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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT STATEMENT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of Report (date of earliest
event reported): April 5, 2000
JFAX.COM, Inc.
(Exact name of Registrant as specified in its charter)
Delaware 0-25965 51-0371142
(State of (Commission (I.R.S. Employer
incorporation) Number) Identification No.)
6922 Hollywood Blvd.
Suite 900
Los Angeles, California 90028
(Address of principal executive offices)
(323) 860-9200
(Registrant's telephone number, including area code)
10960 Wilshire Boulevard
Suite 500
Los Angeles, California 90024
(Former Address, if changed since last report)
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Item 5. Other Events.
On April 5, 2000, JFAX.COM, Inc. ("JFAX.COM") entered into a letter of
intent and a loan commitment letter with EFAX.COM ("EFAX.COM") in which:
- - JFAX.COM and EFAX.COM established the principal terms for a potential
merger of JFAX.COM and EFAX.COM.
- - JFAX.COM agreed to lend EFAX.COM $5 million. The loan will have an interest
rate of 13% and a maturity date of August 31, 2000, subject to adjustment
which could increase the maturity date by up to 60 days.
- - EFAX.COM granted to JFAX.COM a warrant to acquire 250,000 shares of
EFAX.COM's common stock. The warrant will have a term of two years and
will be exercisable at the market price of EFAX.COM's common stock on the
date of grant, but the exercise price will reset to $1.00 per share if the
proposed merger of EFAX.COM and JFAX.COM does not occur.
- - EFAX.COM agreed to grant to JFAX.COM a warrant with a term of two years and
an exercise price of $1.00 per share of EFAX.COM's common stock. The
warrant will be granted if the merger between EFAX.COM and JFAX.COM does
not occur. The warrant will be for 750,000 shares of EFAX.COM's common
stock if JFAX.COM terminates the merger discussions, other than following a
material breach of the letter of intent by EFAX.COM, prior to the execution
of a definitive merger agreement or if the definitive merger agreement is
terminated because JFAX.COM's shareholders fail to approve the merger or
JFAX.COM materially breaches the definitive merger agreement. The warrant
will be for 1,750,000 shares of EFAX.COM's common stock if the merger does
not occur for any reason not discussed in the preceding sentence.
Prior to the execution of a definitive purchase Agreement neither EFAX.COM
nor JFAX.COM is required to complete the merger. In the merger, approximately
18.5 million shares of JFAX.COM common stock will be issued to the current
holders of EFAX.COM's common and preferred stock. The number of shares of
JFAX.COM common stock to be received will be subject to downward adjustment
based on potential fluctuations in the price of JFAX.COM common stock. The
formula for determining the consideration to be received by EFAX.COM's common
and preferred stockholders is included in Exhibit 2.1 to this report. JFAX.COM
would be the surviving corporation in the merger.
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Item 7. Financial Statements and Exhibits
(c) Exhibits
Exhibit Number Description
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2.1 Letter of Intent, dated April 5, 2000, from JFAX.COM,
Inc. to EFAX.COM.
99.1 Press release, dated April 6, 2000, relating to the
proposed merger of JFAX.COM, Inc. and EFAX.COM
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
Dated: April 6, 2000
JFAX.COM, Inc.
(Registrant)
By: /s/ Nicholas V. Morosoff
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Nicholas V. Morosoff
Secretary
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Exhibit 2.1
April 5, 2000
eFAX.com
1378 Willow Road
Menlo Park, California 94025
Re: Letter of Intent
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Ladies and Gentlemen:
This letter sets forth the terms of the proposed two-step transaction (the
"Transactions") pursuant to which eFAX.com, Inc. ("eFAX") will borrow $5 million
from JFAX.COM, Inc. ("JFAX.COM") (the "Loan"), following which eFAX will be
merged into JFAX.COM or with a subsidiary of JFAX.COM (the "Merger") in exchange
for shares of JFAX.COM common stock in the amount described below. Such shares
will be distributed to the existing equityholders of eFAX. This letter
supersedes the terms of any other agreement that purports to forth the terms of
a proposed stock or asset purchase transaction between the parties.
The basic terms upon which the Transactions will be consummated are as follows:
1. Loan. JFAX.COM will lend eFAX $5 million. The terms of the Loan are as
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follows:
(a) Maturity date: The later of (i) August 31, 2000 and (ii) the date
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which is sixty (60) days following the date, if any, upon which
JFAX.COM terminates the Merger discussions (other than following a
material breach by eFAX hereunder) prior to the execution of the
Definitive Merger Agreement (defined below) or upon which the
Definitive Merger Agreement is terminated as a result of a failure to
obtain approval of the JFAX.COM shareholders or as a result of a
material breach by JFAX.COM thereunder.
(b) Interest: 13% per annum.
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(c) Warrants: 250,000 warrants to purchase eFAX common stock at an
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exercise price equal to the market price for eFAX common stock on the
date of grant; provided, however, that the exercise price will be
automatically re-set to $1.00 per share in the event that either party
terminates the Merger discussions for any reason prior to the
execution of the Definitive Merger Agreement or in the event
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the Definitive Merger Agreement is terminated for any reason. The
warrants will have a two-year term and will contain standard anti-
dilution protections and will be granted upon delivery of the Loan
commitment (and will be further documented in a definitive warrant
agreement executed and delivered no later than the first funding under
the Loan).
(d) Security: All of the assets of eFAX (except for non-material assets in
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which a security interest cannot be legally created).
(e) Funding: The Loan will be funded in 3 equal installments on or about
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April 13, on May 10 and on June 10, 2000; provided that eFAX may opt
to not draw down any installment of the Loan or eFax may require that
any installment of the Loan be drawn down at a later date within the
term of the Loan upon providing prior written notice to JFAX.COM.
(f) Covenants: The Loan documents will include standard representations
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and warranties and loan covenants, including covenants that, until the
Loan is paid off in full, without the prior written consent of Lender,
(i) eFAX will not exceed a cash burn rate (excluding any cash
expenditures for Excluded Professional Fees and Severance Payments (as
hereinafter defined) and without any credit being given for cash
received from asset sales) of greater than $1.25 million per month,
calculated on a two-month rolling average basis, (ii) eFAX will not
dispose of any of its assets other than a basket of "non-core" assets
which will not exceed $100,000 in aggregate value (absent the approval
of JFAX.COM, such approval not to be unreasonably withheld), all the
proceeds of which shall be deposited in a segregated account (the
"Asset Sales Account") and shall not be used to fund eFAX operating
expenses, and (iii) eFAX will deposit into the Asset Sales Account any
proceeds received by eFAX upon exercise of eFAX options or warrants.
As used herein, "Excluded Professional Fees and Severance Payments"
shall mean eFAX's cash expenditures for professional fees and
severance, which expenditures shall not exceed $1,000,000 absent the
approval of JFAX.COM (such approval not to be unreasonably withheld).
(g) Conditions to close:
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(i) Reasonably satisfactory lien search completed;
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(ii) Delivery of opinion of counsel for eFAX (relating to due
incorporation, qualification, authorization, execution, and
delivery; enforceability; no conflicts of any material eFAX
agreement as determined by eFAX's management as evidenced by an
officer's certificate; no required consents; usury; and creation of
security interest, in each case subject to standard
qualifications); and
(iii) Delivery of loan and security documents.
The Loan will not be conditioned on the execution of the Definitive
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Merger Agreement or the closing of the Merger.
(h) Commitment letter: A signed commitment letter (the "Commitment Letter")
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in respect of the Loan is being executed and delivered by JFAX to eFAX
concurrently with the execution of this letter. Upon such execution and
delivery, the Commitment Letter shall supercede in all respects the
provisions of this paragraph 1.
2. Merger. The consideration for the Merger Transaction will be a number of
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shares of JFAX.COM common stock determined pursuant to the formula set
forth in (a) below, and otherwise subject to the following conditions:
(a) Consideration: The eFAX shareholders will receive a number of shares of
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common stock of JFAX.COM ("JFAX.COM Shares") determined by the
following formula:
E = ((CS x FMV/E/) + P - LA + M)
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FMV/J/
Where:
E = number of JFAX.COM Shares issuable to eFAX
CS = 13,184,072, the number of outstanding common shares of eFAX, as
of the date hereof, plus shares, if any, issued upon exercise of
eFAX options or warrants during the period between the date hereof
and the closing of the Merger.
FMV/E/ = $6.50, the deemed value for eFAX common stock
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P = $16.2 million, the dollar value (principal and accrued dividends
only) of the outstanding eFAX Series A Preferred Stock
LA = the amount disbursed under the Loan as of the closing date of
the Merger
FMV/J/ = $5.50, the deemed value for JFAX.COM common stock
M = the cash on hand at eFAX as of the closing date of the Merger
(but in no event will M exceed LA and in no event will M include any
cash deposited or required to be deposited in the Asset Sales
Account)
(b) Adjustment: FMV/J/ (the assumed value for JFAX.COM common stock) will
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be subject to adjustment in the event that, on or prior to April 30,
2000, JFAX.COM announces a corporate transaction (the "Announcement")
involving the issuance of JFAX.COM common stock having a fair market
value, or the payment of other consideration to JFAX.COM, in excess of
$25 million. In such event (and only upon the first such event), FMV/J/
will be re-determined as follows:
FMV/J/ = $5.50 + D
Where:
D = the excess (if any) of (i) the 5-trading-day average of the
closing price for JFAX.COM common stock immediately following the
Announcement, over (ii) the 5-trading-day trailing average of the
closing price for JFAX.COM common stock as of the Announcement;
provided that D will be no more than $2.75 in the event that the
Announcement occurs within 5 days of the announcement of the
Transactions.
(c) Conditions. The Merger will be subject to the satisfaction of the
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following conditions:
(1) The negotiation and execution of a definitive merger agreement (the
"Definitive Merger Agreement") embodying the terms of the
transaction set forth herein and other standard representations,
warranties, and covenants, including a covenant on the part of
eFAX's officers and directors to vote all of their outstanding
shares of common stock and all shares for which they hold an
affirmative proxy in favor of the Merger, as
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well as a covenant on the part of eFAX to convert its outstanding
preferred stock to common stock prior to consummation of the
Merger.
(2) Satisfactory completion, prior to the execution of the Definitive
Merger Agreement, by each party and its advisors, of all legal,
business and accounting due diligence investigations, including
without limitation, their investigation of the business and
financial records of the other party.
(3) JFAX.COM's board shall have received an appropriate fairness
opinion from a reputable investment bank.
(4) Execution of definitive Loan documents.
(5) Agreement by the holders of eFAX's Series A Preferred Stock to
convert their preferred shares into a fixed number of shares of
eFAX's common stock on or prior to the Merger.
(6) Agreement by the holders of eFAX's Series A Preferred Stock to a
lock-up of the shares of eFAX common stock, and the shares of
JFAX.COM common stock to be issued to them upon consummation of the
Merger, which lock-up will include a prohibition against engaging
in shorting or hedging strategies both prior to and following the
consummation of the Merger. Between the date of execution of the
Definitive Merger Agreement and the consummation of the Merger, the
lock-up will permit the net disposition of no more than 400,000
shares of eFAX common stock per calendar month (with partial months
pro-rated) (subject to adjustment for stock-splits, stock
dividends, stock combinations, and similar circumstances) and, from
and after consummation of the Merger, the lock-up will permit, on a
monthly basis, the disposition of 10% of the total number of shares
of JFAX common stock received by the holders of eFAX's Series A
Preferred Stock upon consummation of the Merger.
(d) Definitive Merger Agreement: The Definitive Merger Agreement will be
---------------------------
subject to standard conditions to closing, including without
limitation the following:
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(1) JFAX.COM's and eFAX's respective shareholders shall have approved
the Merger.
(2) The parties shall have filed, and all applicable waiting period
shall have expired on, the required notices under the Hart-Scott-
Rodino Act.
(3) The parties shall have obtained all other required governmental
consents including the filing and effectiveness of registration
statement on Form S-4 and listing on NASDAQ for the shares of
JFAX.COM common stock issued upon consummation of the Merger.
(e) Board Seat: The Definitive Merger Agreement will include an
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undertaking by JFAX.COM to nominate (for a period of three years) a
person designated by eFAX to serve on the JFAX.COM board of directors.
(f) Options and Warrants: The Definitive Merger Agreement will provide
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that JFAX.COM will assume all of eFAX's obligations under outstanding
eFAX options and warrants (with appropriate adjustment to reflect the
final conversion ratio of eFAX common stock into JFAX common stock
resulting upon consummation of the Merger); provided that, the numbers
of such warrants and options and the exercise prices are those which
eFAX has previously disclosed to JFAX.COM as described on the
option/warrant disclosure schedule provided by eFAX to JFAX.COM on the
date hereof.
(g) Indemnification: The Definitive Merger Agreement will provide that for
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six years after the consummation of the Merger (the "Merger Date"),
JFAX.COM will (i) indemnify and hold harmless to the fullest extent
permitted under applicable law, individuals who, either prior to the
date hereof, as of the date hereof, or as of the Merger Date, are or
were officers, directors and employees of eFAX as of the Merger Date
with respect to all acts or omissions by them in their capacities as
such at any time on or prior to the Merger Date, (ii) will honor all
indemnification obligations presently provided under eFAX's
certificate of incorporation and by-laws in effect on the date hereof,
and (iii) procure the provision of officers' and directors' liability
insurance in respect of acts or omissions occurring prior to the
Merger Date covering each person currently covered by eFAX's officers'
and directors' liability insurance policy on terms with respect
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to coverage and in amounts no less favorable than those of such policy
in effect on the date hereof; provided, that if the aggregate annual
premiums for such insurance at any time during such period shall
exceed 150% of the per annum rate of premium paid by eFAX as of the
date hereof for such insurance, then JFAX.COM shall provide only such
coverage as shall then be available at an annual premium equal to 150%
of such rate.
3. Warrants. In the event that either party terminates the Merger
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discussions for any reason prior to the execution of the Definitive
Merger Agreement or in the event the Definitive Merger Agreement is
terminated for any reason, JFAX.COM shall be granted 1,750,000
warrants to purchase eFAX common stock at an exercise price of $1.00;
provided, that only 750,000 warrants at $1.00 will granted in the
event that JFAX.COM terminates the Merger discussions (other than
following a material breach by eFAX hereunder) prior to the execution
of the Definitive Merger Agreement or the Definitive Merger Agreement
is terminated as a result of a failure to obtain approval of the
JFAX.COM shareholders or as a result of a material breach by JFAX.COM
thereunder. The warrants will have a two-year term and will contain
standard anti-dilution protections and will be further documented in a
form warrant agreement to be agreed to prior to the first funding
under the Loan. The parties agree that it will be the responsibility
of eFAX to obtain, within two weeks following the date hereof, the
agreements from the holders of its Series A Preferred Stock necessary
to satisfy the conditions set forth in paragraphs 2(c)(5) and 2(c)(6)
above and that any termination of Merger discussions by JFAX.COM upon
failure of either such condition shall be deemed to be a termination
of such discussions by eFAX.com. eFAX.com further agrees (i) prior to
eFAX.com's executing agreements with the holders of its Series A
Preferred Stock satisfying the conditions set forth in paragraphs
2(c)(5) and 2(c)(6) above, to notify JFAX.COM in writing of the terms
of such proposed agreements and (ii) to notify JFAX.COM immediately
after such agreements have been executed by the parties.
4. Exclusivity. It is anticipated that the Definitive Merger Agreement
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will be executed by May 8, 2000. In consideration of the substantial
expenditure of time, effort and expense to be undertaken by JFAX.COM
and its representatives, following the execution and delivery of this
letter, eFAX will undertake and agree that without the prior written
consent of JFAX.COM, during the period from March 31, 2000 through the
earlier of May 8, 2000, or such earlier date as JFAX.COM may
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deliver a Notice of Termination as described below (the "Termination
Date"), neither eFAX nor any of its authorized representatives or
agents will directly or indirectly take any action to initiate,
assist, solicit, negotiate, encourage, accept or otherwise pursue any
offer or inquiry from any person or entity (a) to engage in any
Business Combination (as defined below) other than the transactions
contemplated hereby, or (b) to reach any agreement or understanding
(whether or not such agreement or understanding is absolute,
revocable, contingent or conditional) for, or otherwise attempt to
consummate, any Business Combination other than the transaction
contemplated hereby. For purposes hereof, "Business Combination" means
(i) any merger, consolidation, business combination, sale, lease or
similar transaction relating to eFAX; (ii) any sale or other
disposition of capital stock of, or other equity interests in, eFAX,
(iii) any sale, dividend or other disposition of any or all of the
assets or properties of eFAX, and/or (iv) any other transaction
involving eFAX or its assets (other than sales of "non-core" assets
permitted under the Loan documents ) that is inconsistent with the
transactions contemplated hereby. If at any time JFAX.COM determines
that it has no intention to proceed with the transactions contemplated
by this letter, JFAX.COM shall give prompt written notice (the "Notice
of Termination") to eFAX of such decision not to proceed.
5. Access to Information. Each party and its employees, representatives
---------------------
and agents shall afford, and shall use reasonable efforts to induce
others to afford, to the other party and its representatives and
agents reasonable access to its properties, business, personnel,
advisors and financial, legal, tax and other data and information, in
each case as may be reasonably requested by the other party.
6. Expenses. eFAX and JFAX.COM shall each be responsible for its own
--------
expenses incurred in connection with the Merger Transaction; provided
that eFAX will reimburse JFAX.COM for such out-of-pocket expenses in
the event that eFAX terminates the Merger discussions prior to the
execution of the Definitive Merger Agreement or the Definitive Merger
Agreement is terminated as a result of a failure to obtain approval of
the eFAX shareholders or an action on the part of the eFAX board or as
a result of a material breach by eFAX thereunder. eFAX and JFAX.COM
agree to split the Hart-Scott-Rodino filing fee.
7. Publicity and Disclosure. The parties shall jointly produce and
------------------------
mutually agree on the substance of public press releases and
announcements regarding the
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Transactions, the first of which will be made on Thursday, April 6,
2000; provided, that either party shall have the right in its sole and
absolute discretion (after consultation with the other party) to make
whatever public press releases or announcements which it deems
necessary in order to comply with applicable federal and state
securities or other laws, and the rules and regulations promulgated by
the NASDAQ; provided, further, that JFAX.COM shall make no such
announcement prior to the initial announcement on Thursday, April 6,
2000.
In addition, the parties agree to continue to be bound by the terms
and conditions of the confidentiality agreement, dated March 26, 2000,
between eFAX and JFAX.COM.
8. No Brokers. Both eFAX and JFAX.COM represent and warrant to the other
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that neither it nor any of its employees, affiliates, representatives
or agents has entered into any agreement regarding any transaction
involving eFAX or its stock or assets that could result in the other
party hereto (or any of its affiliates or representatives) having any
liability to any third party as a result of entering into this letter
or consummating the transactions contemplated hereby. Both eFAX and
JFAX.COM shall indemnify, defend, save and hold harmless the other
(and its affiliates, partners and representatives) from any and all
claims or liabilities resulting from any breach of the foregoing
representations and warranties, including any legal or other expenses
incurred in connection with the defense of any such claims.
9. Termination. Paragraph 2 of this letter will terminate automatically
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and be of no further force and effect upon the earliest of (a) the
execution of the Definitive Merger Agreement, (b) the mutual agreement
of eFAX and JFAX.COM, or (c) the Termination Date. All of the other
provisions of this letter (except paragraph 5) shall survive and shall
remain binding following any such termination . Any termination of
this letter shall not affect any rights that any party has with
respect to the breach of any terms hereof by the other party prior to
such termination.
10. Legal Effect. This letter of intent is intended to constitute an
------------
expression of JFAX.COM's and eFAX's mutual intent regarding the
subject matter of Paragraph 2 herein. Except as referred to or set
forth in paragraphs 3, 4, 5, 6, 7, 8, 9 and this paragraph 10, neither
eFAX, JFAX.COM, nor any of their respective employees, affiliates,
representatives or agents shall have any legally binding obligations,
rights, or
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liabilities of any nature whatsoever to each other or to any other
persons or entities, whether pursuant to the terms of this letter,
relating in any manner to the transactions contemplated hereby, or the
consideration hereof. Neither this letter of intent nor any person's
execution hereof shall constitute an obligation or commitment of any
party to enter into the Definitive Merger Agreement or give any party
any rights or claim against the other in the event any party for any
reason terminates negotiations to effect the transactions contemplated
hereby, other than in respect of claimed breaches of paragraphs 3, 4,
5, 6, 7, 8, or 9 or this paragraph 10. All obligations or commitments
to proceed with the Merger contemplated hereby shall be contained only
in the Definitive Merger Agreement.
The Loan Commitment is a separate agreement binding on the parties
hereto and enforceable in accordance with its terms. The covenants and
agreements in the Loan Commitment and those set forth herein are
separate and independent covenants and in no event shall any covenant
or agreement set forth in this letter be subject to any counterclaim,
set-off or deduction whatsoever based upon any alleged breach of the
Loan Commitment.
This letter shall be governed by and construed in accordance with the
laws of the state of California without regard to principles of
conflicts of laws as would cause the application of the laws of any
jurisdiction other than the state of California.
If you are in agreement with the terms set forth above and intend to
proceed with transaction on that basis, please execute this letter of
intent in the space provided below and return an executed copy by facsimile
to the undersigned.
Very truly yours,
JFAX.COM, INC.
By: /s/ Steven J. Hamerslag
-----------------------
Steven J. Hamerslag
President and CEO
ACCEPTED AND AGREED as of the date first set forth above,
EFAX.COM
By: /s/ Ronald Brown
----------------
Ronald Brown
President
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Exhibit 99.1
JFAX.COM SIGNS LETTER OF INTENT TO ACQUIRE EFAX.COM,
CREATING STRONG POSITION IN INTERNET COMMUNICATIONS
Combined Installed Base of Over 125,000 Paying Subscribers
and Over 2.8 Million Free Users Establishes Platform for
Increased Revenue Generation
Consideration to Consist of Approximately 18.5 Million
JFAX.COM Common Shares
HOLLYWOOD AND MENLO PARK, Calif. (April 6, 2000) - JFAX.COM (NASDAQ: JFAX) and
EFAX.COM (NASDAQ: EFAX), two of the world's largest unified messaging services
providers, today announced that they have signed a letter of intent to merge.
The proposed merger transaction will establish the combined company as the clear
industry leader in Internet-based unified messaging services worldwide.
JFAX.COM, the combined company, will have over 125,000 paid subscribers
generating monthly subscription and usage revenue and over 2.8 million free
users who represent an attractive advertising audience and are prime candidates
for a range of revenue-generating products and services that the combined
company will offer.
"Combining the resources of EFAX.COM with JFAX.COM will allow us to achieve
critical mass in the Internet communications marketplace," said Steven J.
Hamerslag, CEO and president of JFAX.COM. "We will have a substantial installed
base of business users on the Internet with an extensive range of communication
service offerings. EFAX.COM has done a great job of establishing a strong brand
and growing a large base of customers. Their paid subscriber base has
accelerated, growing 45% quarter-to-quarter to 66,000. We now have the
additional opportunity to enhance revenue generation by leveraging the EFAX
subscriber base with our previously announced plans for call management
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services that build off our global Internet Protocol (IP) network."
"JFAX has a proven management team, a strong cash position and a global
network with innovative telecom solutions," said Ronald Brown, president of
EFAX.COM. "EFAX.COM has concentrated on Internet document delivery, brand-name
partnerships, and a new wireless initiative for mobile users. JFAX.COM has the
technology platform to tie it all together and expand services even further. We
welcome this opportunity to consolidate a powerful position," he added.
JFAX.COM has committed to loan EFAX.COM, subject to satisfactory
documentation, up to $5 million on a senior secured basis. This loan will enable
EFAX.COM to fund its working capital needs and continuing growth until the
consummation of the merger. The loan commitment also includes a warrant for
JFAX.COM to purchase 250,000 shares of EFAX.COM common stock at yesterday's
close-of-market price. If the merger does not occur, the warrant exercise price
will be reset to $1.00 a share. The proposed merger is subject to negotiation of
definitive agreements, completion of due diligence, and other customary
conditions.
The letter of intent provides that, as total consideration for EFAX.COM,
JFAX.COM will issue approximately 18.5 million shares of its common stock to the
holders of EFAX.COM common and preferred stock, subject to an adjustment of this
number in certain circumstances. EFAX.COM's preferred stockholders have agreed
to exchange their current shares of Series A convertible preferred stock into a
new series of convertible preferred stock. The new series will have a right to
convert into common stock of EFAX.COM at a per-share price based upon the
average trading price for EFAX.COM common stock during the 20-trading-day period
beginning Friday. As a result, the number of shares of JFAX.COM common stock to
be ultimately received by
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existing holders of EFAX.COM common stock will be determined following
completion of such 20-trading-day period.
For example, as of today, the average closing price of the EFAX.COM common
stock for the last 10 trading days has been $5.46. Assuming this average
continues for the next 20 trading days, and further assuming that no other
adjustment becomes applicable, EFAX.COM common shareholders will receive 1.10
shares of JFAX.COM common stock for each share of EFAX.COM common stock. The
actual number of shares that EFAX.COM shareholders receive will likely differ
from the example and such difference may be material.
In consideration for the letter of intent, JFAX.COM will be granted
warrants to purchase either 750,000 or 1.75 million shares, depending on certain
circumstances, of EFAX.COM common stock at an exercise price of $1.00 per share,
in the event the merger does not occur.
This release will be followed promptly by the filing of reports on Form 8-K
which will describe the terms of the transactions in greater detail.
JFAX.COM management has previously encouraged investors to gauge its
progress by its revenues, gross margins and profits, and subscriber base (both
free and paid). For the quarter ended March 31, JFAX.COM said it expects its
gross profits and margins to be at the high end of analysts' expectations.
JFAX.COM also estimated that its subscriber growth exceeded expectations, with
free subscribers growing by 475,000 in the quarter to a total of 820,000. Paid
subscriber levels, however, are estimated to be below estimates for the quarter
following a previously announced decision to defer marketing efforts in the wake
of JFAX.COM's management transition. As a result, quarterly revenues will be
approximately $2.9 million.
"With the combined capabilities of both companies, we will expand our
services beyond message management to a full suite of unified communications
solutions," continued
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Hamerslag. "This will enable customers to access and initiate business
communications easily and seamlessly through a single communications provider."
About JFAX.COM
JFAX.COM (NASDAQ: JFAX) is an award-winning Internet-based messaging and
communications service provider to individuals and businesses throughout the
world. JFAX's services enable the user's email box to function as a single
repository for all email, fax and voicemail and permit convenient advanced
message management through email or by phone. JFAX is a registered trademark of
JFAX. The company is headquartered in Hollywood, California. For more
information on JFAX and its services, see http://www.JFAX.com or call 1-888-GET-
-------------------
JFAX.
About EFAX.COM
EFAX.COM (NASDAQ: EFAX) is a provider of Internet communication services,
and has provisioned unique telephone numbers to about 2 million members. The
Company continues to expand its range of solutions beyond its initial offering
of the world's first free fax-to-email service. The Company markets its Internet
services via its own EFAX.COM web site and through affiliates and co-brand
partners, including Phone.com, Microsoft, Network Solutions, WebTV,
fortunecity.com, FindLaw, Phoenix Technologies and AllBusiness.com. EFAX.COM is
headquartered in Menlo Park, Calif. For more information, call 1-877-EFAXCOM;
fax (650) 326-6003; or visit: http://www.EFAX.com.
-------------------
Safe Harbor for Forward-Looking Statements: Certain statements in this news
release constitute "forward-looking statements" within the meaning of the
Private Securities Litigation Reform Act of 1995. These forward-looking
statements involve risks and uncertainties that could cause actual results to
differ materially from projected results. Forward-looking statements include
statements about efforts
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<PAGE>
to attract or prospects for additional subscribers for our services and other
statements of a non-historical nature. Actual results may differ from projected
results due to various risk factors including our limited operating history, our
use of third parties to market our services, competition including competition
from companies offering free services, risks associated with technological
change, uncertainties regarding the protection of proprietary technology and
other factors set forth in the companies' respective filings with the Securities
and Exchange Commission.
Notice of Registration Statement: JFAX.COM expects to file a registration
statement, which will contain a joint proxy statement/prospectus of JFAX.COM and
EFAX.COM, and other documents with the Securities and Exchange Commission.
INVESTORS AND SECURITY HOLDERS ARE URGED TO READ THE JOINT PROXY
STATEMENT/PROSPECTUS AND ANY OTHER RELEVANT DOCUMENTS FILED WITH THE SEC WHEN
THEY BECOME AVAILABLE BECAUSE THEY WILL CONTAIN IMPORTANT INFORMATION.
Investors and security holders will be able to receive the joint proxy
statement/prospectus and other documents free of charge at the SEC's web site,
www.sec.gov and from JFAX.COM Investor Relations at 6922 Hollywood Boulevard,
- -----------
Hollywood, California 90028.
(C) 2000 JFAX.COM. All rights reserved.
# # #
<TABLE>
<CAPTION>
JFAX contacts, media only:
<S> <C> <C>
John Davis Krys Card Bryan Maxwell
JFAX.COM Rogers & Cowan Rogers & Cowan
(323) 860-9469 (310) 201-8838 (310) 201-8892
[email protected] [email protected] [email protected]
- --------------- ------------------- ----------------------
</TABLE>
<TABLE>
<CAPTION>
JFAX contacts, investor relations only:
<S> <C> <C>
Scott Turrichi Betsy MacKinnon, Jim Lucas Winnie Lerner
JFAX.COM Abernathy MacGregor Group- West Abernathy MacGregor- New York
(323) 860-9408 (213) 630-6550 (212) 371-5999
[email protected] [email protected] [email protected]
- ------------------ ------------- --------------
</TABLE>
<TABLE>
<CAPTION>
EFAX contacts, media and investor relations:
<S> <C> <C>
Todd Kenck Peter Delauzon/ Jonathan Schaffer,
Christina Newman Jill Fatzinger (IR)
EFAX.com (Media) Morgen-Walke Associates, Inc.
650-688-6810 Morgen-Walke Associates, Inc. (415) 296-7383
[email protected] (415) 296-7383 [email protected]
- -------------- ---------------------
</TABLE>
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