<PAGE>
As filed with the Securities and Exchange Commission on November 8, 2000
Registration No. 333-____
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
JFAX.COM, INC.
(Exact name of registrant as specified in our charter)
Delaware 4822 51-0371142
(State or Other Jurisdic- (Primary Standard Industrial (I.R.S. Employer
tion of Incorporation Classification Code Number) Identification Number)
or Organization)
________________________
JFAX.COM, Inc.
d.b.a. j2 Global Communications, Inc.
6922 Hollywood Boulevard
Suite 900
Hollywood, California 90028
(Address of principal executive offices)
(323) 860-9200
(Address, including zip code, and telephone number, including area code, of
registrant's principal executive offices)
Steven J. Hamerslag
Chief Executive Officer
6922 Hollywood Boulevard
Suite 900
Hollywood, California 90028
(Address of principal executive offices)
(323) 860-9200
(Name, address, including zip code, and telephone number, including area code,
of agent for service)
Copies to:
Frank H. Golay, Jr., Esq.
Sullivan & Cromwell
1888 Century Park East
Los Angeles, California 90067
Telephone: (310) 712-6600
Fax: (310) 712-8800
________________________
Approximate date of commencement of proposed sale to the public: From time
to time after this Registration Statement becomes effective.
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. [X]
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, check the following box and
list the Securities Act registration statement number of the earlier effective
registration statement for the same offering. [_]
1
<PAGE>
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 effective 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 effective 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. [_]
<TABLE>
<CAPTION>
CALCULATION OF REGISTRATION FEE
Proposed maximum Proposed maximum
Title of each class of Amount to be offering price per aggregate offering Amount of
securities to be registered registered unit price registration fee(4)
<S> <C> <C> <C> <C>
Common Stock, $.01 par value..... 1,158,770 shares $1.32 (1) $1,529,576 (1) $405
</TABLE>
(1) Estimated solely for the purpose of calculating the registration fee
pursuant to Rule 457(c), based on the average of the high and low prices of
the Common Stock of the Company as reported on the NASDAQ National Market
on September 21, 2000, multiplied by the amount of shares to be registered.
The Registrant hereby amends this Registration Statement on such date or
dates as may be necessary to delay our 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, or until the Registration Statement shall become
effective on such date as the Commission, acting pursuant to said Section 8(a),
may determine.
2
<PAGE>
Prospectus
RED HERRING TEXT
----------------
THE INFORMATION IN THIS PROSPECTUS IS NOT COMPLETE AND MAY BE CHANGED.
THESE SECURITIES MAY NOT BE SOLD UNTIL THE REGISTRATION STATEMENT FILED
WITH THE SECURITIES AND EXCHANGE COMMISSION IS EFFECTIVE. THIS PROSPECTUS
IS NOT AN OFFER TO SELL THESE SECURITIES AND IT IS NOT SOLICITING AN OFFER
TO BUY THESE SECURITIES IN ANY STATE WHERE THE OFFER OR SALE IS NOT
PERMITTED.
Subject to Completion, dated ___________, 2000.
1,158,770 Shares
JFAX.COM, Inc. Common Stock
This is an offering of shares of common stock of JFAX.COM, Inc. from time
to time by the selling stockholders.
Our common stock is listed on the Nasdaq National Market under the symbol
"JCOM."
The last reported sales price of the common stock on November 7, 2000 was
$0.94 per share.
YOU SHOULD READ THE RISK FACTORS BEGINNING ON PAGE 3 IN THIS PROSPECTUS
BEFORE PURCHASING SHARES OF OUR COMMON STOCK.
The selling stockholders may from time to time offer and sell the shares
held by them directly or through agents or dealers at market prices or on other
sale terms determined by them. To the extent required, we will disclose in a
prospectus supplement the names of any agent or dealer, applicable commissions
or discounts and any other required information with respect to any particular
offer. See "Plan of Distribution."
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
Our principal executive offices are located at 6922 Hollywood Blvd., Suite
900, Los Angeles, CA and our telephone number is (323) 860-9200. The date of
this prospectus is November 8, 2000.
<PAGE>
Other than in the United States, neither we nor the selling stockholders
have taken any action in any jurisdiction that would permit a public offering of
our common stock. No offer or sale of shares of our common stock may be made in
any jurisdiction outside the United States, except under circumstances that will
result in compliance with the applicable laws of that jurisdiction. We and the
selling stockholders require persons to whom this prospectus comes to inform
themselves about, and to observe, any restrictions as to the offering of shares
of our common stock and the distribution of this prospectus in jurisdictions
outside the United States.
The shares of common stock offered by this prospectus may not be offered or
sold in or into the United Kingdom, except to persons whose ordinary activities
involve them in acquiring, holding, managing or disposing of investments, as
principal or agent, for the purposes of their businesses or otherwise in
circumstances that do not constitute an offer to the public in the United
Kingdom for the purposes of the Public Offers of Securities Regulations 1995.
This prospectus may only be issued or passed on in or into the United Kingdom to
any person to whom this prospectus may lawfully be issued or passed on by reason
of, or of any regulation made under, Section 58 of the Financial Services Act
1986.
You should rely only on the information or representations provided in this
prospectus or incorporated by reference into this prospectus. We have not
authorized anyone to provide you with any different information or to make any
different representations in connection with any offering made by this
prospectus. This prospectus does not constitute an offer to sell, or a
solicitation of an offer to buy, in any state where the offer or sale is
prohibited. Neither the delivery of this prospectus, nor any sale made under
this prospectus shall, under any circumstances, imply that the information in
this prospectus is correct as of any date after the date of this prospectus.
INFORMATION AVAILABLE TO YOU
Our annual, quarterly and special reports, proxy statements and other
information are filed with the SEC as required by the Securities Exchange Act of
1934. You may inspect and copy these reports, proxy statements and other
information at the public reference facilities maintained by the SEC at Room
1024, Judiciary Plaza, 450 Fifth Street, N.W., Washington, D.C. 20549, and at
the SEC's regional offices located at Seven World Trade Center, Suite 1300, New
York, New York 10048, and at Citicorp Center, 500 West Madison Street, Suite
1400, Chicago, Illinois 60661-2511. You may also obtain copies of these
materials by mail from the Public Reference Section of the SEC at Judiciary
Plaza, 450 Fifth Street, N.W., Washington, D.C. 20549, at prescribed rates. The
SEC also maintains an Internet web site that contains reports, proxy and
information statements and other information regarding registrants that file
electronically with the SEC at the Internet web site address:
http://www.sec.gov.
Our common stock is listed on the Nasdaq National Market, and you may also
inspect and copy these reports, proxy statements and other information at the
Offices of The Nasdaq Stock Market, 1735 K Street, N.W., Washington DC 20006.
This prospectus provides you with a general description of the common stock
being registered. This prospectus is part of a registration statement that we
have filed with the SEC. To see more detail, you should read the exhibits and
schedules filed with our registration statement. You may obtain copies of the
registration statement and the exhibits and schedules to the registration
statement as described above.
2
<PAGE>
RISK FACTORS
An investment in our common stock involves a high degree of risk. You
should consider the following factors carefully before deciding to purchase
shares of our common stock. Many of the following factors discuss risks
associated with our pending merger with eFax.com ("eFax.com").
Because we have a limited operating history, it is difficult to evaluate our
business
We have a limited operating history. We were formed in December 1995, and
our services became commercially available in 1996. Because of our limited
operating history, you have limited operating and financial data about the
company upon which to base an evaluation of our performance and an investment
in our common stock or other securities. You should consider our prospects in
light of the risks, expenses and difficulties it may encounter, including those
frequently encountered by new companies competing in rapidly evolving markets.
These risks include our ability to:
[_] Acquire businesses and technologies;
[_] Integrate the operations of the companies that it has recently
acquired;
[_] Integrate the operations of eFax.com;
[_] Manage growing domestic and international operations;
[_] Create and maintain strategic relationships;
[_] Expand sales and marketing activities;
[_] Expand our customer base and retain key clients;
[_] Introduce new services;
[_] Compete in a highly competitive market;
[_] Upgrade our systems and infrastructure to handle any increases in
messaging traffic;
[_] Reduce service interruptions; and
[_] Recruit and retain key personnel.
If we are unable to execute our plans and grow our business, either as a
result of the risks identified in this section or for any other reason, this
failure would have a material adverse effect on our business, prospects,
financial condition and results of operations.
We expect our losses and negative cash flow to continue, which may aversely
impact our business and our stockholders
We have incurred substantial operating losses, net losses and negative cash
flows on both an annual and quarterly basis. For the year ended December 31,
1999, we had an operating loss of $13.2 million, a net loss attributable to
common shares of $19.0 million and negative cash flow from operating activities
of $12.1 million. For the six-months ended June 30, 2000, we had an operating
loss of $12.7 million, a net loss attributable to common shares of $11.2 million
and negative cash flow from operating activities of $6.2 million. We expect to
continue to incur net losses for the foreseeable future and cannot assure you
that it will ever achieve profitability or generate positive cash flow.
3
<PAGE>
We expect our expenses to increase, and our expenses may exceed our revenues for
a significant period, which could delay or prevent altogether our achieving
profitability, and harm our stockholders
We expect our operating expenses and capital expenditures to increase
significantly, especially in the areas of sales and marketing expenses,
engineering expenses, operating and infrastructure expenses and general and
administrative expenses, as it develops and expands our business. As a result,
we will need to increase our revenue significantly and/or reduce expenses to
become profitable. In order to grow our revenue, we need to add customers for
our services and increase the usage of our services by our customers, thereby
increasing the fees and usage charges that we collect. If our revenue does not
increase as much as we expect or if increases in our expenses are in excess of
our projections, there could be a material adverse effect on our business,
prospects, financial condition and results of operations.
We may need and be unable to obtain additional funding on satisfactory terms,
which could dilute our stockholders or impose burdensome financial restrictions
on our business
If our capital requirements or revenue vary materially from our current
plans or if unforeseen circumstances occur, we may require additional financing
sooner than we anticipate. This may not be available on a timely basis, in
sufficient amounts or on terms acceptable to us. Recently, a number of Internet
companies, including eFax.com, have had difficulty obtaining financing. Any new
financing may also dilute existing stockholders. Any debt financing or other
financing of securities senior to common stock will likely include financial and
other covenants that will restrict our flexibility. At a minimum, we expect
these covenants to include restrictions on our ability to pay dividends on our
common stock. Any failure to comply with these covenants would have a material
adverse effect on our business, prospects, financial condition and results of
operation. Further acquisitions could result in dilution, operating difficulties
and other harmful consequences
We may acquire or invest in additional businesses, products, services and
technologies that complement or augment our service offerings and customer
base. Since January 2000, we have completed the acquisition of one company
(SureTalk.com, Inc.) and certain assets of another company (TimeShift, Inc.).
Pursuant to our pending merger agreement, we will acquire eFax.com if the
transaction is approved by the stockholders of both companies and the conditions
to closing are met. We will need to identify suitable acquisition candidates,
integrate disparate technologies and corporate cultures and manage a
geographically dispersed company. We cannot assure you that it will be able to
do this successfully. Acquisitions could divert attention from other business
concerns and could expose we to unforeseen liabilities. In addition, we may
lose key employees while integrating any new companies. We expect to pay for
some acquisitions by issuing additional common stock, which would dilute current
stockholders. We may also use cash to make acquisitions. It may be necessary
for we to raise additional funds through public or private financings. We
cannot assure you that we will be able to raise additional funds at any
particular point in the future or on favorable terms. In addition, we may be
required to amortize significant amounts of goodwill and other intangible assets
in connection with future acquisitions, which would materially increase
operating expenses.
We will face technical, operational and strategic challenges that may prevent it
from successfully integrating SureTalk.com and TimeShift
Acquisitions involve risks related to the integration and management of
acquired technology, operations and personnel. The integration of SureTalk.com,
Inc. and TimeShift, Inc. into our business has been and will be a complex, time
consuming and expensive process and may disrupt our business if not completed in
a timely and efficient manner. We must operate as a combined organization
utilizing common information and communication systems, operating procedures,
financial controls and human resources practices. We may encounter substantial
difficulties, costs and
4
<PAGE>
delays involved in integrating the operations of our subsidiaries and
businesses, including:
[_] Potential incompatibility of business cultures;
[_] Perceived adverse changes in business focus;
[_] Potential conflicts in advertising or strategic relationships; and
[_] The loss of key employees and diversion of the attention of
management from other on-going business concerns.
Consequently, we may not be successful in integrating acquired businesses or
technologies and may not achieve anticipated revenue and cost benefits. We also
cannot guarantee that these acquisitions will result in sufficient revenues or
earnings to justify our investment in, or expenses related to, these
acquisitions or that any synergies will develop. If we fail to execute our
acquisition strategy successfully for any reason, our business will suffer
significantly.
We have experienced rapid growth which has placed a strain on resources and our
failure to manage growth could cause our business to suffer
We have expanded our operations rapidly and intends to continue this
expansion. The number of our employees increased from 68 on December 31, 1998 to
over 100 on July 31, 2000. This expansion has placed, and is expected to
continue to place, a significant strain on managerial, operational and financial
resources. To manage any further growth, we will need to improve or replace our
existing operational, customer service and financial systems, procedures and
controls. Any failure to properly manage these systems and procedural
transitions could impair our ability to attract and service customers, and could
cause it to incur higher operating costs and delays in the execution of our
business plan. We will also need to continue the expansion of our operations
and employee base. Our management may not be able to hire, train, retain,
motivate and manage required personnel. In addition, our management may not be
able to successfully identify, manage and exploit existing and potential market
opportunities. If we cannot manage growth effectively, our business and
operating results could suffer.
We may not be able to respond to the rapid technological change of the Internet
messaging and communications industry
The Internet messaging and communications industry is characterized by
rapid technological change, changes in user and customer requirements and
preferences, and the emergence of new industry standards and practices that
could render our existing services, proprietary technology and systems obsolete.
We must continually improve the performance, features and reliability of our
services, particularly in response to competitive offerings. Our success
depends, in part, on our ability to enhance our existing messaging and
communications services and to develop new services, functionality and
technology that address the increasingly sophisticated and varied needs of
prospective subscribers. If we do not properly identify the feature preferences
of prospective subscribers, or if we fail to deliver features which meet the
standards of these subscribers, our ability to market our service successfully
and to increase revenues could be impaired. The development of proprietary
technology and necessary service enhancements entail significant technical and
business risks and require substantial expenditures and lead-time. We may not
be able to keep pace with the latest technological developments. We may also be
unable to use new technologies effectively or adapt services to customer
requirements or emerging industry standards.
If we do not successfully address service design risks, our reputation could be
damaged and our business and operating results could suffer
We must accurately forecast the features and functionality required by
target subscribers. In addition, we must design and implement service
enhancements that
5
<PAGE>
meet customer requirements in a timely and efficient manner. We may not
successfully determine customer requirements and may be unable to satisfy
subscriber demands. Furthermore, we may not be able to design and implement a
service incorporating desired features in a timely and efficient manner. In
addition, if any new service we launch is not favorably received by customers
and end-users, our reputation could be damaged. If we fail to accurately
determine customer feature requirements or service enhancements or to market
services containing such features or enhancements in a timely and efficient
manner, our business and operating results could suffer materially.
We cannot predict whether it will be successful because our business model is
unproven and our market is developing
Our business strategy is unproven, and it is too early to reliably gauge
market penetration rates for our services. To date, we have not established a
definite demand or a reliable cost to add a subscriber for these services. In
addition, there can be no assurance that we will be successful in the offering
of any additional services that it is currently planning. If the demand is
lower than anticipated, or the cost to add a subscriber is higher, our business,
prospects, financial condition and results of operations would be materially and
adversely affected.
Other companies are offering free services supported by advertising, which may
cause subscribers to become unwilling to pay for our services
Many services provided over the Internet are provided free of charge to
attract traffic to the service provider's web site. These free services include
free voice-mail, free e-mail and free facsimile-to-e-mail services, which are
being offered by other companies in competition with our services. The
providers of free services attempt to recover their expenses and make a profit
by selling advertising based on the traffic generated from users of free
services. For example, free voice-mail may require users to listen to taped ads
before they can access their messages. We expect that as these free services
become popular with consumers, they will require our subscription services to
provide clear incremental benefits over free services to justify paying for our
services. In addition, to the extent free services of another provider are used
by a potential customer of ours, it may be harder for us to persuade that
potential customer to try our services.
Our failure to achieve or sustain market acceptance at desired pricing levels
could impair our ability to achieve profitability or positive cash flow
The widespread availability of free services, including our own, may result
in consumers being unwilling to pay for messaging services. Even if customers
are willing to pay for these services to avoid the advertising associated with
free services, or to obtain the benefits of unified messaging in our complete
form, we expect prices in our industry will continue to fall. Therefore we may
need to reduce prices for our existing and future services. We cannot predict
whether our pricing schedule will prove to be viable, whether demand for our
services will materialize at the prices we expect to charge or whether we will
be able to sustain adequate future pricing levels as competitors introduce
competing services, including free services. Customers may be unwilling to pay
our prices, either because they find free services to be satisfactory, or
because they find other paid services to offer better value for the cost
involved. The prices for our services are in some cases higher than those
charged by our competitors. Our failure to achieve or sustain desired pricing
levels would have a material adverse effect on our business, prospects,
financial condition and results of operations.
The recent introduction of free fax services may harm our business
In 1999, we introduced free services. We expect to generate revenues from
our free service customers by selling them additional services for which charges
are usage-based. We will also encourage free service customers to convert to
paid
6
<PAGE>
subscriptions. We have a limited track record from which to predict levels of
revenue to be achieved from customers who are attracted by our free services.
The availability of free services may cause some of our paying customers to
switch to our free services and discontinue their payments to us. We introduced
our free services principally as a promotional tool, and partially in response
to the introductions by competing companies. We expect the trend for free
services will continue in our industry. There can be no assurance that the
recent introduction of these competing services will not have a material adverse
effect on our business, prospects, financial condition and results of
operations.
Our operating results in one or more future periods are likely to fluctuate
significantly and may negatively impact our stock price
Our annual and quarterly operating results may fluctuate significantly in
the future as a result of numerous factors, including:
[_] The rate at which we are able to add subscriptions and sell
additional usage-based services to both free and paid customers of
our subscription services;
[_] The amount and timing of expenditures to form strategic
relationships, to enhance sales and marketing and to expand our
infrastructure;
[_] Technical difficulties, system failures or network downtime;
[_] Delays in implementing strategic alliances or loss of strategic
alliances; and
[_] Economic and competitive conditions specific to our industry.
As a result, it is likely that in some future periods our operating results will
be below the expectations of securities analysts and investors. If this
happens, the trading price of our common stock would likely be materially
adversely affected.
If we fail to expand and adapt our network infrastructure, our business may be
harmed
We must continue to expand and adapt our network infrastructure, both
domestically and internationally, as the number of customers and the volume of
messages they wish to transmit increases. The expansion and adaptation of our
network infrastructure will require substantial financial, operational and
management resources, even if the expansion is primarily for our free service
offerings. There can be no assurance that we will be able to expand or adapt
our network infrastructure to meet any additional demand on a timely basis, at a
commercially reasonable cost or at all. In addition, future growth in our
subscriber base for both free and paid services, together with growth in the
subscriber bases of other companies which have recently introduced free
facsimile-to-e-mail services and other Internet-dependent services, will
increase the demand for available network infrastructure and Internet data
transmission capacity. This could lead to insufficient capacity and an
inability on our part to accommodate our future growth. Insufficient network
capacity could lead to a reduction in the reliability of our services. Since
customers will not tolerate a service hampered by slow delivery times or
unreliable service levels, insufficient network capacity could have a material
adverse effect on our business, prospects, financial condition and results of
operations.
Our business could suffer if it cannot obtain telephone numbers
Our future success will depend upon our ability to procure large quantities of
telephone numbers in the United States and foreign countries
Our ability to procure telephone numbers depends on applicable regulations,
the practices of telecommunications carriers that provide telephone numbers and
the level of demand for new telephone numbers. Failure to obtain these numbers
in a
7
<PAGE>
timely and cost-effective manner may prevent us from entering some foreign
markets or hamper our growth in domestic markets, and may have a material
adverse effect on our business, prospects, financial condition and results of
operations. Our ability to procure large quantities of phone numbers will be
particularly limited in area codes of large metropolitan areas, and we may at
some point be unable to provide our customers with phone numbers in the most
desirable area codes (e.g., 212 in Manhattan and 171 in London) in such areas,
having to rely instead on new area codes created for these areas. We do not
allow customers of our free services to choose the area code for the phone
number it provides, and to some extent this makes our free services less
attractive, particularly in comparison to our subscription services, or
subscription services provided by others where the customer may select an area
code. In addition, future growth in our subscriber base for both free and paid
services, together with growth in the subscriber bases of providers of free fax
to e-mail services, will increase the demand for large quantities of telephone
numbers, which could lead to insufficient capacity and an inability on our part
to acquire the necessary phone numbers to accommodate our future growth.
Any failure of the Internet as a message transmission medium could harm our
business
Our future success will depend upon our ability to route our customers'
traffic through the Internet and through other data transmission media. For our
services, other data transmission media include fiber optic or copper lines
owned and operated by third parties, with portions of the capacity on these
media being dedicated for our use. Our success is largely dependent upon the
viability of the Internet as a medium for the transmission of documents. We
also depend on the continued operation of a user's e-mail system. To date, we
have transmitted a limited amount of customer traffic. There can be no
assurance that these will prove to be viable communications media, that document
transmission will be reliable or that capacity constraints which inhibit
efficient document transmission will not develop. We access the Internet and
other data transmission media through dedicated or shared connections to third
party service providers. In many cases, we pay fixed monthly fees for Internet
and other access, regardless of our usage or the volume of our customers'
traffic. There can be no assurance that the current pricing structure for
access to and use of these media will not change unfavorably and, if the pricing
structure changes unfavorably, our business, prospects, financial condition and
results of operations could be materially and adversely affected.
If the Internet stops growing, our business will suffer
Our future success is substantially dependent upon continued growth in the
use of the Internet in order to support the sale of our services. There can be
no assurance that the number of Internet users will continue to grow. As is
typical in the case of a new and rapidly evolving industry, demand and market
acceptance for recently introduced services are subject to a high level of
uncertainty. The Internet may not prove to be a viable avenue to transmit
communications for a number of reasons, including lack of acceptable security
technologies, lack of access and ease of use, traffic congestion, inconsistent
quality or speed of service, potentially inadequate development of the necessary
infrastructure, excessive governmental regulation, uncertainty regarding
intellectual property ownership or lack of timely development and
commercialization of performance improvements, including high-speed modems.
The market may not switch to our services due to concerns about the reliability
of Internet communications, which may significantly impair our business and
prevent the execution of our business plan
Our ability to route existing customers' traffic through the Internet and
to sell our services to new customers may be inhibited by, among other factors,
the reluctance of some customers to switch from traditional fax delivery to
delivery over the Internet, and by widespread concerns over the adequacy of
security in the exchange of information over the Internet. Additionally, there
may be delays in any transmission over the Internet which may result in our
service being regarded as
8
<PAGE>
less timely than a traditional fax delivery. If our existing and potential
customers do not accept delivery through the Internet as a means of sending and
receiving documents via fax, our business, prospects, financial condition and
results of operations would be materially and adversely affected. In addition,
we face similar risks regarding the market acceptance of the delivery of
customers' voice-mail messages and "real time" voice communications over the
Internet. As a result, our business, prospects, financial condition and results
of operations may be materially and adversely affected.
Our business may be constrained because it supports a limited number of
operating system platforms
Our services can be utilized only by those users whose computers are run by
Windows 3.1, Windows 95, Windows 98, Windows NT, Macintosh and UNIX operating
systems. Since there are other operating system platforms, we cannot provide
our services to all potential customers for our services. To the extent other
operating systems proliferate in the future, our ability to attract new
customers and keep existing customers could be significantly impaired.
The market in which we operate is highly competitive, and we may be unable to
compete successfully against new entrants and established industry competitors
with significantly greater financial resources
Competition in the converging Internet and telecommunications industries is
becoming increasingly intense. We face competition for our services from, among
others, voice-mail providers, fax providers, paging companies, Internet service
providers, e-mail providers and telephone companies. The recent trend of
competitors of we providing free services has increased these competitive
pressures. We have responded to this trend by introducing our own free
services. Competitive pressures may impair our ability to achieve
profitability. The increased competition may also make it more difficult for we
to successfully enter into strategic relationships with major companies,
particularly if our goal is to have an exclusive relationship with a particular
company. We compete against other companies that provide one or more of the
services that we do. In addition, these competitors may add services to their
offerings to provide unified messaging services comparable to ours. Future
competition could come from a variety of companies both in the Internet industry
and the telecommunications industry, which could include some of our strategic
alliances. These industries include major companies which have much greater
resources than we do, have been in operation for many years and have large
subscriber bases. These companies may be able to develop and expand their
communications and network infrastructures more quickly, adapt more swiftly to
new or emerging technologies and changes in customer requirements, take
advantage of acquisition and other opportunities more readily and devote greater
resources to the marketing and sale of their products and services than we can.
There can be no assurance that additional competitors will not enter markets
that we plans to serve or that it will be able to compete effectively.
We may have difficulty in retaining our customers, which may prevent our long
term success
Our sales and marketing and other costs of acquiring new subscriptions are
substantial relative to the monthly fees derived from subscriptions.
Accordingly, we believes that our long-term success depends largely on our
ability to retain our existing customers while continuing to attract new ones.
We continue to invest significant resources in our network infrastructure and
customer and technical support capabilities to provide high levels of customer
service. We cannot be certain that these investments will maintain or improve
customer retention. We believe that intense competition from our competitors,
some of which offer free service or other enticements for new subscriptions, has
caused, and may continue to cause, some of our customers to switch to our
competitors' services. In addition, some new customers use the Internet only as
a novelty and do not become consistent users of Internet services and,
therefore, may be more likely to discontinue their service. These factors
adversely affect our customer retention rates. Any decline
9
<PAGE>
in customer retention rates could have a material adverse effect on our
business, prospects, financial condition and results of operations.
The messaging and communications industry is undergoing rapid technological
changes and new technologies may be superior to the technologies we use
The messaging and communications industry is subject to rapid and
significant technological change. We cannot predict the effect of technological
changes on our business. Additionally, widely accepted standards have not yet
developed for the technologies we use. We expect that new services and
technologies will emerge in the market in which we compete. These new services
and technologies may be superior to the services and technologies that we us or
these new services may render our services and technologies obsolete. In
addition, these services and technologies may not be compatible or operate in a
manner sufficient for us to execute our business plan, which could have a
material adverse effect on our business, prospects, financial condition and
results of operations.
A system failure or breach of network security could delay or interrupt service
to our customers
Our operations are dependent on our ability to protect our network from
interruption by damage from fire, earthquake, power loss, telecommunications
failure, unauthorized entry, computer viruses or other events beyond our
control. There can be no assurance that our existing and planned precautions of
backup systems, regular data backups and other procedures will be adequate to
prevent significant damage, system failure or data loss. Despite the
implementation of security measures, our infrastructure may also be vulnerable
to computer viruses, hackers or similar disruptive problems caused by our
customers or other Internet users. Persistent problems continue to affect
public and private data networks, including computer break-ins and the
misappropriation of confidential information. Computer break-ins and other
disruptions may jeopardize the security of information stored in and transmitted
through the computer systems of the individuals and businesses utilizing our
services, which may result in significant liability to we and also may deter
current and potential customers from using our services. Any damage, failure or
security breach that causes interruptions or data loss in our operations or in
the computer systems of our customers could have a material adverse effect on
our business, prospects, financial condition and results of operations.
Our software may have defects and we may encounter development delays
Software-based services and equipment, such as our services, may contain
undetected errors or failures when introduced or when new versions are released.
There can be no assurance that, despite testing by we and by current and
potential customers, errors will not be found in our software after commercial
release, or that it will not experience development delays, resulting in delays
in market acceptance, any of which could have a material adverse effect on our
business, prospects, financial condition and results of operations.
We depend on third parties to market our services, and the failure by these
third parties to market our services may hinder our marketing efforts
Currently, we rely on third parties, including e-mail providers, Internet
service providers, online service providers and telecommunications companies as
a means of marketing our services. We are also in the early stages of marketing
our services through systems integrators. Systems integrators are businesses
that bundle our services with services of other companies to be sold as a
convenient package of services to the customer. In the event of any prolonged
technical problems or failures experienced by these third parties or the
termination of these marketing agreements, our marketing capabilities would be
significantly hindered, which could have a detrimental effect on our business,
prospects, financial condition or results of operations. For example, our
failure to achieve technical integration with America Online's e-mail system
resulted in a renegotiation of our agreement with America Online and a
suspension of our advertising on America Online from late 1998 through 2000.
This resulted in a reduction in our America Online
10
<PAGE>
subscribers, from over 4,000 net additions in 1998 to an approximately 1,400 net
reduction in 1999. Many of these relationships are terminable at will or upon
short notice. Furthermore, none of our relationships with these third parties
includes long-term contractual commitments to continue the relationship, and
many of these relationships are in the early stages of development. Because many
of our strategic allies view unified messaging as important to their future,
they may elect to directly compete with we in the provision of unified messaging
services. In addition, our success in developing an international customer base
depends on the formation of alliances with foreign companies and their ability
to successfully market our services. In any relationship with a third party,
particularly internationally, there may be difficulties in integrating or
coordinating our services and systems with those of the other party. The failure
to form and maintain these strategic alliances or the failure of these companies
to successfully develop and sustain a market for our services could have a
material adverse effect on our business, prospects, financial condition and
results of operations.
Our success depends on our retention of our executive officers and our ability
to hire and retain additional key personnel
Our success depends on the skills, experience and performance of senior
management and other key personnel, many of whom have worked together for only a
short period of time. For example, our President and Chief Executive Officer
and Chief Technology Officer have joined us since the beginning of 2000. The
loss of the services of one or more of our executive officers or other key
employees could have a material adverse effect on our business, prospects,
financial condition and results of operations. Our future success also depends
on our continuing ability to attract and retain highly qualified technical,
sales and managerial personnel. Competition for these personnel is intense, and
there can be no assurance that we can retain our key employees or that it can
attract, assimilate or retain other highly qualified technical, sales and
managerial personnel in the future.
Our international operations are exposed to regulatory, management, credit card,
currency and other risks that may prevent we from being successful in
international markets
At the end of 1999, foreign telephone numbers represented a significant
portion of our total telephone numbers. These foreign numbers were sold through
our U.S. web site. We intend to continue to expand into international markets
and to spend significant financial and managerial resources to do so. If
revenues from international operations do not exceed the expense of establishing
and maintaining these operations, our business, financial condition and
operating results will suffer. At present, we have international operations in
Australia, Canada, Finland, France, Germany, Ireland, Italy, Japan, the
Netherlands, New Zealand, Switzerland and the United Kingdom. We have limited
experience in international operations and may not be able to compete
effectively in international markets. International sales are subject to
inherent risks, including:
[_] Unexpected changes in regulatory requirements and tariffs;
[_] A more complex process to acquire telephone numbers;
[_] Difficulties in staffing and managing foreign operations;
[_] The possibility of subsidization of our competitors and the
nationalization of business;
[_] Longer payment cycles and greater difficulty in accounts receivable
collection;
[_] Differing technology standards;
[_] Potentially adverse tax consequences;
11
<PAGE>
[_] Imposition of currency exchange controls; and
[_] Greater exposure to credit card fraud due to weaker forms of
verification when compared to domestic credit card controls.
To the extent the services we sell are priced and paid for in foreign
currencies, gains and losses on the conversion into U.S. dollars of cash,
receivables and payables arising from international operations could in the
future contribute to fluctuations in our results of operations. Additionally,
fluctuations in exchange rates could adversely affect demand for our services
and have a material adverse effect on our business, prospects, financial
condition and results of operations.
The price of our common stock may decline due to shares eligible for future sale
As of September 15, 2000, we had approximately 36.1 million shares of
common stock outstanding. Most of these shares are available for sale, subject
to compliance with Rule 144 in certain cases. Sales of a substantial number of
shares of common stock in the public market could cause the market price of we
common stock to decline. Assuming, for example only, an exchange ratio of 0.281
then, immediately after our merger with eFax.com, approximately 49.1 million
shares of our common stock or shares of we common stock which can be acquired
upon the exercise of warrants exercisable at $0.01 per share issued by us in the
merger will be eligible for resale either without registration or under
registration statements that we have filed or will file to meet our registration
rights obligations.
Anti-takeover provisions could negatively impact our stockholders
Provisions of Delaware law and of our certificate of incorporation and
bylaws could make it more difficult for a third party to acquire control of us.
For example, we are subject to Section 203 of the Delaware General Corporation
Law which would make it more difficult for another party to acquire us without
the approval of our board of directors. Additionally, our certificate of
incorporation authorizes our board of directors to issue preferred stock without
requiring any stockholder approval, and preferred stock could be issued as a
defensive measure in response to a takeover proposal. These provisions could
make it more difficult for a third party to acquire we even if an acquisition
might be in the best interest of our stockholders.
Our stock price may be volatile or may decline
Our stock price and trading volumes have been highly volatile since our
initial public offering on July 23, 1999. We expect that this volatility will
continue in the future due to factors such as:
[_] Assessments of our progress in adding paid subscriptions or free
customers, and comparisons of our results in these areas versus
our competitors;
[_] Variations between our actual results and analyst and investor
expectations;
[_] New service or technology announcements by us or others, and
regulatory or competitive developments affecting our markets;
[_] Investor perceptions of us and comparable public companies;
[_] Conditions and trends in the communications, messaging and Internet
related industries;
[_] Announcements of technological innovations and acquisitions;
[_] Introduction of new services by we or our competitors;
12
<PAGE>
[_] Developments with respect to intellectual property rights;
[_] Conditions and trends in the Internet and other technology
industries; and
[_] General market conditions.
In addition, the stock market has from time to time experienced significant
price and volume fluctuations that have affected the market prices for the
common stocks of technology companies, particularly Internet companies. These
broad market fluctuations may result in a material decline in the market price
of our common stock. In the past, following periods of volatility in the market
price of a particular company's securities, securities class action litigation
has often been brought against that company. We may become involved in this
type of litigation in the future. Litigation is often expensive and diverts
management's attention and resources, which could have a material adverse effect
on our business and operating results.
We may have liability for Internet content and we may not have adequate
liability insurance
As a provider of messaging and communications services, we face potential
liability for defamation, negligence, copyright, patent or trademark
infringement and other claims based on the nature and content of the materials
transmitted via our services. We do not and cannot screen all of the content
generated by our users, and it could be exposed to liability with respect to
this content. Furthermore, some foreign governments, such as Germany, have
enforced laws and regulations related to content distributed over the Internet
that are more strict than those currently in place in the United States.
Although we carry general liability and umbrella liability insurance, our
insurance may not cover claims of these types or may not be adequate to
indemnify us for all liability that may be imposed. There is a risk that a
single claim or multiple claims, if successfully asserted against we, could
exceed the total of our coverage limits. There is also a risk that a single
claim or multiple claims asserted against us may not qualify for coverage under
our insurance policies as a result of coverage exclusions that are contained
within these policies. Should either of these risks occur, capital contributed
by our stockholders may need to be used to settle claims. Any imposition of
liability, particularly liability that is not covered by insurance or is in
excess of insurance coverage, could have a material adverse effect on our
reputation and business and operating results, or could result in the imposition
of criminal penalties.
Inadequate intellectual property protections could prevent us from enforcing or
defending our proprietary technology
Our success depends to a significant degree upon our proprietary
technology. We rely on a combination of trademark, trade secret and copyright
law and contractual restrictions to protect our proprietary technology.
However, these measures provide only limited protection, and we may not be able
to detect unauthorized use or take appropriate steps to enforce our intellectual
property rights, particularly in foreign countries where the laws may not
protect our proprietary rights as fully as in the United States. In addition,
we may face challenges to the validity and enforceability of our proprietary
rights and may not prevail in any litigation regarding those rights. Companies
in the messaging industry have experienced substantial litigation regarding
intellectual property. Any litigation to enforce our intellectual property
rights would be expensive and time-consuming, would divert management resources
and may not be adequate to protect our business.
13
<PAGE>
We may be found to have infringed the intellectual property rights of others
which could expose us to substantial damages or restrict our operations
We could be subject to claims that we have infringed the intellectual
property rights of others. In addition, we may be required to indemnify our
resellers and users for similar claims made against them. Any claims against us
could require us to spend significant time and money in litigation, pay damages,
develop new intellectual property or acquire licenses to intellectual property
that is the subject of the infringement claims. These licenses, if required,
may not be available at all or on acceptable terms. As a result, intellectual
property claims against we could have a material adverse effect on our business,
prospects, financial conditions and results of operations. For example, on
October 28, 1999, AudioFAX IP LLC filed a lawsuit against us asserting
infringement upon the ownership of certain United States and Canadian patents.
See "Legal Proceedings" in our Amended Annual Report on Form 10-K/A which is
incorporated by reference in this prospectus.
Our services may become subject to burdensome telecommunications regulation
which could increase our costs or restrict our service offerings
We provide our services through data transmissions over public telephone
lines and other facilities provided by telecommunications companies. These
transmissions are subject to regulation by the Federal Communications
Commission, state public utility commissions and foreign governmental
authorities. These regulations affect the prices we pay for transmission
services, the competition we face from telecommunications services and other
aspects of our market. As an Internet messaging services provider, we are not
subject to direct regulation by the FCC. However, as Internet services and
telecommunications services converge and as the services we offer expand, there
may be increased regulation of our business. Therefore, in the future, we may
become subject to FCC or other regulatory agency regulation. Changes in the
regulatory environment could decrease our revenues, increase our costs and
restrict our service offerings.
If regulation of the Internet increases, our business may be adversely affected
There have been various regulations and court cases relating to the
liability of Internet service providers and other online service providers for
information carried on or through their services or equipment, including in the
areas of copyright, indecency, obscenity, defamation and fraud. For example,
federal and state statutes prohibit the online distribution of obscene
materials. The law in this area is unsettled, and there may be new legislation
and court decisions that expose companies such as we to liabilities or affect
their services. Additional laws and regulations may be adopted with respect to
the Internet, covering issues such as support payments to fund Internet
availability, content, user privacy, pricing, libel, obscene material,
indecency, gambling, intellectual property protection and infringement and
technology export and other controls. Other federal Internet-related
legislation has been introduced which may limit commerce and discourse on the
Internet. Because our services relate principally to the Internet, but convert
voice and fax transmissions into e-mails, we are necessarily exposed to legal or
regulatory developments affecting either Internet services or telecommunications
services. Regulatory developments could cause our business, prospects,
financial condition and results of operations to be materially adversely
affected.
We could be required to register as an investment company and become subject to
substantial regulation that would interfere with our ability to conduct our
business
As of June 30, 2000, we had significant cash and cash equivalents, short
term investments and long term investments representing proceeds from our July
23, 1999 initial public offering. We invest such cash in short and long term
instruments consistent with prudent cash management and not primarily for the
purpose of
14
<PAGE>
achieving investment returns. Investment in securities primarily for the purpose
of achieving investment returns could result in our being treated as an
"investment company" under the Investment Company Act of 1940. In addition, the
Investment Company Act requires the registration of companies that are primarily
in the business of investing, reinvesting or trading securities or that fail to
meet certain statistical tests regarding their composition of assets and sources
of income even though they consider themselves not to be primarily engaged in
investing, reinvesting or trading securities. If we are required to register as
an investment company pursuant to the Investment Company Act, we would become
subject to substantial regulation with respect to its capital structure,
management, operations, transactions with affiliated persons and other matters.
Application of the provisions of the Investment Company Act to us would
materially and adversely affect our business, prospects, financial condition and
results of operations.
Our principal stockholders and management own a significant percentage of our
stock and will be able to exercise significant influence
After the eFax.com merger, our executive officers and directors and
principal stockholders together will beneficially own approximately 45% of our
common stock, including shares subject to options and warrants that confer
beneficial ownership of the underlying shares. Accordingly, these stockholders
will continue to have significant influence over our affairs. This
concentration of ownership could have the effect of delaying or preventing a
change in control of we or otherwise discouraging a potential acquirer from
attempting to obtain control of us, which in turn could have a material and
adverse effect on the market price of the common stock or prevent our
stockholders from realizing a premium over the market prices for their shares of
common stock.
We may have a contingent liability arising out of a possible violation of
Section 5 of the Securities Act of 1933 in connection with e-mails sent to
subscribers
As part of a reserved share program in connection with our July 23, 1999
initial public offering, we reserved up to 300,000 shares at the initial public
offering price for offering to up to 3,000 U.S. residents who were randomly
selected from the pool of our subscribers as of June 30, 1999. On or about July
6, 1999 we sent e-mails to approximately 150,000 of our subscribers informing
them of this program and briefly explaining the procedures to be followed. On
or about July 9, 1999 we sent e-mails to the 3,000 subscribers who had been
randomly selected, explaining the procedures in greater detail, and indicating
that these subscribers would have the opportunity to purchase shares through
this subscriber program. As of the applicable deadline, 181 of our subscribers
had opened an account in accordance with the procedures and indicated an
interest, so as to qualify for this reservation. No further subscribers were
accepted in this reservation, which therefore was reduced to a maximum of 18,100
shares. We may have a contingent liability arising out of a possible violation
of Section 5 of the Securities Act of 1933 in connection with the e-mails sent
to the approximately 150,000 subscribers and later to the 3,000 subscribers
selected under this program. Any liability would depend upon the number of
shares purchased by the recipients of such e-mails. If any such liability is
asserted, we intend to contest the matter vigorously. We do not believe that
any such liability would be material to our financial condition.
Although we expect that our pending merger will result in benefits, those
benefits may not be realized
Achieving the benefits of the pending merger with eFAX.com may depend in
part on the integration of technology, operations and personnel. The integration
of eFax.com and us will be a complex, time consuming and expensive process and
may disrupt the business of either or both if not completed in a timely and
efficient manner. The challenges involved in this integration include the
following:
[_] Combining product offerings and product lines effectively and
quickly;
15
<PAGE>
[_] Integrating sales efforts so that customers can do business easily
with all parts of we after the merger;
[_] Bringing together the companies' marketing efforts so that the
industry receives useful information about the merger;
[_] Coordinating research and development activities to enhance
introduction of new products and technologies;
[_] Achieving synergies that have a positive impact on cash flow; and
[_] Persuading employees that our and eFax.com's business cultures are
compatible.
It is not certain that the businesses of eFax.com and us can be successfully
integrated in a timely manner or at all or that any of the anticipated benefits
will be realized. Failure to do so could materially harm the business and
operating results of us after the merger. Also, neither eFax.com nor we can
assure you that our growth rate after the merger will equal the historical
growth rate experienced by either us or eFax.com. In addition, the physical
integration of the two companies' operating systems will depend to a significant
degree on the work of third parties. On the closing date for the merger, we
will issue 2,000,000 shares of our common stock to one of the third parties in
part as compensation for transition services to be provided to eFax.com and to
acquire a license to intellectual property developed by the third party as part
of the services which it had previously provided to eFax.com. Some of the
products and services offered by either eFax.com or us may not be offered by the
combined company, resulting in the potential loss of customers.
Customer and employee uncertainty related to the merger could harm the combined
company
Our or eFax.com's customers may, in response to the announcement of the
merger, delay or defer purchasing decisions. Any delay or deferral in
purchasing decisions by our or eFax.com's customers could seriously harm the
business of the combined company. Similarly, our and eFax.com's employees may
experience uncertainty about their future role with the combined company until
or after strategies with regard to eFax.com are announced or executed. This may
adversely affect the combined company's ability to attract and retain key
management, marketing and technical personnel. Additionally, a number of
eFax.com employees, including three of five executive officers, have left the
company since the initial announcement of the proposed merger and additional key
personnel may leave. These departures may affect the ability to integrate the
two companies and to operate the combined company after the merger.
Our operating results will suffer as a result of purchase accounting treatment,
the impact of amortization of goodwill and other intangibles relating to our
proposed combination with eFax.com
Under U.S. generally accepted accounting principles, we will account for
the merger using the purchase method of accounting. Under purchase accounting,
we will record the market value of our common stock issued in connection with
the merger, the fair value of the options and warrants to purchase eFax.com
common stock, which became options and warrants to purchase our common stock,
and the amount of direct transaction costs as the cost of acquiring the business
of eFax.com. We will allocate that cost to the individual assets acquired and
liabilities assumed, including various identifiable intangible assets such as
acquired technology, acquired trademarks and trade names and acquired workforce,
and to in-process research and development based on their respective fair
values. Intangible assets including goodwill will be generally amortized over a
three-year period. The amount of purchase cost allocated to goodwill and other
intangibles is estimated to be approximately $20.6 million. If goodwill and
other intangible assets were amortized in equal quarterly amounts over a three-
year period following completion of the
16
<PAGE>
merger, the accounting charge attributable to these items would be approximately
$1.7 million per quarter and $6.9 million per fiscal year. As a result, purchase
accounting treatment of the merger will increase the net loss for we in the
foreseeable future which could have a material and adverse effect on the market
value of we common stock following completion of the merger.
We expect to incur significant costs associated with the eFax.com merger
We estimate that we will incur direct transaction costs of approximately
$800,000 associated with the merger, which will be included as a part of the
total purchase cost for accounting purposes. In addition, eFax.com estimates
that it will incur direct transaction costs of approximately $800,000 in
connection with the merger other than expenses related to transitioning the
eFax.com operating system to the operating system of the combined company. We
believe that after the merger we may incur charges to operations, which we
cannot currently estimate, in the quarter in which the merger is completed or
the following quarters, to reflect costs associated with integrating the two
companies. After the merger, we may incur additional material charges in
subsequent quarters to reflect additional costs associated with the merger.
The price of our common stock may be affected by our assumption of options and
warrants
The price of our common stock may also be affected by the number of
warrants and stock options which we will assume as a result of the merger and
which will be exercisable for our common stock. eFax.com currently has
outstanding stock options and warrants to acquire 4,045,628 shares of eFax.com
common stock which may be exercised for shares of our common stock after the
merger. These stock options and warrants will be converted into options and
warrants to acquire an amount of our common stock based on the same exchange
ratio used to determine the fraction of a share of we common stock into which a
share of eFax.com common stock will be converted in the merger. Assuming, for
example only, an exchange ratio of 0.281, the current eFax.com options and
warrants would convert into a right to receive 1,136,821 shares of our common
stock. In addition, the eFax.com preferred stockholders will have a warrant to
acquire our common stock for $0.01 per share. It is currently estimated that the
warrants issued to the preferred stockholders as merger consideration will be
exercisable for 2,397,137 shares of our common stock. The overhang on the market
created by these additional stock options and warrants could negatively affect
the price of our common stock.
If the merger is not completed, our stock price and future business and
operations could be harmed
If the merger is not completed, we may be subject to the following material
risks, among others:
[_] The price of our common stock may decline to the extent that the
current market price of our common stock is higher based on a market
assumption that the merger will be completed; and
[_] Our costs related to the merger, such as legal, accounting and some
of the fees of our financial advisor, must be paid even if the
merger is not completed.
Third-party litigation claims may affect the value of eFax.com to our
stockholders
On June 20, 2000, Jerry Kirsch filed a lawsuit against eFax.com asserting
infringement of a United States patent. Although the suit relates to a line of
business which is being discontinued by eFax.com, if the suit is successful it
could have a material adverse effect on eFax.com and us after the merger. Even
if the
17
<PAGE>
claim is unsuccessful, it could require eFax.com and us after the merger to
spend significant time and money in litigation.
18
<PAGE>
Cautionary Statement Regarding Forward-Looking Statements
This prospectus, including the information incorporated by reference,
contains certain forward-looking statements within the meaning of the Private
Securities Litigation Reform Act of 1995 with respect to our financial
condition, results of operations and business. These statements may be made
directly in this prospectus referring to us, or may be incorporated in this
prospectus by reference to other documents and may include statements regarding
our projected performance. Statements in this prospectus that are not
historical facts are identified as "forward-looking statements" for the purpose
of the safe harbor provided by Section 21E of the Securities Exchange Act of
1934 and Section 27A of the Securities Act. You can find many of these
statements by looking for words such as "believes," "expects," "anticipates,"
"estimates" or similar words or expressions. These forward-looking statements
involve substantial risks and uncertainties. Some of the factors that may cause
actual results to differ materially from those contemplated by such forward-
looking statements include, but are not limited to, the following possibilities:
[_] Combining the businesses of us and eFax.com may cost more than we
expect;
[_] The timing of the completion of the proposed merger and new
operations may be delayed or prohibited;
[_] General economic conditions or conditions in securities markets may
be less favorable than we currently anticipate;
[_] Expected cost savings from the merger may not be fully realized or
realized within the expected time frame;
[_] Integrating the businesses of us and eFax.com and retaining key
personnel may be more difficult than we expect;
[_] Contingencies may arise of which we are not aware or of which we
underestimated the significance;
[_] Our revenues after the merger may be lower than we expects;
[_] We may lose more business or customers after the merger than we
expect; or
[_] Our operating costs may be higher than we expect.
Because such statements are subject to risks and uncertainties, actual results
may differ materially from those expressed or implied by such statements. You
are cautioned not to place undue reliance on such statements, which speak only
as of the date of this prospectus or as of the date of any document incorporated
by reference.
All subsequent written and oral forward-looking statements attributable to
us or any person acting on our behalf are expressly qualified in their entirety
by the cautionary statements contained or referred to in this section. We do
not undertake any obligation to release publicly any revisions to such forward-
looking statements to reflect events or circumstances after the date of this
prospectus or to reflect the occurrence of unanticipated events.
19
<PAGE>
OUR COMPANY
We are an Internet-based messaging and communications services provider to
individuals and businesses throughout the world. Our services enable the user's
e-mail box to function as a single repository for all e-mail, fax and voice mail
and permit convenient message retrieval through e-mail or by phone. Customers
can sign-up for all of our services through our web site and can promptly
receive a JFAX.COM phone number. We provide Internet-based unified messaging
services with over 64,000 paid subscriptions as of June 30, 2000. Since we
started offering our services on a commercial basis in June 1996, we have
expanded our network to offer our services in over 90 area codes in the United
States and abroad, including area codes in 22 of the 25 most populous major
metropolitan areas in the United States. We have over 15 area codes outside the
United States, including area codes in London, Paris, Frankfurt, Zurich, Milan,
Sydney and Tokyo. We intend to continue to increase the number of area codes
and target new international locations.
USE OF PROCEEDS
We will not receive any of the proceeds from the sale of the shares offered
by the selling stockholders.
20
<PAGE>
DESCRIPTION OF CAPITAL STOCK
The following summary information is qualified in entirety by the
provisions of our certificate of incorporation and by-laws, copies of which have
been filed as exhibits to the registration statement of which this prospectus is
a part. See "Information Available to You" for more information.
Our authorized capital stock consists of 200,000,000 shares of common
stock, par value $0.01 per share, and 1,000,000 shares of preferred stock, par
value $0.01 per share. As of November 1, 2000, 36,122,600 shares of common
stock were issued and outstanding, and there were 105 stockholders of record of
the common stock, although there are a larger number of beneficial owners. As
of November 1, 2000, 120 shares of Series B Convertible Preferred Stock were
issued and outstanding, and there was one holder of record of preferred stock.
We also have warrants and stock options outstanding, as described below.
Common Stock
Dividends
Subject to the prior rights of any outstanding preferred stock, the holders
of common stock are entitled to receive dividends out of assets legally
available for payment of dividends at such times and in such amounts as the
board of directors may from time to time determine. See "Dividend Policy."
Voting Rights
Each outstanding share of common stock entitles the holder to one vote on
all matters submitted to a vote of stockholders, including the election of our
directors, subject to any class or series voting rights granted to the preferred
stock. There is no cumulative voting. The board of directors is expressly
authorized to adopt, amend or repeal the by-laws in any manner not inconsistent
with Delaware law or the certificate of incorporation, subject to the power of
the stockholders to adopt, amend or repeal the by-laws. The certificate of
incorporation may be amended by an affirmative vote of the holders of a majority
of our outstanding capital stock entitled to vote on the matter, subject to any
class or series voting rights granted to the preferred stock.
Liquidation Rights and Other Matters
The shares of common stock are neither redeemable nor convertible, and the
holders of common stock have no preemptive or subscription rights to purchase
any of our securities. Upon our liquidation, dissolution or winding up, the
holders of common stock are entitled to receive pro rata any of our assets which
are legally available for distribution after payment of all debts and other
liabilities and subject to any preferential rights of the holders of preferred
stock.
The holders of 2,207,698 shares of our common stock were granted put rights
with respect to those shares, which would be available following a change of
control, as defined, in a manner similar to the redemption rights applicable to
warrants as described below. The put price is $3.20 per share, subject to
anti-dilution adjustments. If the put is triggered, the holders of these shares
may require us to purchase these shares at the put price.
Preferred Stock
As of November 1, 2000, we have one series of preferred stock issued and
outstanding, consisting of 120 shares of Series B Convertible Preferred Stock.
This preferred stock was issued to Steven J. Hamerslag in connection with his
agreeing to join us as President and Chief Executive Officer.
The board of directors may authorize the issuance of one or more additional
series of preferred stock having such rights, including voting, conversion and
redemption rights, and such preferences, including dividend and liquidation
preferences, as the board may determine, without further action by our
stockholders.
21
<PAGE>
The issuance of additional preferred stock by the board of directors could
adversely affect the rights of holders of common stock. For example, the
issuance of preferred stock could result in another series of securities
outstanding with preferences over the common stock with respect to dividends and
in liquidation, with voting rights superior to the common stock, or with rights,
upon conversion or otherwise, the same or superior to the common stock.
We believe that the board of directors' ability to issue preferred stock on
such a wide variety of terms will enable the preferred stock to be used for
important corporate purposes, such as financing acquisitions or raising
additional capital. However, were it inclined to do so, the board of directors
could issue all or part of the preferred stock with, among other things,
substantial voting power or advantageous conversion rights. This stock could be
issued to persons deemed by the board of directors likely to support current
management in a contest for control of the company, either as a precautionary
measure or in response to a specific takeover threat. The ability of the board
of directors to issue additional preferred stock or the issuance of such
preferred stock could have the effect of delaying, deferring or preventing a
change in control of JFAX.COM without any further action by the holders of
common stock. We have no current plans to issue preferred stock for any purpose.
Warrants and Options
In connection with our preferred stock offering in July 1998 (see "Certain
Transactions") we issued 3,393,750 warrants to purchase an aggregate of
3,393,750 shares of common stock at an exercise price of $2.40 per share,
subject to adjustment. These warrants are currently exercisable and expire in
July 2005. Holders of unexercised warrants do not have voting or any other
rights of stockholders. 1,112,500 of these warrants remain outstanding.
Upon the occurrence of a change of control, as defined, that is not
approved by the holders of 66-2/3% in interest of the warrants and the shares of
common stock received on the exercise of warrants, the holders of the warrants
and the shares of common stock held as a result of the exercise of the warrants
will have the right to require us:
. to redeem the warrants at $1.60 each, and
. to redeem the shares of common stock received on exercise of any warrants
at $4.00 each, in each case subject to anti-dilution adjustment.
We have also issued warrants to purchase 420,000 shares of common stock at
an exercise price of $0.70 per share, to purchase 420,000 shares of common stock
at $1.80 per share and to purchase 29,166 shares of common stock at $2.40 per
share, in each case subject to anti-dilution adjustment. The latter warrants
expire in April 1, 2005, and the former two series of warrants expire in January
2007.
We also issued 250,000 warrants to America Online on October 15, 1997 to
purchase 250,000 shares of our common stock at $2.40 per share. These warrants
expire on October 15, 2004.
All of the above warrants are immediately exercisable.
We also have options outstanding and available for grant under our stock
option plan, including outstanding and currently exercisable options to acquire
approximately 950,000 shares of our common stock as of September 15, 2000. We
have filed a registration statement on Form S-8 covering the shares of common
stock issuable under our stock option plan, including shares subject to
outstanding options, thus permitting the resale of such shares in the public
market without restriction under the Securities Act, other than restrictions
applicable to affiliates.
Registration Rights
Pursuant to various registration rights agreements, including agreements
with certain of our officers, directors and significant stockholders, the
holders of
22
<PAGE>
20,793,129 shares of our common stock (excluding the shares of common stock
being offered for sale pursuant to this prospectus) may make requests that we
register their shares, or include their shares in other registrations, under the
Securities Act, subject to conditions as to the minimum aggregate value of
shares to be sold and other customary conditions. These registration rights also
extend to another 1,952,500 shares not yet issued, for example shares issuable
upon the exercise of warrants, for the benefit of the persons having these
rights. Including the shares not yet issued, these registration rights cover
approximately 57% of our outstanding shares of common stock, including shares
issuable upon the exercise of warrants. For a further description of the terms
of the registration rights agreements with our officers, directors and principal
stockholders, see "Certain Transactions" in our Amended Annual Report on Form
10-K/A which is incorporated by reference in this prospectus.
Securityholders' Agreement
We have a securityholders' agreement dated as of June 30, 1998 with certain
of our warrant investors in the June and July 1998 private placements. For a
description of the terms of that securityholders' agreement, see "Certain
Transactions" in our Amended Annual Report on Form 10-K/A which is incorporated
by reference in this prospectus.
Anti-Takeover Effects of Delaware Law
We are a Delaware corporation and are subject to Delaware law, which
generally prohibits a publicly held Delaware corporation from engaging in a
"business combination" with an "interested stockholder" for a period of three
years after the time that the person became an interested stockholder, unless:
. before such time the board of directors of the corporation approved
either the business combination or the transaction in which the person
became an interested stockholder;
. upon consummation of the transaction that resulted in the stockholder
becoming an interested stockholder, the interested person owns at
least 85% of the voting stock of the corporation outstanding at the
time the transaction commenced, excluding shares owned by persons who
are directors and also officers of the corporation and by certain
employee stock plans; or
. at or after such time the business combination is approved by the
board of directors of the corporation and authorized at an annual or
special meeting of stockholders, and not by written consent, by the
affirmative vote of at least 66-2/3% of the outstanding voting stock
of the corporation that is not owned by the interested stockholder.
A "business combination" generally includes mergers, asset sales and
similar transactions between the corporation and the interested stockholder, and
other transactions resulting in a financial benefit to the stockholder. An
"interested stockholder" is a person:
. who, together with affiliates and associates, owns 15% or more of the
corporation's outstanding voting stock, or
. who is an affiliate or associate of the corporation and, together with
his or her affiliates and associates, has owned 15% or more of the
corporation's outstanding voting stock within three years.
The provisions of Delaware law described above would make more difficult or
discourage a proxy contest or acquisition of control by a holder of a
substantial block of our stock or the removal of the incumbent board of
directors. Such provisions could also have the effect of discouraging an
outsider from making a tender offer or otherwise attempting to obtain control of
JFAX.COM, even though such an attempt might be beneficial to us and our
stockholders.
Our certificate of incorporation and by-laws also:
23
<PAGE>
. eliminate the personal liability of directors for monetary damages
resulting from breaches of fiduciary duty to the extent permitted by
Delaware law; and
. indemnify directors and officers to the fullest extent permitted by
Delaware law, including in circumstances in which indemnification is
otherwise discretionary.
We believe that these provisions are necessary to attract and retain
qualified directors and officers.
Our by-laws require that any stockholder proposals to be considered at an
annual meeting of stockholders must be delivered to us not less than 60 nor more
than 90 days prior to the meeting. In addition, in the notice of any such
proposal, the proposing stockholder must state the proposals, the reasons for
the proposal, the stockholder's name and address, the number of shares held by
such stockholder and any material interest of the stockholder in the proposals.
There are additional informational requirements in connection with a proposal
concerning a nominee for the board of directors.
Agent and Registrar
The transfer agent and registrar for our common stock is Computershare
Trust Company, Inc.
SHARES ELIGIBLE FOR FUTURE SALE
At September 15, 2000, we had 36,122,600 shares of common stock outstanding
and 9,053,187 shares issuable upon the exercise of outstanding warrants,
options, and convertible preferred stock. We estimate that approximately one-
quarter of our outstanding shares were previously sold in registered offerings
or in transactions under Rule 144, and therefore are tradable without
restriction, other than any shares purchased by our "affiliates".
The remaining shares owned by existing shareholders are restricted
securities under the Securities Act of 1933, and may be sold only pursuant to a
registration, including this one, or an applicable exemption, including Rule
144. However, most of these restricted shares are currently eligible for sale
pursuant to Rule 144, subject to the limitations of that rule. Market sales of
shares by existing shareholders or the availability of shares for future sale
may depress the market price of our common stock.
24
<PAGE>
SELLING STOCKHOLDERS
The following stockholders are the selling shareholders in this
offering. Pursuant to various registration rights agreements, these stockholders
have certain registration rights and this prospectus has been prepared and filed
in accordance with that agreement.
This table provides information about the selling shareholders and the
shares that may be offered by them as of September 15, 2000.
<TABLE>
<CAPTION>
-------------------------------------------------------------------------------------------------------
Before Offering After Offering
-------------------------------------------------------------------------------------------------------
Number of Number of
Shares Shares
Beneficially Approximate Beneficially Approximate
Name Owned Percentage Owned(1) Percentage
---- ------------ --------------- --------------- -----------
-------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Janice Ingram 7,590 * 0 *
-------------------------------------------------------------------------------------------------------
Anthony M. DeLuise 35,737 * 0 *
-------------------------------------------------------------------------------------------------------
Louis A. Klevan 9,487 * 0 *
-------------------------------------------------------------------------------------------------------
DLJ Capital Corporation 9,537 * 0 *
-------------------------------------------------------------------------------------------------------
DLJ Private Equity Partners Fund, L. P. 721,357 2.00% 0 *
-------------------------------------------------------------------------------------------------------
DLJ Fund Investment Partners II, L. P. 281,143 * 0 *
-------------------------------------------------------------------------------------------------------
DLJ Private Equity Employees Fund, L. P. 25,558 * 0 *
-------------------------------------------------------------------------------------------------------
DLJ ESC II, L.P. 26,474 * 0 *
-------------------------------------------------------------------------------------------------------
Kelly Masuda 38,147 * 0 *
-------------------------------------------------------------------------------------------------------
M. Patrick McCloskey 3,740 * 0 *
-------------------------------------------------------------------------------------------------------
</TABLE>
(1) Assumes that all of the shares that are registered are sold.
25
<PAGE>
PLAN OF DISTRIBUTION
This prospectus relates to the offer and sale from time to time by the
selling shareholders named above of up to 1,158,770 shares of common stock.
The selling shareholders may sell shares of common stock from time to time
directly to purchasers. Alternatively, they may from time to time offer the
shares of common stock to or through dealers or agents, and they may receive
compensation in the form of commissions or discounts from the selling
shareholders or commissions from the purchasers for whom they may act as an
agent. The selling shareholders and any dealers or agents that participate in
the distribution may be deemed to be "underwriters" within the meaning of the
Securities Act of 1933, and any profits and commissions or discounts received by
them may be considered to be underwriting compensation under the Securities Act.
The selling shareholders may also dispose of the shares by writing options on
the shares or by settling short sales of the shares.
The selling shareholders may distribute the shares from time to time in one
or more underwritten transactions at a fixed price, at market prices prevailing
at the time of sale or at negotiated prices. An underwritten offering may be on
a "best efforts" or a "firm commitment" basis. In connection with an
underwritten offering, underwriters or agents may receive compensation in the
form of discounts, concessions or commissions from the selling shareholders or
commissions from the purchasers. Underwriters may sell shares of common stock
to or through dealers, and dealers may receive compensation in the form of
discounts, concessions or commissions from the underwriters or commissions from
the purchasers.
At the time a particular offer of shares of common stock is made, a
prospectus supplement, if required, will be distributed that will set forth the
names of any underwriters, dealers or agents, any commissions or discounts, and
any other required information. The shares of common stock may be sold from
time to time at varying prices determined at the time of sale.
The selling shareholders may also sell the shares of common stock
pursuant to Rule 144 under the Securities Act.
In some states, the shares of common stock may be sold only through
registered or licensed brokers or dealers.
We will pay the expenses incident to the registration, offering and sale of
the shares, which are estimated at approximately $11,000. We have agreed to
indemnify the selling shareholders and any underwriters and their controlling
persons against liabilities under the Securities Act.
26
<PAGE>
VALIDITY OF SECURITIES
The validity of the shares of common stock offered hereby will be passed
upon for us by our general counsel, Nicholas V. Morosoff. Mr. Morosoff is the
beneficial owner of 33,250 shares of our common stock.
EXPERTS
Our consolidated financial statements as of December 31, 1998 and 1999, and
for each of the years in the three-year period ended December 31, 1999 included
in our Annual Report on Form 10-K/A for the fiscal year ended December 31, 1999,
which are incorporated by reference in this prospectus, have been audited by
KPMG LLP, independent certified public accountants, and have been so
incorporated in reliance upon the report of that firm, given upon the authority
of that firm as experts in accounting and auditing.
The financial statements of SureTalk.com, Inc. as of December 31, 1999 and
for the year then ended included on Form 8-K/A filed with the SEC on April 10,
2000, which are incorporated by reference in this prospectus, have been audited
by KPMG LLP, independent certified public accountants, and have been so
incorporated in reliance upon the report of that firm, given upon the authority
of that firm as experts in accounting and auditing.
The financial statements of eFax.com as of January 1, 2000 and for the year
then ended included in eFax.com's Annual Report on Form 10-K for the fiscal year
ended January 1, 2000, which are included in our current report of Form 8-K
filed with the SEC on September 13, 2000 and incorporated by reference in this
prospectus, have been audited by Deloitte & Touche LLP, independent auditors,
and have been so incorporated in reliance upon the report of such firm, given
upon their authority as experts in accounting and auditing.
INCORPORATION OF DOCUMENTS BY REFERENCE
The SEC allows us to "incorporate by reference" the information we file
with the SEC. This permits us to disclose important information to you by
referring to these filed documents. Any information incorporated by reference
is considered part of this prospectus, and any information filed by us with the
SEC after the date of this prospectus will automatically update and supersede
this information. We incorporate by reference the following documents filed with
the SEC:
[_] Our amended annual report on Form 10-K/A for the year ended December
31, 1999.
[_] Our quarterly report on Form 10-Q for the three-months ended March 31,
2000.
[_] Our quarterly report on Form 10-Q for the six-months ended June 30,
2000.
[_] Our amended current report on Form 8-K dated April 10, 2000.
[_] Our current report on Form 8-K dated July 20, 2000.
[_] Our current report on Form 8-K dated July 27, 2000.
[_] Our current report on Form 8-K dated September 13, 2000.
We also incorporate by reference documents filed with the SEC pursuant to
Sections 13(a), 13(c), 14 and 15(d) of the Exchange Act subsequent to the date
of this prospectus and prior to the termination of the offering.
We will provide without charge to each person to whom a prospectus is
delivered, on written or oral request, a copy of any or all of the documents
incorporated by reference other than exhibits to those documents. Requests
27
<PAGE>
should be addressed to: Secretary and General Counsel, JFAX.COM, Inc., 6922
Hollywood Blvd., Suite 900, Los Angeles, CA 90024.
WE HAVE NOT AUTHORIZED ANYBODY TO GIVE ANY INFORMATION OR MAKE ANY
REPRESENTATIONS IN CONNECTION WITH THIS OFFERING, EXCEPT FOR THE CONTENTS OF
THIS PROSPECTUS AND ANY RELATED PROSPECTUS SUPPLEMENT. YOU SHOULD NOT RELY ON
ANY OTHER INFORMATION OR REPRESENTATIONS. THIS PROSPECTUS DOES NOT CONSTITUTE AN
OFFER TO SELL OR A SOLICITATION OF AN OFFER TO BUY ANY SECURITIES OTHER THAN THE
SHARES OF COMMON STOCK OFFERED BY THE SELLING SHAREHOLDERS. THIS PROSPECTUS DOES
NOT CONSTITUTE ANY OFFER OR SOLICITATION RESPECTING THOSE SECURITIES IN ANY
JURISDICTION TO ANY PERSON TO WHOM IT IS UNLAWFUL TO MAKE THAT OFFER OR
SOLICITATION. THIS PROSPECTUS, ANY PROSPECTUS SUPPLEMENT AND ANY DOCUMENTS
INCORPORATED BY REFERENCE IN THIS PROSPECTUS, SPEAK AS OF THEIR RESPECTIVE
DATES. THERE MAY BE CHANGES AFFECTING OUR BUSINESS AND OUR COMPANY AFTER THE
DATES OF THOSE DOCUMENTS.
28
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 14. Other Expenses of Issuance and Distribution
The following is a statement of the estimated expenses to be incurred by
JFAX.COM in connection with the distribution of the securities registered under
this registration statement.
Amount to
---------
be paid
-------
SEC registration fee....................... $ 500
Legal fees and expenses.................... $ 1,000
Nasdaq National Market listing fees........ $ 6,000
Accounting fees and expenses............... $ 1,000
Printing and engraving fees................ $ 1,000
Registrar and transfer agent's fees........ $ 1,000
Miscellaneous.............................. $ 500
-------
Total.................................. $11,000
=======
Item 15. Indemnification of Directors and Officers
As permitted by Delaware law, our certificate of incorporation includes a
provision that eliminates the personal liability of our directors to us or our
stockholders for monetary damages for breach of fiduciary duty as a director.
Article VI of our by-laws provides:
"The Corporation shall indemnify to the full extent permitted by law any
person made or threatened to be made a party to any action, suit or proceeding,
whether civil, criminal, administrative or investigative, by reason of the fact
that such person or such person's testator or intestate is or was a director,
officer or employee of the Corporation or serves or served at the request of the
Corporation any other enterprise as a director, officer or employee. Expenses,
including attorneys' fees, incurred by any such person in defending any such
action, suit or proceeding shall be paid or reimbursed by the Corporation
promptly upon receipt by it of an undertaking of such person to repay such
expenses if it shall ultimately be determined that such person is not entitled
to be indemnified by the Corporation. The rights provided to any person by this
by-law shall be enforceable against the Corporation by such person who shall be
presumed to have relied upon it in serving or continuing to serve as a director,
officer or employee as provided above. No amendment of this by-law shall impair
the rights of any person arising at any time with respect to events occurring
prior to such amendment. For purposes of this by-law, the term 'Corporation'
shall include any predecessor of the Corporation and any constituent corporation
(including any constituent of a constituent) absorbed by the Corporation in a
consolidation or merger; the term 'other enterprise' shall include any
corporation, partnership, joint venture, trust or employee benefit plan;
service 'at the request of the Corporation' shall include service as a director,
officer or employee of the Corporation which imposes duties on, or involves
services by, such director, officer or employee with respect to an employee
benefit plan, our participants or beneficiaries; any excise taxes assessed on a
person with respect to an employee benefit plan shall be deemed to be
indemnifiable expenses; and action by a person with respect to an employee
benefit plan which such person reasonably believes to be in the interest of the
participants and beneficiaries of such plan shall be deemed to be action not
opposed to the best interests of the Corporation."
In addition, the underwriting agreement for the offering will include
customary provisions indemnifying the officers, directors and our control
persons against liabilities in respect of information provided by the
underwriters for use in this registration statement.
29
<PAGE>
We have also obtained a policy of directors' and officers' liability
insurance for our directors and officers to insure directors and officers
against the cost of defense, settlement or payment of a judgment under certain
circumstances.
Item 16. Exhibits
The following exhibits are filed herewith or are incorporated by reference
to exhibits previously filed with the Commission. The Company shall furnish
copies of exhibits for a reasonable fee (covering the expense of furnishing
copies) upon request.
Exhibit
-------
No. Exhibit Title
-- -------------
2.1 Agreement and Plan of Merger, dated as of July 13, 2000, among
eFax.com, JFAX.COM, Inc. and JFAX.COM Merger Sub, Inc.**
2.2 Stock Purchase Agreement, dated as of January 15, 2000, among
JFAX.COM, Inc., the stockholders of SureTalk.Com, Inc. listed
therein, and SureTalk.Com, Inc.****
With respect to exhibits 2.1 and 2.2, such agreements contain a
listing of schedules or similar attachments. Pursuant to the
applicable instruction, such schedules or attachments are not filed
herewith. However, the Registrant agrees to furnish supplementally to
the Commission upon request a copy of any omitted schedule or
attachment.
3.1 Certificate of Incorporation, as amended and restated.*
3.1.1 Certificate Of Designation Of Series B Convertible Preferred Stock of
JFAX.COM, Inc.****
3.2 By-laws, as amended and restated.*
4.1 Specimen of common stock certificate.***
5.1 Opinion of Nicholas V. Morosoff, general counsel to the
Company.
23.1 Consent of KPMG LLP.
23.2 Consent of Deloitte & Touche LLP.
23.3 Consent of Nicholas V. Morosoff (included in 5.1).
* Incorporated by reference to the Company's Registration Statement on
Form S-1 filed with the Commission on April 16, 1999, Registration No.
333-76477.
** Incorporated by reference to the Company's Registration Statement on
Form S-4 filed with the Commission on August 28, 2000, Registration No.
333-44676.
*** Incorporated by reference to the Company's Amendment No. 2 to Registration
Statement on Form S-1 filed with the Commission on June 14, 1999,
Registration No. 333-76477.
**** Incorporated by reference to the Company's Report on Form 10-K filed with\
the Commission on March 30, 2000.
+ Previously filed.
Item 17. Undertakings
Insofar as indemnification for liabilities arising under the Securities Act
30
<PAGE>
may be permitted for directors, officers and controlling persons of the
Registrant pursuant to the foregoing provisions, or otherwise, the Registrant
has been advised that in the opinion of the Securities and Exchange Commission
such indemnification is against public policy as expressed in the Securities 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 our 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 Securities Act and will be governed by
the final adjudication of such issue.
The undersigned Registrant hereby undertakes that:
(1) For purposes of determining any liability under the Securities Act, 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.
(2) For the purpose of determining any liability under the Securities Act,
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 the offering of such securities at that time shall be deemed to be the
initial bona fide offering thereof.
(3) To file, during any period in which offers or sales are being made, a
post-effective amendment to this registration statement:
(i) To include any prospectus required by Section 10 (a) (3) of the
Securities Act of 1933;
(ii) To reflect in the prospectus any facts or events arising after the
effective date of the registration statement (or the most recent post-
effective amendment thereof) which, individually or in the aggregate,
represent a fundamental change in the information set forth in the
registration statement. Notwithstanding the foregoing, any increase or
decrease in volume of securities offered (if the total dollar value of
securities offered would not exceed that which was registered) and any
deviation from the low or high end of the estimated maximum offering
range may be reflected in the form of prospectus filed with the
Commission pursuant to Rule 424 (b) if, in the aggregate, the changes
in volume and price represent no more than 20 percent change in the
maximum aggregate offering price set forth in the "Calculation of
Registration Fee" table in the effective registration statement.
(iii) To include any material information with respect to the plan of
distribution not previously disclosed in the registration statement or
any material change to such information in the registration
statement;"
(4) That, for the purpose of determining any liability under the Securities
Act of 1933, each such post-effective amendment shall be deemed to be a new
registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof.
(5) To remove from registration by means of a post-effective amendment any
of the securities being registered which remain unsold at the termination of the
offering.
(6) That, for purposes of determining any liability under the Securities
Act of 1933, each filing of the registrant's annual report pursuant to Section
13(a)
31
<PAGE>
or Section 15(d) of the Securities Exchange Act of 1934 that is incorporated by
reference in the registration statement shall be deemed to be a new registration
statement relating to the securities offered therein, and the offering of such
securities at that time shall be deemed to be the initial bona fide offering
thereof.
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant
has duly caused this Registration Statement to be signed on our behalf by the
undersigned, thereunto duly authorized, in the City of Los Angeles, State of
California, on the 8th day of November, 2000.
JFAX.COM, Inc.
By: /s/ Steven J. Hamerslag
-------------------------------
Name: Steven J. Hamerslag
Title: President and Chief Executive Officer
POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS, that such person whose signature
appears below constitutes and appoints R. Scott Turicchi, Nehemia Zucker, and
Nicholas V. Morosoff and each of them severally, his true and lawful attorneys-
in-fact with power of substitution and resubstitution to sign in his name, place
and stead, in any and all capacities, to do any and all things and execute any
and all instruments that such attorney may deem necessary or advisable under the
Securities Act of 1933, as amended (the "Securities Act"), and any rules,
regulations and requirements of the U.S. Securities and Exchange Commission, in
connection with the registration under the Securities Act of the Common Stock of
the Registrant, including specifically, but without limiting the generality of
the foregoing, the power and authority to sign his name in his respective
capacity as a member of the Board of Directors or officer of the Registrant, to
this Registration Statement and/or such other form or forms as may be
appropriate to be filed with the Commission as any of them may deem appropriate
in respect of the Common Stock of the Registrant, to any and all amendments
thereto (including post-effective amendments) to this Registration Statement, to
any related Rule 462(b) Registration Statement and to any documents filed as
part of or in connection with this Registration Statement and any and all
amendments thereto, including post-effective amendments.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities indicated on November 8, 2000:
Signature Title
/s/ Steven J. Hamerslag President and Chief Executive Officer
----------------------------
Steven J. Hamerslag (Principal Executive Officer)
/s/ Richard S. Ressler Chairman of the Board
----------------------------
Richard S. Ressler
/s/ Nehemia Zucker Chief Financial and Accounting Officer
----------------------------
Nehemia Zucker (Principal Financial and Accounting Officer)
/s/ Zohar Loshitzer Director
----------------------------
Zohar Loshitzer
/s/ John F. Rieley Director
----------------------------
John F. Rieley
32
<PAGE>
/s/ Michael P. Schulhof Director
----------------------------
Michael P. Schulhof
/s/ R. Scott Turicchi Director
----------------------------
R. Scott Turicchi
/s/ Robert J. Cresci Director
----------------------------
Robert J. Cresci
33
