<PAGE>



                                  UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C.  20549

                                    FORM 10-K
(Mark One)
[X]  ANNUAL REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES EXCHANGE
     ACT OF 1934
     For the fiscal year ended January 1, 2000.
     or
[ ]  TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
     EXCHANGE ACT OF 1934
     For the transition period from __________ to ___________.

                        Commission File Number 0-22561

                                   eFax.com

            (Exact name of Registrant as specified in its charter)

             Delaware                                77-0182451
(State or other jurisdiction of          (I.R.S. Employer Identification No.)
incorporation or Organization)

               1378 Willow Road, Menlo Park, California 94025
            (Address of principal executive offices)   (Zip Code)

      Registrant's telephone number, including area code: (650) 324-0600

Securities registered pursuant to Section 12(b) of the Act:     None

Securities registered pursuant to Section 12(g) of the Act:     Common Stock,
                                                                $.01 par value

     Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.  Yes [X]   No [  ]

     Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to
the best of registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K.  [  ]

     As of April 3, 2000, the aggregate market value of the voting stock held
by non-affiliates of the Registrant was approximately $63,493,325 based upon
the closing sales price of the Common Stock as reported on the Nasdaq National
Market on such date.  Shares of Common Stock held by officers, directors and
holders of more than ten percent of the outstanding Common Stock have been
excluded from this calculation because such persons may be deemed to be
affiliates.  The determination of affiliate status is not necessarily a
conclusive determination for other purposes.

As of April 3, 2000, the Registrant had outstanding 13,184,072 shares of Common
Stock.


                     DOCUMENTS INCORPORATED BY REFERENCE:

     Portions of the following documents are incorporated by reference in this
report: Registrant's Proxy Statement for its 2000 Annual Meeting of
Stockholders which will be filed with the Securities and Exchange Commission no
later than 120 days after January 1, 2000. (Part III).


<PAGE>

                                    EFAX.COM
                                    INDEX TO
                           ANNUAL REPORT ON FORM 10-K
                         FOR YEAR ENDED JANUARY 1, 2000


                                                                          Page
                                                                          ----
                                   PART I

Item 1     Business                                                         3
Item 2     Properties                                                       9
Item 3     Legal Proceedings                                                9
Item 4     Submission of Matters to a Vote of Security Holders              9

                                   PART II

Item 5     Market for the Registrant's Common Equity and Related
           Stockholder Matters                                             10
Item 6     Selected Financial Data                                         12
Item 7     Management's Discussion and Analysis of Financial
           Condition and Results of Operations                             13
Item 7A    Quantitative and Qualitative Disclosures About Market Risk      31
Item 8     Financial Statements and Supplementary Data                     31
Item 9     Changes in and Disagreements with Accountants on
           Accounting and Financial Disclosure                             31

                                   PART III

Item 10     Directors and Executive Officers of the Registrant             32
Item 11     Executive Compensation                                         33
Item 12     Security Ownership of Certain Beneficial Owners
            and Management                                                 33
Item 13     Certain Relationships and Related Transactions                 33

                                   PART IV

Item 14     Exhibits, Financial Statement Schedules, and Reports
            on Form 8-K                                                    34
Signatures                                                                 56

                                      2
<PAGE>

                                   PART I

ITEM 1.  BUSINESS

Overview

     eFax.com is a leading provider of Internet communications services.
eFax.com currently provides its free and fee-based Internet communications
services to more than 1.6 million users.  In February 1999, eFax.com launched
its Internet communications services, which incorporate fax-to-email, voicemail
and voice-to-email capabilities.  Prior to developing this market, eFax.com had
developed and marketed branded and licensed products and software solutions for
the "multifunction product ("MFP) market," which consisted of electronic office
devices that combine print, fax, copy and scan capabilities in a single unit.
In addition, eFax.com has licensed its embedded systems technology and software
to a number of manufacturers of multi-function products.  On January 10, 2000,
we announced that we will focus exclusively on expanding our position as a
leading provider of enhanced Internet communications services and solutions and
that we will discontinue manufacturing and sales of multifunction products.

     To date, the majority of eFax.com's revenues have been generated from
sales and licensing of multifunction products.  Traditionally, we license our
hardware and software technologies for a range of multifunction products sold
under the brand names of our manufacturing and software license customers.
eFax.com also offers software which can be sold on a stand-alone basis, or
bundled with hardware and software technologies to provide the customer with a
complete, integrated hardware and software product solution. Our software
products include eFax Messenger Plus, JetSuite, Filing Central, HotSend and
Paper Master.

     On February 8, 1999, we changed our name from JetFax, Inc. to eFax.com,
Inc. and announced our "eFax(r)" service, a free fax-to-e-mail Internet
service.  On December 16, 1999, eFax.com's corporate name changed from
eFax.com, Inc. to eFax.com.   It is eFax.com's intention to expand its service
and product offerings to include a variety of Internet-based communication
services and products.


eFax.com Internet Services

     In February 1999, we launched the eFax.com web site and service.  This
service provides users with the capability to receive facsimile transmissions
as email attachments by way of the Internet.  To enable the eFax service, a
user simply signs up at the eFax.com website by providing limited personal
information.  Once a user is registered, eFax.com issues a unique telephone
number to be used as a personal eFax number.  eFax users can then receive faxes
by distributing their eFax number instead of a traditional fax number to
contacts.  To view the fax images, our users must install a client application,
eFax Messenger.

     The eFax service has expanded to provide a comprehensive set of unified
communications services to our users on both a free and fee basis.  Our eFax
Plus service is a fee based service incorporating fax-to-email, email-to-fax,
voice-to-email and voicemail.  Pricing for eFax Plus is based upon monthly
subscription fees and usage based charges for outbound faxing.  eFax Free users
can utilize our fax-to-email, voice-to-email and voicemail services for free.
Our cost of supporting free users is offset by revenue from advertising, which
is served to the client viewer on the user's desktop, upgrade campaigns aimed
at converting free users to paid customers, and e-commerce opportunities in our
eFax Mall.

     eFax Free.  eFax Free is an advertising based free service which has been
     ---------
the driving force for user acquisitions for the eFax services.  eFax Free
allows users to receive faxes and voicemails on their eFax number at no cost to
the user.  The eFax Messenger software allows users to view faxes and listen to
voicemails.  In addition, this software incorporates ad serving technology to
present advertisements on the applications tool bar while faxes and voicemails
are viewed or played.

     The eFax Free service provides us with a cost effective vehicle for
attracting users to the eFax services - both free and paid.  Once a user
subscribes to eFax Free, eFax.com will work to monetize the advertising and
promotional opportunities associated with that subscriber's use of the service.

                                      3
<PAGE>

     eFax Plus.  eFax Plus is our premium fax and voicemail service aimed at
     ---------
customers desiring local or toll-free telephone numbers, fax sending and
advanced management of their communications from the Internet.  Features of
this service include sending faxes via email, sending faxes directly from the
Web, optical character recognition of received documents, and automatic email
distribution of received messages to several email recipients.


eFax.com Products

     eFax.com offers the following products and solutions to its Internet, OEM
and other customers:

     eFax Messenger and Messenger Plus.  eFax.com has developed the eFax
     ---------------------------------
Messenger software for eFax users to view faxes and play voice messages.  eFax
Messenger is based on core technology developments we have made in document
portability and image compression.  eFax Messenger is a very small computer
application which is easily downloaded by the user.  It incorporates live
advertising and the capability to view, rotate, enlarge and print images.  The
eFax Messenger Plus software incorporates all the features of eFax Messenger
while including several advanced capabilities for the eFax service as well as
for communicating documents by email.  Key features of eFax Messenger Plus
include text and audio annotations of fax or other documents, fax sending
software which, when used with the eFax service, allows users to send documents
from their computers to any fax machine in the world and the capability to take
nearly any document and create a portable document which can be emailed to
anyone without requiring the person viewing the document to have the underlying
application or fonts.

     Software.   eFax.com offers JetSuite and PaperMaster software for
     --------
convenient communication and handling of electronic and paper documents, as
well as Printer Control Language ("PCL") printer drivers. JetSuite software
combines low-level device drivers for printing, faxing, copying and scanning
with a visual ''desktop'' application that allows a user to organize, convert
and manage documents created or received using a MFP. Users can create a self-
viewing, portable version of any document, whether ''printed'' electronically,
captured from an Internet Web page, scanned or faxed. Such a portable document
can then be e-mailed and viewed without requiring the recipient to have a
specific viewer, while maintaining all of the document's original formatting,
layout, colors and look.  We offer JetSuite to OEMs for use with the OEMs'
embedded system or bundled with eFax.com's embedded system technology.
PaperMaster began shipping in 1994 as user-friendly personal document
management software.  PaperMaster uses a file cabinet metaphor as its user
interface, allowing one to unlock and open various file drawers and folders and
insert a variety of document types.  The software indexes documents, allowing
users to search and retrieve documents based on text strings.  Also included
are search and retrieval capabilities and web links to allow users to easily
save web-based HTML documents.  PaperMaster is marketed through OEM bundles,
upgrades, and direct sales on the Internet.  In 1998 Hewlett-Packard began
bundling PaperMaster with its successful CD-Writer Plus storage system,
broadening the market for PaperMaster to the storage arena.

     Embedded System Technology.   eFax.com develops and licenses its embedded
     --------------------------
system technology for manufacture and integration by its OEM customers into
their MFPs. This technology includes a complete embedded system design,
modified to meet the OEMs' specifications and requirements. Such hardware and
software modifications are performed by eFax.com and typically include changes
to the printer and scanner interfaces and to the control panel and user
interface. We generally receive development fees in return for such
modifications, in addition to prepaid and per unit royalties for the license.
Our embedded system technology has been customized and licensed for use in
Hewlett-Packard LaserJet 3100 and 3150, as well as the previously sold
Minoltafax 1000, the Xerox 3006, and Xerox WorkCenter 250 and the Samsung dex
855.

     Hardware Multifunction Products and Related Consumables.   eFax.com
     -------------------------------------------------------
develops, manufactures and markets high quality multifunction products,
integrating its embedded system technology with a printing and scanning engine.
During fiscal 1999, we discontinued distribution of our JetFax branded
multifunction peripherals through our own channels.  eFax.com's current MFP is
the Series M7, which we began shipping commercially to OEM customers in October
1999. The Series M7 offers the functionality of a high-volume, full-featured
laser printer fax machine in addition to its multifunction print, copy and scan
capabilities. The Series M7 includes features such as a high-speed 33.6 Kbps
modem, which reduces the transmission time;

                                      4
<PAGE>

and fax-to-email capability independent of a network or special software.  We
also sell consumables for our hardware products, including toner cartridges,
imaging drums and inkjet cartridges, which represented 29%, 19% and 17% of the
our total revenues in the years ended December 31, 1999, 1998 and 1997,
respectively.  We will continue to sell consumables to dealers and OEM
customers for the foreseeable future.


Technology

     Portable Document Technology.    Portable document technology replicates
     ----------------------------
documents for storage, transmission and viewing. Messenger Plus portable
documents use a highly compressed print-imaging format containing a combination
of text, fonts, color, graphic elements (such as lines and circles) and
bitmaps. This portable document technology allows a single document database to
handle both hard copy images from scanned or faxed documents and electronically
created documents. Messenger Plus portable documents can easily be shared with
others by using a freely distributable compact version of the Messenger viewer
that combines with the portable document to create a self-viewing document.
Messenger Plus also provides a range of imaging functionality for fast viewing,
zooming and panning, as well as document markup and cleanup functionality.

     Third Generation Embedded System Technology.     eFax.com's third
     -------------------------------------------
generation embedded system technology is based on the eFax.com's application
specific integrated circuit (''ASIC'') semiconductor designs integrated with a
Motorola  microprocessor. The specialized ASICs perform most of the heavy
computational tasks, allowing the single microprocessor to drive the embedded
system and service all of the functions - printing, faxing, copying and
scanning - required by a MFP. The ASICs perform a variety of imaging functions
and provide high-speed data paths for large image data files that are quickly
moving through the various processes in the system. The ASIC imaging functions
include error diffusion scanning, edge enhancement, background compensation,
scaling and print smoothing. A high-speed image bus and numerous direct memory
access ("DMA") channels are also provided by the ASICs to optimize system
performance and provide easy access to a specialized compression/decompression
imaging processor. The firmware in the embedded system is centered on our task-
swapping, real-time operating system. The operating system rotates among the
various MFP functions such as printing, faxing, copying or scanning, allocating
enough processing time for each task to prevent any significant performance
deterioration when swapping among other tasks.


Marketing and Business Development

     We market our eFax services directly to users through advertising and
business development activities.  During 1999, we invested approximately $15.0
million in consumer branding for the eFax services.  Our branding efforts
included radio, Internet banner, sponsorship and location-based advertising.
In addition to traditional media advertising we market to our installed base
extensively through email and the eFax.com website.  eFax.com also has an
active press relations campaign which targets press coverage and informing
industry participants of the eFax service.

     We have partnered with several Internet community sites and technology
providers to capture user registrations.  As an example, we launched a
cobranded service for Microsoft's WebTV in early 2000.  This cobranded service
combined eFax.com's expertise in fax and voice messaging with a customized site
suited to the technical capabilities of the WebTV set top audience.  Additional
cobrand sites launched in 1999 include NBCi, FindLaw, AllBusiness.com and
FortuneCity UK.  We have also partnered with manufacturers of PCs, scanners and
printers to bundle our eFax Messenger Plus software with our partners'
products.  In certain cases, an icon for the eFax Service resides on the
desktop of our partners' PC products, thereby encouraging partner customers to
sign up for eFax services.  We have partnered with HP to distribute our
software with the HP Pavillion desktop and laptop computers; HP bundles our
software with their scanners and Epson bundles our software with their
printers.

     Hardware Products.  eFax.com markets and sells its products worldwide to
     -----------------
OEMs, dealers and distributors. Before 1999, we maintained a separate sales
force for our hardware products and OEM/licensing

                                      5
<PAGE>

businesses.  Marketing resources have been refocused to emphasize Internet
activity through reassignment of personnel and other resources.

     OEM Relationships.   eFax.com licenses its embedded system technology and
     -----------------
software to OEMs. eFax.com works closely with OEM accounts to define product
requirements, create development plans and manage development programs. The
marketing group promotes eFax.com as a leading provider to OEMs of MFP
solutions through a combination of public relations and press coverage,
exhibits and presentations at tradeshows, product brochures and other marketing
promotions.

     Software.   eFax.com's software marketing strategy is to license software
     --------
for bundling with multiple OEM products. In addition, we promote software
upgrades and add-on software products in a number of ways, including software
installation and reminder screens, mailings to registered users, website
advertisements and co-promotions with OEMs.

     eFax.com's international sales efforts are focused principally on Western
Europe. In November 1999, eFax.com launched services in the U.K.  We have
marketing, service or support personnel located in Germany, Ireland and the
U.K. International marketing efforts are focused on promoting eFax services in
Europe and pursuing business development opportunities.  We have recently
closed our German office, which principally supported the hardware product
sales and support in Europe.


Network Operations

     The eFax.com network is currently based on 15 points of presence in the
United States and in the United Kingdom. Each of eFax.com's points of presence
is co-located with a telecommunications partner.  Currently eFax.com works with
ten different partners in the U.S. and three telecom partners in the U.K.  Each
co-location center requires a large number of Direct Inward Dial lines
("DIDs"), that act as individual phone numbers, Internet connectivity, and
telephony services at each site.  Our co-locations are typically located in
manned data centers of our telecom partners, with limited onsite support.  We
manage and monitor our network operations and performance from a central site
in Chicago.  Our telecommunications partners include Focal Communications,
Electric Lightwave, Global Naps, AT&T and Colt Telecom.

     Certain network management and development operations are outsourced to
Integrated Global Concepts.  Integrated Global Concepts provides 24 hour
support and monitoring for our network and licenses to eFax.com certain
elements of our network architecture.  We entered into a two-year agreement
with Integrated Global Concepts in February 1999.

     The decentralization of the eFax.com network provides for greater
reliability and reduces our dependence on any one supplier.  In addition, by
being geographically dispersed our network is less susceptible to network
outages caused by either power interruptions or problems with
telecommunications failures.  Certain functions such as customer data, billing
and outbound fax sending are all centralized.  All inbound message processing
is handled in the distributed eFax.com network.  Each point of presence is
capable of operating independently of the other locations and supporting
customers with telephone numbers based out of the site.


Customers

     The eFax service currently supports over 1.6 million users, including over
45,000 fee-based customers.

     In 1999, our customers also included office equipment dealers and
distributors who resell branded MFPs, options and consumables, as well as OEMs
that license our embedded system technology and software in conjunction with
the manufacture and distribution of MFPs.

     Hardware Products.   In the United States and Canada, eFax.com distributed
     -----------------
JetFax branded products, options and consumables through office equipment
dealers, primarily through IKON and dealers associated

                                      6

<PAGE>

with Business Technology Associates ("BTA"). In the years ended December 31,
1999, 1998 and 1997, revenues recorded by eFax.com from dealers associated with
IKON represented 11%, 16%, and 19%, respectively, of eFax.com's total revenues.
The Company also distributes its products through regional distributors. As of
December 31, 1999, eFax.com had discontinued sales of branded product through
our dealer channel.

     OEM Relationships and JetSuite and PaperMaster Software.   eFax.com
     -------------------------------------------------------
receives license fees and development fees for our embedded system technology
and desktop software from a number of manufacturers of MFPs. We currently
license embedded system technology or desktop software to 25 companies and have
OEM relationships with Hewlett-Packard, Oki Data, and Konica. In the years
ended December 31, 1999 and 1998, Hewlett-Packard represented 13% and 18% of
the eFax.com's total revenues, respectively. In the years ended December 31,
1999, 1998 and December 31, 1997, revenues from Konica represented 13%, 2%, and
0%, respectively, of our total revenues.

     Hewlett-Packard Company.   In 1997, eFax.com entered into a development
     -----------------------
and license agreement with Hewlett-Packard for the inclusion of the our
embedded system technology and JetSuite software in Hewlett-Packard product.
The development was completed in early 1998 and the HP LaserJet 3100 was
launched in March 1998.  Effective May 1998, a follow-on development effort was
undertaken and was completed at December 31, 1998.  In January 2000, the
resulting HP LaserJet 3150 was launched.

     Oki Data Corporation.   In September 1996, eFax.com entered into a license
     --------------------
agreement with Oki Data for the inclusion of JetSuite software with a number of
Oki Data MFPs which are currently in the market.


Research and Development

     eFax.com's principal research and development activities are located at
eFax.com's headquarters in Menlo Park, California and at its software
applications division located in Santa Barbara, California. Primary activities
at those locations include new product development, enhancement of existing
products, product testing and technical documentation.

     Our research and development efforts focus on ongoing development of the
eFax services and supporting software applications.  Software and
communications capabilities developed for our multifunction products have
provided a solid technological base for creating Internet-based product
offerings.


Intellectual Property and Proprietary Rights

     Our success is heavily dependent upon our proprietary technology. To
protect our proprietary rights, eFax.com relies on a combination of copyright,
trade secret and trademark laws, patents and nondisclosure and other
contractual restrictions. As part of our confidentiality procedures, we
generally enter into nondisclosure agreements with our employees, consultants,
OEMs and strategic partners and limits access to and distribution of our
designs, software and other proprietary information.


Manufacturing

     We manufacture our JetFax branded and OEM products for distribution to the
corporate segment of the MFP market. eFax.com generally outsources materials
from suppliers and performs final assembly and testing at our main facility in
Menlo Park, California.  All manufacturing operations should cease at the end
of the first quarter 2000.

     The Series M7 is our current product line of MFPs. The major components of
the Series M7 products are the print engine, the scanner, the user interface
and the multifunction embedded system technology and modem electronics, all of
which are outsourced. The JetFax embedded system and modem assemblies are built
to specification by an external printed circuit board assembler. Final product
assembly at the eFax.com's headquarters consists of integrating the components
and OEM configuration on a progressive assembly line.

                                      7
<PAGE>

Competition

     The market for Internet-related communication services, such as our fax-
to-e-mail, voice-to-e-mail, voicemail and e-mail-to-fax services, are a newly
emerging market and competitors are just beginning to appear. eFax.com
anticipates that it will need to:

   o   provide good service and grow its business rapidly to meet demand;

   o   create name recognition for eFax.com in advance of competitors;

   o   build its subscriber base prior to any significant entry by the
       competition; and

   o   continue to expand and improve on its Internet communication service
       offerings.

     eFax.com's technology, development services and software primarily compete
with solutions developed internally by manufacturing and software license
customers. Virtually all of eFax.com's manufacturing and software license
customers have significant investments in their existing solutions. These
manufacturing and software license customers have the substantial resources
necessary to develop competing multifunction technologies and software that may
be implemented into their own products. eFax.com also competes with
technologies, software and development services provided in the multifunction
product market by other systems and software suppliers to manufacturing and
software license customers.

     The market for Internet-related communication services, related technology
and software is highly competitive.  This market is characterized by continuous
pressure to improve performance, to introduce new features and to accelerate
the release of new products.  eFax.com also competes on the basis of vendor
name and recognition, technology and software expertise, product functionality,
development time and price. eFax.com anticipates increasing competition for its
multifunction products, technologies, software under development and Internet
services.  Most of eFax.com's existing competitors, many of its potential
competitors and all of eFax.com's manufacturing and software license customers
have substantially greater financial, technical, marketing and sales resources
than eFax.com.  In the event that price competition increases, competitive
pressures could cause eFax.com to:

   o   reduce the cost of its fee-based eFax Service offerings;

   o   expand services to match those offered by competitors; or

   o   reduce the amount of royalties received on new licenses.

     In turn, these reductions could reduce eFax.com's profit margins and
result in additional losses and a decrease in market share, which would have a
material adverse effect on eFax.com's business, financial condition and results
of operations.


Backlog

     The Company had essentially no backlog at December 31, 1999 and 1998,
respectively, which is in line with the normal practice in the markets in which
the Company operates.  The office equipment dealer channel for MFPs typically
requires shipment at time of order placement, and the Company has managed
operations to fully satisfy customer demand within each fiscal quarter.  The
software business conventionally does not have a backlog, and revenues from the
Company's development programs are recognized on a percentage of completion
basis.

                                      8

<PAGE>


Employees

     As of December 31, 1999, the Company had 110 employees. There is no labor
union representation for any of the Company's employees. The Company has never
experienced a work stoppage, and relations with employees are considered good.
The Company hires contract employees on an as-needed basis to meet temporary or
specific needs.


ITEM 2.  PROPERTIES

     The Company's headquarters and principal operations are in leased
facilities totaling approximately 42,000 square feet in Menlo Park, California,
and the lease for this facility expires in January 2003. Additionally, the
Company leases approximately 5,200 square feet in Santa Barbara, California for
its software application organization and the one-year extension on the lease
is set to expire July 31, 2001. The Company leases approximately 2,600 square
feet in Beaverton, Oregon for additional software application personnel, and
this lease expires April 2001.


ITEM 3.  LEGAL PROCEEDINGS

     Not applicable.


ITEM 4.  SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

     During the fourth quarter of 1999, no matters were submitted to a vote of
security holders.

                                      9
<PAGE>   10

                                   PART II

ITEM 5.  MARKET FOR THE REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER
         MATTERS


(a)   Market Information and Recent Sales of Unregistered Securities

     The Company's Common Stock is traded on the Nasdaq National Market tier of
the Nasdaq Stock Market under the trading symbol "EFAX".  Prior to February 8,
1999, the symbol for the Company's Common Stock as reported on the Nasdaq
National Market was "JTFX".  Effective with the close of business on February
8, 1999, the Company name was officially changed from "JetFax, Inc." to
"eFax.com, Inc." Subsequently, on December 16, 1999, the Company changed its
name from eFax.com, Inc. to eFax.com.

     The range of daily closing prices per share for the Company's common stock
from January 1, 1999 to December 31, 1999 was:


<TABLE>
<CAPTION>

      Year Ended December 31, 1999:          High             Low
                                           --------         --------
           <S>                             <C>              <C>

            Fourth quarter                  $12.438          $ 6.906
            Third quarter                   $18.375          $ 7.125
            Second quarter                  $30.125          $11.250
            First quarter                   $25.375          $ 2.750

      Year Ended December 31, 1998:          High             Low
                                           --------         --------

            Fourth quarter                  $ 2.750          $ 1.531
            Third quarter                   $ 4.500          $ 2.500
            Second quarter                  $ 7.188          $ 4.438
            First quarter                   $ 7.125          $ 3.625

</TABLE>


     The reported last sale price of the Company's Common Stock on the Nasdaq
National Market on April 3, 2000 was $5.00. The approximate number of holders
of record of the shares of the Company's Common Stock was 254 as of April 3,
1999.  This number does not include stockholders whose shares are held in trust
by other entities. The actual number of stockholders is greater than this
number of holders of record.  Based on the number of annual reports requested
by brokers, the Company estimates that it has approximately 19,339 beneficial
owners of its Common Stock.

     The Company has authorized Common Stock of $0.01 par value and Preferred
Stock. In connection with the initial public offering, all of the convertible
preferred stock, except the Series P Redeemable Preferred Stock, and related
accrued dividends outstanding at the time of the initial public offering
automatically converted into 6,456,681 shares of Common Stock. Approximately
$2.8 million of the net proceeds were used for the mandatory redemption of the
Series P Redeemable Preferred Stock following the closing of the Company's
initial public offering in June 1997.

     On May 10, 1999, eFax.com entered into a purchase agreement with an
investor for the private placement of $15 million of Series A Convertible
Preferred Stock which was not registered under the Securities Act of 1933, as
amended, and is convertible into Common Stock based upon the five-day average
stock price prior to closing which was $21.1375. The conversion price is
subject to an adjustment after one year to the greater of the then current
market price of the Common Stock or 60% of the initial conversion price. The
agreement also includes 300,000 warrants exercisable at $23.25, which
represents a 10% premium to the Series A Convertible Preferred Stock conversion
price. The Series A Convertible Preferred Stock

                                     10

<PAGE>


includes an 8% dividend payable in cash or common stock at the option of
eFax.com. The closing occurred on May 13, 1999. eFax.com has filed a
registration statement for the resale of the shares of Common Stock acquired on
conversion of the Convertible Preferred Stock and upon exercise of the
warrants. Holders of the preferred shares shall have no voting rights, except
as required by law, including but not limited to the General Corporation Laws
of the State of Delaware.  The Company cannot declare or pay any cash dividend
or distribution on the common stock without the prior express written consent
of the holders of not less than two-thirds of the then outstanding preferred
shares.  In the event of a liquidation of the Company, the holders of the
Series A Convertible Preferred Stock would be entitled to receive distributions
in preference to the holders of the Common Stock.

     The Company has not paid any cash dividends on its Common Stock but has
accrued 8% dividends for the Series A Convertible Preferred Stock which are due
in either cash or stock on May 13, 2000. The Company currently intends to
retain the remaining portion of its earnings to fund the development and growth
of its business. See Item 7 - "Management's Discussion and Analysis of
Financial Condition and Results of Operations - Liquidity and Capital
Resources" and Note 6 of Notes to Consolidated Financial Statements contained
in Item 14.


(b)   Report of offering securities and use of proceeds therefrom:

      Not applicable.

                                     11

<PAGE>

ITEM 6.  SELECTED FINANCIAL DATA

     The consolidated statement of operations data set forth below for the
years ended December 31, 1999, 1998 and 1997, and the consolidated balance
sheet data at December 31, 1999 and 1998 are derived from the consolidated
financial statements of the Company included elsewhere in this Annual Report on
Form 10-K. The consolidated statement of operations data set forth below for
the nine months ended December 31, 1996 and the year ended March 31, 1996, and
the consolidated balance sheet data at December 31, 1997 and 1996 and March 31,
1996 are derived from audited consolidated financial statements not included in
this Annual Report on Form 10-K. The following financial data is qualified in
its entirety by, and should be read in conjunction with, ''Management's
Discussion and Analysis of Financial Condition and Results of Operations'' and
the consolidated financial statements and notes thereto included elsewhere in
this Annual Report on Form 10-K.


<TABLE>
<CAPTION>
                                                                         Nine Months  Fiscal Year
                                                                            Ended        Ended
                                             Years Ended December 31,    December 31   March 31,
                                            -------------------------
                                            1999      1998      1997(1)     1996(1)      1996
                                          --------  --------  --------    --------     --------

                                                   (in thousands, except per share data)
<S>                                       <C>      <C>       <C>         <C>          <C>
Consolidated Statement of Operations Data:
 Revenues:
  Product                                 $ 18,817  $ 23,385  $ 16,281    $ 10,205     $ 11,143
  Software and technology license fees       3,629     5,069     4,493       3,200        3,413
  Development fees                           1,059     1,779     2,246       1,468          720
  eFax services                              1,200         -         -           -            -
                                          --------  --------  --------    --------     --------
     Total revenues                         24,705    30,233    23,020      14,873       15,276
                                          --------  --------  --------    --------     --------
 Costs and expenses:
  Cost of product revenues                  13,540    16,005    11,886       8,441       11,102
  Inventory write-down -  hardware
   products                                  1,060         -         -           -            -
  Cost of software and technology
   license fees revenues                       584       710       770         517          587
  Cost of eFax services                      2,400         -         -           -            -
  Research and development                   6,188     5,445     5,355       2,554        2,318
  Selling and marketing                     19,972     7,267     6,046       5,212        5,216
  General and administrative                 5,320     2,592     3,031       1,726        1,652
  Restructuring costs                          872         -         -           -            -
  Acquisition and related expenses               -         -     2,106           -            -
                                          --------  --------  --------    --------     --------
     Total costs and expenses               49,936    32,019    29,194      18,450       20,875
                                          --------  --------  --------    --------     --------
 Loss from operations                      (25,231)   (1,786)   (6,174)     (3,577)      (5,599)
                                          --------  --------  --------    --------     --------
 Interest and other income (expense), net      335       365       111           -         (259)
                                          --------  --------  --------    --------     --------
 Loss before income taxes                  (24,896)   (1,421)   (6,063)     (3,577)      (5,858)
 Provision for income taxes                     67        80        96         107           35
                                          --------  --------  --------    --------     --------
 Net loss                                  (24,963)   (1,501)   (6,159)     (3,684)      (5,893)
 Series A Convertible Preferred
  Stock dividends                             (769)        -         -           -            -
 Series P Redeemable Preferred
  Stock dividends                                -         -       (68)       (116)           -
                                          --------  --------  --------    --------     --------
 Net loss applicable to common
  stockholders                            $(25,732) $ (1,501) $ (6,227)   $ (3,800)    $ (5,893)
                                          ========  ========  ========    ========     ========
 Net loss per share:
   Basic                                  $  (2.04) $  (0.13) $  (0.84)   $  (2.13)    $  (3.86)
                                          ========  ========  ========    ========     ========
   Diluted                                $  (2.04) $  (0.13) $  (0.84)   $  (2.13)    $  (3.86)
                                          ========  ========  ========    ========     ========
 Shares used in computing per
  share amounts:
   Basic                                    12,585    11,784     7,389       1,784        1,526
                                          ========  ========  ========    ========     ========
   Diluted                                  12,585    11,784     7,389       1,784        1,526
                                          ========  ========  ========    ========     ========

                                                         December 31,                  March 31,
                                          ----------------------------------------   ------------
                                            1999      1998      1997 (1)    1996         1996
                                          --------  --------  --------    --------     --------
                                                             (in thousands)
Consolidated Balance Sheet Data:
   Working capital                        $  1,946  $ 10,928  $ 12,814    $    542     $  4,978
   Total assets                             15,508    16,215    18,856       7,092       12,031
Long-term note payable, less current
 portion                                         -         -         -         198            -
   Redeemable preferred stock                    -         -         -       2,726        2,610
   Convertible preferred stock               7,467         -         -           -            -
   Total stockholders' equity (deficit)      8,070    13,837    15,271        (861)       2,708
</TABLE>

(1) Effective December 31, 1996, the Company changed its fiscal year end from
    March 31 to a 52-53 week reporting year ending on the first Saturday on or
    after December 31.

                                     12

<PAGE>

ITEM 7.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
         RESULTS OF OPERATIONS


Overview

     The statements contained in this Annual Report on Form 10-K that are not
purely historical are forward-looking statements within the meaning of Section
27A of the Securities Act of 1933 (the "Securities Act") and Section 21E of the
Securities Exchange Act of 1934 (the "Exchange Act"), including statements
regarding the Company's expectations, hopes, intentions or strategies regarding
the future. When used herein, the words "may," "will," "expect," "anticipate,"
"continue," "estimate," "project," "intend" and similar expressions are
intended to identify forward-looking statements within the meaning of the
Securities Act and the Exchange Act.  Forward-looking statements include:
statements regarding events, conditions and financial trends that may affect
the Company's future plans of operations, business strategy, results of
operations and financial position.  All forward-looking statements included in
this document are based on information available to the Company on the date
hereof, and the Company assumes no obligation to update any such forward-
looking statements. Investors are cautioned that any forward-looking statements
are not guarantees of future performance and are subject to risks and
uncertainties and that actual results may differ materially from those included
within the forward-looking statements as a result of various factors. Factors
that could cause or contribute to such differences include, but are not limited
to, those described below, under the heading "Factors That May Affect Operating
Results" and elsewhere in this Annual Report on Form 10-K.

     eFax.com is a leading provider of Internet communications services.
eFax.com currently provides its free and fee-based Internet communications
services to more than 1.6 million users.  In February 1999, eFax.com launched
its Internet communications services, which incorporate fax-to-email, voicemail
and voice-to-email capabilities.  Prior to developing this market, eFax.com had
developed and marketed branded and licensed products and software solutions for
the MFP market, which consisted of electronic office devices that combine
print, fax, copy and scan capabilities in a single unit.  In addition, eFax.com
has licensed its embedded systems technology and software to a number of
manufacturers of multi-function products.  On January 10, 2000, we announced
that we will focus exclusively on expanding our position as a leading provider
of enhanced Internet communications services and solutions and that we will
discontinue manufacturing and sales of multifunction products.

     eFax.com's revenues are derived from four sources: (i) product revenues
consisting of sales of JetFax branded MFPs, OEM branded MFPs, consumables and
upgrades; (ii) software and technology license fees related to both the
Company's embedded system technology for MFPs and desktop software; (iii)
development fees for the customization and integration of eFax.com's embedded
system technology and desktop software in OEM products; and (iv) eFax( Service
revenues derived from the Company's internet-based services introduced during
the quarter ended June 30, 1999.  Historically, product revenues have accounted
for the majority of eFax.com's total revenues.  For the year ended December 31,
1999, product revenues, software and technology licenses fees, development fees
and eFax services revenues as a percentage of total revenues were 76%, 15%, 4%,
and 5%, respectively, as compared to 77%, 17%, 6%, and 0 % for the prior year.

     Overall product revenues for the year ended December 31, 1999 declined
from the prior year as a result of the Company's transition to an OEM and
internet-based business model.  Shipments of the new OEM platform MFP began in
the fourth quarter of 1999. In January 2000, the Company announced its decision
to discontinue manufacturing its MFP products.  We intend to complete the final
OEM contract during the first quarter of 2000.

     The new emphasis on Internet services has resulted in increased
expenditures for both external promotions and other marketing expenses.  The
majority of these costs are related to media and Internet advertising promoting
both the basic service and new products and features as introduced.  Similarly
infrastructure costs to support the planned expansion of services have
increased.  These infrastructure costs include the cost of delivery of the
service such as telephony charges and depreciation on capital equipment, as
well as technical and operational support personnel.


                                     13

<PAGE>

ITEM 7.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
         RESULTS OF OPERATIONS (continued)

Recent Developments

     On April 5, 2000, the Company entered into a letter of intent and a loan
commitment letter with JFAX.COM, Inc., a unified Internet communications
company, in which:

     o  The Company and JFAX.COM established the principal terms for a
        potential merger of the Company and JFAX.COM.

     o  JFAX.COM agreed to lend the Company $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.

     o  The Company agreed to grant to JFAX.COM a warrant to acquire 250,000
        shares of the Company's common stock. The warrant will have a term of
        two years and will be exercisable at the market price of the Company's
        common stock on the date of grant, but the exercise price will reset to
        $1.00 per share if the proposed merger of the Company and JFAX.COM does
        not occur. The warrant is expected to be granted prior to April 15,
        2000.

     o  The Company agreed to grant to JFAX.COM a warrant with a term of two
        years and an exercise price of $1.00 per share of the Company's common
        stock. The warrant will be granted if the merger between the Company
        and JFAX.COM does not occur. The warrant will be for 750,000 shares of
        the Company's common stock if JFAX.COM terminates the merger
        discussions, other than following a material breach of the letter of
        intent by the Company, 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 the Company'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 the
Company 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 the Company'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 the
Company's common and preferred stockholders is included in Exhibit 2.1 to this
report. JFAX.COM would be the surviving corporation in the merger.  On April 5,
2000, the Company and the current holders of all of its shares of Series A
Convertible Preferred Stock entered into an exchange agreement under which the
holders agreed to exchange all of their outstanding shares of Series A
Convertible Preferred Stock for a new Series B Convertible Preferred Stock. The
Series B shares have a stated value which reflects the 25% premium that the
holders would have had the right, under the Series A Convertible Preferred
Stock, to receive in cash at the time of the Company's merger with JFAX.COM.
The Company has the right to require the Series B stockholders to accept
JFAX.COM common stock at the closing of the merger in return for any shares of
Series B Convertible Preferred Stock which they then own. The Series B
Convertible Preferred Stock will be convertible into shares of the Company's
common stock based on the average closing bid price of the Company's common
stock for the 20 trading days beginning on April 7, 2000. See Note 16 to the
Consolidated Financial Statements.


Results of Operations


     The following table sets forth, as a percentage of total revenues, certain
items in the Company's statements of operations for the periods indicated.

                                     14

<PAGE>


ITEM 7.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
         RESULTS OF OPERATIONS (continued)

<TABLE>
                                                       Year Ended
                                                       December 31,
                                            ----------------------------------
                                               1999        1998        1997
                                             --------    --------    --------

<S>                                            <C>         <C>         <C>
Revenues:
  Product                                          76%         77%         71%
  Software and technology license fees             15          17          19
  Development fees                                  4           6          10
  eFax services                                     5           -           -
                                             --------    --------    --------
     Total revenues                               100         100         100
                                             --------    --------    --------
Costs and expenses:
  Cost of product revenues                         55          53          52
  Inventory write-down - hardware products          4           -           -
  Cost of software and license revenues             2           2           3
  Cost of eFax services                            10           -           -
  Research and development                         25          18          24
  Selling and marketing                            81          24          27
  General and administrative                       21           9          13
  Restructuring costs                               4           -           -
  Acquisition and related expenses                  -           -           9
                                             --------    --------    --------
     Total costs and expenses                     202         106         127
                                             --------    --------    --------
Loss from operations                             (102)         (6)        (27)
Other income, net                                   1           1           -
                                             --------    --------    --------
Loss before income taxes                         (101)         (5)        (27)
Provision for income taxes                          -           -           -
                                             --------    --------    --------
Net loss                                         (101)%        (5)%       (27)%
                                             ========    ========    ========
</TABLE>


Year Ended December 31, 1999 Compared to Year Ended December 31, 1998

     Revenues.  Total revenues decreased 18% to $24.7 million for the year
     --------
ended December 31, 1999 from $30.2 million for the year ended December 31,
1998. The decline resulted primarily from a decline in product revenues as the
Company transitioned to an internet-based business model.

     Product revenues decreased 20% to $18.8 million from $23.4 million for the
years ended December 31, 1999 and 1998, respectively, a reflection of the
factors related to the discontinuation of the Company's JetFax branded
products. Revenue from shipments of MFPs for the year ended December 31, 1999
declined 36% from the preceding year, as final domestic and international units
of the JetFax branded Series M900 product were sold. Product revenues also
reflected the continued erosion in average selling prices, driven by the level
of OEM business, product discontinuation and general market pressures.  Average
selling prices for the year ended December 31, 1999 declined 13% from the prior
year. Unit sales for the year ended December 31, 1999 also decreased, down 39%
from the prior year. As a result, hardware product revenues declined for 1999
as the move to a new business model was implemented.  We anticipate that
product revenues from the shipment of MFPs will end at the end of the first
quarter of 2000.  Consumable revenue increased 28% for the year ended December
31, 1999 versus the prior year  We anticipate that we will continue to sell
consumables to our installed base of hardware customers.  However, as this base
will not continue to grow, we expect revenues will begin to decline over the
next several quarters.

                                     15

<PAGE>

ITEM 7.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
         RESULTS OF OPERATIONS (continued)

     Software and technology licensing fees declined 28% to $3.6 million for
the year ended December 31, 1999 from $5.1 million for the year ended December
31, 1998. The decline resulted from anticipated declines in per unit royalties
for the Hewlett-Packard SureStore CD-Writer, and due to a product transition
and reductions in software revenues due to the withdrawal of PaperMaster
products from the retail distribution channel.  Royalty fees from sales of the
Hewlett-Packard 3100 decreased by 17% from the prior year.  In January 2000,
Hewlett-Packard released the follow-on product to the 3100, the 3150.  We
anticipate that we will continue to receive royalties over the life of this
product.

     Development fees declined 40% to $1.1 million from $1.8 million for the
years ended December 31, 1999 and 1998, respectively, reflecting the completion
of current projects and conversion of development fees to per unit royalties.
Currently, we have no plans for new development projects and as a result do not
anticipate future development fees.

     eFax Service revenue totaled $1.2 million as compared to none in the prior
year and reflects the Company's transition to an internet-based business model.
eFax Service revenue consisted primarily of recurring monthly subscription
fees, signup fees, usage-based charges and revenues from advertising
activities. eFax premium service revenues began in June 1999.

     International revenues accounted for 13%, 18% and 29% of total revenues
for the years ended December 31, 1999, 1998, and 1997, respectively.  All of
the development fees and software and technology license revenues, and most of
the product revenues, have been denominated and collected in United States
dollars. Historically, international revenues were derived primarily from
product sales and consumables. International revenues are likely to decline in
the near term due to the discontinuation of hardware production. The Company
has not hedged the foreign currency exposure related to product sales
denominated in foreign currencies as the impact has not been significant.  See
"Factors That May Affect Operating Results - International Activities."

     Software and technology license fees result from licensing the Company's
proprietary embedded system technology and desktop software to OEMs for
integration into their products. The recurring license revenues reported by the
Company are dependent on the timing and accuracy of product manufacturing or
quarterly sales reports received from the Company's OEM customers. The
quarterly reports, as well as any verbal estimates, are subject to delay and
potential revision by the OEM. In such an event, the Company may subsequently
be required to adjust revenues for subsequent periods due to the change in
estimate, which could have a material adverse effect on the Company's business,
financial condition, and results of operations and on the price of the
Company's Common Stock.

     Cost of Product Revenues.    Cost of product revenues consists primarily
     ------------------------
of purchased materials; direct production labor and supervision for assembly
and testing; subcontracted manufacturing, mainly for printed circuit boards;
indirect labor for inventory management, shipping and receiving, purchasing,
manufacturing engineering, document control and operations management; and
related facility and support costs. Cost of product revenues may vary as a
percentage of total revenues in the future as a result of a number of factors
including: relative production volumes; the mix of product shipped and the
varying proportion of MFPs versus consumables and upgrades; changes in
production yields, especially those associated with the introduction of new
products; risk of inventory obsolescence and excess inventory; pricing
pressures in the market; and vendor quality or supply problems.

     The gross margins for the Company's branded MFP products were constrained
by the competitive nature of the marketplace, pricing pressures and the greater
name recognition of the larger companies with which eFax.com competes. The
margins on consumables, such as toner cartridges and drums, and on upgrades,
such as the two-line upgrade, were typically higher than on the base unit.  In
addition, the Company's consumables generate recurring revenues which tend to
increase as the cumulative number of units sold increases.

                                     16

<PAGE>

ITEM 7.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
         RESULTS OF OPERATIONS (continued)

     Cost of product revenues decreased 15% to $13.5 million from $16.0 million
for the years ended December 31, 1999 and 1998, respectively.  Product gross
margin was 28%, down from 32% for the prior year. The decrease was attributable
to volume and average selling price declines and the absence of favorable
foreign exchange rates experienced on inventory purchases in 1998.

     Inventory Write-Down - Hardware Products. In connection with the Company's
     ----------------------------------------
announced decision to exit from the manufacturing of MFP products, the Company
recognized in 1999 a one-time $1.1 million write-down of inventory to reflect
anticipated realizable values of the inventory on hand.

     Cost of Software and License Revenues.     Cost of software and license
     -------------------------------------
revenues consists primarily of royalties paid for licensed technology included
in the Company's products, amortization of purchased technology, and the
duplication and packaging expense associated with software sold in the retail
market.  Cost of software and license revenues decreased 18% to $584,000 from
$710,000. The decrease in royalty revenues generated a corresponding decrease
in royalties payable for certain technology licensed from others for the year
ended December 31, 1999.

     Cost of eFax Services. Direct costs of providing the eFax Services totaled
     ---------------------
$2.4 million for the year ended December 31, 1999, as compared to none in the
prior year.  Planned expansion in support of the business growth included
service delivery costs such as telephony charges, depreciation on capital
equipment, operations personnel as well as all technical and customer support
related expenses.

     Research and Development.    Research and development expenses rose 14% to
     ------------------------
$6.2 million from $5.4 million for the years ended December 31, 1999 and 1998,
respectively, driven by higher personnel costs related to headcount growth,
software development charges in support of the new eFax Service, and an
increase in prototype and tooling charges in support of the next generation OEM
MFP platform.  Average headcount for the current year rose 2% over the prior
year.

     Selling and Marketing.    Selling and marketing expenses increased 175% to
     ---------------------
$20.0 million from $7.3 million for the years ended December 31, 1999 and 1998,
respectively.  Increased promotional activity in support of the new eFax
Service accounted for effectively all of the increase, more than offsetting the
elimination of external marketing efforts related to the branded hardware
business. Selling and marketing expenses included approximately $15.0 million
in expenses associated with advertising in 1999. Selling and marketing expenses
are expected to decline from the current level on a dollar basis in the first
half of 2000 but remain important to the Company's continued development.

     General and Administrative.     General and administrative expenses rose
     --------------------------
105% to $5.3 million from $2.6 million for the years ended December 31, 1999
and 1998, respectively. The increase primarily resulted from $1.4 million of
stock-based severance charges related to changes in executive management in the
second quarter. The increase in general and administrative expenses in 1999
also resulted from the amortization of trademarks, legal expenses, consultant
expenses, expenses related to external reporting for public companies, and, to
a lesser degree, hiring and compensation expenses were responsible for this
increase.  The Company anticipates a $500,000 charge in the first quarter of
2000 from a severance charge relating to another executive management change.

     Restructuring costs.    In connection with the Company's announced
     -------------------
decision to exit from manufacturing MFP products, the Company recognized an
$872,000 restructuring charge for the write-down of capital equipment,
intellectual property and leasehold improvements, excess facilities accruals
and severance costs. It is anticipated that the discontinuation and
restructuring was substantially completed during the first quarter of 2000.

     Interest and Other Income, Net.     Interest and other income, net,
     ------------------------------
decreased to $335,000 from  $365,000 for the years ended December 31, 1999 and
1998, respectively, as a $143,000 increase in other expense and

                                     17

<PAGE>

ITEM 7.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
         RESULTS OF OPERATIONS (continued)


the absence of $46,000 in other income was partially offset by a $113,000
increase in interest income from interest-bearing investments.

     Provision for Income Tax.     Due to eFax.com's net losses, there were no
     ------------------------
provisions for federal or state income taxes for the years ended December 31,
1999 and 1998, respectively.  Income tax provisions of  $67,000 and $80,000,
for the years ended December 31, 1999 and 1998, respectively, relate primarily
to foreign withholding taxes on certain royalty fees, and also include minimum
state and franchise taxes.


Year Ended December 31, 1998 Compared to Year Ended December 31, 1997

     Revenues.     Total revenues increased 31% to $30.2 million for the year
     --------
ended December 31, 1998 from $23.0 million for the year ended December 31,
1997.  Product revenue from the sale of the Company's MFPs and related
consumables and accessories was $23.4 million in 1998, a 44% increase from
$16.3 million during the year ended December 31, 1997.  All product categories
rose significantly year over year, as MFP's, consumables and accessories
advanced 45%, 42% and 37%, respectively, for the year ended December 31, 1998
from the same period ended December 31, 1997. MFP unit sales increased 61% for
the year ended December 31, 1998 from the same period ended December 31, 1997.
This increase in demand was partially offset by average selling price declines
driven by competitive pricing in the market.  The number of units sold each
quarter was relatively flat during the first nine months of 1998, dropping by
18% in the final three month period ended December 31, 1998.  The decline in
unit shipments in the last quarter was due primarily to inventory level
adjustments at one of the Company's marketing channel partners, IKON, that
began in September 1998 and continued through year-end.

     Development revenue decreased 21% to $1.8 million for the year ended
December 31, 1998 from $2.2 million for the year ended December 31, 1997.
Major development milestones on the original Hewlett-Packard contract were
completed in 1997 and the revenue stream from development fees was converted to
per unit royalties in the first part of 1998. The follow-on development efforts
did not commence until May 1998, which resulted in the decrease.

     Software and technology licensing fees rose 13% to $5.1 million for the
year ended December 31, 1998 from $4.5 million for the year ended December 31,
1997.   The year ended December 31, 1998 included per unit royalties for 1) the
H-P SureStore CD-Writer, which began shipping in February 1998 and 2) H-P
LaserJet 3100, which began shipping in March 1998.  Partially offsetting these
increases in per unit royalties, revenue from acquired DocuMagix software
products for the year ended December 31, 1998 fell 79% to $.5 million from $2.1
million for the same period ended December 31, 1997, the result of withdrawal
of products from the retail distribution channel.

     International revenues declined to 18% of total revenues from 29% for the
year ended December 31, 1998 and 1997, respectively. Product revenue increases
in 1998 were more heavily concentrated in the US as opposed to Europe,
resulting in the proportionate decline.  The Company did not sell its products
in any Asian countries, though products are sold in New Zealand and Australia.
Two customers, Hewlett-Packard and IKON Office Solutions, accounted for $5.3
million (18%) and $4.8 million (16%), respectively, of total revenues for the
year ended December 31, 1998.  The same two customers accounted for $3.1
million (13%) and $4.4 million (19%), respectively, of total revenues for the
year ended December 31, 1997.

     Cost of Product Revenues.    Cost of product revenues consisted primarily
     ------------------------
 of purchased materials; direct production labor and supervision for assembly
and test; subcontracted manufacturing, mainly for printed circuit boards;
indirect labor for inventory management, shipping and receiving, purchasing,
manufacturing engineering, document control and operations management; and
related facility and support costs.

     Cost of product revenues increased 35% to $16.0 million from $11.9 million
for the years ended December 31, 1998 and 1997, respectively.  In 1998 the year
end review of inventory resulted in an increase in reserves of $350,000.
Approximately half of this charge related to reduced MFP demand and half to

                                     18

<PAGE>


ITEM 7.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
         RESULTS OF OPERATIONS (continued)


previously inventoried marketing materials.  Despite this adjustment, product
gross margins expanded to 31.6% from 27.0% for the years ended December 31,
1998 and 1997, respectively. The improvements in gross margin for JetFax
branded products and consumables were due to manufacturing efficiencies, higher
volumes, and a shift in mix to the newer Series M900 product lines, the
aggregate of which more than offset a decline in average selling price of MFPs
and the inventory reserve adjustment.

     The Company purchased print engines for its Series M900 product line in
Yen from Oki Data Corporation and included exchange gains and losses related to
Yen-based purchases and hedging activity in cost of goods sold.  In order to
reduce the potential volatility related to the ongoing Yen liability, the
Company entered into a Yen hedge in August 1997.  As the Yen weakened during
the year ended December 31, 1998, the average exchange rate for purchases
improved to 133 from 122 Yen to the dollar for the year ended December 31,
1997.  As a result of this rate improvement, cost of goods sold was lowered by
over $300,000.  Hedging activity generated a loss of  $12,000 for the year
ended December 31, 1998.  Given the considerable expense associated with
maintaining the Yen hedge, coupled with the recent strengthening of the Yen in
relation to the dollar, the Company decided to terminate its Yen hedge in
September 1998.

     Cost of Software and License Revenues.     Cost of software and license
     -------------------------------------
revenues consisted primarily of royalties paid for licensed technology included
in the Company's products, amortization of purchased technology, and the
duplication and packaging expense associated with software sold in the retail
market.  Cost of software and license revenues decreased 8% to $710,000 from
$770,000. The increase in per unit royalty revenues generated a corresponding
increase in per unit royalties payable for certain technology licensed from
others for the year ended December 31, 1998.  This was in turn offset by
reduced expenses related to retail software sales as the Company withdrew from
the retail channel distribution market.

     Research and Development.     Research and development expenses were
     ------------------------
essentially flat at $5.4 million for the years ended December 31, 1998 and
1997, respectively.  Average engineering headcount increased to 45 from 39 for
the years ended December 31, 1998 and 1997, respectively.  The related increase
in engineering compensation expense was effectively offset by (1) reduced
prototype, materials and external consultant charges and (2) the non-recurrence
of acquisition-related DocuMagix retention bonuses of $150,000 from December
1997.   As a percent of revenue, research and development expense declined to
18%, a result of the increase in revenue.

     Selling and Marketing.     Selling and marketing expenses consist
     ---------------------
primarily of personnel related costs and commissions, travel and entertainment
expenses, advertising and promotional expenses, marketing communications,
customer support, and service and facilities expenses.  Selling and marketing
expenses increased 20% to $7.3 million from $6.0 million for the year ended
December 31, 1998 and 1997, respectively.  An additional $1.3 million in
promotional efforts including dealer incentives, advertising, and public
relations in support of the Series M900 product accounted for the period
increase.  This was offset to a minor degree by the non-recurrence of
acquisition-related DocuMagix retention bonuses of $77,000 from December 1997.
As a percentage of revenues, selling and marketing expenses declined slightly
to 24% from 27% for the year ended December 31, 1998 from the year ended
December 31, 1997, as the rise in revenue outpaced the increase in marketing
charges.

     General and Administrative.     General and administrative expenses
     --------------------------
include personnel related costs for administrative, finance, and executive
personnel, outside professional fees, and facilities expenses. General and
administrative expenses decreased 15% to $2.6 million from $3.0 million for the
years ending December 31, 1998 and 1997, respectively.  Elimination of
redundant costs related to facilities, business insurance, and legal and
accounting services, effective with the acquisition of DocuMagix accounted for
the drop in expense.  Expenses related to public company disclosures, e.g.,
reporting to shareholders and SEC filings, more than offset the non-recurrence
of DocuMagix retention bonuses of $169,000.  As a percentage of revenues,
general and administrative expenses declined to 9% from 13% for the year ended
December 31, 1998 from the year ended December 31, 1997.

     Acquisition Charges and Related Expense.     Acquisition charges related
     ---------------------------------------
to the purchase of substantially all the assets of the Crandell Group, Inc. in
July 1996 and the purchase of DocuMagix, Inc.


                                     19
<PAGE>

ITEM 7.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
         RESULTS OF OPERATIONS (continued)

through a pooling of interests transaction which closed in December 1997.
There were no acquisition related charges for the year ended December 31, 1998;
there were a total of $2.1 million in acquisition charges for the year ended
December 31, 1997.  The Crandell Group's $1.7 million portion of the 1997
acquisition charges was comprised of: a $1.0 million compensation payment in
July 1997, acquisition charges of $0.6 million for a variable equity award
classified as compensation; and compensation expenses of $56,000 associated
with royalties related to the continuing employment of the founders of the
Crandell Group.  The $425,000 DocuMagix portion of the 1997 acquisition charges
was primarily comprised of legal and accounting costs related to the pooling of
interests transaction and the estimated lease obligation for the previous
DocuMagix facility.

     Interest and Other Income (Expense).     Interest and other income, net
     -----------------------------------
increased to $365,000 from $111,000 for the year ended December 31, 1998 and
1997, respectively.  Interest income from investments was essentially flat at
$300,000, while interest expense declined to zero from $119,000.  Foreign
exchange gains (losses) increased to $19,000 from ($58,000) for the years ended
December 31, 1998 and 1997, respectively.

     Provision for Income Taxes.     Due to the Company's net losses, there
     --------------------------
were no provisions for federal or state income taxes for the year ended
December 31, 1998 or the year ended December 31, 1997.  Income tax provisions
of $80,000 and $96,000 for the year ended December 31, 1998 and 1997,
respectively, related primarily to foreign withholding taxes on certain royalty
fees, but also include minimum state and franchise taxes.


Recent Accounting Pronouncements

     In December 1999, the Securities and Exchange Commission ("SEC") released
Staff Accounting Bulletin (SAB) No. 101, Revenue Recognition in Financial
Statements.  This bulletin summarizes certain interpretations and practices
followed by the Division of Corporation Finance and the Office of the Chief
Accountant of the SEC in administering the disclosure requirements of the
Federal securities laws in applying generally accepted accounting principles to
revenue recognition in financial statements.  Application of the accounting and
disclosures desired in the bulletin is required by the second quarter of 2000.
Although the Company has not fully assessed the implications of SAB No. 101,
management does not believe adoption of this bulletin will have a material
impact on the Company's consolidated financial position, results of operations
or cash flows.


Liquidity and Capital Resources

     In 1999, the Company's revenues were not sufficient to support its
operations, and revenues will not be sufficient enough to support operations
until such time, if any, that the Company's revenues from technology licensing
agreements and fee generating Internet-based services gain substantial market
acceptance. Historically, the Company has financed its operations to date
principally through private placements of debt and equity securities, proceeds
from borrowings under a bank line of credit that expired in August 1999, debt
associated with the Crandell Acquisition, and the Company's 1997 initial public
offering of common stock. The total amount of equity raised through a series of
private financing rounds and the Company's June 1997 initial public offering
through December 31, 1999 was $69 million. The Company has completed
discussions with JFAX.COM to finance the Company through an interim loan
agreement of $5.0 million while the two parties continue merger discussion
pursuant to a letter of intent to merge the Company with JFAX.COM; however, no
assurance can be given that these discussions and negotiations will culminate
in the contemplated merger. In the event that the Merger is not consummated,
the Company will need to obtain additional financing to repay the loan from
JFAX.COM and to finance continuing operating losses.  In such event, there can
be no assurance that the Company will be successful in obtaining additional
financing and that would result in a material adverse effect on the Company's
ability to meet its business objectives and continue as a going concern. See
Notes 1 and 16 to the Consolidated Financial Statements.

                                     20

<PAGE>


ITEM 7.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
         RESULTS OF OPERATIONS (continued)

     On May 10, 1999, eFax.com entered into a purchase agreement with an
investor for the private placement of $15.0 million of Series A Convertible
Preferred Stock, convertible into Common Stock at $21.1375 per share.  The
conversion price is subject to an adjustment after one year to the greater of
the then current market price of the Common Stock or 60% of the initial
conversion price if the current market price is less than the initial
conversion price. The agreement also includes 300,000 warrants exercisable at a
10% premium to the Series A Convertible Preferred Stock conversion price.  The
Series A Convertible Preferred Stock includes an 8% dividend payable in cash or
common stock at the option of eFax.com. The closing occurred on May 13, 1999.
eFax.com filed a registration statement for the resale of the shares of Common
Stock acquired on conversion of the Convertible Preferred Stock and upon
exercise of the warrants.

     Cash and short term investments increased to $4.7 million at December 31,
1999 from  $4.1 million at December 31, 1998.  Net cash used for operating
activities was $5.7 million in 1999, resulting primarily from the Company's net
loss of $25.0 million partially offset by noncash charges of $11.4 million. In
addition, inventories decreased to $1.7 million from $4.5 million at December
31, 1999 and 1998, respectively, a result of reduced stocking levels related to
the discontinuance of the Company's MFP product line and an associated write-
down of $1.0 million.  Accounts receivable decreased to $2.4 million from $4.4
million at December 31, 1999 and 1998, respectively, which was principally the
result of the withdrawal from the MFP market.  Accounts payable increased $2.7
million to $4.4 million at December 31, 1999 from $1.7 million at December 31,
1998.  The increase in payables resulted from additional expenses related to
the ramp-up of the Company's internet-based services and related selling and
marketing expenses. Other changes in working capital items also partially
offset the net loss by approximately $0.5 million.

     Investing activities for the year ended December 31, 1999 consumed $2.3
million of cash: $1.9 million for property purchases, $184,000 for investment
in other assets and $187,000 for net purchases of short-term investments.

     Financing activities for the year ended December 31, 1999, provided $15.6
million of cash: $14.2  million in proceeds from the sale of Series A
Convertible Preferred Stock, and $1.4 million in proceeds from the sale of
Common Stock.


Factors That May Affect Operating Results

     eFax.com operates in a dynamic and rapidly changing environment that
involves numerous risks and uncertainties. This Annual Report on Form 10-K may
contain projections of results of operations and financial condition or other
"forward-looking statements" which involve risks and uncertainties. The words
"anticipate," "believe," "estimate," and "expect" and similar expressions when
used in this Annual Report on Form 10-K in relation to eFax.com or its
management are intended to identify such forward-looking statements. eFax.com's
actual results, performance, or achievements could differ materially from these
projections or forward-looking statements as a result of many factors,
including those discussed in this "Factors That May Affect Operating Results"
section of the Annual Report on Form 10-K. This section should be read in
conjunction with the audited Consolidated Financial Statements and Notes
thereto included in Part IV - Item 14 of this Annual Report on Form 10-K.


WE HAVE EXPERIENCED FLUCTUATIONS IN OUR QUARTERLY OPERATING RESULTS.

     eFax.com in the past has experienced, and in the future may experience,
significant fluctuations in its quarterly operating results. These fluctuations
have been or may be caused by many factors, including:

   o   acceptance and timing of new products combining communications
       technology with the Internet;

   o   the size and timing of development or software licensing agreements;

                                     21

<PAGE>


ITEM 7.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
         RESULTS OF OPERATIONS (continued)


   o   the timing of the phase-out of eFax.com's hardware products;

   o   fluctuations in consumer demand for eFax.com's brand products and for
       products which are made by eFax.com's manufacturing and software license
       customers incorporating eFax.com's technology; and

   o   seasonal trends, competition and pricing.


EFAX.COM EXPECTS THAT ITS OPERATING RESULTS WILL CONTINUE TO FLUCTUATE AS A
RESULT OF THESE AND OTHER FACTORS.

     For these and other reasons, we believe that period-to-period comparisons
of eFax.com's results of operations are not necessarily meaningful. We believe
that you should not rely upon these comparisons as indicators of future
performance. It is likely that in future quarters, eFax.com's operating results
will sometimes be below the expectations of public market analysts and
investors. This could have a material adverse effect on the price of eFax.com's
common stock.

     We believe that the accuracy of eFax.com's report of its quarterly license
revenues received from its manufacturing and software license customers has
been, and will continue to be, dependent on the timing and accuracy of product
sales reports which we receive from these manufacturing and software license
customers. Our manufacturing and software license customers only provide these
reports on a quarterly basis and this quarterly basis may not coincide with
eFax.com's quarter. Our manufacturing and software license customers may also
delay or revise these reports. Therefore, we are required to estimate all of
the recurring license revenues from manufacturing and software license
customers for each quarter. As a result, we will record an estimate of such
revenues prior to public announcement of eFax.com's quarterly results.  In the
event the product sales reports we receive from our manufacturing and software
license customers are delayed or subsequently revised, we may be required to
adjust revenues for subsequent periods. This  adjustment of revenues could have
a material adverse effect on eFax.com's business, financial condition and
results of operations and, as a result, the price of eFax.com's common stock.


THE PRICE OF EFAX.COM STOCK MAY BE VOLATILE DUE TO MANY FACTORS, INCLUDING OUR
STATUS AS AN INTERNET-RELATED COMPANY, FLUCTUATIONS IN OUR QUARTERLY OPERATING
RESULTS, THE RAPID PACE OF TECHNOLOGICAL CHANGE, THE UNCERTAINTY OF OUR
BUSINESS TRANSACTIONS AND THE CONTENTS OF NEWS AND SECURITY ANALYST REPORTS.


     The trading price of eFax.com's common stock is likely to be highly
volatile. The price could be subject to wide fluctuations in response to
factors such as:

   o   actual or anticipated variations in eFax.com's quarterly operating
       results;

   o   announcements of technological innovations or new services by eFax.com
       or its competitors;

   o   announcements of significant acquisitions or strategic partnerships by
       eFax.com or its competitors;

   o   changes in financial estimates and recommendations by securities
       analysts; and

   o   news reports relating to trends in eFax.com's markets.


                                     22

<PAGE>


ITEM 7.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
         RESULTS OF OPERATIONS (continued)


     In addition, the stock market in general, and the market prices for
Internet-related companies in particular, have experienced extreme volatility
that is often unrelated to the operating performance of these companies. These
broad market and industry fluctuations may adversely affect the price of
eFax.com's common stock, regardless of eFax.com's actual operating performance.


ALTHOUGH WE TAKE STEPS TO PROTECT OUR INTELLECTUAL PROPERTY RIGHTS, WE MAY
BECOME SUBJECT TO TIME-CONSUMING AND COSTLY LITIGATION WHERE WE ARE ACCUSED OF
INFRINGING THE INTELLECTUAL PROPERTY RIGHTS OF OTHER PARTIES.  IN FACT, WE WERE
RECENTLY SUED FOR INFRINGING A TRADEMARK OF E-FAX COMMUNICATIONS.

     eFax.com's success is heavily dependent upon its intellectual property.
To protect its proprietary rights, eFax.com relies on a combination of
copyright, trade secret and trademark laws, patents, nondisclosure agreements
and other contractual restrictions.  As part of its confidentiality procedures,
eFax.com generally enters into nondisclosure agreements with its employees,
consultants, manufacturing and software license customers and strategic
partners. eFax.com also limits access to and distribution of its designs,
software and other proprietary information. Despite these efforts, eFax.com may
be unable to effectively protect its proprietary rights. In addition,
enforcement of eFax.com's proprietary rights may be expensive. We cannot assure
you that eFax.com's means of protecting its proprietary rights will be
adequate. Nor can we assure you that eFax.com's competitors will not
independently develop similar technology.

     As the number of patents, copyrights, trademarks and other intellectual
property rights in eFax.com's industry increases, eFax.com's intellectual
property may increasingly become the subject of infringement claims.  In the
past, eFax.com has received communications from other parties claiming that
eFax.com's trademarks or products infringe the proprietary rights of these
parties.  eFax.com has also received communications asking for
"indemnification" against such infringement.  "Indemnification" means that
eFax.com would promise to repay or reimburse the other party for loss or
damages suffered by that other party as a result of infringement.  eFax.com's
manufacturing and software license customers generally require eFax.com to
reimburse or "indemnify" the manufacturing and software license customers for
claims of infringement from third parties. We can give you no assurance that
third parties will not make infringement claims against eFax.com or its
manufacturing and software license customers in the future. Any of these
claims, even if they have no legal merit, could be time consuming (especially
for key management and technical personnel), result in costly litigation or
cause delays in revenues. In addition, these claims could require eFax.com to
enter into royalty or licensing agreements on terms unacceptable to eFax.com.
If eFax.com fails to develop a substitute technology, or to license a
substitute technology on acceptable terms, this could have a material adverse
effect on eFax.com's business, financial condition and results of operations.
As an example, eFax.com was sued in February 1999 by E-Fax Communications which
claimed that the use of the name "eFax.com" infringed this party's trademark
rights. In settlement of the matter, eFax.com paid E-Fax Communications a
combination of cash and common stock in an amount not exceeding $2.5 million.


OUR REVENUES MAY NOT GROW AS ANTICIPATED BECAUSE THE MARKET FOR OUR INTERNET-
RELATED SERVICES IS NEW, RAPIDLY CHANGING AND UNCERTAIN.

     The market for Internet-related communication services is very new and is
evolving rapidly.  eFax.com expects to rely significantly in the future on
revenues generated through its "eFax" service, a free fax-to-email, email-to-
fax and voice-to-email service, and products which support this service. We
cannot assure you, however, that the base


                                     23

<PAGE>


ITEM 7.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
         RESULTS OF OPERATIONS (continued)


of customers subscribing to our eFax(c) service will continue to expand
rapidly. Nor can we assure you that users will be willing to pay fees for
premium services or that the subscriber base will grow large enough to be
capable of generating advertising revenue. As a result, our revenues may not
grow as anticipated, which would have a negative effect on our business.


WE HAVE CHANGED THE FOCUS OF OUR BUSINESS TO INTERNET-RELATED SERVICES,
PRODUCTS AND TECHNOLOGIES AND GROWTH OF BUSINESS IN THIS NEW FOCUS AREA IS
UNCERTAIN.

     Historically, eFax.com has focused primarily on the development,
manufacture and sale of its branded multifunction products.  eFax.com derived a
substantial portion of its revenues from the sale of these brand multifunction
products. However, on January 10, 2000, we announced the discontinuation of our
manufacturing operations and that we now expect that our future revenue growth
will be dependent, largely, on expansion of our Internet-based communications
services, such as its fax-to-e-mail service, and on further licensing of
eFax.com's hardware and software technologies and software products. However,
we cannot assure you that eFax.com will realize growth in revenues from such
sales. If such growth in revenues does not occur, it could have a material
adverse effect on eFax.com's business, financial condition and results of
operations.


WE DEPEND ON THE CONTINUED GROWTH OF INTERNET COMMERCE.  WE FACE THE RISKS THAT
INTERNET COMMERCE MAY NOT GROW AS RAPIDLY AS ANTICIPATED AND THAT THE INTERNET
MAY EXPERIENCE TECHNICAL PROBLEMS DUE TO INSUFFICIENT INFRASTRUCTURE AND
INADEQUATE TECHNOLOGICAL IMPROVEMENTS.

     eFax.com intends to derive a significant portion of its revenues from its
Internet communications services, called "eFax", and related products. Rapid
growth in the use of and interest in the Internet and online Internet services
is a recent phenomenon. As a result, a sufficiently broad base of consumers may
not adopt and continue to use the Internet and other online services as a way
of purchasing and conducting business. Internet web-based advertising and the
sales of premium Internet services are relatively new. It is difficult to
predict the extent that these will grow, or if they will grow at all. In
addition, the Internet may not prove to be a viable commercial marketplace for
reasons such as potentially inadequate development of:

   o   Internet network infrastructure;  and

   o   technologies which enable use of the Internet.

     If any of the following take place, it could have a material adverse
effect on eFax.com's business, financial condition and results of operation:

   o   if the use of the Internet and other online services does not continue
       to increase or increases more slowly than expected;

   o   if performance improvements to support increased levels of Internet
       activity prove to be inadequate,

   o   if the infrastructure for the Internet and online services proves to be
       inadequate to effectively support expansion; or

   o   if the Internet does not become a viable commercial marketplace.


                                     24

<PAGE>


ITEM 7.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
         RESULTS OF OPERATIONS (continued)


CERTAIN OF OUR PRODUCTS ARE BEING DISCONTINUED AND OUR MANUFACTURING AND
SOFTWARE LICENSE CUSTOMERS, WHICH PROVIDE A SIGNIFICANT PORTION OF OUR
REVENUES, MAY NOT CONTINUE TO DEVELOP, MARKET OR SELL PRODUCTS INCORPORATING
EFAX.COM'S TECHNOLOGY.

     eFax.com has derived a significant portion of its revenues from licensing
of its software and hardware and software technologies to other parties and
from providing development services to manufacturing and software license
customers. eFax.com currently has manufacturing relationships with Hewlett-
Packard Company, Oki Data Corporation, and Konica Business Systems.  As a
result of discontinuing our hardware products, we do not anticipate future
product revenues Oki Data Corporation or Konica Business Systems after the
first quarter of 2000.  eFax.com anticipates that it will derive a significant
portion of its revenues in the future from its manufacturing and software
license customers and that eFax.com's revenues will be dependent upon, among
other things, the ability and willingness of its manufacturing and software
license customers to develop and promote products that incorporate eFax.com's
technology.  The ability and willingness of these manufacturing and software
license customers to do this is based upon a number of factors, including
eFax.com's ability to complete timely development of designs for them.  We
cannot give you any assurances regarding the ability or willingness of
eFax.com's manufacturing and software license customers to continue developing,
marketing and selling products incorporating eFax.com's technology.  The loss
of any of eFax.com's significant manufacturing and software license customers
could have a material adverse effect on eFax.com's business, financial
condition and results of operations.


WE HAVE A HISTORY OF OPERATING LOSSES AND AN ACCUMULATED DEFICIT

     eFax.com has had annual net losses since the company was formed.
eFax.com's historical losses and certain preferred stock dividends have
resulted in an accumulated deficit of approximately $55.0 million as of
December 31, 1999. We can give you no assurance that eFax.com will achieve
profitability on a quarterly or annual basis in the future. As a result of our
history of operating losses and substantial expenditures associated with the
transition to an Internet-based business model, we are currently experiencing a
liquidity shortfall which we are addressing by seeking additional capital
investments.


WE MAY NOT BE ABLE TO OBTAIN SUFFICIENT FUNDS TO GROW OUR BUSINESS.

     We intend to continue to grow our business.  Due to our limited operating
history in Internet communication services and the nature of our industry, our
future capital needs are difficult to predict.  Therefore, we will require
additional capital to fund any of the following:

   O   continuing operating losses

   o   unanticipated opportunities;

   o   strategic alliances;

   o   potential acquisitions;

   o   changing business conditions; and

   o   unanticipated competitive pressures.


                                     25

<PAGE>


ITEM 7.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
         RESULTS OF OPERATIONS (continued)


     Obtaining additional financing will be subject to a number of factors,
including market conditions, our operating performance and investor sentiment.
These factors may make the timing, amount, terms and conditions of additional
financings unattractive to us.  If we are unable to raise additional capital,
our current operations and our growth could be impeded. See Note 1 of Notes to
Consolidated Financial Statements.


WE MAY FAIL TO ADAPT TO OUR MARKET'S RAPIDLY CHANGING TECHNOLOGY AND EVOLVING
INDUSTRY STANDARDS AND WE MAY LOSE COMPETITIVENESS AND REVENUES AS A RESULT.

     The market for eFax.com's products and services is characterized by
rapidly changing technology, evolving industry standards and needs, and
frequent new product introductions.  As the market for Internet-based
communication services grows, this market will begin to exert more pressure on
companies to develop advanced features at more economical pricing. As product
development increases in complexity and the expected time to bring a product to
market continues to decrease, the risk and difficulty in meeting these
development schedules increases and the costs to eFax.com and its manufacturing
and software license customers also increases.  In addition, eFax.com, its
manufacturing and software license customers and their competitors may, from
time to time, announce new products, capabilities or technologies that may
replace or shorten the life cycles of eFax.com's services and software and the
life cycles of manufacturing and software license customers' products
incorporating eFax.com's technology. eFax.com's success will depend on, among
other things:

   o   market acceptance of eFax.com's service offerings; and

   o   the ability of eFax.com and its manufacturing and software license
       customers to respond to industry changes and market demands.

     Any failure of eFax.com to anticipate or respond adequately to the rapidly
changing technology and evolving industry standards and needs could result in a
loss of our competitiveness or revenues.  Any significant delay in our
development or introduction of new and enhanced products and services could
also result in a loss of competitiveness or revenues.  Such a loss of
competitiveness or revenues could have a material adverse effect on eFax.com's
business, financial condition and results of operations.


WE FACE A HIGH LEVEL OF COMPETITION IN OUR INTERNET-RELATED INDUSTRY.

     The market for Internet-related communication services, such as eFax.com's
fax-to-e-mail service, is a newly emerging market and competitors are just
beginning to appear.  eFax.com anticipates that it will need to:

   o   provide good service and grow its business rapidly to meet demand;

   o   create name recognition for eFax.com in advance of competitors;

   o   build its subscriber base prior to any significant entry by the
       competition; and

   o   continue to expand and improve on its Internet communication service
       offerings.

     eFax.com's technology, development services and software primarily compete
with solutions developed internally by manufacturing and software license
customers. Virtually all of eFax.com's manufacturing and software license
customers have significant investments in their existing solutions. These
manufacturing and

                                     26

<PAGE>


ITEM 7.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
         RESULTS OF OPERATIONS (continued)


software license customers have the substantial resources necessary to develop
competing multifunction technologies and software that may be implemented into
their own products. eFax.com also competes with technologies, software and
development services provided in the multifunction product market by other
systems and software suppliers to manufacturing and software license customers.

     The market for Internet-related communication services, related technology
and software is highly competitive.  This market is characterized by continuous
pressure to improve performance, to introduce new features and to accelerate
the release of new products.  eFax.com also competes on the basis of vendor
name and recognition, technology and software expertise, product functionality,
development time and price. eFax.com anticipates increasing competition for its
multifunction products, technologies, software under development and Internet
services.  Most of eFax.com's existing competitors, many of its potential
competitors and all of eFax.com's manufacturing and software license customers
have substantially greater financial, technical, marketing and sales resources
than eFax.com.  In the event that price competition increases, competitive
pressures could cause eFax.com to:

   o   reduce the cost of its fee-based eFax Service offerings;

   o   expand services to match those offered by competitors; or

   o   reduce the amount of royalties received on new licenses.

     In turn, these reductions could reduce eFax.com's profit margins and
result in losses and a decrease in market share, which would have a material
adverse effect on eFax.com's business, financial condition and results of
operations.


WE ARE DEPENDENT ON KEY PERSONNEL AND COULD BE AFFECTED BY THE LOSS OF THEIR
SERVICES.

     eFax.com is largely dependent upon the skills and efforts of its senior
management, as well as other officers and key employees, some of whom only
recently have joined eFax.com.  None of eFax.com's officers or key employees
have an employment agreement with eFax.com. eFax.com believes that its future
success will depend in large part upon its ability to attract and retain highly
skilled engineering, managerial, sales, marketing and operations personnel,
many of whom are in great demand. Competition for such personnel, especially
engineering personnel, has recently increased significantly. The loss of key
personnel or the inability to hire or retain qualified personnel could have a
material adverse effect on eFax.com's business, financial condition and results
of operations. Edward R. Prince, III, our Chief Executive Officer, and Lon
Radin, our Vice President of Engineering recently resigned.


OUR RAPID GROWTH PLACES A STRAIN ON OUR OPERATIONS AND FINANCIAL RESOURCES AND
WE MAY FAIL TO MANAGE OUR GROWTH EFFECTIVELY.  IN ADDITION, WE MAY FACE RISKS
ASSOCIATED WITH ANY POTENTIAL ACQUISITION OF OTHER COMPANIES WHICH WE MAY
CHOOSE TO UNDERTAKE.

     eFax.com has grown rapidly in recent years.  A continuing period of rapid
growth could place a significant strain on eFax.com's management, operations
and other resources.  eFax.com's ability to manage its growth will require
eFax.com to continue to invest in its operational, financial and management
information systems, procedures and controls, and to attract, retain, motivate
and effectively manage its employees.  We can give no assurance that eFax.com
will be able to manage its growth effectively. Failure to manage growth
effectively would have a material adverse effect on eFax.com's business,
financial condition and results of operations. eFax.com may, from time to time,
pursue the acquisition of other companies, assets


                                     27

<PAGE>


ITEM 7.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
         RESULTS OF OPERATIONS (continued)


or product lines that complement or expand its existing business. Acquisitions
involve a number of risks that could adversely affect eFax.com's operating
results. These risks include:

   o   the diversion of management's attention from day-to-day business;

   o   the difficulty of combining and assimilating the operations and
       personnel of the acquired companies;

   o   charges to the company's earnings as a result of the purchase of
       intangible assets; and

   o   the potential loss of key employees as a result of an acquisition.


     eFax.com has no present commitments nor is it engaged in any discussions
or negotiations regarding possible acquisitions.  However, should any
acquisition by eFax.com take place, we can give no assurance that this
acquisition will not materially and adversely affect eFax.com or that any such
acquisition will enhance eFax.com's business.


WE ARE DEPENDENT ON A LIMITED NUMBER OF SERVICE PROVIDERS AND MAY BE AFFECTED
BY CHANGES, DELAYS OR INTERRUPTIONS IN OF SERVICES FROM THESE SUPPLIERS.

     eFax.com relies on various providers or network communication
infrastructure, telecommunications infrastructure and other partners providing
network management services.  We depend on relationships with providers and
partners for, among other things:

   o   management of our network operations;

   o   providing and managing our telephone numbers;

   o   telephony infrastructure; and

   o   network connectivity.

     eFax.com generally purchases network and telecommunications services under
multi-year agreements.  Alternate providers or partners may be readily
available for some of these services, but there may be unavoidable
interruptions in service if we change service providers.  However, for other
network management services, we do not know how long it would take to find a
replacement provider or partner and to establish a replacement network
operations center.  If we need to find another provider or partner of those
network management services which we now purchase from a single source, we may
experience delays, operational difficulties and increased expenses, and our
ability to provide services to our users or expand our operations may be
impaired.  Although we believe we could develop other providers or partners for
these single source services, no alternative providers or partners currently
exist and the process of finding an alternate provider or partner could take
several months or longer.  Therefore, any interruption in the performance of
these network management services could have a material adverse effect on
eFax.com's business, financial condition and results of operations.

     Given our dependence on network communication infrastructure,
telecommunications infrastructure and network management partners, any of the
following events could have a material adverse effect on eFax.com's business,
financial condition and results of operations:

   o   if any of these companies were to experience extended interruptions in
       network services;


                                     28

<PAGE>


ITEM 7.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
         RESULTS OF OPERATIONS (continued)


   o   if these providers were to experience financial difficulties or other
       problems which prevented them from meeting contractual service
       obligations;

   o   any shortage or interruption in the supply of telephone numbers used in
       eFax.com's services; or

   o   the inability of eFax.com to obtain any of these services from alternate
       providers or partner on acceptable terms.


WE GENERATE A SIGNIFICANT PORTION OF OUR REVENUES FROM OUR INTERNATIONAL
ACTIVITIES AND WE ARE SUBJECT TO MANY RISKS AS A RESULT OF THESE ACTIVITIES.

     A significant portion of eFax.com's total revenues come from sales to
eFax.com's customers outside the United States.  The international market for
eFax.com's brand products and products incorporating eFax.com's technology and
software is highly competitive.  Risks inherent in eFax.com's international
business activities also include:

   o   currency fluctuations and restrictions;

   o   the burdens of complying with a wide variety of foreign laws and
       regulations;

   o   longer accounts receivable cycles;

   o   the imposition of government controls;

   o   risks of localizing and internationalizing products to local
       requirements in foreign countries;

   o   trade restrictions;

   o   tariffs and other trade barriers;

   o   restrictions on bringing earnings back into the United States; and

   o   potentially adverse tax consequences.

     Any of these risks could have a material adverse effect on eFax.com's
business, financial condition and results of operations. Substantially all of
eFax.com's international sales are currently made in U.S. dollars. Therefore,
increases in the value of the U.S. dollar relative to foreign currencies could
make eFax.com's products less competitive in foreign markets. Because of
eFax.com's international activities, it faces currency exposure and currency
exchange risks. For example, eFax.com purchases some of its key components
pursuant to purchase contracts which require payment in foreign currency which
results in currency exchange risks.


OUR BUSINESS DEPENDS UPON THE DELIVERY OF ACCURATE ELECTRONIC INFORMATION VIA
THE INTERNET, AND IF YEAR 2000 ISSUES CAUSE LONG-TERM INOPERABILITY OF THE
INTERNET OR OUR SERVICES, WE COULD LOSE USERS OF OUR SERVICES OR BE UNABLE TO
CONTINUE OUR BUSINESS.

                                     29

<PAGE>

     Year 2000 issues refers to the issue surrounding computer programs that
use two digits rather than four to define a given year.  These programs might
read a date using "00" as the year 1900 rather than the year 2000, which could
cause a system failure or a miscalculation.

     Significant uncertainty exists concerning the potential costs and effects
associated with any year 2000 compliance problems.  Any year 2000 compliance
problems faced by us, users of our online marketplace and strategic partners
could seriously harm our business.  In addition, our ability to operate our
business depends upon delivery of accurate, electronic information via the
Internet.  To the extent year 2000 issues result in the long-term inoperability
of the Internet or our online marketplace, our business would be seriously
harmed.

     eFax.com has recently implemented new information systems and accordingly
does not anticipate any internal year 2000 problems from those information
systems, databases or programs.  However, year 2000 problems faced by major
distributors, suppliers, customers and financial service organizations with
which we interact could adversely impact eFax.com.  Our assessment of the
potential impact of these additional issues was completed in October 1999.  We
can give you no assurance that we were able to detect all potential failures of
eFax.com's computer systems or the computer systems of third parties.  A
significant failure of eFax.com's or a third party's computer system could have
a material adverse effect on eFax.com's business, financial condition and
results of operations.  eFax.com has completed its contingency plan, detailing
actions that would be taken in the event that such failure occurs. To date, we
have not experienced any significant disruptions related to the Year 2000
issue.


WE MAY BE ADVERSELY AFFECTED IF OUR COMPUTER SYSTEMS OR THOSE OF OUR
DISTRIBUTORS, SUPPLIERS AND CUSTOMERS FAIL BECAUSE OF ANY RESIDUAL YEAR 2000
PROBLEMS.

     The Year 2000 issue refers to whether computer systems will properly
recognize two digit year values as the year 2000 versus the year 1900. Systems
that do not properly recognize such information could generate erroneous data
or cause a system to fail. We recognize the need to insure that our operations
and relationships with our customers, suppliers and other third parties will
not be adversely impacted by the Year 2000 software issue. During the past
year, we have implemented and completed a Year 2000 project designed to
identify and assess the risks associated with its information systems,
products, operations and infrastructure, suppliers and customers that are not
Year 2000 compliant, and to develop, implement and test remediation and
contingency plans to mitigate these risks. To date, we have not experienced any
significant disruptions related to the Year 2000 issue and has not been
informed of any failures of the Company's products related to the year 2000
issue. We are not aware of any significant Year 2000 disruptions affecting our
critical suppliers and vendors. We cannot guarantee that our efforts will
prevent a material adverse impact on our results of operations, financial
condition or cash flow that might result from the failure of any key third
party systems to accommodate the Year 2000 problem. If our systems or those of
key third parties are not fully Year 2000 functional, we estimate that
disruptions in operations could occur. Such disruptions could result in delays
in providing services and in issuing billings to customers. These consequences
could have a material adverse impact on our consolidated results of operations,
financial condition and cash flows if we are unable to substantially conduct
our business in the ordinary course.


                                     30

<PAGE>


ITEM 7A.  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

     The following disclosures about the Company's market risk involve forward-
looking statements. Actual results could differ materially from those projected
in the forward-looking statements. The Company faces exposure to market risk
from adverse movements in interest rates and foreign currency exchange rates,
which could impact its results of operations and financial condition.   The
Company does not use derivative financial instruments for speculative purposes.

     Short-term Investments.   At December 31, 1999, the Company held $3.0
     ----------------------
million in short-term investments consisting of high quality financial
instruments with an original maturity of from three to fifteen months. These
available-for-sale securities are subject to interest rate risk and will fall
in value if market interest rates increase. If market interest rates were to
increase immediately and uniformly by 10 percent from levels at December 31,
1999, the fair market value of the short-term investments would decline by an
immaterial amount. The Company generally expects to have the ability to hold
its fixed income investments until maturity and therefore would not expect
operating results or cash flows to be affected to any significant degree by the
effect of a sudden change in market interest rates on short-term investments.

     Foreign Currency Exchange Rate. Historically, the Company's primary
exposure has related to significant purchases of materials for manufacture of
its Series M900 product line which were denominated in Yen. In order to reduce
the potential volatility related to its ongoing Yen liability, the Company has
occasionally purchased foreign currencies and held them during the contract
term. At December 31, 1999 the Company did not hold a hedge position against a
foreign currency exposure.

     At December 31, 1999 the Company had no purchase commitments denominated
in Yen.

     The Company does maintain cash balances denominated in British Pound
Sterling, Irish Punt, French Francs, and German Deutschemarks.  If foreign
exchanges rates were to weaken against the dollar immediately and uniformly by
10 percent from the exchange rate at December 31, 1999, the fair value of these
foreign currency amounts would decline by an immaterial amount.


ITEM 8.  FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

     The Company's financial statements are set forth in Item 14 below.


ITEM 9.  CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
         FINANCIAL DISCLOSURE

     Not applicable.

                                     31


<PAGE>


                                  PART III

ITEM 10.     DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

     The information concerning the directors of the Company is included in the
Company's Proxy Statement to be filed in connection with the Company's 2000
annual meeting of stockholders under the caption "Election of Directors" and is
incorporated herein by reference. The information concerning the executive
officers of the Company required by this item is as follows:

EXECUTIVE OFFICERS

     The current executive officers of the Company, and their ages as of
December 31, 1999, are as follows:

<TABLE>
<CAPTION>

               Name                   Age                  Position
----------------------------------   -----    ---------------------------------
<S>                                   <C>    <C>
Ronald P. Brown                        46     President

Michael Crandell                       44     Executive Vice President and
                                              Chief Technology Officer

Todd J. Kenck                          32     Vice President of Finance, Chief
                                              Financial Officer and Secretary

Michael C. Tonneson                    36     Vice President of Business
                                              Development

Josh A. Mailman                        38     Vice President of Operations


</TABLE>

     Ron Brown joined the Company in August 1998 as the Vice President of
     ---------
Marketing and was named President of the Company in January 2000.  Mr. Brown
was a founding partner in the Internet start-up, Musicvine from February 1997
to August 1998, concentrating on Web-casting sponsorships for large companies.
From February 1994 to February 1997, Mr. Brown was vice president of worldwide
corporate marketing for SyQuest Technology, a manufacturer of removable storage
devices for personal computers. From April 1993, until it was acquired by
Artisoft, Inc. in February 1994, Mr. Brown was vice president of marketing for
Eagle Technology, a manufacturer of networking products. Mr. Brown holds a B.A.
degree in Advertising and an M.B.A. from San Jose State University.

     Michael Crandell joined the Company in July 1996 as the Vice President of
     ----------------
Software and was named Executive Vice President and Chief Technology Officer in
January 2000. From January 1993 to July 1996, Mr. Crandell served as the
President of the Crandell Group, the assets of which were purchased by the
Company in July 1996. Prior to that, Mr. Crandell served as the President of
Crandell Development Corporation, a software development company from November
1984 to December 1992. From 1981 to November 1984, Mr. Crandell worked as a
Software Engineer with Compucorp, Inc. Mr. Crandell holds a B.A. in Religious
Studies from Stanford University.

     Todd J. Kenck joined the Company in April 1999 as the Vice President of
     -------------
Finance, Chief Financial Officer and Secretary.  From January 1998 to April
1999, Mr. Kenck was a Vice President of investment banking with Pacific Growth
Equities, Inc. From October 1989 to January 1998 served in various positions
with Volpe Brown Whelan & Company, LLC, an investment banking company, most
recently as an Associate in the technology investment banking group. Mr. Kenck
holds an M.B.A. from the Harvard Business School and a B.S. in business
administration from the University of Montana.

     Michael C. Tonneson joined the Company in November 1999 as the Vice
     -------------------
President of Business Development.  From June 1999 to November 1999, Mr.
Tonneson was Senior Director of Business Development with Tavolo.com, an online
retailer.  From September 1999 to June 1999, Mr. Tonneson was the Founder of
Natural Beverage Company, a beverage manufacturer.  From 1991 to 1998, Mr.
Tonneson

                                      32

<PAGE>


was Director of the consumer practice of Dove Associates, a strategy consulting
firm.  Mr. Tonneson holds an M.B.A. from the Amos Tuck School at Dartmouth
College and a B.A. in Economics and Computer Science from Dartmouth College.

     Josh A. Mailman rejoined the Company in January 1997 and most recently
     ---------------
held the position of Director of Business Development.  Mr. Mailman was
appointed Vice President of Operations in August 1999.  From July 1993 to
January 1997, Mr. Mailman was with Xerox Corporation in a variety of positions,
lastly as the Director of Worldwide Marketing Operations for their workgroup
fax product line. From May 1992 to June 1993, Mr. Mailman was Product Manager
for the Company.  Mailman holds a B.A. in Economics from the University of
California at Los Angeles and an M.B.A. from The Anderson School of Management
at the University of California at Los Angeles.


ITEM 11.     EXECUTIVE COMPENSATION

     The information required by this item is included under the caption
"Executive Compensation" in the Company's Proxy Statement to be filed in
connection with the Company's 2000 annual meeting of stockholders and is
incorporated herein by reference.


ITEM 12.     SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

     The information required by this item is included under the caption
"Security Ownership of Certain Beneficial Owners and Management" in the
Company's Proxy Statement to be filed in connection with the Company's 2000
annual meeting of stockholders and is incorporated herein by reference.


ITEM 13.     CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

     The information required by this item is included under the caption
"Certain Transactions with Management" in the Company's Proxy Statement to be
filed in connection with the Company's 2000 annual meeting of stockholders and
is incorporated herein by reference.


                                      33

<PAGE>

                                   PART IV

ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K

 (a) The following documents are filed as part of this Report:

<TABLE>
<CAPTION>

     1. Financial Statements.
        --------------------

                                                                           Page
                                                                           ----
       <S>                                                                 <C>
        Independent Auditors' Report......................................   35

        Consolidated Balance Sheets as of December 31, 1999 and 1998......   36

        Consolidated Statements of Operations for the Years Ended
          December 31, 1999, 1998, and 1997...............................   37

        Consolidated Statements of Stockholders' Equity (Deficit) for the
          Years Ended December 31, 1999, 1998, and 1997...................   38

        Consolidated Statements of Cash flows for the Years Ended
           December 31, 1999 1998, and 1997...............................   39

        Notes to Consolidated Financial Statements........................   40

</TABLE>

     2. Financial Statement Schedules.
        -----------------------------
        Schedule II - Valuation and Qualifying Accounts (see page 55)
            Schedules not listed above have been omitted because the
        information required to be set forth therein is not applicable or is
        shown in the financial statements or notes thereto.

     3. Exhibits.
        --------
            Set forth below is a list of management contracts and compensatory
        plans and arrangements required to be filed as Exhibits by Item
        14(a)(3).

        10.2**   1989 Stock Option Plan, as amended and restated, and forms of
                 Stock Option Agreements thereunder.
        10.3**   1995 Stock Plan, as amended and restated, and form of Stock
                 Option Agreement thereunder.
        10.4**   1997 Director Stock Option Plan and form of Stock Option
                 Agreement thereunder.
        10.5**   1997 Employee Stock Purchase Plan and forms of agreements
                 thereunder.
        10.28**  Common Stock Purchase Option dated as of March 29, 1996 by and
                 between Registrant and Steven J. Carnevale.
        10.29**  Common Stock Purchase Option dated as of March 29, 1996 by and
                 between Registrant and Thomas B. Akin.

        ** Incorporated by reference to the identically numbered exhibits filed
           in response to Item 16(a), "Exhibits", of the Company's Registration
           Statement on Form S-1, as amended, (File No. 333-23763), which was
           declared effective on June 10, 1997.

 (b)  Reports on Form 8-K.  No Reports on Form 8-K were filed by the Registrant
      -------------------
      during the fourth quarter of 1999.

 (c)  Exhibits Pursuant to Item 601 of Regulation S-K.  The exhibits required
      -----------------------------------------------
      by this Item are listed in the Exhibit Index attached hereto, which is
      incorporated by reference.

 (d)  Financial Statement Schedules.   The financial statement schedule
      -----------------------------
      required by this Item is listed under Item 14(a)(2) above.


                                      34

<PAGE>



INDEPENDENT AUDITORS' REPORT

To the Board of Directors and Stockholders of
eFax.com:

We have audited the accompanying consolidated balance sheets of eFax.com and
subsidiaries as of December 31, 1999 and 1998, and the related consolidated
statements of operations, stockholders' equity and comprehensive loss and cash
flows for the years ended December 31, 1999, 1998, and 1997.  These financial
statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.

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

In our opinion, such consolidated financial statements present fairly, in all
material respects, the financial position of eFax.com and subsidiaries at
December 31, 1999 and 1998, and the results of their operations and their cash
flows for the years ended December 31, 1999, 1998, and 1997 in conformity with
generally accepted accounting principles.

The accompanying consolidated financial statements have been prepared assuming
that the Company will continue as a going concern.  As discussed in Note 1, the
Company's recurring losses from operations, among other factors, raise
substantial doubt about the Company's ability to continue as a going concern.
Management's plans concerning these matters are also described in Note 1.  The
consolidated financial statements do not include any adjustments that might
result from the outcome of this uncertainty.


DELOITTE & TOUCHE LLP
San Jose, California
January 24, 2000
(April 5, 2000 as to Note 16)


                                      35

<PAGE>


                          EFAX.COM AND SUBSIDIARIES
                         CONSOLIDATED BALANCE SHEETS

              (in thousands, except share and per share amounts)

<TABLE>
<CAPTION>

                                                    December 31, December 31,
                                                        1999         1998
                                                    -----------  ------------
<S>                                                 <C>          <C>
ASSETS

Current assets:
  Cash and cash equivalents                            $  1,752    $  1,305
  Short-term investments                                  2,988       2,808
  Trade receivables, net of allowances of:
    $262 in 1999 and $277 in 1998                         2,414       4,402
  Inventories                                             1,698       4,519
  Prepaid expenses                                          507         247
                                                       --------    --------
    Total current assets                                  9,359      13,281

Property, net                                             2,253       1,339
Other assets                                              3,896       1,595
                                                       --------    --------
Total assets                                           $ 15,508    $ 16,215
                                                       ========    ========

LIABILITIES AND STOCKHOLDERS' EQUITY

Current liabilities:
  Accounts payable                                     $  4,404    $    777
  Accrued liabilities                                     2,044       1,576
  Restructuring reserve                                     605          --
  Current deferred revenue                                  360          --
                                                       --------    --------
    Total current liabilities                             7,413       2,353
                                                       --------    --------
Deferred revenue                                             25          25

Commitments and contingencies (Notes 7 and 16)

Stockholders' equity:
  Convertible preferred stock, $0.01 par value;
    5,000,000 shares authorized, shares outstanding:
    1,500 in 1999 and none in 1998                        7,467          --
  Common stock, $0.01 par value; 35,000,000 shares
    authorized, shares outstanding: 13,012,130 in
    1999 and 11,873,711 in 1998                             130         119
  Additional paid-in capital                             48,342      42,946
  Warrants                                                7,098          --
  Accumulated other comprehensive income                     (7)         --
  Accumulated deficit                                   (54,960)    (29,228)
                                                       --------    --------
    Total stockholders' equity                            8,070      13,837

Total liabilities and stockholders' equity             $ 15,508    $ 16,215
                                                       ========    ========

</TABLE>

See notes to consolidated financial statements.

                                      36

<PAGE>


                           EFAX.COM AND SUBSIDIARIES
                    CONSOLIDATED STATEMENTS OF OPERATIONS

                  (in thousands, except per share amounts)


<TABLE>
<CAPTION>

                                          Year Ended   Year Ended   Year Ended
                                         December 31, December 31, December 31,
                                             1999         1998         1997
                                         ------------ ------------ ------------
<S>                                       <C>          <C>          <C>
Revenues:
  Product................................. $ 18,817     $ 23,385      $ 16,281
  Software and technology license fees....    3,629        5,069         4,493
  Development fees........................    1,059        1,779         2,246
  eFax services...........................    1,200           --            --
                                           --------     --------      --------
    Total revenues........................   24,705       30,233        23,020
                                           --------     --------      --------
Costs and expenses:
  Cost of product revenues................   13,540       16,005        11,886
  Inventory write-down - hardware products    1,060           --            --
  Cost of software and license fees.......      584          710           770
  Cost of eFax services...................    2,400           --            --
  Research and development................    6,188        5,445         5,355
  Selling and marketing...................   19,972        7,267         6,046
  General and administrative..............    5,320        2,592         3,031
  Restructuring costs.....................      872           --            --
  Acquisition and related expenses........       --           --         2,106
                                           --------     --------      --------
    Total costs and expenses..............   49,936       32,019        29,194
                                           --------     --------      --------
Loss from operations......................  (25,231)      (1,786)       (6,174)
Other income (expense), net:
  Interest income.........................      433          320           310
  Interest expense........................       --           (1)         (120)
  Other income (expense)..................      (98)          46           (79)
                                           --------     --------      --------
    Total other income, net...............      335          365           111
                                           --------     --------      --------
Loss before income taxes..................  (24,896)      (1,421)       (6,063)
Provision for income taxes................       67           80            96
                                           --------     --------      --------
Net loss..................................  (24,963)      (1,501)       (6,159)
Series A Convertible Preferred Stock
  Dividends...............................     (769)          --            --
Series P Redeemable Preferred Stock
  Dividends...............................       --           --           (68)
                                           --------     --------      --------
Net loss applicable to common
  Stockholders............................ $(25,732)    $ (1,501)     $ (6,227)
                                           ========     ========      ========
Net loss per share:
  Basic................................... $  (2.04)    $  (0.13)     $  (0.84)
                                           ========     ========      ========
  Diluted................................. $  (2.04)    $  (0.13)     $  (0.84)
                                           ========     ========      ========
Shares used in computation:
  Basic...................................   12,585       11,784         7,389
                                           ========     ========      ========
  Diluted.................................   12,585       11,784         7,389
                                           ========     ========      ========

</TABLE>

See notes to consolidated financial statements.


                                      36

<PAGE>

<TABLE>
<CAPTION>
                                               EFAX.COM AND SUBSIDIARIES
                       CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY AND COMPREHENSIVE LOSS

                                          (in thousands, except share amounts)


                                                                                      Accumulated
                                  Convertible                     Additional             Other
                                Preferred Stock    Common Stock    Paid-in           Comprehensive  Accumulated       Comprehensive
                              ----------------- -----------------
                                Shares   Amount   Shares   Amount  Capital  Warrants Income (Loss)     Deficit    Total    Loss
                              ---------- ------ ---------- ------ --------- -------- -------------- ----------- ------- ----------

<S>                           <C>        <C>    <C>        <C>    <C>        <C>        <C>         <C>        <C>     <C>
Balances, January 1, 1997..... 6,293,978  $  63  1,789,086  $   18 $  21,317   $    -     $     -    $(22,259)  $  (861)
Net loss and comprehensive loss        -      -          -       -         -        -           -      (6,159)   (6,159) $  (6,159)
                                                                                                                         =========
Employee Stock Purchase Plan..         -      -     16,948       -        77        -           -           -        77
Exercise of Common Stock
  Options.....................         -      -    105,374       1        27        -           -           -        28
Exercise of Common Stock
  Warrants....................         -      -    516,782       5       269        -           -           -       274
Cumulative dividends on
  Series F Convertible ($240)
  and Series P Redeemable
 ($68) Preferred Stock........         -      -          -       -       240        -           -         (308)     (68)
Warrant compensation expense
  (Note 2)....................         -      -          -       -       625        -           -            -      625
Issuance of Common Stock in
  connection with Initial
  Public Offering.............         -      -  2,750,000      27    19,329        -           -            -   19,356
Conversion of Convertible
  Preferred Stock to Common
  Stock at IPO................(6,293,978)   (63) 6,293,978      63         -        -           -            -        -
Conversion of Series F
  Cumulative Dividends........         -      -    162,703       2        (2)       -           -            -        -
Issuance of Common Stock for
  DocuMagix warrants..........         -      -      2,190       -         -        -           -            -        -
Issuance of Common Stock in
  Exchange for DocuMagix
  convertible note............         -      -    103,853       1       999        -           -            -    1,000
Adjustment to conform fiscal
  year of DocuMagix...........         -      -        469       -         -        -           -          999      999
                              ---------- ------ ----------   -----  --------     ----     -------   ----------  -------
Balances, December 31, 1997...         -      - 11,741,383     117    42,881        -           -      (27,727)  15,271

Net loss and comprehensive
  Loss........................         -      -          -       -         -        -           -       (1,501)  (1,501) $  (1,501)
                                                                                                                         =========
Employee Stock Purchase Plan..         -      -     51,492       -       157        -           -            -      157
Exercise of Common Stock
  Options.....................         -      -     53,245       1        21        -           -            -       22
Exercise of Common Stock
  Warrants....................         -      -     67,591       1        (1)       -           -            -        -

Repurchase of Common Stock....         -      -    (40,000)      -      (112)       -           -            -     (112)
                              ---------- ------ ----------   -----  --------  -------     -------   ----------  -------
Balances, December 31, 1998            -      - 11,873,711     119    42,946        -           -      (29,228)  13,837
Comprehensive income -
 Net loss.....................         -      -          -       -         -        -           -      (24,963) (24,963) $ (24,963)
 Other comprehensive income,
  net of tax -  change in net
  unrealized loss from
  short-term investments......         -      -          -       -         -        -          (7)           -       (7)        (7)
                                                                                                                         ---------
Comprehensive loss                                                                                                       $ (24,970)
                                                                                                                         =========
Sale of Convertible Preferred
  Stock.......................     1,500  7,467          -       -         -    6,697           -            -   14,164
Employee Stock Purchase Plan..         -      -     32,108       -       124        -           -            -      124
Exercise of Common Stock
  Options.....................         -      -    666,864       7     1,280        -           -            -    1,287
Exercise of Common Stock
  Warrants....................         -      -    281,855       3       117        -           -            -      120
Issuance of IGC SW development
  Shares......................         -      -     30,000       -       208        -           -            -      208
Issuance of Common Stock for
  trademark settlement........         -      -    127,592       1     1,999        -           -            -    2,000
Issuance of Warrants..........         -      -          -       -         -      401           -            -      401
Issuance of options to
  Consultants.................         -      -          -       -       301        -           -            -      301
Accelerated vesting of options         -      -          -       -     1,367        -           -            -    1,367
Dividends on Preferred
  Convertible Stock...........         -      -          -       -         -        -           -         (769)    (769)
                               --------- ------ ----------   -----  --------  -------     -------   ----------  -------
Balances, December 31, 1999...     1,500 $7,467 13,012,130   $ 130  $ 48,342  $ 7,098     $    (7)  $  (54,960) $ 8,070
                               ========= ====== ==========   =====  ========  =======     =======   ==========  =======
</TABLE>

See notes to consolidated financial statements.

                                                                38

<PAGE>




                         EFAX.COM AND SUBSIDIARIES
                   CONSOLIDATED STATEMENTS OF CASH FLOWS

                               (in thousands)

<TABLE>
<CAPTION>

                                         Year Ended   Year Ended   Year Ended
                                         December 31, December 31, December 31,
                                             1999         1998         1997
                                         ------------ ------------ ------------
<S>                                      <C>           <C>          <C>
Cash flows from operating activities:
  Net loss..............................  $ (24,963)    $ (1,501)    $ (6,159)
  Adjustments to reconcile net loss to
    net cash used for operating
      activities:
    DocuMagix net loss for the quarter
      ended March 31, 1997...............         -            -          999
    Depreciation and amortization........     1,345          705          539
    Gain (loss) on disposal of assets....       (61)           3            -
    Warrant compensation expense.........         -            -          625
    Provision for inventory reserves and
      Loss on purchase commitment........     1,060          350          292
    Issuance of Common Stock for service.       208            -            -
    Common Stock options - severance.....     1,367            -            -
    Common Stock options - services......       301            -            -
    Changes in assets and liabilities:
      Trade receivables..................     1,988          418       (2,375)
      Inventories........................     1,761         (840)      (1,769)
      Prepaid expenses...................      (260)          30         (115)
      Accounts payable...................     3,627         (895)        (819)
      Deferred revenue...................       360          (24)          49
      Accrued liabilities................      (177)        (288)         578
      Provision for restructuring reserve       605            -            -
                                           --------     --------     --------
        Net cash used for operating
          Activities.....................   (12,839)      (2,042)      (8,155)
                                           --------     --------     --------
Cash flows from investing activities:
  Purchase of property...................    (1,916)        (604)        (742)
  Purchase of short-term investments.....    (3,004)     (10,044)      (3,024)
  Proceeds from sale of short-term
   Investments...........................     2,817       10,260            -
   Increase in other assets..............      (182)        (532)        (783)
                                           --------     --------     --------
   Net cash used for investing activities    (2,285)        (920)      (4,549)
                                           --------     --------     --------
Cash flows from financing activities:
  Proceeds from sale of Common Stock.....     1,407          179       19,735
  Repurchase of Common Stock.............         -         (112)           -
  Proceeds from issuance of notes payable         -            -          500
  Repayment of notes payable.............         -            -         (950)
  Proceeds from Series A Convertible
    Preferred Stock, net..................   14,164            -            -
    Redemption of Preferred Stock -
      Series P, net......................         -            -       (2,794)
                                           --------     --------     --------
Net cash provided by financing
      Activities.........................    15,571           67       16,491
                                           --------     --------     --------
Increase (decrease) in cash and
  cash equivalents.......................       447       (2,895)       3,787
                                           --------     --------     --------
Cash and cash equivalents, beginning
  of year................................     1,305        4,200          413
                                           --------     --------     --------
Cash and cash equivalents, end of year...  $  1,752     $  1,305     $  4,200
                                           ========     ========     ========
Supplemental cash flow information:
  Interest paid..........................  $      -     $      -     $    120
                                           ========     ========     ========
  Taxes paid-foreign withholding.........  $     33     $     52     $     96
                                           ========     ========     ========
Supplemental noncash investing and
  financial information:
  Warrant expense - service..............  $    399            -     $      -
                                           ========     ========     ========
  Conversion of Convertible Preferred
    Stock to Common Stock at Initial
    Public Offering......................         -            -     $     63
                                           ========     ========     ========
    Conversion of accrued ESPP for
      purchase of Common Stock...........  $    124            -            -
                                           ========     ========     ========
    Cumulative dividends on Series A
      Convertible Preferred Stock........  $    769            -            -
                                           ========     ========     ========
    Cumulative dividends on Series F
      Convertible and Series P Redeemable
      Preferred Stock....................         -            -     $    308
                                           ========     ========     ========
    Issuance of Common Stock in trademark
      settlement agreement ..............  $  2,000            -            -
                                           ========     ========     ========
    Issuance of Common Stock in exchange
      for DocuMagix convertible note.....         -            -     $  1,000
                                           ========     ========     ========

</TABLE>

See notes to consolidated financial statements.


                                      39

<PAGE>




                      EFAX.COM, INC. AND SUBSIDIARIES
                 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
               Years Ended December 31, 1999, 1998, and 1997

1. Nature of Business and Significant Accounting Policies
   ------------------------------------------------------

Nature of Business
------------------

     On February 8, 1999 JetFax, Inc. changed its name to eFax.com, Inc. On
December 16, 1999 eFax.com, Inc. changed its name to eFax.com. ("the Company").
The Company was incorporated in Delaware in August 1988 and since that time has
engaged in the development, manufacture and sale of its branded multifunction
products (MFPs) and entered into agreements with a number of manufacturers
(OEMs) of MFPs for the customization and integration of the Company's embedded
system technology and desktop software in several OEM products. In February
1999, eFax.com changed the focus of the Company's business to Internet-related
services, products and technologies. Concurrent with the change in focus, the
Company discontinued its previous engagement in the development, manufacture
and sale of its MFPs and embedded system technology.

     The consolidated financial statements have been prepared on a going
concern basis, which contemplates, among other things, the realization of
assets and the satisfaction of liabilities in the normal course of business.
The Company's net loss of $25.7 million for the year ended December 31, 1999
and its working capital position of $1.9 million at December 31, 1999 raise
substantial doubt regarding the Company's ability to continue as a going
concern. In 1999, the Company's revenues were not sufficient to support its
operations, and revenues will not be sufficient enough to support operations
until such time, if any, that the Company's revenues from fee generating
Internet-based services gain substantial market acceptance. The Company is
currently in discussions with existing and potential investors to obtain
additional financing and is considering other strategic alternatives (see Note
16). Management believes that these actions will allow the Company to continue
as a going concern. Accordingly, the consolidated financial statements do not
include any adjustments relating to the recoverability and classification of
recorded asset amounts or the amount and classification of liabilities or any
other adjustments that might be necessary should the Company be unable to
continue as a going concern.

Fiscal Period End
-----------------

     The Company operates on a 52-53 week reporting year ending on the first
Saturday on or after December 31. Fiscal years 1999, 1998 and 1997 include 52
weeks. For presentation purposes, the Company refers to its reporting years
ended January 1, 2000, January 2, 1999, and January 3, 1998, as ending on
December 31, 1999, 1998, and 1997, respectively.

Principles of Consolidation
---------------------------

     The consolidated financial statements include the accounts of the Company
and its wholly-owned subsidiaries.  All significant intercompany balances and
transactions have been eliminated.

Certain Significant Risks and Uncertainties
-------------------------------------------

     The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates. Estimates
include the level of the allowance for potentially uncollectible accounts
receivable, reserves for inventories, accrued OEM licensing revenues, product
development revenues recognized on the percentage-of-completion basis, accrued
warranty costs, and a valuation allowance for net deferred tax assets.

     The Company sells and licenses its products and technology primarily to
end users (through independent distributors and dealers) and OEMs in the United
States, Canada, Asia and Europe. In addition, the Company


                                      40

<PAGE>

                        EFAX.COM, INC. AND SUBSIDIARIES
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
                 Years Ended December 31, 1999, 1998, and 1997

performs development services for certain of its OEMs. The Company performs
ongoing credit evaluations of its customers' financial condition and limits its
exposure to losses from bad debts by limiting the amount of credit extended
whenever deemed necessary and generally does not require collateral.

     Certain components used in the Company's products are available only from
one source. In particular, the Company currently purchases its printer engine
and certain semiconductor devices from separate single sources of supply.  Any
shortage or interruption in the supply of any of the components used in the
Company's products, or the inability of the Company to procure these components
from alternate sources on acceptable terms, could have a material adverse
effect on the Company's business, financial condition and results of
operations. The eFax.com network is currently based on 15 points of presence in
the United States and in the United Kingdom. Each of eFax.com's points of
presence is co-located with a telecommunications partner. The decentralization
of the eFax.com network provides for greater reliability and reduces our
dependence on any one supplier.  In addition, by being geographically dispersed
our network is less susceptible to network outages caused by either power
interruptions or problems with telecommunications failures.

     The Company operates in a very dynamic industry.  The Company believes
that changes in any of the following areas could have a negative impact on the
Company's future financial position and results of operations: the fact that
the Company's markets are characterized by rapidly changing technology,
evolving industry standards and frequent introductions of new products and
enhancements, and the Company's ability to respond to such changes; the re-
focus of its business model to Internet-based electronic document
communications; the highly competitive nature of the markets for the Company's
Internet-based services;  the phase-out or early termination of the Company's
branded products or OEM products incorporating the Company's technology;  the
Company's ability to attract and retain skilled personnel; and the quarterly
variability in the Company's revenues.

Foreign Currency Translation
----------------------------

     The Company's foreign subsidiary in Germany uses the U.S. dollar as the
functional currency. Accordingly, assets and liabilities are translated using
period-end exchange rates, except for inventories and property, plant and
equipment, which are translated using historical rates.  Revenues and costs are
translated using historical rates. The resulting translation gains and losses
are included in income as they are incurred. Foreign currency transaction gains
and losses resulting from transactions denominated in other than the U.S.
dollar are included in income as incurred. The Company's foreign loss for the
year ended December 31, 1999 totaled $55,000 as compared to a gain of $19,000
for the year ended December 31, 1998 and a loss of $58,000 for the year ended
December 31, 1997.

     On occasion, the Company enters into firm purchase contracts with
suppliers that are denominated in a foreign currency. At December 31, 1997, the
Company had Yen deposits of 115,000,000 which were designated as a hedge
against Yen denominated firm purchase commitments; in September 1998 the
Company closed its Yen account. The foreign currency gains and losses from the
foreign currency deposit were recognized as an offset to the foreign currency
gains and losses from the firm purchase commitment.   At December 31, 1999 and
1998, respectively, the Company did not hold a hedge position against a foreign
currency.

Concentration of Credit Risk
----------------------------

     Financial instruments that potentially subject the Company to
concentrations of credit risk consist of cash equivalents, short-term
investments and accounts receivable. Credit risk with respect to trade
receivables is spread over a number of geographically diverse customers, who
make up the Company's customer base. At December 31, 1999, two customers each
accounted for 13% of total accounts receivable. At December 31, 1998 and 1997,
one customer accounted for 30% and 35% of total accounts receivable,
respectively.


                                      41

<PAGE>

                        EFAX.COM, INC. AND SUBSIDIARIES
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
                 Years Ended December 31, 1999, 1998, and 1997


Cash Equivalents and Short-Term Investments
-------------------------------------------

     Cash equivalents are highly liquid debt instruments acquired with an
original maturity of three months or less. The recorded carrying amounts of the
Company's cash and cash equivalents approximate their fair market value. Short-
term investments are high quality financial instruments with an original
maturity of three to fifteen months.  The short-term investments are carried at
cost, which approximates fair value.

Accounts Receivable
-------------------

     Accounts receivable include unbilled amounts of $400,000, $526,000, and
$1,469,723 relating to development revenues at December 31, 1999, 1998, and
1997, respectively (see "Revenue Recognition" below).
Inventories

     Inventories are stated at the lower of cost (first-in, first-out) or
market. The Company's products typically experience short life cycles, and the
Company estimates the market value of its inventory based on the anticipated
selling prices adjusted for completion and selling costs. Should the Company
experience a substantial unanticipated decline in the selling price of its
products and/or demand thereof, a valuation adjustment and corresponding charge
to operations could result. In addition, the Company uses subcontractors for
the manufacture of certain of its products and/or components and occasionally
enters into purchase commitments for such purchases. Consequently, the Company
evaluates its exposure relative to such contracts and the estimated selling
prices of the related products, adjusted for completion and selling costs, and
accrues for losses, if anticipated.
Property

     Property is stated at cost or, for items under capital lease, at the
present value of future minimum lease payments at the lease inception.
Depreciation and amortization are computed using the straight-line method over
estimated useful lives of one to five years or the lease term, whichever is
appropriate.

Other Assets
------------

     Other assets as of December 31, 1999, 1998 and 1997 include a minority
investment in Oasis Semiconductor of $725,000, $725,000 and $325,000,
respectively, (accounted for using the cost method) and intangible assets
(acquired software, eFax license, licensing contracts and covenants not to
compete) of $3,171,000, $870,000 and $1,021,000, net of accumulated
amortization of $770,000, $488,000 and $205,000, respectively.  Amortization of
intangible assets is computed using the straight line method over the estimated
useful life of five years.

Long-Lived Assets
-----------------

     In accordance with Statement of Financial Accounting Standards (SFAS) No.
121, "Accounting for the Impairment of Long-Lived Assets and for Long-Lived
Assets to be Disposed of," the Company evaluates long-lived assets for
impairment whenever events or changes in circumstances indicate that the
carrying amount of an asset may not be recoverable.

Income Taxes
------------

     The Company accounts for income taxes under an asset and liability
approach. Deferred tax liabilities are recognized for future taxable amounts
and deferred tax assets are recognized for future deductions net of a valuation
allowance to reduce deferred tax assets to amounts that are more likely than
not to be realized.


                                      42

<PAGE>

                        EFAX.COM, INC. AND SUBSIDIARIES
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
                 Years Ended December 31, 1999, 1998, and 1997


Revenue Recognition
-------------------

     Revenues from product sales to resellers, international distributors, OEMs
and end users are recognized upon shipment.  OEMs, end users, and international
distributors have no rights of return while resellers have limited return
rights.  Allowances for potential returns and exchanges from resellers are
provided at the time of sale based on historical returns and exchange
experience.  The Company defers revenue on sales to domestic distributors and
recognizes the revenue when the distributor sells the product to resellers.
The Company provides a ninety day warranty for parts and service on its
hardware products as well as ongoing technical support to the dealer network.
The Company provides a limited amount of telephone technical support to its
software customers.  Estimated cost of warranty work is accrued when the
revenue is recognized.

     The Company enters into development agreements with OEM customers for
which it receives development fees with certain payments contingent upon
attaining contract milestones. Development fee revenues are derived from
customizing the Company's embedded system technology and software for inclusion
in specific applications for its OEMs' products. The Company's development
contracts with certain OEM customers have enabled the Company to accelerate its
product development efforts.  The Company classifies all development costs
related to such contracts as research and development expenses because such
development fees have only partially funded the Company's product development
activities, and the Company generally retains ownership of the technology
developed under these agreements. The agreements typically provide for license
and royalty payments to the Company based on the OEM customers' subsequent use
of the technology in their products. Revenues from product development
agreements are recognized using the percentage of completion method. Estimates
are reviewed and revised periodically throughout the lives of the contracts.
Any revisions are recorded in the accounting period in which the revisions are
made. Royalties are recognized as earned, and include OEM product licensing
revenues which are primarily determined based on the number of OEM units sold.
Such revenues are initially recorded based on an estimate of such number of
units and are adjusted upon the receipt of actual unit sales data from OEMs in
the accounting period in which the information is received.

     Revenues from the eFax service include sign-up fees, monthly recurring
subscription fees and usage-based charges and are recognized as the services
are provided. The Company pre-bills its customers for monthly recurring
subscription fees and usage fees. In the event of customer cancellation of
services, the Company refunds unearned amounts from subscription fees and usage
fees to the customer.  The Company provides a limited amount of customer
support by email.


Research and Development
------------------------

     Research and development costs include costs and expenses associated with
the design and development of new products. To the extent that such costs
include the development of computer software, the Company follows the working
model approach to determine technological feasibility of the software product.
Costs incurred subsequent to establishing technological feasibility have been
immaterial and, accordingly, all software development costs have been included
in research and development expenses for the periods presented herein.

Stock-Based Compensation
------------------------

     The Company accounts for stock-based awards to employees using the
intrinsic value method in accordance with APB No. 25, "Accounting for Stock
Issued to Employees."

Basic and Diluted Net Loss Per Share
------------------------------------

     Basic and diluted net loss per share has been computed using the weighted
average of common shares outstanding. Potential common shares issuable upon
exercise of options, warrants, convertible preferred

                                      43

<PAGE>

                        EFAX.COM, INC. AND SUBSIDIARIES
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
                 Years Ended December 31, 1999, 1998, and 1997


stock and redeemable preferred stock have been excluded from the computation
during all periods presented as their effect is antidilutive due to the
Company's net losses. Accordingly at December 31, 1999, options and warrants to
purchase approximately 3,425,224 common shares at a weighted average exercise
price of $8.95 per share and 709,640 shares issuable upon conversion of
preferred stock have been excluded from the computation. At December 31, 1998,
options and warrants to purchase approximately 2,530,000 common shares at a
weighted average exercise price of $3.03 per share have been excluded from the
computation.  Such options and warrants will be included, using the treasury
stock method, in periods where the Company reports net income and the average
fair market value of the Company's common stock exceeds the exercise price. The
net loss applicable to common stockholders and the shares used for the
computation of basic and diluted loss per share are the same.

     The pro forma computation set forth below includes in the weighted average
number of shares outstanding the 6,293,978 shares of common stock issued in
connection with the IPO upon the automatic conversion of the outstanding
convertible preferred shares. Because of the significant increase in
outstanding common shares that occurred as a result of the conversion of
convertible preferred stock, management believes that the pro forma computation
of net loss per share provides a useful and more meaningful comparison of year
to year per share data.

<TABLE>
<CAPTION>
                                                           Year Ended
                                                           December 31,
                                                               1997
                                                           ------------
<S>                                                        <C>
Net loss applicable to common stockholders................. $   (6,227)
                                                            ==========
Pro Forma net loss per share:
  Basic.................................................... $    (0.61)
                                                            ==========
  Diluted.................................................. $    (0.61)
                                                            ==========
Shares used in pro forma computation:
  Basic....................................................     10,170
                                                            ==========
  Diluted..................................................     10,170
                                                            ==========

</TABLE>

Comprehensive Income
--------------------

     Effective January 1, 1998, the Company adopted Statement of Financial
Accounting Standards ("SFAS") No. 130, "Reporting Comprehensive Income." SFAS
No. 130 requires an enterprise to report, by major components and as a single
total, the change in net assets during the period from non-owner sources. For
the year ended December 31, 1999, the Company's comprehensive loss and net loss
were $24,970,000 and $24,963,000, respectively. For the years ended December
31, 1998 and 1997, there were no differences between the Company's
comprehensive loss and net loss. Consolidated statements of comprehensive loss
for the year ended December 31, 1999, has been included within the consolidated
statements of shareholders' equity and comprehensive loss.

Disclosures about Segments of an Enterprise and Related Information
-------------------------------------------------------------------

     The Company reports segment data pursuant to SFAS No. 131, "Disclosures
about Segments of an Enterprise and Related Information," which establishes
annual and interim reporting standards for an enterprise's business segments
and related disclosures about its products, services, geographic areas and
major customers.  The Company operates in one reportable segment, within which
are multiple product lines including internet-related services and legacy MFP
and OEM products. Revenues and related costs of goods and services are recorded
for internal management purposes as reflected in the accompanying Consolidated
Statement of Operations. For internal management purposes, expenses below that
level and related assets are not separately recorded and monitored.

                                      44

<PAGE>

                        EFAX.COM, INC. AND SUBSIDIARIES
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
                 Years Ended December 31, 1999, 1998, and 1997


Accounting for Derivative Instruments and Hedging Activities
------------------------------------------------------------
     In June 1998, the Financial Accounting Standards Board issued SFAS No.
133, "Accounting for Derivative Instruments and Hedging Activities," which
defines derivatives, requires that all derivatives be carried at fair value,
and provides for hedging accounting when certain conditions are met. The
Company is required to adopt this statement in the first quarter of fiscal year
2001, with early adoption permitted. On a forward-looking basis, although
eFax.com has not fully assessed the implications of this new statement,
eFax.com does not believe adoption of this statement will have a material
impact on eFax.com's financial position or results of operations.

     At December 31, 1999 and 1998 the Company held no derivatives or hedge
positions.

     On occasion, the Company enters into firm purchase contracts with
suppliers that are denominated in a foreign currency. The Company has
occasionally purchased foreign currencies and held them during the contract
term as a designated hedge of the purchase commitment. The foreign currency
gains and losses from the foreign currency deposit are recognized as an offset
to the foreign currency gains and losses from the firm purchase commitment.

     The Company purchases print engines for its Series M900 product line in
Yen from Oki Data Corporation and includes exchange gains and losses related to
Yen-based purchases and hedging activity in cost of goods sold.  In order to
reduce the potential volatility related to the ongoing Yen liability, the
Company entered into a Yen hedge in August 1997.  At December 31, 1997 the
Company had Yen deposits of 115,000,000 which were designated as a hedge
against Yen denominated firm purchase commitments. Given the considerable
expense associated with maintaining the Yen hedge, coupled with the recent
strengthening of the Yen in relation to the dollar, the Company decided to sell
its Yen hedge in September 1998.  Hedging activity generated a loss of  $12,000
for the year ended December 31, 1998.

Recent Accounting Pronouncements
-------------------------------

In December 1999, the Securities and Exchange Commission (SEC) released
Staff Accounting Bulletin (SAB) No. 101, Revenue Recognition in Financial
Statements.  This bulletin summarizes certain interpretations and practices
followed by the Division of Corporation Finance and the Office of the Chief
Accountant of the SEC in administering the disclosure requirements of the
Federal securities laws in applying generally accepted accounting principles to
revenue recognition in financial statements.  Application of the accounting and
disclosures desired in the bulletin is required by the second quarter of 2000.
Although the Company has not fully assessed the implications of SAB No. 101,
management does not believe adoption of this bulletin will have a material
impact on the Company's consolidated financial position, results of operations
or cash flows.


2. Business Combinations
   ---------------------

     On December 5, 1997, the Company acquired DocuMagix, Inc. ("DocuMagix") in
a merger transaction pursuant to an Agreement and Plan of Reorganization
(Agreement) entered into with DocuMagix on November 11, 1997.  Under the
Agreement, the Company issued 793,957 shares of its common stock in exchange
for all outstanding common and preferred shares of DocuMagix, and all rights
with respect to DocuMagix common stock under outstanding employee options were
converted into rights with respect to the Company's common stock using the
common stock exchange ratio of 0.004572.  In addition, the Company issued 2,190
shares of its common stock to certain holders of DocuMagix warrants in exchange
for such warrants and 103,853 shares of the Company's common stock were
exchanged for $1.0 million of outstanding convertible notes payable by
DocuMagix. The merger has been accounted for as a pooling


                                      45

<PAGE>

                        EFAX.COM, INC. AND SUBSIDIARIES
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
                 Years Ended December 31, 1999, 1998, and 1997

of interests and, accordingly, the consolidated financial statements for all
periods have been restated to reflect the combined operations of the two
companies.


3. Inventories
   -----------

     Inventories consist of (in thousands):


<TABLE>
<CAPTION>


                                                    December 31,  December 31,
                                                        1999          1998
                                                    ------------  ------------
     <S>                                             <C>           <C>
      Materials and supplies.....................     $   305       $ 1,982
      Work-in-process............................         624            93
      Finished goods.............................         769         2,444
                                                      -------       -------
      Total......................................     $ 1,698       $ 4,519
                                                      =======       =======
</TABLE>

4. Property
   --------

     Property consists of (in thousands):

<TABLE>
<CAPTION>

                                                   December 31,  December 31,
                                                       1999          1998
                                                   ------------  ------------
     <S>                                            <C>           <C>
      Furniture and fixtures.....................    $  3,697      $  1,816
      Software...................................         563           501
      Leasehold improvements.....................         441           440
                                                     --------      --------
      Total......................................    $  4,701      $  2,757
      Accumulated depreciation and amortization..      (2,448)       (1,418)
                                                     --------      --------
      Property, net..............................    $  2,253      $  1,339
                                                     ========      ========

</TABLE>


5. Accrued Liabilities
   -------------------

      Accrued liabilities consist of (in thousands):

<TABLE>
<CAPTION>


                                                   December 31,  December 31,
                                                       1999          1998
                                                   ------------  ------------
    <S>                                             <C>           <C>
     Compensation and related benefits...........    $    684      $    632
     Acquisition related accruals................           -            22
     Royalties...................................          42            62
     Product warranty............................          59            78
     Accrued Series A Convertible Preferred
       Stock dividends...........................         769             -
     Other.......................................         490           782
                                                     --------      --------
     Total.......................................    $  2,044      $  1,576
                                                     ========      ========

</TABLE>

6.     Line of Credit
       --------------

     The Company's line of credit expired in August 1999 and was not renewed by
the Company.


7.     Lease Commitments
       -----------------

     The Company leases its primary facility under an operating lease expiring
January 2003. Rent expense is recognized on a straight-line basis over the term
of the lease. The lease agreement requires the Company


                                      46

<PAGE>

                        EFAX.COM, INC. AND SUBSIDIARIES
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
                 Years Ended December 31, 1999, 1998, and 1997


to pay property taxes and maintenance costs. Additionally, the Company leases
approximately 5,200 square feet in Santa Barbara, California for its software
application organization and the one-year extension on the lease is set to
expire July 31, 2001. The Company leases approximately 2,600 square feet in
Beaverton, Oregon for additional software application personnel, and this lease
expires April 2000. For the years ended December 31, 1999, 1998, and 1997, rent
expense was $872,363, $572,000, and $523,000, respectively. Future minimum
annual rental payments for facilities leases are: 2000, $563,000; 2001,
$551,000; 2002, $551,000; 2003, $46,000; and none thereafter.


8.     Stockholders' Equity
       --------------------

     In June 1997, the Company completed an initial public offering of
2,750,000 shares of its common stock (selling shareholders sold an additional
750,000 shares in the offering) at a price of $8.00 per share.  Concurrent with
the offering, each of the 6,293,978 shares of convertible preferred stock then
outstanding were converted into the same number of common shares and the
344,350 shares of Series P Redeemable Preferred Stock were redeemed for $2.8
million from the proceeds of the offering.  In addition, 389,512 shares of
common stock were issued upon the net exercise of warrants, 127,270 shares of
common stock were issued upon the exercise of other warrants and 162,703 shares
of common stock were issued upon conversion of cumulative unpaid dividends on
Series F Preferred Stock.  In 1998, 67,591 shares of common stock were issued
upon the net exercise of warrants. In 1999, the Company issued 1,500 shares of
Convertible Preferred Stock.

Preferred Stock
---------------

     The number of shares of preferred stock authorized to be issued is
5,000,000.  The Board of Directors is authorized to issue the preferred stock
from time to time in one or more series and to fix the rights, privileges and
restrictions of the shares of such series. On May 10, 1999, eFax.com entered
into a purchase agreement with an investor for the private placement of $15
million of Series A Convertible Preferred Stock which were not registered under
the Securities Act of 1933, as amended, convertible into Common Stock based
upon the five-day average stock price prior to closing which was $21.1375. The
conversion price is subject to an adjustment after one year to the greater of
the then current market price of the Common Stock or 60% of the initial
conversion price. The agreement also includes 300,000 warrants exercisable at
$23.25, a 10% premium to the Series A Convertible Preferred Stock conversion
price. The Series A Convertible Preferred Stock includes an 8% dividend payable
in cash or common stock at the option of eFax.com. The closing occurred on May
13, 1999. eFax.com has filed a registration statement for the resale of the
shares of Common Stock acquired on conversion of the Convertible Preferred
Stock and upon exercise of the warrants. Holders of the preferred shares shall
have no voting rights, except as required by law, including but not limited to
the General Corporation Laws of the State of Delaware.  The Company cannot
declare or pay any cash dividend or distribution on the common stock without
the prior express written consent of the holders of not less than two-thirds of
the then outstanding preferred shares.  In the event of a liquidation of the
Company, the holders of the Series A Convertible Preferred Stock would be
entitled to receive distributions in preference to the holders of the Common
Stock. As of December 31, 1999, 1,500 shares of preferred stock were
outstanding.

Stock Option and Purchase Plans
-------------------------------

     The Company has an employee stock option plan and a nonemployee director
option plan under which the Company may grant options to purchase up to
4,400,000 and 270,000 shares of common stock, respectively.  At December 31,
1999, 1,002,159 and 130,000 shares, respectively, remain available for future
grant under these plans.  The terms for exercising options are determined by
the Board of Directors and options expire at the earlier of ten years and one
month or such shorter terms as may be provided in each stock option agreement.
In connection with the merger of DocuMagix (see Note 2), the Company assumed
outstanding DocuMagix options using the common stock exchange ratio.  At
December 31, 1999, options to


                                      47

<PAGE>

                        EFAX.COM, INC. AND SUBSIDIARIES
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
                 Years Ended December 31, 1999, 1998, and 1997


purchase 958 shares of the Company's common stock at a weighted average
exercise price of  $34.42 were outstanding pursuant to the DocuMagix options.

     Stock option activity and balances, excluding DocuMagix option activity,
which is immaterial, are summarized as follows:


<TABLE>
<CAPTION>
                                                                   Weighted
                                                                    Average
                                                       Number    Exercise Price
                                                      of Shares    Per Share
                                                      ---------  --------------
<S>                                                  <C>            <C>
Balance, January 1, 1997............................. 1,034,785      $   0.54
Granted (weighted average fair market value $3.04)... 1,107,100          7.42
Canceled.............................................   (73,509)         4.35
Exercised............................................  (105,374)         0.27
                                                      ---------      --------
Balance, December 31, 1997........................... 1,963,002      $   4.29
Granted (weighted average fair market value $2.04)...   847,800          3.19
Canceled.............................................  (720,408)         5.96
Exercised............................................   (53,245)         0.40
                                                      ---------      --------
Balance, December 31, 1998........................... 2,037,149      $   3.34
Granted (weighted average fair market value $5.40)... 2,189,527          8.87
Canceled.............................................  (779,680)         1.93
Exercised............................................  (666,864)         6.92
                                                      ---------      --------
Balance, December 31, 1999........................... 2,780,132      $   7.03
                                                      =========      ========

</TABLE>

<TABLE>
<CAPTION>

               Options Exercisable                         Options Outstanding
--------------------------------------------------- ---------------------------
                     Number        Weighted    Weighted     Number     Weighted
     Range of      Outstanding at   Average    Average  Exercisable at  Average
     Exercise       December 31,   Remaining   Exercise  December 31,  Exercise
      Prices            1999       Life (Years)   Price       1999       Price
------------------ -------------- ------------ --------- ------------- --------
<S>                  <C>            <C>       <C>        <C>          <C>
$  0.20 - $  0.30      93,254         6.25     $  0.29      61,387     $  0.29
   0.50 -    1.75     299,766         7.49        1.07     177,672        0.85
  2.75  -    5.88     864,295         8.56        2.92     252,789        2.89
  6.00  -    9.44     838,817         8.61        7.82     203,411        7.78
 11.81  -   11.81     410,000         9.62       11.81           -        0.00
 12.31  -   20.13     274,000         8.09       19.20      42,000       19.69
-----------------   ---------        -----     -------     -------     -------
$ 0.20  - $ 20.13   2,780,132         8.49     $  7.03     737,259     $  4.49
=================   =========        =====     =======     =======     =======

</TABLE>

     The Company has reserved 500,000 shares of common stock for issuance
pursuant to the 1997 Employee Stock Purchase Plan. The plan permits employees
to purchase shares at 85% of the lower of the fair market value of the common
stock at the beginning or end of each six-month offering period. During 1997,
1998 and 1999, 16,948, 51,492, and 32,108 shares, respectively, have been
issued under the plan. At December 31, 1999, 399,436 shares are reserved for
issuance under the plan.

     As discussed in Note 1, the Company uses the intrinsic value method
specified by Accounting Principles Board Opinion No. 25 to measure compensation
expense associated with issuing stock options and, accordingly, has recorded no
such expense in the consolidated financial statements, as such issuances have
been at the fair value of the Company's common stock at the date of grant.

     Statement of Financial Accounting Standards No. 123, "Accounting for
Stock-Based Compensation", (SFAS 123) requires the disclosure of pro forma net
income and earnings per share had the Company adopted the fair value method as
of the beginning of the year ended March 31, 1996. Under SFAS 123, the


                                      48

<PAGE>

                        EFAX.COM, INC. AND SUBSIDIARIES
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
                 Years Ended December 31, 1999, 1998, and 1997

fair value of stock-based awards to employees is calculated through the use of
the minimum value method for all periods prior to the initial public offering,
and subsequently through the use of option pricing models, even though such
models were developed to estimate the fair value of freely tradable, fully
transferable options without vesting restrictions, which significantly differ
from the Company's stock option awards. These models also require subjective
assumptions, including future stock price volatility and expected time to
exercise, which greatly affect the calculated values. The Company's stock
option calculations were made using the Black-Scholes option pricing model with
the following weighted average assumptions:

<TABLE>
<CAPTION>

                                              Employee Stock Options
                                   --------------------------------------------
                                    Year Ended    Year Ended     Year Ended
                                    December 31,   December 31,  December 31,
                                        1999           1998          1997
                                    ------------  -------------  -------------
<C>                                    <C>           <C>             <C>
Risk-Free Interest Rate...........      5.00%         5.36%           5.76%
Stock Volatility (*)..............       100%          100%             65%
Expected Life (in years)..........       0.5             1               1
Dividends.........................         -             -               -

</TABLE>

(*) 1997 :  65% subsequent to public filing; 0% prior to public filing


     The Company's calculations are based on a multiple option valuation
approach and forfeitures are recognized as they occur. If the computed fair
values of the stock-based awards (including awards under the Purchase Plan) had
been amortized to expense over the vesting period of the awards, pro forma net
loss available to common stockholders would have been $29,118,000 ($2.31 per
share) for the year ended December 31, 1999, $3,262,000 ($0.28 per share) for
the year ended December 31, 1998, and $6,706,000 ($0.91 per share) for the year
ended December 31, 1997. However, because options vest over several years and
grants prior to April 1, 1995 have been excluded from these calculations, the
pro forma adjustments for the years ended December 31, 1999, 1998, and 1997 are
not indicative of future period pro forma adjustments, assuming grants are made
in those years, when the calculation will apply to all applicable stock
options.

     As of December 31, 1999, the Company has reserved or otherwise committed
to issue 645,092 shares of Common Stock upon exercise of warrants.


9.     Income Taxes
       ------------

     No federal and state income taxes were provided for the years ended
December 31, 1998, December 31, 1997, and the nine months ended December 31,
1996 due to the Company's net losses.  Foreign withholding taxes of
approximately $52,000, $96,000 and $105,000 were paid during the years ended
December 31, 1998, December 31, 1997, and the nine months ended December 31,
1996, respectively.  The Company's effective tax rate differs from the federal
statutory rate as follows (in thousands):

                                      49

<PAGE>

                        EFAX.COM, INC. AND SUBSIDIARIES
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
                 Years Ended December 31, 1999, 1998, and 1997


<TABLE>
<CAPTION>
                                            Year         Year         Year
                                            Ended        Ended        Ended
                                         December 31, December 31, December 31,
                                             1999          1998         1997
                                         ------------ ------------ ------------
<S>                                       <C>          <C>         <C>
Taxes computed at federal statutory
  rate of 35%...........................   $ (8,760)     $ (554)     $ (2,156)
Change in valuation allowance...........      9,681         554         2,156
Foreign withholding taxes...............         33          52            96
Other...................................       (887)         28             -
                                           --------      ------      --------
Total provision.........................   $     67      $   80      $     96
                                           ========      ======      ========

</TABLE>

     Deferred income taxes reflect the net tax effects of temporary differences
between the carrying amount of assets and liabilities for financial reporting
purposes and the amounts used for income tax purposes, as well as operating
loss and tax credit carryforwards. Significant components of the Company's net
deferred income tax asset are as follows (in thousands):


<TABLE>
<CAPTION>

                                                      December 31, December 31,
                                                           1999        1998
                                                      ------------ ------------
<S>                                                    <C>          <C>
Deferred tax asset:
  Net operating loss carryforwards...................   $ 15,844     $  7,283
  Tax credit carryforwards...........................        643          277
  Accounts receivable allowances.....................        120          110
  Depreciation.......................................         30           99
  Inventory valuation................................        339          173
  Nondeducted expense accrual........................        527          201
  Warranty reserve...................................         23           31
  Capitalized research and development...............        440           68
  Vacation accrual...................................        190          140
  Other..............................................         46          139
                                                        --------     --------
Total deferred tax assets............................     18,202        8,521
Valuation allowance..................................    (18,202)      (8,521)
                                                        --------     --------
                                                        $      -     $      -
                                                        ========     ========

</TABLE>

     As a result of the Company's history of operating losses, management
believes that the recognition of the deferred tax asset is considered less
likely than not. Accordingly, the Company has fully reserved its net deferred
tax assets as of December 31, 1999 and 1998.  At December 31, 1999,
consolidated net operating loss carryforwards of approximately $44.0 million
and $14.0 million were available to offset future Federal and state taxable
income, respectively, and research and development tax credits of $355,000 and
$288,000 were available to offset future Federal and state income taxes,
respectively.  Current Federal and California tax law includes certain
provisions limiting the annual use of net operating loss carryforwards in the
event of certain defined changes in stock ownership.  The Company's ability to
utilize its net operating loss and tax credit carryforwards could be limited
according to these provisions. Management believes such limitation could result
in the loss of carryforward benefits which expire from 2004 through 2019. The
use of the above loss carryforwards is dependent upon the Company's ability to
achieve profitability. The Company's net operating loss carryforwards
attributable to its DocuMagix subsidiary before its acquisition are limited
according to these provisions to approximately $380,000 per year or
approximately $5.7 million and $1.9 million in total through the applicable
federal and California carryforward periods, respectively.


                                      50

<PAGE>

                        EFAX.COM, INC. AND SUBSIDIARIES
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
                 Years Ended December 31, 1999, 1998, and 1997


10. Employee Benefit Plan
    ---------------------

     The Company has a 401(k) tax deferred savings plan for all eligible
employees. Participants may contribute a percentage of their compensation,
which may be limited by the plan administrator or applicable tax laws. The
Company may make discretionary matching contributions. Such matching
contributions were immaterial for the year ended December 31, 1999, 1998, and
1997.

11. Customer Information
    --------------------

     Three customers accounted for 11%, 13% and 13%, respectively, of total
revenues for the year ended December 31, 1999.  Two customers accounted for 18%
and 16%, respectively, of total revenues for the year ended December 31, 1998.
The same two customers accounted for 19% and 13%, respectively, of total
revenues for the year ended December 31, 1997.


12. Related Party Transactions
    --------------------------

     Related party transactions and balances not otherwise disclosed herein
were as follows (in thousands):

<TABLE>
<CAPTION>

                                                  December 31,  December 31,
                                                      1999          1998
                                                  ------------  ------------
    <S>                                            <C>           <C>
     Sales to related party.....................    $     -       $    31
     Purchases from related party...............          -             -

</TABLE>

     The Company has also granted a stockholder a nonexclusive royalty-free
license to utilize certain of its intellectual property.


13.     Geographic Reporting

     The following is a summary of revenues by geographic region (in
thousands):

<TABLE>
<CAPTION>

                                            Year         Year         Year
                                            Ended        Ended        Ended
                                         December 31, December 31, December 31,
                                             1999          1998         1997
                                         ------------ ------------ ------------
   <S>                                    <C>          <C>          <C>
    United States.......................   $ 21,258     $ 24,747     $ 16,386
    Europe..............................      3,228        4,665        4,545
    Asia................................        219          568        1,098
    Other...............................          -          253          991
                                           --------     --------     --------
     Total                                 $ 24,705     $ 30,233     $ 23,020
                                           ========     ========     ========

</TABLE>

* Total revenues are attributed to countries based on "ship to" location of
  customer.



14. Discontinued Product Lines and Related Restructuring Charges
    ------------------------------------------------------------

	During January 2000, the Company restructured its operations to focus on
the Internet communications services which it introduced in February 1999 by
discontinuing efforts on the development and marketing of branded and licensed
products and software solutions for the "multifunction product ("MFP) market".
In connection with the Company's announced decision to exit from the
manufacturing of MFP products, the Company recognized in 1999 a  $1.1 million
write-down of inventory to reflect anticipated net realizable


                                      51


<PAGE>

                        EFAX.COM, INC. AND SUBSIDIARIES
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
                 Years Ended December 31, 1999, 1998, and 1997

values of the inventory on hand. Also in connection with the Company's decision
to exit from manufacturing MFP products, the Company recognized an $872,000
restructuring charge for the write-down of capital equipment, intellectual
property and leasehold improvements, excess facilities accruals and severance
costs. As a result, the Company substantially reduced its manufacturing work
force and downsized its hardware manufacturing operations. The discontinuation
and restructuring was substantially completed in the first quarter of 2000,
during which an additional charge of $500,000 will be recognized.  The Company
recorded total charges of $ 1.9 million as follows:


<TABLE>
<CAPTION>

                                          Total
                                      Restructuring               Balance at
(in thousands)                           Charge     Utilized  December 31, 1999
                                      ------------- --------  -----------------
<S>                                    <C>         <C>          <C>
Write-down of inventory...............  $    826    $   826        $      -
Reserve for estimated cost of
  purchase commitments................       234          -             234
                                        --------    -------         -------
  Subtotal............................     1,060        826             234
                                        --------    -------         -------
Write-down of machinery and equipment        312        312               -
Reserve for estimated lease costs.....       171          -             171
Reserve for estimated severance costs        169         22             147
Write-down of acquired technology.....       167        167               -
Reserve for estimated post-warranty
 technical support costs..............        53          -              53
                                        --------    -------         -------

 Subtotal.............................       872        501             371
                                        --------    -------         -------
                                        $  1,932    $ 1,327         $   605
                                        ========    =======         =======

</TABLE>


     Included in the fourth quarter 1999 write-downs is a $312,000 charge
related to the net loss on disposal of machinery and equipment and leasehold
improvements which was written down to fair market value in accordance with
SFAS No. 121, "Accounting for Impairment of Long-Live Assets and for Long-Lived
Assets to be Disposed Of."

     The Company anticipates substantially all accrued severance and benefits
will be paid within one year.



15. Quarterly Results - Unaudited
    -----------------------------
(in thousands, except per share amounts)

<TABLE>
<CAPTION>
                                                 Three Months Ended
                                    -------------------------------------------
                                     Mar. 31,   June 30,  Sept. 30,  Dec.  31,
                                       1999       1999      1999       1999
                                    ---------- ---------- ---------- ----------
<S>                                  <C>       <C>        <C>       <C>
Total revenues...................    $ 7,770    $ 6,283    $ 6,149    $  4,503
Loss from operations.............    $(1,314)   $(6,229)   $(7,476)   $(10,212)
Net loss applicable to
  common stockholders............    $(1,292)   $(6,383)   $(7,618)   $(10,439)
Net loss per share:
  Basic..........................    $ (0.11)   $ (0.51)   $ (0.59)   $  (0.83)
  Diluted........................    $ (0.11)   $ (0.51)   $ (0.59)   $  (0.83)
Shares used in computing per
  share amounts:
  Basic..........................     12,009     12,538     12,854      12,939
  Diluted........................     12,009     12,538     12,854      12,939

</TABLE>


                                      52

<PAGE>

                        EFAX.COM, INC. AND SUBSIDIARIES
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
                 Years Ended December 31, 1999, 1998, and 1997


(in thousands, except per share amounts)

<TABLE>
<CAPTION>
                                                 Three Months Ended
                                    -------------------------------------------
                                     Mar. 31,   June 30,  Sept. 30,  Dec.  31,
                                       1999       1999      1999       1999
                                    ---------- ---------- ---------- ----------
<S>                                 <C>        <C>         <C>       <C>
Total revenues.....................  $ 7,698    $  7,722    $ 7,748   $ 7,064
Income (loss) from operations......  $(1,325)   $     64    $   (85)  $  (441)
Net income (loss) applicable to
  common stockholders..............  $(1,289)   $    114    $    37   $  (365)
Net income (loss) per share:
  Basic............................  $ (0.11)   $   0.01    $  0.00   $ (0.03)
  Diluted..........................  $ (0.11)   $   0.01    $  0.00   $ (0.03)
Shares used in computing per share
  amounts:
  Basic............................   11,741      11,755     11,806    11,834
  Diluted..........................   11,741      13,136     12,838    11,834

</TABLE>

* See "Basic and Diluted Net Loss Per Share" in Note 1 for the determination of
  the number of shares used in computing net loss per share in accordance with
  the adoption of SEC Staff Accounting Bulletin No.98.


16. Subsequent Events
    -----------------

     On April 5, 2000, the Company entered into a letter of intent and a loan
commitment letter with JFAX.COM, Inc., a unified Internet communications
company, in which:

     o  The Company and JFAX.COM established the principal terms for a
        potential merger of the Company and JFAX.COM.

     o  JFAX.COM agreed to lend the Company $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.

     o  The Company agreed to grant to JFAX.COM a warrant to acquire 250,000
        shares of the Company's common stock. The warrant will have a term of
        two years and will be exercisable at the market price of the Company's
        common stock on the date of grant, but the exercise price will reset to
        $1.00 per share if the proposed merger of the Company and JFAX.COM does
        not occur. The warrant is expected to be granted prior to April 15,
        2000.

     o  The Company agreed to grant to JFAX.COM a warrant with a term of two
        years and an exercise price of $1.00 per share of the Company's common
        stock. The warrant will be granted if the merger between the Company
        and JFAX.COM does not occur. The warrant will be for 750,000 shares of
        the Company's common stock if JFAX.COM terminates the merger
        discussions, other than following a material breach of the letter of
        intent by the Company, 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 the Company's common stock if the merger
        does not occur for any reason not discussed in the preceding sentence.


                                      53

<PAGE>

                        EFAX.COM, INC. AND SUBSIDIARIES
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
                 Years Ended December 31, 1999, 1998, and 1997


     Prior to the execution of a definitive purchase agreement, neither the
Company 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 the Company'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 the
Company's common and preferred stockholders is included in Exhibit 2.1 to this
report. JFAX.COM would be the surviving corporation in the merger.  On April 5,
2000, the Company and the current holders of all of its shares of Series A
Convertible Preferred Stock entered into an exchange agreement under which the
holders agreed to exchange all of their outstanding shares of Series A
Convertible Preferred Stock for a new Series B Convertible Preferred Stock. The
Series B shares have a stated value which reflects the 25% premium that the
holders would have had the right, under the Series A Convertible Preferred
Stock, to receive in cash at the time of the Company's merger with JFAX.COM.
The Company has the right to require the Series B stockholders to accept
JFAX.COM common stock at the closing of the merger in return for any shares of
Series B Convertible Preferred Stock which they then own. The Series B
Convertible Preferred Stock will be convertible into shares of the Company's
common stock based on the average closing bid price of the Company's common
stock for the 20 trading days beginning on April 7, 2000.


                                      54

<PAGE>


                                                                    Schedule II

                        EFAX.COM, INC. AND SUBSIDIARIES
                      VALUATION AND QUALIFYING ACCOUNTS

                               (in thousands)

<TABLE>
<CAPTION>

                                    Balance at  Charged to           Balance at
                                   Beginning of  Cost and  Deduction/  End of
                                      Period     Expenses  Write-off   Period
                                   ------------ ---------- ---------- ---------
<S>                                  <C>         <C>        <C>        <C>
Year Ended December 31, 1999:
  Accounts receivable allowance....   $ 277       $    -     $  (15)    $ 262
                                      =====       ======     ======     =====

Year Ended December 31, 1998:
  Accounts receivable allowance....   $ 656       $    -     $ (379)    $ 277
                                      =====       ======     ======     =====
Year Ended December 31, 1997:
  Accounts receivable allowance....   $ 559       $  133     $  (36)    $ 656
                                      =====       ======     ======     =====

</TABLE>

                                      55

<PAGE>


                                  SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities and
Exchange Act of 1934, the registrant has duly caused this Report to be signed
on its behalf by the undersigned, thereunto duly authorized, in the city of
Menlo Park, State of California on the 7th day of April, 2000.

                                                     EFAX.COM

                                      By:      /s/  RONALD P. BROWN
                                          ----------------------------------
                                                  Ronald P. Brown,
                                                     President


                               POWER OF ATTORNEY

     KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature
appears below constitutes and appoints Ronald P. Brown and Todd J. Kenck, and
each of them, his attorneys-in-fact, each with the power of substitution, for
him in any and all capacities, to sign any amendments to this Report on Form
10-K and to file the same, with exhibits thereto and other documents in
connection therewith, with the Securities and Exchange Commission, hereby
ratifying and confirming all that each of said attorneys-in-fact, or his
substitute or substitutes, may do or cause to be done by virtue hereof.

     Pursuant to the requirements of the Securities Exchange Act of 1934, this
Report has been signed below by the following persons on behalf of the
registrant and in the capacities and on the date indicated.

<TABLE>
<CAPTION>

       Signatures                      Title                          Date
       ----------                      -----                          ----

<S>                          <C>                                <C>
  /s/  RONALD P. BROWN        President                          April 7, 2000
-------------------------
   (Ronald P. Brown)          (Principal Executive Officer)

  /s/  TODD J. KENCK          Vice President of Finance,         April 7, 2000
-------------------------
     (Todd Kenck)             Chief Financial Officer,
                              and Secretary (Principal
                              Financial and Accounting Officer)

  /s/  THOMAS B. AKIN         Director                           April 7, 2000
-------------------------
   (Thomas B. Akin)

 /s/  DOUGLAS Y. BECH         Director                           April 7, 2000
-------------------------
   (Douglas Y. Bech)


 /s/  STEVEN J. CARNEVALE     Director                           April 7, 2000
-------------------------
  (Steven J. Carnevale)


 /s/  ALBERT E. SISTO         Director                           April 7, 2000
-------------------------
   (Albert E. Sisto)


  /s/  LON RADIN              Director                           April 7, 2000
-------------------------
     (Lon Radin)


</TABLE>

                                      56


                                 Exhibit Index

                                   eFax.com

                Exhibits Pursuant to Item 601 of Regulation S-K

<TABLE>
<CAPTION>

  (a) Exhibits
     <S>     <C>
      3.1**   Certificate of Incorporation of Registrant filed on August 3,
              1988, as currently in effect.
      3.2**   Certificate of Amendment of Certificate of Incorporation, as
              filed on October 31, 1990.
      3.3**   Certificate of Amendment of Certificate of Incorporation, as
              filed on August 13, 1991.
      3.4**   Certificate of Amendment of Certificate of Incorporation, filed
              on February 12, 1996.
      3.5**   Certificate of Amendment of Certificate of Incorporation filed on
              February 12, 1996.
      3.6**   Certificate of Amendment of Certificate of Incorporation filed on
              November 4, 1996.
      3.7**   Amended Certificate of Designation of Series A Preferred Stock,
              as currently in effect.
      3.8**   Certificate of Designation of Series B Preferred Stock, as
              currently in effect.
      3.9**   Certificate of Designation of Series C Preferred Stock, as
              currently in effect.
      3.10**  Certificate of Designation of Series D Preferred Stock, as
              currently in effect.
      3.11**  Certificate of Designation of Series E Preferred Stock, as
              currently in effect.
      3.12**  Amended Certificate of Designation of Series E Preferred Stock,
              as currently in effect.
      3.13**  Certificate of Designation of Series P Preferred Stock, as
              currently in effect.
      3.14**  Certificate of Designation of Series F Preferred Stock, as
              currently in effect.
      3.16**  Amended and Restated Bylaws of Registrant, as currently in
              effect.
      3.18**  Certificate of Ownership and Merger, merging eFax.com, Inc., a
              Delaware corporation and wholly owned subsidiary of JetFax, Inc.,
              with and into JetFax, Inc. as filed on February 8, 1999.
      3.19++  Certificate of Designations, Preferences and Rights of Series A
              Convertible Preferred Stock of eFax.com, Inc. dated as of May 12,
              1999.
      3.20++  Certificate of Amendment of the Certificate of Designations,
              Preferences and Rights of Series A Convertible Preferred Stock of
              eFax.com, Inc. dated as of May 13, 1999.
      3.21    Certificate of Amendment f Certificate of Incorporation, as filed
              on December 16, 1999.
      4.1**   Specimen Common Stock Certificate.
      4.2++   Form of Warrant to Purchase Common Stock by and between eFax and
              Global NAPS, Inc.
      4.3++   Form of Warrant to Purchase Common Stock by and between eFax and
              Fisher Capital, Ltd.
      4.4++   Form of Warrant to Purchase Common Stock by and between eFax and
              Wingate Capital, Ltd.
      4.5++   Registration Rights Agreement, dated as of May 7, 1999 by and
              between eFax and Fisher Capital, Ltd., and Wingate Capital, Ltd.
      4.6#    Form of Warrant to Purchase Common Stock by and between eFax and
              Reedland Capital Partners.
     10.1**   Form of Indemnification Agreement between Registrant and each of
              its directors and officers.
     10.2**   1989 Stock Option Plan, as amended and restated, and forms of
              Stock Option Agreements thereunder.
     10.3**+  1995 Stock Plan, as amended and restated, and form of Stock
              Option Agreement thereunder.
     10.4**   1997 Director Stock Option Plan and form of Stock Option
              Agreement thereunder.
     10.5**   1997 Employee Stock Purchase Plan and forms of agreements
              thereunder.
     10.6**   Lease Agreement dated December 1, 1992 between Registrant and
              Lincoln Menlo Phase I Associates Limited for Menlo Park,
              California office.
     10.7**   Lease dated December 18, 1991 between Crandell Development
              Corporation and Robert S. Grant for Santa Barbara, California
              office.
     10.8**   Registration Rights Agreement dated March 5, 1997 by and among
              the Registrant and Rudy Prince, Lon B. Radin and Virginia Snyder.
     10.9**   Stock and Warrant Purchase Agreement dated as of August 31, 1988
              by and among Registrant and Purchasers of 299,995 shares of
              Series A Preferred, as amended February 1994.
     10.10**  Preferred Stock Purchase Agreement dated as of December 16, 1988
              by and among Registrant and purchasers of 336,000 shares of
              Series A Preferred, as amended February 1994.
     10.11**  Preferred Stock Purchase Agreement dated as of June 22, 1989 by
              and between Registrant and David A. Brewer.


                                      57

<PAGE>


     10.12**  Form of Subscription and Stock Purchase Agreement dated January
              1991 by and between Registrant and certain purchasers of Series A
              Preferred Stock.
     10.13**  Form of Subscription and Stock Purchase Agreement dated July 1989
              by and between Registrant and certain purchasers of shares of
              Series B Preferred Stock.
     10.14**  Form of Subscription and Stock Purchase Agreement dated December
              1989 by and between Registrant and certain purchasers of shares
              of Series B Preferred Stock.
     10.15**  Form of Subscription and Stock Purchase Agreement dated
              August/September 1990 by and between Registrant and certain
              purchasers of shares of Series C Preferred Stock.
     10.16**  Subscription and Stock Purchase Agreement for the purchase of
              shares of Series C Preferred Stock dated September 6, 1990 by and
              between Registrant and Draper Associates Polaris Fund.
     10.17**  Subscription and Stock Purchase Agreement dated September 7, 1990
              by and between Registrant and Adlar Turnkey Manufacturing
              Corporation.
     10.18**  Form of Subscription and Stock Purchase Agreement for shares of
              Series D and Series E Preferred Stock and Warrants dated July
              1991 by and between Registrant and certain purchasers of shares
              of Series D and Series E Preferred Stock.
     10.19**  Series E Preferred Stock Purchase Agreement dated August 18,
              1991, as amended as of January 30, 1996, by and between
              Registrant and Ailicec California Corporation.
     10.20**  Series F Preferred Stock Purchase Agreement dated as of March 5,
              1996 by and between Registrant and purchasers of Series F
              Preferred Stock.
     10.26**  Asset Purchase Agreement dated July 31, 1996, as amended December
              16, 1996, by and between Registrant and the Crandell Group, Inc.
     10.27^** Development Agreement dated September 25, 1991 and amended as of
              February 12, 1997 by and between Registrant and Ailicec
              International Enterprises Limited.
     10.28**  Common Stock Purchase Option dated as of March 29, 1996 by and
              between Registrant and Steven J. Carnevale.
     10.29**  Common Stock Purchase Option dated as of March 29, 1996 by and
              between Registrant and Thomas B. Akin.
     10.30**  Promissory Note to Lon B. Radin dated March 1, 1992 from
              Registrant.
     10.31^** Development and Supply Agreement dated June 30, 1995 by and
              between Registrant and Samsung Electronics Corporation.
     10.32^** Software License Agreement dated September 30, 1996 by and
              between Registrant and Oki Data Corporation.
     10.33^** Supply and License Agreement dated November 1, 1996 by and
              between Registrant and Pixel Magic, Inc.
     10.34^** Facsimile Product Development Agreement dated June 9, 1994 by and
              between Registrant and Xerox Corporation.
     10.35^** Facsimile Product Development Agreement dated November 23, 1994
              by and between Registrant and Xerox Corporation.
     10.36^** Master Development, Purchase and Distribution License Agreement
              dated effective as of January 31, 1997 by and between Registrant
              and Hewlett-Packard Company.
     10.38**  Security Agreement dated July 31, 1996 by and between Registrant
              and the Crandell Group, Inc.
     10.39^** OEM Purchase Agreement dated February 22, 1995, as amended
              February 21, 1997, by and Between Registrant and Oki America,
              Inc.
     10.40**  Loan and Security Agreement dated August 23, 1996 by and between
              Registrant and Cupertino National Bank & Trust and the amendment
              thereto dated March 11, 1997 and the amendment Thereto dated
              March 31, 1997.
     10.41**  Form of Dealer Agreement.
     10.42^** Agreement dated November 30, 1994 by and between the Crandell
              Group, Inc. and Intel Corporation as amended May 11, 1995,
              assigned and delegated to Registrant as of July 30, 1996 and as
              further amended December 23, 1996.
     10.43*** First Amendment dated September 15, 1997 to Lease Agreement dated
              April 4, 1997 between Registrant and Lincoln Menlo Phase I
              Associates Limited for Menlo Park, California office.
     10.44*** Second Amendment dated December 2, 1997 to Lease Agreement dated
              April 4, 1997 between Registrant and Lincoln Menlo Phase I
              Associates Limited for Menlo Park, California office, as amended
              September 15, 1997.
     10.45*** Sublease dated August 1, 1997 between Registrant and Systems &
              Software Consortium, Inc. Santa Barbara, California office.


                                      58

<PAGE>

     10.46*** Lease Agreement between Registrant and Landlord, K. Dalbey and M.
              Tachouet dated March 28, 1997 for Beaverton, Oregon office.
     10.51^   Revision D to Master Development, Purchase and Distribution
              License Agreement dated as of December 22, 1998 by and between
              Registrant and Hewlett-Packard Company which incorporates by
              reference Master Development, Purchase and Distribution License
              Agreement dated effective as of January 31, 1997 by and between
              Registrant and Hewlett-Packard Company (Exhibit 10.36^**).
     10.54++  Stock Purchase Agreement, dated as of February 23, 1999, by and
              between eFax and Integrated Global Concepts, Inc.
     10.55++  Securities Purchase Agreement, dated as of May 7, 1999, by and
              between eFax and Fisher Capital, Ltd., and Wingate Capital, Ltd.
     21.1     Subsidiaries of Registrant.
     23.1     Independent Auditors' Consent and Report on Schedule (see page
              62).
     24.1     Power of Attorney (see Signature Page).
     27.1     Financial Data Schedule.

**  Incorporated by reference to the identically numbered exhibits filed in
    response to Item 16(a), "Exhibits", of the Company's Registration Statement
    on Form S-1, as amended, (File No. 333-23763), which was declared effective
    on June 10, 1997.

^   Confidential treatment has been granted with respect to certain portions of
    the exhibit and the omitted portions have been separately filed with the
    Commission.

*** Incorporated by reference to the identically numbered exhibits filed in
    response pursuant to Item 601 of Regulation S-K of the Company's filing on
    Annual Report on Form 10-K for the fiscal year ended January 3, 1998.

^^  Incorporated by reference to Exhibit 10.1 filed November 17, 1998, on
    Report on Form 10-Q for the quarter ended October 3, 1998.

**+ Incorporated by reference to Exhibit A, filed April 16, 1999, to the
    Company's Definitive Proxy Statement.

++  Incorporated by reference to the identically numbered exhibits filed May
    18, 1999 on Form 10-Q for the quarter ended April 3, 1999.

#   Incorporated by reference to the identically numbered exhibit filed
    August 17, 1999 on Report on Form 10-Q for the quarter ended July 3, 1999.


                                      59


<PAGE>


</TABLE>