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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 SEPTEMBER 30, 2004

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: 0-25965

______________


j2 GLOBAL COMMUNICATIONS, INC.

(Exact name of registrant as specified in its charter)

DELAWARE 51-0371142
(State or other jurisdiction (I.R.S. Employer
of incorporation or organization) Identification No.)

6922 HOLLYWOOD BOULEVARD
SUITE 500
LOS ANGELES, 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 [ ]

Indicate by check mark whether the registrant is an accelerated filer (as
defined in Rule 12b-2 of the Act).

Yes [X] No [ ]

As of October 14, 2004, the registrant had 23,494,470 shares of Common Stock
outstanding.
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j2 GLOBAL COMMUNICATIONS, INC.

FOR THE QUARTER ENDED SEPTEMBER 30, 2004

INDEX

PAGE
----

PART I. FINANCIAL INFORMATION

Item 1. Financial Statements 3
Condensed Consolidated Balance Sheets (unaudited) 3
Condensed Consolidated Statements of Operations (unaudited) 4
Condensed Consolidated Statements of Cash Flows (unaudited) 5
Notes to Condensed Consolidated Financial Statements (unaudited) 6

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

and Results of Operations 11

Item 3. Quantitative and Qualitative Disclosures About Market Risk 16

Item 4. Controls and Procedures 17

PART II. OTHER INFORMATION

Item 1. Legal Proceedings 17

Item 6. Exhibits 17

Signatures 19

Index of Exhibits 20
Exhibit 31(a)
Exhibit 31(b)
Exhibit 32(a)
Exhibit 32(b)


2


PART I. FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS


j2 GLOBAL COMMUNICATIONS, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS)

SEPTEMBER 30, DECEMBER 31,
2004 2003
----------- -----------
(Unaudited)

ASSETS
Cash and cash equivalents $ 42,343 $ 46,882
Short-term investments 12,738 8,539
Accounts receivable,
net of allowances of $799 and $239, respectively 8,843 5,877
Prepaid expenses and other current assets 2,747 2,571
Deferred income taxes 5,063 10,004
----------- -----------
Total current assets 71,734 73,873

Long-term investments 28,806 8,408
Property and equipment, net 8,670 6,594
Goodwill 19,975 15,616
Other purchased intangibles, net 10,916 2,320
Other assets 213 329
Deferred income taxes 1,967 5,716
----------- -----------
Total assets $ 142,281 $ 112,856
=========== ===========

LIABILITIES & STOCKHOLDERS' EQUITY
Accounts payable and accrued expenses $ 5,368 $ 4,010
Deferred revenue 5,606 4,698
Current portion of long-term debt and capital leases 1,699 1,022
----------- -----------
Total current liabilities 12,673 9,730

Long-term debt and capital leases 1,029 221
----------- -----------
Total liabilities 13,702 9,951

Total stockholders' equity 128,579 102,905
----------- -----------
Total liabilities and stockholders' equity $ 142,281 $ 112,856
=========== ===========


SEE ACCOMPANYING NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

3


j2 GLOBAL COMMUNICATIONS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED, IN THOUSANDS EXCEPT SHARE AND PER SHARE AMOUNTS)


THREE MONTHS ENDED NINE MONTHS ENDED
SEPTEMBER 30, SEPTEMBER 30,
2004 2003 2004 2003
----------- ----------- ----------- -----------

Revenues:
Subscriber $ 26,985 $ 17,806 $ 74,110 $ 48,567
Advertising 668 681 2,076 1,902
Licensing and Other 118 416 358 679
----------- ----------- ----------- -----------
27,771 18,903 76,544 51,148

Cost of revenues 4,363 3,494 12,066 9,751
----------- ----------- ----------- -----------

Gross profit 23,408 15,409 64,478 41,397
----------- ----------- ----------- -----------

Operating expenses:
Sales and marketing 4,729 2,897 13,275 8,273
Research, development and engineering 1,418 1,006 3,732 3,055
General and administrative 5,321 4,085 14,537 11,296
----------- ----------- ----------- -----------

Total operating expenses 11,468 7,988 31,544 22,624
----------- ----------- ----------- -----------

Operating earnings 11,940 7,421 32,934 18,773

Interest and other income, net 505 126 1,043 269
----------- ----------- ----------- -----------

Earnings before income taxes 12,445 7,547 33,977 19,042

Income tax expense 4,316 347 11,960 862
----------- ----------- ----------- -----------

Net earnings $ 8,129 $ 7,200 $ 22,017 $ 18,180
=========== =========== =========== ===========

Net earnings per common share:
Basic $ 0.35 $ 0.32 $ 0.95 $ 0.81
Diluted $ 0.32 $ 0.28 $ 0.87 $ 0.73

Weighted average shares outstanding:
Basic 23,348,269 22,857,057 23,227,534 22,578,729
Diluted 25,572,432 25,493,305 25,397,789 24,990,025


SEE ACCOMPANYING NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

4


j2 GLOBAL COMMUNICATIONS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED, IN THOUSANDS)

NINE MONTHS ENDED SEPTEMBER 30,
2004 2003
----------- -----------

Cash flows from operating activities:
Net earnings $ 22,017 $ 18,180
Adjustments to reconcile net earnings to net cash
provided by operating activities:
Depreciation and amortization 3,455 2,986
Compensation in exchange for note reduction 130 130
Tax benefit of non-qualifying stock option exercises 2,019 726
Deferred income taxes 8,688 --
Decrease (increase) in:
Accounts receivable (2,332) (557)
Interest receivable 4 (27)
Prepaid expenses 1,109 542
Other assets (360) (139)
(Decrease) increase in:
Accounts payable 1,175 (395)
Deferred revenue 631 1,026
----------- -----------
Net cash provided by operating activities 36,536 22,472
----------- -----------

Cash flows from investing activities:
Purchases of investments, net (24,517) (8,213)
Purchase of property and equipment (3,098) (2,660)
Proceeds from sale of equipment 73
Acquisition of businesses, net of cash received (8,561) (975)
Payment of accrued exit costs (348) --
Purchase of intangible assets (4,860) (200)
Repayments of notes receivable, net -- 539
----------- -----------
Net cash used in investing activities (41,384) (11,436)
----------- -----------

Cash flows from financing activities:
Issuance of common stock under employee
stock purchase plan 325 270
Exercise of stock options and warrants 1,074 2,906
Repayment of long-term debt and capital leases (1,119) (676)
----------- -----------
Net cash provided by financing activities 280 2,500
----------- -----------

Effect of exchange rate on cash and cash equivalents 29 --
----------- -----------

Net (decrease) increase in cash and cash equivalents (4,539) 13,536
Cash and cash equivalents at beginning of period 46,882 32,777
----------- -----------
Cash and cash equivalents at end of period $ 42,343 $ 46,313
=========== ===========


SEE ACCOMPANYING NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

5


j2 GLOBAL COMMUNICATIONS, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

SEPTEMBER 30, 2004

(UNAUDITED)

NOTE 1 - BASIS OF PRESENTATION

j2 Global Communications, Inc. ("j2 Global" or the "Company") is a Delaware
corporation founded in 1995. The Company provides outsourced, value-added
messaging and communications services to individuals and businesses throughout
the world. It offers fax, voicemail and email solutions, unified messaging &
communications services, document management solutions and conference calling
services. j2 Global markets its services principally under the brand names
eFax(R), j2(R), jConnect(R), JFAX(R), eFax Corporate(R), Onebox(R), Electric
Mail(R), jBlast(R), eFax BroadcastTM, eVoiceTM, PaperMaster(R), ConsensusTM, M4
Internet(R) and Protofax(R).

The consolidated financial statements include the accounts of j2 Global and
its direct and indirect, domestic and international, wholly-owned subsidiaries.
All inter-company accounts and transactions have been eliminated in
consolidation.

The accompanying interim condensed consolidated financial statements
and related financial schedules are unaudited. The Company's interim condensed
consolidated financial statements have been prepared in accordance with
accounting principles generally accepted in the United States of America
("GAAP") including those for interim financial information and with the
instructions for Form 10-Q and Article 10 of Regulation S-X issued by the
Securities and Exchange Commission ("SEC"). Accordingly, they do not include all
of the information and note disclosures required by GAAP for complete financial
statements. These statements are unaudited and, in the opinion of management,
all adjustments (consisting of normal recurring adjustments) considered
necessary for a fair presentation have been reflected in these condensed
consolidated financial statements. These consolidated financial statements
should be read in conjunction with the audited financial statements and related
notes for the year ended December 31, 2003 included in the Company's Annual
Report on Form 10-K filed with the SEC on March 15, 2004.

The results of operations for these interim periods are not necessarily
indicative of the operating results for the full year or for any future period.

NOTE 2 - ACCOUNTING FOR STOCK OPTIONS

The Company applies the intrinsic value-based method of accounting
prescribed by Accounting Principles Board ("APB") Opinion No. 25, "Accounting
for Stock Issued to Employees", and related interpretations to account for its
fixed plan stock options. These interpretations include Financial Accounting
Standards Board ("FASB") Interpretation No. 44, "Accounting for Certain
Transactions Involving Stock Compensation an Interpretation of APB Opinion No.
25", issued in March 2000. Under this method, compensation expense is generally
recorded on the date of grant only if the current market price of the underlying
stock exceeded the exercise price. The Company has adopted the disclosure only
provisions of FASB Statement ("SFAS") No. 123, "Accounting for Stock-Based
Compensation", and SFAS No. 148, "Accounting for Stock-Based
Compensation-Transition and Disclosure", which is an amendment to SFAS No. 123.
These statements establish accounting and disclosure requirements using a fair
value-based method of accounting for stock-based employee compensation plans. As
allowed by SFAS No. 123 and SFAS No. 148, the Company has elected to continue to
apply the intrinsic value-based method of accounting described above.

The Company accounts for option grants to non-employees using the guidance
of SFAS No. 123, as amended by SFAS No. 148, and Emerging Issues Task Force
("EITF") Issue No. 96-18, "Accounting for Equity Instruments That Are Issued to
Other Than Employees for Acquiring, or in Conjunction with Selling, Goods or
Services," whereby the fair value of such options is determined using the
Black-Scholes option pricing model at the earlier of the date at which the
non-employee's performance is complete or a performance commitment is reached.

6


Under the intrinsic value method, no compensation cost using the intrinsic
value method has been recognized for stock option grants in the accompanying
financial statements. If the fair value-based method had been applied in
measuring stock compensation expense under SFAS No. 123, as amended by SFAS No.
148, the pro forma effect on net earnings and net earnings per share would have
been as follows:


Three Months Ended Nine Months Ended
September 30, September 30,
2004 2003 2004 2003
---------- ---------- ---------- ----------
(In thousands, except per share data)


Net earnings, as reported $ 8,129 $ 7,200 $ 22,017 $ 18,180
Add: Stock based employee compensation
expense included in reported net
earnings, net of related tax benefits -- -- -- --
Deduct: Stock based employee compensation
expense determined under the fair
value-based method for all awards,
net of related tax effect (499) (531) (1,323) (1,420)
---------- ---------- ---------- ----------
Pro forma net earnings $ 7,630 $ 6,669 $ 20,694 $ 16,760
========== ========== ========== ==========

Basic net earnings per common share:
As reported $ 0.35 $ 0.32 $ 0.95 $ 0.81
========== ========== ========== ==========
Pro forma $ 0.33 $ 0.29 $ 0.89 $ 0.74
========== ========== ========== ==========

Diluted net earnings per common share:
As reported $ 0.32 $ 0.28 $ 0.87 $ 0.73
========== ========== ========== ==========
Pro forma $ 0.30 $ 0.26 $ 0.81 $ 0.67
========== ========== ========== ==========


On October 13, 2004, the FASB concluded that its proposed Statement,
"Share-Based Payment," which would require all companies to record compensation
cost for all share-based payments (including employee stock options) at fair
value, would be effective for public companies for interim or annual periods
beginning after June 15, 2005. The FASB has tentatively concluded that companies
could adopt the new standard, which it currently plans to issue on or around
December 15, 2004, using the modified prospective transition method or the
modified retrospective transition method. As of the date of this report, the
FASB continues to discuss certain issues in relation to its proposed Statement.
Until the proposed Statement is issued in its final form, the Company is unable
to evaluate its impact or determine if it will have a material effect on the
Company's financial condition or results of operations.

NOTE 3 - USE OF ESTIMATES

The preparation of financial statements in accordance with GAAP 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 net revenue and expenses during the reporting period. On an ongoing
basis, management evaluates its estimates, including those related to revenue
recognition, allowances for doubtful accounts and the valuation of deferred
income taxes, long-lived and intangible assets and goodwill. These estimates are
based on historical experience and on various other factors that management
believes to be reasonable under the circumstances, the results of which form the
basis for making judgments about the carrying value of assets and liabilities
that are not readily apparent from other sources. Actual results could differ
from those estimates.

NOTE 4 - RECENT ACCOUNTING PRONOUNCEMENTS

In January 2003, the FASB issued Interpretation No. 46, "Consolidation of
Variable Interest Entities - an Interpretation of ARB No. 51" ("FIN 46"). FIN 46
requires that variable interest entities be consolidated by a company if that
company absorbs a majority of the entity's expected losses, receives a majority
of its expected residual returns, or both, as a result of holding a variable
interest. In December 2003, the FASB issued FIN 46R, which made certain
amendments to FIN 46. The Company does not have any variable interest entities
and the adoption of FIN 46 did not have a material effect on the Company's
financial condition, results of operations or liquidity.

7


In March 2004, the EITF reached a consensus on Issue No. 03-1, "The Meaning
of Other-Than-Temporary Impairment and Its Application to Certain Investments"
("EITF 03-1"). EITF 03-1 provides guidance for determining when an investment is
other-than-temporarily impaired to be applied in reporting periods beginning
after June 15, 2004 and contains disclosure requirements effective in annual
financial statements for fiscal years ending after December 15, 2003 for
investments accounted for under SFAS Nos. 115 and 124. For all other investments
within the scope of this Issue, the disclosures are effective for fiscal years
ending after June 15, 2004. The Company has evaluated the impact of the adoption
of EITF 03-1 and does not believe it will have a material effect on the
Company's financial condition or results of operations.

NOTE 5 - EARNINGS PER COMMON SHARE

Basic earnings per share is computed on the basis of the weighted average
number of common shares outstanding. Diluted earnings per share is computed on
the basis of the weighted average number of common shares outstanding plus the
effect of outstanding stock options and warrants using the "treasury stock"
method. The components of basic and diluted earnings per share are as follows:


Three Months Ended Nine Months Ended
September 30, September 30,
------------------------- -------------------------
2004 2003 2004 2003
----------- ----------- ----------- -----------
(In thousands, except share and per share data)

Numerator for basic and diluted net
earnings per common share:
Net earnings $ 8,129 $ 7,200 $ 22,017 $ 18,180
----------- ----------- ----------- -----------

Denominator:
Weighted average outstanding shares of
common stock 23,348,269 22,857,057 23,227,534 22,578,729
Dilutive effect of:
Employee stock options 2,025,137 2,312,510 1,974,866 2,120,686
Warrants 199,026 323,738 195,389 290,610
----------- ----------- ----------- -----------
Common stock and common stock equivalents 25,572,432 25,493,305 25,397,789 24,990,025
----------- ----------- ----------- -----------

Net earnings per share:
Basic $ 0.35 $ 0.32 $ 0.95 $ 0.81
=========== =========== =========== ===========
Diluted $ 0.32 $ 0.28 $ 0.87 $ 0.73
=========== =========== =========== ===========


NOTE 6 - ACQUISITIONS

During the nine months ended September 30, 2004, the Company completed
three acquisitions. In the first acquisition, the Company purchased
substantially all of the assets and operations of The Electric Mail Company Inc.
("Electric Mail"), a Canadian-based provider of outsourced email and value-added
messaging services. In the second acquisition, the Company acquired all of the
issued and outstanding shares of capital stock of Jump B.V. ("Jump"), a
Netherlands-based provider of fax-to-email and unified messaging services. In
the third acquisition, the Company acquired the Onebox(R) unified communications
assets from Call Sciences, Ltd. and its direct and indirect wholly-owned
subsidiaries (collectively, "Call Sciences"), a New Jersey and United
Kingdom-based provider of unified communications solutions. The aggregate
purchase price, including acquisition costs, for these three acquisitions was
$8.6 million, payable in cash at closing, with a contingent earn-out based on
future revenues with respect to the Jump acquisition. The transactions have been
accounted for using the purchase method and, accordingly, the results of
operations of Electric Mail, Jump and Call Sciences have been included in the
consolidated results of the Company since the date of acquisition. For Electric
Mail and Jump, the excess of the purchase price over the fair value of
identifiable net assets acquired amounted to approximately US$6.0 million of
which US$1.8 million was allocated to identifiable intangible assets. The

8


excess of the purchase price of the Call Sciences acquisition over the fair
value of the intangible net assets acquired has not yet been allocated between
goodwill and identifiable intangible assets. The results of operations for
Electric Mail, Jump and Call Sciences during periods prior to our acquisition
were not material to our consolidated results of operations and, accordingly,
pro forma results of operations have not been prepared.

NOTE 7 - GOODWILL AND PURCHASED INTANGIBLE ASSETS

Intangible assets are recorded at cost, less accumulated amortization.
Amortization of intangible assets with finite lives is provided over their
estimated useful lives ranging from 30 to 132 months on a straight-line basis.
Amortization expense, included in general and administrative expense, during the
three- and nine-month periods ended September 30, 2004 approximated $292,000 and
$522,000, respectively. Amortization expense is estimated to approximate
$731,000, $991,000, $931,000, $896,000 and $825,000 for the fiscal years ended
December 31, 2004, 2005, 2006, 2007 and 2008, respectively. Goodwill and a trade
name with an indefinite useful life are recorded net of accumulated amortization
through December 31, 2001. The changes in the carrying amount of goodwill for
the nine months ended September 30, 2004 are as follows:


(in thousands)

Balance at December 31, 2003 $ 15,616
Acquisitions and other(1) 4,359
------------
Balance at September 30, 2004 $ 19,975
============

(1) Other primarily includes the effect of foreign currency translation. See
also Note 6 - Acquisitions.


As of September 30, 2004, intangible assets with finite lives, goodwill and
trade name balances, net of accumulated amortization were as follows:


AMORTIZATION HISTORICAL ACCUMULATED
PERIOD COST AMORTIZATION NET
------------ ---------- ------------ ---------
(IN THOUSANDS)
Intangible assets subject to amortization

Patents 96-132 months $ 5,699 $ 404 $ 5,295
Customer relationships 30-60 months 1,775 263 1,512
Software 60 months 309 61 248

Intangible assets not subject to amortization
Goodwill 19,975
Indefinite-lived trade name 1,268

Other
Unallocated - refer to Note 6 2,633 40 2,593


NOTE 8 - INCOME TAXES

Income tax expense amounted to approximately $4,316,000 and $347,000 for
the three months ended September 30, 2004 and 2003, respectively. For the nine
months ended September 30, 2004 and 2003, income tax expense was $11,960,000 and
$862,000, respectively. During the nine months ended September 30, 2004,
deferred income taxes decreased by $8.7 million primarily due to the offset of
the Company's tax liability against available net operating loss and the tax
credit carry-forwards. For the nine months ended September 30, 2003, income tax
expense was substantially offset by net operating loss carry-forwards for which
a valuation allowance had previously been recognized against the deferred tax
assets.

9


Income tax expense for the three and nine months ended September 30, 2004
is based on our worldwide estimated effective annual tax rate of approximately
35%.

NOTE 9 - SUPPLEMENTAL CASH FLOW INFORMATION

Cash paid for interest during the nine-month periods ended September 30,
2004 and 2003 approximated $51,000 and $40,000, respectively, substantially all
of which related to long-term debt and capital leases.

The Company paid cash of approximately $1.4 million and $300,000,
respectively, for income taxes during the nine-month periods ended September 30,
2004 and 2003.

During the nine months ended September 30, 2004, the Company entered into a
loan arrangement approximating $1.2 million to finance computer software.

During the nine months ended September 30, 2004 and 2003, the Company
entered into loan arrangements approximating $944,000 and $1.2 million,
respectively, to finance certain corporate insurance policies.

During the nine months ended September 30, 2004 and 2003, the Company
entered into capital lease arrangements for certain computer equipment and
software approximating $289,000 and $239,000, respectively.

Through the nine months ended September 30, 2004 and 2003, the Company
recorded the tax benefit from the exercise of non-qualified stock options as a
reduction of its income tax liability and an increase in equity in the amount of
approximately $2.0 million and $726,000, respectively.

NOTE 10 - LEGAL PROCEEDINGS

The Company is not currently aware of any legal proceedings or claims that
it believes are likely to have a material adverse effect on the Company's
business, prospects, financial condition, results of operations or cash flows.
However, the Company is currently engaged as plaintiff in the following two
patent infringement actions:

Venali Patent Infringement Lawsuit
- ----------------------------------

In February 2004, the Company filed a patent infringement suit against
Venali, Inc. ("Venali"), a provider of Internet fax solutions, in United States
District Court for the Central District of California, alleging that Venali
infringes two of the Company's U.S. patents. The Company is seeking monetary
damages for past infringement, injunctive relief prohibiting Venali from
continuing to infringe these patents, and attorneys' fees. In April 2004, Venali
filed an answer and counterclaim, in which it denied infringing the patents and
counterclaimed for a declaration of noninfringement and invalidity of the
patents. In October 2004, the Company amended its complaint to add allegations
that Venali infringes two additional patents acquired by the Company after the
filing of the original complaint. The parties are currently engaged in pretrial
discovery and a trial date is currently set for January 2006. While the Company
is optimistic about its prospects and is vigorously pursuing its claims against
Venali, there can be no guarantee or certainty that the Company will prevail in
this action.

CallWave Patent Infringement Lawsuit
- ------------------------------------

In August 2004, the Company filed a patent infringement suit against
CallWave, Inc. ("CallWave"), a provider of communications applications services,
in United States District Court for the Central District of California, alleging
that CallWave infringes one of the Company's U.S. patents. The Company is
seeking monetary damages for past infringement, injunctive relief prohibiting
CallWave from continuing to infringe the patent, and attorneys' fees. In
September 2004, CallWave filed an answer, in which it denied infringing the
patent and requested a declaration of noninfringement and invalidity of the
patent and attorneys' fees. The litigation is currently in the pre-discovery
stage. While the Company is optimistic about its prospects and is vigorously
pursuing its claims against CallWave, there can be no guarantee or certainty
that the Company will prevail in this action.

10


ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS

ORGANIZATION AND DESCRIPTION OF BUSINESS

j2 Global Communications, Inc. ("j2 Global", "Our" or "We") is a Delaware
corporation founded in 1995. We provide outsourced, value-added messaging and
communications services to individuals and businesses around the world. We offer
fax, voicemail and email solutions, unified messaging & communications services,
document management solutions and conference calling services. We market our
services principally under the brand names eFax(R), j2(R), jConnect(R), JFAX(R),
eFax Corporate(R), Onebox(R), Electric Mail(R), jBlast(R), eFax BroadcastTM,
eVoiceTM, PaperMaster(R), ConsensusTM, M4 Internet(R) and Protofax(R). We
deliver our services through our global telephony/Internet Protocol ("IP")
network, which offers local telephone numbers in more than 1,400 cities in 20
countries across five continents.

Our core services, each of which operates in large and distinct markets,
include fax, voicemail, email, unified messaging & communications, document
management and conference calling. Individuals and businesses are already using
many of these services. Our primary challenge, therefore, is not to introduce
new services to prospective customers. Rather, it is to communicate to prospects
how our particular solutions are more secure, efficient and cost-effective than
traditional alternatives. In addition, we offer permission-based, personalized
email marketing services to help third parties maximize their advertising
efforts, and third party advertising services to our Free base of customers
(described below).

We operate in one reportable segment: value-added messaging and
communications services, which provides for the delivery of fax, voice and email
messages via the telephone and/or Internet networks. Our services are
distributed worldwide primarily over the telephone and Internet networks, and
thus, we do not consider our operations subject to any geographic segment
reporting.

We generate a substantial portion of our revenues from subscribers that pay
us for activation, subscription and usage fees. Activation and subscription fees
are referred to as "fixed" revenues, while usage fees are referred to as
"variable" revenues. We also generate a small percentage of our overall revenue
from advertising and international "calling party pays" arrangements to non-paid
subscribers (sometimes referred to as "Free" subscribers). These Free
advertising-supported subscribers also serve as a source for attracting new paid
subscribers. This process of migrating advertising-supported customers to paid
services is part of our life cycle management program. Through this program, we
monitor usage levels of advertising-supported customers, send them promotional
up-sell messages and cull out subscribers that do not adhere to the limitations
on our Free services set forth in our customer agreements.

Of the more than 7.6 million telephone numbers (sometimes referred to as
Direct Inward Dial numbers or "DIDs") deployed as of September 30, 2004,
approximately 515,000 were deployed to paying subscribers, with the balance
deployed to Free advertising-supported and international "calling party pays"
subscribers.

During the past three years, we have derived substantially all of our
revenues from the sale of our eFax Plus(R) and jConnect Premier(R) paid
services. These services are deployed through a DID. As a result, we believe
that paying DIDs and the revenues associated therewith are an important metric
for understanding our business. It has been and continues to be our objective to
increase the number of paying DIDs through a variety of distribution channels,
marketing arrangements and enhanced brand awareness. In addition, we
continuously seek to increase revenues through a combination of stimulating use
by our customers of usage-based services, introduction of new services and
instituting appropriate price increases to our fixed monthly subscription and
other fees.

The following table sets forth key operating metrics of our Company for the
three and nine months ended September 30, 2004 and 2003:

11


September 30,
2004 2003
---------- ----------
(In thousands)

Advertising-supported telephone numbers 7,106 5,147
Paying telephone numbers 515 380
---------- ----------
Total active telephone numbers 7,621 5,527
========== ==========

Three Months Ended Nine Months Ended
September 30, September 30,
2004 2003 2004 2003
---------- ---------- ---------- ----------
(In thousands except percentages and average revenue
per paying telephone number)
Subscriber revenues:
Fixed $ 19,122 $ 12,121 $ 52,893 $ 33,214
Variable 7,863 5,685 21,217 15,353
---------- ---------- ---------- ----------
Total subscriber revenues $ 26,985 $ 17,806 $ 74,110 $ 48,567
========== ========== ========== ==========

Percentage of total subscriber revenues:
Fixed 70.9% 68.1% 71.4% 68.4%
Variable 29.1% 31.9% 28.6% 31.6%

Revenues:
DID based revenues $ 25,994 $ 17,478 $ 71,715 $ 47,376
Non-DID based revenues 1,777 1,425 4,829 3,772
---------- ---------- ---------- ----------
Total revenues $ 27,771 $ 18,903 $ 76,544 $ 51,148
========== ========== ========== ==========

Average revenue per paying
telephone number(1) $ 16.95 $ 15.36 $ 16.81 $ 15.54
========== ========== ========== ==========


(1) See calculation of average revenue per paying telephone number at the end of
this section, Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations.


DISCUSSION OF CRITICAL ACCOUNTING POLICIES AND ESTIMATES

In the ordinary course of business, we have made a number of estimates and
assumptions relating to the reporting of results of operations and financial
condition in the preparation of our financial statements. Actual results could
differ significantly from those estimates under different assumptions and
conditions. During the nine months ended September 30, 2004, there have been no
changes in the Company's critical accounting policies described in the Company's
Annual Report on Form 10-K filed with the SEC on March 15, 2004.

RESULTS OF OPERATIONS FOR THE THREE- AND NINE-MONTH PERIODS ENDED SEPTEMBER 30,
2004 AND 2003

REVENUES

SUBSCRIBER REVENUES. Subscriber revenues are comprised primarily of monthly
recurring subscription and usage based fees. Subscriber revenues were $27.0
million and $17.8 million for the three months ended September 30, 2004 and
2003, respectively. For the nine months ended September 30, 2004 and 2003,
subscriber revenues were $74.1 million and $48.6 million, respectively. The
increase in subscriber revenues was due to an increase in our base of paying
subscribers combined with a price increase discussed below. The increase in our
base of paid subscribers was the result of new sign-ups derived from subscribers
coming directly to our websites, Free-to-Paid subscriber upgrades, small to
medium-sized enterprise sales, direct large enterprise sales and direct
marketing spend for Paid subscribers, net of cancellations.

At the end of the second quarter of 2003, we implemented a price increase
for new individual subscribers. Commencing at the end of the third quarter of
2003, we began implementing this same price increase to a substantial portion of
our existing individual subscribers, which at the time represented more than
half of our subscriber revenues. These price changes resulted in increased
monthly recurring revenues of between $2.50 and $3.00 per

12


individual paying customer, depending on the services provided. We substantially
completed implementation of these price changes by June 30, 2004. The results of
these price changes exceeded our expectations in terms of the rate of sign-ups
and cancellations (i.e., we did not see a material decrease in new customer
sign-ups and cancellations of existing subscribers were lower than anticipated).
However, due to a number of factors affecting the Company's net sign-ups and
related revenues during a given reporting period, it is not possible to quantify
the financial impact of the price increase.

ADVERTISING. Advertising revenues were $668,000 and $681,000 for the three
months ended September 30, 2004 and 2003, respectively. For the nine months
ended September 30, 2004 and 2003, advertising revenues were $2.1 million and
$1.9 million, respectively. We generate advertising revenues primarily by
delivering email messages on behalf of advertisers to our Free
advertising-supported customers. The increase in advertising revenues year over
year was due primarily to an increase in the size of our Free
advertising-supported customer base which was partially offset by a decline in
email advertising prices due to market conditions.

LICENSING AND OTHER. Licensing and other revenues were $118,000 and $416,000 for
the three months ended September 30, 2004 and 2003, respectively. For the nine
months ended September 30, 2004 and 2003, licensing and other revenues were
$358,000 and $679,000, respectively. Throughout these periods, our licensing and
other revenues have consisted primarily of revenues from licensing our
PaperMaster document management software.

COST OF REVENUES. Cost of revenues is comprised primarily of costs associated
with data and voice transmission, telephone numbers, customer service, on-line
processing fees and equipment depreciation. Cost of revenues was $4.4 million,
or 16% of total revenues, and $3.5 million, or 18% of total revenues, for the
three months ended September 30, 2004 and 2003, respectively. For the nine
months ended September 30, 2004 and 2003, cost of revenues was $12.1 million, or
16% of total revenues, and $9.8 million, or 19% of total revenues, respectively.
The increase in cost of revenues was due primarily to costs incurred in building
and expanding our network infrastructure, enhancing and growing our customer
support services and incurring increased variable transmission costs associated
with a larger subscriber base and increased usage. Cost of revenues as a
percentage of revenues decreased as a result of increases in revenues over the
same periods with a relatively stable level of cost of revenues.

OPERATING EXPENSES

SALES AND MARKETING. Sales and marketing expenses are comprised primarily of
payments to sales and marketing personnel, advertising expenses and other
business development related expenses. Sales and marketing expenses were $4.7
million, or 17% of total revenues, and $2.9 million, or 15% of total revenues,
for the three months ended September 30, 2004 and 2003, respectively. For the
nine months ended September 30, 2004 and 2003, sales and marketing expenses were
$13.3 million, or 17% of total revenues, and $8.3 million, or 16% of total
revenues, respectively. The increase in sales and marketing expenses was due
primarily to increased Internet-based advertising spend and additional marketing
personnel. Our Internet-based advertising relationships consist primarily of
fixed cost and performance-based (cost-per-impression, cost-per-click and
cost-per-acquisition) advertising relationships with an array of on-line service
providers. During the second half of 2003, we experienced upward pricing
pressure for certain Internet-based advertising, and we expect this trend to
continue through at least the balance of 2004 and into 2005.

RESEARCH, DEVELOPMENT AND ENGINEERING. Our research, development and engineering
costs consist primarily of personnel-related expenses. Research, development and
engineering costs were $1.4 million, or 5% of total revenues, and $1.0 million,
or 5% of total revenues, for the three months ended September 30, 2004 and 2003,
respectively. For the nine months ended September 30, 2004 and 2003, research,
development and engineering costs were $3.7 million, or 5% of total revenues,
and $3.1 million, or 6% of total revenues, respectively. The increase in
research, development and engineering costs was primarily due to an increase in
personnel costs to maintain our existing services, accommodate our service
enhancements, develop and implement additional service features and
functionality and continue to bolster our infrastructure security. Research,
development and engineering costs as a percentage of revenues decreased year
over year as a result of increases in revenues over the same periods versus a
more stable level of research, development and engineering expenses. For 2005,
we expect research, development and engineering costs as a percentage of
revenues to grow as we intend to increase spending to further develop and
implement additional service features and functionality.

13


GENERAL AND ADMINISTRATIVE. Our general and administrative costs consist
primarily of personnel-related expenses, depreciation and amortization, bad debt
expense and insurance costs. General and administrative costs were $5.3 million,
or 19% of total revenues, and $4.1 million, or 22% of total revenues, for the
three months ended September 30, 2004 and 2003, respectively. For the nine
months ended September 30, 2004 and 2003, general and administrative costs were
$14.5 million, or 19% of total revenues, and $11.3 million, or 22% of total
revenues, respectively. General and administrative costs as a percentage of
revenues decreased because revenues increased over the same periods at a faster
rate than general and administrative costs.

AMORTIZATION OF OTHER INTANGIBLES. Amortization of intangible assets with finite
lives is provided over their estimated useful lives ranging from 30 to 132
months on a straight-line basis. Amortization of intangibles, included in
general and administrative expenses, aggregated $292,000 and $46,000 for the
three months ended September 30, 2004 and 2003, respectively and $522,000 and
$102,000 for the nine months ended September 30, 2004 and 2003, respectively.
The increase in amortization of intangible assets was primarily attributable to
the acquisitions of the shares of Driverworks.com Development Corporation (d/b/a
M4 Internet) in September 2003, assets of The Electric Mail Company Inc. and the
shares of Jump B.V. in March 2004 and assets of Call Sciences, Ltd. in July
2004.

INTEREST AND OTHER INCOME. Our interest and other income is generated from
interest earned on cash, cash equivalents and short- and long-term investments.
Interest and other income amounted to $505,000 and $126,000 for the three months
ended September 30, 2004 and 2003, respectively, and $1.0 million and $269,000
for the nine months ended September 30, 2004 and 2003, respectively. The
increase in interest and other income was primarily due to higher cash and
investment balances for 2004 and a shift in allocation to investments with
longer maturities and higher returns.

INCOME TAXES. Income tax expense amounted to approximately $4.3 million and
$347,000 for the three months ended September 30, 2004 and 2003, respectively.
For the nine months ended September 30, 2004 and 2003, income tax expense was
$12.0 million and $862,000, respectively. For the nine months ended September
30, 2003, income tax expense was substantially offset by net operating loss
carry-forwards for which a valuation allowance had previously been recognized
against the deferred tax assets.

Income tax expense for the three and nine months ended September 30, 2004
is based on our worldwide estimated effective annual tax rate of approximately
35%.

LIQUIDITY AND CAPITAL RESOURCES

Our cash and cash equivalents and short-term investments were $55.1 million
at September 30, 2004. Our primary sources of liquidity are cash flows generated
from operations, together with cash and cash equivalents and short-term
investments. Net cash provided by operating activities was $36.5 million and
$22.5 million for the nine months ended September 30, 2004 and 2003,
respectively. Our operating cash flows result primarily from cash received from
our subscribers, offset by cash payments we make to third parties for their
services and employee compensation. More than two-thirds of our subscribers pay
us by credit card and therefore our receivables from subscribers settle quickly.
We invest our short- and long-term investments primarily in high-grade debt
securities. Allocations of our total cash and cash equivalents and short- and
long-term investments on hand will generally vary during any given reporting
period based on our short-term working capital requirements and return on
investment opportunities.

Net cash used in investing activities was approximately $41.4 million and
$11.4 million for the nine months ended September 30, 2004 and 2003,
respectively. For the first three quarters of 2004, net cash used in investing
activities was primarily attributable to purchases of investments, acquisition
of businesses, purchases of intangible assets and purchases of property and
equipment. For the first three quarters of 2003, net cash used in investing
activities was primarily comprised of purchases of investments and property and
equipment.

Net cash provided by financing activities was approximately $280,000 and
$2.5 million for the nine months ended September 30, 2004 and 2003,
respectively. For the first three quarters of 2004 and 2003, net cash provided
by financing activities was primarily comprised of proceeds from the exercise of
stock options and common shares issued under our employee stock purchase plan,
offset by repayments of long-term debt and capital lease obligations.

14


We have an investment with an immaterial carrying amount in Oasis
Semiconductor, Inc. ("Oasis"), a privately-held company. This investment in an
equity security is accounted for under the cost method and is included in "other
assets" on our consolidated balance sheet. In March 2004, Oasis filed a
registration statement on Form S-1 with the United States Securities and
Exchange Commission regarding its intent to initiate an initial public offering
("IPO"). On April 27, 2004, Oasis filed an amended registration statement on
Form S-1 indicating our intent to sell approximately 420,000 shares in the
offering, resulting in us owning slightly under 10% of Oasis' issued and
outstanding shares of capital stock after the offering. However, we are unable
to determine when and if Oasis will complete the IPO, and if so, at what
offering value. If this offering were to be completed, our carrying value or
related proceeds from the offering may become material.

We currently anticipate that our existing cash and cash equivalents and
short-term investment balances will be sufficient to meet our anticipated needs
for working capital and capital expenditures for at least the next 12 months.

CONTRACTUAL OBLIGATIONS AND COMMERICAL COMMITMENTS

PURCHASE OBLIGATIONS

During the first quarter of 2004, we entered into an obligation to purchase
computer software and related services totaling $2.6 million.

FORWARD-LOOKING INFORMATION

IN ADDITION TO HISTORICAL INFORMATION, THE FOREGOING MANAGEMENT'S
DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
CONTAINS FORWARD-LOOKING STATEMENTS. THESE FORWARD-LOOKING STATEMENTS INVOLVE
RISKS, UNCERTAINTIES AND ASSUMPTIONS. THE ACTUAL RESULTS MAY DIFFER MATERIALLY
FROM THOSE ANTICIPATED IN THESE FORWARD-LOOKING STATEMENTS AS A RESULT OF MANY
FACTORS, INCLUDING BUT NOT LIMITED TO THOSE DISCUSSED BELOW, THE RESULTS OF ANY
ACQUISITION WE MAY COMPLETE AND THE FACTORS DISCUSSED IN THE SECTION IN THIS
QUARTERLY REPORT ON FORM 10-Q ENTITLED "QUANTITATIVE AND QUALITATIVE DISCLOSURES
ABOUT MARKET RISK". READERS ARE CAUTIONED NOT TO PLACE UNDUE RELIANCE ON THESE
FORWARD-LOOKING STATEMENTS, WHICH REFLECT MANAGEMENT'S OPINIONS ONLY AS OF THE
DATE HEREOF. WE UNDERTAKE NO OBLIGATION TO REVISE OR PUBLICLY RELEASE THE
RESULTS OF ANY REVISION TO THESE FORWARD-LOOKING STATEMENTS. READERS SHOULD
CAREFULLY REVIEW THE RISK FACTORS DESCRIBED BELOW, THOSE IDENTIFIED IN THE "RISK
FACTORS" SECTION OF OUR ANNUAL REPORT ON FORM 10-K FILED WITH THE SECURITIES AND
EXCHANGE COMMISSION ("SEC") ON MARCH 15, 2004 AND THE RISK FACTORS SET FORTH IN
OTHER DOCUMENTS WE FILE FROM TIME TO TIME WITH THE SEC.

Some factors that could cause actual results to differ materially from
those anticipated in these forward-looking statements include, but are not
limited to, our ability to:

o Sustain growth or profitability;

o Continue to maintain, expand and retain our customer base;

o Compete with other similar providers with regard to price, service and
functionality;

o Cost-effectively procure large quantities of telephone numbers in
desired locations in the United States and abroad;

o Achieve business and financial objectives in light of burdensome
telecommunications or Internet regulation;

o Obtain large quantities of non-paying users on a cost effective basis,
and effectively derive revenues from those users through advertising
to them and selling them paid services;

o Successfully manage our cost structure, including but not limited to
our telecommunication and personnel related expenses;


15


o Successfully adapt to technological changes in the messaging,
communications and document management industries;

o Successfully protect our intellectual property and avoid infringing
upon the proprietary rights of others;

o Adequately manage growth in terms of managerial and operational
resources;

o Maintain and upgrade our systems and infrastructure to deliver
acceptable levels of service quality and security of customer data and
messages;

o Introduce new services and achieve acceptable levels of
returns-on-investment for those new services; and

o Recruit and retain key personnel.


CALCULATION OF AVERAGE REVENUE PER PAYING TELEPHONE NUMBER:


THREE MONTHS ENDED NINE MONTHS ENDED
SEPTEMBER 30, SEPTEMBER 30,
2004 2003 2004 2003
---------- ---------- ---------- ----------
(In thousands except average revenue per
paying telephone number)


DID based revenues $ 25,994 $ 17,478 $ 71,715 $ 47,376

Less advertising and other revenues 968 681 2,456 1,902
---------- ---------- ---------- ----------

Total paying telephone number revenues $ 25,026 $ 16,797 $ 69,259 $ 45,474
========== ========== ========== ==========

Average paying telephone number monthly
revenue (total divided by number of months) $ 8,342 $ 5,599 $ 7,695 $ 5,053

Number of paying telephone numbers

Beginning of period 469 349 400 270
End of period 515 380 515 380

Average of period 492 365 458 325

Average revenue per paying telephone number $ 16.95 $ 15.36 $ 16.81 $ 15.54



ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

THE FOLLOWING DISCUSSION OF THE MARKET RISKS WE FACE CONTAINS
FORWARD-LOOKING STATEMENTS. FORWARD-LOOKING STATEMENTS ARE SUBJECT TO RISKS AND
UNCERTAINTIES. ACTUAL RESULTS COULD DIFFER MATERIALLY FROM THOSE DISCUSSED IN
THE FORWARD-LOOKING STATEMENTS.

We believe that our exposure to market risk related to changes in interest
rates and foreign currency exchange rates is not significant, primarily because
our indebtedness under financing arrangements has fixed interest rates and our
transactions are substantially denominated in US Dollars. During the balance of
2004 and in future years, we believe we will expand our international customer
base and, as a result, we expect a greater level of foreign currency market
risk.

16


We invest our cash primarily in high-grade interest-bearing securities. Our
return on these investments is subject to interest rate fluctuations.

We do not have derivative financial instruments for hedging, speculative or
trading purposes.

ITEM 4. CONTROLS AND PROCEDURES

As of September 30, 2004, the end of the period covered by this report, j2
Global's management, with the participation of our President (principal
executive officer) and Chief Financial Officer (principal financial officer),
carried out an evaluation of the effectiveness of our disclosure controls and
procedures (as defined in Rule 13a-15(e) under the Securities Exchange Act of
1934). Based upon that evaluation, our President (principal executive officer)
and Chief Financial Officer (principal financial officer) concluded that these
disclosure controls and procedures were effective as of the end of the period
covered in this report. In addition, no change in our internal control over
financial reporting (as defined in Rule 13a-15(f) under the Securities Exchange
Act of 1934) occurred during the quarter ended September 30, 2004 that has
materially affected, or is reasonably likely to materially affect, our internal
control over financial reporting.

PART II. OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

We are not currently aware of any legal proceedings or claims that we
believe are likely to have a material adverse effect on our business, prospects,
financial condition, results of operations or cash flows. However, we are
currently engaged as plaintiff in the following two patent infringement actions:

Venali Patent Infringement Lawsuit
- ----------------------------------

In February 2004, we filed a patent infringement suit against Venali, Inc.
("Venali"), a provider of Internet fax solutions, in United States District
Court for the Central District of California, alleging that Venali infringes two
of our U.S. patents. We are seeking monetary damages for past infringement,
injunctive relief prohibiting Venali from continuing to infringe these patents,
and attorneys' fees. In April 2004, Venali filed an answer and counterclaim, in
which it denied infringing the patents and counterclaimed for a declaration of
noninfringement and invalidity of the patents. In October 2004, we amended our
complaint to add allegations that Venali infringes two additional patents
acquired by us after the filing of the original complaint. The parties are
currently engaged in pretrial discovery and a trial date is currently set for
January 2006. While we are optimistic about our prospects and are vigorously
pursuing our claims against Venali, there can be no guarantee or certainty that
we will prevail in this action.

CallWave Patent Infringement Lawsuit
- ------------------------------------

In August 2004, we filed a patent infringement suit against CallWave, Inc.
("CallWave"), a provider of communications applications services, in United
States District Court for the Central District of California, alleging that
CallWave infringes one of our U.S. patents. We are seeking monetary damages for
past infringement, injunctive relief prohibiting CallWave from continuing to
infringe the patent, and attorneys' fees. In September 2004, CallWave filed an
answer, in which it denied infringing the patent and requested a declaration of
noninfringement and invalidity of the patent and attorneys' fees. The litigation
is currently in the pre-discovery stage. While we are optimistic about our
prospects and are vigorously pursuing our claims against CallWave, there can be
no guarantee or certainty that we will prevail in this action.

ITEM 6. EXHIBITS

31(a) Rule 13a-14(a) Certification by Chief Executive Officer in
accordance with Section 302 of the Sarbanes-Oxley Act of 2002.

17


31(b) Rule 13a-14(a) Certification by Chief Financial Officer in
accordance with Section 302 of the Sarbanes-Oxley Act of 2002.

32(a) Section 1350 Certification by Chief Executive Officer in
accordance with Section 906 of the Sarbanes-Oxley Act of 2002.

32(b) Section 1350 Certification by Chief Financial Officer in
accordance with Section 906 of the Sarbanes-Oxley Act of 2002.


ITEMS 2, 3, 4 AND 5 ARE NOT APPLICABLE AND HAVE BEEN OMITTED.



























18


SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.

j2 Global Communications, Inc.


Date: November 8, 2004 By: /s/ R. SCOTT TURICCHI
------------------------------
R. Scott Turicchi
Chief Financial Officer
(Principal Financial Officer)

Date: November 8, 2004 By: /s/ GREGGORY KALVIN
------------------------------
Greggory Kalvin
Chief Accounting Officer
(Principal Accounting Officer)

















19


INDEX TO EXHIBITS

Exhibit Number Description
- -------------- -----------

31(a) Certification of Chief Executive Officer pursuant to Section
302 of the Sarbanes-Oxley Act of 2002.

31(b) Certification of Chief Financial Officer pursuant to Section
302 of the Sarbanes-Oxley Act of 2002.

32(a) Certification of Chief Executive Officer pursuant to Section
906 of the Sarbanes-Oxley Act of 2002.

32(b) Certification by Chief Financial Officer pursuant to Section
906 of the Sarbanes-Oxley Act of 2002.























20