<PAGE> 1
Filed Pursuant to Rule 424(b)(1)
Registration No. 333-80379
PROSPECTUS
2,867,976 SHARES OF COMMON STOCK
8X8, INC.
This prospectus relates to the public offering, which is not being
underwritten, of 2,867,976 shares of our common stock which is held by the
selling stockholders identified on page 15 of this prospectus.
The prices at which the selling stockholders may sell the shares will be
determined by the prevailing market price for the shares or in negotiated
transactions. We will not receive any of the proceeds from the sale of the
shares.
Our common stock is quoted on the Nasdaq National Market under the symbol
"EGHT." On June 16, 1999, the last sale price of our common stock was $5.03 per
share.
THE SHARES OFFERED IN THIS PROSPECTUS INVOLVE A HIGH DEGREE OF RISK. YOU
SHOULD CAREFULLY CONSIDER THE "RISK FACTORS" COMMENCING ON PAGE 4 IN DETERMINING
WHETHER TO PURCHASE THE COMMON STOCK.
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED OR DISAPPROVED THESE SECURITIES OR PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
The date of this Prospectus is June 17, 1999
THE INFORMATION IN THIS PROSPECTUS IS NOT COMPLETE AND MAY BE AMENDED OR
CHANGED. THE SELLING STOCKHOLDERS MAY NOT SELL THESE SECURITIES UNTIL THE
REGISTRATION STATEMENT FILED WITH THE SECURITIES AND EXCHANGE COMMISSION IS
EFFECTIVE. THIS PROSPECTUS IS NOT AN OFFER TO SELL THESE SECURITIES AND IT IS
NOT SOLICITING AN OFFER TO BUY THESE SECURITIES IN ANY STATE WHERE THE OFFER OR
SALE IS NOT PERMITTED.
<PAGE> 2
WHERE YOU CAN FIND MORE INFORMATION
This prospectus is part of a registration statement on Form S-3 that we
filed with the Securities and Exchange Commission. Certain information in the
registration statement has been omitted from this prospectus in accordance with
the rules of the SEC. We file annual, quarterly and special reports, proxy
statements and other information with the SEC. You can inspect and copy the
registration statement as well as reports, proxy statements and other
information we have filed with the SEC at the public reference room maintained
by the SEC at 450 Fifth Street, NW, Washington, D.C. 20549, and at the following
Regional Offices of the SEC: Seven World Trade Center, New York, New York 10048,
and Northwest Atrium Center, 500 West Madison Street, Chicago, Illinois 60661.
You can obtain copies from the public reference room of the SEC at 450 Fifth
Street, NW, Washington, D.C. 20549 upon payment of certain fees. You can call
the SEC at 1-800-732-0330 for further information about the public reference
room. We are also required to file electronic versions of these documents with
the SEC, which may be accessed through the SEC's World Wide Web site at
http://www.sec.gov. Our common stock is quoted on the Nasdaq National Market.
Reports, proxy and information statements and other information concerning 8x8,
Inc. may be inspected at The Nasdaq Stock Market at 1735 K Street, NW,
Washington, D.C. 20006.
The SEC allows us to "incorporate by reference" certain of our
publicly-filed documents into this prospectus, which means that information
included in these documents is considered part of this prospectus. Information
that we file with the SEC subsequent to the date of this prospectus will
automatically update and supersede this information. We incorporate by reference
the documents listed below and any future filings made with the SEC under
Sections 13(a), 13(c), 14 or 15(d) of the Securities Exchange Act of 1934, until
the selling stockholders have sold all their shares.
The following documents filed with the SEC are incorporated by reference in
this prospectus:
1. Our Annual Report on Form 10-K for the year ended March 31, 1999 filed
May 24, 1999.
2. Our Proxy Statement dated June 8, 1999, filed in connection with our
1999 Annual Meeting of Stockholders.
3. Our Current Report on Form 8-K, filed with the SEC on June 7, 1999.
4. Our Current Report on Form 8-K filed with the SEC on June 7, 1999.
5. The description of our common stock in our registration statement on
Form 8-A, filed with the SEC on November 21, 1996, including any
amendments or reports filed for the purpose of updating such
description.
We will furnish without charge to you, on written or oral request, a copy of any
or all of the documents incorporated by reference, other than the exhibits to
those documents. You should direct any requests for documents to Sandra L.
Abbott, Chief Financial Officer and Vice President, Finance, 2445 Mission
College Blvd., Santa Clara, California 95054, telephone: (408) 727-1885.
2
<PAGE> 3
THE COMPANY
We develop, manufacture and market telecommunication equipment with an
emphasis on multimedia Internet protocol applications. Our products are highly
integrated, leverage our proprietary technology and are comprised of
communication semiconductors, multimedia compression algorithms, network
protocols and embedded system design. These products may be used in applications
including voice-over-IP, video monitoring and streaming, and videoconferencing.
We market our products mainly to original equipment manufacturers, but also to
end users for our video monitoring system products.
We recently organized into two business units. The first business unit,
Broadband Telephony, markets our telecommunications products to OEMs. This
business unit's product line includes the Audacity processor, the Symphony
voice-over-IP module, and our videoconferencing and videophone semiconductors.
The second business unit, Video Monitoring, markets our monitoring products
under the RSM brand name to end users. In addition, we will continue to sell our
existing inventory of ViaTV videophone products through select channels over the
next several quarters.
In May 1999 we announced that we had entered into a definitive agreement to
acquire Odisei S.A., a privately held, development stage company based in Sophia
Antipolis, France, that develops Internet protocol telephony software. Odisei is
developing a scalable, Java-based software solution for managing voice-over-IP
networks. The software will run on a carrier-grade server located at a telephony
service provider's site and will provide complete voice and data services over
T1/E1, xDSL or cable communication links. The acquisition closed on May 24,
1999.
Our principal offices are located at 2445 Mission College Blvd., Santa
Clara, California 95054 and our telephone number is (408) 727-1885.
3
<PAGE> 4
RISK FACTORS
Before you invest in our common stock, you should become aware of various
risks, including those described below. You should carefully consider these risk
factors, together with all of the other information included in this prospectus,
including the documents incorporated in this prospectus by reference, before you
decide whether to purchase shares of our common stock. The risks set out below
may not be exhaustive.
WE HAVE A HISTORY OF LOSSES AND WE ARE UNCERTAIN AS TO OUR FUTURE PROFITABILITY.
We recorded operating losses of $20.2 million and $13.6 million in the
years ended March 31, 1999 and 1997, respectively, and operating losses in three
of the four quarters in fiscal 1998. We would not have been profitable in fiscal
1998 had we not received nonrecurring license and other revenues. Revenues
fluctuated from $19.1 million in fiscal 1997 to $49.8 million in fiscal 1998 to
$31.7 million in fiscal 1999. In view of our historical operating losses, we
cannot be certain that we will be able to achieve profitability on either an
annual or quarterly basis.
OUR OPERATING RESULTS MAY DECLINE FROM PREVIOUS PERIODS IF WE ARE UNABLE TO
SECURE FUTURE LICENSE AND OTHER SOURCES OF REVENUES.
In the past, we have received substantial revenues from licensing of
technology. License and other revenues, all of which were nonrecurring, were
$5.5 million, $14.5 million and $3.9 million in the fiscal years ended March 31,
1999, 1998 and 1997, respectively. If we do not receive additional revenues from
licensing of our technology in the future, our operating results may decline
from previous periods.
WE HAVE DISCONTINUED OUR VIATV PRODUCT LINE AND IF WE CANNOT LOWER EXPENSES AND
SELL REMAINING INVENTORY, OUR OPERATING RESULTS MAY DECLINE.
We announced in April 1999 that we would cease production of our ViaTV
product line and withdraw from its distribution channels over the subsequent
several quarters. In fiscal 1999 and 1998, ViaTV revenues represented 49% and
38% respectively of product revenues. With the discontinuation of production, it
is not clear how much, if any, revenue we will be able to generate from selling
our existing inventories of ViaTV's. We do not expect to be able to generate
revenues from our other products to compensate for the loss of ViaTV revenues
for at least the next twelve months, if at all. If we cannot adequately
compensate for lower revenues with decreased manufacturing overhead expenses and
with lower operating expenses, it could have a material adverse effect on our
business and operating results.
In fiscal 1999, we recognized a $5.7 million expense associated with
valuing the ViaTV inventory at the current estimated fair market value. Our
discontinuation of the sale of ViaTV's may also result in higher levels of
product returns, the necessity of granting price protection to resellers, more
lengthy receivable collection cycles and higher warranty costs, which may have a
material adverse effect on our business and operating results. If we are unable
to sell the remaining ViaTV inventory in a timely manner, at or above the
estimated fair market value, it would have a material adverse effect on our
business and operating results. At March 31, 1999, the ViaTV inventory was
recorded on our financial statements at a value of $2.5 million.
4
<PAGE> 5
Our operating results historically have been subject to increased
seasonality with sales higher during our third fiscal quarter, corresponding to
the Christmas shopping season. Our discontinuation of ViaTV products may result
in substantially different patterns in operating results.
THE GROWTH OF OUR BUSINESS AND FUTURE PROFITABILITY DEPENDS ON FUTURE BROADBAND
TELEPHONY REVENUE.
We believe that our business and future profitability will be largely
dependent on widespread market acceptance of our broadband telephony products.
Neither our videoconferencing semiconductor business nor our video monitoring
business have provided, nor are they expected to provide sufficient revenues to
profitably operate our business. To date, we have not sold any significant
quantities of broadband telephony products. If we are not able to generate
revenue selling into the broadband telephony market, it would have a material
adverse effect on our business and operating results.
OUR FUTURE OPERATING RESULTS MAY NOT FOLLOW PAST TRENDS DUE TO MANY FACTORS AND
ANY OF THESE COULD CAUSE OUR STOCK PRICE TO FALL.
Our historical operating results have fluctuated significantly and will
likely continue to fluctuate in the future, and a decline in our operating
results could cause our stock price to fall. On an annual and a quarterly basis
there are a number of factors that may affect our operating results, many of
which are outside our control. These include, but are not limited to:
- changes in market demand;
- the timing of customer orders;
- competitive market conditions;
- lengthy sales cycles, regulatory approval cycles;
- new product introductions by us or our competitors;
- market acceptance of new or existing products;
- the cost and availability of components;
- the mix of our customer base and sales channels;
- the mix of products sold;
- the management of inventory;
- the level of international sales;
- continued compliance with industry standards; and
- general economic conditions.
Our gross margin is affected by a number of factors including, product mix,
the recognition of license and other revenues for which there may be no or
little corresponding cost of revenues, product pricing, the allocation between
international and domestic sales, the percentage of direct sales and sales to
resellers, and manufacturing and component costs. The markets for our products
are characterized by falling average selling prices. We
5
<PAGE> 6
expect that, as a result of competitive pressures and other factors, gross
profit as a percentage of revenue for our semiconductor products will likely
decrease for the foreseeable future. The market for IP telephony semiconductors
is likely to be a high volume market characterized by commodity pricing. We will
not be able to generate average selling prices or gross margins for our
broadband telephony semiconductors similar to those that we have historically
commanded for our videoconferencing semiconductors. In addition, the gross
margins for our video monitoring and broadband systems products are, and will
likely continue to be, substantially lower than the gross margins for our
semiconductors. In the likely event that we encounter significant price
competition in the markets for our products, we could be at a significant
disadvantage compared to our competitors, many of which have substantially
greater resources, and therefore may be better able to withstand an extended
period of downward pricing pressure.
Variations in timing of sales may cause significant fluctuations in future
operating results. In addition, because a significant portion of our business
may be derived from orders placed by a limited number of large customers,
including OEM customers, the timing of such orders can also cause significant
fluctuations in our operating results. For example, 3Com, which purchased
approximately 34% of ViaTV videophones sold by us in the year ended March 31,
1998, has not ordered additional products from us since delivery of its
purchases in the quarter ended December 31, 1997. Anticipated orders from
customers may fail to materialize. Delivery schedules may be deferred or
canceled for a number of reasons, including changes in specific customer
requirements or international economic conditions. The adverse impact of a
shortfall in our revenues may be magnified by our inability to adjust spending
to compensate for such shortfall. Announcements by us or our competitors of new
products and technologies could cause customers to defer purchases of our
existing products, which would also have a material adverse effect on our
business and operating results.
As a result of these and other factors, it is likely that in some future
period our operating results will be below the expectations of securities
analysts or investors, which would likely result in a significant reduction in
the market price for our common stock.
We may not be able to manage our inventory levels effectively which may
lead to inventory obsolescence which would force us to lower our prices.
Our products have lead times of up to several months, and are built to
forecasts that are necessarily imprecise. Because of our practice of building
our products to necessarily imprecise forecasts, it is likely that, from time to
time, we will have either excess or insufficient product inventory. In
particular, we had significant inventory quantities of ViaTV products, both on
hand and at our retail distributors when we discontinued production in April
1999. In the fourth quarter ended March 31, 1999, cost of product revenues
included a $5.7 million charge associated with the write off of inventories
related to our decision to cease production and distribution of our ViaTV
product line. At March 31, 1999, the ViaTV inventory was recorded at a value of
$2.5 million. Because retailers and other distributors may have contractual
rights to price protection if we decrease the selling price, and because we may
need to significantly decrease the selling price to sell existing ViaTV
inventory, our cost of such inventory may exceed our actual selling price.
Excess inventory levels will subject us to the risk of inventory obsolescence
and the risk that our selling prices may drop below our inventory costs, while
insufficient levels of inventory may negatively affect relations with customers.
Any of these factors could have a material adverse effect on our operating
results and business.
6
<PAGE> 7
WE WILL NEED TO RAISE ADDITIONAL CAPITAL IN 2000 TO SUPPORT OUR GROWTH, AND
FAILURE TO DO SO IN A TIMELY MANNER MAY CAUSE US TO DELAY OUR PLANS FOR GROWTH.
We believe that we will be able to fund planned expenditures and satisfy
our cash requirements for at least the next twelve months from cash flow from
operations, if any, and existing cash balances. As of March 31, 1999, we had
approximately $15.8 million in cash and cash equivalents. However, we currently
estimate that we will be required to raise additional financing at some point
during calendar year 2000 and if we are unable to do so, our growth may be
limited. We will be evaluating financing alternatives prior to that time. We may
also seek to exploit business opportunities that will require additional capital
from equity or debt sources in order to finance growth and capital requirements.
In particular, the development and marketing of new products could require a
significant commitment of resources, which could in turn require us to obtain
additional financing earlier than otherwise expected. We may not be able to
obtain additional financing as needed on acceptable terms or at all which would
force us to delay our plans for growth and implementation of our strategy.
WE DEPEND ON PURCHASE ORDERS FROM KEY CUSTOMERS AND FAILURE TO RECEIVE
SIGNIFICANT PURCHASE ORDERS IN THE FUTURE WOULD CAUSE A DECLINE IN OUR OPERATING
RESULTS.
Historically, a significant portion of our sales have been to relatively
few customers, although the composition of these customers has varied. Revenues
from our ten largest customers in the years ended March 31, 1999, 1998 and 1997
accounted for approximately 40%, 61% and 61%, respectively, of total revenues.
3Com accounted for 20% of total revenues during the year ended March 31, 1998
and ASCII, our former distributor in Japan, accounted for 13% of total revenues
during the year ended March 31, 1997. Substantially all of our product sales
have been made, and are expected to continue to be made, on a purchase order
basis. None of our customers has entered into a long-term agreement requiring
them to purchase our products. In the future, we will need to gain purchase
orders for our products to earn additional revenue. Further, all of our license
and other revenues are nonrecurring.
THE GROWTH OF OUR BUSINESS DEPENDS ON THE GROWTH OF THE IP TELEPHONY MARKET.
Success of our broadband telephony product strategy assumes that there will
be future demand for IP telephony systems. In order for the IP telephony market
to continue to grow, several things need to occur. Telephone service providers
must continue to invest in the deployment of high speed broadband networks to
residential and commercial customers. IP networks must improve their quality of
service for real-time communications, managing effects such as packet jitter,
packet loss and unreliable bandwidth, so that toll-quality service can be
provided. IP telephony equipment must achieve the five-nines reliability that
users of the public switched telephone network have come to expect from their
telephone service. IP telephony service providers must offer cost and feature
benefits to their customers that are sufficient to cause the customers to switch
away from traditional telephony service providers. If any or all of these
factors fail to occur our business will not grow.
7
<PAGE> 8
TECHNICAL AND QUALITY DIFFICULTIES COULD IMPEDE MARKET ACCEPTANCE OF OUR VIDEO
MONITORING PRODUCTS WHICH WOULD LIMIT OUR GROWTH.
Due to bandwidth constraints, our video monitoring products transmit video
over a plain old telephone system, which is known as POTS, at a frame rate and
resolution that are significantly less than the frame rate and resolution of
standard closed circuit TV monitors. Furthermore, our video monitoring products
transmit audio over a POTS line with a fidelity that is often less than toll
quality and that degrades in the presence of background noise. The POTS
infrastructure varies widely in configuration and integrity, which can degrade,
make unreliable or even eliminate the digital connections between our video
monitoring products. The security industry demands a high degree of quality,
robustness and reliability of its products. Actual or perceived technical
difficulties or insufficient video or audio quality could cause our existing
customers to forego future purchases or cause potential customers to seek
alternative solutions, either of which would limit the growth of our business.
OUR MARKETS ARE SUBJECT TO RAPID TECHNOLOGICAL CHANGE AND WE DEPEND ON NEW
PRODUCT INTRODUCTION IN ORDER TO MAINTAIN AND GROW OUR BUSINESS.
IP telephony and video monitoring are emerging markets and are
characterized by rapid changes in customer requirements, frequent introductions
of new and enhanced products, and continuing and rapid technological
advancement. To compete successfully, we must continue to design, develop,
manufacture and sell new and enhanced products that provide increasingly higher
levels of performance and reliability and lower cost, take advantage of
technological advancements and changes, and respond to new customer
requirements. Our success in designing, developing, manufacturing and selling
such products will depend on a variety of factors, including:
- the identification of market demand for new products;
- product selection;
- timely implementation of product design and development;
- product performance;
- cost-effectiveness of products under development;
- effective manufacturing processes; and
- the success of promotional efforts.
We have in the past experienced delays in the development of new products
and the enhancement of existing products, and such delays will likely occur in
the future. If we are unable, due to resource constraints or technological or
other reasons, to develop and introduce new or enhanced products in a timely
manner, if such new or enhanced products do not achieve sufficient market
acceptance or if such new product introductions decrease demand for existing
products, our operating results would decline and our business would not grow.
8
<PAGE> 9
IF WE DO NOT DEVELOP AND MAINTAIN SUCCESSFUL PARTNERSHIPS FOR BROADBAND
TELEPHONY PRODUCTS, WE MAY NOT BE ABLE TO SUCCESSFULLY MARKET OUR SOLUTIONS.
We are entering into new market areas and our success is partly dependent
on our ability to forge new marketing and engineering partnerships. IP telephony
communications systems are extremely complex and no single company possesses all
the required technology components needed to build a complete end to end
solution. Partnerships will be required to augment our development programs and
to assist us in marketing complete solutions to our customer base. We may not be
able to develop such partnerships in the course of our product development. Even
if we do establish the necessary partnerships, we may not be able to adequately
capitalize on these partnerships to aid in the success of our business.
ACQUISITIONS, WHICH ARE INHERENTLY RISKY, ARE PART OF OUR GROWTH STRATEGY.
As part of our growth strategy, we may make acquisitions of, or significant
investments in, businesses that offer complementary products, services and
technologies. Any future acquisition or investment may result in the use of
significant amounts of cash, potentially dilutive issuances of equity
securities, incurrence of debt and amortization of expenses related to goodwill
and other intangible assets. In addition, acquisitions involve numerous risks,
including:
- the difficulties in the integration and assimilation of the operations,
technologies, products and personnel of an acquired business;
- the diversion of management's attention from other business concerns;
- the availability of favorable acquisition financing for future
acquisitions;
- the potential loss of key employees from either our pre-existing
businesses or any acquired business; and
- the assumption of liabilities of any acquired company.
Our inability to successfully integrate any acquired company could
adversely affect our business.
INABILITY TO PROTECT OUR PROPRIETARY TECHNOLOGY OR INFRINGEMENT BY US OF A THIRD
PARTY'S PROPRIETARY TECHNOLOGY WOULD DISRUPT OUR BUSINESS.
We rely in part on trademark, copyright and trade secret law to protect our
intellectual property in the United States and abroad. We seek to protect our
software, documentation and other written materials under trade secret and
copyright laws, which afford only limited protection. We also rely in part on
patent laws to protect our intellectual property in the United States and
abroad. We currently hold nine United States patents, including patents relating
to programmable integrated circuit architectures, telephone control
arrangements, software structures and memory architecture technology, and have a
number of United States and foreign patent applications pending. We cannot
predict whether such patent applications will result in an issued patent. We may
not be able to protect our proprietary rights in the United States or abroad
(where effective intellectual property protection may be unavailable or limited)
and competitors may independently develop technologies that are similar or
superior to our technology, duplicate our technology or design around any patent
of ours. We have in the past licensed and in
9
<PAGE> 10
the future expect to continue licensing our technology to others, many of whom
are located or may be located abroad. There are no assurances that such
licensees will protect our technology from misappropriation. Moreover,
litigation may be necessary in the future to enforce our intellectual property
rights, to determine the validity and scope of the proprietary rights of others,
or to defend against claims of infringement or invalidity. Such litigation could
result in substantial costs and diversion of management time and resources and
could have a material adverse effect on our business and operating results.
There has been substantial litigation in the semiconductor, electronics and
related industries regarding intellectual property rights, and from time to time
third parties may claim infringement by us of their intellectual property
rights. Our broad range of technology, including systems, digital and analog
circuits, software and semiconductors, increases the likelihood that third
parties may claim infringement by us of their intellectual property rights. If
we were found to be infringing on the intellectual property rights of any third
party, we could be subject to liabilities for such infringement, which could be
material, and we could be required to refrain from using, manufacturing or
selling certain products or using certain processes, either of which could have
a material adverse effect on our business and operating results. From time to
time, we have received, and may continue to receive in the future, notices of
claims of infringement, misappropriation or misuse of other parties' proprietary
rights. There can be no assurance that we will prevail in these discussions and
actions, or that other actions alleging infringement by the Company of
third-party patents will not be asserted or prosecuted against the Company.
On March 2, 1999, we were informed that the Lemelson Foundation Partnership
filed a lawsuit in the United States District Court in Phoenix, Arizona on
February 26, 1999, against us and eighty-seven other United States semiconductor
and electronics companies for alleged infringement of patent rights claimed to
be owned by the Lemelson Medical Foundation. Litigation may be necessary in the
future to determine the validity and scope of the claimed proprietary rights of
the Lemelson Medical Foundation, or to defend against the alleged claims of
infringement. Such litigation could result in substantial costs and diversion of
management time and resources. If we were found to be infringing on the alleged
intellectual property rights of the Lemelson Medical Foundation, we could be
subject to liabilities for such infringement, which could be material, and we
could be required to refrain from using, manufacturing or selling certain
products or using certain processes.
THE FAILURE OF IP NETWORKS TO MEET THE RELIABILITY AND QUALITY STANDARDS
REQUIRED FOR VOICE COMMUNICATIONS WOULD RENDER OUR PRODUCTS OBSOLETE.
Circuit-switched networks such as the public switched telephone network
feature a very high reliability, with a guaranteed quality of service. The
common standard for reliability of carrier-grade real-time voice communications
is 99.999%, meaning that the network can be down for only a few minutes per
year. In addition, such networks have imperceptible delay and consistently
satisfactory audio quality. Emerging broadband IP networks such as LANs, WANs
and the Internet, or emerging last mile technologies such as cable, DSL and
wireless local loop will not be used for telephony unless such networks and
technologies can provide reliability and quality consistent with these
standards.
10
<PAGE> 11
OUR PRODUCTS MUST COMPLY WITH INDUSTRY STANDARDS AND FCC REGULATIONS, AND
CHANGES MAY REQUIRE US TO MODIFY EXISTING PRODUCTS.
In addition to reliability and quality standards, the market acceptance of
telephony over broadband IP networks is dependent upon the adoption of industry
standards so that products from multiple manufacturers are able to communicate
with each other. Broadband telephony products rely heavily on standards such as
H.323, SGCP, MGCP, and H.GCP to interoperate with other vendors' equipment.
There is currently a lack of agreement among industry leaders about which
standard should be used for a particular application, and about the definition
of the standards themselves. Furthermore, the industry has had difficulty
achieving true multivendor interoperability for highly complex standards such as
H.323. We also must comply with certain rules and regulations of the Federal
Communications Commission regarding electromagnetic radiation and safety
standards established by Underwriters Laboratories as well as similar
regulations and standards applicable in other countries. Standards are
continuously being modified and replaced. As standards evolve, we may be
required to modify our existing products or develop and support new versions of
our products. The failure of our products to comply, or delays in compliance,
with various existing and evolving industry standards could delay or interrupt
volume production of our broadband telephony products, which would have a
material adverse effect on our business and operating results.
WE MAY TRANSITION TO SMALLER GEOMETRY PROCESS TECHNOLOGIES AND HIGHER LEVELS OF
DESIGN INTEGRATION WHICH COULD DISRUPT OUR BUSINESS.
We continuously evaluate the benefits, on an integrated circuit,
product-by-product basis, of migrating to smaller geometry process technologies
in order to reduce costs and we have commenced migration of certain future
products to smaller geometry processes. We believe that the transition of our
products to increasingly smaller geometries will be important for us to remain
competitive. We have in the past experienced difficulty in migrating to new
manufacturing processes, which has resulted and could continue to result in
reduced yields, delays in product deliveries and increased expense levels.
Moreover, we are dependent on relationships with our foundries and their
partners to migrate to smaller geometry processes successfully. If any such
transition is substantially delayed or inefficiently implemented we may
experience delays in product introductions and incur increased expenses. As
smaller geometry processes become more prevalent, we expect to integrate greater
levels of functionality as well as customer and third-party intellectual
property into our products. Some of this intellectual property includes analog
components for which we have little or no experience or in-house expertise. We
cannot predict whether higher levels of design integration or the use of
third-party intellectual property will adversely affect our ability to deliver
new integrated products on a timely basis, or at all.
IF WE DISCOVER PRODUCT DEFECTS, WE MAY HAVE PRODUCT-RELATED LIABILITIES WHICH
MAY CAUSE US TO LOSE REVENUES OR DELAY MARKET ACCEPTANCE OF OUR PRODUCTS.
Products as complex as those offered by us frequently contain errors,
defects and functional limitations when first introduced or as new versions are
released. We have in the past experienced such errors, defects or functional
limitations. We sell products into markets that are extremely demanding of
robust, reliable, fully functional products. Therefore delivery of products with
production defects or reliability, quality or compatibility problems could
significantly delay or hinder market acceptance of such products, which could
damage our credibility with its customers and adversely affect our ability to
11
<PAGE> 12
retain its existing customers and to attract new customers. Moreover, such
errors, defects or functional limitations could cause problems, interruptions,
delays or a cessation of sales to our customers. Alleviating such problems may
require significant expenditures of capital and resources by us. Despite testing
by us, our suppliers or our customers may find errors, defects or functional
limitations in new products after commencement of commercial production,
resulting in additional development costs, loss of, or delays in, market
acceptance, diversion of technical and other resources from our other
development efforts, product repair or replacement costs, claims by our
customers or others against our, or the loss of credibility with our current and
prospective customers.
WE HAVE SIGNIFICANT INTERNATIONAL OPERATIONS WHICH SUBJECTS US TO RISKS THAT
COULD CAUSE OUR OPERATING RESULTS TO DECLINE.
Sales to customers outside of the United States represented 43%, 47% and
54% of total revenues in the fiscal years ended March 31, 1999, 1998 and 1997,
respectively. Specifically, sales to customers in the Asia Pacific region
represented 26%, 25% and 33% of our total revenues for the fiscal years ended
March 31, 1999, 1998 and 1997, respectively, while sales to customers in Europe
represented 17%, 22% and 21% of our total revenues for the same periods,
respectively.
International sales of our semiconductors will continue to represent a
substantial portion of our product revenues for the foreseeable future. In
addition, substantially all of our current products are, and substantially all
of our future products will be, manufactured, assembled and tested by
independent third parties in foreign countries. International sales and
manufacturing are subject to a number of risks, including general economic
conditions in regions such as Asia, changes in foreign government regulations
and telecommunications standards, export license requirements, tariffs and
taxes, other trade barriers, fluctuations in currency exchange rates, difficulty
in collecting accounts receivable and difficulty in staffing and managing
foreign operations. We are also subject to geopolitical risks, such as
political, social and economic instability, potential hostilities and changes in
diplomatic and trade relationships, in connection with its international
operations. A significant decline in demand from foreign markets, which may
result from the current economic conditions in the Asia Pacific region, or for
other reasons could have a material adverse effect on our business and operating
results.
WE NEED TO EXPAND OUR MANAGEMENT SYSTEMS AND HIRE AND RETAIN KEY PERSONNEL TO
SUPPORT OUR PRODUCTS.
The development and marketing of our broadband telephony and video
monitoring products will continue to place a significant strain on our limited
personnel, management and other resources. Our ability to manage any future
growth effectively will require us to successfully attract, train, motivate,
retain and manage employees, particularly key engineering and managerial
personnel, to effectively integrate new employees into our operations and to
continue to improve our operational, financial and management systems. Our
failure to manage growth and changes in our business effectively and to attract
and retain key personnel could limit our growth and the success of our products
and business.
Further, we are highly dependent on the continued service of and our
ability to attract and retain qualified technical, marketing, sales and
managerial personnel. The competition for such personnel is intense,
particularly in the San Francisco Bay area where we are located. The loss of any
key person or the failure to recruit additional key technical and sales
12
<PAGE> 13
personnel in a timely manner would have a material adverse effect on our
business and operating results. We currently do not have employment contracts
with any of our employees and we do not maintain key person life insurance
policies on any of our employees.
FAILURE OF OUR COMPUTER SYSTEMS AND SOFTWARE PRODUCTS TO PROPERLY RECOGNIZE THE
YEAR 2000 COULD ADVERSELY AFFECT OUR BUSINESS.
Many currently installed computer systems and software products are coded
to accept only two digit entries in the date code field. As the year 2000
approaches, these field codes will need to accept four digit entries to
distinguish years beginning with "19" from those beginning with "20." We are
assessing the readiness of our products, internal computer systems, as well as
the third-party equipment and software that we utilize, for the year 2000. We
cannot assure you that all of our operating systems and software will be year
2000 compliant. Additionally, we cannot be certain that our customers,
subcontract manufacturers, component suppliers and other providers of goods and
services upon which we depend will be year 2000 compliant. Any failure of our
computer systems and software products or those of our customers or suppliers to
properly recognize the year 2000 could adversely affect our business.
CERTAIN PROVISIONS IN OUR CORPORATE CHARTER AND BYLAWS MAY DISCOURAGE TAKE-OVER
ATTEMPTS AND THUS DEPRESS THE MARKET PRICE OF OUR STOCK.
Provisions of our Certificate of Incorporation and Bylaws may have the
effect of making it more difficult for a third party to acquire, or discouraging
a third party from attempting to acquire, control of us. These provisions
include:
- elimination of the right of the stockholders to act by written consent
without a meeting;
- elimination of cumulative voting by stockholders in the election of
directors;
- advance notice requirements for director nominations by stockholders and
submission of other proposals for consideration at stockholder meetings;
and
- the ability of our Board of Directors to issue up to 5,000,000 shares of
preferred stock and to determine the price, rights, preferences,
privileges and restrictions of those shares without any further vote or
action by the stockholders.
These provisions could limit the price that certain investors might be
willing to pay in the future for shares of our common stock.
OUR STOCK PRICE HAS BEEN VOLATILE AND WE CANNOT ASSURE YOU THAT OUR STOCK PRICE
WILL NOT DECLINE.
The market price of the shares of our common stock has been and is likely
to be highly volatile. It may be significantly affected by factors such as:
- actual or anticipated fluctuations in our operating results;
- announcements of technical innovations;
- loss of key personnel;
- new products or new contracts by us, our competitors or their customers;
13
<PAGE> 14
- governmental regulatory action;
- developments with respect to patents or proprietary rights, general
market conditions, changes in financial estimates by securities analysts
and other factors which could be unrelated to, or outside our control.
The stock market has from time to time experienced significant price and
volume fluctuations that have particularly affected the market prices for the
common stocks of technology companies and that have often been unrelated to the
operating performance of particular companies. These broad market fluctuations
may adversely affect the market price of our common stock. In the past,
following periods of volatility in the market price of a company's securities,
securities class action litigation has often been initiated against the issuing
company. If our stock price is volatile, we may also be subject to such
litigation. Such litigation could result in substantial costs and a diversion of
management's attention and resources, which would disrupt business and could
cause a decline in our operating results. Any settlement or adverse
determination in such litigation would also subject us to potentially
significant liability.
YOU SHOULD NOT RELY ON FORWARD-LOOKING STATEMENTS BECAUSE THEY ARE INHERENTLY
UNCERTAIN.
You should not rely on forward-looking statements in this prospectus. This
prospectus contains forward-looking statements that involve risks and
uncertainties. We use words such as "anticipates," "believes," "plans,"
"expects," "future," "intends" and similar expressions to identify such
forward-looking statements. You should not place undue reliance on these
forward-looking statements, which apply only as of the date of this prospectus.
Our actual results could differ materially from those anticipated in these
forward-looking statements for many reasons, including the risks faced by us
described above and elsewhere in this prospectus.
USE OF PROCEEDS
The proceeds from the sale of the common stock offered pursuant to this
prospectus are solely for the account of the selling stockholders. Accordingly,
we will not receive any proceeds from the sale of the shares from the selling
stockholders.
ISSUANCE OF COMMON STOCK TO SELLING STOCKHOLDERS
On May 24, 1999, we issued an aggregate of 2,867,976 shares of common stock
to the stockholders of Odisei S.A. pursuant to a stock exchange agreement. Under
the terms of the stock exchange agreement, we own all but six shares of Odisei,
thereby making Odisei our majority-owned subsidiary.
14
<PAGE> 15
SELLING STOCKHOLDERS
All of the common stock registered for sale pursuant to this prospectus are
owned by the selling stockholders as the former stockholders of Odisei and all
of the shares offered by the selling stockholders were acquired in connection
with the stock exchange agreement.
The following table sets forth certain information known to us with respect
to the beneficial ownership of our common stock by the selling stockholders, as
of June 7, 1999. The following table assumes that the selling stockholders sell
all of their shares. We are unable to determine the exact number of shares that
will actually be sold. Dominique P. Pitteloud was appointed as a Vice President
of 8x8 after we acquired Odisei and Frederic Artru is the chief executive
officer of Odisei. None of the other selling stockholders has held any position
or office or had a material relationship with us, except that certain of them
are non-officer employees of Odisei.
The number and percentage of shares beneficially owned is based on
15,437,239 shares outstanding at May 20, 1999, determined in accordance with
Rule 13d-3 of the Exchange Act, and the information is not necessarily
indicative of beneficial ownership for any other purpose. Under such rule,
beneficial ownership includes any shares as to which the individual has sole or
shared voting power or investment power and also any shares which the individual
has the right to acquire within 60 days of June 8, 1999 through exercise of any
stock option or other right. Unless otherwise indicated in the footnotes, each
person has sole voting and investment power (or shares such powers with his or
her spouse) with respect to the shares shown as beneficially owned.
<TABLE>
<CAPTION>
SHARES
BENEFICIALLY
OWNED AFTER
NUMBER OF SHARES OFFERING(1)
BENEFICIALLY OWNED SHARES BEING ----------------
NAME AND ADDRESS OF BENEFICIAL OWNER PRIOR TO OFFERING OFFERED NUMBER PERCENT
- ------------------------------------ ------------------ ------------ ------ -------
<S> <C> <C> <C> <C>
Frederic Artru...................... 751,188 751,188 0 0%
3353, Rte. De St. Mathieu
Grasse, France 06130
Michel de Guilhermier............... 178,796 178,796 0 0%
175 Q, Boulevard Jean Jaures
Boulogne, France 92100
Philippe Artru...................... 139,996 139,996 0 0%
4, Place Bir Hakeim
Grenoble, France 38000
Monique Artru....................... 139,996 139,996 0 0%
10, Alleedu Chateau
Meylan, France 38240
Marc Sounigo........................ 99,600 99,600 0 0%
4, rue Paul Baudry
Paris, France 75008
Christophe Chausson................. 80,000 80,000 0 0%
26 Boulevard Malesherbes
Paris, France 75008
</TABLE>
15
<PAGE> 16
<TABLE>
<CAPTION>
SHARES
BENEFICIALLY
OWNED AFTER
NUMBER OF SHARES OFFERING(1)
BENEFICIALLY OWNED SHARES BEING ----------------
NAME AND ADDRESS OF BENEFICIAL OWNER PRIOR TO OFFERING OFFERED NUMBER PERCENT
- ------------------------------------ ------------------ ------------ ------ -------
<S> <C> <C> <C> <C>
Renaud Artru........................ 80,000 80,000 0 0%
11, allee de la Piat
Meylan, France 38240
Renee Artru......................... 80,000 80,000 0 0%
11, allee de la Piat
Meylan, France 38240
Claude Rameau....................... 66,400 66,400 0 0%
38, Quai Lallia
Le Mee Sur Seine, France 77350
Marie Madeleine Novel............... 64,000 64,000 0 0%
45, Rue Bois Levret
St. Maurice L'Exile, France 38550
Dominique Pitteloud................. 303,200 303,200 0 0%
917 Sycamore Drive
Palo Alto, CA 94403
Nicolas Jourdier.................... 53,200 53,200 0 0%
8, Rouget De Lisle
Le Vesinet, France 78110
Hubert Novel........................ 48,000 48,000 0 0%
45, Rue Bois Levret
St. Maurice L'Exile, France 38550
Philippe Dewost..................... 24,000 24,000 0 0%
41 Camille Desmoulins
Issy-les-Moulineaux C, France
92442
Stanislas Artru..................... 20,400 20,400 0 0%
26, Chemin De La Forestiere
Batiment 3
Ecully, France 69130
Xavier Artru........................ 16,000 16,000 0 0%
43, rue Joseph Ricard
St. Foy Les Lyon, France 69110
Raymonde Artru...................... 16,000 16,000 0 0%
Residence Lucie Pellat
Montbonnot, France 38330
Geraldine Artru..................... 420 420 0 0%
26, Chemin De La Forestiere
Batiment 3
Ecully, France 69130
</TABLE>
16
<PAGE> 17
<TABLE>
<CAPTION>
SHARES
BENEFICIALLY
OWNED AFTER
NUMBER OF SHARES OFFERING(1)
BENEFICIALLY OWNED SHARES BEING ----------------
NAME AND ADDRESS OF BENEFICIAL OWNER PRIOR TO OFFERING OFFERED NUMBER PERCENT
- ------------------------------------ ------------------ ------------ ------ -------
<S> <C> <C> <C> <C>
Sophie Artru........................ 420 420 0 0%
3353 Rte. De St. Mathieu
Grasse, France 06130
Phac le Tuan........................ 47,600 47,600 0 0%
2075 Zanker Road
San Jose, CA 95131
Pierre Opman........................ 132,800 132,800 0 0%
Chaussee De Waterloo 777
Bruxelles, Belgium 1180
Nathalie Artru...................... 84,400 84,400 0 0%
Iztazqual Street
Mannai Round about _BP2636
Doha, Qatar
Bianca Finance...................... 132,800 132,800 0 0%
49 Route de Croissy
78110 Le Vesnet
France
Sylvie Sauret....................... 14,668 14,668 0 0%
6, Place Mejane-Garbejaire
Valbonne, France 06560
Jean-Hugues Robert.................. 84,000 84,000 0 0%
3169, Avenue Marcel Pagnol
La Gaude, France 06610
Pascal Jacob........................ 40,800 40,800 0 0%
158 Chemin des Peyroues
Mougins, France 06250
Marc Petit-Huguenin................. 40,000 40,000 0 0%
943, Chemin de Vosgelades
Vence, France 06140
Kris Hasenjager..................... 26,668 26,668 0 0%
17, Traverse du Barry
Valbonne, France 06560
Vincent Figari...................... 37,332 37,332 0 0%
19, Rue de Gonelle, le
Haut-Sartoux
Valbonne, France 06560
Philippe Boyer...................... 13,332 13,332 0 0%
23 Avenue de Tournamy
Mougins, France 06250
</TABLE>
17
<PAGE> 18
<TABLE>
<CAPTION>
SHARES
BENEFICIALLY
OWNED AFTER
NUMBER OF SHARES OFFERING(1)
BENEFICIALLY OWNED SHARES BEING ----------------
NAME AND ADDRESS OF BENEFICIAL OWNER PRIOR TO OFFERING OFFERED NUMBER PERCENT
- ------------------------------------ ------------------ ------------ ------ -------
<S> <C> <C> <C> <C>
Nicolas Gironi...................... 13,332 13,332 0 0%
18, Montee de Cimiez
Nice, France 06000
Olivier Chicha...................... 30,668 30,668 0 0%
10, Bvd. Edouart Baudoiun
Juan-les-Pins, France 06160
Isabelle Dalmasso................... 8,000 8,000 0 0%
Miremonts-Chemin de Vence
Magagnosc, France 06520
</TABLE>
- -------------------------
(1) This registration statement also shall cover any additional shares of common
stock which become issuable in connection with the shares registered for
sale hereby by reason of any stock dividend, stock split, recapitalization
or other similar transaction effected without the receipt of consideration
which results in an increase in the number of 8x8's outstanding shares of
common stock.
18
<PAGE> 19
PLAN OF DISTRIBUTION
The shares of common stock covered by this prospectus may be offered and
sold from time to time by the selling stockholders. The selling stockholders
will act independently of us in making decisions with respect to the timing,
manner and size of each sale. The selling stockholders may sell the shares on
the Nasdaq National Market, or in private sales at negotiated prices. The shares
may be sold by one or more of the following:
- a block trade in which the broker-dealer so engaged will attempt to sell
the shares as agent but may position and resell a portion of the block as
principal to facilitate the transaction;
- purchases by a broker-dealer as principal and resale by such
broker-dealer for its own account pursuant to this prospectus;
- an over-the-counter distribution in accordance with the rules of the
Nasdaq National Market;
- ordinary brokerage transactions and transactions in which the broker
solicits purchasers; and
- in privately negotiated transactions.
To the extent required, this prospectus may be amended or supplemented from
time to time to describe a specific plan of distribution. In effecting sales,
broker-dealers engaged by the selling stockholders may arrange for other
broker-dealers to participate in the resales.
The selling stockholders may enter into hedging transactions with
broker-dealers in connection with distributions of the shares or otherwise. In
such transactions, broker-dealers or other financial institutions may engage in
short sales of the shares in the course of hedging the positions they assume
with selling stockholders. The selling stockholders may also sell shares short
and redeliver the shares to close out such short positions. The selling
stockholders may also enter into option or other transactions with
broker-dealers which require the delivery to the broker-dealer of the shares.
The broker-dealer may then resell or otherwise transfer such shares pursuant to
this prospectus. The selling stockholders may also pledge or loan the shares to
a broker-dealer. The broker-dealer may sell the shares so loaned, or upon a
default the broker-dealer may sell the pledged shares pursuant to this
prospectus. In addition, any shares that qualify for sale pursuant to Rule 144
may be sold under Rule 144 rather than pursuant to this prospectus.
In effecting sales, broker-dealers or agents engaged by the selling
stockholders may arrange for other broker-dealers or agents to participate.
Broker-dealers or agents may receive compensation in the form of commissions,
discounts or concessions from selling stockholders. Broker-dealers or agents may
also receive compensation from the purchasers of the shares for whom they act as
agents or to whom they sell as principals, or both. We will pay all expenses
incident to the offering and sale of the shares to the public other than any
commissions and discounts of underwriters, dealers or agents and any transfer
taxes.
The selling stockholders and any underwriter, broker-dealer or agent who
participate in the distribution of such shares may be deemed to be
"underwriters" under the Securities Act of 1933, and any discount, commission or
concession received by such persons might be deemed to be an underwriting
discount or commission under the Securities Act of 1933.
19
<PAGE> 20
In order to comply with the securities laws of certain states, if
applicable, the shares must be sold in such jurisdictions only through
registered or licensed brokers or dealers. In addition, in certain states the
shares may not be sold unless they have been registered or qualified for sale in
the applicable state or an exemption from the registration or qualification
requirement is available and is complied with.
We have advised the selling stockholders that the anti-manipulation rules
of Regulation M under the Exchange Act may apply to sales of shares in the
market and to the activities of the selling stockholders and their affiliates.
In addition, we will make copies of this prospectus available to the selling
stockholders and we have informed them of the need for delivery of copies of
this prospectus to purchasers at or prior to the time of any sale of the shares
offered hereby. The selling stockholders may indemnify any broker-dealer that
participates in transactions involving the sale of the shares against certain
liabilities, including liabilities arising under the Securities Act of 1933.
At the time a particular offer of shares is made, if required, a prospectus
supplement will be distributed that will set forth the number of shares being
offered and the terms of the offering, including the name of any underwriter,
dealer or agent, the purchase price paid by any underwriter, any discount,
commission and other item constituting compensation, any discount, commission or
concession allowed or reallowed or paid to any dealer, and the proposed selling
price to the public.
LEGAL MATTERS
The validity of the shares of common stock offered hereby will be passed
upon by Wilson Sonsini Goodrich & Rosati, Professional Corporation, Palo Alto,
California, counsel to 8x8, Inc.
EXPERTS
The financial statements incorporated in this prospectus by reference to
the Annual Report on Form 10-K for the year ended March 31, 1999, have been so
incorporated in reliance on the report of PricewaterhouseCoopers LLP,
independent accountants, given on the authority of said firm as experts in
auditing and accounting.
We have not authorized any person to make a statement that differs from
what is in this prospectus. If any person does make a statement that differs
from what is in this prospectus, you should not rely on it. This prospectus is
not an offer to sell, nor is it seeking an offer to buy, these securities in any
state in which the offer or sale is not permitted. The information in this
prospectus is complete and accurate as of its date, but the information may
change after that date.
20
<PAGE> 21
------------------------------------------------------
------------------------------------------------------
NO DEALER, SALESPERSON OR OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATIONS OTHER THAN THOSE CONTAINED IN OR
INCORPORATED BY REFERENCE IN THIS PROSPECTUS. IF GIVEN OR MADE, SUCH INFORMATION
OR REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY US OR
THE SELLING STOCKHOLDERS. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL,
OR A SOLICITATION OF AN OFFER TO SELL, OR A SOLICITATION OF AN OFFER TO BUY,
SUCH SECURITIES BY ANYONE IN ANY JURISDICTION WHERE, OR TO ANY PERSON TO WHOM,
IT IS UNLAWFUL TO MAKE SUCH OFFER OR SOLICITATION. NEITHER THE DELIVERY OF THIS
PROSPECTUS NOR ANY SALE MADE HEREUNDER SHALL, UNDER ANY CIRCUMSTANCES, CREATE
ANY IMPLICATION THAT THERE HAVE BEEN NO CHANGE IN THE AFFAIRS OF 8X8, INC. SINCE
THE DATE AS OF WHICH INFORMATION IS GIVEN IN THIS PROSPECTUS.
------------------------
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Where You Can Find More
Information....................... 2
The Company......................... 3
Risk Factors........................ 4
Use of Proceeds..................... 14
Issuance of Common Stock to Selling
Stockholders...................... 14
Selling Stockholders................ 15
Plan of Distribution................ 19
Legal Matters....................... 20
Experts............................. 20
</TABLE>
------------------------------------------------------
------------------------------------------------------
- ------------------------------------------------------
- ------------------------------------------------------
8X8, INC.
2,867,976 Shares
of
Common Stock
--------------------
PROSPECTUS
--------------------
June 17, 1999
- ------------------------------------------------------
- ------------------------------------------------------
