease equipment from Cisco Systems
Capital Corporation and TLP Leasing under master agreements and multiple lease
sub-agreements. Each of the multiple equipment leases specifies its own term,
rate and payment schedule, depending upon the value and amount of equipment
leased. As of December 31, 1999, the aggregate outstanding balance under our
leases from Cisco was $14.0 million, and we had an additional $1.0 million
available for borrowing under that master agreement. As of the same date, the
aggregate outstanding balance under the TLP master lease was $1.4 million, with
no additional amount available for borrowing under that lease program.

We have a credit facility allowing us to borrow up to $750,000 from Silicon
Valley Bank in equipment advances for equipment purchased before July 31, 1999.
As of December 31, 1999, we had made borrowings in the aggregate amount of
$506,000 under this equipment facility. Interest accrues on the average
outstanding daily balance of the equipment advances at an annual rate equal to
the prime rate plus 1 1/2%. The outstanding principal and interest of these
equipment advances are payable in 36 equal monthly installments of combined
principal and interest, with the first payment due August 5, 1999. No equipment
advances may be borrowed after July 31, 1999, and any amounts repaid may not be
reborrowed. We expect to continue to use equipment leasing alternatives as we
expand our network if alternatives are available on favorable terms.

REVOLVING LINE OF CREDIT. On June 18, 1999, we entered into a Loan and
Security Agreement with Silicon Valley Bank that provides us with access to a
$1.5 million revolving credit facility. The line of credit is secured by a lien
on all of our assets, receivables and after acquired property. Interest accrues
daily on the unpaid principal of the facility at an annual rate equal to the
prime rate, as defined in the Loan and Security Agreement, plus 1%. We must make
interest payments on outstanding borrowings on a monthly basis, otherwise any
unpaid interest is added to the outstanding principal amount, and accrues
interest at the same rate. As of December 31, 1999, we had made no borrowings
under the Loan and Security Agreement. All outstanding amounts under our line of
credit shall become due and payable in full on June 18, 2000.

YEAR 2000 READINESS

The year 2000 problem stems from the fact that many currently installed
computer systems include software and hardware products that are unable to
distinguish 21(st) century dates from those in the 20(th) century. As a result,
computer software and hardware used by many companies and governmental agencies
may need to be upgraded to support year 2000 requirements or risk system failure
or miscalculations causing disruptions to normal business activities.

We are a comparatively new enterprise, and accordingly, the software and
hardware we use to manage our business has all been purchased or developed by us
within the last 18 months. While this fact does not necessarily protect us
against year 2000 exposure, we believe we gain some mitigation from the fact
that the information technology we use to manage our business is not based upon
"legacy" hardware and software systems. "Legacy system" is a term often used to
describe hardware and software systems which were developed in previous years
when there was less awareness of year 2000 issues. Generally, hardware and
software design within more recent years in particular has given greater
consideration to year 2000 issues. All of the software code we have internally
developed to manage our network traffic, for example, is written and tested to
be year 2000 ready.

STATE OF READINESS. We are continuing to assess the corporate systems and
operations that we believe could be affected by the year 2000 problem. We
focused our year 2000 compliance review on three areas:

31
<PAGE>
- information technology infrastructure, including the operation of the
iBasis Network and related software applications;

- third-party compliance; and

- non-information technology systems.

Our own personnel performed all of the assessment, remediation and testing
of our systems; to date we have not engaged any outside service or consultants
to test or review our systems for year 2000 readiness.

INFORMATION TECHNOLOGY INFRASTRUCTURE. Because our network and business
systems are essential to our business, financial condition and results of
operations, we began assessing these systems prior to other less critical
information technology systems. We use the following information technology for
our infrastructure:

- critical systems directly responsible for processing Internet telephony
including:

- our billing and provisioning systems,

- our proprietary software as well as software and hardware we have
purchased,

- equipment in our network that carries traffic, including gateways and
switches, and

- our global network operation center systems;

- website and Internet systems including local access networks and
firewalls;

- main enterprise systems, such as those used for human resources, e-mail,
intranet and accounting;

- individual workstations, including personal computers and printers; and

- network systems.

We continue to believe that all of our critical systems are year 2000 ready.
While to date we have not experienced any material disruptions as a result of
year 2000 problems, we are rechecking the test results of our proprietary
Assured Quality Routing software and our iTrac software. Based on
representations from third-party vendors, we believe that the software and
hardware components of our service switch systems and global network operations
center will continue to function properly in the year 2000. We will continue to
monitor the year 2000 readiness of the system suppliers of our website, main
enterprise systems, our individual workstations and network systems. To date, we
have not discovered year 2000 problems in these systems. We have designed our
systems to be year 2000 ready and will continue to test these systems.

THIRD-PARTY COMPLIANCE. Our material third-party business relationships
include:

- Cisco Systems;

- several Internet service providers; and

- Datex Communications Corporation, our outsourced billing service bureau.

Cisco Systems provides a substantial majority of the gateways used in the
iBasis Network to provide our Internet telephony services. Any failure of these
systems to function properly as a result of the year 2000 date change would
cause a material disruption of our services. Cisco has represented to us that
its gateways and other Cisco components we use are year 2000 ready.

In addition, we rely on third-party network infrastructure providers to gain
access to the Internet. If these providers experience business interruptions,
which to date have not been apparent, as a result of their failure to function
properly as a result of the year 2000 date change, our ability to provide
Internet connectivity could be impaired, which could have a material adverse
effect on our business, financial condition and results of operations.

32
<PAGE>
Datex Communications Corporation provides our outsourced billing services.
Datex has represented to us that their systems are year 2000 ready. If Datex'
systems and ability to process our billing are impaired by year 2000 issues, we
may be unable to bill and collect revenues from our customers, which could have
a material adverse effect on our business, financial condition and results of
operations.

We are unable to predict, and have not attempted to assess, the year 2000
readiness of the systems our customers and our partners use to interact with us.
Because the majority of our business involves international communications, we
are dependant upon systems and equipment local to these countries. We currently
do not know the level of testing and preparation for year 2000 readiness of the
organizations in these countries. Since some countries outside of the United
States and organizations within these countries are not as intensively acting to
remediate their year 2000 issues, any disruption in these countries could
adversely affect our service in such countries. However, this issue is not
unique to us, as all of our customers and partners are having to face this issue
to support their normal business operations.

NON-INFORMATION TECHNOLOGY SYSTEMS. Some non-information technology systems
used in our business, such as heating, ventilation, and air conditioning
systems; our telephone systems; and other equipment, may contain date-processing
embedded technology. The year 2000 problem could cause failures in these assets
and disrupt our operations. We are continuing to monitor the year 2000 readiness
of these systems. To date, we have not discovered year 2000 problems in these
systems.

We do not believe that any year 2000 failure of any of our non-information
technology systems will have a material adverse effect on our business,
financial condition or results of operations.

COSTS. We have not recorded the amount of employee time expended on year
2000 assessment, remediation and testing activities. Accordingly, we are unable
to determine the cost of employee time devoted to year 2000 matters. We have
funded and will continue to fund, if necessary, our year 2000 monitoring and
preparations principally through cash on hand and cash flow from operations.

MOST REASONABLY LIKELY WORST CASE SCENARIO. It is possible that problems
related to the year 2000 date change could result in one or more of the
following:

- a complete disruption of our Internet telephony services to any, and or
all, countries; and

- a disruption of billing cycles.

Most, if not all, of the alternatives that would allow us to run our systems
in the event of such disruptions would result in increased costs, reduced
revenues or service delays, which would increase our operating losses. Extended
disruptions may impact long-term customer and supplier relationships, which
could further impact future profitability.

CONTINGENCY PLAN. To date we have not formulated contingency plans should
any of our or a third-party's systems or equipment fail to be year 2000 ready.
We intend to develop contingency plans to address any year 2000 readiness
problems if necessary.

MARKET RISK

To date, we have not engaged in trading market risk sensitive instruments or
purchasing hedging instruments that would be likely to expose us to market risk,
whether interest rate, foreign currency exchange, commodity price or equity
price risk. We have not purchased options or entered into swaps of forward or
futures contracts. Our primary market risk exposure is that of interest rate
risk on borrowings under our credit lines, which are subject to interest rates
based on the banks' prime rate, and a change in the applicable interest rate
would affect the rate at which we could borrow funds or finance equipment
purchases. While to date our global operations have generated revenues in United
States dollars, we are currently evaluating the impact of foreign currency
exchange risk on our results of operations as we continue to expand globally.

33
<PAGE>
BUSINESS

COMPANY OVERVIEW

We are a leading provider of high quality Internet telephony services that
enable telecommunications carriers and other communications service providers to
offer international voice, fax and other value-added applications over the
Internet. By outsourcing international communications services to us, our
customers are able to lower costs, generate new revenue and extend their
business into Internet-based services quickly while maintaining service quality
comparable to that of traditional voice networks.

INDUSTRY OVERVIEW

TELECOMMUNICATIONS MARKET OVERVIEW. According to the Gartner Group, a
leading market research firm, the global telecommunications market is expected
to grow to approximately $1.9 trillion by 2003. Global deregulation and rapid
technological advances have resulted in the emergence of many new communications
service providers, increased competition among traditional telecommunications
carriers, lower prices, innovative new services and accelerated customer
turnover. In their efforts to add and retain customers, communications service
providers are looking for ways to cut costs and offer new services.

INTERNATIONAL LONG DISTANCE MARKET. The international long distance market
is a large and growing segment of the telecommunications market. According to
TeleGeography, a market research firm, the total market for international long
distance services in 1997 was approximately $65.9 billion. International Data
Corporation expects international long distance traffic to grow from
94.9 billion minutes in 1998 to 187.1 billion minutes in 2002. We believe that
this growth will accelerate as countries around the world continue to deregulate
their telecommunication markets. One important result of this global trend
towards deregulation and technological change is the increasing number of
communications service providers. TeleGeography has reported that the number of
international long distance carriers has grown from 367 in 1995, to 1,042 in
1998.

EMERGENCE OF INTERNET TELEPHONY. Although it has been possible to transmit
voice over data networks since 1995, only recently has the technology improved
such that phone-to-phone calls can be transmitted over data networks with
quality approaching that of traditional voice networks. International Data
Corporation projects that worldwide Internet telephony will grow from $0.5
billion in 1999, to $18.7 billion in 2004, approximately half of which would be
generated by new services, including voice-enabled ecommerce and other enhanced
services such as unified communications. Wholesale worldwide Internet telephony,
including wholesale international Internet telephony, is expected to grow to
$2.0 billion by the same date. In addition, International Data Corporation
projects that international Internet telephony will comprise $17.3 billion of
the total $18.7 billion market in 2004.

Internet telephony offers communications service providers the following
advantages over traditional voice networks, allowing them to complete calls at
comparable quality with lower costs, and offer new services:

- TECHNOLOGICAL EFFICIENCIES. Traditional voice networks use circuit
switching technology, which establishes dedicated lines between an
originating and terminating point for the duration of a call. In contrast,
Internet telephony is based on packet switching technology. This
technology completes a call by digitizing and dividing a speaker's voice
into small packets that travel to their destination along lines carrying
packets of other Internet traffic. Packets from multiple calls or faxes
can be carried over the same line simultaneously with data from other
sources, which results in a higher utilization of transmission lines than
can be achieved with circuit-switched technology. Unlike circuit-switched
traffic, data packets also can be compressed, which means

34
<PAGE>
that Internet telephony uses less bandwidth per call than traditional
circuit-switched calling. As a result of these features, calls can be
completed at a lower cost using Internet telephony. We believe that
packet-switched networks, including the Internet, will allow other
traditional services to be offered more cost-effectively as well.

- ECONOMIES OF SCALE. Internet telephony calls are carried over large and
rapidly growing data networks. Businesses recently have spent billions of
dollars to upgrade their data networks to accommodate dramatic increases
in data traffic. According to TeleGeography, the total bandwidth used for
data surpassed that used for voice in the United States long distance
market in 1998. This growth is driven largely by technological innovation
and the rapid expansion of the Internet as a global medium for
communications and commerce. As data networks continue to grow,
communications service providers should benefit from greater economies of
scale and be able to offer Internet-based services, such as Internet
telephony, more cost effectively than services over traditional voice
networks.

- OPPORTUNITY TO BY-PASS INTERNATIONAL SETTLEMENT RATES. Traditional
international long distance calls are completed over international voice
networks. These networks are typically owned by government bodies or
telecommunications carriers who charge settlement rates or tariffs for
their use. International calls routed over the Internet bypass a
significant portion of these fees, and as a result can generally be
completed at lower cost.

- ADDITIONAL CHANNEL FOR CARRIERS. Carriers regularly outsource their voice
and fax traffic to take advantage of the lowest-cost provider to a
particular destination and partner with companies that can provide
additional channels. Internet telephony offers an opportunity for service
providers with access to necessary technology to develop networks that can
provide these additional channels.

- MORE SERVICES AND EASIER ROLL OUT. In contrast to the closed, proprietary
structure inherent in traditional circuit-switched voice networks,
Internet telephony embraces an open architecture and open standards, which
facilitates innovation at lower costs. Traditional voice networks are
designed specifically to provide one basic service, making it difficult to
introduce new services over those networks. In contrast, data networks
convert all services into data packets, and allow for the introduction of
an indefinite variety of packet-based services that were not possible over
the traditional network. Since rollout of new services does not
necessitate network-wide upgrades, it is easier for communications service
providers to deploy new services quickly. While voice and fax are the
dominant services provided today, additional services, such as Internet
call waiting, unified messaging and electronic commerce can be provided
over data networks.

DEMAND FOR INTERNET TELEPHONY SOLUTIONS. While there are many reasons for
telecommunications carriers and other communications service providers to take
advantage of Internet telephony, for the most part, they have been slow to
establish in-house Internet telephony capability for a number of reasons. These
reasons include:

- lack of adequate Internet telephony technology until recently;

- concerns over quality;

- prior substantial investment in circuit-switched networks and the
associated expertise; and

- a hesitation to build new networks and cannibalize traffic from their
traditional voice networks.

Developing an international Internet telephony network for a substantial
portion of a communications service provider's traffic would also be expensive
and time-consuming, requiring each service provider to negotiate agreements in
each country where it would like to be able to complete calls. Therefore, many
communications service providers are looking to outsource their Internet
telephony services.

35
<PAGE>
To date, however, few Internet telephony providers have been able to offer
the quality, reliability and back office support necessary to meet the carriers'
strict requirements. In addition, most Internet telephony providers do not have
the international presence to be able to complete calls to a sufficient number
of destinations, and do not have the capacity to carry the volume of traffic
required by carriers to any given location.

THE IBASIS SOLUTION

We provide high quality Internet-based communication services to
telecommunications carriers and other communications service providers. Our
solution enables communications service providers to outsource their
international voice, fax and other value-added services over the Internet at
substantially lower costs than over traditional networks while maintaining high
quality service. We provide our customers access to the iBasis Network, our
international, scaleable, standards-based Internet telephony network through
"Internet branch offices" strategically located in major cities in North
America, Asia, Latin America, Europe and Africa. Our services provide the
following key benefits to our customers:

HIGH QUALITY VOICE AND FAX TRANSMISSIONS. Our proprietary technology
enables us to complete international voice and fax calls over the iBasis Network
with quality comparable to that of traditional circuit-switched voice networks.
This is supported by the fact that carriers are able to provide our Internet
telephony services to their customers undifferentiated from their traditional
services. Through our global network operations center and proprietary Assured
Quality Routing software, we are able to monitor our network and route traffic
over dedicated private lines or traditional circuit-switched lines when
necessary to maintain high quality. This enables us to provide consistently high
quality services to communications service providers.

COST EFFECTIVE SOLUTIONS. Our transmission costs are lower because packet
switching is more efficient than traditional circuit switching. In addition, we
leverage the Internet to deliver traffic, which results in lower costs than
transmission alternatives that deploy dedicated connections. Our packet-based
scaleable solution also allows us to better match our investment in equipment
with capacity needs, and provide lower cost world-class operating support
systems. Also, we are currently able to circumvent many of the international
tariffs or settlement rates associated with international calls over
circuit-switched voice networks, which results in additional cost savings.

INTERNATIONAL HIGH-CAPACITY NETWORK. Our iBasis Network is a growing
international network that allows us to complete calls worldwide. During our
fourth quarter ended December 31, 1999, we transported approximately
63.8 million minutes of traffic over the more than 3,200 lines we have deployed
internationally through our relationships with communications service providers.

FLEXIBLE BACK OFFICE SOLUTION THAT FACILITATES NEW SERVICES AND EFFECTIVE
BUSINESS MANAGEMENT. We provide communications service providers with an
integrated network, making possible advanced reporting and monitoring that
customers can access from an easy to use web-based application. The flexibility
of our back office systems allows us to provide timely statistics and integrated
billing that enables a communications service provider to manage its costs more
effectively and offer new services more readily.

EASE OF DEPLOYMENT AND TIME TO MARKET. We enable carriers to route calls
over our network in a timely and cost effective manner. Carriers and other
communications service providers need no special equipment or technical
expertise in order to access our services as connections are made in the same
manner as traditional voice-based services. Our solution shortens communications
service providers' time-to-market by enabling them to complete calls to any
country on our network without experiencing the delays typically incurred in
establishing separate contracts with local service providers in each country.

36
<PAGE>
OPEN, SCALEABLE ARCHITECTURE DESIGNED FOR NEW SERVICES. Our network
architecture is open, scaleable and standards based. This allows for fast
deployment of services to new countries, and enables us to offer other
value-added services over our network quickly and easily. We currently offer
voice, fax and billing services and will offer other new value-added services.
On February 3, 2000, we announced our intention to deploy Cisco Systems'
uOne-TM- application on the iBasis Network, thereby allowing communications
service providers to provide unified communications services to their end-user
customers over our network.

OUR STRATEGY

Our objective is to be the leading provider of high quality Internet-based
communication services to telecommunications carriers and other communications
service providers. We plan to accomplish this by pursuing the following
strategies:

FOCUS ON HIGH-VOLUME COMMUNICATIONS SERVICE PROVIDERS. We are focused on
providing Internet-based communications services to high-volume carriers. By
focusing on carriers, rather than the end-users, we are able to avoid the time
and expense associated with building a retail sales and support infrastructure.
Our focus on carriers has the added benefit that we do not compete with our
customers for end-users.

PROVIDE CARRIER-CLASS SERVICES USING THE INTERNET. Through our proprietary
technologies, we offer high quality voice and fax completion services using the
Internet. By using the Internet to deliver a majority of our services, we are
able to avoid the costs associated with developing an extensive network of
private dedicated lines. We intend to continue to use the Internet to provide
our high quality services at competitive prices. We will continue to introduce
only those services that we can offer at carrier-class quality.

FOCUS ON THE INTERNATIONAL MARKET AND EXPAND OUR GEOGRAPHIC PRESENCE THROUGH
PARTNERSHIPS AND ACQUISITIONS. The international long distance market segment is
large and growing and has historically offered higher revenue per minute than
the domestic long distance market segment. We intend to build the leading
international Internet telephony network to allow carriers to use us for their
international Internet telephony services around the world. We will continue to
focus on the international segment and partner with communications service
providers such as China Unicom and Dacom, the second largest carriers in China
and Korea respectively, that can originate and terminate calls in their
respective countries. We will also consider acquiring other complementary
businesses or technologies if attractive opportunities arise.

CONTINUE TO BE AT THE FOREFRONT OF INTERNET-BASED COMMUNICATIONS
TECHNOLOGY. In order to provide these high quality services and stay at the
forefront of Internet-based communications technology and service offerings, we
will continue to invest in improving our technology, and partner with leaders in
Internet-based communications hardware and software.

INCREASE SALES AND MARKETING EFFORTS AND BRAND AWARENESS. We will continue
to expand our sales and marketing activities, while focusing on communications
service providers domestically as well as internationally. We intend to build
iBasis into the premier brand in the Internet telephony marketplace and will
strive to make our name synonymous with high quality, value-added Internet
telephony services for communications service providers. We are in the process
of hiring additional sales, sales support and marketing professionals with
specific experience in our target markets and regions.

OFFER ADDITIONAL INTERNET-BASED COMMUNICATION SERVICES. We intend to
introduce new services that carriers can offer over our network or their own
networks. We are focused on applications that will allow carriers to expand
their business, improve service quality and cut costs. We also intend to offer
new services such as dedicated Internet and circuit-switched network access,
which will help our customers enter new markets quickly. We believe that these
new services will increase our customer

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base and allow us to cross-sell other services to communications service
providers once they are our customers. On February 3, 2000, we announced our
intention to deploy Cisco Systems' uOne-TM- application on the iBasis Network,
thereby allowing communications service providers to provide unified
communications services to their end-user customers over our network.

THE IBASIS NETWORK

The iBasis Network is our international network over which we deliver large
volumes of high quality international voice, fax and other value-added services
at significant cost savings. During our fourth quarter ended December 31, 1999,
we transported approximately 63.8 million minutes of traffic over our network.
The iBasis Network consists of four principal elements:

- "Internet central offices" and "Internet branch offices" that translate
voice to data for transmission and retrieval over a data network;

- the transmission medium, which is principally the Internet;

- Assured Quality Routing, our proprietary software; and

- our global network operations center, from which we oversee and coordinate
the operation of the gateways and the transmission network.

Following is a diagram of the iBasis Network.

[Diagram depicting the flow of information, moving clockwise from the lower
left with arrows connecting the various points, from a telephone, cellular phone
and fax machine, through telephone lines, labeled "Circuit-Switched Network,"
into an iBasis Internet Central Office/Internet Branch Office, to a cloud
labeled "The Internet," continuing out through another Internet Central Office/
Internet Branch Office, to another picture of telephone lines, labeled
"Circuit-Switched Network," and concluding with the depiction of a telephone,
cellular phone and fax machine. In the center of the diagram, connection to the
Internet Central Offices/Internet Branch Offices and the Internet, is a box with
the text "iBasis Global Network Operations Center" and "Assured Quality
Routing." Above the Internet cloud is a small cloud labeled "Alternate Routes"
connected the to Points of Presence with dotted lines.]

INTERNET CENTRAL OFFICES AND INTERNET BRANCH OFFICES. The entrance point
for communications traffic over the iBasis Network is an Internet branch office,
four of which have enhanced functionality and capacity and are referred to as
Internet central offices. Our customers can interconnect with the iBasis Network
by connecting dedicated voice circuits from their facilities to one of four
Internet central

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offices, located in New York; Los Angeles; London, England; and Hong Kong,
China. Alternatively, our customers may elect to install an iBasis Internet
branch office directly at their facilities to eliminate the cost of backhauling
traffic from their facilities to one of our Internet central offices. Internet
branch offices receive calls through a local carrier's switched network.
Gateways in each Internet branch office digitize, compress and packetize voice
and fax calls and then transmit them over the Internet. At the destination,
another Internet branch office reverses the process and the call is switched
back from the Internet to a local carrier's circuit-switched network in the
destination country.

We currently operate Internet branch offices located in more than two dozen
countries worldwide, including Australia, China, Germany, Hong Kong, Japan,
Korea, the United Kingdom and the United States. Some of these Internet branch
offices are owned by us and others are owned by our partners. The Internet
branch offices are scaleable and flexible platforms designed for interconnection
with the iBasis Network and are built primarily using Cisco Systems' equipment.
The scaleability of the Internet branch offices permits us to quickly increase
capacity in discrete increments at relatively low cost, either for a region or a
customer. In addition, the Internet branch office flexible architecture is
designed to easily integrate and support the new services we intend to offer.

THE INTERNET. We use the Internet to transmit the substantial majority of
our voice and fax traffic and deliver other value-added services, because of its
global coverage, rapid growth and flexible connectivity. By using the Internet,
we avoid having to build a private, dedicated network of fiber and cable
connections, which would delay our time-to-market in many locations and would be
more costly to deploy. We have addressed the challenges present in using the
Internet by:

- selecting only high quality, service-oriented Internet service providers
as our vendors;

- purchasing high-speed connections into the Internet backbone; and

- continuously monitoring the quality of the connections between each
Internet branch office and the Internet.

We also use data transmission over private leased lines or traditional
circuit-based voice networks where the Internet is not available or would not
permit us to meet our quality standards.

ASSURED QUALITY ROUTING. We have deployed a proprietary software
application, Assured Quality Routing, to maintain high quality voice and fax
service. This application monitors the quality of calls placed over our network
by applying defined quality parameters to each processed call. These quality
parameters include measures of voice and fax quality that are important to
carriers, including overall voice quality, call completion rates and post-dial
delay. The system alerts us whenever the transmission quality drops below
specific thresholds. We temporarily route subsequent calls to a circuit-switched
network or an alternate Internet-based network to restore high quality.

GLOBAL NETWORK OPERATIONS CENTER. We manage our network of Internet central
offices and Internet branch offices around the world and implement our
proprietary Assured Quality Routing software through our global network
operations center. It is comprised of network management tools from
Hewlett-Packard and a number of other vendors that permit us to monitor, test
and diagnose all components of the iBasis Network. The global network operations
center is staffed and running 7 days a week, 24 hours a day at our Burlington,
Massachusetts headquarters, complete with:

- real-time, end-to-end monitoring and analysis of call behavior patterns on
the iBasis Network to identify and address potential problems before they
become serious and to anticipate issues related to network growth;

- system redundancy, including power back-up and multiple network paths; and

- a help desk, which allows us to respond to our customers problems on a
timely basis.

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OUR SERVICES

Our current services include international voice and fax call completion and
a retail rating or billing solution. We also provide customers with our
web-based traffic revenue reporting system called iTrac. Customers have the
option to purchase these services as a complete suite or separately.

INTERNATIONAL VOICE AND FAX SERVICES. We offer international voice and fax
call completion services, and other value-added services, that provide our
customers a high quality, low-cost alternative for international voice and fax
transport of phone-to-phone or fax-to-fax calls placed by their business and
residential customers. Our proprietary Assured Quality Routing software and
web-based extranet are important components of our services and are integrated
elements of our advanced operational support systems.

On January 19, 2000, we announced that we will be offering service level
agreements to our international customers. These service level agreements for
international termination services guarantee customers sending calls over our
network call completion rates equivalent to or better than those provided by
alternative networks, including the public-switched telephone network. The call
completion rate, known in the telecommunications industry as the answer seizure
ratio, represents the percentage of calls out of all attempts that are
successfully completed. The higher the answer seizure ratio, the more reliable
the network and the more billable calls that result for a carrier.

RETAIL RATING SERVICE. We introduced our retail rating service to provide a
simple and easy-to-implement outsourced billing solution to customers who want
to offer prepaid or postpaid calling card origination services. Under this
program, we maintain and administer a billing support system that performs the
authentication, authorization and accounting for this service. At the same time,
our customers control the end-user calling settlement rates, and remain
responsible for card fulfillment, sales, marketing and end-user customer care.
The customer benefits of this service are:

- faster time-to-market for the introduction of calling card services;

- no up-front or ongoing investments in billing system hardware and
software; and

- reduced staffing and training expenses.

INTERACTIVE TRAFFIC REVENUE ANALYSIS CENTER. iTrac is proprietary web-based
traffic reporting analysis software that enables our customers to better manage
their operations through real-time information exchange. iTrac provides
statistics on service quality and traffic volume, helping customers to quickly
address issues that affect service and to do effective network capacity
planning. This information is delivered in a cost-efficient manner using
sophisticated and secure extranet technologies that customers access using a
standard web browser.

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FUTURE SERVICES. We intend to add new services that leverage components of
the iBasis Network to generate additional sources of revenue. We believe that
our ability to deploy new Internet-based communication services makes us an
attractive partner for application developers. We also believe that the ability
to offer these new services will be beneficial to our customers, regardless of
whether or not they directly charge their end-users for these services, because
they will help our customers attract new subscribers and retain and "up-sell"
their existing subscriber base. Some of the services that we may choose to
introduce in the future include:

- UNIFIED COMMUNICATIONS. On February 3, 2000, we announced that we intend
to deploy Cisco Systems' uOne-TM- unified communications application on
the iBasis Network. This application will permit our customers to offer a
communications solution that will unify the storage and retrieval of
e-mail and voice-mail messages as well as faxes. With the proliferation of
messaging worldwide and as people send more and more e-mail, voice-mail
and faxes, unified communications services will allow subscribers to
access their messages from a single source.

- INTERNET TELEPHONY HOSTING. On December 6, 1999, we announced that we
would begin offering Internet telephony hosting services on the iBasis
Network. These services will provide customers with access to a turnkey
solution that enables them to quickly begin offering voice, fax, pre-paid
calling and other value-added Internet telephony services with a global
footprint with minimal capital investment.

- BASIC MESSAGING SERVICES. We may offer additional basic messaging
services, including outsourced voice-mail, store-and-forward fax, or
faxmail, and e-mail.

- OTHER ADVANCED MESSAGING SERVICES. We may offer other advanced messaging
services including: one-number service, which allows subscribers to
consolidate existing office, home, and mobile numbers into a single
contact or "follow-me" number; Internet call management services such as
caller ID, call waiting and call forwarding; and message delivery that
includes the recording and scheduling of a message, repeated delivery
attempts and message delivery confirmation. These services may in some
cases leverage components of our network to provide international
call-termination services and operational support services.

- INFORMATION SERVICES. We may offer Internet-based information services
that deliver detailed, metered billing information that can help customers
to understand better how their network is being used.

- DIRECTORY SERVICES. We may offer subscriber-based directory services that
maintain important customer information. This would enable communications
service providers to customize and automate their services.

- INTERNET AND CIRCUIT-SWITCHED INFRASTRUCTURE. We may offer
circuit-switched access, dedicated Internet access, and equipment
co-location services to help our customers meet their time-to-market
objectives.

- CONFERENCING SERVICES. We may offer audio, video and data conferencing
services.

- BILLING SERVICES. We may offer additional outsourced billing services such
as on-line bill presentment and Internet telephony clearinghouse
settlement services.

MARKETS AND CUSTOMERS

Telephone companies can be segregated by size into first tier, second tier
and third tier carriers. Generally, first tier carriers are large domestic and
international carriers, such as MCI WorldCom, Cable & Wireless and certain
government-affiliated monopolies, such as the Japanese telecommunications
carrier KDD. First tier carriers generally have annual revenues in excess of
$2 billion. Second tier carriers have revenues generally in the $750 million to
$2 billion range, but have

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fewer direct operating agreements with other carriers and fewer international
facilities. Examples of tier two carriers are RSL, WorldxChange Communications,
World Access Telecomm Group, Star Telecomm and PGE. Third tier carriers are
typically switch-based resellers with revenues of less than $750 million.

We provide services to members of all three tiers of United States carriers,
who transmit voice and fax traffic through our New York or Los Angeles Internet
central offices for completion overseas. As of December 31, 1999, we were
providing services to ten of the top twelve highest volume United States-based
international carriers. The ability to provide quality consistently acceptable
to these classes of carriers is of vital importance, because these carriers
often have traffic volumes that regularly overflow their capacity.

Overseas we have established relationships with in-country companies and
local service providers that have local market expertise and relationships to
build strong businesses. Some of our overseas partners/customers are very large
well-established national carriers, such as the Korean company, Dacom, and China
Unicom. Others are emerging carriers or Internet service providers who are able
to provide the services necessary to terminate minutes for us in their country.

SALES AND MARKETING

SALES STRATEGY. Our sales efforts target leading telecommunications
carriers both in the United States and overseas. Our sales force, made up of
experienced personnel with long-time relationships in the telecommunications
industry, is frequently supplemented by senior members of management. As of
December 31, 1999, we had deployed nine sales personnel to cover domestic
carriers, with an additional seven in sales support roles. In the United States,
we sell directly to carriers and have successfully developed brand awareness and
beneficial relationships through numerous channels including the web, trade
shows, speaking engagements and joint marketing programs. The ability to provide
quality acceptable to leading carriers is a strong selling point for us. These
carriers have traffic that frequently exceeds their capacity and compels them to
seek alternative channels that offer comparable quality, particularly where
those channels can offer better pricing. Our sales process often involves a test
by our potential customers of our services with traffic to a particular country.
Our experience has been that once a carrier has begun to use our network for a
single country and has found our quality to be acceptable, the sales process for
other countries becomes easier.

In overseas markets, we seek to establish relationships with local service
providers that have the local market expertise to provide the termination
services we need. We believe that the opportunity we offer these companies to
terminate a substantial number of minutes makes us an attractive partner. As of
December 31, 1999, we had deployed eleven sales personnel to cover international
markets, two of whom are employed by our majority-owned joint venture in Hong
Kong. We have also established an office in Seoul, Korea that covers Korea,
Japan and Taiwan; an office in Jakarta covering the Southeast Asian countries
and employ an in-country sales person in China. Other countries are covered from
the United States where we have a sales office in Dallas and our worldwide
headquarters in Burlington, Massachusetts. Prime candidates for overseas
partners are carriers, call back companies, cellular, PCS and paging companies
and Internet service providers.

In Hong Kong, we have formed a joint venture with a local equipment
provider, MicroWorld, to help us develop a stronger local market presence. We
hope to use this joint venture to accelerate our penetration throughout Asia.

MARKETING STRATEGY. Our marketing strategy includes public relations
campaigns, interaction with industry analysts, attendance at trade shows and a
comprehensive website at www.ibasis.net. We have engaged a public relations firm
to conduct a campaign to position us as the preeminent Internet telephony
provider. We aggressively pursue favorable coverage in the trade and business
press and participate in a variety of industry trade shows, including Voice on
the Net, Telecommunications

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Resellers Association and Telecom Business. We believe our website will continue
to be an effective marketing tool in international markets.

STRATEGIC TECHNOLOGY RELATIONSHIPS

We have entered into strategic technology relationships with a number of
leading technology providers in the Internet telephony industry, including Cisco
Systems, Belle Systems and NetSpeak Corporation. We believe that our strategic
technology relationships are important because they give us early access to new
technologies and because many of our strategic relationship partners are an
important part of our sales and marketing programs.

CISCO SYSTEMS

As a Cisco Alliance Partner, we have access to Cisco's sales, marketing and
technical resources to aid our global expansion. We understand that Cisco has
selected fewer than 30 companies to participate in this program. The Cisco sales
and marketing resources available to us under this program include matching
funds for selected marketing activities, joint sales calls, event sponsorship
and seminar support. In addition, as a Cisco Alliance Partner, we have access to
Cisco technical resources and early opportunities to bring new products and
features to the marketplace. Currently, we are engaged in three beta programs
with Cisco for new products and features. We also conduct joint sales and
marketing programs with Cisco, participate with Cisco in industry trade shows
and periodically meet with consultants at Cisco's executive briefing center.
Under the terms of our alliance agreement with Cisco, we have committed to
appoint Cisco our preferred vendor. In addition, we are required to purchase 80%
of our total net purchases of any network equipment from Cisco, where Cisco has
a solution.

In addition, the iBasis Network has been designated by Cisco as a certified
Cisco Powered Network-TM-. This designation permits us to leverage Cisco's
significant worldwide brand equity by displaying the Cisco Powered
Network-TM-trademark in our literature and exhibits.

BELLE SYSTEMS

We also have a strategic alliance with Belle Systems A/S, a leading provider
of billing systems for Cisco-based IP Networks. Belle Systems billing solutions
are based on an architecture that provides the scaleability and flexibility that
is critical to our continued success in deploying IP-messaging services.

Under the agreement, we are licensing computer software from Belle Systems
that allows us to integrate their billing system into our network, in exchange
for which we pay product and license fees, which for specified products are not
to exceed the lowest price offered by Belle Systems to any of its customers for
the same or similar products. Belle Systems will provide general service and
support for the system, and use its best efforts to provide any additional
assistance for a reasonable price, also not to exceed the lowest prices charged
by Belle Systems to other customers. The agreement also contains a limited
warranty for the system, a mutual non-disclosure obligation, and a source code
escrow at our expense.

NETSPEAK CORPORATION

We have entered into a strategic partnership agreement with NetSpeak, a
leading developer of Advanced Intelligent Network technologies that enable
innovative solutions for concurrent, real-time interactive voice, video and data
communications over data networks. Under the agreement, we are licensing
computer software from NetSpeak that we and our customers can use to assist in
call routing and completion and, in exchange for which, we are obligated to pay
product and licensing fees. NetSpeak will also provide us with software
maintenance and support services for which we are obligated to pay maintenance
and support fees. Under the terms of the agreement, we have a limited

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obligation to upgrade our NetSpeak software to maintain some of NetSpeak's
service obligations. We will also work with NetSpeak in the development and
deployment of new functions and features to the software that will, among other
things, add value-added service capabilities that will enhance and differentiate
our offerings to service providers. Each of NetSpeak and iBasis will also engage
in co-branding and are obligated to engage in co-marketing activities to
increase customer awareness of the services offered by each company and to
represent each other as a strategic partner.

COMPETITION

The market for international voice and fax call completion services is
highly competitive. We face competition from a variety of sources, including
large communications service providers with more resources, longer operating
histories and more established positions in the telecommunications marketplace,
some of whom have begun to develop Internet telephony capabilities. Many of our
competitors are larger companies. We also compete with small companies who have
focused primarily on Internet telephony. We believe that we compete principally
on quality of service, price and bandwidth. We also expect that the ability to
offer enhanced service capabilities, including new services, will become an
increasingly important competitive factor in the near future.

TELECOMMUNICATIONS COMPANIES AND LONG DISTANCE PROVIDERS.

Large carriers around the world carry a substantial majority of the traffic.
These carriers, such as British Telecom and Deutsche Telecom, have started or
begun to deploy packet-switched networks for voice and fax traffic. These
carriers have substantial resources and have large budgets available for
research and development. In addition, several companies, many with significant
resources, such as Level 3 and Qwest Communications, are building fiber optic
networks, primarily in the United States, for Internet telephony traffic. These
networks can be expected to carry voice and fax and these newer companies may
expand into international markets.

The nature of the telecommunications marketplace is such that carriers buy
from and sell to each other. Major carriers have multiple routes to virtually
every destination, and frequently buy and sell based on the strength and
capacity to a particular country. We have relationships with many of these
carriers and have carried traffic for them in the past. We expect to continue to
exchange traffic with many of these companies in the future, even as they begin
to devote more resources to competing in the Internet telephony market.

INTERNET TELEPHONY SERVICE PROVIDERS

A number of companies have started Internet telephony operations in last few
years. AT&T Clearinghouse, GRIC Communications and ITXC sell international voice
and fax over the Internet, and compete directly with us. Other Internet
telephony companies, including Net2Phone and deltathree.com, are currently
focusing on the retail market and personal computer-based Internet telephony,
but may compete with us in the future.

GOVERNMENT REGULATION

UNITED STATES GOVERNMENT REGULATION OF THE INTERNET AND INTERNET
TELEPHONY. We believe that under United States law the Internet-related
services that we provide constitute information services, rather than
telecommunications services. As such, our services are not currently regulated
by the Federal Communications Commission or state agencies responsible for
regulating telecommunications carriers, although aspects of our operations may
be subject to state or federal regulation such as regulations governing
universal service funding, confidentiality of communications, copyright and
excise taxes. However, several efforts have been made to enact federal
legislation that would either regulate or exempt from regulation services
provided over the Internet. Therefore, we cannot assure you that

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Internet-related services such as ours will not be regulated in the future.
Increased regulation of the Internet may slow its growth by negatively impacting
the cost of doing business over the Internet. This would materially adversely
affect our business, financial condition and results of operations.

We also cannot assure you that Internet telephony will continue to be
lightly regulated by the FCC and state regulatory agencies. Although the FCC has
determined that, at present, information service providers, including Internet
telephony providers, are not telecommunications carriers, we cannot be certain
that this position will continue. On April 10, 1998, the FCC issued a report to
Congress discussing its implementation of certain universal service provisions
contained in the 1996 amendments to the Communications Act of 1934. In its
report, the FCC stated that it would undertake an examination of whether
phone-to-phone Internet telephony should be considered an information service or
a telecommunications service. The FCC noted that certain forms of phone-to-phone
Internet telephony appeared to lack the characteristics of an information
service and to have the same functionality as non-Internet protocol
telecommunications services. In addition, the FCC is currently considering
whether to impose surcharges and/or other common carrier regulations upon
certain providers of Internet telephony, primarily those which, unlike us,
provide Internet telephony services to end-users. If the FCC determines that
Internet telephony is subject to regulation as a telecommunications service, it
may subject providers of Internet telephony services to traditional common
carrier regulation and require them to make universal service contributions and
pay access charges. It is also possible that the FCC will adopt a regulatory
framework for Internet telephony providers different than that applied to
traditional common carriers. Finally, Congressional dissatisfaction with the
FCC's conclusions regarding Internet telephony could result in legislation
requiring the FCC to impose greater or lesser regulation. Any change in the
existing regulation of Internet telephony by the FCC or Congress could
materially adversely affect our business, financial condition and results of
operations.

In addition to the FCC and Congress, state regulatory authorities and
legislators may assert jurisdiction over the provision of intrastate Internet
telephony services. Some states already have initiated proceedings to examine
the regulation of such services. While we do not currently provide intrastate
services and have no current plans to do so, additional regulation of Internet
telephony by the states could preclude us from entering the intrastate market or
make entrance more difficult.

INTERNATIONAL GOVERNMENT REGULATION OF THE INTERNET AND INTERNET
TELEPHONY. We provide our Internet telephony services in various countries in
Europe, Asia, Latin America, and the Middle East. The regulatory treatment of
Internet telephony in these countries varies widely and is subject to constant
change. Some countries currently impose little or no regulation on Internet
telephony, as in the United States. Conversely, other countries that prohibit or
limit competition for traditional voice telephony services generally do not
permit Internet telephony or strictly limit the terms under which it may be
provided. Still other countries regulate Internet telephony like traditional
voice telephony services or determine on a case-by-case basis whether to
regulate Internet telephony as a voice service or as another telecommunications
service. Finally, in many countries, Internet telephony has not been addressed
by legislation or the regulatory authorities. The varying and constantly
changing regulation of Internet telephony in the countries in which we currently
provide or may provide services may materially adversely affect our business
financial condition and results of operations.

The European Union, for example, distinguishes between voice telephony,
which may be regulated by the member states, and other telecommunications
services, which are fully liberalized. With regard to Internet telephony, the
European Commission concluded in a Communication to the Member States that at
present Internet telephony should not be considered voice telephony and thus
should not be regulated as such by the member states. However, the Commission
noted that providers of Internet telephony whose services satisfied the European
Union's definition of voice telephony could be considered providers of voice
telephony and could be regulated by the member states. Moreover, Commission
Communications are not binding on the member states. Therefore, we cannot assure
you

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that the services provided by us in the European Union will not be deemed voice
telephony and, accordingly, subject to heightened regulation by one or more
European Union countries in the future. France is currently conducting an
investigation of how Internet telephony should be regulated. We also provide our
services in countries where the regulation of Internet telephony is more
restrictive than in the United States and the European Union. For example, we
have a contractual relationship with China Unicom, the second largest
telecommunications company in the People's Republic of China, to provide
international Internet telephony and facsimile services in China. China limits
competition in the telecommunications industry to several government-owned
companies. At present, Internet telephony is permitted on an experimental basis
only by China Unicom, China Telecom, and Jitong Communications. It is uncertain
whether Internet telephony will continue to be permitted when the trial period
ends.

Similarly, we provide our services in other countries in which the
regulatory status of Internet telephony is unclear or in the process of
development, and in countries in which regulatory processes are not as
transparent as in the United States and Europe. Changes in the regulatory
regimes of these countries that have the effect of limiting or prohibiting
Internet telephony, or that impose new or additional regulatory requirements on
providers of such services, may result in our being unable to provide service to
one or more countries in which we currently operate. That result could have a
material adverse effect on our business, financial condition and results of
operations.

In addition, as we expand into additional foreign countries, such countries
may assert that we are required to qualify to do business in the particular
foreign country, that we are otherwise subject to regulation, or that we are
prohibited from conducting our business in that country. Our failure to qualify
as a foreign corporation in a jurisdiction in which we are required to do so, or
to comply with foreign laws and regulations, would materially adversely affect
our business, financial condition and results of operations, including by
subjecting us to taxes and penalties and/or by precluding us from, or limiting
us in, enforcing contracts in such jurisdictions. Likewise, our customers and
partners may be or become subject to requirements to qualify to do business in a
particular foreign country, to otherwise comply with regulations, or to cease
from conducting business in that country. We cannot be certain that our
customers and partners are currently in compliance with regulatory or other
legal requirements in their respective countries, that they will be able to
comply with existing or future requirements, and/ or that they will continue in
compliance with any requirements. The failure of our customers and partners to
comply with these requirements could materially adversely affect our business,
financial conditions and results of operations.

OTHER UNITED STATES REGULATIONS AFFECTING THE INTERNET. Congress has
recently adopted legislation that regulates certain aspects of the Internet,
including online content, user privacy, and taxation. In addition, Congress and
other federal entities are considering other proposals that would further
regulate use of the Internet. For example, Congress is currently considering
legislation on a wide range of issues including Internet spamming, database
privacy, gambling, pornography and child protection, Internet fraud, privacy,
and digital signatures. Similarly, various states have adopted or are
considering Internet-related legislation. Increased regulation of the Internet
may slow its growth, which may negatively impact the cost of doing business over
the Internet and materially adversely impact our business, financial condition
and results of operations.

OTHER INTERNATIONAL REGULATIONS AFFECTING THE INTERNET. The European Union
also has enacted legislation that affects the Internet. For example, the
European Union imposes restrictions on the collection and use of personal data
and grants European Union citizens broad rights to access and limit the use of
their personal data. United States companies that collect or transmit
information over the Internet from individuals in European Union Member States
are subject to European Union legislation, which imposes restrictions that are
more stringent than existing Internet privacy standards in the United States.
Although we do not engage in the collection of personal data for purposes other
than routing and billing for our services, the legislation is broadly
applicable. The potential effect on us

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of development in this area is uncertain; however, a prohibition on the export
of personal data by us would have a material adverse impact on our business,
financial condition and results of operations.

INTELLECTUAL PROPERTY

We regard our copyrights, service marks, trademarks, trade dress, trade
secrets and similar intellectual property as critical to our success and we rely
on trademark and copyright law, trade secret protection and confidentiality
and/or license agreements with our employees, customers, partners and others to
protect our proprietary rights. We pursue the registration of our trademarks and
service marks in the United States and have applied for the registration of
certain of our trademarks and service marks. We have been granted trademark
registration for the mark VIP Calling-Registered Trademark- in the United
States, and have pending registration applications for the service marks Assured
Quality Routing-SM-, Broadbandit-SM- and iBasis-SM-. In addition, we have
pending registration for the marks iBasis and iBasis and design in the United
States. However, effective protection may not be available in every country in
which iBasis has, or will have, a commercial presence.

EMPLOYEES

As of December 31, 1999, we had 147 full-time employees and one part-time
employee, with approximately 62 in sales and marketing, 47 in engineering and
operations and 38 in general and administrative. As of December 31, 1999, we
engaged approximately 51 independent contractors and we employ a limited number
of temporary employees. Our employees are not represented by a labor union and
we consider our labor relations to be good.

FACILITIES

We are headquartered at 20 Second Avenue in Burlington, Massachusetts, where
we lease approximately 27,235 square feet of commercial space pursuant to a term
lease that expires in March 2005, subject to a five year renewal at our option.
We also lease approximately 14,462 square feet of commercial space at 10 Second
Avenue in Burlington, Massachusetts pursuant to a term lease that expires in
March 2005, subject to a five year renewal at our option. These facilities are
principally used for executive office space, including sales and marketing and
finance and administration. We also maintain our global network operations
center at this location. We lease an additional 3,156 square feet of space in
Los Angeles, California to house telecommunications equipment pursuant to a term
lease that expires in April 2009. We also maintain a facility in New York, New
York, to house telecommunications equipment, where we lease approximately 4,372
square feet of commercial space pursuant to a ten year term lease that expires
in July 2008. We also maintain a facility in Miami, Florida to house
telecommunications equipment, where we lease approximately 5,250 square feet of
space pursuant to a lease that expires in February 2010. We believe that our
existing facilities are adequate for our current needs and that suitable
additional or alternative space will be available in the future on commercially
reasonable terms.

LEGAL PROCEEDINGS

We are not currently a party to any material legal proceedings.

47
<PAGE>
MANAGEMENT

DIRECTORS, EXECUTIVE OFFICERS AND KEY EMPLOYEES

The directors, executive officers and key employees of iBasis, and their
ages as of January 31, 2000, are as follows.

<TABLE>
<CAPTION>
NAME AGE POSITION
- ---- -------- --------
<S> <C> <C>
EXECUTIVE OFFICERS AND DIRECTORS

Ofer Gneezy (1).................... 48 President and Chief Executive Officer, Director
Gordon J. VanderBrug............... 56 Executive Vice President, Director
Michael J. Hughes.................. 37 Vice President, Finance and Chief Financial Officer
John G. Henson, Jr................. 57 Vice President, Engineering and Operations
Charles Giambalvo.................. 44 Senior Vice President of Worldwide Sales
Charles N. Corfield (2)............ 40 Director
John Jarve (1)..................... 44 Director
Izhar Armony (1)(2)................ 36 Director
Robert Maginn...................... 43 Director
Charles S. Houser.................. 56 Director
Charles M. Skibo (1)............... 61 Director
Carl Redfield (2).................. 52 Director

KEY EMPLOYEES

Dan Powdermaker.................... 36 Vice President, Europe, Middle East and Africa
Gerald E. O'Loughlin............... 35 Vice President, North America
Juan Bergelund..................... 43 Vice President, Latin America
Craig Inouye....................... 38 Vice President, Asia
Matthew Kristin.................... 37 Chief Information Officer and Vice President of
Information Systems
Mary Cogan......................... 51 Vice President of Human Resources
</TABLE>

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

(1) Member of the Compensation Committee.

(2) Member of the Audit Committee.

MR. GNEEZY has served as the President, Chief Executive Officer and as a
director of iBasis since our formation in August 1996. From 1994 to 1996, Mr.
Gneezy was President of Acuity Imaging, Inc., a multinational public company
focused on the industrial automation industry. From 1980 to 1994, prior to being
renamed Acuity Imaging in connection with a merger with Itran, Mr. Gneezy was an
executive of Automatix Inc., a public industrial automation company, most
recently serving as its President and Chief Executive Officer. Mr. Gneezy
graduated from Tel-Aviv University, obtained his Masters of Science from the
Massachusetts Institute of Technology and is a graduate of the Advanced
Management Program of the Harvard Business School.

DR. VANDERBRUG has served as Executive Vice President and as a director of
iBasis since October 1996. From 1991 to 1996, Dr. VanderBrug was the Director of
Marketing, Electronic Imaging Systems of Polaroid Corporation. In 1980 Dr.
VanderBrug co-founded Automatix, Inc. Dr. VanderBrug received his B.A. in
mathematics from Calvin College, an M.A. in mathematics from Wayne State
University, and his Ph.D. in computer science from the University of Maryland.

MR. HUGHES has served as Vice President of Finance and Administration and
Chief Financial Officer of iBasis since August 1998. From 1995 to 1998, Mr.
Hughes was Director of Finance/ Controller at Teleport Communications Group, a
provider of local and long distance telecommunications services, including
voice, data, and Internet services. Prior to joining TCG in 1995, Hughes held
various financial positions at Houghton Mifflin Company and previously served as
an

48
<PAGE>
auditor at KPMG Peat Marwick. Mr. Hughes received a B.S. in accounting from
Bentley College and an M.B.A. in finance from Babson College. Mr. Hughes is a
certified public accountant.

MR. HENSON has served as Vice President, Engineering and Operations of
iBasis since 1998. Prior to joining iBasis, Mr. Henson was Vice President,
Network Operations at LCI International Inc., a telecommunications company that
was recently acquired by Qwest Communications. From 1992 to 1996, Mr. Henson was
a Senior Vice President at BancOne Services Corporation, where he was
responsible for telecommunications and data communications services.

MR. GIAMBALVO has served as Senior Vice President of Worldwide Sales of
iBasis since January 2000. From 1998 to 1999, Mr. Giambalvo was the president of
VocalTec Communications, Inc., a company that helped pioneer commercial Internet
telephony. Prior to joining VocalTec, in 1998, Mr. Giambalvo was vice president
of sales at Stratus Computer, a computer maker. From 1990 to 1998,
Mr. Giambalvo was the senior vice president of sales and customer service at ECI
Telecom, Inc., a leading manufacturer of telecommunications transmission
equipment. Mr. Giambalvo received an M.S. in telecommunications management from
Golden Gate University and a B.S. in electrical engineering and a B.F.A in
communications from The New York Institute of Technology.

MR. CORFIELD has been a director of iBasis since September 1997. Mr.Corfield
has been a partner at each of Whitman Capital and Mercury Capital, both
investment firms, since 1996. Mr. Corfield serves on the board of directors of
Liberate Technologies, a web-based, enhanced television company. Mr. Corfield
co-founded Frame Technology, a software company, in 1986 and was a member of its
board of directors and its Chief Technology Officer until it was acquired by
Adobe Systems in 1995.

MR. JARVE has been a director of iBasis since August 1998. Since 1985, Mr.
Jarve has been employed by Menlo Ventures, a venture capital firm focused on the
software, communications, health care, and Internet sectors, where he currently
serves as a general partner and managing director. Mr. Jarve serves on the board
of directors of Digital Insight Corporation, a provider of Internet banking
services. Mr. Jarve received a B.S. and M.S. in electrical engineering from the
Massachusetts Institute of Technology and an M.B.A. from Stanford University.

MR. ARMONY has been a director of iBasis since August 1998. He is currently
a partner at Charles River Ventures, a venture capital firm. Mr. Armony was an
associate with General Atlantic Partners in 1996. From 1988 to 1995, Mr. Armony
was the Vice President of Marketing and Business Development at Onyx
Interactive. Mr. Armony received an M.A. in cognitive psychology from the
University of Tel Aviv, an M.A. in international studies from the University of
Pennsylvania, and an M.B.A. from Wharton.

MR. MAGINN has been a director of iBasis since November 1997. Since 1983,
Mr. Maginn has been employed by Bain & Company, Inc., a strategy consulting
firm. Mr. Maginn currently serves as an officer and director of Bain &
Company, Inc.

MR. HOUSER has been a director of iBasis since October 1997. He is currently
a principal and managing director of Seruus Capital Partners, LP and Seruus
Telecom Fund, LP. Mr. Houser is the Chairman and Chief Executive Officer of
State Communications Inc. (d/b/a Trivergent Communications), a
telecommunications company. He was Executive Vice President of LCI
International, a long-distance company, from October 1995 until May 1996. Prior
to that date, he was Chairman and CEO of Corporate Telemanagement Group from its
inception in November 1989 until its sale to LCI International in
September 1995.

MR. SKIBO has been a director of iBasis since September 1999. Currently, Mr.
Skibo is the Chief Executive Officer and Chairman of Colo.com, a provider of
facilities and co-location services to the communication and information
technology industries. Since 1994, Mr. Skibo has served as Chairman and Chief
Executive Officer of Strategic Enterprises and Communications, Inc., a venture
capital firm. Mr. Skibo also serves as Chairman and Chief Executive Officer of
Allied Telecommunications, a communications company. From 1985 to 1987, Mr.
Skibo was President and CEO of US Sprint and its predecessor company, U.S.
Telecom.

49
<PAGE>
MR. REDFIELD has been a director of iBasis since September 1999.
Mr. Redfield has been Senior Vice President, Manufacturing and Logistics of
Cisco since February 1997. From September 1993 to February 1997, Mr. Redfield
was Vice President of Manufacturing at Cisco. Mr. Redfield also is a director of
CTC Communications Corp., and VA Linux Systems, Inc. Mr. Redfield received a
B.S. in Materials Engineering from Rensselaer Polytechnic Institute.

MR. POWDERMAKER has served as Vice President, Asia of iBasis since 1998,
prior to that, from 1997 to 1998, Mr. Powdermaker was our Director of Carrier
Sales. From 1996 to 1997, Mr. Powdermaker was client business manager of BCS
Global Markets, a networking services division of AT&T focused on the world's
2,000 largest telecommunications users. From 1995 to 1996, Mr. Powdermaker was a
sales manager with AT&T. In 1994, Mr. Powdermaker was employed in a business
development position with MFS Communications Company. Mr. Powdermaker received
an A.B. in political science from Boston College and an M.A. in Latin American
studies and M.B.A. in finance and marketing from the University of Chicago's
Graduate School of Business.

MR. O'LOUGHLIN has served as Vice President, North America of iBasis since
June 1999. From December 1998 to May 1999, Mr. O'Loughlin was our Director of
Carrier Sales. Prior to joining iBasis, Mr. O'Loughlin was General Manager for
Allied Communication Holdings. From July 1997 until April 1998, Mr. O'Loughlin
was a vice president of carrier services at Arbinet Communications. From October
1994 to June 1997, Mr. O'Loughlin served as Director of Carrier Sales for
TresCom International.

MR. BERGELUND has served as Vice President, Latin America of iBasis since
December 1998. From March 1996 to 1998, Mr. Bergelund was Chief Operating
Officer of IPTEL--Americas Exchange, Inc., a start-up Latin American Internet
telephony network. From 1992 to 1996, Mr. Bergelund was a senior manager
consultant at Oracle Corporation's Latin America Division. Mr. Bergelund
received a B.S. in Electrical Engineering and an M.S. in telecommunications
engineering from the Instituto de Ciencias JEN, Madrid, Spain.

MR. INOUYE has served as Vice President, Asia for iBasis since
January 2000. From 1998 to 2000, Mr. Inouye was director of international
business development and carrier sales for DirectNet Telecommunications, a
provider of wholesale international telecommunications products and services.
From 1986 to 1998, Mr. Inouye served in a variety of managerial and sales
positions, including regional director for international relations, with GTE
Hawaiian Telephone Company. Mr. Inouye received a B.A. in business
administration from the University of Hawaii.

MR. KRISTIN has served as the Chief Information Officer of iBasis since
June 1999 and Vice President of Information Systems since December 1999. From
1994 to 1999, Mr. Kristin served as manager of workflow solutions for Concert
Communication Services, a global telecommunications carrier.

MS. COGAN has served as Vice President of Human Resources of iBasis since
January 2000. From 1997 to 1999, Ms. Cogan was a human resources consultant with
MSC Associates, a human resource consulting group. From 1994 to 1997, Ms. Cogan
served as the senior director of human resources for Cascade Communications
Corp., a global provider of wide area networking products and services for the
telecommunications and Internet industries. In addition, Ms. Cogan has held
human resource positions as Summa Four, Inc., Northern Telecom and Data General
Corp. Ms. Cogan received an M.B.A. in finance and human resources from
Northeastern University and a B.A. from the University of Massachusetts.

BOARD OF DIRECTORS

Our board of directors is divided into the following three classes, with the
members of the respective classes serving for staggered three-year terms.

- Class 1 directors, whose terms expire at the annual meeting of
stockholders to be held in 2000;

50
<PAGE>
- Class 2 directors, whose terms expire at the annual meeting of
stockholders to be held in 2001; and

- Class 3 directors, whose terms expire at the annual meeting of
stockholders to be held in 2002.

Messrs. Armony, Houser and Maginn are our Class 1 directors, Messrs. Jarve,
Skibo and VanderBrug are our Class 2 directors, and Messrs. Corfield, Gneezy and
Redfield are our Class 3 directors. At each annual meeting of stockholders, our
stockholders will elect the successors to directors whose terms have expired to
serve from the time of election and qualification until the third annual meeting
following election. The classification of the board of directors may delay or
prevent a change in control or in the management of iBasis. See "Description of
Capital Stock--Delaware Law and Certain Certificate of Incorporation and By-Law
Provisions."

Messrs. Gneezy, VanderBrug, Houser, Corfield, Maginn, Armony and Jarve were
nominated and elected as directors by the holders of our common and preferred
stock in accordance with provisions of a shareholders agreement. This agreement
terminated upon completion of our initial public offering in November 1999. Each
of the individuals will remain as a director until he resigns or stockholders
elect his replacements in accordance with our certificate of incorporation.

Our executive officers are appointed by the board of directors and serve
until their successors have been duly elected and qualified. There are no family
relationships among any of our executive officers or directors.

DIRECTOR COMPENSATION

Our directors do not receive cash compensation for their services as
directors. However, non-employee directors are reimbursed for travel expenses.
We maintain directors' and officers' liability insurance and our by-laws provide
for mandatory indemnification of directors and officers to the fullest extent
permitted by Delaware law. In addition, our certificate of incorporation limits
the liability of our directors to either iBasis or its stockholders for breaches
of the directors' fiduciary duties to the fullest extent permitted by Delaware
law. See "Description of Capital Stock--Delaware Law and Certain Certificate of
Incorporation and By-Law Provisions."

Messrs. Gneezy and VanderBrug, each of whom is both a director and executive
officer of iBasis, received a stock option grant in 1998 for their service as
officers of iBasis. See "Management--Executive Compensation." In addition, in
September 1999, each of Messrs. Skibo and Redfield received an option to
purchase 80,000 shares of common stock under the iBasis 1997 Stock Incentive
Plan, with such options vesting in equal 25% increments on the date of each of
the next four annual meetings of our stockholders following our initial public
offering, beginning with the annual meeting to take place in 2000, provided that
the director is re-elected to the board of directors at such meeting. Each of
the other non-employee members of the board of directors, including
Messrs. Armony, Houser, Jarve, Corfield, and Maginn, received an option to
purchase 40,000 shares of common stock on the same terms. The vesting of each of
the options will accelerate by 12 months, or 25% of the total grant, in the
event of a change in control of iBasis, as defined in the option agreements.

COMMITTEES OF THE BOARD OF DIRECTORS

The compensation committee currently consists of Messrs. Armony, Gneezy,
Jarve and Skibo. The compensation committee reviews and evaluates the salaries,
supplemental compensation and benefits of our officers, reviews general policy
matters relating to compensation and benefits of our employees and makes
recommendations concerning these matters to the board of directors. The
compensation committee also administers our 1997 Stock Incentive Plan and our
1999 Employee Stock Purchase Plan.

The audit committee currently consists of Messrs. Armony, Corfield and
Redfield. The audit committee reviews with our independent accountants the scope
and timing of its audit services, the accountants' report on our financial
statements following completion of their audit and our policies and procedures
with respect to internal accounting and financial controls. In addition, the
audit committee

51
<PAGE>
will make annual recommendations to the board of directors for the appointment
of independent accountants for the ensuing fiscal year.

COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION

With the exception of Mr. Gneezy, no member of the compensation committee is
or has been an officer or employee of ours. All decisions regarding the
compensation of our executive officers for the fiscal year ended December 31,
1999 were made by the compensation committee, except that Mr. Gneezy did not
participate in deliberations or decisions regarding his own compensation. None
of our executive officers serves as a member of the board of directors or
compensation committee of any other entity that has one or more executive
officers serving as a member of our board of directors or compensation
committee.

EMPLOYMENT AGREEMENTS

We currently have employment contracts in effect with Ofer Gneezy, our
President and Chief Executive Officer, Dr. VanderBrug, our Vice President, Mr.
Henson, our Vice President of Engineering and Operations, Mr. Hughes, our Vice
President of Finance and Chief Financial Officer and Mr. Giambalvo, our Senior
Vice President of Worldwide Sales.

iBasis and Mr. Gneezy are parties to an employment agreement, dated
August 11, 1997, governing his employment with iBasis as President and Chief
Executive Officer. Under the terms of the employment agreement, Mr. Gneezy is to
be paid a base salary of $125,000, and is eligible to receive an annual bonus at
the discretion of the board of directors. iBasis and Dr. VanderBrug are parties
to an employment agreement, dated August 11, 1997, governing his employment with
iBasis as Executive Vice President. Under the terms of the employment agreement,
Dr. VanderBrug is to be paid a base salary of $115,000, and is eligible to
receive an annual bonus at the discretion of the board of directors. iBasis and
Mr. Henson are parties to an employment agreement dated as of August 17, 1999
governing his employment with iBasis as Vice President, Engineering and
Operations. Under the terms of the employment agreement, Mr. Henson is to be
paid a base salary of $120,000, and is eligible to receive an annual bonus at
the discretion of the chief executive officer or board of directors. iBasis and
Mr. Hughes are parties to an employment agreement dated as of August 17, 1999
governing his employment with iBasis as Vice President, Finance and Chief
Financial Officer. Under the terms of the employment agreement, Mr. Hughes is to
be paid a base salary of $120,000, and is eligible to receive an annual bonus at
the discretion of the chief executive officer or board of directors. iBasis and
Mr. Giambalvo are parties to an employment agreement, dated as of February 8,
2000, governing his employment with iBasis as Senior Vice President of Worldwide
Sales. Under the terms of the employment agreement, Mr. Giambalvo is to be paid
a base salary of $185,000, and is eligible to receive an annual bonus at the
discretion of the board of directors.

We may terminate the employment agreements with Messrs. Gneezy and
VanderBrug "for cause" or at any time upon at least thirty days prior written
notice, and Messrs. Gneezy and VanderBrug may terminate their employment
agreements "for good reason" or at any time upon at least thirty days prior
written notice. If we terminate either of Messrs. Gneezy and VanderBrug without
cause or if either resigns for good reason, we must continue to pay his base
salary for one year and continue to provide health benefits for one year.

We may terminate the employment agreements with Messrs. Henson, Hughes and
Giambalvo "for cause" or at any time upon at least thirty days prior written
notice, and Messrs. Henson, Hughes and Giambalvo may terminate their employment
agreements for "good reason" or at any time upon at least thirty days prior
written notice. If, within six months following an acquisition or change in
control, we terminate either of Messrs. Henson, Hughes and Giambalvo without
cause or if either resigns for good reason, we must continue to pay his base
salary for nine months and continue to provide health benefits for nine months.

52
<PAGE>
The employment agreements with Messrs. Gneezy, VanderBrug, Henson, Hughes
and Giambalvo entitle them to life insurance, health insurance and other
employee fringe benefits to the extent that we make benefits of this type
available to our other executive officers. All intellectual property that
Messrs. Gneezy, VanderBrug, Henson, Hughes and Giambalvo may invent, discover,
originate or make during the term of their employment shall be the exclusive
property of iBasis. Each of Messrs. Gneezy, VanderBrug, Henson, Hughes and
Giambalvo may not, during or after the term of his employment, disclose or
communicate any confidential information without our prior written consent. Each
employment agreement also contains a non-competition provision that is intended
to survive the termination of each officer's employment for a period of one
year. The agreements with Messrs. Gneezy and VanderBrug also provide that in the
event of an acquisition or change in control, each of their options and
restricted shares, if any, shall automatically become fully vested immediately
prior to such event, and each such option shall remain exercisable until the
expiration of such option or until it sooner terminates in accordance with its
terms. The agreements with Messrs. Henson, Hughes and Giambalvo provide that in
the event that we terminate the employment of the officer without cause, or the
officer terminates his employment with "good reason," in either case within six
months after the occurrence of an acquisition or change in control, then his
options and restricted stock, if any, shall immediately vest and become
exercisable, and each option shall remain exercisable until the expiration of
the option or until it sooner terminates in accordance with its terms.

We have also entered into a stock restriction agreement with Mr. Gneezy and
Dr. VanderBrug. Under the terms of the agreement, if either Mr. Gneezy or Dr.
VanderBrug leaves his employment with us, either because he terminates his
employment voluntarily and without "good reason," or he is terminated "for
cause," we have the right to purchase a percentage of the common stock held by
him at the fair market value, as determined by our board of directors, on the
date of the purchase by iBasis. The percentage we have the right to acquire
under these circumstances decreases over time, from approximately 16.9% as of
the date of this prospectus to 0% on or after August 26, 2000, at which time the
agreement will terminate. The terms "good reason" and "for cause" have the same
meanings as they do in the officers' employment agreements.

In general, "good reason" as used in both the employment agreements and the
stock restriction agreement of Messrs. Gneezy, VanderBrug, Hughes, Henson and
Giambalvo is defined to mean any material change in the compensation, position,
location of employment or responsibilities of the employee. "For cause"
generally means gross negligence or willful misconduct of the employee, a breach
of the employment agreement or the commission of a crime.

Our employment agreement with Mr. Giambalvo also contains provisions
relating to Mr. Giambalvo's relocation to the Boston area. Under the terms of
Mr. Giambalvo's employment agreement, we have agreed to provide Mr. Giambalvo
with $70,000 to cover his relocation expenses. In addition, we have agreed to
guarantee a loan of up to $500,000 to Mr. Giambalvo for a period of six months,
in the event he purchases a home in the Boston area before he sells his existing
home.

EXECUTIVE COMPENSATION

The following table sets forth information for the fiscal years ended
December 31, 1998 and 1999 with respect to the compensation of our chief
executive officer and our three other most highly compensated executive officers
whose total salary and bonus exceeded $100,000 for the year ended December 31,
1999.

53
<PAGE>
SUMMARY COMPENSATION TABLE

<TABLE>
<CAPTION>
LONG-TERM
COMPENSATION
AWARDS
ANNUAL COMPENSATION (1) ---------------------
------------------------------------ SECURITIES UNDERLYING ALL OTHER
NAME AND PRINCIPAL POSITION YEAR SALARY BONUS OPTIONS (#) COMPENSATION
- --------------------------- -------- -------- -------- --------------------- ------------
<S> <C> <C> <C> <C> <C>
Ofer Gneezy..................... 1999 $150,000 $135,000 -- --
President and Chief Executive 1998 134,866 37,500 80,000 --
Officer
Gordon J. VanderBrug............ 1999 135,000 122,400 -- --
Executive Vice President 1998 122,240 33,750 60,000 --
John G. Henson, Jr. (2)......... 1999 125,000 85,600 50,000 --
Vice President, Engineering & 1998 67,898 30,000 200,000 $17,791(3)
Operations
Michael J. Hughes (4)........... 1999 120,000 75,750 50,000 --
Vice President, Finance and 1998 48,808 12,500 200,000 --
Chief Financial Officer
</TABLE>

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

(1) Excludes certain perquisites and other benefits, the amount of which did not
exceed 10% of the employee's total salary and bonus.

(2) Mr. Henson became Vice President, Engineering and Operations in June 1998.

(3) Represents reimbursed relocation expenses.

(4) Mr. Hughes became Vice President, Finance and Chief Financial Officer in
August 1998.

STOCK OPTION GRANTS

The following table contains information concerning options to purchase
common stock that we granted made in the year ended December 31, 1999 to each of
the officers named in the summary compensation table.

OPTION GRANTS IN 1999

<TABLE>
<CAPTION>
POTENTIAL REALIZABLE
VALUE AT
INDIVIDUAL GRANTS ASSUMED ANNUAL
----------------------------------------------------------------- RATES OF
PERCENT OF TOTAL STOCK PRICE APPRECIATION
NUMBER OF OPTIONS GRANTED EXERCISE FOR OPTION TERM(2)
SECURITIES UNDERLYING TO EMPLOYEES PRICE PER EXPIRATION -------------------------
NAME OPTIONS GRANTED(1) IN 1999 SHARE DATE 5% 10%
- ---- --------------------- ---------------- --------- ---------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
Ofer Gneezy............. -- -- -- -- -- --
Gordon J. VanderBrug.... -- -- -- -- -- --
John G. Henson, Jr...... 50,000 2.5% $ 4.00 6/3/2009 $2,142,000 $3,529,000
Michael J. Hughes....... 50,000 2.5 4.00 6/3/2009 2,142,000 3,529,000
</TABLE>

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

(1) Shares underlying options generally vest over a four-year period, with 6.25%
of the shares vesting on each of the first sixteeen three-month
anniversaries after the grant date. However, during the first year of
employment, no shares underlying an option vest until the first anniversary
of the optionee's employment when all of the shares that would have vested
before such date become exercisable. For disclosure regarding terms of the
stock options, see "Management--1997 Stock Incentive Plan."

(2) The 5% and 10% assumed annual rates of compounded stock price appreciation
are mandated by the rules of the Securities and Exchange Commission and do
not represent an estimate or projection of our future stock prices.
Potential realizable value is determined by multiplying $28.75, the closing
price of the common stock on the Nasdaq National Market on December 31,
1999, by the stated annual appreciated rate compounded annually for the term
of the option, subtracting the exercise price or base price per share from
the product, and multiplying the remainder by the

54
<PAGE>
number of options granted. Actual gains, if any, on stock option exercises
and common stock holdings are dependent on the future performance of the
common stock and overall stock market conditions. There can be no assurance
that the amounts reflected in the table will be achieved.

OPTION EXERCISES AND HOLDINGS

The following table contains information concerning option holdings for the
year ended December 31, 1999 with respect to each of the officers named in the
summary compensation table.

<TABLE>
<CAPTION>
1999 YEAR-END OPTION VALUES
---------------------------------------------------------
NUMBER OF SHARES VALUE OF UNEXERCISED
UNDERLYING UNEXERCISED IN-THE-MONEY
OPTIONS AT YEAR END OPTIONS AT YEAR END(1)
--------------------------- ---------------------------
NAME EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- ---- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C>
Ofer Gneezy.................................... 20,000 60,000 $ 553,000 $1,659,000
Gordon J. VanderBrug........................... 15,000 45,000 414,750 1,244,250
John G. Henson, Jr............................. 71,250 178,750 1,980,938 4,866,563
Michael J. Hughes.............................. 63,750 186,250 1,769,063 5,078,438
</TABLE>

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

(1) Value is determined by subtracting the exercise price from $28.75, the
closing price of the common stock on the Nasdaq National Market on
December 31, 1999, multiplied by the number of shares underlying the
options.

1997 STOCK INCENTIVE PLAN

In August 1997, our board of directors approved our 1997 Stock Incentive
Plan, which was amended in December 1998 and in September 1999. The initial
adoption of the plan and each of its amendments were subsequently approved by
our stockholders. Our stock incentive plan provides for the grant of incentive
stock options, nonqualified stock options and restricted stock awards. Employees
(including officers and employee directors), directors, consultants and advisors
are eligible for all awards except incentive stock options. Only employees are
eligible for incentive stock options. A maximum of 5,700,000 shares of common
stock have been authorized for issuance under our stock incentive plan. Under
our stock incentive plan, as of December 31, 1999:

- options for the purchase of 2,947,725 shares of common stock had been
granted and were outstanding under the plan;

- 206,125 shares had been issued upon exercise of options granted under the
plan;

- a grant of 15,000 shares of restricted stock had been made under the plan;
and

- options for the purchase of 403,650 shares that were granted under the
plan had been cancelled.

2,531,150 shares of common stock remained available for the grant of awards
under the plan as of December 31, 1999. No participant in our stock incentive
plan may, in any year, be granted options or restricted stock awards with
respect to more than 100,000 shares of common stock.

The compensation committee administers our stock incentive plan and has the
authority to make all determinations required under our stock incentive plan,
including the eligible persons to whom, and the time or times at which, options
or restricted stock awards may be granted, the exercise price or purchase price,
if any, of each option or restricted stock award, whether each option is
intended to qualify as an incentive stock option or a nonqualified stock option,
and the number of shares subject to each option or restricted stock award. The
compensation committee also has authority to:

- interpret our stock incentive plan;

- determine the terms and provisions of the option or restricted stock award
instruments; and

- make all other determinations necessary or advisable for administration of
our stock incentive plan.

The committee has authority to prescribe, amend, and rescind rules and
regulations relating to our stock incentive plan. The exercise price of options
granted under our stock incentive plan shall not be

55
<PAGE>
less than 100% of the fair market value of the common stock on the date of
grant, or 110% in the case of incentive stock options issued to an employee who
at the time of grant owns more than 10% of the total combined voting power of
all classes of iBasis stock. The options become exercisable at such time or
times, during such periods, and for such numbers of shares as shall be
determined by the compensation committee and expire after a specified period
that may not exceed ten years from the date of grant.

The compensation committee may, in its discretion, provide for the
acceleration of one or more outstanding options and the vesting of unvested
shares held as restricted stock awards upon occurrence of a change of control of
iBasis.

In the event of a merger, consolidation, or sale, transfer, or other
disposition of all or substantially all of our assets, the compensation
committee may, in its discretion, provide for the automatic acceleration of one
or more outstanding options that are assumed or replaced and do not otherwise
accelerate by reason of the transaction. In addition, the compensation committee
may similarly provide for the termination of any of our repurchase rights that
may be assigned in connection with the merger, consolidation, or sale, transfer,
or other disposition of all or substantially all of our assets, in the event
that a holder of restricted stock's employment, directorship or consulting or
advising relationship should subsequently terminate following the transaction.

The board of directors may amend, modify, suspend or terminate our stock
incentive plan at any time, subject to applicable law and the rights of holders
of outstanding options and restricted rights awards. Our stock incentive plan
will terminate on August 11, 2007, unless the board of directors terminates it
prior to that time.

1999 EMPLOYEE STOCK PURCHASE PLAN

In September 1999, our board of directors and stockholders approved the 1999
iBasis, Inc. Employee Stock Purchase Plan, which enables eligible employees to
acquire shares of our common stock through payroll deductions. In December 1999,
the employee stock purchase plan was amended. Our employee stock purchase plan
is intended to qualify as an employee stock purchase plan under Section 423 of
the Internal Revenue Code. The initial offering period started on January 1,
2000 and will end on June 30, 2000, unless otherwise determined by the board of
directors. Subsequent offerings under the employee stock purchase plan are
planned to start on January 1 and July 1 of each year and end on June 30 and
December 31 of each year. During each offering period, an eligible employee may
select a rate of payroll deduction of from 1% to 10% of compensation, up to an
aggregate of $12,500 in any offering period. The purchase price for our common
stock purchased under our employee stock purchase plan is 85% of the lesser of
the fair market value of the shares on the first or last day of the offering
period. An aggregate of 500,000 shares of common stock have been reserved for
issuance under the employee stock purchase plan.

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<PAGE>
CERTAIN TRANSACTIONS

PREVIOUS CAPITAL STOCK FINANCINGS

Between February 1997 and July 1999, we sold an aggregate of 1,500,000
shares of our Class B common stock and 13,556,603 shares of our preferred stock
for cash. All of these shares of Class B common stock and preferred stock
automatically converted into an aggregate of 17,556,603 shares of common stock
upon the completion of our initial public offering in November 1999. See
"Principal Stockholders" for information regarding our securities which are held
by our directors and officers and the holders of 5% or more of the outstanding
common stock.

CLASS A COMMON STOCK. In August 1996, we issued 6,000,000 shares of our
Class A common stock to Ofer Gneezy at a price of $.001 per share, for a total
cash consideration to us of $50. The 6,000,000 shares reflect both a 40-for-1
stock split in February 1997, and a 2-for-1 stock dividend in December 1997. Mr.
Gneezy is our President and Chief Executive Officer and a director. Our Class A
common stock converted into common stock on a one-for-one basis upon the
completion of our initial public offering.

CLASS B COMMON STOCK. In February, March and April 1997, we issued
1,500,000 shares of our Class B common stock to a number of independent
investors and our founders at a purchase price of $0.33 per share, for a total
cash consideration to us of approximately $500,000. In this transaction, we sold
300,000 shares of Class B common stock to the Charles N. Corfield Trust, 15,000
shares to Ofer Gneezy, 15,000 shares to Gordon J. VanderBrug, 150,000 shares to
Elka, Ltd., 150,000 shares to Henry Meester, Jr., 240,000 shares to Porky
Partners L.L.C., 150,000 shares to Providence Investment Company Limited,
150,000 shares to David J. Roux and 300,000 shares to the Melvin C. VanderBrug
Trust. An additional 30,000 shares were sold to an independent investor. Charles
N. Corfield, the sole trustee of the Charles N. Corfield Trust, is a director of
iBasis. Mr. VanderBrug is our Executive Vice President and a director. All of
the outstanding Class B common stock automatically converted into common stock
on a share-for-share basis upon the completion of our initial public offering.

SERIES A PREFERRED STOCK. In October, November and December 1997, and March
and June 1998, subject to commitments made in 1997, we issued an aggregate of
1,250,000 shares of Series A preferred stock to a number of independent
investors and our founders at a purchase price of $3.00 per share for a total
cash consideration to us of approximately $3.75 million. In these transactions,
we sold 200,000 shares of Series A preferred stock to the Charles N. Corfield
Trust, 3,333 shares to Ofer Gneezy, 25,000 shares to Henry Meester, Jr., 25,000
shares to the Melvin C. VanderBrug Trust, 16,667 shares to David J. Roux,
333,333 shares to Seruus Telecom Fund, L.P., 16,500 shares to Elka, Ltd.,
278,084 shares to Bain Securities, Inc., 278,084 shares to Sunapee
Securities, Inc. and 1,667 shares to Gordon J. VanderBrug. An additional 72,332
shares of Series A preferred stock were sold to other independent investors,
including two stockholders of iBasis. Mr. Houser, a director of iBasis, is the
chairman and a managing director of Seruus Ventures, LLC, an affiliated entity
of Seruus Telecom Fund, L.P. All of the outstanding Series A preferred stock
automatically converted into common stock upon the completion of our initial
public offering on the basis of three shares of common stock for each share of
Series A preferred stock.

SERIES B PREFERRED STOCK. On August 26, 1998, we issued 6,562,500 shares of
Series B preferred stock to a number of independent investors, our founders and
certain existing shareholders at a purchase price of $1.60 per share, for a
total cash consideration to us of approximately $10.5 million. In this
transaction, we sold 56,578 shares of Series B preferred stock to Charles River
VIII-A LLC, 3,068,422 shares to Charles River Partnership VIII, LP, 100,000
shares to the Charles N. Corfield Trust, 5,000 shares to Ofer Gneezy, 19,100
shares to David J. Roux, 62,500 shares to Charles S. Houser, 12,500 shares to
Michael J. Hughes, 125,960 shares to Menlo Entrepreneurs Fund VII, L.P., and
2,999,040 shares to Menlo Ventures VII, L.P. An additional 113,400 shares of
Series B preferred stock

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<PAGE>
were sold to other independent investors, including six stockholders of iBasis.
Izhar Armony, a director of iBasis, is a partner at Charles River Ventures, an
affiliated entity of Charles River VIII-A LLC and Charles River Partnership
VIII, LP. Michael J. Hughes is the Vice President, Finance and Chief Financial
Officer of iBasis. John Jarve, a director of iBasis, is a principal and managing
director of Menlo Ventures, an affiliated entity of Menlo Entrepreneurs Fund
VII, L.P. and Menlo Ventures VII, L.P. All of the outstanding Series B preferred
stock automatically converted into common stock on a share-for-share basis upon
the completion of our initial public offering.

SERIES C PREFERRED STOCK. In July 1999, we issued 5,744,103 shares of
Series C preferred stock to a number of independent investors, our founders and
certain existing shareholders at a purchase price of $4.37 per share, for a
total cash consideration to us of approximately $25.1 million. In this
transaction, we sold 4,577 shares of Series C preferred stock to Ofer Gneezy,
4,577 shares to Michael J. Hughes, 23,000 shares to Elka, Ltd., 114,416 shares
to the Charles N. Corfield Trust, 53,432 shares to Porky Partners II, L.L.C.,
37,500 shares to Charles S. Houser, 12,429 shares to Charles River VIII-A LLC,
114,416 shares to Dirigo Partners, L.L.C., an affiliate of David J. Roux,
674,071 shares to Charles River Partnership VIII, LP, 121,234 shares to the
Melvin C. VanderBrug Trust, 658,829 shares to Menlo Ventures VII, L.P., 27,671
shares to Menlo Entrepreneurs Fund VII, L.P., 517,784 shares to New Media
Investors III, LLC, 1,888,010 shares to TCV III (Q), L.P., an aggregate of
171,487 shares to affiliates of TCV III (Q), 1,137,761 shares to Integral
Capital Partners IV, L.P. and 6,404 shares to one of its affiliates. An
additional 176,505 shares of Series C preferred stock were sold to other
independent investors, including eight stockholders of iBasis. All of the
outstanding Series C preferred stock automatically converted into common stock
on a share-for-share basis upon the closing of our initial public offering.

RIGHTS AND RESTRICTIONS OF CLASS B COMMON STOCK AND PREFERRED STOCK.

When the Class A and Class B common stock and Series A, Series B and
Series C preferred stock converted into common stock upon the completion of our
initial public offering, all rights and restrictions of the Class A and Class B
common stock and the Series A, Series B and Series C preferred stock, including
any redemption rights and special voting rights, terminated. Notwithstanding the
conversion, the original holders of the Series A, Series B and Series C
preferred stock are entitled to "piggyback" and certain demand registration
rights with respect to the shares of common stock into which the Series A,
Series B and Series C preferred stock converted. See "Description of Capital
Stock--Registration Rights."

CHANGE IN CONTROL ARRANGEMENTS AND INDEMNIFICATION

Our certificate of incorporation limits the liability of our directors for
monetary damages arising from a breach of their fiduciary duty as directors,
except to the extent otherwise required by Delaware law. Such limitation of
liability does not affect the availability of equitable remedies such as
injunctive relief or rescission.

Our by-laws provide that we may indemnify our directors and officers to the
fullest extent permitted by Delaware law.

Provisions in our employment agreements with Messrs. Gneezy and VanderBrug
are triggered upon a change in control of iBasis. In general, a "change in
control" is defined to mean a merger, consolidation or similar transaction in
which securities possessing more than 50% of the total combined voting power of
our outstanding securities are transferred to a new person, or upon the sale,
transfer or other disposition of all or substantially all of our assets to one
or more persons. Under each agreement, immediately prior to a change in control,
each stock option and restricted share held by the officer shall immediately
vest and become exercisable.

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<PAGE>
Provisions in our employment agreements with Messrs. Henson, Hughes and
Giambalvo are also triggered upon a change in control of iBasis. Under each
agreement, if within the six month period following the occurrence of an
acquisition or change in control, the company terminates the employment of the
officer without cause, or the officer terminates his employment with "good
reason," then he shall be entitled to the continuation of his salary and health
benefits for a period of nine months from the date of his termination. In
general, "good reason" is defined to mean any material change in the
compensation, position or responsibilities of the officer that is, taken as a
whole, inconsistent with their respective positions held prior to the change in
control. Further, upon any such termination each option to acquire our capital
stock held by the officer shall immediately vest and become exercisable.

Each of the nonemployee members of our board of directors, including
Messrs. Armony, Houser, Jarve, Corfield, and Maginn, received an option to
purchase 40,000 shares of common stock. Each of Mr. Redfield and Mr. Skibo,
non-employee members of our board of directors, received an option to purchase
80,000 shares of common stock. The vesting of each of the options will
accelerate by 12 months, or 25% of the total grant, in the event of a change in
control of iBasis, as defined in the option agreements. See
"Management--Director Compensation."

FUTURE TRANSACTIONS

We believe all of the transactions set forth above that we consummated with
parties that may be deemed to be affiliated with us were made on terms no less
favorable to us than could have been obtained from unaffiliated third-parties.
We will require that all future transactions with parties affiliated with us,
including loans between us and our officers, directors, principal stockholders
and their affiliates, be approved by a majority of the board of directors,
including a majority of independent and disinterested directors, and that such
transactions be on terms no less favorable to us than could be obtained from
unaffiliated third-parties.

For a description of other transactions and employment and other
arrangements between us and our directors and executive officers, see
"Management--Director Compensation" and "--Employment Agreements."

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<PAGE>
PRINCIPAL AND SELLING STOCKHOLDERS

The following table sets forth certain information regarding beneficial
ownership of common stock as of December 31, 1999, by:

- each person or entity we know owns beneficially more than 5% of our common
stock;

- each of our directors;

- each of our executive officers named in the summary compensation table;

- all executive officers and directors as a group; and

- each selling stockholder.

The numbers set forth in the following table assume the underwriters do not
exercise their over-allotment option. Beneficial ownership is determined in
accordance with the rules and regulations of the Securities and Exchange
Commission. In computing the number of shares beneficially owned by a person and
the percentage ownership of that person, shares of common stock subject to
options held by that person that are currently exercisable or exercisable within
60 days of December 31, 1999 are deemed outstanding. These shares, however, are
not deemed outstanding for the purposes of computing the percentage ownership of
any other person. Except as indicated in the footnotes to this table and
pursuant to applicable community property laws, each stockholder named in the
table has sole voting and investment power with respect to the shares set forth
opposite such stockholder's name. Unless otherwise indicated, the address for
each of the following stockholders is c/o iBasis, Inc., 20 Second Avenue,
Burlington, Massachusetts 01803.

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<PAGE>

<TABLE>
<CAPTION>
SHARES NUMBER SHARES
BENEFICIALLY OWNED OF SHARES BENEFICIALLY OWNED
PRIOR TO OFFERING OFFERED(1) AFTER OFFERING(1)
--------------------- ---------- ---------------------
NAME OF BENEFICIAL OWNER NUMBER PERCENT NUMBER PERCENT
- ------------------------ ---------- -------- ---------- --------
<S> <C> <C> <C> <C> <C>
Robert E. Genter............................ 13,125 * 7,000 6,125 *
Bayfield Capital Ltd........................ 24,999 * 2,500 22,499 *
Robin Buchanan.............................. 50,001 * 5,000 45,001 *
Mark Daniell................................ 63,101 * 6,310 56,791 *
Jean-Pierre Felenbok........................ 50,001 * 5,000 45,001 *
Daniel Friedberg............................ 9,999 * 1,000 8,999 *
Bernard Gautier............................. 9,999 * 1,000 8,999 *
James Hildebrandt........................... 50,001 * 5,000 45,001 *
Bernard Kummerli............................ 24,999 * 2,500 22,499 *
Bruno Lannes................................ 15,000 * 1,500 13,500 *
William McMahon............................. 99,501 * 9,950 89,551 *
Keiji Nagano................................ 20,001 * 2,000 18,001 *
Lucien-Charles Nicolet...................... 9,999 * 1,000 8,999 *
Charles Ormiston............................ 18,000 * 1,800 16,200 *
Porky Partners II, L.L.C.................... 53,432 * 5,343 48,089 *
Paul Rogers................................. 5,001 * 500 4,501 *
Fritz Seikowsky............................. 39,999 * 4,000 35,999 *
Oliver Stratton............................. 24,999 * 2,500 22,499 *
Sunapee Securities, Inc..................... 996,000 3.2% 132,065 863,935 2.7%
Theodor Weimer.............................. 9,999 * 1,000 8,999 *
Richard Frawley............................. 9,153 * 915 8,238 *
Henry Meester, Jr........................... 225,000 * 22,500 202,500 *
Steve Melanson.............................. 2,500 * 250 2,250 *
David Roux.................................. 579,101 1.8% 115,820 463,281 1.4%
David C. Schultz............................ 77,000 * 7,700 69,300 *
Catherine VanderBrug........................ 37,865 * 1,136 36,729 *
Edward VanderBrug........................... 5,000 * 150 4,850 *
Jacquelyn VanderBrug........................ 95,000 * 16,500 78,500 *
Michael VanderBrug.......................... 30,000 * 900 29,100 *
Renee VanderBrug............................ 30,000 * 900 29,100 *
Children of the Bridge LLP.................. 475,234 1.5% 26,635 448,599 1.3%
Cynthia Woodrow............................. 10,000 * 10,000 0 *
Michele Boerman............................. 10,000 * 10,000 0 *
C. Bradley VanderBrug....................... 1,000 * 1,000 0 *
Evangelistic Association of New England
d/b/a Vision New England.................. 1,000 * 1,000 0 *
Lexington Christian Academy................. 4,000 * 4,000 0 *
Other Selling Stockholders.................. 10,000
All directors and executive officers as a
group (12 persons)(13).................... 18,220,852 57.8% 805,239 17,415,613 52.0%
</TABLE>

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

* Represents less than 1% of the outstanding shares of common stock.

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(1) Assumes no exercise of the underwriters' over-allotment option. If the
underwriters exercise their over-allotment option in full, each of the
following selling stockholders may sell up to the additional numbers of
shares set forth below:

<TABLE>
<CAPTION>
SHARES SHARES
BENEFICIALLY OWNED BENEFICIALLY OWNED
PRIOR TO ASSUMED ADDITIONAL AFTER ASSUMED
EXERCISE OF SHARES TO EXERCISE OF
OVER-ALLOTMENT OPTION BE OFFERED OVER-ALLOTMENT OPTION
------------------------------------ ---------- ------------------------------------
NAME OF BENEFICIAL OWNER NUMBER PERCENT NUMBER PERCENT
- ------------------------ --------- ------------------------ --------- ------------------------
<S> <C> <C> <C> <C> <C>
Ofer Gneezy................ 3,661,939 10.9% 75,092 3,586,847 10.1%
Gordon VanderBrug.......... 1,785,251 5.3% 36,500 1,748,751 4.9%
</TABLE>

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

* Represents less than 1% of the outstanding shares of common stock.

(2) Consists of 3,742,493 shares held by Charles River Partnership VIII, LP and
69,007 shares held by Charles River VIII-A, LLC. Mr. Armony, one of our
directors, is a partner of Charles River Ventures, an affiliate of Charles
River Partnership VIII, LP and Charles River VIII-A, LLC. Mr. Armony
disclaims beneficial ownership of the shares held by the entities affiliated
with Charles River Ventures, except to the extent of his pecuniary interest
therein. Based upon information provided by Charles River Partnership VIII
and affiliated entities' Schedule 13G, filed with the SEC February 2, 2000.
The address for Mr. Armony and Charles River Ventures is 1000 Winter Street,
Suite 3300, Waltham, Massachusetts 02451.

(3) Includes 20,000 shares of common stock issuable upon exercise of options
within 60 days of December 31, 1999. Also includes 50,000 shares held by The
Ofer Gneezy 1999 Family Trust for the benefit of Mr. Gneezy's children.
Mr. Gneezy disclaims beneficial ownership of the shares held by The Ofer
Gneezy 1999 Family Trust. Based in part upon information provided by
Mr. Gneezy's Schedule 13G, filed with the SEC February 14, 2000. Mr. Gneezy
is our President, CEO and one of our directors.

(4) Consists of 3,657,869 shares held by Menlo Ventures VII, L.P. and 153,631
shares held by Menlo Entrepreneurs Fund VII, L.P. Mr. Jarve, one of our
directors, is managing director of MV Management VII, LLC, the general
partner of Menlo Ventures VII, L.P. and Menlo Entrepreneurs Fund VII, L.P.
Mr. Jarve disclaims beneficial ownership of the shares held by the entities
affiliated with Menlo Ventures, except to the extent of his pecuniary
interest therein. Based upon information provided by Menlo Ventures VII,
L.P. and affiliated entities' Schedule 13G, filed with the SEC February 4,
2000. The address for Mr. Jarve and Menlo Ventures is 3000 Sand Hill Road,
Building 4, Suite 100, Menlo Park, California 94025.

(5) Consists of 14,955 shares held by TCV III (GP), 71,034 shares held by
TCV III, L.P., 1,888,010 shares held by TCV III (Q), L.P. and 85,498 shares
held by TCV III Strategic Partners, L.P. collectively, the "TCV Funds." Jay
C. Hoag and Richard H. Kimball are the sole managing members of Technology
Crossover Management III, L.L.C., "TCM III", the general partner of each of
the TCV Funds. Consequently, TCM III and Messrs. Hoag and Kimball may each
be deemed to beneficially own all of the shares held by the TCV Funds.
TCM III and Messrs. Hoag and Kimball each disclaim beneficial ownership of
such shares, except to the extent of their respective pecuniary interest in
those shares. Based upon information provided by Technology Crossover
Ventures and affiliated entities' Schedule 13G, filed with the SEC
January 31, 2000. The address for each of these entities is 575 High Street,
Suite 400, Palo Alto, California 94301.

(6) Includes 15,000 shares of common stock issuable upon exercise of options
within 60 days of December 31, 1999. Also includes 1,317,345 shares held by
the G.J. & C.E. VanderBrug Family Limited Partnership. Dr. VanderBrug
disclaims beneficial ownership of the shares held by the G.J. & C.E.
VanderBrug Family Limited Partnership, except to the extent of his pecuniary
interest

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<PAGE>
therein. Does not include 37,865 shares of common stock held by
Dr. VanderBrug's spouse. Dr. VanderBrug disclaims beneficial ownership of
the shares held by his spouse. Dr. VanderBrug is our Executive Vice
President and one of our directors.

(7) Consists of 996,000 shares held by Sunapee Securities, Inc. and 517,784
shares held by New Media Investors III, LLC. Mr. Maginn, one of our
directors, is a director of Bain & Co., Inc., an affiliate of Sunapee
Securities, Inc. and New Media Investors III, LLC. Mr. Maginn disclaims
beneficial ownership of the shares held by the entities affiliated with
Bain & Co., Inc., except to the extent of his pecuniary interest therein.
The address for Mr. Maginn and Bain & Co., Inc. is Two Copley Place, Boston,
Massachusetts 02116.

(8) Consists of 1,114,416 shares held by the Charles N. Corfield Trust u/a/d
12/19/91, a revocable trust of which Mr. Corfield is the sole trustee and
100,000 shares held by Mr. Corfield, individually. Mr. Corfield is one of
our directors.

(9) Consists of 1,137,761 shares held by Integral Capital Partners IV, L.P. and
6,404 Integral Capital Partners IV MS Side Fund, L.P. The address for
Integral Capital is 2750 Sand Hill Road, Menlo Park, California 94025.

(10) Consists of 999,999 shares held by Seruus Telecom Fund, L.P. and 100,000
shares held by Mr. Houser, individually. Mr. Houser, one of our directors,
is the managing director of Seruus Ventures, an affiliate of Seruus Telecom
Fund, L.P. Mr. Houser disclaims beneficial ownership of the shares held by
Seruus Telecom Fund, L.P., except to the extent of his pecuniary interest
therein.

(11) Includes 63,750 shares of common stock issuable upon the exercise of
options within 60 days of December 31, 1999. Mr. Hughes is our Vice
President, Finance and our Chief Financial Officer.

(12) Consists entirely of 71,250 shares of common stock issuable upon the
exercise of options within 60 days of December 31, 1999. Mr. Henson is our
Vice President, Engineering & Operations.

(13) Includes 170,000 shares of common stock issuable upon exercise of options
within 60 days of December 31, 1999 and certain shares held by affiliates of
such directors and executive officers.

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<PAGE>
DESCRIPTION OF CAPITAL STOCK

Our authorized capital stock consists of 85,000,000 shares of common stock
and 15,000,000 shares of preferred stock, each having a par value of $0.001 per
share.

COMMON STOCK

As of December 31, 1999, there were 31,642,728 shares of common stock
outstanding and held of record by approximately 120 stockholders. Based upon the
number of shares of common stock outstanding as of that date and giving effect
to the issuance of the shares of common stock offered by iBasis hereby, assuming
no exercise of the underwriters' over-allotment option, there will be 33,672,813
shares of common stock outstanding upon the closing of this offering.

Holders of common stock are entitled to one vote for each share held on all
matters submitted to a vote of stockholders and do not have cumulative voting
rights. Accordingly, holders of a majority of the shares of common stock
entitled to vote in any election of directors may elect all of the directors
standing for election. Holders of common stock are entitled to receive ratably
such dividends, if any, as may be declared by the board of directors out of
funds legally available therefor, subject to any preferential dividend rights of
outstanding preferred stock. Upon our liquidation, dissolution or winding up,
the holders of common stock are entitled to receive ratably the net assets of
our company available after the payment of all debts and other liabilities,
subject to the prior rights of any outstanding preferred stock. Holders of the
common stock have no preemptive, subscription, redemption or conversion rights.
The rights, preferences and privileges of holders of common stock are subject
to, and may be adversely affected by, the rights of the holders of shares of any
series of preferred stock that we may designate and issue in the future. There
are presently no shares of preferred stock outstanding.

COMMON STOCK WARRANTS

As of the date of this prospectus, we had warrants outstanding to purchase a
total of 58,125 shares of common stock, all of which are currently exercisable.
All of these warrants were issued to TLP Leasing Programs, Inc., an equipment
financing company, in connection with the establishment of master equipment
financing relationships. The first of these warrants enables its holder to
purchase a total of 20,625 shares of common stock at an exercise price of $1.00
per share. This warrant was issued in September 1997 and expires on
September 9, 2007. The second warrant enables its holder to purchase a total of
37,500 shares of common stock at an exercise price of $1.00 per share. This
warrant was issued in June 1998 and expires on June 7, 2008. The warrants
provide their holders with certain rights to the registration of the shares of
common stock issuable upon exercise of the warrants. See "Description of Capital
Stock--Registration Rights."

PREFERRED STOCK

The board of directors is authorized, subject to certain limitations
prescribed by law, without further stockholder approval, from time to time to
issue up to an aggregate of 15,000,000 shares of preferred stock in one or more
series and to fix or alter the designations, preferences and rights, and any
qualifications, limitations or restrictions thereof, of the shares of each such
series, including the number of shares constituting any such series and the
dividend rights, dividend rates, conversion rights, voting rights, terms of
redemption, including sinking fund provisions, redemption price or prices and
liquidation preferences thereof. The issuance of preferred stock may have the
effect of delaying, deferring or preventing a change of control of iBasis. We
have no present plans to issue any shares of preferred stock.

REGISTRATION RIGHTS

The holders of approximately 16,056,603 shares of common stock, have demand
registration rights with respect to those shares under the Securities Act as of
the date of this prospectus. We granted such rights under the terms of a
registration rights agreement, dated as of July 12, 1999, to investors that

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<PAGE>
participated in our preferred stock financings, some of whom are affiliates or
directors of us. If requested to do so by holders of at least 30% of the holders
of our common stock, which was the result of conversion of our Series A
preferred stock, Series B preferred stock or Series C preferred stock, we will
be required, subject to limitations relating to the timing of the request, to
file a registration statement under the Securities Act covering all registrable
shares, having a market value of at least $1.0 million, requested to be
included. We are required to effect up to two such demand registrations. A
stockholder may not request a registration prior to June 30, 2001. We will bear
all fees, costs and expenses of any of these demand registrations other than
underwriting discounts and commissions. Once we are eligible to register shares
using a short-form registration statement, we will be required, if requested to
do so by holders of at least 20% of the registrable shares then outstanding, to
register shares having a market value of at least $1.0 million.

We have the right to delay any registration requests for a period not to
exceed 90 days in any 12-month period where registration, in the judgment of our
board of directors, would have an adverse impact on transactions being pursued
by us. We will bear all fees, costs and expenses of any of these demand
registrations other than underwriting discounts and commissions.

In addition, under the agreement described above, holders of registrable
shares have piggyback registration rights. If we propose to register any of our
securities under the Securities Act other than in connection with our employee
benefit plans or a corporate reorganization, then, subject to limitations based
on the number of shares to be registered and the terms on which they are to be
sold, the holders of registrable shares may require us to include all or a
portion of their shares in such registration, although the managing underwriter
of any such offering has the right to limit the number of shares in such
registration. We will bear all fees, costs and expenses of such registrations
other than underwriting discounts and commissions.

The warrants we have issued to TLP Leasing Programs, Inc. to purchase 58,125
shares of common stock contain registration rights that require us to give
notice to the holder of these warrants of our intention to file a registration
statement relating to the common stock. We are required to use our best efforts
to register all of the registrable shares, subject to the rights of the managing
underwriter of a particular offering to cut-back the number of shares being
registered, that the holder of the warrants requests. We will bear all fees,
costs and expenses of such registrations other than underwriting discounts,
commissions and the legal fees of the warrant holder.

DELAWARE LAW AND CERTAIN CERTIFICATE OF INCORPORATION AND BY-LAW PROVISIONS

We are subject to the provisions of Section 203 of the Delaware General
Corporation Law. Subject to certain exceptions, Section 203 prohibits a publicly
held Delaware corporation from engaging in a "business combination" with an
"interested stockholder" for a certain period of time. That period is three
years from the date of the transaction in which the person became an interested
stockholder, unless the interested stockholder attained such status with the
approval of the board of directors or unless the business combination is
approved in a prescribed manner. A "business combination" includes certain
mergers, asset sales and other transactions resulting in a financial benefit to
the interested stockholder. Subject to certain exceptions, an "interested
stockholder" is a person who, together with his or her affiliates and
associates, owns, or owned within three years prior, 15% or more of the
corporation's voting stock.

Our certificate of incorporation and by-laws provide for the division of the
board of directors into three classes, as nearly equal in size as possible, with
each class beginning its three-year term in different years. See
"Management-Executive Officers and Directors." A director may be removed only
for cause by the vote of a majority of the shares entitled to vote for the
election of directors.

Our by-laws provide that for nominations for the board of directors or for
other business to be properly brought by a stockholder before a meeting of
stockholders, the stockholder must first have given timely notice of the matter
in writing to our secretary. To be timely, a notice of nominations or

65
<PAGE>
other business to be brought before an annual meeting must be delivered between
120 days and 150 days prior to date one year after the date of the preceding
year's proxy statement. If the date of the current year's annual meeting is more
than 30 days before or 60 days after such anniversary, or if no proxy statement
was delivered to stockholders in connection with the preceding year's annual
meeting, a stockholder's notice will be timely if it is delivered not earlier
than 90 days prior to the current year's annual meeting and not later than
60 days prior to the annual meeting or 10 days following the date on which
public announcement of the date of the annual meeting is first made by us,
whichever is later. With respect to special meetings, notice must generally be
delivered not more than 90 days prior to such meeting and not later than
60 days prior to such meeting or 10 days following the day on which public
announcement of the date of the annual meeting is first made by us, whichever is
later. The notice must contain, among other things, certain information about
the stockholder delivering the notice and, as applicable, background information
about each nominee or a description of the proposed business to be brought
before the meeting.

Our certificate of incorporation empowers the board of directors, when
considering a tender offer or merger or acquisition proposal, to take into
account factors in addition to potential economic benefits to stockholders.
These factors may include:

- comparison of the proposed consideration to be received by stockholders in
relation to the market price of our capital stock, the estimated current
value of our company in a freely negotiated transaction and the estimated
future value of our company as an independent entity;

- the impact of such a transaction on our employees, suppliers and customers
and its effect on the communities in which we operate; and

- the impact of such a transaction on our unique corporate culture and
atmosphere.

The provisions described above could make it more difficult for a third
party to acquire, or discourage a third party from acquiring control of our
company.

Our certificate of incorporation also provides that any action required or
permitted to be taken by our stockholders may be taken only at duly called
annual or special meetings of the stockholders, and that special meetings may be
called only by the chairman of the board of directors, a majority of the board
of directors or our president. These provisions could have the effect of
delaying until the next annual stockholders meeting stockholder actions that are
favored by the holders of a majority of the common stock. These provisions may
also discourage another person or entity from making a tender offer to our
stockholders for the common stock. This is because the person or entity making
the offer, even if it acquired a majority of our outstanding voting securities,
would be unable call a special meeting of the stockholders or to take action by
written consent. As a result, any desired actions they would like to take, such
as electing new directors or approving a merger, would have to wait until the
next duly called stockholders meeting.

The Delaware General Corporation Law provides that the affirmative vote of a
majority of the shares entitled to vote on any matter is required to amend a
corporation's certificate of incorporation or by-laws, unless the corporation's
certificate of incorporation or by-laws, as the case may be, requires a greater
percentage. The certificate of incorporation requires the affirmative vote of
the holders of at least 67% of our outstanding voting stock to amend or repeal
any of the provisions our certificate of incorporation described above, or to
reduce the number of authorized shares of common stock and preferred stock. The
67% vote is also required to amend or repeal any of the provisions of our
by-laws that are described above. Our by-laws may also be amended or repealed by
a majority vote of the board of directors. The 67% stockholder vote would be in
addition to any separate class vote that might in the future be required
pursuant to the terms of any preferred stock that might be outstanding at the
time any amendments are submitted to stockholders.

TRANSFER AGENT AND REGISTRAR

The Transfer Agent and Registrar for the common stock is BankBoston, N.A.

66
<PAGE>
SHARES ELIGIBLE FOR FUTURE SALE

As of December 31, 1999, we had outstanding 31,700,853 shares of common
stock assuming the exercise of all outstanding stock purchase warrants but no
exercise of outstanding options under our stock incentive plans or other
agreements. We are offering 3,500,000 shares of common stock by this prospectus
and shares of common stock initially issuable upon the conversion of
the $150 million aggregate principal amount of convertible notes being offered
by us in the concurrent note offering. Of these shares, the 3,500,000 shares
sold in this offering, the shares issuable upon the conversion of the notes sold
in the concurrent note offering and the 7,820,000 shares issued in our initial
public offering will be freely transferable without restriction or further
registration under the Securities Act, except for any shares held by an existing
"affiliate" of ours, as such term is defined by Rule 144 under the Securities
Act. The remaining shares are "restricted shares" as defined in
Rule 144.

In addition, substantially all of our option holders, warrant holders and
affiliates, and all of our officers and directors, have agreed under written
"lock-up" agreements not to sell any shares of common stock for a specified
period of time after the date of this prospectus without the prior written
consent of FleetBoston Robertson Stephens Inc. See "Underwriting."

RULE 144

In general, under Rule 144 as currently in effect, a person (or persons
whose shares are aggregated) who owns shares that were purchased from us or any
affiliate at least one year previously, including a person who may be deemed an
affiliate of us, is entitled to sell within any three-month period a number of
shares that does not exceed the greater of:

- 1% of the then outstanding shares of the common stock which will equal
approximately 336,673 shares immediately after the completion of this
offering; or

- the average weekly trading volume of the common stock on the Nasdaq
National Market during the four calendar weeks preceding the date on which
notice of the sale is filed with the Securities and Exchange Commission.

Sales under Rule 144 must be made with the required notice and the
availability of current public information about us.

Any person or persons whose shares are aggregated, who is not deemed to have
been an affiliate of ours at any time during the 90 days preceding a sale, and
who owns shares within the definition of "restricted securities" under Rule 144
under the Securities Act that were purchased from us or any affiliate at least
two years previously, would be entitled to sell such shares under Rule 144(k)
without regard to the volume limitations, manner of sale provisions, public
information requirements, or notice requirements.

RULE 701

Rule 701 may be relied upon with respect to the resale of securities
originally purchased from us by our employees, directors, officers, consultants
or advisers prior to our initial public offering. In addition, the Securities
and Exchange Commission has indicated that Rule 701 will apply to the typical
stock options granted by an issuer before it becomes a public company, along
with the shares acquired upon exercise of such options, including exercises
after the date of this prospectus. Securities issued in reliance on Rule 701 are
restricted securities and, subject to the contractual restrictions described
above, beginning 90 days after the date of our initial public offering, may be
sold by:

- persons other than affiliates, in ordinary brokerage transactions, and

- by affiliates under Rule 144 without compliance with its one-year holding
requirement.

67
<PAGE>
SALES OF RESTRICTED SHARES

As a result of the foregoing regulations, we expect that:

- 2,951,226 shares of common stock are eligible for resale without
restriction under Rule 144(k) or Rule 701, of which 2,766,222 shares are
subject to lock-up agreements;

- upon the expiration of the several lock-up agreements, but in no event
later than 90 days after the date of this prospectus, an additional
15,127,399 shares of common stock, including 14,895,999 shares of common
stock held by affiliates of ours, will be eligible for sale under
Rule 144, subject to the volume and other limitations of such rule;

- 5,467,747 shares of common stock will be eligible for sale under Rule 144
beginning on July 12, 2000 and 276,356 shares of common stock will be
eligible for sale under Rule 144 beginning on July 16, 2000; and

- in addition, 58,125 shares of common stock acquired pursuant to the
exercise of warrants will be eligible for sale one year from the date the
warrants are exercised.

We have agreed not to offer, sell or otherwise dispose of any shares of
common stock or any securities convertible into or exercisable or exchangeable
for common stock or any rights to acquire common stock for a period of 90 days
after the date of this prospectus, without the prior written consent of the
representative of the Underwriters, subject to certain limited exceptions. See
"Underwriting."

The holders of 16,056,603 shares of common stock or their transferees have
rights to have their shares registered under the Securities Act. See
"Description of Capital Stock--Registration Rights." Registration of such shares
under the Securities Act would cause such shares to be freely tradable without
restriction under the Securities Act, except for shares purchased by affiliates
immediately upon the effectiveness of such registration, which could result in
some of such shares becoming eligible for sale in advance of the date set forth
above.

In addition, on February 17, 2000 we filed a registration statement under
the Securities Act covering the 5,700,000 shares of common stock covered by the
1997 Stock Incentive Plan and the 500,000 shares of common stock covered by the
1999 Employee Stock Purchase Plan. See "Management--1997 Stock Incentive Plan;
- --1999 Employee Stock Purchase Plan." The registration statement automatically
became effective upon filing. Following the filing, shares registered under
these registration statements will, subject to the lock-up agreements described
above and Rule 144 volume limitations applicable to affiliates, be available for
sale in the open market upon the exercise of vested options. As of December 31,
1999, options to purchase an aggregate of 2,947,725 shares were issued and
outstanding under the 1997 Stock Incentive Plan and no purchases had been made
under the 1999 Employee Stock Purchase Plan.

68
<PAGE>
UNDERWRITING

The underwriters named below, acting through their representatives,
FleetBoston Robertson Stephens Inc., Chase Securities Inc., U.S. Bancorp Piper
Jaffray Inc. and Dain Rauscher Incorporated, have severally agreed with us,
subject to the terms and conditions set forth in the underwriting agreement, to
purchase from us and from the selling stockholders the number of shares of
common stock set forth opposite their names below. The underwriters are
committed to purchase and pay for all shares if any are purchased.

<TABLE>
<CAPTION>
NUMBER
UNDERWRITER OF SHARES
- ----------- ---------
<S> <C>
FleetBoston Robertson Stephens Inc..........................
Chase Securities Inc........................................
U.S. Bancorp Piper Jaffray Inc..............................
Dain Rauscher Incorporated..................................

---------
Total...................................................
=========
</TABLE>

The representatives have advised us and the selling stockholders that the
underwriters propose to offer the shares of common stock to the public at the
offering price set forth on the cover page of this prospectus and to certain
dealers at that price less a concession of not in excess of $ per share, of
which $ may be reallowed to other dealers. After this offering, the public
offering price, concession and reallowance to dealers may be reduced by the
representatives. This reduction shall not change the amount of proceeds to be
received by us as stated on the cover page of this prospectus. The common stock
is offered by the underwriters as stated herein, subject to receipt and
acceptance by them and subject to their right to reject any order in whole or in
part.

The underwriters have informed us that they do not intend to confirm sales
to any accounts over which they exercise discretionary authority.

OVER-ALLOTMENT OPTION. iBasis and some of the selling stockholders have
granted to the underwriters an option, exercisable during the 30-day period
after the date of this prospectus, to purchase up to 413,408 and 111,592 shares,
respectively, for an aggregate of 525,000 additional shares of common stock at
the same price per share as we will receive for the 3,500,000 shares that the
underwriters have agreed to purchase. If the underwriters exercise this option,
each of the underwriters will have a firm commitment, subject to certain
conditions, to purchase approximately the same percentage of such additional
shares that the number of shares of common stock to be purchased by it shown in
the above table bears to the 3,500,000 shares of common stock offered in this
offering. If purchased, such additional shares will be sold by the underwriters
on the same terms as those on which the 3,500,000 shares offered in this
offering are being sold. The selling stockholders will be obligated, pursuant to
the option, to sell shares to the underwriters to the extent the option is
exercised. The underwriters may exercise such option only to cover
over-allotments made in connection with the sale of the shares of common stock
offered in this offering. If such option is exercised in full, the total public
offering price, underwriting discounts and commissions and net proceeds to us
will be $193,952,257, $8,727,852 and $184,624,402, respectively.

In the event that the underwriters do not exercise their over-allotment
option in full, Ofer Gneezy and Gordon VanderBrug shall sell up to 75,092 and
36,500 shares, respectively, and any additional shares shall be sold by iBasis.
In the event that over-allotment option is exercised for less than 111,592

69
<PAGE>

shares, such shares shall be distributed between the selling stockholders pro
rata based on their proportional share of the allotment.

We estimate that the total expenses payable by us in connection with this
offering, other than the underwriting discounts and commissions referred to
above, will be approximately $0.5 million.

INDEMNITY. The underwriting agreement contains covenants of indemnity among
the underwriters, the selling stockholders and us against various civil
liabilities, including liabilities under the Securities Act and liabilities
arising from breaches of representations and warranties contained in the
underwriting agreement.

LOCK-UP AGREEMENTS. Each executive officer, director, director-nominee, and
a substantial majority of our stockholders, agreed with the representatives for
specified periods of time after the date of this prospectus, subject to certain
exceptions, not to offer to sell, contract to sell, or otherwise sell, dispose
of, loan, pledge or grant any rights with respect to any shares of common stock,
any options or warrants to purchase any shares of common stock, or any
securities convertible into or exchangeable for shares of common stock, owned as
of the date of this prospectus or thereafter acquired directly by such holders
or with respect to which they have or hereafter acquire the power of
disposition, without the prior written consent of FleetBoston Robertson
Stephens Inc. FleetBoston Robertson Stephens Inc. may, in its sole discretion
and at any time or from time to time without notice, release all or any portion
of the securities subject to the lock-up agreements. The lock-up period with
respect to approximately 425,000 of the shares held by these stockholders
expires May 8, 2000, and the lock-up period with respect to the remaining
22,904,298 shares held by these stockholders expires 90 days after the date of
this prospectus. There are no agreements between the representatives and any of
our stockholders who have executed a lock-up agreement providing consent to the
sale of shares prior to the expiration of the lock-up period.

FUTURE SALES. In addition, we have agreed that during the 90 days after the
date of this prospectus we will not, subject to certain exceptions, without the
prior written consent of FleetBoston Robertson Stephens Inc. (i) consent to the
disposition of any shares held by shareholders subject to lock-up agreements
prior to the expiration of the lock-up period or (ii) issue, sell, contract to
sell, or otherwise dispose of, any shares of common stock, any options or
warrants to purchase any shares of common stock or any securities convertible
into, exercisable for or exchangeable for shares of common stock other than the
sale of shares in this offering, the issuance of common stock upon the exercise
of outstanding options or warrants and the issuance of options under our
existing stock option and incentive plans, provided that those options do not
vest prior to the expiration of the lock-up period. See "Shares Eligible for
Future Sale."

STABILIZATION. The representatives of the underwriters have advised us
that, pursuant to Regulation M under the Securities Act, certain persons
participating in this offering may engage in transactions, including stabilizing
bids, syndicate covering transactions or the imposition of penalty bids, that
may have the effect of stabilizing or maintaining the market price of the common
stock at a level above that which might otherwise prevail in the open market. A
"stabilizing bid" is a bid for or the purchase of shares of common stock on
behalf of the underwriters for the purpose of fixing or maintaining the price of
the common stock. A "syndicate covering transaction" is the bid for or the
purchase of the common stock on behalf of the underwriters to reduce a short
position incurred by the underwriters in connection with this offering. A
"penalty bid" is an arrangement permitting the representatives to reclaim the
selling concession otherwise accruing to an underwriter or syndicate member in
connection with this offering if the common stock originally sold by such
underwriter or syndicate member is purchased by the representatives in a
syndicate covering transaction and has therefore not been effectively placed by
such underwriter or syndicate member. The representatives have advised us that
such transactions may be effected on the Nasdaq National Market or otherwise
and, if commenced, may be discontinued at any time.

70
<PAGE>
PASSIVE MARKET MAKING. In connection with this offering, certain
underwriters and selling group members (if any) who are qualified market makers
on the Nasdaq National Market may engage in passive market making transactions
in the common stock on the Nasdaq National Market in accordance with Rule 103 of
Regulation M, during the business day prior to the pricing of the offering,
before the commencement of offers or sales of the common stock. Passive market
makers must comply with applicable volume and price limitations and must be
identified as such. In general, a passive market maker must display its bid at a
price not in excess of the highest independent bid for such security; if all
independent bids are lowered below the passive market maker's bid, however, such
bid must then be lowered when certain purchase limits are exceeded.

SHARES ACQUIRED BY EMPLOYEES AND AFFILIATES OF FLEETBOSTON ROBERTSON
STEPHENS INC., CHASE SECURITIES INC. AND U.S. BANCORP PIPER JAFFRAY
INC. Certain employees and other affiliates of FleetBoston Robertson Stephens
Inc., Chase Securities Inc. and U.S. Bancorp Piper Jaffray Inc., representatives
of the underwriters, acquired an aggregate of 68,648 shares of our Series C
preferred stock in July 1999, at a purchase price of $4.37 per share, for an
aggregate purchase price of approximately $300,000.

LEGAL MATTERS

Bingham Dana LLP, Boston, Massachusetts will pass upon the validity of the
common stock offered in this offering. The descriptions of the regulatory
requirements under the Communications Act of 1934, as amended, regulations
thereunder and state regulations set forth under "Risk Factors--Risks Related to
the Internet and Internet Telephony Industry" and "Business--Government
Regulation" have been included under the authority of Swidler Berlin Shereff
Friedman, LLP, Washington, D.C. as experts in telecommunications law. Investors
should not rely on Swidler Berlin Shereff Friedman, LLP with respect to any
other matters. Also, Alston & Bird LLP, Atlanta, Georgia will pass upon certain
legal matters in connection with this offering for the underwriters. Five
attorneys at Bingham Dana LLP own, in the aggregate, 15,379 shares of our common
stock.

EXPERTS

Our consolidated balance sheets as of December 31, 1998 and 1999, and the
related consolidated statements of operations, redeemable convertible preferred
stock and stockholders (deficit) equity and cash flows and for the years ended
December 31, 1997, 1998 and 1999 included in this prospectus and registration
statement and the consolidated statements of operations data for the period from
inception (August 2, 1996) to December 31, 1996 derived from financial
statements not included in this prospectus have been audited by Arthur Andersen
LLP, independent public accountants, as indicated in their report with respect
thereto, and are included herein in reliance upon the authority of said firm as
experts in giving said report.

WHERE YOU CAN FIND MORE INFORMATION

We have filed with the Securities and Exchange Commission a registration
statement on Form S-1, including exhibits, schedules and amendments filed with
this registration statement, under the Securities Act with respect to the shares
of common stock to be sold in this offering. This prospectus does not contain
all of the information set forth in the registration statement and exhibits and
schedules thereto. For further information with respect to iBasis and the shares
of common stock to be sold in this offering, reference is made to the
registration statement, including the exhibits and schedules thereto. Statements
contained in this prospectus as to the contents of any contract or other
document referred to herein, where that contract is an exhibit to the
registration statement, are qualified in all respects by the exhibit to which
the reference relates. Copies of the registration statement, including the
exhibits and schedules thereto, may be examined without charge at the public
reference room of the Securities and Exchange Commission, 450 Fifth Street, N.W.
Room 1024, Washington, DC 20549, and the Securities and Exchange Commission's
Regional Offices located at 500 West Madison Street, Suite 1400, Chicago, IL
60601, and 7 World Trade Center, 13(th) Floor, New York, NY 10048. Information

71
<PAGE>
about the operation of the public reference room may be obtained by calling the
Securities and Exchange Commission at 1-800-SEC-0300. Copies of all or a portion
of the registration statement can be obtained from the public reference room of
the Securities and Exchange Commission upon payment of prescribed fees. Our
Securities and Exchange Commission filings, including our registration
statement, are also available to you on the Securities and Exchange Commission's
website (http://www.sec.gov).

72
<PAGE>
IBASIS, INC.
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

<TABLE>
<CAPTION>
PAGE
--------
<S> <C>
Report of Independent Public Accountants.................... F-2
Consolidated Balance Sheets as of December 31, 1998 and
1999...................................................... F-3
Consolidated Statements of Operations for the Years Ended
December 31, 1997, 1998 and 1999.......................... F-4
Consolidated Statements of Redeemable Convertible Preferred
Stock and Stockholders' Equity (Deficit) for the Years
Ended December 31, 1997, 1998 and 1999.................... F-5
Consolidated Statements of Cash Flows for the Years Ended
December 31, 1997, 1998 and 1999.......................... F-6
Notes to Consolidated Financial Statements.................. F-7
</TABLE>

F-1
<PAGE>
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS

To iBasis, Inc.:

We have audited the accompanying consolidated balance sheets of iBasis, Inc.
(a Delaware corporation) (formerly VIP Calling, Inc.) and subsidiaries as of
December 31, 1998 and 1999, and the related consolidated statements of
operations, redeemable convertible preferred stock and stockholders' equity
(deficit) and cash flows for the three years ended December 31, 1999. These
consolidated financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on these consolidated
financial statements based on our audits.

We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred to above
present fairly, in all material respects, the financial position of iBasis, Inc.
and subsidiaries as of December 31, 1998 and 1999, and the results of their
operations and their cash flows for the three years ended December 31, 1999, in
conformity with generally accepted accounting principles.

ARTHUR ANDERSEN LLP

Boston, Massachusetts
February 2, 2000

F-2
<PAGE>
IBASIS, INC.
CONSOLIDATED BALANCE SHEETS

<TABLE>
<CAPTION>
DECEMBER 31,
--------------------------
1998 1999
ASSETS ----------- ------------
<S> <C> <C>
Current assets:
Cash and cash equivalents................................. $ 7,399,451 $123,665,961
Accounts receivable, net of allowance for doubtful
accounts of approximately $127,000 and $633,000,
respectively............................................ 1,084,623 5,404,338
Prepaid expenses and other current assets................. 245,644 964,675
----------- ------------
Total current assets.................................. 8,729,718 130,034,974
----------- ------------
Property and equipment, at cost:
Network equipment......................................... 3,113,885 6,544,913
Equipment under capital lease............................. 343,990 16,430,153
Leasehold improvements.................................... 311,792 1,696,755
Computer software......................................... 145,626 782,244
Furniture and fixtures.................................... 44,555 154,970
----------- ------------
3,959,848 25,609,035
Less--Accumulated depreciation and amortization........... (239,637) (3,218,920)
----------- ------------
3,720,211 22,390,115
Other assets................................................ 321,932 1,048,000
----------- ------------
$12,771,861 $153,473,089
----------- ------------
</TABLE>

LIABILITIES, REDEEMABLE CONVERTIBLE PREFERRED STOCK AND STOCKHOLDERS' EQUITY
(DEFICIT)

<TABLE>
<S> <C> <C>
Current liabilities:
Accounts payable.......................................... $ 3,752,974 $ 6,112,938
Accrued expenses.......................................... 483,539 4,391,296
Capital lease obligations, current portion................ 251,890 4,376,280
----------- ------------
Total current liabilities............................. 4,488,403 14,880,514
----------- ------------
Capital lease obligations, net of current portion........... 212,679 11,688,843
Minority interest (Note 4).................................. 49,000 --
Commitments (Note 8)
Redeemable convertible preferred stock:
Series B, $.001 par value-
Authorized--6,875,000 shares
Issued and outstanding--6,562,500 and no shares at
December 31, 1998 and 1999, respectively (stated at
redemption value)..................................... 10,719,205 --
Stockholders' equity (deficit):
Series A convertible preferred stock, $.001 par value-
Authorized--1,256,875 shares
Issued and outstanding--1,250,000 and no shares at
December 31, 1998 and 1999, respectively.............. 1,250 --
Common stock, $.001 par value-
Authorized--no shares and 85,000,000 shares at December
31, 1998 and 1999, respectively
Issued and outstanding--none and 31,642,728 at December
31, 1998 and 1999, respectively....................... -- 31,642
Class A common stock, $.001 par value-
Authorized--30,000,000 shares
Issued and outstanding--6,060,000 and no shares at
December 31, 1998 and 1999, respectively.............. 6,060 --
Class B common stock, $.001 par value-
Authorized--1,500,000 shares
Issued and outstanding--1,500,000 and no shares at
December 31, 1998 and 1999, respectively.............. 1,500 --
Additional paid-in capital................................ 4,022,059 156,887,447
Deferred compensation..................................... -- (2,200,547)
Accumulated deficit....................................... (6,728,295) (27,814,810)
----------- ------------
Total stockholders' (deficit) equity.................. (2,697,426) 126,903,732
----------- ------------
$12,771,861 $153,473,089
----------- ------------
</TABLE>

The accompanying notes are an integral part of these consolidated financial
statements.

F-3
<PAGE>
IBASIS, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS

<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
---------------------------------------
1997 1998 1999
---------- ----------- ------------
<S> <C> <C> <C>
Net revenue............................................ $ 127,425 $ 1,978,430 $ 19,417,102
Operating expenses:
Data communications and telecommunications........... 186,587 2,729,980 21,006,774
Research and development............................. 317,992 1,673,884 6,183,391
Selling and marketing................................ 97,463 1,160,448 5,568,399
General and administrative........................... 453,617 1,365,132 5,308,465
Depreciation and amortization........................ 18,554 363,821 2,997,355
Loss (gain) on disposal of property and equipment.... -- 531,129 (15,297)
---------- ----------- ------------
Total operating expenses............................... 1,074,213 7,824,394 41,049,087
---------- ----------- ------------
Loss from operations................................... (946,788) (5,845,964) (21,631,985)
Interest income........................................ 17,490 179,270 1,329,237
Interest expense....................................... (4,171) (52,983) (835,593)
Other income (expense), net............................ 7,829 (6,826) 2,826
Minority interest in loss of joint venture............. -- -- 49,000
---------- ----------- ------------
Net loss............................................. (925,640) (5,726,503) (21,086,515)
Accretion of dividends on redeemable convertible
preferred stock...................................... -- (219,205) (1,020,366)
---------- ----------- ------------
Net loss applicable to common stockholders........... $ (925,640) $(5,945,708) $(22,106,881)
========== =========== ============
Net loss per share (Note 1(d)):
Basic and diluted net loss per share................. $ (0.15) $ (0.99) $ (2.29)
========== =========== ============
Basic and diluted weighted average common shares
outstanding........................................ 6,005,877 6,022,551 9,655,253
========== =========== ============
</TABLE>

THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE CONSOLIDATED FINANCIAL
STATEMENTS.

F-4
<PAGE>
IBASIS, INC.
CONSOLIDATED STATEMENTS OF REDEEMABLE CONVERTIBLE PREFERRED STOCK AND
STOCKHOLDERS' EQUITY (DEFICIT)
<TABLE>
<CAPTION>
SERIES B REDEEMABLE SERIES C REDEEMABLE
CONVERTIBLE PREFERRED CONVERTIBLE PREFERRED SERIES A CONVERTIBLE
STOCK STOCK PREFERRED STOCK COMMON STOCK
------------------------- ------------------------- ---------------------- ----------
NUMBER REDEMPTION NUMBER REDEMPTION NUMBER $.001 PAR NUMBER
OF SHARES VALUE OF SHARES VALUE OF SHARES VALUE OF SHARES
---------- ------------ ---------- ------------ ---------- --------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
Balance, December 31, 1996....... -- $ -- -- $ -- -- $ -- --
Issuance of Class A common
stock........................ -- -- -- -- -- -- --
Sale of Class B common stock,
net of issuance costs of
approximately $10,000........ -- -- -- -- -- -- --
Sale of Series A convertible
preferred stock, net of
issuance costs of
approximately $35,000........ -- -- -- -- 805,250 805 --
Net loss....................... -- -- -- -- -- -- --
---------- ------------ ---------- ------------ ---------- ------- ----------
Balance, December 31, 1997....... -- -- -- -- 805,250 805 --
Sale of Series A convertible
preferred stock.............. -- -- -- -- 444,750 445 --
Sale of Series B redeemable
convertible preferred stock,
net of issuance costs of
approximately $57,000........ 6,562,500 10,500,000 -- -- -- -- --
Accretion of dividends on
Series B redeemable
convertible preferred
stock........................ -- 219,205 -- -- -- -- --
Net loss....................... -- -- -- -- -- -- --
---------- ------------ ---------- ------------ ---------- ------- ----------
Balance, December 31, 1998....... 6,562,500 10,719,205 -- -- 1,250,000 1,250 --
Sale of Series C redeemable
convertible preferred stock, net
of issuance cost of
approximately $59,900........... -- -- 5,744,103 25,101,740 -- -- --
Compensation expense related to
employee stock option grant..... -- -- -- -- -- -- --
Exercise of Class A common stock
options......................... -- -- -- -- -- -- --
Accretion of dividends on Series
B redeemable convertible
preferred stock................. -- 541,541 -- -- -- -- --
Accretion of dividends on Series
C redeemable convertible
preferred stock................. -- -- -- 478,825 -- -- --
Deferred compensation related to
stock options................... -- -- -- -- -- -- --
Amortization of deferred
compensation.................... -- -- -- -- -- -- --
Conversion of preferred stock and
Class B common stock to Class A
common stock.................... (6,562,500) (10,500,000) (5,744,103) (25,101,740) (1,250,000) (1,250) --
Conversion of Class A common
stock to common stock........... -- -- -- -- -- -- 23,738,353
Reclassification of dividends on
Series B and Series C redeemable
convertible preferred stock..... -- (760,746) -- (478,825) -- -- --
Exercise of common stock
options......................... -- -- -- -- -- -- 84,375
Sale of common stock under
initial public offering, net of
issuance costs of approximately
$10,420,000..................... -- -- -- -- -- -- 7,820,000
Net loss......................... -- -- -- -- -- -- --
---------- ------------ ---------- ------------ ---------- ------- ----------
Balance, December 31, 1999....... -- $ -- -- $ -- -- $ -- 31,642,728
========== ============ ========== ============ ========== ======= ==========

CLASS A COMMON CLASS B COMMON
MMON STOCK
----------- ----------------------- ---------------------- ADDITIONAL
$.001 PAR NUMBER $.001 PAR NUMBER $.001 PAR PAID-IN DEFERRED
VALUE OF SHARES VALUE OF SHARES VALUE CAPITAL COMPENSATION
--------- ----------- --------- ---------- --------- ------------- -------------
<S> <C> <C> <C> <C> <C> <C> <C>
Balance, December 31, 1996....... $ -- 6,000,000 $ 6,000 -- $ -- $ 94,000 $ --
Issuance of Class A common
stock........................ -- 60,000 60 -- -- 1,940 --
Sale of Class B common stock,
net of issuance costs of
approximately $10,000........ -- -- -- 1,500,000 1,500 488,500 --
Sale of Series A convertible
preferred stock, net of
issuance costs of
approximately $35,000........ -- -- -- -- -- 2,379,949 --
Net loss....................... -- -- -- -- -- -- --
------- ----------- -------- ---------- ------- ------------- -----------
Balance, December 31, 1997....... -- 6,060,000 6,060 1,500,000 1,500 2,964,389 --
Sale of Series A convertible
preferred stock.............. -- -- -- -- -- 1,333,806 --
Sale of Series B redeemable
convertible preferred stock,
net of issuance costs of
approximately $57,000........ -- -- -- -- -- (56,931) --
Accretion of dividends on
Series B redeemable
convertible preferred
stock........................ -- -- -- -- -- (219,205) --
Net loss....................... -- -- -- -- -- -- --
------- ----------- -------- ---------- ------- ------------- -----------
Balance, December 31, 1998....... -- 6,060,000 6,060 1,500,000 1,500 4,022,059 --
Sale of Series C redeemable
convertible preferred stock, net
of issuance cost of
approximately $59,900........... -- -- -- -- -- (59,892) --
Compensation expense related to
employee stock option grant..... -- -- -- -- -- 13,750 --
Exercise of Class A common stock
options......................... -- 121,750 122 -- -- 25,728 --
Accretion of dividends on Series
B redeemable convertible
preferred stock................. -- -- -- -- -- (541,541) --
Accretion of dividends on Series
C redeemable convertible
preferred stock................. -- -- -- -- -- (478,825) --
Deferred compensation related to
stock options................... -- -- -- -- -- 2,384,340 (2,384,340)
Amortization of deferred
compensation.................... -- -- -- -- -- -- 183,793
Conversion of preferred stock and
Class B common stock to Class A
common stock.................... -- 17,556,603 17,556 (1,500,000) (1,500) 35,586,934 --
Conversion of Class A common
stock to common stock........... 23,738 (23,738,353) (23,738) -- -- -- --
Reclassification of dividends on
Series B and Series C redeemable
convertible preferred stock..... -- -- -- -- -- 1,239,571 --
Exercise of common stock
options......................... 84 -- -- -- -- 2,726 --
Sale of common stock under
initial public offering, net of
issuance costs of approximately
$10,420,000..................... 7,820 -- -- -- -- 114,692,597 --
Net loss......................... -- -- -- -- -- -- --
------- ----------- -------- ---------- ------- ------------- -----------
Balance, December 31, 1999....... $31,642 -- $ -- -- $ -- $ 156,887,447 $(2,200,547)
======= =========== ======== ========== ======= ============= ===========

TOTAL
STOCKHOLDERS'
ACCUMULATED EQUITY
DEFICIT (DEFICIT)
------------ -------------
<S> <C> <C>
Balance, December 31, 1996....... $ (76,152) $ 23,848
Issuance of Class A common
stock........................ -- 2,000
Sale of Class B common stock,
net of issuance costs of
approximately $10,000........ -- 490,000
Sale of Series A convertible
preferred stock, net of
issuance costs of
approximately $35,000........ -- 2,380,754
Net loss....................... (925,640) (925,640)
------------ ------------
Balance, December 31, 1997....... (1,001,792) 1,970,962
Sale of Series A convertible
preferred stock.............. -- 1,334,251
Sale of Series B redeemable
convertible preferred stock,
net of issuance costs of
approximately $57,000........ -- (56,931)
Accretion of dividends on
Series B redeemable
convertible preferred
stock........................ -- (219,205)
Net loss....................... (5,726,503) (5,726,503)
------------ ------------
Balance, December 31, 1998....... (6,728,295) (2,697,426)
Sale of Series C redeemable
convertible preferred stock, net
of issuance cost of
approximately $59,900........... -- (59,892)
Compensation expense related to
employee stock option grant..... -- 13,750
Exercise of Class A common stock
options......................... -- 25,850
Accretion of dividends on Series
B redeemable convertible
preferred stock................. -- (541,541)
Accretion of dividends on Series
C redeemable convertible
preferred stock................. -- (478,825)
Deferred compensation related to
stock options................... -- --
Amortization of deferred
compensation.................... -- 183,793
Conversion of preferred stock and
Class B common stock to Class A
common stock.................... -- 35,601,740
Conversion of Class A common
stock to common stock........... -- --
Reclassification of dividends on
Series B and Series C redeemable
convertible preferred stock..... -- 1,239,571
Exercise of common stock
options......................... -- 2,810
Sale of common stock under
initial public offering, net of
issuance costs of approximately
$10,420,000..................... -- 114,700,417
Net loss......................... (21,086,515) (21,086,515)
------------ ------------
Balance, December 31, 1999....... $(27,814,810) $126,903,732
============ ============
</TABLE>

THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE CONSOLIDATED FINANCIAL
STATEMENTS.

F-5
<PAGE>
IBASIS, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS

<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
---------------------------------------
1997 1998 1999
---------- ----------- ------------
<S> <C> <C> <C>
Cash flows from operating activities:
Net loss.................................................. $ (925,640) $(5,726,503) $(21,086,515)
Adjustments to reconcile net loss to net cash used in
operating activities
Depreciation and amortization........................... 18,554 363,821 2,997,355
Loss (gain) on disposal of property and equipment....... -- 531,129 (15,297)
Compensation expense related to stock option grant...... -- -- 13,750
Minority interest....................................... -- 49,000 (49,000)
Amortization of deferred compensation................... -- -- 183,793
Changes in current assets and liabilities--
Accounts receivable................................... (29,820) (1,054,803) (4,319,715)
Prepaid expenses and other current assets............. (73,382) (172,262) (719,031)
Accounts payable...................................... 240,142 3,501,268 2,359,962
Accrued expenses...................................... 103,976 379,563 3,907,757
---------- ----------- ------------
Net cash used in operating activities............... (666,170) (2,128,787) (16,726,941)
---------- ----------- ------------
Cash flows from investing activities:
Purchases of property and equipment....................... (438,835) (3,522,070) (5,245,055)
Increase in other assets.................................. (71,972) (249,960) (726,068)
---------- ----------- ------------
Net cash used in investing activities............... (510,807) (3,772,030) (5,971,123)
---------- ----------- ------------
Cash flows from financing activities:
Net proceeds from issuance of Series A convertible
preferred stock......................................... 2,380,754 1,334,251 --
Net proceeds from issuance of Series B redeemable
convertible preferred stock............................. -- 10,443,069 --
Net proceeds from issuance of Series C redeemable
convertible preferred stock............................. -- -- 25,041,848
Net proceeds from issuance of Class A common stock........ 2,000 -- --
Net proceeds from issuance of Class B common stock........ 490,000 -- --
Net proceeds from initial public offering................. -- -- 114,700,417
Proceeds from exercise of stock options................... -- -- 28,660
Payments on capital lease obligations..................... (8,352) (166,045) (806,351)
---------- ----------- ------------
Net cash provided by financing activities............. 2,864,402 11,611,275 138,964,574
---------- ----------- ------------
Net increase in cash and cash equivalents................... 1,687,425 5,710,458 116,266,510
Cash and cash equivalents, beginning of year................ 1,568 1,688,993 7,399,451
========== =========== ============
Cash and cash equivalents, end of year...................... $1,688,993 $ 7,399,451 $123,665,961
========== =========== ============
Supplemental disclosure of cash flow information:
Cash paid during the year for interest................ $ 4,114 $ 55,274 $ 599,878
========== =========== ============
Supplemental disclosure of noncash investing and financing
activities:
Equipment acquired under capital lease obligations.... $ 199,696 $ 439,270 $ 16,404,132
========== =========== ============
Accretion of dividends on Series B redeemable
convertible preferred stock......................... $ -- $ 219,205 $ 541,541
========== =========== ============
Accretion of dividends on Series C redeemable
convertible preferred stock......................... $ -- $ -- $ 478,825
========== =========== ============
</TABLE>

THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE CONSOLIDATED FINANCIAL
STATEMENTS.

F-6
<PAGE>
IBASIS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(1) OPERATIONS AND SIGNIFICANT ACCOUNTING POLICIES

iBasis, Inc. (formerly VIP Calling, Inc.) (the Company) is a
facilities-based international telecommunications carrier that utilizes the
Internet to provide economical international telecommunications services to
carriers and telephony resellers around the world. The Company was originally
incorporated as a Delaware corporation on August 2, 1996 and was renamed VIP
Calling, Inc. on December 30, 1996. In July 1999, the Company amended its
Certificate of Incorporation to effect a name change from VIP Calling, Inc. to
iBasis, Inc. In March 1998, the Company entered into a joint venture agreement
with another company to operate in Hong Kong (see Note 4). In December 1998, the
Company established Ivanet LLC, a wholly owned subsidiary focusing on network
services. The Company currently operates through various service agreements with
local service providers in the United States, Europe, Asia, the Middle East,
Latin America, Africa and Australia.

In November 1999, the Company completed its initial public offering and
issued 7,820,000 shares of $.001 par value Common Stock which resulted in total
net proceeds to the Company of $114.7 million.

The Company is subject to a number of risks common to companies in similar
stages of development, including dependence on key individuals and key vendors,
the need for adequate financing to fund future operations, the continued
successful development and marketing of its services and the attainment of
profitable operations.

The accompanying consolidated financial statements reflect the application
of certain significant accounting policies as described in this note and
elsewhere in these notes to consolidated financial statements.

(A) PRINCIPLES OF CONSOLIDATION

The accompanying consolidated financial statements include the accounts of
iBasis, Inc., iBasis Securities Corporation, Ivanet LLC and its majority owned
joint venture. All significant intercompany balances have been eliminated in
consolidation.

(B) USE OF ESTIMATES IN THE PREPARATION OF FINANCIAL STATEMENTS

The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenue and expenses during the reporting
period. Actual results could differ from those estimates.

In 1997, revenue principally consisted of the resale of certain equipment
gateways to two unrelated companies. Revenue was recognized upon shipment of the
equipment. The resale of equipment was not a material component of the Company's
revenue during 1998 and 1999. In early 1998, the Company commenced the resale of
international minutes of calling time for calls resold through the Company's
gateways. Revenue from the resale of minutes is recognized in the period the
service is provided, net of reserves for potential billing credits.

F-7
<PAGE>
IBASIS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

(1) OPERATIONS AND SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
(D) NET LOSS PER SHARE

Basic and diluted net loss per common share were determined by dividing net
loss by the weighted average common shares outstanding during the period. Basic
and diluted net loss per share are the same as the outstanding common stock
options, common stock warrants, convertible preferred stock and Class B common
stock are antidilutive as the Company has recorded a net loss for all periods
presented. Options and warrants to purchase a weighted average total of 114,441,
and 310,404 of Class A common shares have been excluded from the computation of
diluted weighted average common shares outstanding for the year ended
December 31, 1997 and 1998, respectively. Options and warrants to purchase a
weighted average total of 1,973,282 common shares have been excluded from the
computation of diluted weighted average common shares outstanding for the year
ended December 31, 1999.

The following table reconciles the weighted average common shares
outstanding to the shares used in the computation of basic and diluted weighted
average common shares outstanding:

<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
---------------------------------
1997 1998 1999
--------- --------- ---------
<S> <C> <C> <C>
Weighted average common shares outstanding.................. 6,036,082 6,060,000 9,681,482
Less--Weighted average unvested common shares outstanding... 30,205 37,449 26,229
--------- --------- ---------
Basic and diluted weighted average common shares
outstanding............................................... 6,005,877 6,022,551 9,655,253
========= ========= =========
</TABLE>

(E) CASH AND CASH EQUIVALENTS

The Company considers highly liquid investments purchased with an original
maturity of 90 days or less at the time of purchase to be cash equivalents. At
December 31, 1998 and 1999, cash equivalents included money market accounts and
commercial paper that are readily convertible into cash. Under SFAS 115,
ACCOUNTING FOR CERTAIN INVESTMENTS IN DEBT AND EQUITY SECURITIES, the Company
classifies its investments as held-to-maturity, and therefore has recorded them
at amortized cost in the accompanying balance sheet.

(F) PROPERTY AND EQUIPMENT

The Company provides for depreciation and amortization using the
straight-line method by charging to operations amounts estimated to allocate the
cost of the property and equipment over their estimated useful lives, as
follows:

<TABLE>
<CAPTION>
ESTIMATED
ASSET CLASSIFICATION USEFUL LIFE
- -------------------- -------------
<S> <C>

Network equipment........................................... 3 years

Equipment under capital lease............................... Life of lease

Leasehold improvements...................................... Life of lease

Computer software........................................... 3 years

Furniture and fixtures...................................... 5 years
</TABLE>

F-8
<PAGE>
IBASIS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

(1) OPERATIONS AND SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
(G) RESEARCH AND DEVELOPMENT EXPENSES

The Company charges research and development expenses to operations as
incurred.

(H) CONCENTRATION OF CREDIT RISK/SIGNIFICANT CUSTOMERS

Statement of Financial Accounting Standards (SFAS) No. 105, DISCLOSURE OF
INFORMATION ABOUT FINANCIAL INSTRUMENTS WITH OFF-BALANCE-SHEET RISK AND
FINANCIAL INSTRUMENTS WITH CONCENTRATIONS OF CREDIT RISK, requires disclosure of
any significant off-balance-sheet and credit risk concentrations. The Company
has no significant off-balance-sheet concentrations such as foreign exchange
contracts, option contracts or other foreign hedging arrangements. The Company
maintains the majority of its cash and cash equivalent balances with one
financial institution. Two customers represented approximately 42% and 32% of
total accounts receivable at December 31, 1998 and 1999, respectively. The
following table represents customers that account for more than 10% of net
revenue in any of the periods reported:

<TABLE>
<CAPTION>
YEARS ENDED
DECEMBER 31,
------------------------------
1997 1998 1999
-------- -------- --------
<S> <C> <C> <C>
Customer A.................................................. -- 7% 12%
Customer B.................................................. -- 18% 7%
Customer C.................................................. -- 15% --
Customer D.................................................. -- 11% 2%
Customer E.................................................. 78% -- --
Customer F.................................................. 18% -- --
Customer G.................................................. -- -- 10%
</TABLE>

(I) FAIR VALUE OF FINANCIAL INSTRUMENTS

Financial instruments consist principally of cash and cash equivalents,
accounts receivable, accounts payable and redeemable convertible preferred
stock. The estimated fair value of these instruments approximates their carrying
value.

(J) STOCK-BASED COMPENSATION

SFAS No. 123, ACCOUNTING FOR STOCK-BASED COMPENSATION, requires the
measurement of the fair value of stock options or warrants to be included in the
consolidated statements of operations or disclosed in the notes to consolidated
financial statements. The Company has determined that it will account for
stock-based compensation for employees under the intrinsic value-based method of
the Accounting Principles Board (APB) Opinion No. 25, ACCOUNTING FOR STOCK
ISSUED TO EMPLOYEES, and elect the disclosure-only alternative under SFAS No.
123. The Company accounts for stock-based compensation for nonemployees under
the fair value method prescribed by SFAS No. 123. To date there have been no
material grants to nonemployees.

(K) COMPREHENSIVE INCOME

In June 1997, the Financial Accounting Standards Board (FASB) issued SFAS
No. 130, REPORTING COMPREHENSIVE INCOME. The Company does not have any
components of comprehensive income other than its reported net loss.

F-9
<PAGE>
IBASIS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

(1) OPERATIONS AND SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
(L) LONG-LIVED ASSETS

The Company's long-lived assets consist primarily of property and equipment.
In accordance with SFAS No. 121, ACCOUNTING FOR THE IMPAIRMENT OF LONG-LIVED
ASSETS AND FOR LONG-LIVED ASSETS TO BE DISPOSED OF, the Company has assessed the
realizability of these assets and has determined that there were no asset
impairments.

(M) RECENT ACCOUNTING PRONOUNCEMENTS

In June 1998, the FASB issued SFAS No. 133, ACCOUNTING FOR DERIVATIVES AND
HEDGING ACTIVITIES, which establishes accounting and reporting standards for
derivative instruments, including certain derivative instruments embedded in
other contracts (collectively referred to as derivatives) and for hedging
activities. SFAS No. 133, as amended by SFAS No. 137, is effective for all
fiscal quarters of fiscal years beginning after June 15, 2000. As the Company
does not currently engage in derivatives or hedging transactions, there will be
no current impact to the Company's results of operations, financial position or
cash flows upon the adoption of SFAS No. 133.

(N) RECLASSIFICATIONS

Certain reclassifications have been made to the 1997 and 1998 financial
statements to conform to the 1999 presentation.

(O) OTHER ASSETS

Other assets at December 31, 1999 consisted primarily of deposits.

(2) ACCRUED EXPENSES

Accrued expenses at December 31, 1998 and 1999 consisted of the following:

<TABLE>
<CAPTION>
1998 1999
-------- ----------
<S> <C> <C>
Accrued professional fees............................. $ 72,500 $ 144,750
Accrued other......................................... $411,039 $4,246,546
-------- ----------
$483,539 $4,391,296
======== ==========
</TABLE>

(3) INCOME TAXES

The Company had elected to be treated as an S corporation for income tax
purposes from incorporation until January 1997. Effective January 1, 1997, the
Company terminated its S corporation status and became a C corporation for
income tax purposes. The Company provides for income taxes in accordance with
SFAS No. 109, ACCOUNTING FOR INCOME TAXES. Under SFAS No. 109, deferred tax
assets and liabilities are recognized based on temporary differences between the
financial statement and tax bases of assets and liabilities using currently
enacted tax rates.

No provision for federal or state income taxes has been recorded, as the
Company incurred net operating losses for all periods presented. As of Decmber
31, 1999, the Company has net operating loss carryforwards of approximately
$25,658,000 available to reduce future federal and state income taxes, if

F-10
<PAGE>
IBASIS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

(3) INCOME TAXES (CONTINUED)
any. If not utilized, these carryforwards expire at various dates through 2019.
If substantial changes in the Company's ownership should occur, as defined by
Section 382 of the Internal Revenue Code (the Code), there could be annual
limitations on the amount of carryforwards which can be realized in future
periods. The Company has completed several financings since its inception and
believes that it may have incurred an ownership change as defined under the
Code.

The approximate income tax effects of each type of temporary difference and
carryforward are as follows:

<TABLE>
<CAPTION>
DECEMBER 31,
--------------------------
1998 1999
----------- ------------
<S> <C> <C>
Net operating loss carryforwards.................. $ 2,636,000 $ 10,263,000
Other temporary differences....................... 38,000 578,000
Valuation allowance............................... (2,674,000) (10,841,000)
----------- ------------
$ -- $ --
=========== ============
</TABLE>

The Company has recorded a 100% valuation allowance against the net deferred
tax asset as of December 31, 1998 and 1999, because the future realizability of
such asset is uncertain. The increase in the valuation allowance during these
years primarily relates to the Company's net losses recorded in each year.

(4) HONG KONG JOINT VENTURE

On March 28, 1998, the Company entered into an agreement to form a joint
venture, iBasis Hong Kong Limited (the Joint Venture), with Microworld Limited
(Microworld) for the purpose of establishing a business that will provide
telecommunications and other services to customers in Hong Kong. Microworld
assigned certain contracts and paid $49,000 of cash for a 49% ownership in the
Joint Venture. The Company paid $51,000 in cash for a 51% ownership in the Joint
Venture.

The Joint Venture will terminate upon the withdrawal of either party by
written notification, the mutual election to terminate the agreement, the
insolvency of either party, or the transfer of the shares of Microworld to the
Company. The joint venture agreement does not provide for the allocation of
losses, income, gains and distributions.

Because the Company has deemed that it has control over the Joint Venture,
it has consolidated the entity for financial statement presentation. As of
December 31, 1998, the Joint Venture had not commenced operations. The Company
has consolidated the Joint Venture and has recorded a minority interest of
$49,000 in the accompanying consolidated balance sheet at December 31, 1998. The
minority interest was reduced to zero during 1999 as the Joint Venture losses
exceeded the invested amounts.

(5) LINE OF CREDIT

On June 18, 1999, the Company entered into a loan and security agreement
(the Agreement) with a bank which provides for a revolving line of credit (the
Revolver) and an equipment line of credit (the Equipment Line).

F-11
<PAGE>
IBASIS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

(5) LINE OF CREDIT (CONTINUED)
The Revolver allows the Company to borrow up to $1,500,000. The Revolver
expires in June 2000. Borrowings under the Revolver, collateralized by
substantially all assets of the Company, are payable at maturity and bear
interest at the bank's prime rate (8.5% at December 31, 1999) plus 1% per annum.
The Agreement requires the Company to maintain certain financial covenants
including a minimum quick ratio, tangible net worth and liquidity, as defined.
The Agreement also prohibits the payment of dividends. At December 31, 1999,
there were no borrowings under the Revolver.

The Company borrowed $505,634 under the Equipment Line during 1999 for
purposes of equipment purchases. Borrowings under the Equipment Line bear
interest at the bank's prime rate (8.5% at December 31, 1999) plus 1.5% and are
payable in 36 equal monthly installments of principal and interest through
August 2002. At December 31, 1999, there was no availability under the Equipment
Line. The amounts under this facility have been included in Capital lease
obligations in the accompanying consolidated balance sheet as of December 31,
1999.

(6) REDEEMABLE CONVERTIBLE PREFERRED STOCK

In August 1998, the Company sold 6,562,500 shares of Series B redeemable
convertible preferred stock (Series B) for aggregate proceeds of $10,500,000. On
July 12, 1999, the Company sold 5,744,103 shares of Series C redeemable
convertible preferred stock (Series C) for aggregate proceeds of $25,101,740.

The rights, preferences and privileges of the Series B and Series C were as
follows:

VOTING

The holders of Series B and Series C were entitled to the number of votes
equal to the number of common shares into which the preferred shares were
convertible. The preferred shareholders voted together with the holders of
common stock as a single class, except where a separate class vote was otherwise
required by applicable law or the Certificate of Incorporation or bylaws.

DIVIDENDS

The holders of Series B and Series C were entitled to receive dividends,
when and if declared by the Board of Directors, and in preference and prior to
any dividend declared or paid on any shares of common stock in preference to the
holders of common stock. The Board of Directors never declared dividends on
shares of Series B or Series C.

LIQUIDATION PREFERENCE

In the event of any voluntary or involuntary liquidation, dissolution or
winding up of the Company, the holders of Series B and Series C were entitled to
be paid out of the assets available for distribution an amount equal to the
greater of $1.60 and $4.37 per share, respectively, plus any declared but unpaid
dividends or the amount that would be distributed to each preferred stockholder
if all shares of Series B and Series C were converted to Class A common shares.
If the assets of the Company were insufficient to pay the full preferential
amounts to the preferred stockholders, the assets were to be distributed ratably
among the outstanding shares of Series B and Series C in proportion to its
aggregate liquidation preference amounts.

F-12
<PAGE>
IBASIS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

(6) REDEEMABLE CONVERTIBLE PREFERRED STOCK (CONTINUED)
CONVERSION

Upon the closing of the Company's initial public offering, all of the
outstanding shares of Series B and Series C automatically converted into
6,562,500 and 5,744,103 shares of Class A common shares, respectively.

REDEMPTION

At any time on or after August 26, 2003, upon receipt of written request for
redemption from holders of at least 60% of the shares of Series B or Series C
then outstanding, the Company will redeem all of the outstanding shares of
Series B and Series C in three equal annual installments at a redemption price
of $1.60 and $4.37 per share, respectively, plus any declared but unpaid
dividends. For the purpose of redemption, the Series B and Series C will have an
annual 6% accrued dividend. As of the closing of the initial public offering,
cumulative dividends on Series B and Series C totaled $1,239,571. These
dividends are not included for purposes of conversion. Upon the initial public
offering the Series B and Series C converted into Class A common stock and,
therefore, these dividends have been reclassified to additional paid-in capital
in the consolidated balance sheet as of December 31, 1999.

(7) STOCKHOLDERS' EQUITY (DEFICIT)

(A) AUTHORIZED CAPITAL STOCK

Effective July 12, 1999, the authorized capital stock of the Company
increased to 45,406,875, consisting of 31,500,000 shares of common stock, $0.001
par value per share, of which 30,000,000 and 1,500,000 shares have been
designated Class A common stock (Class A) and Class B common stock (Class B),
respectively, and 13,906,875 shares of preferred stock, $0.001 par value per
share, of which 1,256,875 shares are designated Series A convertible preferred
stock (Series A), 6,875,000 shares are designated Series B and 5,775,000 shares
are designated Series C.

In connection with the Company's initial public offering, 85,000,000 shares
of common stock, $0.001 par value per share (Common Stock) and 15,000,000 shares
of preferred stock, $0.001 par value per share (Preferred Stock) were
authorized.

Upon the completion of the initial public offering, all outstanding shares
of preferred stock, as well as Class B common stock, were converted into the
following number of shares of Class A common stock:

Subsequently, all outstanding shares of Class A common stock were converted
into 23,738,353 shares of $.001 par value Common Stock.

F-13
<PAGE>
IBASIS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

(7) STOCKHOLDERS' EQUITY (DEFICIT) (CONTINUED)
(B) SERIES A CONVERTIBLE PREFERRED STOCK

During 1997 and 1998, the Company sold an aggregate of 1,250,000 shares of
Series A for aggregate proceeds of $3,750,000.

The rights, preferences and privileges of the Series A were as follows:

VOTING

The holders of Series A were entitled to the number of votes equal to the
number of common shares into which the preferred shares were convertible. The
preferred shareholders voted together with the holders of common stock as a
single class, except where a separate class vote was otherwise required by
applicable law or the Certificate of Incorporation or bylaws.

DIVIDENDS

The holders of Series A were entitled to receive dividends, when and if
declared by the Board of Directors, and in preference and prior to any dividend
declared or paid on any shares of common stock in preference to the holders of
common stock. The Board of Directors never declared dividends on shares of
Series A.

LIQUIDATION PREFERENCE

In the event of any voluntary or involuntary liquidation, dissolution or
winding up of the Company, the holders of Series A were entitled to be paid out
of the assets available for distribution an amount equal to the greater of $3.00
per share plus any declared but unpaid dividends or the amount that would have
been distributed to each preferred stockholder if all shares of Series A were
converted to Class A common shares. If the assets of the Company were
insufficient to pay the full preferential amounts to the preferred stockholders,
the assets were to be distributed ratably among the outstanding shares of,
first, Series B, and second, Series A, in proportion to their aggregate
liquidation preference amounts.

CONVERSION

In connection with the initial public offering, each outstanding share of
Series A was converted into three shares of common stock.

The Company's Board of Directors approved a 40-for-1 common stock split in
February of 1997 and a 3-for-1 common stock split in December of 1997, which
have been retroactively reflected in the accompanying consolidated financial
statements.

The rights, preferences and privileges of the Class A and Class B were as
follows:

VOTING

The holders of Class A and Class B voted for each share of stock owned. The
common shareholders voted as a single class, together with the holders of
Series A and Series B, except where a

F-14
<PAGE>
IBASIS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

(7) STOCKHOLDERS' EQUITY (DEFICIT) (CONTINUED)
separate class vote was otherwise required by applicable law or the Certificate
of Incorporation or bylaws.

DIVIDENDS

Holders of Class B were entitled to dividends, when and if declared by the
Board of Directors, equal to an aggregate of $.33 per share (the Priority
Dividend) prior to any dividends being declared or paid to holders of Class A,
subject to the preferential dividend rights of holders of the Series A and B
preferred stock. Class A was not entitled to any priority dividend. After the
Priority Dividend has been paid, holders of Class A and Class B were entitled to
receive equal dividends, when and if declared by the Board of Directors.
Dividends were never declared on shares of Class A or Class B.

LIQUIDATION PREFERENCE

In the event of any voluntary or involuntary liquidation, dissolution or
winding up of the Company, and subject to the preferential rights of the holders
of Series A and B, the holders of Class B had a liquidation preference over the
holders of Class A of $.33 per share less any Priority Dividend previously paid.
The holders of Class A were then entitled to a distribution amount of $.33 per
share. Any remaining assets of the Company were to be distributed ratably among
the holders of Class A and Class B. If assets of the Company were insufficient
to pay the full amount to the common stockholders, the assets were to be
distributed ratably among the common stockholders in proportion to, and in order
of their rights to, their aggregate liquidation amounts.

CONVERSION

Upon the completion of the Company's initial public offering, all 6,060,000
shares of Class A common stock and all 1,500,000 shares of Class B common stock
were converted into 6,060,000 and 1,500,000 shares of common stock,
respectively.

RESTRICTED STOCK AWARD

In connection with a restricted stock award, the Company signed an agreement
with one of its employees stipulating that if the shareholder's employment with
the Company terminates, the Company will have the right to repurchase any
unvested shares for $.0333 per share, which was the fair value of the stock on
the date of grant. The shares vest at a rate of 25% per year. At December 31,
1999, there were 22,500 unvested shares under this agreement.

STOCK REPURCHASE AGREEMENT

In connection with the issuance of Series B, the Company signed an agreement
with two of the shareholders that stipulates that if either shareholder's
employment with the Company terminates prior to August 26, 2000, the Company
will have the right to repurchase any unvested shares of Class A Common Stock at
fair market value, as determined by the Board of Directors. At the signing of
this agreement, 55% of each of these shareholders' Class A Common Stock shares
were vested immediately, with 5.625% vesting every three months. At
December 31, 1999, there were 938,250 unvested shares under this agreement.

F-15
<PAGE>
IBASIS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

(7) STOCKHOLDERS' EQUITY (DEFICIT) (CONTINUED)
(D) STOCK INCENTIVE PLAN

The Company's 1997 Stock Incentive Plan (the Plan) provides for the granting
of restricted stock awards and incentive stock options (ISOs) and nonqualified
options to purchase up to 5,700,000 shares of Common Stock to key employees,
directors and consultants. Under terms of the Plan, the exercise price of
options granted shall be determined by the Board of Directors and for ISOs shall
not be less than fair market value of the stock on the date of grant. Options
vest in 16 equal installments on each of the first 16 three-month anniversaries
of the date of grant, provided that no options shall vest during the optionee's
first year of employment. The term of each stock option shall be determined by
the Board of Directors, but shall not exceed 10 years from the date of grant.

The following table summarizes the option activity for the years ended
December 31, 1997, 1998 and 1999:

<TABLE>
<CAPTION>
WEIGHTED
EXERCISE AVERAGE
NUMBER OF PRICE PER EXERCISE
SHARES SHARE PRICE
--------- ----------- --------
<S> <C> <C> <C>
Outstanding, January 1, 1997................ -- $ -- $ --
Granted................................... 342,300 .03 .03
--------- ----------- -----
Outstanding, December 31, 1997.............. 342,300 .03 .03
Granted................................... 1,186,600 .50-1.10 .70
Terminated................................ (200,000) .50 .50
--------- ----------- -----
Outstanding, December 31, 1998.............. 1,328,900 .03-1.10 .56
Granted................................... 2,028,600 1.00-37.94 6.13
Exercised................................. (206,125) .03-.50 .14
Terminated................................ (203,650) .50-37.94 1.27
--------- ----------- -----
Outstanding, December 31, 1999.............. 2,947,725 $.03-$37.94 $4.37
--------- ----------- -----
Exercisable, December 31, 1999.............. 400,869 $ .03-$5.00 $ .93
--------- ----------- -----
</TABLE>

F-16
<PAGE>
IBASIS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

(7) STOCKHOLDERS' EQUITY (DEFICIT) (CONTINUED)
The following table summarizes information relating to currently outstanding
and exercisable stock options as of December 31, 1999:

<TABLE>
<CAPTION>
OUTSTANDING EXERCISABLE
----------------------------------- --------------------
WEIGHTED
AVERAGE
REMAINING WEIGHTED WEIGHTED
RANGE OF CONTRACTUAL AVERAGE AVERAGE
EXERCISE NUMBER OF LIFE (YEARS) EXERCISE NUMBER OF EXERCISE
PRICES SHARES OUTSTANDING PRICE SHARES PRICE
- ---------- --------- ------------ -------- --------- --------
<S> <C> <C> <C> <C> <C>
$ .03 182,925 7.61 $ .03 98,794 $ .03
.50-.65 425,800 8.59 .54 139,600 .53
1.00-1.10 475,800 8.96 1.03 113,250 1.03
1.50 195,000 9.31 1.50 6,913 1.50
4.00 649,300 9.44 4.00 42,187 4.00
5.00 481,600 9.69 5.00 125 5.00
11.00 491,500 9.85 11.00 -- --
28.75 30,000 10.00 28.75 -- --
37.94 15,800 9.92 37.94 -- --
--------- -------
2,947,725 400,869
--------- -------
</TABLE>

At December 31, 1999, options to purchase 2,531,150 common shares were
available for future grants under the Plan.

The Company applies the accounting provisions prescribed in APB No. 25 and
related Interpretations. During September 1999, the Company issued stock options
with an exercise price less than the fair market value of the common stock as
determined for accounting purposes. Accordingly, total deferred compensation
related to these stock options of approximately $2,384,000 was recorded during
the year ended December 31, 1999, and is being amortized over the vesting period
of the options, generally over four years. Amortization of deferred compensation
of approximately $184,000 has been recognized as an expense in the year ended
December 31, 1999. Prior to September 1999, the Company had not issued stock
options with an exercise price less than the fair market value.

(E) EMPLOYEE STOCK PURCHASE PLAN

On September 9, 1999, the Company's board of directors and stockholders
approved the 1999 iBasis, Inc. employee stock purchase plan (the Purchase Plan),
which enables eligible employees to acquire shares of the Company's common stock
through payroll deductions. The Purchase Plan is intended to qualify as an
employee stock purchase plan under Section 423 of the Internal Revenue Code. The
offering periods under the Purchase Plan start on January 1 and July 1 of each
year and end on June 30 and December 31 of each year, unless otherwise
determined by the board of directors. During each offering period, an eligible
employee may select a rate of payroll deduction of from 1% to 10% of
compensation, up to an aggregate of $12,500 in any offering period. The purchase
price for common stock purchased under the Purchase Plan is 85% of the lesser of
the fair market value of the shares on the first or last day of the offering
period. An aggregate of 500,000 shares of common stock have been reserved for
issuance under the Purchase Plan.

F-17
<PAGE>
IBASIS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

(7) STOCKHOLDERS' EQUITY (DEFICIT) (CONTINUED)
(F) PREFERRED STOCK WARRANTS

The Company has granted warrants for the purchase of Series A and Series B
to an equipment leasing company. At December 31, 1998, warrants for the purchase
of 6,875 shares of Series A and 37,500 shares of Series B were outstanding at an
exercise price per share of $3.00 and $1.00, respectively. Upon conversion of
the Company's preferred stock (see note 7(a)), these warrants converted into
common stock warrants for 20,625 and 37,500 shares, respectively. At
December 31, 1999, 20,625 and 37,500 warrants were exercisable for common stock,
respectively. The value of these warrants at the date of grant was calculated
and deemed to be not material to the financial statements.

(G) STOCK-BASED COMPENSATION

In October 1995, the Financial Accounting Standards Board (FASB) issued SFAS
No. 123, ACCOUNTING FOR STOCK-BASED COMPENSATION, which requires the measurement
of the fair value of stock options or warrants to be included in the statements
of operations or disclosed in the notes to the financial statements. The Company
has determined that it will continue to account for stock-based compensation for
employees under the Accounting Principles Board Opinion No. 25 and elect the
disclosure-only alternative under SFAS No. 123 for options granted in 1997, 1998
and 1999, using the Black-Scholes option pricing model prescribed by SFAS No.
123.

The weighted average assumptions are as follows:

<TABLE>
<CAPTION>
DECEMBER 31,
------------------------------------
1997 1998 1999
---------- ---------- ----------
<S> <C> <C> <C>
Risk-free interest rate.................... 6.16% 4.99% 5.77%
Expected dividend yield.................... -- -- --
Expected lives............................. 5 years 5 years 5 years
Volatility................................. 60% 60% 61%
Weighted average remaining contractual
life..................................... 9.62 years 9.49 years 9.20 years
Weighted average fair value of options
granted.................................. $0.02 $0.39 $4.90
</TABLE>

Had compensation expense from the Company's stock incentive plan been
determined consistent with SFAS No. 123, net loss and net loss per share would
have been approximately as follows:

<TABLE>
<CAPTION>
DECEMBER 31,
----------------------------------------
1997 1998 1999
----------- ----------- ------------
<S> <C> <C> <C>
Net loss applicable to common
stockholders--
As reported......................... $ (925,640) $(5,945,708) $(22,106,881)
Pro forma........................... (926,282) (5,979,305) (22,667,437)
Basic and diluted net loss per share--
As reported......................... $ (0.15) $ (0.99) $ (2.29)
Pro forma........................... (0.15) (0.99) (2.35)
</TABLE>

F-18
<PAGE>
IBASIS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

(8) COMMITMENTS

In 1998, the Company entered into an agreement with a leasing company under
which the Company will be able to finance up to $15,000,000 of equipment
purchases with monthly payment terms over the life of each lease. Each
outstanding lease bears interest at an annual rate of 13.6% and has a 36-month
term. As of December 31, 1999, the Company had approximately $1,000,000
available under the leasing agreement.

During 1997, 1998 and 1999, the Company entered into various lease
agreements with another leasing company. Each outstanding lease bears interest
at an annual rate ranging from 10.5% to 13.0% and has a term ranging from 24 to
36 months. As of December 31, 1999, the Company had approximately $1,426,000
outstanding under these lease agreements.

The Company leases its facilities and certain equipment under both operating
and capital leases that expire through 2009. The approximate future minimum
payments under these leases as of December 31, 1999 are as follows:

<TABLE>
<CAPTION>
OPERATING CAPITAL
YEAR LEASES LEASES
- ---- ---------- -----------
<S> <C> <C>
2000................................................ $1,041,983 $ 8,015,988
2001................................................ 1,088,406 7,861,264
2002................................................ 1,135,729 5,012,663
2003................................................ 1,106,287 68,177
2004................................................ 1,129,848 --
Thereafter.......................................... 1,938,734 --
---------- -----------
Total future minimum lease payments................. $7,440,987 20,958,092
==========
Less--Amounts representing interest................. 4,892,969
-----------
Present value of obligations........................ 16,065,123
Less--Current portion............................... 4,376,280
-----------
$11,688,843
===========
</TABLE>

Rent expense included in the consolidated statements of operations was
approximately $83,000, $69,000, $640,000 for the years ended December 31, 1997,
1998 and 1999, respectively.

(9) SEGMENT AND GEOGRAPHIC INFORMATION

The Company has adopted SFAS No. 131, DISCLOSURES ABOUT SEGMENTS OF AN
ENTERPRISE AND RELATED INFORMATION, in the fiscal year ended December 31, 1998.
SFAS No. 131 establishes standards for reporting information regarding operating
segments in annual financial statements and requires selected information for
those segments to be presented in interim financial reports issued to
stockholders. SFAS No. 131 also establishes standards for related disclosures
about products and services and geographic areas. Operating segments are
identified as components of an enterprise about which separate discrete
financial information is available for evaluation by the chief operating
decision maker, or decision-making group, in deciding how to allocate resources
and assess performance. The Company's chief decision-maker, as defined under
SFAS No. 131, is a combination of the Chief Executive Officer and the Chief
Financial Officer. To date, the Company has viewed its operations and manages
its business as principally one segment, international telecommunication
services. Associated

F-19
<PAGE>
IBASIS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

(9) SEGMENT AND GEOGRAPHIC INFORMATION (CONTINUED)
services are not significant. As a result, the financial information disclosed
herein represents all of the material financial information related to the
Company's principal operating segment.

The following table represents percentage revenue from individual countries:

<TABLE>
<CAPTION>
YEAR ENDED
DECEMBER 31,
------------------------------
1997 1998 1999
-------- -------- --------
<S> <C> <C> <C>
US.................................................... --% 86% 95%
Hong Kong............................................. 17 -- --
Japan................................................. 79 -- --
Other................................................. 4 14 5
---- ---- ----
100% 100% 100%
---- ---- ----
</TABLE>

The following table represents percentage of minute revenue for traffic sent
to the specified geographic destinations:

<TABLE>
<CAPTION>
YEAR ENDED
DECEMBER 31,
------------------------------
1997 1998 1999
-------- -------- --------
<S> <C> <C> <C>
Asia.................................................. 100% 56% 49%
Latin America......................................... -- 14 22
Middle East........................................... -- 14 18
United States......................................... -- 12 1
Europe................................................ -- -- 7
Other................................................. -- 4 3
---- ---- ----
100% 100% 100%
---- ---- ----
</TABLE>

As of December 31, 1999, there was approximately $669,000 of equipment held
at our joint venture (see Note 4).

(10) RELATED PARTY

In November 1997, $115,000 of consulting fees were paid to a holder of
Series A and B for services rendered. These fees paid to this related party are
included in general and administrative expenses in the accompanying consolidated
financial statements.

For the years ended December 31, 1998 and 1999, the Company paid
approximately $415,000 and $289,000, respectively, to a related party,
Microworld Limited (see Note 4) for services rendered. These fees paid to this
related party are included in data communications and telecommunications costs
in the accompanying consolidated financial statements.

F-20
<PAGE>
IBASIS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

(11) VALUATION AND QUALIFYING ACCOUNTS

The following is a rollforward of the Company's allowance for doubtful
accounts:

<TABLE>
<CAPTION>
BALANCE AT
BEGINNING OF BALANCE AT
PERIOD ADDITIONS DEDUCTIONS END OF PERIOD
------------ --------- ---------- -------------
<S> <C> <C> <C> <C>
Year ended December 31, 1997.... $ -- $ -- $ -- $ --
-------- -------- ------- --------
Year ended December 31, 1998.... $ -- $126,741 $ -- $126,741
-------- -------- ------- --------
Year ended December 31, 1999.... $126,741 $510,380 $(4,000) $633,121
======== ======== ======= ========
</TABLE>

F-21
<PAGE>

[Inside Back Cover]

(Stylized logo of iBasis)
<PAGE>
[LOGO]
<PAGE>
THE INFORMATION CONTAINED IN THIS PROSPECTUS IS NOT COMPLETE AND MAY BE CHANGED.
WE MAY NOT SELL THESE SECURITIES UNTIL THE REGISTRATION STATEMENT FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION IS EFFECTIVE. THIS PROSPECTUS IS NOT AN OFFER
TO SELL SECURITIES, AND WE ARE NOT SOLICITING OFFERS TO BUY THESE SECURITIES IN
ANY STATE WHERE THE OFFER OR SALE IS NOT PERMITTED.
<PAGE>
SUBJECT TO COMPLETION, DATED MARCH 8, 2000

[LOGO]

3,500,000 SHARES

COMMON STOCK

iBasis, Inc. is offering 2,000,000 shares of its common stock and selling
stockholders are offering 1,500,000 shares of common stock. Our common stock is
traded on the Nasdaq National Market under the symbol "IBAS." The last reported
sale price of our common stock on the Nasdaq National Market on March 6, 2000
was $79.38 per share.

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

INVESTING IN OUR COMMON STOCK INVOLVES RISKS.
SEE "RISK FACTORS" BEGINNING ON PAGE 6.

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

The selling stockholders and iBasis have granted the underwriters a 30-day
option to purchase up to an additional 525,000 shares of common stock in the
aggregate to cover over-allotments. FleetBoston Robertson Stephens Inc. expects
to deliver the shares of common stock to purchasers on March 15, 2000.

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

ROBERTSON STEPHENS INTERNATIONAL

CHASE H&Q
U.S. BANCORP PIPER JAFFRAY
DAIN RAUSCHER WESSELS

THE DATE OF THIS PROSPECTUS IS , 2000.
<PAGE>
UNDERWRITING

<TABLE>
<CAPTION>
NUMBER
UNDERWRITER OF SHARES
- ----------- ---------
<S> <C>
FleetBoston Robertson Stephens International Inc............
Chase Securities Inc........................................
U.S. Bancorp Piper Jaffray Inc..............................
Dain Rauscher Incorporated..................................

---------
Total...................................................
=========
</TABLE>

The underwriters have informed us that they do not intend to confirm sales
to any accounts over which they exercise discretionary authority.

OVER-ALLOTMENT OPTION. iBasis and some of the selling stockholders have
granted to the underwriters an option, exercisable during the 30-day period
after the date of this prospectus, to purchase up to and shares,
respectively, for an aggregate of 525,000 additional shares of common stock at
the same price per share as we will receive for the 3,500,000 shares that the
underwriters have agreed to purchase. If the underwriters exercise this option,
each of the underwriters will have a firm commitment, subject to certain
conditions, to purchase approximately the same percentage of such additional
shares that the number of shares of common stock to be purchased by it shown in
the above table bears to the 3,500,000 shares of common stock offered in this
offering. If purchased, such additional shares will be sold by the underwriters
on the same terms as those on which the 3,500,000 shares offered in this
offering are being sold. The selling stockholders will be obligated, pursuant to
the option, to sell shares to the underwriters to the extent the option is
exercised. The underwriters may exercise such option only to cover
over-allotments made in connection with the sale of the shares of common stock
offered in this offering. If such option is exercised in full, the total public
offering price, underwriting discounts and commissions and proceeds to us will
be $ , $ and $ , respectively.

In the event that the underwriters do not exercise their over-allotment
option in full, the shares of common stock to be sold in such option shall be
allocated as follows. First, Ofer Gneezy and Gordon VanderBrug shall sell up to
75,092 and 36,500 shares, respectively.

69
<PAGE>
PART II

INFORMATION NOT REQUIRED IN PROSPECTUS

ITEM 13. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION

Expenses of the Registrant in connection with the issuance and distribution
of the securities being registered, other than the underwriting discount, are
estimated as follows:

<TABLE>
<CAPTION>
TOTAL
--------
<S> <C> <C>
SEC Registration Fee........................................ $ 89,695
NASD Fees................................................... $ 30,500
NASDAQ Listing Fees......................................... $ 17,500
Printing and Engraving Expenses............................. $ 130,000
Legal Fees and Expenses..................................... $ 165,000
Accountants' Fees and Expenses.............................. $ 100,000
Blue Sky Fees and expenses (including legal fees)........... $ 5,000
Transfer Agent and Registrar's Fees......................... $ 15,000
Miscellaneous Costs......................................... $ 47,305
Total....................................................... $ 600,000
</TABLE>

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

ITEM 14. INDEMNIFICATION OF DIRECTORS, OFFICERS AND EMPLOYEES

Section 145 of the Delaware General Corporation law empowers a Delaware
corporation to indemnify its officers and directors and certain other persons to
the extent and under the circumstances set forth therein.

The Amended and Restated Certificate of Incorporation of the Registrant and
the Amended and Restated By-laws of the Registrant, copies of which are filed as
Exhibits 3.1 and 3.2, provide for indemnification of officers and directors of
the Registrant and certain other persons against liabilities and expenses
incurred by any of them in certain stated proceedings and under certain stated
conditions.

The above discussion of the Registrant's Amended and Restated Certificate of
Incorporation, Amended and Restated By-Laws and Section 145 of the Delaware
General Corporation Law is not intended to be exhaustive and is qualified in its
entirety by such Amended and Restated Certificate of Incorporation, Amended and
Restated By-Laws and statute.

The Registrant will agree to indemnity the Underwriters and their
controlling persons, and the Underwriters will agree to indemnify the Registrant
and its controlling persons, including directors and executive officers of the
Registrant, against certain liabilities, including liabilities under the
Securities Act. Reference is made to the form of the Underwriting Agreement that
will be filed as part of the Exhibits hereto.

ITEM 15. RECENT SALES OF UNREGISTERED SECURITIES

Between August 1996 and August 1997, the Registrant issued 6,060,000 shares
of Class A Common Stock, in the form of sales and restricted stock grants, to
three investors for an aggregate purchase price of $102,000. The 6,060,000
shares reflect both a 40-for-1 stock split in February 1997, and a 2-for-1 stock
dividend in December 1997. These sales and grants were made in reliance upon
Rule 506 of Regulation D, promulgated under the Securities Act and Section 4(2)
of the Securities Act, as transactions with an accredited investor by an issuer
not involving a public offering.

In February, March and April 1997, the Registrant issued and sold 1,500,000
shares of Class B Common Stock to a total of 10 investors for an aggregate
purchase price of $500,000. These

II-1
<PAGE>
transactions were made in reliance upon Rule 506 of Regulation D, promulgated
under the Securities Act and Section 4(2) of the Securities Act, as transactions
with an accredited investor by an issuer not involving a public offering.

On September 10, 1997 the Registrant issued a warrant to purchase up to
6,875 shares of Series A Preferred Stock to TLP Leasing Programs, Inc. in
connection with the Registrant's entering into a commercial agreement with such
investor. This warrant was issued in reliance upon Rule 506 of Regulation D,
promulgated under the Securities Act and Section 4(2) of the Securities Act, as
transactions with an accredited investor by an issuer not involving a public
offering.

In October, November and December 1997, and March and June 1998 subject to
commitments in 1997, the Registrant issued and sold an aggregate of 1,250,000
share of Series A Convertible Preferred Stock to a total of 14 investors for an
aggregate purchase price of $3,750,000. These transactions were made in reliance
upon Rule 506 of Regulation D, promulgated under the Securities Act and
Section 4(2) of the Securities Act, as transactions with an accredited investor
by an issuer not involving a public offering.

On June 8, 1998 the Registrant issued a warrant to purchase up to 37,500
shares of Series B Preferred Stock to TLP Leasing Programs, Inc. in connection
with the Registrant's entering into a commercial agreement with such investor.
This warrant was issued in reliance upon Rule 506 of Regulation D, promulgated
under the Securities Act and Section 4(2) of the Securities Act, as transactions
with an accredited investor by an issuer not involving a public offering.

On August 26, 1998, the Registrant issued and sold 6,562,500 shares of
Series B Convertible Preferred Stock to a total of 14 investors for an aggregate
purchase price of $10,500,000. These transactions were made in reliance upon
Rule 506 of Regulation D, promulgated under the Securities Act and Section 4(2)
of the Securities Act, as transactions with an accredited investor by an issuer
not involving a public offering.

In July 1999, the Registrant issued and sold 5,744,103 shares of Series C
Convertible Preferred stock to 40 investors for an aggregate purchase price of
$25,101,740. These transactions were made in reliance upon Rule 506 of
Regulation D, promulgated under the Securities Act and Section 4(2) of the
Securities Act, as transactions with an accredited investor by an issuer not
involving a public offering.

As of December 31, 1999, the Registrant has issued options to certain
employees, officers and consultants of the Registrant, to purchase an aggregate
of 3,557,500 shares of common stock under the Registrant's 1997 Stock Incentive
Plan. The purchase price under the options is $0.03 to $37.94 based on the fair
market value of the stock on the date of grant. The grants of options, and sales
of common stock upon the exercise of these options, were made in reliance upon
Rule 701 promulgated under the Securities Act and are deemed to be exempt
transactions as sales of an issuer's securities pursuant to a written plan or
contract relating to the compensation of such individuals and upon Section 4(2)
of the Securities Act as transactions not involving any public offering.

II-2
<PAGE>
ITEM 16. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES

(a) Exhibits

The following is a list of exhibits filed as a part of this registration
statement:

<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
- --------------------- ------------------------------------------------------------
<C> <S>
1.1 Form of Underwriting Agreement.

3.1** Amended and Restated Certificate of Incorporation of the
Registrant.

3.2** Amended and Restated By-Laws of the Registrant.

4.1 Specimen Certificate for shares of the Registrant's common
stock (incorporated by reference from Exhibit Specimen
Certificate for shares of the Registrant's common stock to
the Registrant's Registration Statement on Form S-1 (file
no. 333-85545)).

5.1 Opinion of Bingham Dana LLP, counsel to the Registrant,
regarding the legality of the shares of common stock
registered hereunder.

10.1 Lease, dated January 8, 1999, as amended, between the
Registrant and Rodger P. Nordblum and Peter C. Nordblum as
Trustees of Northwest Associates under Declaration of Trust
dated December 9, 1971 with respect to property located at
20 Second Avenue, Burlington, Massachusetts (incorporated by
reference from Exhibit 10.1 to the Registrant's Registration
Statement on Form S-1 (file no. 333-85545)).

10.2 Standard Form Commercial Lease, dated as of February 26,
1997, between the Registrant and Technology Properties
Associates, with respect to property located at 121
Middlesex Turnpike, Burlington, Massachusetts (incorporated
by reference from Exhibit 10.2 to the Registrant's
Registration Statement on Form S-1 (file no. 333-85545)).

10.3 Lease, dated as of August 7, 1998, between the Registrant
and 111 Eighth Avenue LLC, relating to property located at
111 Eighth Avenue, New York, New York (incorporated by
reference from Exhibit 10.3 to the Registrant's Registration
Statement on Form S-1 (file no. 333-85545)).

10.4 Lease, dated December 11, 1998 between the Registrant and
Downtown Properties L.L.C., with respect to property located
at 611 Wilshire Boulevard, Los Angeles, California
(incorporated by reference from Exhibit 10.4 to the
Registrant's Registration Statement on Form S-1 (file no.
333-85545)).

10.5 Warrant, dated as of September 10, 1997, for the purchase of
shares of preferred stock of the Company issued to TLP
Leasing Programs, Inc. (incorporated by reference from
Exhibit 10.5 to the Registrant's Registration Statement on
Form S-1 (file no. 333-85545)).

10.6 Warrant, dated as of June 8, 1998, for the purchase of
shares of preferred stock of the Company issued to TLP
Leasing Programs, Inc. (incorporated by reference from
Exhibit 10.6 to the Registrant's Registration Statement on
Form S-1 (file no. 333-85545)).

10.7 Master Agreement of Terms and Conditions for Lease between
the Registrant and Cisco Systems Capital Corporation, dated
as of November 3, 1998, as amended (incorporated by
reference from Exhibit 10.7 to the Registrant's Registration
Statement on Form S-1 (file no. 333-85545)).
</TABLE>

II-3
<PAGE>

<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
- --------------------- ------------------------------------------------------------
<C> <S>
10.8 1997 Stock Incentive Plan of the Registrant (incorporated by
reference from Exhibit 10.8 to the Registrant's Registration
Statement on Form S-1 (file no. 333-85545)).

10.9 Employment Agreement between the Registrant and Ofer Gneezy,
dated as of August 11, 1997 (incorporated by reference from
Exhibit 10.9 to the Registrant's Registration Statement on
Form S-1 (file no. 333-85545)).

10.10 Employment Agreement between the Registrant and Gordon J.
VanderBrug, dated as of August 11, 1997. (incorporated by
reference from Exhibit 10.10 to the Registrant's
Registration Statement on Form S-1 (file no. 333-85545)).

10.11 Employment Agreement between the Registrant and Michael J.
Hughes, dated as of August 17, 1999 (incorporated by
reference from 10.11 to the Registrant's Registration
Statement on Form S-1 (file no. 333-85545)).

10.12 Employment Agreement between the Registrant and John G.
Henson, Jr., dated as of August 17, 1999 (incorporated by
reference from Exhibit 10.12 to the Registrant's
Registration Statement on Form S-1 (file no. 333-85545)).

10.13 Series A Convertible Preferred Stock Purchase Agreement,
dated as of October 24, 1997, between the Registrant and the
"Purchaser" parties thereto (incorporated by reference from
Exhibit 10.13 to the Registrant's Registration Statement on
Form S-1 (file no. 333-85545)).

10.14 Series B Convertible Preferred Stock Purchase Agreement,
dated as of August 26, 1998, between the Registrant and the
"Purchaser" parties thereto (incorporated by reference from
Exhibit 10.14 to the Registrant's Registration Statement on
Form S-1 (file no. 333-85545)).

10.15 Series C Convertible Purchase Agreement, dated as of July
12, 1999, between the Registrant and the "Purchaser" parties
thereto (incorporated by reference from Exhibit 10.15 to the
Registrant's Registration Statement on Form S-1 (file no.
333-85545)).

10.16 Second Amended and Restated Shareholders' Agreement, dated
as of July 12, 1999, among the Registrant and the holders of
the capital stock of the Registrant who become parties
thereto (incorporated by reference from Exhibit 10.16 to the
Registrant's Registration Statement on Form S-1 (file no.
333-85545)).

10.17 First Amended and Restated Registration Rights Agreement,
dated as of July 12, 1999, among the Registrant and the
holders of the capital stock of the Registrant who become
parties thereto (incorporated by reference from Exhibit
10.17 to the Registrant's Registration Statement on Form S-1
(file no. 333-85545)).

10.18 Shareholders Agreement, dated as of March 28, 1998, relating
to VIP Calling (Hong Kong) Limited (incorporated by
reference from Exhibit 10.18 to the Registrant's
Registration Statement on Form S-1 (file no. 333-85545)).

10.19 Amendment No. 1 to the Shareholders Agreement, dated as of
March 28, 1998, relating to VIP Calling (Hong Kong) Limited
(incorporated by reference from Exhibit 10.19 to the
Registrant's Registration Statement on Form S-1 (file no.
333-85545)).

10.20 Amendment No. 2 to the Shareholders Agreement, dated as of
March 28, 1998, relating to VIP Calling (Hong Kong) Limited
(incorporated by reference from Exhibit 10.20 to the
Registrant's Registration Statement on Form S-1 (file no.
333-85545)).

10.21 Loan and Security Agreement between the Registrant and
Silicon Valley Bank, dated as of June 18, 1999 (incorporated
by reference from Exhibit 10.21 to the Registrant's
Registration Statement on Form S-1 (file no. 333-85545)).
</TABLE>

II-4
<PAGE>

<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
- --------------------- ------------------------------------------------------------
<C> <S>
10.22 Stock Restriction Agreement, dated as of August 26, 1998,
between the Registrant and Ofer Gneezy and Gordon VanderBrug
(incorporated by reference from Exhibit 10.22 to the
Registrant's Registration Statement on Form S-1 (file no.
333-85545)).

10.23 Alliance Agreement, dated January 4, 1999, between the
Registrant and Cisco Systems, Inc. (incorporated by
reference from Exhibit 10.23 to the Registrant's
Registration Statement on Form S-1 (file no. 33-85545)).

10.24 Memorandum of Agreement, dated August 16, 1999, between the
Registrant and NetSpeak Corporation (incorporated by
reference from Exhibit 10.24 to the Registrant's
Registration Statement on Form S-1 (file no. 333-85545)).

10.25 Strategic Partner Agreement between NetSpeak Corporation and
the Registrant, dated as of September 15, 1999 (incorporated
by reference from Exhibit 10.25 to the Registrant's
Registration Statement on Form S-1 (file no. 333-85545)).

10.26** 1999 Employee Stock Purchase Plan of the Registrant, as
amended.

10.27** Lease between the Registrant and NWT Partners, Ltd. with
respect to property located at 100 N. Biscayne Boulevard,
Miami, Florida.

10.28** Lease, dated October 22, 1999, between the Registrant and
Roger P. Nordblom and Peter C. Nordblom, as Trustees of
N.W. Building 1 Associates under Declaration of Trust dated
November 11, 1984 and filed with the Middlesex South
Registry District of the Land Court as Document
Number 674807 with respect to property located at 10 Second
Avenue, Burlington, Massachusetts.

10.29 Employment Agreement between the Registrant and Charles
Giambalvo, dated as of February 8, 2000.

10.30** Supply Contract, dated as of December 30, 1999, between the
Registrant and Belle Systems A/S.

21.1 Subsidiaries of the Registrant (incorporated by reference
from Exhibit 21.1 to the Registrant's Registration Statement
on Form S-1 (file no. 333-85545)).

23.1 Consent of Arthur Andersen LLP.

23.2 Consent of Bingham Dana LLP, counsel to the Registrant
(included in Exhibit 5.1).

23.3 Consent of Swidler Berlin Sheref Friedman, LLP.

24.1** Power of Attorney (included in signature page to
Registration Statement).

27.1** Financial Data Schedule.
</TABLE>

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

* To be filed by amendment.

** Previously filed.

(b) Financial Statement Schedules

All schedules have been omitted because either they are not required, are
not applicable or the information is otherwise set forth in the Consolidated
Financial Statements and notes thereto.

II-5
<PAGE>
ITEM 17. UNDERTAKINGS

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 provisions described in Item 14 hereof, 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.

The undersigned Registrant hereby undertakes:

(1) To provide the Underwriter at the closing specified in the Underwriting
Agreement certificates in such denominations and registered in such names as
required by the Underwriter to permit prompt delivery to each purchaser.

(2) That for purposes of determining any liability under the Securities Act of
1933, the information omitted from the form of prospectus filed as part of
this registration statement in reliance upon Rule 430A and contained in a
form of prospectus filed by the Registrant pursuant to Rule 424(b)(1) or
(4), or 497(h) under the Securities Act shall be deemed to be part of this
registration statement as of the time it was declared effective.

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

II-6
<PAGE>
SIGNATURES

Pursuant to the requirements of the Securities Act of 1933, as amended, the
Registrant certifies that it has reasonable grounds to believe that it meets all
of the requirements for filing on Form S-1 and has duly caused this Amendment
No. 2 to the Registration Statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the Town of Burlington, Commonwealth
of Massachusetts, on this 8th day of March, 2000.

<TABLE>
<S> <C> <C>
iBASIS, INC.

By: /s/ OFER GNEEZY*
-----------------------------------------
Ofer Gneezy
PRESIDENT AND CHIEF EXECUTIVE OFFICER
</TABLE>

POWER OF ATTORNEY

Each person whose signature appears below hereby appoints Ofer Gneezy,
Gordon J. VanderBrug and Michael J. Hughes, and each of them severally, acting
alone and without the other, his true and lawful attorney-in-fact with full
power of substitution or resubstitution, for such person and in such person's
name, place and stead, in any and all capacities, to sign on such person's
behalf, individually and in each capacity stated below, any and all amendments
to this Amendment No. 2 to the Registration Statement including post-effective
amendments, and to sign any and all additional registration statements relating
to the same offering of securities of the Registration Statement that are filed
pursuant to Rule 462(b) of the Securities Act of 1933, and to file the same,
with all exhibits thereto, and other documents in connection therewith, with the
Securities and Exchange Commission, granting unto said attorneys-in-fact, 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 such person might or could do in person, hereby ratifying and
confirming all that said attorneys-in-fact, or their 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 Amendment
No. 2 to the Registration Statement has been signed below by the following
persons in the capacities and on the dates indicated:

<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<C> <S> <C>
/s/ OFER GNEEZY* President, Chief Executive
-------------------------------------- Officer and Director March 8, 2000
Ofer Gneezy (Principal Executive Officer)

Vice President, Finance and
/s/ MICHAEL J. HUGHES Chief Financial Officer
-------------------------------------- (Principal Financial and March 8, 2000
Michael J. Hughes Accounting Officer)

/s/ GORDON J. VANDERBRUG* Executive Vice President and
-------------------------------------- Director March 8, 2000
Gordon J. VanderBrug

/s/ ROBERT MAGINN* Director
-------------------------------------- March 8, 2000
Robert Maginn

/s/ CHARLES S. HOUSER* Director
-------------------------------------- March 8, 2000
Charles S. Houser
</TABLE>

II-7
<PAGE>

<TABLE>
<C> <S> <C>
/s/ IZHAR ARMONY* Director
-------------------------------------- March 8, 2000
Izhar Armony

/s/ JOHN JARVE* Director
-------------------------------------- March 8, 2000
John Jarve

/s/ CHARLES N. CORFIELD* Director
-------------------------------------- March 8, 2000
Charles N. Corfield

/s/ CHARLES M. SKIBO* Director
-------------------------------------- March 8, 2000
Charles M. Skibo

* /s/ MICHAEL J. HUGHES
- --------------------------------------
Michael J. Hughes
Attorney-in-fact
</TABLE>

II-8
<PAGE>
EXHIBIT INDEX

<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
- --------------------- ------------------------------------------------------------
<C> <S>

1.1 Form of Underwriting Agreement.

3.1 ** Amended and Restated Certificate of Incorporation of the
Registrant.

3.2 ** Amended and Restated By-Laws of the Registrant.

5.1 Opinion of Bingham Dana LLP, counsel to the Registrant,
regarding the legality of the shares of common stock
registered hereunder.

<PAGE>

10.26** 1999 Employee Stock Purchase Plan of the Registrant, as
amended.

10.27** Lease between the Registrant and NWT Partners, Ltd. with
respect to property located at 100 N. Biscayne Boulevard,
Miami, Florida.

10.28** Lease, dated October 22, 1999 between the Registrant and
Roger P. Nordblom and Peter C. Nordblom, as Trustees of
N.W. Building 1 Associates under Declaration of Trust dated
November 11, 1984 and filed with the Middlesex South
Registry District of the Land Court as Document
Number 674807 with respect to property located at 10 Second
Avenue, Burlington, Massachusetts.

10.29 Employment Agreement between the Registrant and Charles
Giambalvo, dated as of February 8, 2000.

10.30** Supply Contract, dated as of December 30, 1999, between the
Registrant and Belle Systems A/S.

21.1 Subsidiaries of the Registrant (incorporated by reference
from Exhibit 21.1 to the Registrant's Registration Statement
on Form S-1 (file no. 333-85545)).

23.1 Consent of Arthur Andersen LLP.

23.2 Consent of Bingham Dana LLP, counsel to the Registrant
(included in Exhibit 5.1).

23.3 Consent of Swidler Berlin Sheref Friedman, LLP.

24.1** Power of Attorney (included in signature page to
Registration Statement).

27.1** Financial Data Schedule.
</TABLE>

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

* To be filed by amendment.

** Previoulsy filed.

<PAGE>

Exhibit 1.1

UNDERWRITING AGREEMENT

March 9, 2000

FleetBoston Robertson Stephens Inc.
Chase Securities Inc.
U.S. Bancorp Piper Jaffray Inc.
Dain Rauscher Incorporated
As Representatives of the several Underwriters
c/o FleetBoston Robertson Stephens Inc.
555 California Street, Suite 2600

San Francisco, CA 94104

Ladies and Gentlemen:

INTRODUCTORY. iBasis, Inc., a Delaware corporation (the "Company"),
proposes to issue and sell to the several underwriters named in SCHEDULE A (the
"Underwriters") an aggregate of 2,000,000 shares of its Common Stock, par value
$0.001 per share (the "Common Shares"). In addition, the stockholders of the
Company named in Schedule B (the "Selling Stockholders") propose to sell to the
Underwriters an aggregate of 1,500,000 Common Shares. The 2,000,000 Common
Shares to be sold by the Company and the 1,500,000 Common Shares to be sold by
the Selling Stockholders are collectively called the "Firm Shares." In addition,
the Company and certain of the Selling Stockholders have granted to the
Underwriters an option to purchase up to an additional 525,000 Common Shares
(the "Option Shares") as provided in Section 2. The Firm Shares and, if and to
the extent such option is exercised, the Option Shares, are collectively called
the "Shares." FleetBoston Robertson Stephens Inc., Chase Securities, Inc., U.S.
Bancorp Piper Jaffray Inc. and Dain Rauscher Incorporated have agreed to act as
representatives of the several Underwriters (in such capacity, the
"Representatives,") in connection with the offering and sale of the Shares.

The Company has prepared and filed with the Securities and Exchange
Commission (the "Commission") a registration statement on Form S-1 (File No.
333-96535), which contains a form of prospectus to be used in connection with
the public offering and sale of the Shares. Such registration statement, as
amended, including the financial statements, exhibits and schedules thereto, in
the form in which it was declared effective by the Commission under the
Securities Act of 1933, as amended, and the rules and regulations promulgated
thereunder (collectively, the "Securities Act"), including any information
deemed to be a part thereof at the time of effectiveness pursuant to Rule 430A
or Rule 434 under the Securities Act, is called the "Registration Statement."
Any registration statement filed by the Company pursuant to Rule 462(b) under
the Securities Act is called the "Rule 462(b) Registration Statement," and from
and after the date and time of filing of the Rule 462(b) Registration Statement
the term "Registration Statement" shall include the Rule 462(b) Registration
Statement. Such prospectus, in the form

<PAGE>

first used by the Underwriter after effectiveness of the Registration Statement
to confirm sales of the Shares, is called the "Prospectus," PROVIDED, HOWEVER,
if the Company has, with the consent of FleetBoston Robertson Stephens Inc.,
elected to rely upon Rule 434 under the Securities Act, the term "Prospectus"
shall mean the Company's prospectus subject to completion (each, a "preliminary
prospectus") dated February 22, 2000 (such preliminary prospectus is called the
"Rule 434 preliminary prospectus"), together with the applicable term sheet (the
"Term Sheet") prepared and filed by the Company with, the Commission under Rules
434 and 424(b) under the Securities Act and all references in this Agreement to
the date of the Prospectus shall mean the date of the Term Sheet. All references
in this Agreement to the Registration Statement, the Rule 462(b) Registration
Statement, a preliminary prospectus, the Prospectus or the Term Sheet, or any
amendments or supplements to any of the foregoing, shall include any copy
thereof filed with the Commission pursuant to its Electronic Data Gathering,
Analysis and Retrieval System ("EDGAR").

The Company and the Selling Stockholders hereby confirm their
respective agreements with the Underwriters as follows:

SECTION 1. REPRESENTATIONS AND WARRANTIES.

A. REPRESENTATIONS AND WARRANTIES OF THE COMPANY.

The Company hereby represents, warrants and covenants to each
Underwriter as follows:

(a) COMPLIANCE WITH REGISTRATION REQUIREMENTS. The Registration
Statement and any Rule 462(b) Registration Statement have been declared
effective by the Commission under the Securities Act. The Company has complied
with all requests of the Commission for additional or supplemental information.
No, stop order suspending the effectiveness of the Registration Statement or any
Rule 462(b) Registration Statement is in effect and no proceeding for such
purpose have been instituted or are pending or, to the knowledge of the Company,
are contemplated or threatened by the Commission.

Each preliminary prospectus and the Prospectus when filed complied in
all material respects with the Securities Act and, if filed by electronic
transmission pursuant to EDGAR (except as may be permitted by Regulation S-T
under the Securities Act), was identical to the copy thereof delivered to the
Underwriters for use in connection with the offer and sale of the Shares. Each
of the Registration Statement, any Rule 462(b) Registration Statement and any
post-effective amendment thereto, at the time it became effective and at all
subsequent times, complied in all material respects with the Securities Act and
did not at the time the Registration Statement was declared effective, and will
not contain on the Closing Date and on any Second Closing date, any untrue
statement of a material fact or omit to state a material fact required to be
stated therein or necessary to make the statements therein in the light of the
circumstances under which they were made, not

-2-
<PAGE>

misleading. The Prospectus, as amended or supplemented, as of its date and at
all subsequent times prior to and including the Closing Date and any Second
Closing Date, did not and will not on the Closing Date or any Second Closing
Date contain any untrue statement of a material fact or omit to state a material
fact necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading. The representations
and warranties set forth in the two immediately preceding sentences do not apply
to statements in or omissions from the Registration Statement, any Rule 462(b)
Registration Statement, or any post-effective amendment thereto, or the
Prospectus, or any amendments or supplements thereto, made in reliance upon and
in conformity with information relating to any Underwriter furnished to the
Company in writing by the Representative expressly for use therein. There are no
contracts or other documents required to be described in the Prospectus or to be
filed as exhibits to the Registration Statement which have not been described or
filed as required.

(b) OFFERING MATERIALS FURNISHED TO UNDERWRITERS. The Company has
delivered to the Representatives three complete conformed copies of the
Registration Statement and of each consent and certificate of experts filed as a
part thereof, and conformed copies of the Registration Statement (without
exhibits) and preliminary prospectuses and the Prospectus, as amended or
supplemented, in such quantities and at such places as the Representatives have
reasonably requested for each of the Underwriters.

(c) DISTRIBUTION OF OFFERING MATERIAL BY THE COMPANY. The Company has
not distributed and will not distribute, prior to the later of the Second
Closing Date (as defined below), if any, and the completion of the Underwriters'
distribution of the Shares, any offering material in connection with the
offering and sale of the Shares other than a preliminary prospectus, the
Prospectus or the Registration Statement.

(d) THE UNDERWRITING AGREEMENT. This Agreement has been duly
authorized, executed and delivered by, and is a valid and binding agreement of,
the Company, enforceable against the Company in accordance with its terms,
except as rights to indemnification and contribution hereunder may be limited by
applicable law and public policy and except as the enforcement hereof may be
limited by bankruptcy, insolvency, reorganization, moratorium or other similar
laws relating to or affecting the rights and remedies of creditors or by general
equitable principles.

(e) AUTHORIZATION OF THE SHARES TO BE SOLD BY THE COMPANY. The Common
Shares to be purchased by the Underwriters from the Company have been duly
authorized for issuance and sale pursuant to this Agreement and, when issued and
delivered by the Company pursuant to this Agreement, against payment therefore,
will be validly issued, fully paid and nonassessable.

(f) AUTHORIZATION OF THE SHARES TO BE SOLD BY THE SELLING STOCKHOLDERS.
The Common Shares to be purchased by the Underwriters from the Selling
Stockholders, when issued, were validly issued, fully paid and nonassessable.

(g) No APPLICABLE REGISTRATION OR OTHER SIMILAR RIGHTS. There are no
persons with registration or other similar rights to have any equity or debt
securities registered for sale under the Registration Statement or included in
the offering contemplated by this Agreement, except for such rights as have been
satisfied under the Registration Statement, duly waived or have lapsed in
accordance with their terms.

-3-
<PAGE>

(h) NO MATERIAL ADVERSE CHANGE. Subsequent to the respective dates as
of which information is given in the Prospectus: (i) there has been no material
adverse change, or any development that could reasonably be expected to result
in a material adverse change, in the condition, financial or otherwise, or in
the earnings, business, operations or prospects, whether or not arising from
transactions in the ordinary course of business, of the Company and its
subsidiaries, considered as one entity (any such change or effect, where the
context so requires, is called a "Material Adverse Change" or a "Material
Adverse Effect"); (ii) the Company and its subsidiaries, considered as one
entity, have not incurred any material liability or obligation, indirect, direct
or contingent, not in the ordinary course of business nor entered into any
material transaction or agreement not in the ordinary course of business; and
(iii) there has been no dividend or distribution of any kind declared, paid or
made by the Company or, except for dividends paid to the Company or other
subsidiaries, any of its subsidiaries on any class of capital stock or
repurchase or redemption by the Company or any of its subsidiaries of any class
of capital stock.

(i) INDEPENDENT ACCOUNTANTS. Arthur Anderson LLP, who have expressed
their opinion with respect to the financial statements (which term as used in
this Agreement includes the related notes thereto) and supporting schedules
filed with the Commission as a part of the Registration Statement and included
in the Prospectus, are independent public or certified public accountants as
required by the Securities Act.

(j) PREPARATION OF THE FINANCIAL STATEMENTS. The financial statements
filed with the Commission as a part of the Registration Statement and included
in the Prospectus present fairly the consolidated financial position of the
Company and its subsidiaries as of and at the dates indicated and the results of
their operations and cash flows for the periods specified. The supporting
schedules included in the Registration Statement present fairly the information
required to be stated therein. Such financial statements and supporting
schedules have been prepared in conformity with generally accepted accounting
principles as applied in the United States, ("U.S. GAAP") applied on a
consistent basis throughout the periods involved, except as may be expressly
stated in the related notes thereto. No other financial statements or supporting
schedules are required to be included in the Registration Statement. The
financial data set forth in the Prospectus under the captions "Summary-Summary
Consolidated Financial Data," "Selected Consolidated Financial Data" and
"Capitalization" fairly present the information set forth therein on a basis
consistent with that of the audited financial statements contained in the
Registration Statement other than the absence of footnotes. The pro forma and
pro forma as adjusted consolidated balance sheet data of the Company and its
subsidiaries and the related notes thereto included under the caption
"Summary--Summary Consolidated Financial Data," "Selected Consolidated Financial
Data" and elsewhere in the Prospectus and in the Registration Statement present
fairly the information contained therein, have been prepared in accordance with
the Commission's rules and guidelines with respect to pro forma financial
statements and have been properly presented on the bases described therein, and
the assumptions used in the preparation thereof are reasonable and the
adjustments used therein are appropriate to give effect to the transactions and
circumstances referred to therein. No other pro forma financial information is
required to be included in the Registration Statement pursuant to Regulation
S-X.

-4-
<PAGE>

(k) COMPANY'S ACCOUNTING SYSTEM. The Company and each of its
subsidiaries maintains a system of accounting controls sufficient to provide
reasonable assurances that (i) transactions are executed in accordance with
management's general or specific authorization; (ii) transactions are recorded
as necessary to permit preparation of financial statements in conformity with
U.S. GAAP and to maintain accountability for assets; (iii) access to assets is
permitted only in accordance with management's general or specific
authorization; and (iv) the recorded accountability for assets is compared with
existing assets at reasonable intervals and appropriate action is taken with
respect to any differences.

(l) SUBSIDIARIES OF THE COMPANY. The Company does not own or control,
directly or indirectly, any corporation, association or other entity other than
as listed in Exhibit 21.1 to the Registration Statement. The subsidiaries
considered in the aggregate as a single subsidiary, would not constitute a
"significant subsidiary," as defined in Rule 1-02(v) of Regulation S-X under the
Securities Act.

(m) INCORPORATION AND GOOD STANDING OF THE COMPANY AND ITS
SUBSIDIARIES. Each of the Company and its subsidiaries has been duly organized
and is validly existing as a corporation or limited liability company, as the
case may be, in good standing under the laws of the jurisdiction in which it is
organized with full corporate power and authority to own its properties and
conduct its business as described in the Prospectus, and is duly qualified to do
business as a foreign corporation and is in good standing under the laws of each
jurisdiction which requires such qualification, except where the failure to be
so qualified will not have a Material Adverse Change.

(n) CAPITALIZATION AND OTHER CAPITAL STOCK. The authorized, issued and
outstanding capital stock of the Company, upon consummation of the Closing and
assuming no issuance of any of the Company's ___% Convertible Subordinated Notes
due 2005 that are being offered in a concurrent public offering or issuance of
Common Stock upon the conversion thereof, will be as set forth in the Prospectus
under the caption "Capitalization" (other than for subsequent issuances, if any,
pursuant to employee benefit plans described in the Prospectus or upon exercise
of outstanding options or warrants described in the Prospectus). The Common
Shares (including the Shares) conform in all material respects to the
description thereof contained in the Prospectus. All of the issued and
outstanding Common Shares, upon the consummation of the Closing, will have been
duly authorized and validly issued, fully paid and nonassessable and will have
been issued in compliance with federal and state securities laws. None of the
outstanding Common Shares Will have been issued in violation of any preemptive
rights, rights of first refusal or other similar rights to subscribe for or
purchase securities of the Company. There are no authorized or outstanding
options, warrants, preemptive rights, rights of first refusal or other rights to
purchase or equity or debt securities convertible into or exchangeable or
exercisable for, any capital stock of the Company or any of its subsidiaries
other than those accurately and completely described in the Prospectus. The
description of the Company's stock option, stock bonus and other stock plans or
arrangements, and the options or other rights granted thereunder, set forth in
the Prospectus accurately and completely presents the information required to be
shown with respect to such plans, arrangements, options and rights.

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(o) Stock EXCHANGE LISTING. The Shares have been registered pursuant to
Section 12(g) of the Securities Exchange Act of 1934, as amended (the "Exchange
Act") and are approved for quotation on the Nasdaq National Market, subject only
to official notice of issuance, and the Company has taken no action designed to,
or likely to have the effect of, terminating the registration of the Common
Shares under the Exchange Act or delisting the Common Shares from the Nasdaq
National Market, nor has the Company received any notification that the
Commission or the National Association of Securities Dealers, LLC (the "NASD")
is contemplating terminating such registration or listing.

(p) NO CONSENTS, APPROVALS OR AUTHORIZATIONS REQUIRED. No consent,
approval, authorization, filing with or order of any court or governmental
agency or regulatory body is required in connection with the transactions
contemplated herein, except such as have been obtained or made under the
Securities Act and such as may be required (i) under the blue sky laws of any
jurisdiction in connection with the purchase and distribution of the Shares by
the Underwriters in the manner contemplated here and in the Prospectus, (ii) by
the NASD and (iii) by the federal and provincial law of Canada.

(q) NON-CONTRAVENTION OF EXISTING INSTRUMENTS AGREEMENTS. Neither the
issue and sale of the Shares nor the consummation of any other of the
transactions herein contemplated nor the fulfillment of the terms hereof will
conflict with, result in a breach or violation or imposition of any lien, charge
or encumbrance upon any property or assets of the Company or any of its
subsidiaries pursuant to, (i) the charter or by-laws of the Company or any of
its subsidiaries, (ii) the terms of any indenture, contract, lease, mortgage,
deed of trust, note agreement, loan agreement or other agreement, obligation,
condition, covenant or instrument to which the Company or any of its
subsidiaries is a party or bound or to which its or their property is subject or
(iii) any statute, law, rule, regulation, judgment, order or decree applicable
to the Company or any of its subsidiaries of any court, regulatory body,
administrative agency, governmental body, arbitrator or other authority having
jurisdiction over the Company or any of its subsidiaries or any of its or their
respective properties.

(r) NO DEFAULTS OR VIOLATIONS. Neither the Company nor any subsidiary
is in violation or default of (i) any provision of its charter or by-laws, (ii)
the terms of any indenture, contract, lease, mortgage, deed of trust, note
agreement, loan agreement or other agreement, obligation, condition, covenant or
instrument to which it is a party or bound or to which its property is subject
or (iii) any statute, law, rule, regulation, judgment, order or decree of any
court; regulatory body, administrative agency, governmental body, arbitrator or
other authority having jurisdiction over the Company or such subsidiary or any
of their respective properties, as applicable, except any such violations or
defaults which would not, singly or in the aggregate, result in a Material
Adverse Change or except as otherwise disclosed in the Prospectus.

(s) NO ACTIONS, SUITS OR PROCEEDINGS. No action, suit or proceeding by
or before any court or governmental agency, authority or body or any arbitrator
involving the Company or any of its subsidiaries or its or their respective
properties is pending or, to the knowledge of the Company, threatened that (i)
could reasonably be expected to have a Material Adverse Effect on the
performance of this Agreement or the consummation of any of the transactions
contemplated hereby or (ii) could reasonably be expected to result in a Material
Adverse Effect.

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<PAGE>

(t) ALL NECESSARY PERMITS, ETC. The Company and each subsidiary possess
such valid and current certificates, authorizations or permits issued by the
appropriate federal, state, local or foreign regulatory agencies or bodies
necessary to conduct their respective businesses, and neither the Company nor
any subsidiary has received any notice of proceedings relating to the revocation
or modification of, or non-compliance with, any such certificate, authorization
or permit which singly or in the aggregate, if the subject of an unfavorable
decision, ruling or finding, could reasonably be expected to result in a
Material Adverse Change.

(u) TITLE TO PROPERTIES. The Company and each of its subsidiaries has
good and marketable title to all the properties and assets reflected as owned in
the financial statements referred to in Section 1(A)(j) above (or elsewhere in
the Prospectus), in each case free and clear of any security interests,
mortgages, liens, encumbrances, equities, claims and other defects, except such
as do not materially and adversely affect the value of such property and do not
materially interfere with the use made or proposed to be made of such property
by the Company or such subsidiary. The real property, improvements, equipment
and personal property held under lease by the Company or any subsidiary are held
under leases, with such exceptions, if any, as are not material and do not
materially interfere with the use made or proposed to be made of such real
property, improvements, equipment or personal property by the Company or such
subsidiary.

(v) TAX LAW COMPLIANCE. The Company and its consolidated subsidiaries
have filed all necessary federal, state, local and foreign income and franchise
tax returns or have properly requested extensions thereto and have paid all
taxes required to be paid by any of them and, if due and payable, any related or
similar assessment, fine or penalty levied against any of them except as may be
being contested in good faith and by appropriate proceedings. The Company has
made adequate charges, accruals and reserves in the applicable financial
statements referred to in Section 1(A)(j) above in respect of all federal,
state, local and foreign income and franchise taxes for all periods as to which
the tax liability of the Company of its consolidated subsidiaries has not been
finally determined. The Company is not aware of any tax deficiency that has been
or might be asserted or threatened against the Company that could result in a
Material Adverse Change.

(w) INTELLECTUAL PROPERTY RIGHTS. Each of the Company and its
subsidiaries owns or possesses legally enforceable rights to use all patents,
patent rights or licenses, inventions, collaborative research agreements, trade
secrets, know-how, trademarks, service marks, trade names and copyrights which
are necessary to conduct its businesses as described in the Registration
Statement and Prospectus; the expiration of any patents, patent rights, trade
secrets trademarks, service marks, trade names or copyrights would not result in
a Material Adverse Change that is not otherwise accurately and completely
described in the Prospectus; the Company has not received any notice of, and has
no knowledge of any infringement of or conflict with asserted rights of the
Company by others with respect to any patent, patent rights, inventions, trade
secrets, know-how, trademarks, service marks, trade names or copyrights; and the
Company has not received any notice of, and has no knowledge of, any
infringement of or conflict with asserted rights of others with respect to any
patent, patent rights, inventions, trade secrets, know-how, trademarks, service
marks, trade names or copyrights which, singly or in the

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<PAGE>

aggregate, if the subject of an unfavorable decision, ruling or finding, could
reasonably be expected to result in a Material Adverse Change. There is no claim
being made against the Company regarding patents, patent trademarks, service
marks, trade names or copyright that could reasonably be expected to result in a
Material Adverse Effect. The Company and its subsidiaries do not in the conduct
of their business as now conducted and as proposed to be conducted as described
in the Prospectus infringe or conflict with any right or patent of any third
party, or any discovery, invention, product or process which is the subject of a
patent application filed by any third party, known to the Company or any of its
subsidiaries, which such infringement or conflict could reasonably be expected
to result in a Material Adverse Change.

(x) YEAR 2000 PREPAREDNESS. There are no issues related to the
Company's, or any of its subsidiaries', preparedness for the Year 2000 that (i)
are of a character required to be described or referred to in the Registration
Statement or Prospectus by the Securities Act which have not been accurately and
completely described in the Registration Statement or Prospectus or (ii) could
reasonably be expected to result in any Material Adverse Change or that might
materially affect the properties, assets or rights of the Company or any of its
Subsidiaries. All internal computer systems and each Constituent Component (as
defined below) of those systems and all computer-related products and each
Constituent Component of those products of the Company and each of its
subsidiaries fully comply with Year 2000 Qualification Requirements. For
purposes of this Agreement, "Year 2000 Qualifications Requirements" means that
the internal computer systems and each Constituent Component (as defined below)
of those systems and all computer-related products and each Constituent
Component (as defined below) of those products of the Company and each of its
Subsidiaries (i) have been reviewed to confirm that they store, process
(including sorting and performing mathematical operations, calculations and
computations), input and output data-containing date and information correctly
regardless of whether the date contains dates and times before, on or after
January 1, 2000, (ii) have been designated to ensure date and time entry
recognition and calculations, and date data interface values that reflect the
century, (iii) accurately manage and manipulate data involving dates and times,
including single century formulas and multi-century formulas, and will not cause
an abnormal ending scenario within the application or generate incorrect values
or invalid results involving such dates, (iv) accurately process any date
rollover, and (v) accept and respond to two-digit year date input in a manner
that resolves any ambiguities as to the century. For purposes of this Agreement,
"Constituent Component" means all software (including operating systems,
programs, packages and utilities), firmware, hardware, networking components,
and peripherals provided as part of the configuration. The Company has inquired
of material vendors as to their preparedness for the Year 2000 and has disclosed
in the Registration Statement or Prospectus any issues relating to such material
vendors and known to the Company that could reasonably be expected to result in
any Material Adverse Change.

(y) NO TRANSFER TAXES OR OTHER FEES. There are no transfer taxes or
other similar fees or charges under federal, state, local or foreign laws
required to be paid in connection with the execution and delivery of this
Agreement or the issuance and sale by the Company of the Shares.

(z) COMPANY NOT AN "INVESTMENT COMPANY". The Company has been advised
of the rules and requirements under the Investment Company Act of 1940, as
amended (the "Investment Company Act"). The Company is not, and after receipt of
payment for the Shares

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<PAGE>

will not be, an "investment company" or an entity "controlled" by an "investment
company" within the meaning of the Investment Company Act and will conduct its
business in a manner so that it will not become subject to the Investment
Company Act.

(aa) INSURANCE. Except as otherwise accurately and completely described
in the Prospectus, each of the Company and its subsidiaries is insured by
recognized, financially sound and reputable institutions with policies in such
amounts and with such deductibles and covering such risks as are generally
deemed adequate and customary for their businesses including, but not limited
to, policies covering real and personal property owned or leased by the Company
and its subsidiaries against theft, damage, destruction, acts of vandalism and
earthquakes, general liability and Directors and Officers liability. The Company
has no reason to believe that it or any subsidiary will not be able (i) to renew
its existing insurance coverage as and when such policies expire or (ii) to
obtain comparable coverage from similar institutions as may be necessary or
appropriate to conduct its business as now conducted and at a cost that would
not result in a Material Adverse Change. Neither of the Company nor any
subsidiary has been denied any insurance coverage which it has sought or for
which it has applied.

(bb) LABOR MATTERS. To the Company's knowledge, no labor disturbance by
the employees of the Company or any of its subsidiaries exists or is imminent;
and the Company is not aware of any existing or imminent labor disturbance by
the employees of any of its principal suppliers that could reasonably be
expected to result in a Material Adverse Change.

(cc) NO PRICE STABILIZATION OR MANIPULATION. The Company and, to its
knowledge, each of its directors and officers, has not taken and will not take,
directly or indirectly, any action designed to or that could reasonably be
expected to cause or result in stabilization or manipulation of the price of the
Common Stock to facilitate the sale or resale of the Shares.

(dd) LOCK-UP AGREEMENTS. Each officer and director of the company, each
Selling Stockholder and each beneficial owner of one or more percent of the
outstanding issued share capital of the Company (or option to acquire the same)
has signed an agreement in the form attached hereto as EXHIBIT A (the "Lock-up
Agreements"). The Company has provided to counsel for the Underwriters a
complete and accurate list of all securityholders of the Company and the number
and type of securities held by each securityholder. The Company has provided to
counsel for the Underwriters true, accurate and complete copies of all of the
Lock-up Agreements presently in effect or effected hereby. The Company hereby
represents and warrants that it will not release any of its officers, directors
or other stockholders from any Lock-up Agreements currently existing or
hereafter effected without the prior written consent of FleetBoston Robertson
Stephens Inc.

(ee) RELATED PARTY TRANSACTIONS. There are no business relationships
or related-party transactions involving the Company or any subsidiary or any
other person required to be described in the Prospectus which have not been
accurately and completely described.

(ff) NO UNLAWFUL CONTRIBUTIONS OR OTHER PAYMENTS. Neither the Company
nor any of its subsidiaries nor, to the Company's knowledge, any employee or
agent of the Company or any subsidiary, has made any contribution or other
payment to any official of, or candidate for, any

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<PAGE>

federal, state or foreign office in violation of any law or of the character
required to be disclosed in the Prospectus.

(gg) ENVIRONMENTAL LAWS. (i) The Company is in compliance with all
rules, laws and regulations relating to the use, treatment, storage and disposal
of toxic substances and protection of health or the environment ("Environmental
Laws") which are applicable to its business, except where the failure to comply
would not result in a Material Adverse Change, (ii) the Company has received no
notice from any governmental authority or third party of an asserted claim under
Environmental Laws, which claim is required to be disclosed in the Registration
Statement and the Prospectus, (iii) the Company will not be required to make
future material capital expenditures to comply with Environmental Laws and (iv)
no property which is owned, leased or occupied by the Company has been
designated as a Superfund site pursuant to the Comprehensive Response,
Compensation, and Liability Act of 1980, as amended (42 U.S.C. Section 9601, ET
SEQ.), or otherwise designated as a contaminated site under applicable state or
local law.

(hh) ERISA COMPLIANCE. The Company and its subsidiaries and any
"employee benefit plan" (as defined under the Employee Retirement Income
Security Act of 1974, as amended, and the regulations and published
interpretations thereunder (collectively, "ERISA")) established or maintained by
the Company, its subsidiaries or their "ERISA Affiliates" (as defined below) are
in compliance in all material respects with ERISA. "ERISA Affiliate" means, with
respect to the Company or a subsidiary, any member of any group of organizations
described in Sections 414(b), (c), (m) or (o) of the Internal Revenue Code of
1986, as amended, and the regulations and published interpretations thereunder
(the "Code") of which the Company or such subsidiary is a member. No "reportable
event" (as defined under ERISA) has occurred or is reasonably expected to occur
with respect to any "employee benefit plan" established or maintained by the
Company, its subsidiaries or any of their ERISA Affiliates. No "employee benefit
plan" established or maintained by the Company, its subsidiaries or any of their
ERISA Affiliates, if such "employee benefit plan" were terminated, would have
any "amount of unfounded benefit liabilities" (as defined under ERISA). Neither
the Company, its subsidiaries nor any of their ERISA Affiliates has incurred or
reasonably expects to incur any liability under (i) Title IV of ERISA with
respect to termination of, or withdrawal from, any "employee benefit plan" or
(ii) Sections 412, 4971, 4975 or 4980B of the Code. Each "employee benefit plan"
established or maintained by the Company, its subsidiaries or any of their ERISA
Affiliates that is intended to be qualified under Section 401(a) of the Code is
so qualified and nothing has occurred, whether by action or failure to act,
which would cause the loss of such qualification.

(ii) EXCHANGE ACT REPORTS FILED. The Company has filed all reports
required to be filed pursuant to the Securities Act and the Exchange Act.

Any certificate signed by an executive officer of the Company and
delivered to the Representative or to counsel for the Underwriters at the
closing of any sale of the Shares shall be deemed to be a representation and
warranty by the Company to each Underwriter as to the matters set forth therein.

B. REPRESENTATIONS AND WARRANTIES OF THE SELLING STOCKHOLDERS.

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<PAGE>

Each Selling Stockholder, severally and not jointly, represents,
warrants and covenants with each Underwriter as follows:

(a) THE UNDERWRITING AGREEMENT. This Agreement has been duly
authorized, executed and delivered by or on behalf of such Selling Stockholder
and is a valid and binding agreement of such Selling Stockholder, enforceable in
accordance with its terms, except as rights to indemnification hereunder may be
limited by applicable law and except as the enforcement hereof may be limited by
bankruptcy, insolvency, reorganization, moratorium or other similar laws
relating to or affecting the rights and remedies of creditors or by general
equitable principles.

(b) THE CUSTODY AGREEMENT AND POWER OF ATTORNEY. Each of the (i)
Custody Agreement signed by such Selling Stockholder and EquiServe Trust
Company, N.A., as custodian (the "Custodian"), relating to the deposit of the
Shares to be sold by such Selling Stockholder (the "Custody Agreement") and (ii)
Power of Attorney appointing certain individuals named therein as such Selling
Stockholder's attorneys-in-fact (each, an "Attorney-in-Fact") to the extent set
forth therein relating to the transactions contemplated hereby and by the
Prospectus (the "Power of Attorney"), of such Selling Stockholder has been duly
authorized, executed and delivered by such Selling Stockholder and is a valid
and binding agreement of such Selling Stockholder, enforceable against such
Selling Stockholder in accordance with its terms, except as rights to
indemnification thereunder may be limited by applicable law and except as the
enforcement thereof may be limited by bankruptcy, insolvency, reorganization,
moratorium or other similar laws relating to or affecting the rights and
remedies of creditors or by general equitable principles. Each Selling
Stockholder agrees that the Shares to be sold by such Selling Stockholder on
deposit with the Custodian are subject to the interests of the Underwriters,
that the arrangements made for such custody are to that extent irrevocable, and
that the obligations of such Selling Stockholder hereunder shall not be
terminated, except as provided in this Agreement or in the Custody Agreement, by
any act of the Selling Stockholder, by operation of law, by death or incapacity
of such Selling Stockholder or by the occurrence of any other event. If such
Selling Stockholder should die or become incapacitated, or if any other event
should occur, before the delivery of the Shares to be sold by such Selling
Stockholder hereunder, the documents evidencing the Shares to be sold by such
Selling Stockholder then on deposit with the Custodian shall be delivered by the
Custodian in accordance with the terms and conditions of this Agreement as if
such death, incapacity or other event had not occurred, regardless of whether or
not the Custodian shall have received notice thereof.

(c) TITLE TO SHARES TO BE SOLD. Such Selling Stockholder is the lawful
owner of the Shares to be sold by such Selling Stockholder hereunder and upon
sale and delivery of, and payment for, such Shares, as provided herein, such
Selling Stockholder will convey good and marketable title to such Shares, free
and clear of all liens, encumbrances, equities and claims whatsoever.

(d) ALL AUTHORIZATIONS OBTAINED. Such Selling Stockholder has, and on
the First Closing Date and, if applicable, the Second Closing Date (as defined
below) will have, good and valid title to all of the Common Shares which may be
sold by such Selling Stockholder pursuant

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to this Agreement on such date and the legal right and power, and all
authorizations and approvals required by law to enter into this Agreement and
the Custody Agreement and Power of Attorney, to sell, transfer and deliver all
of the Shares which maybe sold by such Selling Stockholder pursuant to this
Agreement and to comply with its other obligations hereunder and thereunder.

(e) NO FURTHER CONSENTS, AUTHORIZATION OR APPROVALS. No consent,
approval, authorization or order of any court or governmental agency or body is
required for the consummation by such Selling Stockholder of the transactions
contemplated herein, except such as may have been obtained under the Securities
Act and such as may be required under the federal and provincial securities laws
of Canada or the blue sky laws or any jurisdiction in connection with the
purchase and distribution of the Shares by the Underwriters and such other
approvals as have been obtained.

(f) NON-CONTRAVENTION. Neither the sale of the Shares being sold by
such Selling Stockholder nor the consummation of any other of the transactions
herein contemplated by such Selling Stockholder or the fulfillment of the terms
hereof by such Selling Stockholder will conflict with, result in a breach or
violation of, or constitute a default under any law or the terms of any
indenture or other agreement or instrument to which such Selling Stockholder is
party or bound, any judgment, order or decree applicable to such Selling
Stockholder or any court or regulatory body, administrative agency, governmental
body or arbitrator having jurisdiction over such Selling Stockholder.

(g) NO REGISTRATION OR OTHER SIMILAR RIGHTS. Such Selling Stockholder
does not have, or has waived prior to the date hereof or otherwise had satisfied
any registration or other similar rights to have any equity or debt securities
registered for sale by the Company (i) under the Registration Statement or
included in the offering contemplated by this Agreement or (ii) under the
registration statement (Registration No. 333-96533) filed concurrently with the
Registration Statement in connection with the offering by the Company of up to
$172,500,000 aggregate principal amount of % Convertible Subordinated Notes due
2005 (the "Debt Offering") or included in the offering contemplated by the
underwriting agreement entered into by the Company in connection with the Debt
Offering..

(h) NO PREEMPTIVE, CO-SALE OR OTHER RIGHTS. Such Selling Stockholder
does not have, or has waived prior to the date hereof, any preemptive right,
co-sale right or right of first refusal or other similar right to purchase any
of the Shares that are to be sold by the Company to the Underwriters pursuant to
this Agreement.

(i) DISCLOSURE MADE BY SUCH SELLING STOCKHOLDER IN THE PROSPECTUS. All
information furnished by or on behalf of the Selling Stockholder in writing
expressly for use in the Registration Statement and Prospectus is, and on the
First Closing Date and, if applicable, the Second Closing Date (as defined
below) will be, true, correct, and complete in all material respects, and does
not, and on the First Closing Date and, if applicable, the Second Closing Date,
will not, contain any untrue statement of a material fact or omit to state any
material fact necessary to make such information not misleading. Such Selling
Stockholder confirms as accurate the number of shares of Common Shares set forth
opposite such Selling Stockholder's

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<PAGE>

name in the Prospectus under the caption "Principal and Selling Stockholders"
(both prior to and after giving effect to the sale of the Shares).

(j) NO PRICE STABILIZATION OR MANIPULATION. Such Selling Stockholder
has not taken and will not take, directly or indirectly, any action designed to
or that might be reasonably expected to cause or result in stabilization or
manipulation of the price of the Common Stock to facilitate the sale or resale
of the Shares.

(k) NO TRANSFER TAXES OR OTHER FEES. There are no transfer taxes or
other similar fees or charges under Federal law or the laws of any state, or any
political subdivision thereof, required to be paid in connection with the
execution and delivery of this Agreement or the sale by such Selling Stockholder
of the Shares.

(l) DISTRIBUTION OF OFFERING MATERIALS BY THE SELLING STOCKHOLDERS.
Such Selling Stockholder has not distributed and will not distribute, prior to
the later of the Second Closing Date (as defined below) and the completion of
the Underwriters' distribution of the Shares, any offering material in
connection with the offering and sale of the Shares by such Selling Stockholder
other than a preliminary prospectus, the Prospectus or the Registration
Statement.

(m) CONFIRMATION OF COMPANY REPRESENTATIONS AND WARRANTIES. Such
Selling Stockholder is not prompted to sell the Shares to be sold by such
Selling Stockholder by any material information concerning the Company which is
not set forth in the Registration Statement and the Prospectus. Such Selling
Stockholder, if a director and/or an officer of the Company, is aware of no fact
that causes such Selling Stockholder to believe that the representations and
warranties of the Company contained in Section 1(A) hereof are not true and
correct in all material respects.

Any certificate signed by or on behalf of the Selling Stockholder and
delivered to the Representatives or to counsel for the Underwriters shall be
deemed to be a representation and warranty by such Selling Stockholder to each
Underwriter as to the matters covered thereby.

SECTION 2. PURCHASE, SALE AND DELIVERY OF THE SHARES.

(a) THE FIRM SHARES. Upon the terms set forth herein, (i) the Company
agrees to issue and sell to the several Underwriters an aggregate of 2,000,000
Firm Shares and (ii) the Selling Stockholders agree to sell to the several
Underwriters an aggregate of 1,500,000 Firm Shares, each such Selling
Stockholder selling the number of Firm Shares set forth opposite such Selling
Stockholder's name on SCHEDULE B. On the basis of the representations,
warranties and agreements herein contained, and upon the terms but subject to
the conditions herein set forth, the Underwriters agree, severally and not
jointly, to purchase from the Company and the Selling Stockholders the
respective number of Firm Shares set forth opposite their names on SCHEDULE A.
The purchase price per Firm Share to be paid by the several Underwriters to the
Company and the Selling Stockholders shall be $[__] per share.

(b) THE FIRST CLOSING DATE. Delivery of the Firm Shares to be purchased
by the Underwriters and payment therefor shall be made by the Company and the
Representative at

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<PAGE>

6:00 a.m. San Francisco time, at the offices of Bingham Dana LLP (or at such
other place as may be agreed upon among the Representatives and the Company),
(i) on the third (3rd) full business day following the first day that Shares are
traded, (ii) if this Agreement is executed and delivered after 1:30 P.M., San
Francisco time, the fourth (4th) full business day following the day that this
Agreement is executed and delivered or (iii) at such other time and date not
later that seven (7) full business days following the first day that Shares are
traded as the Representative and the Company may determine (or at such time and
date to which payment and delivery shall have been postponed pursuant to Section
8 hereof), such time and date of payment and delivery being herein called the
"Closing Date;" PROVIDED, HOWEVER, that if the Company has not made available to
the Representatives copies of the Prospectus within the time provided in Section
4(d) hereof, the Representative may, in its sole discretion, postpone the
Closing Date until no later that two (2) full business days following delivery
of copies of the Prospectus to the Representative.

(c) THE OPTION SHARES; THE SECOND CLOSING DATE. In addition, on the
basis of the representations, warranties and agreements herein contained, and
upon the terms but subject to the conditions herein set forth, (i) the Company
hereby grants an option (the "Over-Allotment Option") to the several
Underwriters to purchase, severally and not jointly, up to an aggregate of
414,000 Option Shares from the Company and (ii) certain of the Selling
Stockholders hereby grant an option to the several Underwriters to purchase,
severally and not jointly, up to an aggregate of 111,000 Option Shares, such
Selling Stockholder selling the number of Option Shares set forth opposite such
Selling Stockholder's name on SCHEDULE B. The Option Shares shall be purchased
at the purchase price per share to be paid by the Underwriters for the Firm
Shares. The Over Allotment Option is for use by the Underwriters solely in
covering any over-allotments in connection with the sale and distribution of the
Firm Shares. The Over-Allotment Option may be exercised at any time upon notice
by the Representatives to the Company, which notice may be given at any time
within 30 days from the date of this Agreement. The time and date of delivery of
the Option Shares, if subsequent to the First Closing Date, is called the
"Second Closing Date" and shall be determined by the Representatives and shall
not be earlier than three nor later than five full business days after delivery
of such notice of exercise. If any Option Shares are to be purchased, each
Underwriter agrees, severally and not jointly, to purchase the number of Option
Shares (subject to such adjustments to eliminate fractional shares as the
Representatives may determine) that bears the same proportion to the total
number of Option Shares to be purchased as the number of Firm Shares set forth
on SCHEDULE A opposite the name of such Underwriter bears to the total number of
Firm Shares. In the event that the Over-Allotment Option is not exercised in
full, the Option Shares shall be allocated among the Company and the Selling
Stockholders as follows. First, each of Ofer Gneezy and Gordon VanderBrug shall
sell up to the number of shares set forth next to such Selling Stockholders'
names on SCHEDULE B (such shares to be allocated among such Selling Stockholders
pro rata based upon such maximum share amounts if the Over-Allotment Option is
exercised for fewer than 111,000 shares). Any remaining Option Shares shall be
sold by the Company. The Representatives may cancel the Over-Allotment

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Option at any time prior to its expiration by giving written notice of such
cancellation to the Company.

(d) PUBLIC OFFERING OF THE SHARES. The Representatives hereby advise
the Company and the Selling Stockholders that the Underwriters intend to offer
for sale to the public, as described in the Prospectus, their respective
portions of the Shares as soon after this Agreement has been executed and the
Registration Statement has been declared effective as the Representatives, in
their sole judgment, have determined is advisable and practicable.

(e) PAYMENT FOR THE SHARES. Payment for the Shares sold by the Company
shall be made at the First Closing Date (and, if applicable, at the Second
Closing Date) by wire transfer in immediately available-funds to the order of
the Company. Payment for the Shares sold by the Selling Stockholders shall be
made at the First Closing Date (and, if applicable, at the Second Closing Date)
by wire transfer of immediately available funds to the order of the Custodian.

It is understood that the Representatives have been authorized, for
their own accounts and the accounts of the several Underwriters, to accept
delivery of and receipt for, and make payment of the purchase price for, the
Firm Shares and any Option Shares the Underwriters have agreed to purchase.
FleetBoston Robertson Stephens Inc., individually and not as a Representative of
the Underwriters, may (but shall not be obligated to) make payment for any
Shares to be purchased by any Underwriter whose funds shall not have been
received by the Representatives by the First Closing Date or the Second Closing
Date, as the case may be, for the account of such Underwriter, but any such
payment shall not relieve such Underwriter from any of its obligations under
this Agreement.

Each Selling Stockholder hereby agrees that (i) it will pay all stock
transfer taxes, stamp duties and other similar taxes, if any, payable upon the
sale or delivery of the Shares to be sold by such Selling Stockholder to the
several Underwriters, or otherwise in connection with the performance of such
Selling Stockholder's obligations hereunder and (ii) the Custodian is authorized
to deduct for such payment any such amounts from the proceeds to such Selling
Stockholder hereunder and to hold such amounts for the account of such Selling
Stockholder with the Custodian under the Custody Agreement.

(f) DELIVERY OF THE SHARES. The Company shall deliver, or cause to be
delivered, a credit representing the Firm Shares to an account or accounts at
The Depository Trust Company, as designated by the Representatives for the
accounts of the Representatives and the several Underwriters at the First
Closing Date, against the irrevocable release of a wire transfer of immediately
available funds for the amount of the purchase price therefor. The Company shall
also deliver, or cause to be delivered a credit representing the Option Shares
the Underwriters have agreed to purchase at the First Closing Date (or the
Second Closing Date, as the case may be), to an account or accounts at The
Depository Trust Company as designated by the Representatives for the accounts
of the Representatives and the several Underwriters, against the irrevocable
release of a wire transfer of immediately available funds for the amount of the
purchase price therefor. Time shall be of the essence, and delivery at the time
and place specified in this Agreement is a further condition to the obligations
of the Underwriters.

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(g) WAIVER OF LOCK-UP AGREEMENTS. With respect to the Shares being sold
by the Selling Stockholders, FleetBoston Robertson Stephens, Inc., on behalf of
the several underwriters, hereby waives the Lock-Up Agreements entered into by
such Selling Stockholders in connection with the Company's initial public
offering and this Offering and consents to the sale of the Shares by the Selling
Stockholder pursuant to this Agreement. This is a limited waiver and the Lock-Up
Agreements shall remain in full force and effect with respect to shares of
Company common stock that are not being sold pursuant to this Agreement.

SECTION 3. COVENANTS OF THE COMPANY.

A. COVENANTS OF THE COMPANY

The Company further covenants and agrees with each Underwriter as
follows:

(a) REGISTRATION STATEMENT MATTERS. The Company will (i) use its best
efforts to cause the Registration Statement to be declared effective or, if the
procedure in Rule 430A of the Securities Act is followed, to prepare and timely
file with the Commission under Rule 424(b) under the Securities Act a Prospectus
in a form approved by the Representatives containing information previously
omitted at the time of effectiveness of the Registration Statement in reliance
on Rule 430A of the Securities Act and (ii) not file any amendment to the
Registration Statement or supplement to the Prospectus of which the
Representatives shall not previously have been advised and furnished with a copy
or to which the Representatives shall have reasonably objected in writing or
which is not in compliance with the Securities Act. If the Company elects to
rely on Rule 462(b) under the Securities Act, the Company shall file a Rule
462(b) Registration Statement with the Commission in compliance with Rule 462(b)
under the Securities Act prior to the time confirmations are sent or given, as
specified by Rule 462(b)(2) under the Securities Act, and shall pay the
applicable fees in accordance with Rule 111 under the Securities Act.

(b) SECURITIES ACT COMPLIANCE. The Company will advise the
Representatives promptly (i) when the Registration Statement or any
post-effective amendment thereto shall be declared effective, (ii) of receipt of
any comments from the Commission, (iii) of any request of the Commission for
amendment of the Registration Statement or for supplement to the Prospectus or
for any additional information and (iv) of the issuance by the Commission of any
stop order suspending the effectiveness of the Registration Statement or the use
of the Prospectus or of the institution of any proceedings for that purpose. The
Company will use its best efforts to prevent the issuance of any such stop order
preventing or suspending the use of the Prospectus and to obtain as soon as
possible the lifting thereof, if issued.

(c) BLUE SKY COMPLIANCE. The Company will cooperate with the
Representatives and counsel for the Underwriters in endeavoring to qualify the
Shares for sale under the securities laws of such jurisdictions (both national
and foreign) as the Representatives may reasonably request and will make such
applications, file such documents, and furnish such information as may be
reasonably required for that purpose, provided the Company shall not be required
to qualify as a foreign corporation or to file a general consent to service of
process in any jurisdiction where it is not now so qualified or required to file
such a consent. The Company

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<PAGE>

will, from time to time, prepare and file such statements, reports and other
documents, as are or may be required to continue such qualifications in effect
for so long a period as the Representatives may reasonably request for
distribution of the Shares.

(d) AMENDMENTS AND SUPPLEMENTS TO THE PROSPECTUS AND OTHER SECURITIES
ACT MATTERS. The Company will comply with the Securities Act and the Exchange
Act, and the rules and regulations of the Commission thereunder, so as to permit
the completion of the distribution of the Shares as contemplated in this
Agreement and the Prospectus. If during the period in which a prospectus is
required by law to be delivered by an Underwriter or dealer, any event shall
occur as a result of which, in the judgment of the Company or in the reasonable
opinion of the Representatives or counsel for the Underwriters, it becomes
necessary to amend or supplement the Prospectus in order to make the statements
therein, in the light of the circumstances existing at the time the Prospectus
is delivered to a purchaser, not misleading, or, if it is necessary at any time
to amend or supplement the Prospectus to comply with any law, the Company
promptly will prepare and file with the Commission, and furnish at its own
expense to the Underwriters and to dealers, an appropriate amendment to the
Registration Statement or supplement to the Prospectus so that the Prospectus as
so amended or supplemented will not, in the light of the circumstances when it
is so delivered, be misleading, or so that the Prospectus will comply with the
law.

(e) COPIES OF ANY AMENDMENTS AND SUPPLEMENTS TO THE PROSPECTUS. The
Company agrees to furnish the Representatives, without charge, during the period
beginning on the date hereof and ending on the later of the First Closing Date
or such date, as in the opinion of counsel for the Underwriters, the Prospectus
is no longer required by law to be delivered in connection with sales by an
Underwriter or dealer (the "Prospectus Delivery Period"), as many copies of the
Prospectus and any amendments and supplements thereto as the Representatives may
request.

(f) INSURANCE. The Company shall obtain Directors and Officers
liability insurance in the minimum amount of $10.0 million which shall apply to
the offering contemplated hereby.

(g) NOTICE OF SUBSEQUENT EVENTS. If at any time during the ninety (90)
day period after the Registration Statement becomes effective, any rumor,
publication or event relating to or affecting the Company shall occur as a
result of which in your opinion the market price of the Company Shares has been
or is likely to be materially affected (regardless of whether such rumor,
publication or event necessitates a supplement to or amendment of the
Prospectus), the Company will, after written notice from you advising the
Company to the effect set forth above, promptly prepare, consult with you
concerning the substance of and disseminate a press release or other public
statement, reasonably satisfactory to you, responding to or commenting on such
rumor, publication or event.

(h) USE OF PROCEEDS. The Company shall apply the net proceeds from the
sale of the Shares sold by it in the manner described under the caption "Use of
Proceeds" in the Prospectus.

(i) TRANSFER AGENT. The Company shall engage and maintain, at its
expense, a registrar and transfer agent for the Common Shares.

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<PAGE>

(j) EARNINGS STATEMENT. AS soon as practicable, the Company will make
generally available to its security holders and to the Representatives an
earnings statement (which need not be audited) covering a period of at least 12
months beginning after the effective date of the Registration Statement that
satisfies the provisions of Section 11(a) of the Securities Act.

(k) PERIODIC REPORTING OBLIGATIONS. During the Prospectus Delivery
Period the Company shall file, on a timely basis, with the Commission and the
Nasdaq National Market all reports and documents required to be filed under the
Exchange Act as required by the National Association of Security Dealers, LLC.

(1) AGREEMENT NOT TO OFFER OR SELL ADDITIONAL SECURITIES. The Company
will not, without the prior written consent of FleetBoston Robertson Stephens
Inc., for a period of 90 days following the date of the Prospectus, offer, sell
or contract to sell, or otherwise dispose of or enter into any transaction which
is designed to, or could be expected to, result in the disposition (whether by
actual disposition or effective economic disposition due to cash settlement or
otherwise by the Company or any affiliate of the Company or any person in
privity with the Company or any affiliate of the Company) directly or
indirectly, or announce the offering of, any other Common Shares or any
securities convertible into, or exchangeable for, Common Shares; PROVIDED,
HOWEVER, that the Company may (i) issue and sell Common Shares pursuant to any
director or employee stock option plan, stock ownership plan or dividend
reinvestment plan of the Company in effect at the date of the Prospectus and
described in the Prospectus so long as at the time of such issuance or sale, the
Company already has or otherwise obtains a Lock-Up Agreement in the form of
Exhibit ___ from such holder providing that none of those shares may be
transferred on during the period of 90 days from the date that the Registration
Statement is declared effective (the "Lock-Up Period") and the Company shall
enter stop transfer instructions with its transfer agent and registrar against
the transfer of any such Common Shares, (ii) the Company may issue the ___%
Convertible Subordinated Notes due 2005 to be issued in a concurrent offering as
described in the Prospectus and the Common Shares issuable upon the conversion
thereof, (iii) the Company may issue Common Shares issuable upon the conversion
of securities or the exercise of warrants outstanding at the date of the
Prospectus and described in the Prospectus. Notwithstanding the foregoing,
BancBoston Robertson Stephens Inc. agrees it will not unreasonably withhold
consent to the issuance of equity securities in connection with an acquisition.

(m) FUTURE REPORTS TO THE REPRESENTATIVES. During the period of three
years from the date hereof the Company will furnish to the Representatives (i)
as soon as practicable after the end of each fiscal year, copies of the Annual
Report of the Company containing the balance sheet of the Company as of the
close of such fiscal year and statements of income, stockholders' equity and
cash flows for the year then ended and the unqualified opinion thereon of the
Company's independent public or certified public accountants; (ii) as soon as
practicable after the filing thereof, copies of each proxy statement, Annual
Report on Form 10-K, Quarterly Report on Form 10-Q, Current Report on Form 8-K
or other report filed by the Company with the Commission, the National
Association of Securities Dealers, LLC or any securities exchange; and (iii) as
soon as available, copies of any report or communication of the Company mailed
generally to holders of its capital stock.

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<PAGE>

B. COVENANTS OF THE SELLING STOCKHOLDERS.

Each Selling Stockholder, severally and jointly, further
covenants and agrees with each Underwriter:

(a) AGREEMENT NOT TO OFFER OR SELL ADDITIONAL SECURITIES. Such Selling
Stockholder will not, during the Lock-Up Period, make a disposition of
Securities (as defined in EXHIBIT A hereto) now owned or hereafter acquired
directly by such person or with respect to which such person has or hereafter
acquires the power of disposition, otherwise than (i) as a bona fide gift or
gifts, provided the donee or donees thereof agree in writing to be bound by this
restriction, (ii) as a distribution to partners or shareholders of such person,
provided that the distributees thereof agree in writing to be bound by the terms
of this restriction, (iii) with respect to dispositions of Common Shares
acquired on the open market or (iv) with the prior written consent of
FleetBoston Robertson Stephens Inc. The foregoing restriction has been expressly
agreed to preclude the holder of the Securities from engaging in any hedging or
other transaction which is designed to or reasonably expected to lead to or
result in a disposition of Securities during the Lock-Up Period, even if such
Securities would be disposed of by someone other than such holder. Such
prohibited hedging or other transactions would include, without limitation, any
short sale (whether or not against the box) or any purchase, sale or grant of
any right (including, without limitation, any put or call option) with respect
to any Securities or with respect to any security (other than a broad-based
market basket or index) that includes, relates to or derives any significant
part of its value from Securities. Furthermore, such person has also agreed and
consented to the entry of stop transfer instructions with the Company's transfer
agent against the transfer of the Securities held by such person except in
compliance with this restriction.

(b) WAIVER OF REGISTRATION RIGHTS IN CONNECTION WITH THE REGISTRATIONS.
Such Selling Stockholder acknowledges that they are and continue to be subject
to the lock-up agreements that were entered into at the time of, or became
effective upon, the Company's initial public offering in November 1999, which
have been waived by the Representatives and the Company to the extent necessary
to permit the sale of the Selling Stockholder Shares pursuant to this Agreement.
Such Selling Stockholder hereby waives on behalf of himself and the other
holders of Registrable Shares any notice requirements and any and all rights
such Selling Stockholders may have had under the First Amended and Restated
Registration Rights Agreement dated July 12, 1999 to include any shares of
Common Stock in the Registration Statement or the registration statement for the
Debt Offering. Such Selling Stockholder shall provide any additional information
or documents as reasonably requested by the Company or the Representatives to
further evidence the agreements and waivers set forth in this Section 3(B)(b).

(c) DELIVERY OF FORMS W-8 AND W-9. To deliver to the Representatives
prior to the First Closing Date a properly completed and executed United States
Treasury Department Form W-8 (if the Selling Stockholder is a non-United States
person) or Form W-9 (if the Selling Stockholder is a United States Person).

(d) NOTIFICATION OF UNTRUE STATEMENTS, ETC. If, at any time prior to
the date on which the distribution of the Common Shares as contemplated herein
and in the Prospectus has been completed, as determined by the Representatives,
the Selling Stockholder has knowledge of the

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occurrence of any event as a result of which the Prospectus or the Registration
Statement, in each case as then amended or supplemented, would include an untrue
statement of a material fact or omit to state any material fact necessary to
make the statements therein, in light of the circumstances under which they were
made, not misleading, such Selling Stockholder will promptly notify the Company
and the Representatives.

SECTION 4. CONDITIONS OF THE OBLIGATIONS OF THE UNDERWRITERS. The
obligations of the several Underwriters to purchase and pay for the Shares as
provided herein on the First Closing Date and, with respect to the Option
Shares, the Second Closing Date, shall be subject to the accuracy of the
representations and warranties on the part of the Company and the Selling
Stockholders set forth in Section 1 hereof as of the date hereof and as of the
First Closing Date as though then made and, with respect to the Option Shares,
as of the Second Closing Date as though then made, to the timely performance by
the Company of its covenants and other obligations hereunder, and to each of the
following additional conditions:

(a) COMPLIANCE WITH REGISTRATION REQUIREMENTS, NO STOP ORDER, NO
OBJECTION FROM THE NATIONAL ASSOCIATION OF SECURITIES DEALERS, LLC. The
Registration Statement shall have been declared effective prior to the execution
of this Agreement, or at such later date as shall be consented to in writing by
you; and no stop order suspending the effectiveness thereof shall have been
issued and no proceedings for that purpose shall have been initiated or, to the
knowledge of the Company or any Underwriter, threatened by the Commission, and
any request of the Commission for additional information (to be included in the
Registration Statement or the Prospectus or otherwise) shall have been complied
with to the satisfaction of Underwriters' Counsel; and the National Association
of Securities Dealers, LLC shall have raised no objection to the fairness and
reasonableness of the underwriting terms and arrangements.

(b) CORPORATE PROCEEDINGS. All corporate proceedings and other legal
matters in connection with this Agreement, the Registration Statement and the
Prospectus, and the registration, authorization, issue, sale and delivery of the
Shares, shall have been in form and substance reasonably satisfactory to
Underwriters' Counsel, and such counsel shall have been furnished with such
papers and information as they may reasonably have requested to enable them to
pass upon the matters referred to in this Section 4.

(c) NO MATERIAL ADVERSE CHANGE. Subsequent to the execution and
delivery of this Agreement and prior to the First Closing Date, or the Second
Closing Date, as the case may be, there shall not have been any Material Adverse
Change in the condition (financial or otherwise), earnings, operations, business
or prospects of the Company and its subsidiaries considered as one enterprise
from that described in the Registration Statement or Prospectus, which, in your
sole judgment, is material and adverse and that makes it, in your sole judgment,
impracticable or inadvisable to proceed with the public offering of the Shares
as contemplated by the Prospectus.

(d) OPINION OF COUNSEL FOR THE COMPANY. You shall have received on the
First Closing Date and the Second Closing Date, as the case may be, an opinion
of Bingham Dana LLP counsel for the Company substantially in the form of EXHIBIT
C attached hereto, dated the First Closing Date or the Second Closing Date, as
the case may be, addressed to the Underwriters and with reproduced copies or
signed counterparts thereof for each of the Underwriters.

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<PAGE>

(e) OPINION OF GOVERNMENT REGULATION COUNSEL FOR THE COMPANY. You shall
have received on the First Closing Date and the Second Closing Date, as the case
may be, an opinion of Swidler Berlin Sheroff Friedman, LLP, government
regulation counsel for the Company substantially in the form of EXHIBIT D
attached hereto.

(f) OPINION OF COUNSEL FOR THE UNDERWRITERS. You shall have received on
the First Closing Date and the Second Closing Date, as the case may be, an
opinion of Alston & Bird LLP, substantially in the form of EXHIBIT E hereto. The
Company shall have furnished to such counsel such documents as they may have
requested for the purpose of enabling them to pass upon such matters.

(g) ACCOUNTANTS' COMFORT LETTER. You shall have received on the First
Closing Date and on the Second Closing Date, as the case may be, a letter from
Arthur Andersen LLP addressed to the Underwriters, dated the First Closing Date
or the Second Closing Date, as the case may be, confirming that they are
independent certified public accountants with respect to the Company within the
meaning of the Securities Act and the applicable published Rules and Regulations
and based upon the procedures described in such letter delivered to you
concurrently with the execution of this Agreement (herein called the "Original
Letter"), but carried out to a date not more than four (4) business days prior
to the First Closing Date or the Second Closing Date, as the case may be, (i)
confirming, to the extent true, that the statements and conclusions set forth in
the Original Letter are accurate as of the First Closing Date or the Second
Closing Date, as the case may be, and (ii) setting forth any revisions and
additions to the statements and conclusions set forth in the Original Letter
which are necessary to reflect any changes in the facts described in the
Original Letter since the date of such letter, or to reflect the availability of
more recent financial statements, data or information. The letter shall not
disclose any change in the condition (financial or otherwise), earnings,
operations, business or prospects of the Company and its subsidiaries considered
as one enterprise from that described in the Registration Statement or
Prospectus, which, in your sole judgment, is material and adverse and that makes
it, in your sole judgment, impracticable or inadvisable to proceed with the
public offering of the Shares as contemplated by the Prospectus. The Original
Letter from Arthur Andersen LLP shall be addressed to or for the use of the
Underwriters in form and substance satisfactory to the Underwriters and shall
(i) represent, to the extent true, that they are independent certified public
accountants with respect to the Company within the meaning of the Securities Act
and the applicable published Rules and Regulations, (ii) set forth their opinion
with respect to their examination of the consolidated balance sheet of the
Company as of December 31, 1998 and 1999 and related consolidated statements of
operations, shareholders' equity, and cash flows for the twelve (12) months
ended December 31, 1997, 1998 and 1999, , and (iii) address other matters agreed
upon by Arthur Andersen LLP and you. In addition, you shall have received from
Arthur Andersen LLP a letter addressed to the Company and made available to you
for the use of the Underwriters stating that their review of the Company's
system of internal accounting controls, to the extent they deemed necessary in
establishing the scope of their examination of the Company's consolidated
financial statements as of December 31, 1999, did not disclose any weaknesses in
internal controls that they considered to be material weaknesses.

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<PAGE>

(h) OFFICERS' CERTIFICATE. You shall have received on the First Closing
Date and the Second Closing Date, as the case may be, a certificate of the
Company, dated the First Closing Date or the Second Closing Date, as the case
may be, signed by the Chief Executive Officer and Chief Financial Officer of the
Company, to the effect that, and you shall be satisfied that:

(i) The representations and warranties of the Company in this Agreement
are true and correct, as if made on and as of the First Closing Date or
the Second Closing Date, as the case may be, and the Company has
complied in all material respects with all the agreements and satisfied
all the conditions on its part to be performed or satisfied at or prior
to the First Closing Date or the Second Closing Date, as the case may
be;

(ii) No stop order suspending the effectiveness of the Registration
Statement has been issued and no proceedings for that purpose have been
instituted or are pending or threatened under the Securities Act;

(iii) When the Registration Statement became effective and at all times
subsequent thereto up to the delivery of such certificate, the
Registration Statement and the Prospectus, and any amendments or
supplements thereto, contained all material information required to be
included therein by the Securities Act and in all material respects
conformed to the requirements of the Securities Act, the Registration
Statement and the Prospectus, and any amendments or supplements
thereto, did not and does not include any untrue statement of a
material fact or omit to state a material fact required to be stated
therein or necessary to make the statements therein, in light of the
circumstances under which they were made not misleading; and, since the
effective date of the Registration Statement, there has occurred no
event required to be set forth in an amended or supplemented Prospectus
which has not been so set forth; and

(iv) Subsequent to the respective dates as of which information is
given in the Registration Statement and Prospectus, there has not been
(a) any material adverse change in the condition (financial or
otherwise), earnings, operations, business or prospects of the Company
and its subsidiaries considered as one enterprise, (b) any transaction
that is material to the Company and its subsidiaries considered as one
enterprise, except transactions entered into in the ordinary course of
business, (c) any obligation, direct or contingent, that is material to
the Company and its subsidiaries considered as one enterprise, incurred
by the Company or its subsidiaries, except obligations incurred in the
ordinary course of business, (d) except as described in the Prospectus,
any change in the capital stock or outstanding indebtedness of the
Company or any of its subsidiaries that is material to the Company and
its subsidiaries considered as one enterprise, (e) any dividend or
distribution of any kind declared, paid or made on the capital stock of
the Company or any of its subsidiaries, or (f) any loss or damage
(whether or not insured) to the property of the Company or any of its
subsidiaries which has been sustained or will have been sustained which
has had or would reasonably be expected to have a material adverse
effect on the condition (financial or otherwise), earnings, operations,
business or prospects of the Company and its subsidiaries considered as
one enterprise.

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<PAGE>

(i) LOCK-UP AGREEMENT FROM CERTAIN STOCKHOLDERS OF THE COMPANY. The
Company shall have obtained and delivered to you an agreement in the form of
EXHIBIT F attached hereto from each officer and director of the Company, and
each beneficial owner of one or more percent of the outstanding issued share
capital of the Company (including holders of options to acquire the same).

(j) OPINION OF COUNSEL FOR THE SELLING STOCKHOLDERS. You shall have
received on the First Closing Date and the Second Closing Date, as the case may
be, opinions of Bingham Dana LLP, special counsel for certain Selling
Stockholders and opinions of counsel delivered by certain other Selling
Stockholders, in each case substantially in the form of EXHIBIT G attached
hereto, dated the First Closing Date or the Second Closing Date, as the case may
be, addressed to the Underwriters and with reproduced copies or signed
counterparts thereof for each of the Underwriters.

(k) SELLING STOCKHOLDER'S CERTIFICATE. On the First Closing Date and
the Second Closing Date, as the case may be, the Representatives shall have
received a written certificate executed by the Attorney-in-Fact of each Selling
Stockholders, dated as of the First Closing Date or the Second Closing Date, as
the case may be, to the effect that: (i) the representations, warranties and
covenants of such Selling Stockholder set forth in Section 1(B) of this
Agreement are true and correct with the same force and effect as though
expressly made by such Selling Stockholder on and as of such Closing Date; and
(ii) such Selling Stockholder has complied with all the agreements and satisfied
all the conditions on its part to be performed or satisfied at or prior to such
Closing Date.

(l) SELLING STOCKHOLDER'S DOCUMENTS. At least three business days prior
to the date hereof, the Company and each Selling Stockholder shall have
furnished for review by the Representative copies of the Powers of Attorney and
Custody Agreements executed by the Selling Stockholders and such further
information, certificates and documents as the Representatives may reasonably
request.

(m) STOCK EXCHANGE LISTING. The Shares shall have been approved for
quotation on the Nasdaq National Market, subject only to official notice of
issuance.

(n) COMPLIANCE WITH PROSPECTUS DELIVERY REQUIREMENTS. The Company shall
have complied with the provisions of Section 3(e) hereof with respect to the
furnishing of Prospectuses.

(o) ADDITIONAL DOCUMENTS. On or before each of the First Closing Date
and the Second Closing Date, as the case may be, the Representative and counsel
for the Underwriters shall have received such information, documents and
opinions as they may reasonably require for the purposes of enabling them to
pass upon the issuance and sale of the Shares as contemplated herein, or in
order to evidence the accuracy of any of the representations and warranties, or
the satisfaction of any of the conditions or agreements, herein contained.

If any condition specified in this Section 4 is not satisfied when and
as required to be satisfied, this Agreement may be terminated by the
Representative by notice to the Company at

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any time on or prior to the First Closing Date and, with respect to the Option
Shares, at any time prior to the Second Closing Date, which termination shall be
without liability on the part of any party to any other party, except that
Section 5 (Payment of Expenses), Section 6 (Reimbursement of Underwriters'
Expenses), Section 7 (Indemnification and Contribution) and Section 10
(Representations and Indemnities to Survive Delivery) shall at all times be
effective and shall survive such termination.

SECTION 5. PAYMENT OF EXPENSES. The Company agrees to pay all costs,
fees and expenses incurred in connection with the performance of its obligations
hereunder and in connection with the transactions contemplated hereby,
including, without limitation, (i) all expenses incident to the issuance and
delivery of the Common Shares (including all printing and engraving costs), (ii)
all fees and expenses of the registrar and transfer agent of the Common Stock,
(iii) all necessary issue, transfer and other stamp taxes in connection with the
issuance and sale of the Shares to the Underwriters, (iv) all fees and expenses
of the Company's counsel, independent public or certified public accountants and
other advisors, (v) all costs and expenses incurred in connection with the
preparation, printing, filing, shipping and distribution of the Registration
Statement (including financial statements, exhibits, schedules, consents and
certificates of experts), each preliminary prospectus and the Prospectus, and
all amendments and supplements thereto, and this Agreement, (vi) all filing
fees, attorneys' fees and expenses incurred by the Company or the Underwriters
in connection with qualifying or registering (or obtaining exemptions from the
qualification or registration of) all or any part of the Shares for offer and
sale under the state securities or blue sky laws or the provincial securities
laws of Canada or any other country, and, if requested by the Representatives,
preparing and printing a "Blue Sky Survey," an "International Blue Sky Survey"
or other memorandum, and any supplements thereto, advising the Underwriters of
such qualifications, registrations and exemptions, (vii) the filing fees
incident to the National Association of Securities Dealers, LLC review and
approval of the Underwriters' participation in the offering and distribution of
the Common Shares, (viii) the fees and expenses associated with obtaining
approval for the quotation of the Shares on the Nasdaq National Market, (ix) all
reasonable costs and expenses incident to the preparation and undertaking of
"road show" presentations to be made to prospective investors, and (x) all other
fees, costs and expenses referred to in Item 13 of Part II of the Registration
Statement, PROVIDED, that in no event shall the Company be required to pay in
excess of $20,000 in respect of the fees and expenses of Underwriter's counsel
pursuant to this Section 5, or Section 5 of the Underwriting Agreement dated as
of the date hereof relating to the Company's concurrent public offering of
Convertible Subordinated Notes due 2005. Except as provided in this Section 5,
Section 6, and Section 7 hereof, the Underwriters shall pay their own expenses,
including the fees and disbursements of their counsel.

The Selling Stockholders agree with each Underwriter to pay (directly
or by reimbursement) their pro rata share of all fees and expenses incident to
the performance of his, her or its obligations under this Agreement which are
not otherwise specifically provided for herein, including but not limited to (i)
fees and expenses of counsel and other advisors for such Selling Stockholder,
(ii) fees and expenses of the Custodian, and (iii) expenses and taxes incident
to the sale and delivery of the Common Shares to be sold by such Selling
Stockholder to the Underwriters hereunder (which taxes, if any, may be deducted
by the Custodian under the provisions of Section 2 of this Agreement).

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<PAGE>

This Section 5 shall no affect or modify any separate, valid agreement
relating to the allocation of payment of expenses between the Company, on the
one hand, and the Selling Stockholders, on the other hand.

SECTION 6. REIMBURSEMENT OF UNDERWRITERS' EXPENSES. If this Agreement
is terminated by the Representative pursuant to Section 4, Section 7, Section 8
or Section 9, or if the sale to the Underwriters of the Shares on the First
Closing Date is not consummated because of any refusal, inability or failure on
the part of the Company to perform any agreement herein or to comply with any
provision hereof, the Company agrees to reimburse the Representatives and the
other Underwriters (or such Underwriters as have terminated this Agreement with
respect to themselves), severally, upon demand for all out-of-pocket expenses
that shall have been reasonably and actually incurred by the Representatives and
the Underwriters prior to the date of termination in connection with the
proposed purchase and the offering and sale of the Shares, including, without
limitations, to fees and disbursements of counsel, printing expenses, travel
expenses, postage, facsimile and telephone charges.

SECTION 7. INDEMNIFICATION AND CONTRIBUTION.

(a) INDEMNIFICATION OF THE UNDERWRITERS.

(1) The Company agrees to indemnify and hold harmless each Underwriter,
its officers and employees, and each person, if any, who controls any
Underwriter within the meaning of the Securities Act and the Exchange Act
against any loss, claim, damage, liability or expense, as incurred, to which
such Underwriter or such controlling per-son may become subject, under the
Securities Act, the Exchange Act or other federal or state statutory law or
regulation, or at common law or otherwise (including in settlement of any
litigation, if such settlement is effected with the written consent of the
Company, which consent shall not be unreasonably withheld or delayed), insofar
as such loss, claim, damage, liability or expense (or actions in respect thereof
as contemplated below) arises out of or is based (i) upon any untrue statement
or alleged untrue statement of a material fact contained in the Registration
Statement, or any amendment thereto, including any information deemed to be a
part thereof pursuant to Rule 430A or Rule 434 under the Securities Act, or the
omission or alleged omission therefrom of a material fact required to be stated
therein or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading; or (ii) upon any
untrue statement or alleged untrue statement of a material fact contained in any
preliminary prospectus or the Prospectus (or any amendment or supplement
thereto), or the omission or alleged omission therefrom of a material fact
necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading; or (iii) in whole or
in part upon any inaccuracy in the representations and warranties of the Company
contained herein; or (iv) in whole or in part upon any failure of the Company to
perform its obligations hereunder or under applicable law; or (v) any act or
failure to act or any alleged act or failure to act by any Underwriter in
connection with, or relating in any manner to, the Shares or the offering
contemplated hereby, and which is included as part of or referred to in any
loss, claim, damage, liability or action arising out of or based upon any matter
covered by clause (i), (ii), (iii) or (iv) above, provided that the Company
shall not be liable under this clause (v) to the extent that a

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court of competent jurisdiction shall have determined by a final judgment that
such loss, claim, damage, liability or action resulted directly from any such
acts or failures to act undertaken or omitted to be taken by such Underwriter
through its bad faith or willful misconduct; and to reimburse each Underwriter
and each such controlling person for any and all expenses (including the
reasonable fees and disbursements of counsel chosen by FleetBoston Robertson
Stephens Inc.) as such expenses are reasonably incurred by such Underwriter or
such controlling person in connection with investigating, defending, settling,
compromising or paying any such loss, claim, damage, liability, expense or
action; PROVIDED, HOWEVER, that the foregoing indemnity agreement shall not
apply to any loss, claim, damage, liability or expense to the extent, but only
to the extent, arising out of or based upon any untrue statement or alleged
untrue statement or omission or alleged omission made in reliance upon and in
conformity with written information furnished to the Company by the
Representatives expressly for use in the Registration Statement, any preliminary
prospectus or the Prospectus (or any amendment or supplement thereto); and
provided, further, that with respect to any preliminary prospectus, the
foregoing indemnity agreement shall not inure to the benefit of any Underwriter
from whom the person asserting any loss, claim, damage, liability or expense
purchased Shares, or any person controlling such Underwriter, if copies of the
Prospectus were timely delivered to the Underwriter pursuant to Section 2 and a
copy of the Prospectus. (as then amended or supplemented if the Company shall
have furnished any amendments or supplements thereto) was not sent or given by
or on behalf of such Underwriter to such person, if required by law so to have
been delivered, at or prior to the written confirmation of the sale of the
Shares to such person, and if the Prospectus (as so amended or supplemented)
would have cured the defect giving rise to such loss, claim, damage, liability
or expense. The indemnity agreement set forth in this Section 7(a)(1) shall be
in addition to any liabilities that the Company may otherwise have.

(2) The Selling Stockholders, severally and not jointly, agree
to indemnify and hold harmless each Underwriter, its officers and employees, and
each person, if any, who controls any Underwriter within the meaning of the
Securities Act and the Exchange Act against any loss, claim, damage, liability
or expense, as incurred, to which such Underwriter or such controlling person
may become subject, under the Securities Act, the Exchange Act or other federal
or state statutory law or regulation, or at common law or otherwise (including
in settlement of any litigation, if such settlement is effected with the written
consent of the Company, which consent shall not be unreasonably withheld),
insofar as such loss, claim, damage, liability or expense (or actions in respect
thereof as contemplated below) arises out of or is based (i) upon any untrue
statement or alleged untrue statement of a material fact contained in the
Registration Statement, or any amendment thereto, including any information
deemed to be apart thereof pursuant to Rule 430A or Rule 434 under the
Securities Act, or the omission or alleged omission therefrom of a material fact
required to be stated therein or necessary to make the statements therein not
misleading; or (ii) upon any untrue statement or alleged untrue statement of a
material fact contained in any preliminary prospectus or the Prospectus (or any
amendment or supplement thereto), or the omission or alleged omission therefrom
of a material fact necessary in order to make the statements therein, in the
light of the circumstances under which they were made, not misleading, in the
case of subparagraphs (i) and (ii) of this Section 7(a)(2) to the extent, but
only to the extent, that such untrue statement or alleged untrue statement or
omission or alleged omission was made in reliance upon and in conformity with
written information furnished to the Company or such Underwriter by such Selling
Stockholder,

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<PAGE>

directly or through such Selling Stockholder's representatives, specifically for
use in the preparation thereof; or (iii) in whole or in part upon any inaccuracy
in the representations and warranties of the Selling Stockholder contained
herein; or (iv) in whole or in part upon any failure of the Selling Stockholder
to perform its obligations hereunder or under law; or (v) any act or failure to
act or any alleged act or failure to act by any Underwriter in connection with,
or relating in any manner to, the Shares or the offering contemplated hereby,
and which is included as part of or referred to in any loss, claim, damage,
liability or action arising out of or based upon any matter covered by clause
(i), (ii), (iii) or (iv) above, provided that the Selling Stockholder shall not
be liable under this clause (v) to the extent that a court of competent
jurisdiction shall have determined by a final judgment that such loss, claim,
damage, liability or action resulted directly from any such acts or failures to
act undertaken or omitted to be taken by such Underwriter through its bad faith
or willful misconduct; and to reimburse each Underwriter and each such
controlling person for any and all expenses (including the fees and
disbursements of counsel chosen by FleetBoston Robertson Stephens Inc.) as such
expenses are reasonably incurred by such Underwriter or such controlling person
in connection with investigating, defending, settling, compromising or paying
any such loss, claim, damage, liability, expense or action; provided, however,
that the foregoing indemnity agreement shall not apply to any loss, claim,
damage, liability or expense to the extent, but only to the extent, arising out
of or based upon any untrue statement or alleged untrue statement or omission or
alleged omission made in reliance upon and in conformity with written
information furnished to the Selling Stockholder by the Representatives
expressly for use in the Registration Statement, any preliminary prospectus or
the Prospectus (or any amendment or supplement thereto); and provided, further,
that with respect to any preliminary prospectus, the foregoing indemnity
agreement shall not inure to the benefit of any Underwriter from whom the person
asserting any loss, claim, damage, liability or expense purchased Shares, or any
person controlling such Underwriter, if copies of the Prospectus were timely
delivered to the Underwriter pursuant to Section 2 and a copy of the Prospectus
(as then amended or supplemented if the Company shall have furnished any
amendments or supplements thereto) was not sent or given by or on behalf of such
Underwriter to such person, if required by law so to have been delivered, at or
prior to the written confirmation of the sale of the Shares to such person, and
if the Prospectus (as so amended or supplemented) would have cured the defect
giving rise to such loss, claim, damage, liability or expense. In no event,
however, shall the liability of any Selling Stockholder for indemnification
under this Section 7(a)(2) exceed the proceeds received by such Selling
Stockholder from the Underwriters upon the sale of the Shares. The indemnity
agreement set forth in this Section 7(a)(2) shall be in addition to any
liabilities that the Selling Stockholders may otherwise have.

(b) INDEMNIFICATION OF THE COMPANY, ITS DIRECTORS AND OFFICERS AND THE
SELLING STOCKHOLDERS. Each Underwriter agrees, severally and not jointly, to
indemnify and hold harmless the Company, each of its directors, each of its
officers who signed the Registration Statement, the Selling Stockholders and
each person, if any, who controls the Company or any of the Selling Stockholders
within the meaning of the Securities Act or the Exchange Act, against any loss,
claim, damage, liability or expense, as incurred, to which the Company, or any
such director, officer or controlling person may become subject, under the
Securities Act, the Exchange Act, or other federal or state statutory law or
regulation, or at common law or otherwise (including in settlement of any
litigation, if such settlement is effected with the written consent of such
Underwriter), insofar as such loss, claim, damage, liability or expense (or
actions

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<PAGE>

in respect thereof as contemplated below) arises out of or is based (i) upon any
untrue or alleged untrue statement of a material fact contained in the
Registration Statement, any preliminary prospectus or the Prospectus (or any
amendment or supplement thereto), or arises out of or is based upon the omission
or alleged omission to state therein a material fact required to be stated
therein or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading in each case to the
extent, but only to the extent, that such untrue statement or alleged untrue
statement or omission or alleged omission was made in the Registration
Statement, any preliminary prospectus, the Prospectus (or any amendment or
supplement thereto), in reliance upon and in conformity with written information
furnished to the Company and the Selling Stockholders by the Representatives
expressly for use therein and (ii) in whole or in part upon any failure of any
Underwriter to perform its obligations hereunder or under applicable law; and to
reimburse the Company, or any such director, officer, Selling Stockholder or
controlling person for any legal and other expense reasonably incurred by the
Company, or any such director, officer, Selling Stockholder or controlling
person in connection with investigating, defending, settling, compromising or
paying any such loss, claim, damage, liability, expense or action. The indemnity
agreement set forth in this Section 7(b) shall be in addition to any liabilities
that each Underwriter may otherwise have.

(c) INFORMATION PROVIDED BY THE UNDERWRITERS. The Company and each of
the Selling Stockholders hereby acknowledge that the only information that the
Underwriters have furnished to the Company and the Selling Stockholders
expressly for use in the Registration Statement, any preliminary prospectus or
the Prospectus (or any amendment or supplement thereto) are the statements set
forth in the table in the first paragraph, the second paragraph, the third
paragraph and the tenth paragraph under the caption "Underwriting" in the
Prospectus; and the Underwriters confirm that such statements are true and
correct in all material respects.

(d) NOTIFICATIONS AND OTHER INDEMNIFICATION PROCEDURES. Promptly after
receipt by an indemnified party under this Section 7 of notice of the
commencement of any action, such indemnified party will, if a claim in respect
thereof is to be made against an indemnifying party under this Section 7, notify
the indemnifying party in writing of the commencement thereof, but the omission
so to notify the indemnifying party will not relieve it from any liability which
it may have to any indemnified party for contribution or otherwise than under
the indemnity agreement contained in this Section 7 or to the extent it is not
prejudiced as a proximate result of such failure. In case any such action is
brought against any indemnified party and such indemnified party seeks or
intends to seek indemnity from an indemnifying party, the indemnifying party
will be entitled to participate in, and, to the extent that it shall elect,
jointly with all other indemnifying parties similarly notified, by written
notice delivered to the indemnified party promptly after receiving the aforesaid
notice from such indemnified party, to assume the defense thereof with counsel
reasonably satisfactory to such indemnified party; PROVIDED, HOWEVER, if the
defendants in any such action include both the indemnified party and the
indemnifying party and the indemnified party shall have reasonably concluded
that a conflict may arise between the positions of the indemnifying party and
the indemnified party in conducting the defense of any such action or that there
may be legal defenses available to it and/or other indemnified parties which are
different from or additional to those available to the indemnifying party, the
indemnified party or parties shall have the right to select separate counsel to
assume such legal defenses and to otherwise participate in the defense of such
action

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<PAGE>

on behalf of such indemnified party or parties. Upon receipt of notice from the
indemnifying party to such indemnified party of such indemnifying party's
election so to assume the defense of such action and approval by the indemnified
party of counsel, the indemnifying party will not be liable to such indemnified
party under this Section 7 for any legal or other expenses subsequently incurred
by such indemnified party in connection with the defense thereof unless (i) the
indemnified party shall have employed separate counsel in accordance with the
proviso to the next preceding sentence (it being understood, however, that the
indemnifying party shall not be liable for the expenses of more than one
separate counsel (together with local counsel), approved by the indemnifying
party (FleetBoston Robertson Stephens Inc. in the case of Section 7(b) and
Section 8), representing the indemnified parties who are parties to such
action), (ii) the indemnifying party shall not have employed counsel
satisfactory to the indemnified party to represent the indemnified party within
a reasonable time after notice of commencement of the action, or (iii) the
indemnifying party has authorized the employment of counsel for the indemnified
party at the expense of the indemnifying party, in each of which cases the fees
and expenses of counsel shall be at the expense of the indemnifying party.

(e) SETTLEMENTS. The indemnifying party under this Section 7 shall not
be liable for any settlement of any proceeding effected without its written
consent, which consent shall not be unreasonably withheld or delayed, but if
settled with such consent or if there be a final judgment for the plaintiff, the
indemnifying party agrees to indemnify the indemnified party against any loss,
claim, damage, liability or expense by reason of such settlement or judgment.
Notwithstanding the foregoing sentence, if at any time an indemnified party
shall have requested an indemnifying party to reimburse the indemnified party
for fees and expenses of counsel as contemplated by Section 7(d) hereof, the
indemnifying party agrees that it shall be liable for any settlement of any
proceeding effected without its written consent if (i) such settlement is
entered into more than 30 days after receipt by such indemnifying party of the
aforesaid request and (ii) such indemnifying party shall not have reimbursed the
indemnified party in accordance with such request prior to the date of such
settlement. No indemnifying party shall, without the prior written consent of
the indemnified party, effect any settlement, compromise or consent to the entry
of judgment in any pending or threatened action, suit or proceeding in respect
of which any indemnified party is or could have been a party and indemnity was
or could have been sought hereunder by such indemnified party, unless such
settlement, compromise or consent includes (i) an unconditional release of such
indemnified party from all liability on claims that are the subject matter of
such action, suit or proceeding and (ii) does not include a statement as to or
an admission of fault, culpability or a failure to act by or on behalf of any
indemnified party.

(f) CONTRIBUTION. If the indemnification provided for in this Section 7
is unavailable to or insufficient to hold harmless an indemnified party under
Section 7(a) or (b) above in respect of any losses, claims, damages or
liabilities (or actions or proceedings in respect thereof) then each
indemnifying party shall contribute to the aggregate amount paid or payable by
such indemnified party in such proportion as is appropriate to reflect the
relative benefits received by the Company and the Selling Stockholders on the
one hand and the Underwriters on the other from the offering of the Shares. If,
however, the allocation provided by the immediately preceding sentence is not
permitted by applicable law then each indemnifying party shall contribute to
such amount paid or payable by such indemnified party in such proportion as is
appropriate to reflect not only such relative benefits but also the relative
fault of the Company

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<PAGE>

and the Selling Stockholders on the one hand and the Underwriters on the other
in connection with the statements or omissions which resulted in such losses,
claims, damages or liabilities, (or actions or proceedings in respect thereof),
as well as any other relevant equitable considerations. The relative benefits
received by the Company and the Selling Stockholders on the one hand and the
Underwriters on the other shall be deemed to be in the same proportion as the
total net proceeds from the offering (before deducting expenses) received by the
Company and the Selling Stockholders bears to the total underwriting discounts
and commissions received by the Underwriters, in each case as set forth in the
table on the cover page of the Prospectus. The relative fault shall be
determined by reference to, among other things, whether the untrue or alleged
untrue statement of a material fact or the omission or alleged omission to state
a material fact relates to information supplied by the Company and the Selling
Stockholders on the one hand or the Underwriters on the other and the parties'
relative intent, knowledge, access to information and opportunity to correct or
prevent such statement or omission.

The Company, Selling Stockholders and Underwriters agree that it would
not be just and equitable if contributions pursuant to this Section 7(f) were
determined by pro rata allocation (even if the Underwriters were treated as one
entity for such purpose) or by any other method of allocation which does not
take account of the equitable considerations referred to above in this Section
7(f). The amount paid or payable by an indemnified party as a result of the
losses, claims, damages or liabilities (or actions or proceedings in respect
thereof) referred to above in this Section 7(f) shall be deemed to include any
legal or other expenses reasonably incurred by such indemnified party in
connection with investigating or defending any such action or claim.
Notwithstanding the provisions of this subsection (f), (i) no Underwriter shall
be required to contribute any amount in excess of the underwriting discounts and
commissions applicable to the Shares purchased by such Underwriter and (ii) no
person guilty of fraudulent misrepresentation (within the meaning of Section 11
(f) of the Securities Act) shall be entitled to contribution from any person who
was not guilty of such fraudulent misrepresentation. The Underwriters'
obligations in this Section 7(f) to contribute are several in proportion to
their respective underwriting obligations and not joint.

(g) TIMING OF ANY PAYMENTS OF INDEMNIFICATION. Any losses, claims,
damages, liabilities or expenses for which an indemnified party is entitled to
indemnification or contribution under this Section 7 shall be paid by the
indemnifying party to the indemnified party as such losses, claims, damages,
liabilities or expenses are incurred, but in all cases, no later than thirty
(30) days of invoice to the indemnifying party.

(h) SURVIVAL. The indemnity and contribution agreements contained in
this Section 7 and the representation and warranties of the Company set forth in
this Agreement shall remain operative and in full force and effect, regardless
of (i) any investigation made by or on behalf of any Underwriter or any person
controlling any Underwriter, the Company, its directors or officers, the Selling
Stockholders or any persons controlling the Company or a Selling Stockholder,
(ii) acceptance of any Shares and payment therefor hereunder, and (iii) any
termination of this Agreement. A successor to any Underwriter, or to the
Company, its directors or officers, the Selling Stockholders or any person
controlling the Company or a Selling Stockholder, shall be entitled to the
benefits of the indemnity, contribution and reimbursement agreements contained
in this Section 7.

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<PAGE>

(i) ACKNOWLEDGEMENTS OF PARTIES. The parties to this Agreement hereby
acknowledge that they are sophisticated business persons who were represented by
counsel during the negotiations regarding the provisions hereof including,
without limitation, the provisions of this Section 7, and are fully informed
regarding said provisions. They further acknowledge that the provisions of this
Section 7 fairly allocate the risks in light of the ability of the parties to
investigate the Company and its business in order to assure that adequate
disclosure is made in the Registration Statement and Prospectus as required by
the Securities Act and the Exchange Act.

SECTION 8. DEFAULT OF ONE OR MORE OF THE SEVERAL UNDERWRITERS. If, on
the First Closing Date or the Second Closing Date, as the case may be, any one
or more of the several Underwriters shall fail or refuse to purchase Shares that
it or they have agreed to purchase on such date, and the aggregate number of
Common Shares which such defaulting Underwriter or Underwriters agreed but
failed or refused to purchase does not exceed 10% of the aggregate number of the
Shares to be purchased on such date, the other Underwriters shall be obligated,
severally, in the proportions that the number of Firm Common Shares set forth
opposite their respective names on SCHEDULE A bears to the aggregate number of
Firm Shares set forth opposite the names of all such non-defaulting
Underwriters, or in such other proportions as may be specified by the
Representatives with the consent of the non-defaulting Underwriters, to purchase
the Shares which such defaulting Underwriter or Underwriters agreed but failed
or refused to purchase on such date. If, on the First Closing Date or the Second
Closing Date, as the case may be, any one or more of the Underwriters shall fail
or refuse to purchase Shares and the aggregate number of Shares with respect to
which such default occurs exceeds 10% of the aggregate number of Shares to be
purchased on such date, and arrangements satisfactory to the Representatives and
the Company for the purchase of such Shares are not made within 48 hours after
such default, this Agreement shall terminate without liability of any party to
any other party except that the provisions of Section 4, and Section 7 shall at
all times be effective and shall survive such termination. In any such case
either the Representatives or the Company shall have the right to postpone the
First Closing Date or the Second Closing Date, as the case may be, but in no
event for longer than seven days in order that the required changes, if any, to
the Registration Statement and the Prospectus or any other documents or
arrangements may be effected.

As used in this Agreement, the term "Underwriter" shall be deemed to
include any person substituted for a defaulting Underwriter under this Section
8. Any action taken under this Section 8 shall not relieve any defaulting
Underwriter from liability in respect of any default of such Underwriter under
this Agreement.

SECTION 9. TERMINATION OF THIS AGREEMENT. Prior to the First Closing
Date, this Agreement may be terminated by the Representatives by notice given to
the Company and the Selling Stockholders if at any time (i) trading or quotation
in any of the Company's securities shall have been suspended or limited by the
Commission or by the Nasdaq Stock Market, or trading in securities generally on
either the Nasdaq Stock Market or the New York Stock Exchange shall have been
suspended or limited, or minimum or maximum prices shall have been generally
established on any of such stock exchanges by the Commission or the NASD; (ii) a

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general banking moratorium shall have been declared by any of federal, state, or
local authorities; (iii) there shall have occurred any outbreak or escalation of
national or international hostilities or any crisis or calamity, or any change
in the United States or international financial markets, or any substantial
change or development involving a prospective change in United States' or
international political, financial or economic conditions, as in the reasonable
judgment of the Representatives is material and adverse and makes it
impracticable or inadvisable to market the Common Shares in the manner and on
the terms described in the Prospectus or to enforce contracts for the sale of
securities; , (iv) in the reasonable judgment of the Representatives there shall
have occurred any Material Adverse Change; or (v) the Company shall have
sustained a loss by strike, fire, flood, earthquake, accident or other calamity
of such character as in the reasonable judgment of the Representatives may
interfere materially with the conduct of the business and operations of the
Company regardless of whether or not such loss shall have been insured. Any
termination pursuant to this Section 9 shall be without liability on the part of
(a) the Company or the Selling Stockholders to any Underwriter, except that the
Company and the Selling Stockholders shall be obligated to reimburse the
expenses of the Representatives and the Underwriters pursuant to Sections 5 and
6 hereof, (b) any Underwriter to the Company or the Selling Stockholders, or (c)
of any party hereto to any other party except that the provisions of Section 7
shall at all times be effective and shall survive such termination.

SECTION 10. REPRESENTATIONS AND INDEMNITIES TO SURVIVE DELIVERY. The
respective indemnities, agreements, representations, warranties and other
statements of the Company, of its officers and of the several Underwriters set
forth in or made pursuant to this Agreement will remain in full force and
effect, regardless of any investigation made by or on behalf of any Underwriter
or the Company or any of its or their respective partners, officers or directors
or any controlling person, as the case may be, and will survive delivery of and
payment for the Shares sold hereunder and any termination of this Agreement.

SECTION 11. NOTICES. All communications hereunder shall be in writing
and shall be mailed, hand delivered or telecopied and confirmed to the parties
hereto as follows:

If to the Representatives:

FLEETBOSTON ROBERTSON STEPHENS INC.

555 California Street
San Francisco, California 94104
Facsimile: (415) 676-2696
Attention: General Counsel

Copy to:
Alston & Bird LLP
One Atlantic Center
1201 West Peachtree Street
Atlanta, Georgia 30309
Facsimile: (404) 881-4777
Attention: J. Vaughan Curtis, Esq.

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<PAGE>

If to the Company

iBasis, Inc.
20 Second Avenue
Burlington, MA 01803
Facsimile: 781-505-7300
Attention: President

Copy to:
Bingham Dana LLP
150 Federal Street
Boston, MA 02110
Facsimile: (617) 951-8736
Attention: David L. Engel, Esq. and Johan V. Brigham, Esq.

If to the Selling Stockholders:

Copy to:
Bingham Dana LLP
150 Federal Street
Boston, MA 02110
Facsimile: (617) 951-8736
Attention: David L. Engel, Esq. and Johan V. Brigham, Esq.

Any party hereto may change the address for receipt of communications by giving
written notice to the others.

SECTION 12. SUCCESSORS. This Agreement will inure to the benefit of and
be binding upon the parties hereto, including any substitute Underwriters
pursuant to Section 9 hereof, and to the benefit of the employees, officers and
directors and controlling persons referred to in Section 7, and to their
respective successors, and no other person will have any right or obligation
hereunder. The term "successors" shall not include any purchaser of the Shares
as such from any of the Underwriters merely by reason of such purchase.

SECTION 13. PARTIAL UNENFORCEABILITY. The invalidity or
unenforceability of any Section, paragraph or provision of this Agreement shall
not affect the validity or enforceability of any other Section, paragraph or
provision hereof. If any Section, paragraph or provision of this Agreement is
for any reason determined to be invalid or unenforceable, there shall be deemed
to be made such minor changes (and only such minor changes) as are necessary to
make it valid and enforceable.

-33-
<PAGE>

SECTION 14. GOVERNING LAW PROVISIONS.

(a) GOVERNING LAW. This agreement shall be governed by and construed in
accordance with the internal laws of the state of New York applicable to
agreements made and to be performed in such state.

(b) CONSENT TO JURISDICTION. Any legal suit, action or proceeding
arising out of or based upon this Agreement or the transactions contemplated
hereby ("Related Proceedings") may be instituted in the federal courts of the
United States of America located in the State of New York (collectively, the
"Specified Courts"), and each party irrevocably submits to the exclusive
jurisdiction (except for proceedings instituted in regard to the enforcement of
a judgment of any such court (a "Related Judgment"), as to which such
jurisdiction is non-exclusive) of such courts in any such suit, action or
proceeding. Service of any process, summons, notice or document by mail to such
party's address set forth above shall be effective service of process for any
suit, action or other proceeding brought in any such court. The parties
irrevocably and unconditionally waive any objection to the laying of venue of
any suit, action or other proceeding in the Specified Courts and irrevocably and
unconditionally waive and agree not to plead or claim in any such court that any
such suit, action or other proceeding brought in any such court has been brought
in an inconvenient forum.

(c) WAIVER OF IMMUNITY. With respect to any Related Proceeding, each
party irrevocably waives, to the fullest extent permitted by applicable law, all
immunity (whether on the basis of sovereignty or otherwise) from jurisdiction,
service of process, attachment (both before and after judgment) and execution to
which it might otherwise be entitled in the Specified Courts, and with respect
to any Related Judgment, each party waives any such immunity in the Specified
Courts or any other court of competent jurisdiction, and will not raise or claim
or cause to be pleaded any such immunity at or in respect of any such Related
Proceeding or Related Judgment, including, without limitation, any immunity
pursuant to the United States Foreign Sovereign Immunities Act of 1976, as
amended.

SECTION 15. FAILURE OF A SELLING STOCKHOLDER TO SELL AND DELIVER COMMON
SHARES. If one or more of the Selling Stockholders shall fail to sell and
deliver to the Underwriters an aggregate of more than __________ Shares to be
sold and delivered by such Selling Stockholders at the First Closing Date or the
Second Closing Date pursuant to this Agreement, then the Company shall sell such
number of Common Shares as is equal to the number of Shares that such defaulting
Selling Stockholder had agreed to sell to the Underwriters hereunder. If one or
more of the Selling Stockholders shall fail to sell and deliver to the
Underwriters the Shares to be sold and delivered by such Selling Stockholders
pursuant to this Agreement at the First Closing Date, then the Underwriters
shall have the right, by written notice from the Representatives to the Company
and the Selling Stockholders, to postpone the First Closing Date, but in no
event for longer than seven days in order that the required changes, if any, to
the Registration Statement and the Prospectus or any other documents or
arrangements may be effected.

SECTION 16. GENERAL PROVISIONS. This Agreement constitutes the entire
agreement of the parties to this Agreement and supersedes all prior written or
oral

-34-
<PAGE>

and all contemporaneous oral agreements, understandings and negotiations with
respect to the subject matter hereof. This Agreement may be executed in two or
more counterparts, each one of which shall be an original, with the same effect
as if the signatures thereto and hereto were upon the same instrument. This
Agreement may not be amended or modified unless in writing by all of the parties
hereto, and no condition herein (express or implied) may be waived unless waived
in writing by each party whom the condition is meant to benefit. The Table of
Contents and the Section headings herein are for the convenience of the parties
only and shall not affect the construction or interpretation of this Agreement.

[The remainder of this page has been intentionally left blank.]

-35-
<PAGE>

If the foregoing is in accordance with your understanding of our
agreement, please sign and return to the Company the enclosed copies hereof,
whereupon this instrument, along with all counterparts hereof, shall become a
binding agreement between the Company and the several Underwriters in accordance
with its terms.

Very truly yours,

IBASIS, INC.

By:
------------------------------------
Name:
----------------------------------
Title:
---------------------------------

THE SELLING STOCKHOLDERS
(severally and not jointly)

By:
------------------------------------
Name:
----------------------------------
Attorney-in-Fact for the
Selling Stockholders

The foregoing Underwriting Agreement is hereby confirmed and accepted
by the Representatives as of the date first above written.

FLEETBOSTON ROBERTSON STEPHENS INC.
CHASE SECURITIES INC.
U.S. BANCORP PIPER JAFFRAY INC.
DAIN RAUSCHER INCORPORATED

On their behalf and on behalf of each of the several underwriters named in
SCHEDULE A hereto.

BY: FLEETBOSTON ROBERTSON STEPHENS INC.

By: _________________________________
Authorized Signatory

-36-
<PAGE>

EXHIBIT A

Schedule of Underwriters

- -------------------------------------- ----------------------------
Underwriter Number of Firm Shares
to be Purchased

- -------------------------------------- ----------------------------
<S> <C>
FleetBoston Robertson Stephens Inc.

- -------------------------------------- ----------------------------
Chase Securities Inc.

- -------------------------------------- ----------------------------
U.S. Bancorp. Piper Jaffrey Inc.

- -------------------------------------- ----------------------------
Dain Rauscher Incorporated

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

TOTAL UNDERWRITERS (__) 3,500,000
- -------------------------------------- ----------------------------

</TABLE>

<PAGE>

EXHIBIT B

Schedule of Selling Stockholders

- ------------------------------------------ --------------------- -----------------
Number of Firm Shares Number of Option

Name and Address of Selling Stockholder to be Sold Shares to be Sold
- ------------------------------------------ --------------------- -----------------
<S> <C> <C>

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

</TABLE>

<PAGE>

EXHIBIT C

Opinion of Counsel for the Company

(1) The Company has been duly incorporated and is validly existing as a
corporation in good standing under the DGCL.

(2) The Company has the corporate power and authority to own, lease and
operate its properties and to conduct its business as described in the
Prospectus.

(3) The Company is presently qualified to do business as a foreign
corporation in each jurisdiction within the United States in which it owns or
leases real property as described in the Registration Statement, except where
the failure to be so qualified would not have a Material Adverse Effect.

(4) Immediately after the closing of the Offering, the authorized
capital stock of the Company will consist of (i) eighty-five million
(85,000,000) shares of common stock, $0.001 par value per share (the "COMMON
STOCK"), and (ii) fifteen million (15,000,000) shares of preferred stock, $0.001
par value per share, and there will be no shares of any other class of capital
stock authorized. All of the shares of Common Stock issued and outstanding
(including the Shares which may be sold by the Selling Stockholders) after the
closing of the Offering will have been duly authorized and validly issued and
will be fully paid and non-assessable. The shares of Common Stock issued and
outstanding after the closing of the Offering will not have been issued in
violation of, or subject to, any preemptive right, co-sale right, registration
right, right of first refusal or other similar right provided by (A) the
Restated Charter, the By-laws, or the DGCL, or (B), to our knowledge, any
agreement or instrument to which the Company is a party or by which the Company
is bound.

(5) The Shares to be issued by the Company pursuant to the terms of the
Underwriting Agreement have been duly authorized and, upon issuance and delivery
against payment therefor in accordance with the terms thereof, will be duly and
validly issued and fully paid and nonassessable, and will not have been issued
in violation of or subject to any preemptive right, co-sale right, registration
right, right of first refusal or other similar right provided by (A) the
Restated Charter, the By-laws, or the DGCL, or (B), to our knowledge, any
agreement or instrument to which the Company is a party or by which the Company
is bound.

(6) The Company has the corporate power and authority to enter into the
Underwriting Agreement and to issue, sell and deliver to the Underwriters the
Shares to be issued and sold by the Company thereunder.

(7) The Underwriting Agreement has been duly authorized by all
necessary corporate action on the part of the Company and has been duly executed
and delivered by the Company and is a valid and binding agreement of the
Company, enforceable against the Company in accordance

<PAGE>

with its terms (except that we express no opinion as to the enforceability of
the indemnification and contribution provisions of the Underwriting Agreement).

(8) The Registration Statement has become effective under the Act and,
to our knowledge, no stop order suspending the effectiveness of the Registration
Statement has been issued and no proceedings for that purpose have been
instituted or are pending or threatened under the Act.

(9) The Registration Statement and the Prospectus (other than the
financial statements (including supporting schedules) and financial data and
information and information derived therefrom, as to which we express no
opinion), as of the effective date of the Registration Statement, complied as to
form in all material respects with the requirements of the Act and the
applicable rules and regulations promulgated thereunder.

(10) The information in the Prospectus under the caption "Description
of Capital Stock," to the extent that it constitutes matters of law or legal
conclusions, has been reviewed by us and is a fair summary of such matters and
conclusions, provided that no opinion is given as to the number of shares of
Common Stock or preferred stock outstanding. The form of the certificate
evidencing the Common Stock and filed as an exhibit to the Registration
Statement complies with the DGCL.

(11) The description in the Registration Statement and the Prospectus
of the Restated Charter and the By-laws under the caption "Delaware Law and
Certain Certificate of Incorporation and By-Law Provisions," to the extent that
it constitutes matters of law or legal conclusions, is accurate in all material
respects and fairly presents the information with respect thereto required to be
presented by the Act.

(12) To our knowledge, there are no agreements, contracts, leases or
documents to which the Company is a party of a character required to be
described or referred to in the Registration Statement or Prospectus or to be
filed as an exhibit to the Registration Statement which are not described or
referred to therein or filed as required.

(13) The performance of the Underwriting Agreement and the consummation
of the transactions contemplated therein (other than performance of the
Company's indemnification obligations thereunder, concerning which no opinion is
expressed) will not (a) result in any violation of the Restated Charter or the
By-laws or (b) to our knowledge, result in a material breach or violation of any
of the terms and provisions of, or constitute a default under, any bond,
debenture, note or other evidence of indebtedness, or any lease, contract,
indenture, mortgage, deed of trust, loan agreement, joint venture or other
agreement or instrument known to us to which the Company is a party or by which
its properties are bound, or any applicable statute, rule or regulation known to
us or, to our knowledge, any order, writ or decree of any court, government or
governmental agency or body having jurisdiction over the Company or any of its
subsidiaries, or over any of their properties or operations (except that we
express no opinion as to the Company's performance of its obligations under the
indemnification and contribution provisions of the Underwriting Agreement, to
the extent such performance may be considered to violate securities laws or
public policy).

-41-
<PAGE>

(14) No consent, approval, authorization or order of or qualification
with any Federal or Massachusetts court, government or governmental agency or
body having jurisdiction over the Company or any of its subsidiaries, or over
any of their properties or operations is necessary in connection with the
consummation by the Company of the transactions contemplated under the
Underwriting Agreement, except (i) such as have been obtained under the Act or
the Exchange Act, (ii) such as may be required under state or other securities
or Blue Sky laws in connection with the purchase and the distribution of the
Shares by the Underwriters, or (iii) such as may be required by the National
Association of Securities Dealers, LLC.

(15) To our knowledge, there are no legal or governmental proceedings
pending or overtly threatened against the Company or any of its subsidiaries of
a character required to be disclosed in the Registration Statement or the
Prospectus by the Act, other than those described therein.

(16) To our knowledge, except as referred to in the Registration
Statement and Prospectus, no holders of any shares of Common Stock or other
securities of the Company have registration rights with respect to securities of
the Company and, except as referred to in the Registration Statement and
Prospectus, all holders of securities of the Company having rights known to us
to the registration of such shares of Common Stock or other securities because
of the filing of the Registration Statement by the Company have, with respect to
the offering contemplated thereby, waived such rights or such rights have
expired by reason of lapse of time following notification of the Company's
intent to file the Registration Statement.

(17) The Company is not and, after giving effect to the offering and
the sale of the Shares and the application of the proceeds thereof as described
in the Prospectus, will not be, an "investment company" as such term is defined
in the Investment Company Act of 1940, as amended.

***

In addition, we have participated in certain conferences with officers
and other representatives of the Company and representatives of the independent
accountants of the Company, at which conferences the contents of the
Registration Statement and Prospectus and related matters were discussed and,
although we do not assume any responsibility for the accuracy, completeness or
fairness of the statements contained in the Registration Statement or the
Prospectus, no facts have come to our attention that have caused us to believe
that, as of its effective date, the Registration Statement (other than the
financial statements and related schedules and other financial and statistical
data therein, as to which we express no view) contained an untrue statement of a
material fact or omitted to state a material fact required to be stated therein
or necessary to make the statements therein not misleading or that, as of its
date, the Prospectus (other than the financial statements and related schedules
and other financial and statistical data therein, as to which we express no
view) contained an untrue statement of a material fact or omitted to state a
material fact necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading or that, as of the date
hereof, as applicable, either the Registration Statement or the Prospectus
(other than the financial statements and related schedules and other financial
and statistical data therein, as to which we express no view) contains an untrue
statement of a material fact or omits to state a material fact

-42-
<PAGE>

necessary to make the statements therein, in the light of the circumstances
under which they were made, not misleading.

-43-
<PAGE>

EXHIBIT D

Opinion of Government Regulation Counsel For the Company

1. The statements in the Registration Statement under the captions "Risk Factors
- -- Risk related to the Internet and Internet Telephony Industry" and "Business
- -- Government Regulation" (to the extent that the discussion in these sections
pertains to the Telecommunications Laws), insofar as such statements constitute
a summary of the legal matters, documents or proceedings pertaining to the
Companies, fairly summarize such matters referred to therein.

<PAGE>

EXHIBIT E

Opinion of Counsel for the Underwriters

1. The Shares to be issued by the Company have been duly authorized
and, upon issuance and delivery and payment therfor in accordance with the terms
of the Underwriting Agreement, will be validly issued, fully paid and
non-assessable.

2. The Registration Statement complied as to form in all material
respects with the requirements of the Act; the Registration Statement has become
effective under the Act and, to our knowledge, no stop order proceedings with
respect thereto have been instituted or threatened or are pending under the Act.

3. The Underwriting Agreement has been duly authorized, executed and
delivered by the Company and the Selling Stockholders.

In connection with the preparation of the Registration Statement and
the Prospectus, we have participated in conferences with officers and
representatives of the Company, counsel for the Company and the independent
accountants of the Company, at which conferences we made inquiries of such
officers, representatives and others and discussed the contents of the
Registration Statement and the Prospectus. While the limitations inherent in the
independent verification of factual matters and the character of determinations
involved in the registration process are such that we are not passing upon and
do not assume any responsibility for the accuracy, completeness or fairness of
the statements contained in the Registration Statement or the Prospectus, based
on such participation, inquiries and discussion, no facts have come to our
attention that would lead us to believe that the Registration Statement (except
for financial statements, schedules, and other financial information contained
therein or omitted therefrom, as to which we express no belief) at the time it
became effective (but after giving effect to changes incorporated pursuant to
Rule 430A under the Act) contained any untrue statement of a material fact or
omitted to state a material fact required to be stated therein or necessary to
make the statements therein not misleading, or that the Registration Statement,
the Prospectus and any amendment or supplement thereto (except for financial
statements, schedules and other financial information contained therein or
omitted therefrom, as to which we express no belief), as of the date thereof or
as of the date of this opinion, contained any untrue statement of a material
fact or omitted to state a material fact necessary in order to make the
statements therein, in light of the circumstances under which they were made,
not misleading.

<PAGE>

EXHIBIT F

<PAGE>

EXHIBIT G

Opinion of Counsel for the Selling Stockholders

(i) Each of the Underwriting Agreement and the Custody Agreement has
been duly authorized, executed and delivered on behalf of and constitutes the
valid and binding obligation of the Selling Stockholders enforceable against
each such Selling Stockholder in accordance with its terms (except that we
express no opinion as to the enforceability of the indemnification and
contribution provisions of the Underwriting Agreement).

(ii) To our knowledge, each Selling Stockholder has full legal right,
power and authority, and, to our knowledge, any approval required by law (other
than as required by state securities and blue sky laws as to which we express no
opinion) to sell, assign, transfer and deliver such Selling Stockholder's
Shares.

(iii) Assuming the Underwriters are protected purchasers, upon delivery
of the Shares of the Selling Stockholders against payment therefor as provided
in the Underwriting Agreement, good and marketable title to such shares, free
and clear of all liens, encumbrances, equities or claims, will be transferred to
the Underwriters who have purchased such Shares in good faith and without notice
of any such lien, encumbrance, equity or other adverse claim, as that term is
used and defined under Article 8 of the Uniform Commercial Code.

<PAGE>

Exhibit 5.1

BINGHAM DANA LLP
150 Federal Street
Boston, MA 02110

March 8, 2000

iBasis, Inc.
20 Second Avenue
Burlington, MA 01803

Re: REGISTRATION STATEMENT ON FORM S-1 UNDER THE SECURITIES ACT OF
1933, AS AMENDED (FILE NO. 333-96535)

Ladies and Gentlemen:

We have acted as counsel to iBasis, Inc., a Delaware corporation (the
"COMPANY"), in connection with the registration under the Securities Act of
1933, as amended (the "ACT"), of 4,025,000 shares (collectively, the "SHARES")
of the Company's Common Stock, $0.01 par value per share, of which certain of
the Shares (the "COMPANY SHARES") are to be offered by the Company and certain
of the Shares (the "SELLING STOCKHOLDER SHARES") are to offered by certain
stockholders of the Company (the "SELLING STOCKHOLDERS"), pursuant to a
Registration Statement on Form S-1 (Reg. No. 333-96535) initially filed by the
Company with the Securities and Exchange Commission on February 10, 2000 (the
"REGISTRATION STATEMENT").

As such counsel, we have reviewed the corporate proceedings taken by
the Company with respect to the authorization of the issuance of the Shares. We
have also examined and relied upon originals or copies, certified or otherwise
authenticated to our satisfaction, of such corporate records, documents,
agreements or other instruments of the Company. As to all matters of fact
(including factual conclusions and characterizations and descriptions of
purpose, intention or other state of mind) we have entirely relied upon
certificates of officers of the Company, and have assumed, without independent
inquiry, the accuracy of those certificates.

We have assumed the genuineness of all signatures, the conformity to
the originals of all documents reviewed by us as copies, the authenticity and
completeness of all original documents reviewed by us in original or copy form
and the legal competence of each individual executing a document. We have also
assumed that the registration requirements of the Act and all applicable
requirements of state laws regulating the sale of securities will have been duly
satisfied. We have also assumed that the Company has

<PAGE>

iBasis, Inc.
March 8, 2000
Page 2

received the specified purchase price for the Selling Stockholder Shares and
will receive the specified purchase price for the Company Shares.

With respect to our opinion set forth below regarding the due
authorization of the Shares, we have assumed that all members of the board of
directors of the Company have executed and delivered an action by unanimous
written consent that contains the resolutions set forth in ANNEX A hereto, and
that such action by unanimous written consent has been filed with the minutes of
proceedings of such board of directors.

This opinion is limited solely to the Delaware General Corporation Law,
as applied by courts located in Delaware, the applicable provisions of the
Delaware Constitution and the reported judicial decisions interpreting those
laws.

Subject to the foregoing, it is our opinion that (i) the Selling
Stockholder Shares have been duly authorized and validly issued and are fully
paid and non-assessable, and (ii) the Company Shares have been duly authorized
and when issued and paid for in accordance with the terms of the underwriting
agreement described in the Registration Statement, will be validly issued, fully
paid and non-assessable.

We hereby consent to the filing of this opinion as an exhibit to the
Registration Statement and to the reference to this firm under the heading
"Legal Matters" in the Prospectus included in the Registration Statement.

Very truly yours,

/s/ Bingham Dana LLP

BINGHAM DANA LLP

<PAGE>

ANNEX A

I. OFFERING OF COMMON STOCK

1. SECONDARY PUBLIC OFFERING

RESOLVED: That, the Corporation be, and it hereby is, authorized to
issue and sell up to 2,318,408 shares (representing
2,000,000 shares plus an additional 318,408 shares that
may be sold pursuant to an option to be granted to the
underwriters for a period of up to 30 days after the
effective date of the commencement of the Offering defined
below, the "COMPANY SHARES") of its common stock, par
value, $0.001 per share (the "COMMON STOCK"), in an
underwritten public offering on a firm commitment basis,
which offering may also include the Secondary Shares (as
defined below) (the "OFFERING"), with the exact number of
shares to be sold by the Corporation (which may exceed
2,318,408 shares if determined to be advisable by the
Public Offering Committee described below), and the price
per share to be determined by the Public Offering
Committee described below.

FURTHER
RESOLVED: That, in accordance with the requirements of the
Securities Act of 1933, as amended ("1933 ACT"), there be
issued, sold and registered under the 1933 Act all of the
Company Shares, together with up to 1,706,592 shares (the
"SECONDARY SHARES," and together with the Company Shares,
the "SHARES") of Common Stock that may be offered for sale
by certain stockholders (the "SELLING STOCKHOLDERS") of
the Corporation.

2. APPROVAL OF FILING OF REGISTRATION STATEMENT ON FORM S-1

RESOLVED: That the preparation, execution and filing by the Chief
Executive Officer, Executive Vice President and the Chief
Financial Officer (each an "AUTHORIZED OFFICER") of the
Company, each acting individually in the name and on
behalf of the Company, with the Securities and Exchange
Commission (the "SEC"), of a registration statement on
Form S-1, relating to the Offering, are hereby severally
confirmed, adopted, approved and ratified as acts of the
Company with full retroactive and prospective effect.

iBasis, Inc.
March 8, 2000
Page 2

and regulations promulgated thereunder, or the orders and
directions of the Commission, and that upon the signing
thereof by at least a majority of the Directors and by the
duly authorized officers or their duly authorized
attorneys or attorney, the officers of the Corporation or
their duly authorized attorneys or attorney are hereby
authorized to cause the same to be filed with the
Commission.

3. PUBLIC OFFERING COMMITTEE

RESOLVED: That Ofer Gneezy, Izhar Armony and John Jarve be and
hereby are appointed as a Public Offering Committee of the
Board of Directors (the "PUBLIC OFFERING COMMITTEE"), and
are hereby authorized and directed, INTER ALIA, (i) to
negotiate and authorize on behalf of the Corporation
underwriting agreements with each of the Underwriters (as
defined below) for the sale and issuance by the
Corporation to the Underwriters of shares of Common Stock
for the Offering; (ii) to determine, in their discretion,
the number of shares of Common Stock to be offered and
sold by the Corporation in the Offering; (iii) to
authorize the price at which such shares shall be offered
and sold in the Offering; (iv) to determine the
underwriting fees and commissions to be offered to the
Underwriters in connection with the Offering; (v) to
designate one or more Authorized Officers from time to
time; (vi) without limiting the power delegated to the
Authorized Officers, to approve the form of any amendment
to the Registration Statement; and (vii) to authorize the
Authorized Officers to take any other actions considered
necessary or advisable by the Public Offering Committee in
connection with the public offering contemplated by these
resolutions.

4. COMPLIANCE WITH BLUE SKY LAWS

RESOLVED: That, the Authorized Officers are, and each one of them
acting singly is, authorized in the name and on behalf of
this Corporation, to take any and all action which they
may deem necessary or advisable in order to effect the
registration or qualification (or exemption therefrom) of
the shares of Common Stock for issue, offer, sale, or
trade under the Blue Sky or securities laws of any of the
States of the United States of America and the securities
laws of the Dominion of Canada and any of its provinces,
and in connection therewith to execute, acknowledge,
verify, deliver, file or cause to be published any
applications, reports, consents to service of process,
appointments of

<PAGE>

iBasis, Inc.
March 8, 2000
Page 3

attorneys to receive service of process and other papers
and instruments which may be required under such laws, and
to take any and all further action which they may deem
necessary or advisable in order to maintain any such
registration or qualifications for as long as they may
deem necessary or desirable, the necessity or desirability
thereof or being conclusively proved by the action taken.

5. APPLICATION TO NASDAQ

RESOLVED: That, application be made to The Nasdaq Stock Market for
the listing of the additional shares of the Corporation's
Common Stock referred to herein on said Nasdaq Stock
Market, and that the Authorized Officers are, and each of
them acting singly is, hereby authorized to sign in the
name and on behalf of the Corporation the documents or
agreements relative to such listing, and to take or cause
to be taken on behalf of the Corporation, at any time or
from time to time, such action or actions as in the
opinion of the officer acting (as proved conclusively by
the action taken) may be necessary or desirable to effect
and keep effective listing of such Common Stock on such
system and, if requested, to appear before officials of
such system with authority to make all required changes in
said application and related documents, and any such
application or document signed in the name of this
Corporation may be accepted by any party concerned
herewith as having been authorized by this resolution.

6. APPROVAL OF UNDERWRITING AGREEMENT

RESOLVED: That, the Corporation be, and it hereby is, authorized to
issue and sell the Company Shares in a public offering,
through a firm commitment underwriting by certain
underwriters (collectively, the "UNDERWRITERS"), at a sale
price to be determined by the Public Offering Committee.

FURTHER

RESOLVED: That the Authorized Officers be, and each of them acting
singly hereby is, authorized on behalf of the Corporation
to enter into an underwriting agreement (the "UNDERWRITING
AGREEMENT") with the Underwriters relating to the purchase
of the Shares by such Underwriters on a firm commitment
basis; and that said officers be, and each of them acting
singly hereby is, authorized for and in the name of the
Corporation to execute and deliver the Underwriting
Agreement in such form and with such provisions
(including, without

<PAGE>

iBasis, Inc.
March 8, 2000
Page 4

limitation, with respect to the public offering price,
discounts, commissions and expenses) as may be approved by
the officer or officers so acting, such approval to be
conclusively evidenced by such execution and delivery.

7. RESERVATIONS OF SHARES

RESOLVED: That the Corporation reserve from authorized but unissued
shares a sufficient number of Company Shares to be sold
pursuant to the Underwriting Agreement, and that such
shares shall be, when issued and delivered in accordance
with the terms of the Underwriting Agreement,
validly-issued, fully-paid and non-assessable.

II. CONVERTIBLE SUBORDINATED NOTES OFFERING

1. OFFERING OF CONVERTIBLE SUBORDINATED NOTES

RESOLVED: That, the Corporation be, and it hereby is, authorized to
issue and sell up to $172,500,000 aggregate principal
amount of Notes in a public offering through a firm
commitment underwriting to certain underwriters (the "DEBT
UNDERWRITERS") (representing $150,000,000 aggregate
principal amount of Notes plus an additional $22,500,000
aggregate principal amount of Notes that may be sold
pursuant to an option to be granted to the Debt
Underwriters), with a maturity of not to exceed five years
from the date of issue, with such Notes to be convertible
into shares of Common Stock, with the exact aggregate
principal amount of Notes to be sold by the Corporation
(which may exceed $172,500,000 aggregate principal amount
of Notes if determined to be advisable by the Public
Offering Committee described below), and the interest
rate, maturity, conversion rate and other terms of the
Notes to be determined by the Public Offering Committee.

FURTHER
RESOLVED: That, in connection with the offering and sale of the
Notes (the "DEBT OFFERING"), the Corporation enter into
(i) an Underwriting Agreement between the Corporation and
the Debt Underwriters, having such terms and
conditions and in such form as the Public Offering
Committee shall determine and (ii) an Indenture (the
"INDENTURE") between the Corporation and such institution
as may be selected by the Public Offering Committee (the
"TRUSTEE"), having such terms and

<PAGE>

iBasis, Inc.
March 8, 2000
Page 5

conditions and in such form as the Public Offering
Committee shall determine.

FURTHER
RESOLVED: That there are hereby reserved for issuance out of the
Corporation's authorized but unissued Common Stock such
number of shares of Common Stock as may be required to be
issued upon conversion of the Notes (the "CONVERSION
SHARES"), including such additional shares of Common Stock
becoming issuable upon conversion of the Notes pursuant to
the anti-dilution provisions of the Indenture, with the
initial number of Conversion Shares each $1,000 principal
amount of Notes shall be convertible into to be determined
by the Public Offering Committee, and that such shares of
Common Stock, when issued and delivered in accordance with
the terms of the Notes and the Indenture, will be
validly-issued, fully-paid and non-assessable.

2. APPROVAL OF FILING OF REGISTRATION STATEMENT ON FORM S-1

RESOLVED: That the preparation, execution and filing by the
Authorized Officers each acting individually in the name
and on behalf of the Company, with the SEC, of a
registration statement relating to the Notes and the
Conversion Shares, are hereby severally confirmed,
adopted, approved and ratified as acts of the Company with
full retroactive and prospective effect.

FURTHER
RESOLVED: That, the Authorized Officers are, and each one of them
acting singly is, hereby authorized, empowered and
directed to execute in like manner on behalf of the
Corporation, and individually as officers, such amendment
or amendments to the Registration Statement as may be
required or deemed by them advisable under the 1933 Act,
the rules and regulations promulgated thereunder, or the
orders and directions of the Commission, and that upon the
signing thereof by at least a majority of the Directors
and by the duly authorized officers or their duly
authorized attorneys or attorney, the officers of the
Corporation or their duly authorized attorneys or attorney
are hereby authorized to cause the same to be filed with
the Commission.

<PAGE>

iBasis, Inc.
March 8, 2000
Page 6

3. AUTHORITY OF THE PUBLIC OFFERING COMMITTEE

RESOLVED: That, the Public Offering Committee be and hereby is
authorized and directed (i) to negotiate and authorize on
behalf of the Corporation the form, terms and conditions
of the Debt Underwriting Agreement, the Notes and the
Indenture with the Debt Underwriters or the Trustee, as
the case may be, for the sale and issuance by the
Corporation of the Notes to the Debt Underwriters (or any
additional or substitute investment banking firm or firms
selected by the Public Offering Committee) for the
Offering; (ii) to determine, in their discretion, the
aggregate principal amount of Notes to be offered and sold
by the Corporation in the Offering; (iii) to authorize the
interest rate and maturity of the Notes, any provisional
redemption fees and the optional redemption prices, and
the number of Conversion Shares to be issuable upon the
conversion of the Notes; (iv) to determine the fees and
commissions to be offered to the Debt Underwriters in
connection with the Offering; (v) without limiting the
power delegated to the Authorized Officers, to approve the
form of any amendment to the Registration Statement; and
(vi) to authorize the Authorized Officers to take any
other actions considered necessary or advisable by the
Offering Committee in connection with the Offering.

4. COMPLIANCE WITH BLUE SKY LAWS

RESOLVED: That, the Authorized Officers are, and each one of them
acting singly is, authorized in the name and on behalf of
the Corporation, to take any and all action which they may
deem necessary or advisable in order to effect the
registration or qualification (or exemption therefrom) of
the Notes and Conversion Shares for issue, offer, sale, or
trade under the Blue Sky or securities laws of any of the
States of the United States of America, and in connection
therewith to execute, acknowledge, verify, deliver, file
or cause to be published any applications, reports,
consents to service of process, appointments of attorneys
to receive service of process and other papers and
instruments which may be required under such laws, and to
take any and all further action which they may deem
necessary or advisable in order to maintain any such
registration or qualifications for as long as they may
deem necessary or desirable, the necessity or desirability
thereof being conclusively proved by the action taken.

<PAGE>

iBasis, Inc.
March 8, 2000
Page 7

5. APPLICATION TO NASDAQ

RESOLVED: That, application be made to The Nasdaq Stock Market for
the listing of the Conversion Shares on said Nasdaq Stock
Market, and that the Authorized Officers are, and each of
them acting singly is, hereby authorized to sign in the
name and on behalf of the Corporation the documents or
agreements relative to such listing, and to take or cause
to be taken on behalf of the Corporation, at any time or
from time to time, such action or actions as in the
opinion of the officer acting (as proved conclusively by
the action taken) may be necessary or desirable to effect
and keep effective listing of such Common Stock on such
system and, if requested, to appear before officials of
such system with authority to make all required changes in
said application and related documents, and any such
application or document signed in the name of this
Corporation may be accepted by any party concerned
herewith as having been authorized by this resolution.

III. MISCELLANEOUS

1. INVESTMENT COMPANY MATTERS

RESOLVED: That, because (i) the Corporation may be deemed to be an
"investment company" as that term is defined in Section 3
of the Investment Company Act of 1940, as amended (the
"1940 ACT"), (ii) the Corporation has a bona fide intent
to be engaged primarily, as soon as is reasonably
possible, but in any event, no later than November 16,
2000 in a business other than that of investing,
reinvesting, owning, holding or trading in securities, and
(iii) the Corporation intends to rely upon safe harbor
Rule 3a-2 under the 1940 Act which would deem the
Corporation not to be engaged in the business of
investing, reinvesting, owning, holding, or trading in
securities, and therefore not subject to the 1940 Act, for
a period up to November 16, 2000; the Corporation rely on
the safe harbor of Rule 3a-2 under the 1940 Act.

FURTHER
RESOLVED: That the Corporation has a bona fide intent to be engaged
primarily, as soon as is reasonable possible, but in any
event, no later than November 16, 2000, in a business
other than that of investing, reinvesting, owning, holding
or trading in securities.

<PAGE>

iBasis, Inc.
March 8, 2000
Page 8

2. RESOLUTIONS OF GENERAL APPLICABILITY.

RESOLVED: That the Authorized Officers and any person or persons
designated and authorized to act by any of the Authorized
Officers are, and each of them acting singly is authorized
to do and perform or cause to be done and performed, in
the name and on behalf of the Corporation, all other acts,
to pay or cause to be paid, on behalf of the Corporation,
all related costs and expenses and to execute and deliver
or cause to be executed and delivered such other notices,
requests, demands, directions, consents, approvals,
orders, applications, agreements, instruments,
certificates, undertakings, supplements, amendments,
further assurances or other communications of any kind,
under the corporate seal of the Corporation or otherwise
and in the name of and on behalf of the Corporation or
otherwise, as he, she or they may deem necessary,
advisable or appropriate to effect the intent of the
foregoing resolutions or to comply with the requirements
of the instruments approved and authorized by the
foregoing resolutions.

FURTHER
RESOLVED: That any acts of any the Authorized Officers and of any
person or persons designated and authorized to act by any
of the Authorized Officers, which acts would have been
authorized by the foregoing resolutions except that such
acts were taken prior to the adoption of such resolutions,
are hereby severally ratified, confirmed, approved and
adopted as the acts of the Corporation.

<PAGE>

Exhibit 10.29

EMPLOYMENT AGREEMENT

THIS AGREEMENT, dated as of February 8, 2000 (the "EFFECTIVE DATE"), is
made by and between iBasis, Inc., a Delaware corporation with its principal
place of business at 20 Second Avenue, Burlington, Massachusetts 01803 (the
"EMPLOYER"), and Charles Giambalvo (the "EMPLOYEE").

Section 1. FREEDOM TO CONTRACT.

The Employee represents that he is free to enter into this Agreement,
and that he has not made and will not make any agreements in conflict with this
Agreement. The Employee will not, and the Employer will not require the Employee
to, disclose to the Employer, or use for the Employer's benefit, any trade
secrets or confidential information now or hereafter in the Employee's
possession which is the property of any other party.

Section 2. EMPLOYMENT.

The Employer hereby continues to employ the Employee, and the Employee
hereby accepts his continued employment by the Employer, upon the terms and
conditions set forth herein.

Section 3. EFFECTIVE DATE AND TERM.

This Agreement shall take effect as of the Effective Date, and shall
continue in full force and effect until terminated in accordance with Section 6
herein.

Section 4. TITLE AND DUTIES; EXTENT OF SERVICES.

The Employee shall promote the business and affairs of the Employer as
Senior Vice President of Worldwide Sales of the Employer, with responsibility
for performing such duties consistent with such position as the Chief Executive
Officer of the Employer (the "CEO") or the Board of Directors of the Employer
(the "BOARD") may from time to time designate. Except as otherwise provided in
this Agreement and except for vacations and absences due to temporary illness,
the Employee shall devote his full time and efforts to the business and affairs
of the Employer, provided that, with the Employer's prior written consent the
Employee may engage in such other business activities outside the scope of his
employment hereunder as in the reasonable judgment of the Employer will not
materially adversely affect the Employee's ability to perform his obligations
under this Agreement.

<PAGE>
-2-

Section 5. COMPENSATION AND FRINGE BENEFITS.

Section 5.1. BASE SALARY. In consideration of the services rendered by
the Employee under this Agreement, the Employer shall pay the Employee an
initial base salary (the "Base Salary") at an annual rate of One Hundred
Eighty-five Thousand Dollars ($185,000), payable in arrears bi-weekly (or on
such other payment schedule as the Employer shall have reasonably implemented
with respect to the payment of its other salaried employees), such Base Salary
being subject to increase at the discretion of the CEO or the Board.

Section 5.2. PERFORMANCE BONUS. On an annual basis, the CEO or the
Board shall establish, objective written performance goals for the Employee.
Upon the attainment of such performance goals, in addition to his Base Salary,
the Employee shall be entitled to a cash bonus in an amount determined in the
discretion of the CEO or the Board. Any such performance bonus shall be due and
payable within ninety (90) days after the end of the calendar year to which it
relates.

Section 5.3. FRINGE BENEFITS. The Employee shall be entitled to such
life insurance, health insurance and other employee fringe benefits as may be
offered or generally made available by the Employer to its executive officers.

Section 5.4. RELOCATION BENEFITS.

(a) The Employee shall be entitled to $70,000 for relocation
expenses in connection with the Employee's relocation of his residence from New
York to the Boston, Massachusetts metro area (the "BOSTON AREA"). Prior to
relocation of the Employee's family and household goods to Boston, the
Employer's standard policy regarding transportation, lodging and per diem
amounts shall apply to Employee's expense reimbursement.

(b) In connection with the Employee's relocation to the Boston
Area, the Employer will guaranty a bridge loan to the Employee in the aggregate
principal of up to $500,000 for a period up to six months, provided that the
Employee has purchased a primary residence in the Boston Area prior to the sale
of the Employee's existing primary residence in New York. In connection with any
such bridge loan pursuant to this Section 5.4, the Employer will pay the
Employee's interest payments on such loan during the six month is guaranteed by
the Employer.

Section 6. TERMINATION; CHANGE OF CONTROL.

Section 6.1. TERMINATION OF EMPLOYMENT. The Employee's employment
hereunder shall terminate upon the Employee's death or Permanent Disability. For
purposes of this Agreement, "Permanent Disability" shall mean the

<PAGE>
-3-

Employee's inability to perform his duties hereunder for a continuous period of
three (3) months or a total of more than six (6) months in any twelve (12) month
period by reason of his physical or mental illness or incapacity. In the event
of any dispute concerning the existence of a Permanent Disability, such question
shall be determined by a licensed physician selected by the Employer and
reasonably acceptable to the Employee, whose determination shall be final and
binding upon the parties. The Employee shall submit to such examinations and
furnish such information as such physician may reasonably request. The
Employee's employment hereunder may also be terminated:

(a) By the Employee at any time upon at least thirty (30) days
prior written notice to the Employer; or

(b) By the Employer at any time upon at least thirty (30) days
prior written notice to the Employee; or

(i) failure of the Employer to continue to employ the
Employee as Senior Vice President of Worldwide Sales of the
Employer; or

(ii) material diminution of the Employee's
responsibilities, duties or authorities as Senior Vice
President of Worldwide Sales of the Employer, or assignment to
the Employee of any responsibilities or duties inconsistent
with such positions; or

(iii) failure of the Employer to pay and provide to
the Employee the compensation provided for herein; or

(iv) requiring the Employee to be permanently based
anywhere other than the principal executive offices of the
Employer (excluding business-related travel to an extent
reasonably consistent with past practice); or

(d) By the Employer at any time for cause, including but not
limited to:

(i) the Employee's gross negligence or willful
misconduct with respect to the business and affairs of the
Employer; or

(ii) the Employee's material breach of this
Agreement; or

(iii) the commission by the Employee of an act
involving moral turpitude or fraud; or

<PAGE>
-4-

(iv) the Employee's conviction of any felony.

The provisions of Sections 6.2, 6.3, 7, 8, 9 and 10 shall survive any
termination of the Employee's employment hereunder and shall continue in effect
until such time as all obligations of the parties described therein have been
satisfied.

Section 6.2. COMPENSATION FOLLOWING TERMINATION; SEVERANCE PAY;
ACCELERATION OF STOCK OPTIONS.

(a) If the Employee terminates his employment pursuant to
Section 6.1(a) hereof, or if such employment is terminated by the death
or Permanent Disability of the Employee, the Employee shall not be
entitled to compensation, severance pay or fringe benefits beyond the
date upon which he ceases to be employed hereunder (the "EMPLOYMENT
TERMINATION DATE") except as may be otherwise provided in any then
existing insurance or health benefit programs of the Employer.

(b) If, within the six (6) month period following the
occurrence of an Acquisition or Change in Control (each as defined
below), the Employer terminates the employment of the Employee pursuant
to Section 6.1(b) hereof or the Employee terminates his employment
pursuant to Section 6.1(c) hereof, then:

(i) the Employee shall be entitled for a period of nine
(9) months from the Employment Termination Date, to continue to
receive payment of his Base Salary (as in effect on the Employment
Termination Date) at the same rate and on the same schedule as if
the Employee were still employed by the Employer during such
period; PROVIDED, HOWEVER, that each such payment shall be subject
to dollar-for-dollar reduction for any cash amounts received by
the Employee or accrued for his benefit from any successor
employer or other entity as payment for services rendered during
such nine (9) month period. During such nine (9) month period, the
Employer shall also continue to provide the Employee with such
health benefits as were provided to the Employee immediately prior
to the Employment Termination Date (or substantially comparable
benefits if a continuation of benefits is not permitted under then
existing insurance or health benefit programs of the Employer),
such benefits to be provided to the same extent and under the same
terms and conditions as if the Employee were still employed by the
Employer during such period. Except as specifically provided in
this Section 6.2(b), the Employee shall not be entitled to any
fringe benefits following the Employment Termination Date.

<PAGE>
-5-

(ii) each option to acquire shares of capital stock of the
Employer and each share of restricted capital stock of the
Employer then held by the Employee shall automatically and without
further action become fully vested, and each such option shall
remain exercisable until the expiration of such option or until it
sooner terminates in accordance with its terms; PROVIDED, HOWEVER,
that nothing in this Section 6.2(b) shall be applied so as to
restrict, impair or reduce in any way any other right that the
Employee may have from time to time with respect to the
acceleration of vesting of any option to acquire shares of capital
stock of the Employer or share of restricted capital stock of the
Employer then held by the Employee.

(c) If the Employer terminates the employment of the Employee
for cause pursuant to Section 6.1(d) hereof, the Employee shall not be
entitled to compensation, performance bonus or fringe benefits
hereunder beyond the Employment Termination Date.

(d) For purposes of this Section 6.2, the term "Acquisition"
shall mean:

(i) a merger, consolidation or similar transaction in
which securities possessing more than 50% of the total
combined voting power of the Employer's outstanding securities
are transferred to a person or persons different from the
persons who held those securities immediately prior to such
transaction, or

(ii) the sale, transfer, or other disposition of all
or substantially all of the Employer's assets to one or more
persons (other than any wholly owned subsidiary of the
Employer) in a single transaction or series of related
transactions.

(e) For purposes of this Section 6.2, the term "Change in
Control" shall mean a change in ownership or control of the Employer
effected through either of the following transactions:

(i) any person or related group of persons (other
than the Employer or a person that directly or indirectly
controls, is controlled by, or is under common control with
the Employer) directly or indirectly acquires beneficial
ownership (determined pursuant to Rule 13d-3 promulgated under
the Securities Exchange Act 1934, as amended) of securities
possessing more than 50% of the total combined voting power of
the Company's outstanding securities pursuant to a tender or
exchange offer made directly to the Employer's stockholders,
or

(ii) over a period of 36 consecutive months or less,
there is a change in the composition of the Board such that a
majority of the

<PAGE>
-6-

Board members (rounded up to the next whole number, if a
fraction) ceases, by reason of one or more proxy contests for
the election of Board members, to be composed of individuals
who either (A) have been Board members continuously since the
beginning of such period, or (B) have been elected or
nominated for election as Board members during such period by
at least a majority of the Board members described in the
preceding clause (A) who were still in office at the time such
election or nomination was approved by the Board.

Section 7. INTELLECTUAL PROPERTY MATTERS.

Section 7.1. INVENTIONS. All discoveries, inventions, improvements,
techniques, trademarks and innovations, whether or not patentable or subject to
copyright protection (including all data and records pertaining thereto), which
the Employee may invent, discover, originate or make during the term of his
employment with the Employer either alone or with others and whether or not
during working hours or by the use of facilities of the Employer, and which
relate to, or are, or may likely be useful in connection with the business of
the Employer ("INVENTIONS"), shall be the exclusive property of the Employer.
The Employee shall promptly and fully disclose Inventions to the Employer and
shall promptly record Inventions in such form as the Employer may request.

Section 7.2. ASSIGNMENTS. The Employee shall assign to the Employer all
right, title and interest to all Inventions reduced to writing, drawings or
practice by or for the Employee during the term of his employment. The Employee
shall execute upon the Employer's request at any time, and at the Employer's
sole expense, any applications, assignments and other documents that the
Employer may deem necessary or desirable to protect or perfect its rights,
including any patent rights in Inventions, and shall assist the Employer, at the
Employer's sole expense, in obtaining, defending and enforcing its rights
thereon. The Employee hereby appoints the Employer his attorney-in-fact for
purposes of effecting any assignments hereunder.

Section 7.3. CONFIDENTIAL INFORMATION. The Employee acknowledges that
all information acquired by the Employee from the Employer, its customers,
suppliers or others, or developed by the Employee alone or in conjunction with
others during the term of his employment which relate directly or indirectly to
the present or potential business of the Employer, including but not limited to
any ideas, formulae, processes, know-how, data, test results, raw materials,
prospective products or services, techniques, models, computer programs, plans,
schedules, sketches, notebooks drawings, process sheets, customer or supplier
lists, and financial information ("CONFIDENTIAL INFORMATION"), is a valuable and
unique asset of the Employer for the Employer's sole benefit. Except as set
forth below, the Employee shall not, at any time during or after the term of his

<PAGE>
-7-

employment, use for himself or others, or disclose or communicate to any person,
firm, corporation, association, or other entity for any reason or purposes
whatsoever (other than to Directors, officers and employees of the Employer in
the regular course of the Employer's business or to others subject to
appropriate confidentiality restrictions), any Confidential Information without
the prior written consent of the Employer; PROVIDED, HOWEVER, that the
confidentiality and nondisclosure provisions of this Section 7.3 shall not apply
to (i) a disclosure of any Confidential Information which, as of the time of
such disclosure, or thereafter, shall have become a part of the public knowledge
through no fault of the Employee, (ii) a disclosure of Confidential Information
by the Employee to a governmental entity in fulfillment of a legal obligation of
the Employee to such governmental authority, (iii) Confidential Information that
the Employee can establish was lawfully in his possession at the time of
disclosure by Employer and was not acquired, directly or indirectly, from
Employer and (iv) Confidential Information which Employee lawfully receives from
a third party, provided, however, that such Confidential Information was not
obtained by said third party, directly or indirectly, from the Employer.

Section 7.4. PROPRIETARY ITEMS. All originals, copies and summaries of
manuals, memoranda, notes, photographs, notebooks, records, reports, plans,
drawings and other documents or items of any kind concerning any matters
affecting or relating to the present or potential business of the Employer,
whether or not they contain Confidential Information, are, and shall continue to
be, the property of the Employer, and all of such documents or items in the
possession or control of the Employee shall be delivered to the Employer by the
Employee immediately upon the Employer's request or termination of the
Employee's employment hereunder.

Section 8. NON-COMPETITION.

In view of the unique nature of the business of the Employer and the
need of the Employer to maintain its competitive advantage in the industry
through the protection of its trade secrets and proprietary information, the
Employee agrees that during the term of his employment with the Employer and for
a period of one (1) year thereafter, the Employee shall not, directly or
indirectly, within the United States of America or its Territories or
Possessions or within any other country in which the Employer or any affiliate
of the Employer is engaged in or actively contemplating engaging in any activity
described below (i) engage in, (ii) own greater than a 5% interest in, be
employed by, or consult for, or act as an advisor to, any business, person or
entity which engages in, or (iii) otherwise participate in any way in, research,
development, manufacturing, marketing, selling or licensing activities, or in
any other activity, that may reasonably be deemed by the Employer to be in
competition with any activity in which the Employer or any subsidiary of the
Employer is then, or is then contemplating becoming, engaged in the field of
internet telephony. If at any

<PAGE>
-8-

time the foregoing provisions shall be deemed to be invalid or unenforceable or
are prohibited by the laws of the state or place where they are to be performed
by reason of being vague or unreasonable as to duration or place of performance,
this section shall be considered divisible and shall become and be immediately
amended to include only such time and such area as shall be determined to be
reasonable and enforceable by the court or other body having jurisdiction over
this Agreement; and the Employee and the Employer expressly agree that this
section, as so amended, shall be valid and binding as though any invalid or
unenforceable provision had not been included herein. The Employee further
agrees that during, and for a period of one (1) year after termination of, the
Employee's employment hereunder, he shall not solicit, or arrange to have any
other person or entity solicit, any person or entity engaged by the Employer as
an employee, customer, supplier, or consultant or advisor to, the Employer to
terminate such party's relationship with the Employer. The time periods provided
for in this Section 8 shall be extended for a period of time in which Employee
is in violation of any of the provisions of this Section 8.

Section 9. REMEDIES.

The Employer and Employee agree and acknowledge that the rights and
obligations set forth under this Agreement are of a unique and special nature
and that each party is, therefore, without an adequate legal remedy in the event
of the other party's violation of the covenants set forth in this Agreement. The
Employer and Employee agree, therefore, that the covenants made under this
Agreement shall be specifically enforceable in equity, in addition to all other
rights and remedies, at law or in equity or otherwise (including termination of
employment) that may be available to the parties.

Section 10. PROVISIONS OF GENERAL APPLICATION.

Section 10.1. DISPUTES. In the event of any dispute touching or
concerning this Agreement, the parties will submit to the exclusive jurisdiction
and venue of any court of competent jurisdiction sitting in Suffolk County,
Massachusetts, and the parties agree to comply with all requirements necessary
to give such court jurisdiction over the parties and the controversy. EACH PARTY
HEREBY WAIVES ANY RIGHT TO A JURY TRIAL AND TO CLAIM OR RECOVER PUNITIVE
DAMAGES.

Section 10.2. GOVERNING LAW. This Agreement and the rights and
obligations of the parties hereunder shall be construed, interpreted and
determined in accordance with the internal substantive laws of the Commonwealth
of Massachusetts (excluding choice of law or conflict of law provisions).

Section 10.3. COUNTERPARTS. This Agreement may be executed in any
number of counterparts, each of which shall be an original and all of which,
taken together,

<PAGE>
-9-

shall constitute one and the same document. In making proof of this Agreement it
shall not be necessary to produce or account for more than one such counterpart.

Section 10.4. OTHER AGREEMENTS. This Agreement represents the entire
understanding and agreement between the parties as to the subject matter hereof
and supersedes all prior or concurrent oral or written agreements relating
thereto.

Section 10.5. AMENDMENT. This Agreement may be amended only by a
written document executed in one or more counterparts by each of the parties
hereto.

Section 10.6. WAIVER. No consent to or waiver of any breach or default
in the performance of any obligation hereunder shall be deemed or construed to
be a consent to or waiver of any other breach or default in the performance of
any of the same or any other obligation hereunder. Failure on the part of either
party to complain of any act or failure to act of the other party or to declare
the other party in default, irrespective of the duration of such failure, shall
not constitute a waiver of rights hereunder and no waiver hereunder shall be
effective unless it is in writing, executed by the party waiving the breach or
default hereunder.

Section 10.7. ASSIGNMENT. This Agreement shall be binding upon and
inure to the benefit of the parties hereto and their successors and assigns.
This Agreement may be assigned by the Employer to any Affiliate (as hereinafter
defined) or to a successor to the portion of its business to which this
Agreement relates (whether by purchase or otherwise). For purposes of this
Agreement, "Affiliate" shall mean any person or entity which, directly or
indirectly, controls or is controlled by or is under common control with the
Employer and, for the purposes of this definition, "control" (including the
terms "controlled by" and "under common control with"), shall mean the
possession, directly or indirectly, of the power to direct or cause the
direction of the management and policies of another, whether through the
ownership of voting securities or holding of office in another, by contract or
otherwise. The Employee may not assign or transfer any of his rights or
obligations under this Agreement.

Section 10.8. HEADINGS. The headings of sections and subsections of
this Agreement have been inserted for convenience of reference only and shall
not be deemed to be a part of this Agreement or to affect the meaning of any of
its provisions.

Section 10.9. SEVERABILITY. If any provision of this Agreement shall,
in whole or in part, prove to be invalid for any reason, such invalidity shall
affect only the portion of such provision which shall be invalid, and in all
other respects this Agreement shall stand as if such invalid provisions, or the
invalid portion thereof, had not been a part hereof.

<PAGE>
-10-

IN WITNESS WHEREOF, this Agreement has been executed by the Employer,
by its duly authorized officer, and by the Employee, as of the Effective Date.

IBASIS, INC.

By: /s/ Ofer Gneezy
-----------------------------
Name: Ofer Gneezy
Title: President

EMPLOYEE

/s/ Charles Giambalvo
-----------------------------
Charles Giambalvo

<PAGE>

EXHIBIT 23.1

CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS

As independent public accountants, we hereby consent to the use of our report
(and to all references to our Firm) included in or made a part of this
registration statement.

/s/ Arthur Andersen LLP
-----------------------
ARTHUR ANDERSEN LLP

Boston, Massachusetts
March 7, 2000

<PAGE>

EXHIBIT 23.3

[LETTERHEAD OF SWIDLER BERLIN SHEREFF FRIEDMAN, LLP]

March 7, 2000

VIA OVERNIGHT MAIL

iBasis, Inc.
20 Second Avenue
Burlington, MA 01803

Re: Registration Statement on Form S-1

Gentlemen:

We hereby consent to being named under the caption "Legal Matters" in
the prospectus of iBasis (the "Company") included in the Registration
Statement on Form S-1 of the Company to be filed with the Securities and
Exchange Commission on or after the date hereof.

/s/ Andrew D. Lipman
------------------------------------
Andrew D. Lipman
Partner
Swidler Berlin Shereff Friedman, LLP