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Filed by ITXC Corp.
Pursuant to Rule 425 under the
Securities Act of 1933 and deemed
filed pursuant to Rule 14a-12 of the
Securities Act of 1934
Subject Company: ITXC Corp.
Commission File No.: 333-44248
First used on September 7, 2000
FREQUENTLY ASKED QUESTIONS REGARDING THE PROPOSED
ACQUISITION OF EFUSION, INC. BY ITXC CORP.
What are the details of the transaction?
ITXC Corp. (NASDAQ: ITXC) and privately-held eFusion, Inc. have signed a
definitive merger agreement providing for ITXC to acquire eFusion. The agreement
calls for eFusion's shareholders to receive a total of 5,658,986 shares of
ITXC's Common Stock plus additional ITXC shares to cover eFusion's unencumbered
cash on hand at the closing, which is estimated to be around $9,500,000. The
merger will be accounted for as a purchase and is expected to close this year.
At closing, eFusion will become a wholly owned subsidiary of ITXC and will
continue to be based in Beaverton, Oregon.
What is ITXC's principal purpose in acquiring eFusion?
We believe that, within ten years, all remote voice communication will be on the
Internet just as all email is on the Internet today. Just as email is both less
expensive and much more capable than snail mail, ecalling is both less expensive
and better than traditional phone calling. ITXC has demonstrated how effectively
the Internet can be used to lower the cost of traditional telephony and has
extended its network to over 60 countries in two years. eFusion's
Push-to-Talk(TM) (PtT) application shows how adding voice to a traditional web
application like browsing improves service, increases sales, and provides
capability that neither the web or the telephone network alone could provide.
We believe that these enhanced applications will deliver higher gross margins
than ITXC's current business. It has always been ITXC's intent to deliver both
high-volume and high-margin applications. The acquisition of eFusion speeds the
deployment of high-margin applications.
We believe that the combination of our two companies will be extremely well
positioned to lead the way in the transition of voice communication from the
traditional telephone network to the Internet. We believe that leading this
transition will build value for you, our combined stockholders. This is a huge
potential market in which each of our companies, on its own, is already a
leader. Combining our strengths is a strategy for growing faster and assuring
leadership.
Is the transaction subject to any conditions?
Yes, it is subject to a number of conditions, including approvals of both
companies' shareholders and other customary closing conditions.
Is a "collar" part of the agreement?
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No. There are no provisions for cancellation or renegotiation dependent on the
trading price of ITXC stock in either direction. The number of shares of ITXC
to be issued in return for eFusion is fixed other than the small adjustment for
eFusion cash at hand at the closing.
What will be the financial impact of the acquisition on ITXC?
We expect that the acquisition will accelerate our revenue growth with services
that have significantly higher margins than our basic service. Although the
combined company will have somewhat greater losses in the next few quarters than
ITXC would have had alone, we anticipate being able to fund the working capital
needs of the combined business from our existing cash on hand and do not expect
this combination to delay the quarterly period in which ITXC becomes EBITDA
positive.
What exactly is eFusion?
eFusion is an applications service provider that can rapidly deploy Internet
voice services to assist carriers, Internet service providers, and e-commerce
enterprises to provide their end-users with a richer, more fulfilling online
experience. By combining the power and economy of the Internet with the features
and benefits of the traditional telephone network, eFusion brings voice to the
Internet and delivers a range of applications that bridge the two networks.
eFusion currently offers two categories of Internet voice services:
. e-commerce Solutions. An e-commerce enterprise can implement eFusion's Push
to Talk service to facilitate live interaction between Internet web site users
and web site representatives or customer service personnel.
. Internet Subscriber Services. Using eFusion's Suite Adeline Internet call
assistant service, Internet service providers can enable their subscribers to
take incoming telephone calls while connected to the Internet over a single
telephone line, or, if a customer chooses, to forward a call to another
telephone or a voice mailbox.
What aspects of ITXC are particularly relevant to the combined companies?
ITXC has used the Internet to improve the economics of traditional phone-to-
phone calling and to provide worldwide reach for Web-to-phone calling. It has
built the world's largest Internet telephony network, ITXC.net(TM), and has
invented its patent-pending BestValue Routing(TM) technology to provide high
quality service over the Internet. ITXC.net had more than 270 points of presence
in over 60 countries at the beginning of August.
Customers use eFusion products over the Internet. Merchants who put Push-to-Talk
buttons on their web sites need assurance that their customers will get good
voice quality; they need a worldwide presence; we believe that ITXC.net delivers
this quality and reach.
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Further, ITXC has demonstrated its ability to scale services very quickly and
with good economics. After just two years of operation, ITXC delivered more
than 200 million minutes over ITXC.net.
What exactly is "ecalling"?
ecalling is the Internet successor to phone calling. With it, users are
reachable wherever they travel with a single ID - just as email users can be
reached anywhere with a single address. This "reach me" service integrates
phones, wireless, and computers. With ecalling, voice can be combined with other
forms of Internet communication like web browsing (Push to Talk) or email
(integrated messaging). The ecalling umbrella also covers devices like mobile
phones, laptops, desk phones, and PDAs all talking to each other on one
network...the Internet.
Does eFusion have a patent portfolio?
They do. The eFusion patent portfolio covers the above mentioned services and
other aspects of voice on the Internet and voice-enhanced e-commerce.
What does eFusion's client list look like?
They have been selling products to major companies. Some of those that have been
announced are US West (now QWEST) ; Duro Communications, a major ISP in the
South Eastern US; and Cameraworld.com, a major on-line reseller of camera
equipment.
Who are the strategic investors in eFusion?
Current eFusion shareholders include AT&T Ventures, Intel (which was also an
early investor in ITXC), France Telecom, Lucent, Microsoft and Telecom Italia.
What merger experience does ITXC have?
CEO Tom Evslin, CFO Ed Jordan, and COO John Musci have each been heavily
involved in several major acquisitions before they joined ITXC. They are
personally leading this effort.
Why did ITXC decide to purchase eFusion rather than developing the technology
internally or licensing it?
A company that wants to move at Internet speed needs to be willing to go outside
whenever externally-developed capability can shorten time to market. A "not
invented here" syndrome is a sure recipe for being beaten to market. The
eFusion technology appears to ITXC to be the best of breed in several quickly
growing markets even ignoring its strong patent protection, its market
beachheads, and the eFusion people. It is being used in actual revenue
generating service today.
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In many cases ITXC will license technology. For example, it licenses gateway
and gatekeeper software. However, ITXC believes that the capabilities developed
by eFusion in both the Push to Talk and Call Management areas and the interfaces
developed to link to the public switched telephone network are both
differentiating and important to success in these aspects of ecalling. ITXC
believes it will create greater shareholder value by owning these capabilities
rather than by licensing them. ITXC wants the people who built these
capabilities and have introduced them to the market on the ITXC team expanding
the beachheads and extending the products.
ITXC has filed a Registration Statement on SEC Form S-4 in connection with the
merger and both ITXC and eFusion expect to mail a Proxy Statement/Prospectus to
their shareholders containing information about the merger. Investors and
security holders are urged to read the Registration Statement and the Proxy
Statement/Prospectus carefully when they are available. The Registration
Statement and the Proxy Statement/Prospectus contain important information about
ITXC, eFusion, the merger and related matters. Investors and security holders
will be able to obtain free copies of these documents through the web site
maintained by the U.S. Securities and Exchange Commission at http//www.sec.gov.
In addition to the Registration Statement and the Proxy Statement/Prospectus,
ITXC files annual, quarterly and special reports, proxy statements and other
information with the Securities and Exchange Commission. You may read and copy
any reports, statements and other information filed by ITXC at the SEC public
reference rooms at 450 Fifth Street, N.W., Washington, D.C. 20549 or at the
Commission's other public reference rooms in New York, New York and Chicago,
Illinois. Please call the Commission at 1-800-SEC-0330 for further information
on public reference rooms. ITXC's filings with the Commission also are available
to the public from commercial document-retrieval services and at the web site
maintained by the Commission at http//www.sec.gov. eFusion, its directors,
executive officers and certain members of management and employees may be
soliciting proxies from eFusion's stockholders in favor of the adoption of the
merger agreement. Similarly, ITXC, its directors, executive officers, certain
members of management, certain employees and certain other representatives may
be soliciting proxies from ITXC's stockholders in favor of the merger. A
description of any interests that eFusion's and ITXC's directors and executive
officers have in the merger will be available in the Proxy Statement/Prospectus.
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