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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington. D.C. 20549

FORM 10-Q

[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934

For the quarterly period ended June 30, 2001

[_] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934

Commission File Number: 0-25965

j2 Global Communications, Inc.
(Exact name of registrant as specified in its charter)

Delaware 51-0371142
(State or Other Jurisdiction of (I.R.S. Employer
Incorporation or Organization) Identification Number)

6922 Hollywood Boulevard
Suite 800
Hollywood, California 90028
(Address of principal executive offices)

(323) 860-9200
(Registrant's telephone number, including area code)

Indicate by check mark whether the registrant (1) has filed all reports
required 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 [_]

As of July 31, 2001, there were 11,261,822 shares of the Registrant's
common stock, $0.01 per share, outstanding.

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j2 Global Communications, Inc.

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j2 Global Communications, Inc.

For the Quarter Ended June 30, 2001

INDEX

Page
----

PART I. FINANCIAL INFORMATION

Item 1. Condensed Consolidated Financial Statements (Unaudited)

Condensed Consolidated Statements of Operations............... 3

Condensed Consolidated Balance Sheets......................... 4

Condensed Consolidated Statements of Cash Flows............... 5

Notes to Condensed Consolidated Financial Statements.......... 6

Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations........................... 9

Item 3. Quantitative and Qualitative Disclosures about Market Risk.... 14

PART II. OTHER INFORMATION

Item 1. Legal Proceedings............................................. 14

Item 2. Changes in Securities and Use of Proceeds..................... 14

Item 3. Defaults Upon Senior Securities............................... 15

Item 4. Submission of Matters to a Vote of Security Holders.......... 15

Item 5. Other Information............................................. 16

Item 6. Exhibits and Reports on Form 8-K.............................. 16

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PART I

FINANClAL INFORMATION

ITEM I. Financial Statements

j2 Global Communications, INC.
Condensed Consolidated Statements of Operations
(Unaudited)
(In thousands, except share and per share amounts)

Three months ended Six months ended
June 30, June 30,
------------------------------ -----------------------------
2001 2000 2001 2000
----------- ------------ ----------- ------------

Revenues
Subscriber $ 7,537 $ 3,008 $ 13,706 $ 5,873
Hardware --- ---- 742 ---
Other 326 ---- 627 ---
----------- ------------ ----------- ------------
Total revenue 7,863 3,008 15,075 5,873

Cost of revenue
Subscriber 3,063 1,676 6,118 3,037
Other --- --- 450 ---
----------- ------------ ----------- ------------
Total cost of revenue 3,063 1,676 6,568 3,037

Gross profit 4,800 1,332 8,507 2,836

Operating expenses
Sales and marketing 1,003 2,429 2,187 4,618
Research and development 647 564 1,181 1,353
General and administrative 3,502 3,809 7,219 7,772
Amortization of goodwill and other
intangibles 1,734 1,141 3,470 1,801
----------- ------------ ----------- ------------
Total operating expenses 6,886 7,943 14,057 15,544
----------- ------------ ----------- ------------

Operating loss (2,086) (6,611) (5,550) (12,708)

Other income, net 377 676 801 1,474
----------- ------------ ----------- ------------
Net loss (1,709) (5,935) (4,749) (11,234)
=========== ============ ============ =============
Basic and diluted net loss per common
share (0.15) (0.66) (0.41) (1.27)
=========== ============ ============ =============

Weighted average shares outstanding 11,483,292 9,004,053 11,498,434 8,843,341
----------- ------------ ----------- ------------

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j2 Global Communications, INC.
Condensed Consolidated Balance Sheets
(Unaudited)
(in thousands)

June 30, 2001 December 31,2000
------------- ----------------

ASSETS

Cash and cash equivalents $ 22,036 $ 23,824
Short-term investments 1,994 1,963
Accounts receivable, net 2,620 2,443
Prepaid expenses and other 1,792 2,047
------------- ----------------
Total current assets 28,442 30,277

Furniture, fixtures and equipment, net 6,099 6,214
Goodwill, net 18,166 20,759
Other purchased intangibles, net 2,163 2,945
Long-term investments --- 2,320
Other assets 2,182 2,790

------------- ----------------
Total assets $ 57,052 $ 65,305
============= ================

LIABILITIES AND STOCKHOLDERS' EQUITY
Accounts payable and accrued expenses $ 4,052 $ 5,298
Accrued exit costs 1,142 2,106
Deferred revenue 1,101 1,485
Current portion of capital lease payable 609 295
Current portion of long-term debt 844 1,285
Other 433 132
------------- ----------------
Total current liabilities 8,181 10,601

Capital lease obligations --- 168
Long-term debt 180 416
------------- ----------------
Total liabilities 8,361 11,185

Redeemable common stock --- 7,065
Comman stock subject to put option 998 998

Total stockholders' equity 47,693 46,057
------------- ----------------
Total liabilities and stockholders' equity $ 57,052 $ 65,305
============= ================

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j2 Global Communications, Inc.
Condensed Consolidated Statements of Cash Flows
(Unaudited)
(in thousands)

Six months ended
June 30,
--------------------------------
2001 2000
--------------------------------

Net cash used in operating activities $ (1,364) (6,163)
------------- -----------
Cash flows from investing activities:
Redemption of investments, net 2,289 14,217
Investment in joint venture - (45)
Issuance of notes receivable - (2,200)
Purchases of furniture, fixtures and equipment (946) (2,743)
------------- -----------
Net cash provided by investing activities 1,343 9,229
------------- -----------
Cash flows from financing activities:
Exercise of stock options - 89
Proceeds (repayments) of loans payable, net (676) 204
Repayments of capital lease obligations, net (180) (567)
Purchase of redeemable common stock (911) -
------------- -----------
Net cash used in financing activities (1,767) (274)
------------- -----------
Net increase (decrease) in cash and cash equivalents (1,788) 2,792
Cash and cash equivalents, beginning of year 23,824 12,256
------------- -----------
Cash and cash equivalents, end of period $ 22,036 15,048
============= ===========

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j2 Global Communications, Inc.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

June 30, 2001

(Unaudited)

NOTE 1 - BASIS OF PRESENTATION

The accompanying financial information is unaudited but reflects all adjustments
(consisting only of normal recurring adjustments) that are, in the opinion of
management, necessary for a fair presentation of the consolidated financial
position and results of operations for the interim periods. The condensed
consolidated financial statements should be read in conjunction with the
consolidated financial statements and notes thereto, together with management's
discussion and analysis of financial condition and results of operations, for
the fiscal year ended December 31, 2000 as presented in the Company's Form 10-K,
as amended on April 30, 2001. The results of operations for the three and six
months ended June 30, 2001 are not necessarily indicative of the results to be
expected for the entire fiscal year.

NOTE 2 - USE OF ESTIMATES

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 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.

NOTE 3 - COMPREHENSIVE LOSS

Comprehensive loss is comprised of net loss and unrealized gains and losses on a
short-term investments classified as available for sale. Comprehensive loss was
$1.7 and $6.2 million for the quarters ended June 30, 2001 and 2000,
respectively, and $4.7 million and $11.7 million for the six months ended June
30, 2001 and 2000, respectively.

NOTE 4 - BUSINESS COMBINATIONS

SureTalk.com, Inc.
- ------------------

On January 26, 2000, the Company acquired all of the outstanding stock of
SureTalk.com, Inc. for $12 million in common stock, valued at the average
closing price at the acquisition date. SureTalk.com, Inc. was a closely held
Internet-based faxing, messaging and communications company based in Carlsbad,
California. The acquisition was accounted for as a purchase transaction with
substantially all of the purchase price allocated to goodwill and other
purchased intangibles which will be amortized over 2 to 3 years.

TimeShift, Inc.
- ----------------

On March 6, 2000 the Company acquired substantially all of the assets of
TimeShift, Inc. for $1.1 million in common stock, valued at the average closing
price at the acquisition date. TimeShift was a closely held Internet technology
company based in San Francisco, California.

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eFax.com
--------

On November 29, 2000, the Company acquired all of the outstanding stock of
eFax.com, Inc. for $8.2 million, including $5.8 million in common stock, valued
at the average closing price at the acquisition date; $0.8 million in
acquisition costs; and $1.6 million in common stock warrants, valued at their
fair value at the acquisition date. eFax.com was a leading provider of unified
messaging and communications services. The acquisition was accounted under the
purchase method of accounting and accordingly, the assets and liabilities were
recorded based upon their fair values at the date of acquisition. In connection
with this acquisition, the Company recorded approximately $16.1 million in
goodwill and other intangible assets that are being amortized on a straight line
basis over seven years.

The operations of the above acquired companies are included in the results of
operations and cash flows of the Company from the date of acquisition forward.

The pro forma consolidated financial information for the three and six months
ended June 30, 200O determined as if the SureTalk and eFax acquisitions had
occurred on January 1, 2000 would have resulted in net sales of $5.7 million and
$10.8 million, net loss of $5.8 million and $11.2 million, loss from operations
of $6.5 million and $12.7 million, and basic and diluted loss per share of $0.50
and $0.98 respectively. The pro forma financial information is not necessarily
indicative of the combined results that would have occurred had the acquisitions
taken place at the beginning of the period, nor is it necessarily indicative of
results that may occur in the future. The pro forma effect of the TimeShift
transaction is immaterial for all periods presented and therefore is not
included in the pro forma information.

NOTE 5 - INTEGRATION COSTS

In connection with the acquisition of eFax.com, the Company incurred acquisition
integration expenses for the incremental cost to exit and consolidate activities
at eFax locations, to involuntary terminate eFax employees, and for other
activities of eFax with j2 Global. Generally accepted accounting principles
require that these integration expenses, which are not associated with the
generation of future revenues and have no future economic benefit, be reflected
as assumed liabilities in the allocation of the purchase price to the net assets
acquired. The components of the acquisition integration liabilities included in
the purchase price allocation are as follows:

efax duplicate efax duplicate Workforce Occupancy
(thousands) phone operations information systems reductions Costs Total
---------------- ------------------- ---------- ---------- -----

Balance November 29, 2000
(efax.com acquisition date) $ 1,204 675 380 386 2,645

Utilized - fiscal 2000 (134) (75) (300) (30) (539)
----- ---- ---- ---- -----

Balance December 31, 2000 1,070 600 80 356 2,106

Adjustments - three months
ended March 31, 2001 - (300) 300 - -

Utilized - three months ended
March 31, 2001 (276) - (309) (128) (713)
----- ---- ---- ---- -----

Balance March 31, 2001 794 300 71 228 1,393

Utilized three months ended
June 30, 2001 (198) (30) (23) 0 (251)
----- ---- ---- ---- -----

Balance June 30, 2001 $ 596 270 48 228 1,142

-7-

Certain aspects of the integration plan will be refined as actual costs are
incurred. Adjustments to the estimated acquisition integration liabilities based
on these refinements will be included in the allocation of the purchase price of
eFax.com if the adjustment is determined within the purchase price allocation
period. Adjustments that are determined after the end of the purchase price
allocation period will be (1) incurred as a reduction of net income if the
ultimate amount of the liability exceeds the estimate or (2) recorded as a
reduction of goodwill if the ultimate amount of the liability is below the
estimate.

NOTE 6 - LOSS PER SHARE

The Company has adopted SFAS No. 128, "Earnings Per Share." Basic net loss per
share is computed using the weighted average number of common shares outstanding
during the period. Diluted net loss per share excludes the effect of 889,470
common stock equivalents, because their effect would be anti-dilutive.

NOTE 7 - LITIGATION

On October 28, 1999, AudioFAX IP LLC filed a lawsuit against the Company in
the United States District Court for the Northern District of Georgia asserting
the ownership of certain United States and Canadian patents and claiming that
the Company is infringing these patents as a result of our sale of enhanced
facsimile services. The suit requests unspecified damages, treble damages due to
willful infringement, and preliminary and permanent injunctive relief. The
Company filed an answer to the complaint on December 2, 1999. Discovery began in
early 2000 and no trial date has been set.

The case was stayed pursuant to a consent order submitted by both parties in
September 2000 pending the re-examination by the U.S. Patent and Trademark
Office of one of the patents in suit and is still stayed. Audiofax IP, LLC has
indicated that the re-examination proceeding will soon be completed. Therefore,
the stay will be lifted and discovery will resume.

The Company has reviewed the AudioFAX patents with its business and technical
personnel and outside patent counsel and has concluded that the Company does
not infringe these patents. As a result, the Company is confident of its
position in this matter and is vigorously defending the suit. However, the
outcome of complex litigation is uncertain and cannot be predicted with
certainty at this time. Any unanticipated adverse result could have a material
adverse effect on the Company's financial condition and results of operations.

NOTE 8 - REVERSE STOCK SPLIT

On February 8, 2001 the Company carried out a 1 for 4 reverse stock split.
All share and per data are presented on a post split basis.

-8-

ITEM 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations

Results of Operations for the Three Months Ended June 30, 2001 and June 30, 2000

Revenue. Subscriber revenue was $7.5 million and $3.0 million for the three
months ended June 30, 2001 and 2000, respectively. The increase in revenue was
primarily due to an increased number of subscriptions, principally through our
acquisition of eFax.com in November 2000, and a price increase to eFax
subscribers effective February 2001. Total subscribers at June 30, 2001 were 4.5
million. This compares to pro forma total subscribers, inclusive of eFax.com, of
3.2 million at June 30, 2000.

For the three months ended June 30, 2001 other revenues consist primarily
of royalties from certain licensing arrangements related to sales of consumable
products to users of existing eFax.com licensed fax machines. Because the
eFax.com acquisition took place in November 2000, there were no comparable
revenues for the three months ended June 30, 2000.

Cost of Revenue. Subscriber cost of revenue is comprised primarily of data
and voice network costs, customer service expenses, online processing fees, and
equipment depreciation. Subscriber cost of revenue was $3.1 million, or 41% of
subscriber revenue, and $1.7 million, or 56% subscriber of revenue, for the
three months ended June 30, 2001 and 2000, respectively. The increase in cost of
revenue reflects the cost of building and expanding our server and networking
infrastructure and customer service capabilities to accommodate growth of our
subscriber base.

Operating Expenses

Sales and Marketing. Our sales and marketing costs for the three months
ended June 30, 2001 consisted primarily of personnel, advertising costs, and
consulting fees. For the three months ended June 30, 2000 our sales and
marketing costs consisted primarily of payments with respect to strategic
alliances, personnel related expenses, consulting, advertising, and public
relations. Sales and marketing expenses were $1.0 million, or 13% of subscriber
revenue, and $2.4 million, or 81% of subscriber revenue, for the three months
ended June 30, 2001 and 2000, respectively. Sales and marketing costs decreased
for the three months ended June 30, 2001 as compared to the same period in 2000
primarily due to the reduction of fixed payments for advertising in favor of
transactions requiring payment only upon acquisition of paid subscribers.

Beginning in the second half of fiscal 2000, and continuing through today,
our marketing strategy has focused primarily on "cost of acquisition"
transactions, on which we paid customer acquistion expenses only after obtaining
a paid customer. Prior to that time, our marketing strategy focused primarily on
online advertising which required us to pay the advertiser regardless of
customer acquistion.

Research and Development Research and development costs were $647,000, or
8% of total revenue, and $564,000, or 19% of total revenue, for the three months
ended June 30, 2001 and 2000, respectively. Research and development costs for
the three months ended June 30, 2001 and 2000 primarily consisted of personnel
related expenses. The percentage of revenue decline from fiscal 2000 to 2001 was
primarily due to increases in revenues over these comparable periods.

-9-

General and Administrative. Our general and administrative costs consist
primarily of personnel related expenses, professional fees, and occupancy costs.
General and administrative costs were $3.5 million, or 45% of total revenue, and
$3.8 million, or 127% or total revenue, for the quarters ended June 30, 2001 and
2000, respectively. The percentage of revenue decline in the second quarter of
2001 versus 2000 was principally due to increases in revenues over these
comparable periods.

Amortization of Goodwill and Other Intangibles. For the three months ended
June 30, 2001 and 2000, amortization of goodwill and other intangibles
aggregated $1.7 million and $1.1 million, respectively. The increase in fiscal
2001 was due to the acquisition of eFax.com in November 2000.

Other Income, net. Other income, net, was $377,000 and $676,000 for the
three months ended June 30, 2001 and 2000, respectively. Other income, net,
primarily resulted from interest income earned on our cash and cash equivalents
and short and long-term investments offset by interest expense on capital lease
obligations and long-term debt. Amounts for the first quarter of 2000 were
higher than 2001 primarily due to the carrying of higher cash and investment
balances.

Results of Operations for the Six Months Ended June 30, 2001 and June 30, 2000

Revenue. Subscriber revenue was $13.7 million and $5.9 million for the six
months ended June 30, 2001 and 2000, respectively. The increase in revenue was
primarily due to an increased number of subscriptions, principally through our
acquisition of eFax.com in November 2000, and a price increase to eFax.com
subscribers effective February 2001. Total subscribers at June 30, 2001 were 4.5
million. This compares to pro forma total subscribers, inclusive of eFax.com, of
3.2 million at June 30, 2000.

Hardware and other revenues aggregated $1.4 million for the six months
ended June 30, 2001. We had no comparable revenues for the six months ended June
30, 2000. Hardware revenues resulted from sales of consumable products to users
of existing eFax.com licensed fax machines. Other revenues consisted primarily
of royalties from certain licensing arrangements related to eFax hardware
products. On February 15, 2001, we sold, at book value, our remaining
consumables inventory to a third party and simultaneously entered into a royalty
based agreement with that party for future consumable sales. As a result,
hardware sales and cost of sales are not expected to recur subsequent to the
first quarter of fiscal 2001 . Instead, we will receive royalty payments which
are expected to result in immaterial revenues for fiscal 2001.

Cost of Revenue. Subscriber cost of revenue is comprised primarily of data
and voice network costs, customer service expenses, online processing fees, and
equipment depreciation. Subscriber cost of revenue was $6.1 million, or 45% of
subscriber revenue, and $3.0 million, or 52% of subscriber revenue, for the six
months ended June 30, 2001 and 2000, respectively. The increase in cost of
revenue reflects the cost of building and expanding our server and networking
infrastructure and customer service capabilities to accommodate growth of our
subscriber base.

Cost of revenue from hardware sales, which, as discussed in the "Revenue"
section of MD&A above, are not expected subsequent to the first quarter of
fiscal 2001, was $450,000 or 61% of hardware sales, for the six months ended
June 30, 2001. There were no comparable cost of revenues for the six months
ended June 30, 2000.

Operating Expenses

Sales and Marketing. Our sales and marketing costs for the six months ended
June 30, 2001 consisted primarily of personnel related expenses, advertising
costs, and consulting fees. For the six months ended June 30, 2000 our sales and
marketing costs consisted primarily of payments with respect to strategic
alliances, personnel related expenses, consulting, advertising, and public
relations. Sales and marketing expenses were

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$2.2 million, or 16% of subscriber revenue, and $4.6 million, or 79% of
subscriber revenue, for the six months ended June 30, 2001 and 2000,
respectively. Sales and marketing costs decreased for the six months ended June
30, 2001 as compared to the same period in 2000 primarily due to the reduction
of fixed payments for advertising in favor of transactions requiring payment
only upon acquisition of paid subscribers.

Beginning in the second half of fiscal 2000, and continuing through today,
our marketing strategy has focused primarily on "cost of acquisition"
transactions, on which we paid customer acquisition expenses only after
obtaining a paid customer. Prior to that time, our marketing strategy focused
primarily on online advertising which required us to pay the advertiser
regardless of customer acquisition.

Research and Development Research and development costs were $1.2 million,
or 8% of total revenue, and $1.4 million, or 23% of total revenue, for the six
months ended June 30, 2001 and 2000, respectively. Research and development
costs for the six months ended June 30, 2001 and 2000 primarily consisted of
personnel related expenses. The percentage of revenue decline from fiscal 2000
to 2001 was primarily due to increases in revenues over these comparable
periods.

General and Administrative. Our general and administrative costs consist
primarily of personnel related expenses, professional fees, and occupancy costs.
General and administrative costs were $7.2 million, or 48% of total revenue, and
$7.8 million, or 132% of total revenue, for the six months ended June 30, 2001
and 2000, respectively. The percentage of revenue decline for the six months
ended June 30, 2001 versus 2000 was principally due to increases in revenues
over these comparable periods.

Amortization of Goodwill and Other Intangibles. For the six months ended
June 30, 2001 and 2000, amortization of goodwill and other intangibles
aggregated $3.5 million and $1.8 million respectively. The increase was due to
the acquisition of eFax.com in November 2000.

Other Income, Net. Other income, net, was $801,000 and $1.5million for the
six months ended June 30, 2001 and 2000, respectively. Other income, net,
primarily resulted from interest income earned on our cash and cash equivalents
and short and long-term investments offset by interest expense on capital lease
obligations and long-term debt. Amounts for the six months ended June 30, 2000
were higher than the comparable period for fiscal 2001 primarily due to the
carrying of higher cash and investment balances.

Liquidity and Capital Resources

As of June 30, 2001, we had $22.0 million in cash and cash equivalents and
$2.0 million in short-term investments. Short-term investments consisted of
government and corporate debt securities. Short-term maturities range from three
months to one year.

Net cash used in operating activities decreased to $1.4 million for the six
months ended June 30, 2001 from $6.2 million for the same period in 2000. The
decrease in net cash used in operating activities was due primarily to a
decrease in net loss and an increase in depreciation and amortization offset by
a decrease in accounts payable and accrued expenses.

Net cash provided by investing activities was $1.3 million and $9.2 million
for the six months ended June 30, 2001 and 2000, respectively. The decrease in
net cash provided by investing activities from fiscal 2000 to 2001 was primarily
due to decreases in the redemption of short and long-term investments and
purchases of property, plant and equipment, and the issuance of notes
receivable.

-11-

Net cash used in financing activities of $1.8 million for the six months
ended June 30, 2001 consisted of repayments of long-term debt and capital lease
obligations and the purchase of redeemable common stock. Net cash used in
financing activities of $274,000 for the six months ended June 30, 2000
consisted of repayments of long-term debt and capital lease obligations offset
by the exercise of employee stock options.

We have approved a program to purchase up to $2 million of our securities,
through a series of market or off market transactions, during the period ending
December 31, 2001. Pursuant to this program, on June 20, 2001, we closed an off
market transaction to repurchase, 251,922 shares of our redeemable common stock,
and 117,188 outstanding warrants for $911,024 in cash. Prior to repurchase,
these common shares were classified in our balance sheet at their redeemable
security value of $3,224,598 due to certain put features available to the
holders.

The fair value paid for these shares, and the difference between their
fair value and their carrying value was recorded as treasury stock and
additional paid in capital, respectively, in our stockholders' equity section in
the accompanying June 30, 2001 balance sheet. The fair value paid for the
warrants was an immaterial amount and was recorded as additional paid in capital
in our stockholders' equity section in the accompanying June 30, 2001 balance
sheet.

On June 28, 2001 the remaining 300,003 redeemable common shares were
privately sold by the holder. In connection with the sale, the put feature
associated with the securities was eliminated, and as such, we have reclassified
the carrying value of these shares of $3,840,035 to stockholders equity in the
accompanying June 30, 2001 balance sheet.

Our capital requirements depend on numerous factors, including market
acceptance of our services, the amount of resources we devote to investments in
our network and development of our services, the resources we devote to the
sales and marketing of our services and our brand promotions, and other factors.
We have experienced a substantial increase in our capital expenditures and
operating lease arrangements since our inception consistent with the growth in
our operations and staffing, and anticipate that this will continue for the
foreseeable future. Additionally, we expect to make additional investments in
technologies and our network, and plan to expand our sales and marketing
programs and conduct more aggressive brand promotions.

We currently anticipate that our cash and cash equivalents and short and
long-term investments will be sufficient to meet our anticipated needs for
working capital and capital expenditures for at least the next 12 months.
Although operating activities may provide cash in certain periods, to the extent
we experience growth in the future we anticipate that our operating and
investing activities may use cash. Consequently, any such future growth may
require us to obtain additional equity or debt financing, which may not be
available on attractive terms, or at all, or may be dilutive.

Recently Issued Accounting Pronouncements

In July 2001, the FASB issued Statement No. 141, Business Combinations,
and Statement No. 142, Goodwill and Other Intangible Assets. Statement 141
requires that the purchase method of accounting be used for all business
combinations initiated after June 30, 2001 as well as all purchase method
business combinations completed after June 30, 2001. Statement 141 also
specifies criteria intangible assets acquired in a purchase method business
combination must meet to be recognized and reported apart from goodwill, noting
that any purchase price allocable to an assembled workforce may not be accounted
for separately. Statement 142 will require that goodwill and intangible assets
with indefinite useful lives no longer be amortized, but instead tested for
impairment at least annually in accordance with the provisions of Statement 142.
Statement 142 will also require that intangible assets with definite useful
lives be amortized over their respective estimated useful lives to their
estimated residual values, and reviewed for impairment in accordance with SFAS
No. 121, Accounting for the Impairment of Long-Lived Assets and for Long-Lived
Assets to Be Disposed Of.

-12-

We are required to adopt the provisions of Statement 141 immediately,
except with regard to business combinations initiated prior to July 1, 2001, and
Statement 142 effective January 1, 2002. Furthermore, any goodwill and any
intangible asset determined to have an indefinite useful life that are acquired
in a purchase business combination completed after June 30, 2001 will not be
amortized, but will continue to be evaluated for impairment in accordance with
the appropriate pre-Statement 142 accounting literature. Goodwill and intangible
assets acquired in business combinations completed before July 1, 2001 will
continue to be amortized prior to the adoption of Statement 142.

Statement 141 will require, upon adoption of Statement 142, that we
evaluate our existing intangible assets and goodwill that were acquired in a
prior purchase business combination, and to make any necessary reclassifications
in order to conform with the new criteria in Statement 141 for recognition apart
from goodwill. Upon adoption of Statement 142, we will be required to reassess
the useful lives and residual values of all intangible assets acquired in
purchase business combinations, and make any necessary amortization period
adjustments by the end of the first interim period after adoption. In addition,
to the extent an intangible asset is identified as having an indefinite useful
life, we will be required to test the intangible asset for impairment in
accordance with the provisions of Statement 142 within the first interim period.
Any impairment loss will be measured as of the date of adoption and recognized
as the cumulative effect of a change in accounting principle in the first
interim period.

In connection with the transitional goodwill impairment evaluation,
Statement 142 will require that we perform an assessment of whether there is an
indication that goodwill (and equity-method goodwill) is impaired as of the date
of adoption. To accomplish this we must identify our reporting units and
determine the carrying value of each reporting unit by assigning the assets and
liabilities, including the existing goodwill and intangible assets, to those
reporting units as of the date of adoption. We will then have up to six months
from the date of adoption to determine the fair value of each reporting unit and
compare it to the reporting unit's carrying amount. To the extent a reporting
unit's carrying amount exceeds its fair value, an indication exists that the
reporting unit's goodwill may be impaired and we must perform the second step of
the transitional impairment test. In the second step, we must compare the
implied fair value of the reporting unit's goodwill, determined by allocating
the reporting unit's fair value to all of it assets (recognized and
unrecognized) and liabilities in a manner similar to a purchase price allocation
in accordance with Statement 141, to its carrying amount, both of which would be
measured as of the date of adoption. This second step is required to be
completed as soon as possible, but no later than the end of the year of
adoption. Any transitional impairment loss will be recognized as the cumulative
effect of a change in accounting principle in our statement of earnings.

And finally, any unamortized negative goodwill (and negative equity-method
goodwill) existing at the date Statement 142 is adopted must be written off as
the cumulative effect of a change in accounting principle.

As of the date of adoption, we expect to have unamortized goodwill in the
amount of $15.4 million, unamortized identifiable intangible assets in the
amount of $1.4 million, and no unamortized negative goodwill, all of which will
be subject to the transition provisions of Statements 141 and 142. Amortization
expense related to goodwill was $3.2 million and $2.7 million for the year ended
December 31, 2000 and the six months ended June 30, 2001, respectively. Because
of the extensive effort needed to comply with adopting Statements 141 and 142,
it is not practicable to reasonably estimate the impact of adopting these
Statements on the Company's financial statements at the date of this report,
including whether any transitional impairment losses will be required to be
recognized as the cumulative effect of a change in accounting principle.

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ITEM 3. Quantitative and Qualitative Disclosures About Market Risk

At June 30, 2001, short-term investments consisted of corporate debt securities.
Short-term maturities range from three months to one year. Such securities bear
interest at fixed rates ranging from 3.8% to 4.7% per annum and are classified
as held to maturity because the we have the ability and intent to do so. At June
30, 2001, cost approximates fair market value and we believe we have immaterial
market rate risk due to the short-term nature of our investments

We believe that our exposure to currency exchange fluctuation risk is
insignificant because our transactions with international vendors and customers
are generally denominated in US dollars.

PART II.
OTHER INFORMATION

ITEM 1. Legal Proceedings

On October 28, 1999, AudioFAX IP LLC filed a lawsuit against us in the
United States District Court for the Northern District of Georgia asserting the
ownership of certain United States and Canadian patents and claiming that we are
infringing these patents as a result of our sale of enhanced facsimile services.
The suit requests unspecified damages, treble damages due to willful
infringement, and preliminary and permanent injunctive relief. We filed an
answer to the complaint on December 2, 1999. Discovery began in early 2000 and
no trial date has been set.

The case was stayed pursuant to a consent order submitted by both parties
in September 2000 pending the re-examination by the U.S. Patent and Trademark
Office of one of the patents in suit and is still stayed. Audiofax IP, LLC has
indicated that the re-examination proceeding will soon be completed. Therefore,
the stay will be lifted and discovery will resume.

We have reviewed the AudioFAX patents with our business and technical
personnel and outside patent counsel and have concluded that we do not infringe
these patents. As a result, we are confident of our position in this matter and
are vigorously defending the suit. However, the outcome of complex litigation is
uncertain and cannot be predicted with certainty at this time. Any unanticipated
adverse result could have a material adverse effect on our financial condition
and results of operations.

ITEM 2. Changes in Securities and Use of Proceeds

A. Not applicable

B. Not applicable

C. Not applicable

D. Sales of Registered Securities and Use of Proceeds

During July 1999, the Company completed its initial public offering (the
"Offering") of 8,500,000 shares

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of its common stock. The offering date was July 23, 1999. The Company's common
stock is publicly traded on the NASDAQ National Market under the symbol "JCOM."

The lead underwriters in the offering were Donaldson, Lukfin & Jenrette;
BancBoston Robertson Stephens; CIBC World Markets; and DLJdirect Inc. The shares
of common stock sold in the Offering were registered under the Securities Act of
1933, as amended, on a Registration Statement on Form S-1 (the "Registration
Statement") (File No. 333-76477), which the Securities and Exchange Commission
declared effective on July 22, 1999.

The Company registered a total of 8,500,000 shares of common stock for sale
under the Registration Statement for an aggregate amount of $80,750,000 (based
upon the offering price of $9.50 per share). The Company sold all 8,500,000
shares for an aggregate amount of $80,750,000 (before deduction of underwriting
discounts, commissions and other expenses). Additionally, the underwriters had
an option to purchase an additional 473,000 shares from the Company and 802,000
shares from certain selling stockholders to cover overallotments. None of those
shares were sold in the Offering. If they had been sold, the aggregate amount
received for the optional shares on the same basis as above would have been $4.5
million for the Company and $7.6 million for the selling stockholders.

After deducting underwriting discounts and commissions of $5,652,500 and
expenses of $1,274,000 in connection with the Offering, the Company received net
proceeds from the Offering of $73.8 million.

Through June 30, 2001, we have used $53.5 million of proceeds from the
Offering for the following purposes: (i) $17.4 million for repayment of long-
term debt in the amount of $10.5 million and redemption of preferred stock in
the amount of $6.8 million, (ii) $7.5 million for expansion of our worldwide
network, (iii) $14.5 million for funding advertising and marketing activities,
(iv) $9.2 million for funding general corporate expenses, and (v) $4.9 million
for note receivable advances to eFax.com.

ITEM 3. Defaults Upon Senior Securities

Not applicable

ITEM 4. Submission of Matters to a Vote of Security Holders

The Company held its 2001 Annual Meeting on June 26, 2001. There were 11,517,692
shares of Company common stock entitled to be voted on May 16, 2001, the record
date for the meeting. The following matters were submitted to the Company's
shareholders for a vote at the Annual Meeting:

1. To elect the following five director nominees to serve for the ensuing
year and until their successors are elected. The votes cast and withheld for
such nominees were as follows:

Nominee For Withheld
------- --- --------
Richard S. Ressler 7,481,999 7,818
John F. Rieley 7,481,999 7,818
Michael P. Schulhof 7,481,765 8,052
Robert J. Cresci 7,481,765 8,052
Douglas Y. Bech 7,481,732 8,085

2. To approve the Company's 2001 Employee Stock Purchase Plan.

For Against Abstain
--- ------- -------

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7,355,904 129,186 4,727

3. To ratify the appointment of KPMG LLP as the Company's Independent
Auditors for Fiscal 2001.

For Against Abstain
--- ------- -------

7,481,886 5,337 2,594

Based on these voting results, each of the directors nominated was elected and
the three other matters were approved.

ITEM 5. Other Information

Not applicable

ITEM 6. Exhibits and Reports on Form 8-K

A. Exhibits.

The following exhibits are filed herewith or are incorporated by reference
to exhibits previously filed with the Commission. The Company shall furnish
copies of exhibits for a reasonable fee (covering the expense of furnishing
copies) upon request.

Exhibit
No. Exhibit Title
- --- -----------

10.1 Employment Agreement for Scott Jarus, dated June 20, 2001.

10.2 Promissory Note Secured by Deed of Trust, issued by Scott Jarus
and Rebecca Jarus to j2 Global Communications, Inc. on July 19,
2001.

10.3 Deed of Trust granted by Scott Jarus and Rebecca Jarus to j2
Global Communications on July 19, 2001.

10.4 Redemption Agreement dated June 20, 2001 among j2 Global
Communications, Inc. and the Shareholders referred to therein.

B. Reports on Form 8-K

Form Item Description Filing Date
---- ---- ----------- -----------

8-K 5, 7 Regulation FD Disclosure April 23, 2001

SIGNATURE

Pursuant to the requirements 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.

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j2 Global Communications, Inc.
(Registrant)

By: /s/ Nehemia Zucker
----------------------------------
Its: Chief Financial Officer and Duly
Authorized Officer of the Registrant
August 13, 2001

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