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As filed with the Securities and Exchange Commission on March 21, 2000
Registration No. 333-
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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
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8X8, INC.
(Exact name of Registrant as specified in its charter)
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DELAWARE 2445 MISSION COLLEGE BLVD. 77-0142404
(State or other jurisdiction of SANTA CLARA, CA 95054 (I.R.S. Employer
incorporation or organization) (408) 727-1885 Identification Number)
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(Address, including zip code, and telephone number, including area code, of the
Registrant's principal executive offices)
PAUL VOOIS
CHIEF EXECUTIVE OFFICER AND CHAIRMAN OF THE BOARD
8X8, INC.
2445 MISSION COLLEGE BLVD.
SANTA CLARA, CA 95054
(408) 727-1885
(Name, address, including zip code, and telephone number, including area code,
of agent for service)
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Copies to:
ROBERT A. KOENIG, ESQ.
NAMEE LEE, ESQ.
LATHAM & WATKINS
135 COMMONWEALTH DRIVE
MENLO PARK, CA 94025
(650) 328-4600
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APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC:
FROM TIME TO TIME AFTER THIS REGISTRATION STATEMENT BECOMES EFFECTIVE.
If the only securities being registered on this Form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box. [ ]
If any of the securities being registered on this form are to be offered
on a delayed or continuous basis pursuant to Rule 415 under the Securities Act
of 1933, other than securities offered only in connection with dividend or
interest reinvestment plans, check the following box. [X]
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. [ ]
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ]
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. [ ]
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CALCULATION OF REGISTRATION FEE
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PROPOSED PROPOSED
MAXIMUM MAXIMUM
TITLE OF EACH CLASS AMOUNT OFFERING AGGREGATE AMOUNT OF
OF SECURITIES TO TO BE PRICE OFFERING REGISTRATION
BE REGISTERED REGISTERED PER SHARE(1) PRICE(1) FEE
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Common Stock, $0.001 par value 1,378,119 shares $23.31 $32,123,953 $8,480.72
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(1) Estimated solely for the purpose of computing the registration fee required
by Section 6(b) of the Securities Act and computed pursuant to Rule 457(c)
under the Securities Act based upon the average of the high and low prices
of the Common Stock on March 15, 2000, as reported on the Nasdaq National
Market.
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The Registrant hereby amends this Registration Statement on such date or
dates as may be necessary to delay its effective date until the Registrant shall
file a further amendment which specifically states that this Registration
Statement shall thereafter become effective in accordance with Section 8(a) of
the Securities Act of 1933 or until the Registration Statement shall become
effective on such date as the Commission, acting pursuant to said Section 8(a),
may determine.
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THE INFORMATION IN THIS PROSPECTUS IS NOT COMPLETE AND MAY BE AMENDED OR
CHANGED. THE SELLING STOCKHOLDERS MAY NOT SELL THESE SECURITIES PURSUANT TO THIS
PROSPECTUS 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.
SUBJECT TO COMPLETION, DATED MARCH __, 2000
PROSPECTUS
1,378,119 SHARES OF COMMON STOCK
8X8, INC.
This prospectus relates to the public offering, which is not being
underwritten, of 1,378,119 shares of our common stock which is held by the
selling stockholders identified on page 13 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 March 20, 2000, the last sale price of our common stock was $25.44
per share.
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THE SHARES OFFERED IN THIS PROSPECTUS INVOLVE A HIGH DEGREE OF RISK. YOU
SHOULD CAREFULLY CONSIDER THE "RISK FACTORS" COMMENCING ON PAGE 3 IN DETERMINING
WHETHER TO PURCHASE THE COMMON STOCK.
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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.
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THE DATE OF THIS PROSPECTUS IS MARCH __, 2000
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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 (SEC). 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 the shares.
The following documents filed with the SEC are incorporated by reference
in this prospectus:
1. Our Current Report on Form 8-K, filed February 15, 2000;
2. Our Quarterly Report on Form 10-Q for the quarterly period ended
December 31, 1999 filed February 14, 2000;
3. Our Current Report on Form 8-K, filed December 23, 1999;
4. Our Quarterly Report on Form 10-Q for the quarterly period ended
September 30, 1999 filed November 15, 1999;
5. Our Current Report on Form 8-K, filed November 9, 1999;
6. Our Current Report on Form 8-K/A, filed August 9, 1999;
7. Our Quarterly Report on Form 10-Q for the quarterly period ended
June 30, 1999 filed August 9, 1999;
8. Our Proxy Statement dated June 8, 1999, filed in connection with our
1999 Annual Meeting of Stockholders;
9. Our Current Report on Form 8-K, filed June 7, 1999;
10. Our Annual Report on Form 10-K for the year ended March 31, 1999
filed May 24, 1999; and
11. The description of our common stock in our registration statement on
Form 8-A 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 David M. Stoll,
Chief Financial Officer and Vice President, Finance, 2445 Mission College Blvd.,
Santa Clara, California 95054, telephone: (408) 727-1885.
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THE COMPANY
We develop, manufacture and market telecommunications equipment and
software focused primarily on multimedia Internet protocol, or IP, applications.
Our products are highly integrated, leverage our proprietary technology and are
comprised of multimedia communication semiconductors, multimedia compression
algorithms, network protocols and embedded system design. Our products are used
in applications including voice-over-IP, or VoIP, videoconferencing and video
monitoring. We market our products mainly to original equipment manufacturers
(OEMs) to distributors and dealers for our video monitoring system products and
to internet service providers (ISPs), competitive local exchange carriers and
data local exchange carriers for certain of our VoIP products.
In May 1999 we acquired Odisei S.A., a privately held, development stage
company based in Sophia Antipolis, France, that developed a software-based IP
private branch exchange, or PBX, application that enables voice services and
advanced PBX call control features.
On January 24, 2000, we entered into an agreement pursuant to which
STMicroelectronics NV purchased 3.7 million shares of our common stock at a
price of $7.50 per share for a total investment of $27.75 million. This
transaction is part of a strategic partnership with STMicroelectronics NV to
develop and market semiconductor products for VoIP applications. Under the
strategic partnership, STMicroelectronics NV took a non-exclusive,
royalty-bearing license to 8x8's VoIP software and digital signal processor
technology.
We are contemplating possible strategic alternatives, including a sale,
spin-off or joint venture transaction, that could result in the disposition of
all or part of our video monitoring business unit. We have made no definitive
decision with respect to any such transaction and there can be no assurance that
such a transaction could be completed.
Our principal offices are located at 2445 Mission College Blvd., Santa
Clara, California 95054 and our telephone number is (408) 727-1885.
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 an operating loss of $17.5 million in the nine month period
ended December 31, 1999 and had an accumulated deficit of $44.3 million at
December 31, 1999. In addition, we recorded operating losses for the fiscal year
ended March 31, 1999 and 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. We expect to continue to incur operating losses for the
foreseeable future, and such losses may be substantial. We will need to generate
significant revenue growth to achieve profitability. Given our history of
fluctuating revenues and operating losses, we cannot be certain that we will be
able to achieve profitability on either a quarterly or annual 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
$3.1 million and $3.7 million for the nine month periods ended December 31, 1999
and 1998, respectively, and were $5.5 million and $14.5 million in the fiscal
years ended March 31, 1999 and
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1998, 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 ARE CONTEMPLATING STRATEGIC
TRANSACTIONS THAT MAY INVOLVE A DISPOSITION OF ALL OR PART OF OUR VIDEO
MONITORING BUSINESS UNIT. IF WE CANNOT LOWER EXPENSES, OUR OPERATING RESULTS MAY
DECLINE
We announced in April 1999 that we would cease production of our ViaTV
product line and withdraw from our distribution channels over the next several
quarters. In the third quarter and nine months ended December 31, 1999, ViaTV
product revenues represented approximately 8% and 18% of total product revenues,
respectively. For the years ended March 31, 1999 and 1998, ViaTV revenues
represented 49% and 38% of product revenues, respectively. We have been
successful in selling the majority of existing ViaTV related inventories as of
December 31, 1999 and, therefore, we do not anticipate any material revenues
from our ViaTV product line in the future. 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 addition, our sales have been historically
higher during the third fiscal quarter which corresponds to the Christmas
shopping season. The discontinuation of our ViaTV product line may impact this
pattern.
We are also contemplating strategic alternatives for our video monitoring
business unit. We are contemplating possible strategic alternatives, including a
sale, spin-off or joint venture transaction that could result in the disposition
of all or part of our video monitoring business unit. We have made no definitive
decision with respect to any such transaction and there can be no assurance that
such a transaction could be completed. In the third quarter and nine months
ended December 31, 1999, video monitoring product revenues represented
approximately 33% and 29% of total product revenues, respectively. For the
fiscal year ended March 31, 1999, video monitoring product revenues represented
approximately 11% of product revenues. If we cease to derive revenues from the
sale of video monitoring products, and are not able to adequately compensate for
lower revenues with decreased manufacturing overhead expenses and with lower
operating expenses, it could have an adverse effect on our business and
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 multimedia communications 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 generated
significant revenue from the sale of our broadband telephony products. If we are
not able to generate significant revenues selling into the broadband telephony
market, it would have a material adverse effect on our business and operating
results.
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
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 99.999% 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 may not grow.
OUR FUTURE OPERATING RESULTS MAY NOT FOLLOW PAST OR EXPECTED TRENDS DUE TO MANY
FACTORS AND ANY OF THESE COULD CAUSE OUR STOCK PRICE TO FALL
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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:
o changes in market demand;
o the timing of customer orders;
o competitive market conditions;
o lengthy sales cycles, regulatory approval cycles;
o new product introductions by us or our competitors;
o market acceptance of new or existing products;
o the cost and availability of components;
o the mix of our customer base and sales channels;
o the mix of products sold;
o the management of inventory;
o the level of international sales;
o continued compliance with industry standards; and
o 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 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 IP 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 videoconferencing 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. 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 or all
future periods 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
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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. For example,
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 of our ViaTV product line. Excess inventory levels
would 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.
WE MAY NEED TO RAISE ADDITIONAL CAPITAL TO SUPPORT OUR GROWTH, AND FAILURE TO DO
SO IN A TIMELY MANNER MAY CAUSE US TO DELAY OUR PLANS FOR GROWTH
As of December 31, 1999, we had approximately $21.8 million in cash and
cash equivalents. 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. However, we may seek
to explore business opportunities, including acquiring or investing in
complementary businesses or products, that will require additional capital from
equity or debt sources. Additionally, 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 which could seriously harm our business, financial condition and
results of operations. If we issue additional equity or convertible debt
securities to raise funds, the ownership percentage of our existing stockholders
would be reduced. New investors may demand rights, preferences or privileges
senior to those of existing holders of our common stock.
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 for the third quarter and nine months ended
December 31, 1999 accounted for approximately 44% and 40%, respectively, of
total revenues. Revenues from our ten largest customers for the fiscal years
ended March 31, 1999 and 1998 accounted for 40% and 61%, respectively, of total
revenues. 3Com Corp. accounted for 20% of total revenues during the year ended
March 31, 1998. 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 it 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.
TECHNICAL AND QUALITY DIFFICULTIES COULD IMPEDE MARKET ACCEPTANCE OF OUR VIDEO
MONITORING PRODUCTS WHICH WOULD LIMIT OUR GROWTH
Due to bandwidth constraints, certain of 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, audio
transmitted over a POTS line has 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, 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.
WE FACE INTENSE COMPETITION
We compete with both manufacturers of digital signal processing
semiconductors and gateway products developed for the growing VoIP marketplace.
We also compete with manufacturers of multimedia communication semiconductors
and systems. In addition, we compete with manufacturers of private branch
exchange (PBX)
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systems focused on small and medium size businesses. The markets for our
products are characterized by intense competition, declining average selling
prices and rapid technological change.
IP Telephony and Videoconferencing Products
The principal competitive factors in the market for IP telephony and
videoconferencing semiconductors include product definition, product design,
system integration, chip size, functionality, time-to-market, adherence to
industry standards, price and reliability. We have a number of competitors in
this market including Analog Devices, AudioCodes Ltd., Broadcom Corporation,
Conexant, DSP Group, Lucent Technologies Inc., Motorola, Inc., Neo Paradigm
Labs, Philips Electronics NV, Texas Instruments, Inc. and Winbond Electronics.
Certain of our competitors for IP telephony and videoconferencing semiconductors
maintain their own semiconductor foundries and may therefore benefit from
certain capacity, cost and technical advantages.
Principal competitive factors in the market for VoIP gateway products
include product definition, product design, system integration, system
functionality, time-to-market, interoperability with common network equipment,
adherence to industry standards, price and reliability. Currently there are a
large number of system suppliers offering carrier-class gateway products such as
Cisco Systems, Inc., Clarent Corporation, Mediatrix, NX Networks, Nokia
Corporation, Nortel Networks, Nuera Communications, Inc., VocalTec
Communications, and Lucent Technologies Inc. At this time there is limited
competition in the residential and small office VoIP gateway market. We expect,
however, that this market will be characterized by intense competition,
declining average selling prices and rapid technology changes. In addition, our
presence in the VoIP systems business may result in certain customers or
potential customers perceiving us as a competitor or potential competitor, which
may be used by other semiconductor manufacturers to their advantage.
The market for our Intraswitch iPBX product is new, rapidly evolving and
highly competitive. We expect competition to intensify in the future as existing
competitors develop new products and new competitors enter the market. We
believe that a critical factor to success in this market is our ability to
establish and maintain strong partner and customer relationships with a wide
variety of ISPs, competitive local exchange carriers and data local exchange
carriers. If we fail to establish and maintain these relationships, we will be
at a serious competitive disadvantage. Other significant competitive factors
include product definition, product design, system integration, system
functionality, time-to-market, interoperability with common network equipment,
adherence to industry standards, price and reliability.
We face competition from companies providing traditional PBX systems. Our
principal competitors that produce traditional PBX systems are Lucent
Technologies Inc. and Nortel Networks. Additionally, we face competition from
companies such as NBX Corporation, acquired by 3Com Corporation, Selsius
Systems, acquired by Cisco Systems, Inc., Shoreline Teleworks, Inc., Altigen
Communications and Tundo Corporation as well as any number of future
competitors. Many of our competitors are substantially larger than we are and
have significantly greater name recognition, financial, sales and marketing,
technical, customer support, manufacturing and other resources. These
competitors may also have established distribution channels and relationships
with service providers. These competitors may be able to respond more rapidly to
new or emerging technologies and changes in customer requirements or devote
greater resources to the development, promotion and sale of their products.
These competitors may enter our existing or future markets with solutions that
may be less expensive, provide higher performance or additional features or be
introduced earlier than our solutions. If any technology that is competing with
ours is more reliable, faster, less expensive or has other advantages over our
technology, then the demand for our products and services could decrease and
harm our business.
We expect our competitors to continue to improve the performance of their
current products and introduce new products or new technologies. If our
competitors successfully introduce new products or enhance their existing
products, this could reduce the sales or market acceptance of our products and
services, increase price competition or make our products obsolete. To be
competitive, we must continue to invest significant resources in research and
development, sales and marketing and customer support. We may not have
sufficient resources to make these investments or to make the technological
advances necessary to be competitive, which in turn will cause our business to
suffer.
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Video Monitoring Products
The competitive factors in the market for our video monitoring products
include audio and video quality, acceptable phone line transmission rates,
ability to connect and maintain stable connections, ease of use, price, access
to enabling technologies, product design, time-to-market, adherence to industry
standards, interoperability, strength of distribution channels, customer
support, reliability and brand name. We expect intense competition for our video
monitoring products. Competition is expected from:
o Large security equipment manufacturers. We may face intense competition
for our video monitoring products from many well known, established
suppliers of security equipment, such as Ademco, Pelco and Ultrak who have
continually reduced the cost of their products and may enter the market
for lower cost video communication products.
o Personal computer system and software manufacturers. Potential customers
for our remote surveillance module products may elect instead to buy PCs
pre-equipped with video communication software capabilities or a
third-party software application for use on a PC. As a result, we face or
may face competition from Intel, and PC software suppliers such as
Microsoft, AOL, Javelin and Prism.
ADVIS, C-Phone Corporation, Leadtek Research, Inc., Truedox Technology
Corporation and Video Communication Systems GmbH are among the companies selling
low-cost products targeted specifically at the video monitoring marketplace. We
expect that additional companies will introduce products that compete with our
video monitoring products in the future. Certain manufacturers or potential
manufacturers of low-cost videophones have licensed or purchased, or may license
or purchase, our technology and semiconductors in order to do so. KME and 3Com
in particular have licensed substantially all of the technology underlying our
ViaTV products, and may use such technology to introduce products that compete
with our video monitoring products. Each of Leadtek Research, Inc. and Truedox
Technology Corporation license our technology and purchase our multimedia
communication semiconductors. We aggressively license our semiconductor,
software and systems technology and sell our semiconductor and system products
to third parties. Thus, it is likely that other OEM customers will become
competitors with respect to our video monitoring products business. Other
competitors may purchase multimedia communication semiconductors and related
technology from other suppliers.
Our reliance on developing vertically integrated technology, comprising
systems, circuit boards, software and semiconductors, places a significant
strain on us and on our research and development resources. Competitors that
focus on one aspect of technology, such as systems or semiconductors, may have a
considerable advantage. In addition, many of our current and potential
competitors have longer operating histories, are substantially larger, and have
greater financial, manufacturing, marketing, technical and other resources. Many
of our competitors also have greater name recognition and a larger installed
base of products. Competition in our markets may result in significant price
reductions. As a result of their greater resources, many current and potential
competitors may be better able to initiate and withstand significant price
competition or downturns in the economy. There can be no assurance that we will
be able to continue to compete effectively, and any failure to do so would have
a material adverse effect on our business and operating results.
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 in these emerging markets, as well as in
the more established videoconferencing market, 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:
o the identification of market demand for new products;
o product selection; o timely implementation of product design and
development;
o product performance;
o cost-effectiveness of products under development;
-8-
<PAGE> 10
o effective manufacturing processes; and
o 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.
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.
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 law, which afford only limited protection. We also rely in part on
patent law to protect our intellectual property in the United States and abroad.
We currently hold sixteen 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 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.
We rely on certain technology, including hardware and software licensed
from third parties. The loss of, or inability to maintain, existing licenses
could have a material adverse effect on our business and operating results.
-9-
<PAGE> 11
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.
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, SIP, 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.
FUTURE REGULATION OR LEGISLATION COULD RESTRICT OUR BUSINESS OR INCREASE OUR
COST OF DOING BUSINESS
At present there are few laws or regulations that specifically address
access to or commerce on the Internet, including IP telephony. We are unable to
predict the impact, if any, that future legislation, legal decisions or
regulations concerning the Internet may have on our business, financial
condition and results of operations. Regulation may be targeted towards, among
other things, assessing access or settlement charges, imposing tariffs or
imposing regulations based on encryption concerns or the characteristics and
quality of products and services, which could restrict our business or increase
our cost of doing business. The increasing growth of the broadband IP telephony
market and popularity of broadband IP telephony products and services heighten
the risk that governments will seek to regulate broadband IP telephony and the
Internet. In addition, large, established telecommunications companies may
devote substantial lobbying efforts to influence the regulation of the broadband
IP telephony market, which may be contrary to our interests.
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. 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
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<PAGE> 12
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 our customers and adversely affect our ability to
retain our 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 us, or the loss of credibility with our current and
prospective customers.
WE DO NOT MANUFACTURE OUR HARDWARE PRODUCTS AND WE ARE SUBJECT TO SUPPLY RISKS
We outsource the manufacturing of our semiconductors and our broadband
telephony and video monitoring system products to independent foundries and
subcontract manufacturers, respectively. Our primary semiconductor manufacturer
is Taiwan Semiconductor Manufacturing Corporation. Subcontract manufacturers
include EFA Corporation in Taiwan and Flash Electronics in Fremont, California.
We also rely on Amkor/Anam Electronics in South Korea for packaging and testing
of our semiconductors. We do not have long-term purchase agreements with our
subcontract manufacturers or our component suppliers. There can be no assurance
that our subcontract manufacturers will be able or willing to reliably
manufacture our products, or that our component suppliers will be able or
willing to reliably supply components for our products, in volumes, on a cost
effective basis or in a timely manner. We may experience difficulties due to our
reliance on independent semiconductor foundries, subcontract manufacturers and
component suppliers that could have a material adverse effect on our business
and operating results.
In addition, from time to time we may issue non-cancelable purchase orders
to our third-party manufacturers for raw materials used in our video monitoring
or other potential system-level products to ensure availability for long
lead-time items or to take advantage of favorable pricing terms. If we should
experience decreased demand for our video monitoring products or future
system-level products, we would still be required to take delivery of and make
payment for such raw materials. In the event of a significant decrease in system
level product demand, such purchase commitments could have a material adverse
effect on our business and operating results.
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 45%, 43% and
47% of total revenues in the nine months ended December 31, 1999 and the fiscal
years ended March 31, 1999 and 1998, respectively. Specifically, sales to
customers in the Asia Pacific region represented 21%, 26% and 25% of our total
revenues in the nine months ended December 31, 1999 for the fiscal years ended
March 31, 1999 and 1998, respectively, while sales to customers in Europe
represented 24%, 17% and 22% 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
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<PAGE> 13
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
could have a material adverse effect on our business and operating results.
WE NEED TO 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 sales 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
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.
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:
o actual or anticipated fluctuations in our operating results;
o announcements of technical innovations;
o loss of key personnel;
o new products or new contracts by us, our competitors or their customers;
o governmental regulatory action; and
o 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 significant liability.
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.
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<PAGE> 14
DESCRIPTION OF NOTES AND WARRANTS
In December 1999, we issued $7.5 million of 4% Series A and Series B
convertible subordinated notes (the "Notes"). The Notes mature on December 17,
2002, unless converted or redeemed earlier.
The $3.75 million Series A notes are convertible into our common stock at
a conversion price equal to 117.5% of the average closing bid price of our
common stock for the five trading days starting February 1, 2000. The conversion
price per share cannot be higher than $7.05 or lower than $4.00. The $3.75
million Series B notes are convertible into our common stock at a conversion
price equal to 117.5% of the average closing bid price of our common stock for
the five trading days starting March 8, 2000. We have the option to redeem the
Series B notes at par in the event that the Series B conversion price is lower
than the Series A conversion price divided by 1.175. In addition, we have the
option to redeem the Series B debentures at 107% of par in the event that the
Series B conversion price is greater than two times the Series A conversion
price.
For each of the Notes, the lender received a three year warrant to
purchase our common stock equal in number to the amount of the corresponding
notes divided by the conversion price of the notes. The exercise price of the
warrants will be equal to the conversion price of the corresponding notes. We
also issued warrants to the placement agent equal to 10% of the total warrants
issued to the lender at substantially the same terms granted to the lender. If
the Series B notes are redeemed by us, the related warrants will be terminated.
We may issue an aggregate of up to 1,378,119 shares of common stock to
certain holders of Series A and Series B notes and/or associated warrants in
connection with the conversion of notes, exercise of warrants and/or interest
payments pursuant to the terms of such notes and/or associated warrants.
SELLING STOCKHOLDERS
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 March 21, 2000. 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. None of the selling stockholders
has held any position or office or had a material relationship with us.
The percentage of shares beneficially owned is based on 22,894,380 shares
outstanding at March 17, 2000 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 March 21, 2000 through conversion of notes, 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>
NUMBER OF SHARES BENEFICIALLY
SHARES OWNED
BENEFICIALLY SHARES AFTER OFFERING(1)
OWNED PRIOR BEING ------------------------
NAME OF SELLING STOCKHOLDER TO OFFERING OFFERED NUMBER(2) PERCENT
- ----------------------------------- --------------- ----------- ---------- ----------
<S> <C> <C> <C> <C>
Fisher Capital Ltd.(3) 794,545 794,545(4) - *
Wingate Capital Ltd.(3) 486,977 486,977(4) - *
</TABLE>
- -----------------------------
* Represents beneficial ownership of less than one percent.
(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.
(2) This table assumes that all shares offered hereby will be sold by the
selling shareholders.
(3) Citadel Limited Partnership is the trading manager of each of Fisher
Capital Ltd. and Wingate Capital Ltd. (collectively, the "Citadel
Entities") and consequently has voting control and investment discretion
over securities held by the Citadel Entities. Kenneth C. Griffin
indirectly controls Citadel Limited Partnership. The ownership information
for each of the Citadel Entities does not include the ownership
information for the other Citadel Entities. Citadel Limited Partnership,
Mr. Griffin and each of the Citadel Entities disclaims beneficial
ownership of the shares held by the other Citadel Entities.
(4) In addition to the share amounts shown, the "Shares Being Offered" may
also include, with respect to Fisher Capital Ltd., up to 59,890 additional
shares which may be issued in lieu of cash interest payments otherwise due
on the Series A and Series B notes, and with respect to Wingate Capital
Ltd., up to 36,707 additional shares may be issued in lieu of cash
interest payments otherwise due on the Series A and Series B notes.
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<PAGE> 15
PLAN OF DISTRIBUTION
We are registering the resale of the shares of the common stock on behalf
of the selling stockholders. As used in this prospectus, the term "selling
stockholders" includes pledgees, transferees or other successors-in-interest
selling shares received from the selling stockholders as pledgors, borrowers or
in connection with other non-sale-related transfers after the date of this
prospectus. This prospectus may also be used by transferees of the selling
stockholders, including broker-dealers or other transferees who borrow or
purchase the shares to settle or close out short sales of shares of common
stock. The selling stockholders will act independently of us in making decisions
with respect to the timing, manner, and size of each sale or non-sale related
transfer. We will not receive any of the proceeds of this offering. The selling
stockholders are offering shares of common stock that they received or will
receive in connection with the stock exchange agreement. The selling
stockholders may also have received shares of common stock as payments of
interest by us. This prospectus covers their resale of up to 1,378,119 shares of
common stock.
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 may
sell the shares on the Nasdaq National Market, or in private sales at negotiated
prices.
The selling shareholders may sell shares of common stock from time to time
in one or more transactions:
o at fixed prices that may be changed,
o at market prices prevailing at the time of sale, or
o at prices related to such prevailing market prices or at negotiated
prices.
The selling shareholders may offer their shares of common stock in one or
more of the following transactions:
o on any national securities exchange or quotation service on which
the common stock may be listed or quoted at the time of sale,
including the Nasdaq National Market;
o in the over-the-counter market,
o in privately-negotiated transactions,
o through options,
o by pledge to secure debts and other obligations,
o by a combination of the above methods of sale, or
o to cover short sales made pursuant to this prospectus.
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 of the shares in the course of hedging the positions
they assume with selling stockholders. The selling stockholders may also sell
shares short and deliver 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.
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<PAGE> 16
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 Latham & Watkins, Menlo Park, California, counsel to 8x8, Inc.
EXPERTS
The consolidated financial statements of 8x8, Inc. 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 accounting and auditing.
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.
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<PAGE> 17
================================================================================
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 has 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..............................3
USE OF PROCEEDS..........................12
DESCRIPTION OF NOTES AND WARRANTS........13
SELLING STOCKHOLDERS.....................13
PLAN OF DISTRIBUTION.....................14
LEGAL MATTERS............................15
EXPERTS..................................15
</TABLE>
8X8, INC.
1,378,119 SHARES
OF
COMMON STOCK
PROSPECTUS
March , 2000
================================================================================
<PAGE> 18
PART II
INFORMATION NOT REQUIRED IN THE PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
The Registrant will pay all expenses incident to the offering and sale to
the public of the share being registered other than any commissions and
discounts of underwriters, dealers or agents and any transfer taxes. Such
expenses are set forth in the following table. All of the amounts shown are
estimates except the Securities and Exchange Commission ("SEC") registration
fee.
<TABLE>
<CAPTION>
<S> <C>
SEC registration fee $ 8,480.72
NASDAQ National Market listing fee 0
Legal fees and expenses 5,000
Accounting fees and expenses 5,000
Miscellaneous expenses 10,000
----------
Total $28,480.72
==========
</TABLE>
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS
As permitted by Section 145 of the Delaware General Corporation Law, the
Registrant's Amended and Restated Certificate of Incorporation, includes a
provision that eliminates the personal liability of its directors for monetary
damages for breach or alleged breach of their duty of care. In addition, as
permitted by Section 145 of the Delaware General Corporation Law, Article VI of
the Bylaws of the Registrant provides that: (i) the Registrant is required to
indemnify its directors and officers and persons serving in such capacities in
other business enterprises (including, for example, subsidiaries of the
Registrant) at the Registrant's request, to the fullest extent permitted by
Delaware law, including in those circumstances in which indemnification would
otherwise be discretionary; (ii) the Registrant may, in its discretion,
indemnify employees and agents in those circumstances where indemnification is
not required by law; (iii) the Registrant is required to advance expenses, as
incurred, to its directors and officers in connection with defending a
proceeding (except that it is not required to advance expenses to a person
against whom the Registrant brings a claim for breach of the duty of loyalty,
failure to act in good faith, intentional misconduct, knowing violation of law
or deriving an improper personal benefit); (iv) the rights conferred in the
Bylaws are not exclusive, and the Registrant is authorized to enter into
indemnification agreements with its directors, officers and employees; and (v)
the Registrant may not retroactively amend the Bylaw provisions in a way that is
adverse to such directors, officers and employees.
The Registrant's policy is to enter into an indemnification agreement
having the form filed as Exhibit 10.1 to Registration Statement No. 333-15627
with each of its directors and executive officers, that provide the maximum
indemnity allowed to directors and officers by Section 145 of the Delaware
General Corporation Law and the Bylaws, as well as certain additional procedural
protections. In addition, the indemnification agreements provide that directors
and officers will be indemnified to the fullest possible extent not prohibited
by law against all expenses (including attorney's fees) and settlement amounts
paid or incurred by them in any action or proceeding, including any action by or
in the right of the Registrant, arising out of such person's services as a
director or officer of the Registrant, any subsidiary of the Registrant or any
other company or enterprise to which such person provides services at the
request of the Registrant. The Registrant will not be obligated pursuant to the
indemnification agreements to indemnify or advance expenses to an indemnified
party with respect to proceedings or claims initiated by the indemnified party
and not by way of defense, except with respect to proceedings specifically
authorized by the Board of Directors or brought to enforce a right to
indemnification under the indemnification agreement, the Registrant's Bylaws or
any statute or law. Under the agreements, the Registrant is not obligated to
indemnify the indemnified party:
(a) if a court of competent jurisdiction, by final judgment or decree,
shall determine that (i) the claim or claims in respect of which indemnity is
sought arise from an indemnitee's fraudulent, dishonest or willful misconduct,
or (ii) such indemnity is not permitted under applicable law; or
II-1
<PAGE> 19
(b) on account of any suit in which judgment is rendered for an accounting
of profits made from the purchase or sale by an indemnitee of securities of the
Registrant in violation of the provisions of Section 16(b) of the Securities
Exchange Act of 1934 and amendments thereto or similar provisions of any
federal, state or local statutory law; or
(c) for any acts or omissions or transactions from which a director may
not be relieved or liability under the Delaware General Corporation Law; or
(d) with respect to proceedings or claims initiated or brought voluntarily
by an indemnitee and not by way of defense, except (i) with respect to
proceedings brought in good faith to establish or enforce a right to
indemnification under the indemnification agreement or any other statute or law,
or (ii) at the Registrant's discretion, in specific cases if the Board of
Directors of the Registrant has approved the initiation or bringing of such
suit; or
(e) for expenses or liabilities of any type whatsoever (including, but not
limited to, judgments, fines, ERISA excise taxes or penalties, and amounts paid
in settlement) which have been paid directly to an indemnitee by an insurance
carrier under a policy of directors' and officers' liability insurance
maintained by the Registrant; or
(f) on account of any suit brought against an indemnitee for misuse or
misappropriation of non-public information, or otherwise involving indemnitee's
status as an "insider" of the Registrant, in connection with any purchase or
sale by an indemnitee of securities of the Registrant.
The indemnification provisions in the Bylaws and the indemnification
agreements entered into between the Registrant and its directors and officers
may be sufficiently broad to permit indemnification of the Registrant's
directors and officers for liabilities arising under the Securities Act of 1933.
ITEM 16. EXHIBITS
<TABLE>
<S> <C>
4.1 Securities Purchase Agreement, dated as of December 15, 1999 by
and among Wingate Capital Ltd., Fisher Capital Ltd. and the
Registrant with schedule and exhibits (Incorporated by reference
from Exhibit 4.1 of the Quarterly Report on Form 10-Q filed on
February 14, 2000)
4.2 Registration Rights Agreement, dated as of December 15, 1999,
by and among Registrant and the parties listed therein
(Incorporated by reference from Exhibit 4.2 of the Quarterly
Report on Form 10-Q filed on February 14, 2000)
5.1 Opinion of Latham & Watkins
23.1 Consent of PricewaterhouseCoopers LLP, Independent Accountants
23.2 Consent of Counsel (included as Exhibit 5.1)
24.1 Power of Attorney (included on page II-4)
</TABLE>
ITEM 17. UNDERTAKINGS
A. UNDERTAKING REGARDING RULE 415 OFFERING
The undersigned Registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being made,
a post-effective amendment to this Registration Statement to include
any material information with respect to the plan of distribution
not previously disclosed in the Registration Statement or any
material change to such information in the Registration Statement.
(2) That, for the purpose of determining any liability under the
Securities Act, each post-effective amendment shall be deemed to be
a new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall be
deemed to be the initial bona fide offering thereof.
(3) To remove from registration by means of a post-effective amendment
any of the securities being registered which remain unsold at the
termination of this offering.
II-2
<PAGE> 20
(4) That, for purposes of determining any liability under the Securities
Act, each filing of the Registrant's annual report pursuant to
Section 13(a) or Section 15(d) of the Exchange Act that is
incorporated by reference in the Registration Statement shall be
deemed to be a new registration statement relating to the securities
offered therein, and the offering of such securities at that time
shall be deemed to be the initial bona fide offering thereof.
B. UNDERTAKING REGARDING FILINGS INCORPORATING SUBSEQUENT EXCHANGE ACT
DOCUMENTS BY REFERENCE
The undersigned Registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, each filing of the
Registrant's annual report pursuant to Section 13(a) or Section 15(d) of the
Exchange Act (and, where applicable, each filing of an employee benefit plan's
annual report pursuant to Section 15(d) of the Exchange Act) that is
incorporated by reference in the Registration Statement shall be deemed to be a
new registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof.
C. UNDERTAKING IN RESPECT OF INDEMNIFICATION
Insofar as indemnification for liabilities arising under the Securities
Act may be permitted to directors, officers and controlling persons of the
Registrant pursuant to the foregoing provisions, or otherwise, the Registrant
has been advised that in the opinion of the SEC such indemnification is against
public policy as expressed in the Securities Act of 1933 and is, therefore,
unenforceable. In the event that a claim for indemnification against such
liabilities (other than the payment by the Registrant of expenses incurred or
paid by a director, officer or controlling person of the Registrant in the
successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the Registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Securities Act of 1933 and will be governed by the
final adjudication of such issue.
D. UNDERTAKING PURSUANT TO RULE 430A
The undersigned Registrant hereby undertakes that:
(1) For purposes of determining any liability under the Securities Act, the
information omitted from the form of the prospectus filed as part of this
Registration Statement in reliance upon Rule 430A and contained in a form
of prospectus filed by the Registrant pursuant to Rule 424(b)(1) or (4) or
497(h) under the Securities Act shall be deemed to be part of this
Registration Statement as of the time it was declared effective.
(2) For the purposes of determining any liability under the Securities Act,
each post-effective amendment that contains a form of prospectus shall be
deemed to be a new registration statement relating to the securities
offered therein, and the offering of such securities at that time shall be
deemed to be the initial bona fide offering thereof.
II-3
<PAGE> 21
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-3 and has duly caused this registration
statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Santa Clara, State of California, on March 21, 2000.
8X8, INC.
By: /s/ PAUL VOOIS
-------------------------------------
Paul Voois, CHAIRMAN OF THE BOARD
AND CHIEF EXECUTIVE OFFICER
POWER OF ATTORNEY
Each person whose signature appears below constitutes and appoints Paul
Voois and David M. Stoll, jointly and severally, as attorneys-in-fact, each with
the power of substitution, in any and all capacities, to sign any amendment to
this Registration Statement and to file the same, with exhibits thereto and
other documents in connection therewith, with the Securities and Exchange
Commission, granting to sale attorneys-in-fact, and each of them, full power and
authority to do and perform each and every act and thing requisite and necessary
to be done in connection therewith, as fully to all intents and purposes they
might or could do in person, hereby ratifying and confirming all that said
attorneys-in-fact or any of them, or their, his or her substitute or
substitutes, may lawfully do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this
registration statement has been signed below by the following persons on the
dates indicated in the capacities indicated.
<TABLE>
<CAPTION>
<S> <C> <C>
SIGNATURE TITLE DATE
- -------------------------------- --------------------------------------------------- ----------------
/s/ PAUL VOOIS Chairman of the Board and Chief Executive Officer March 21, 2000
- -------------------------------- (Principal Executive Officer)
Paul Voois
/s/ DAVID M. STOLL Chief Financial Officer and Vice President, Finance March 21, 2000
- -------------------------------- (Principal Financial and Accounting Officer)
David M. Stoll
/s/ KEITH R. BARRACLOUGH President, Chief Operating Officer and Director March 21, 2000
- --------------------------------
Keith R. Barraclough
/s/ LEE CAMP Director March 21, 2000
- --------------------------------
Lee Camp
/s/ BERND GIROD Director March 21, 2000
- --------------------------------
Bernd Girod
/s/ GUY L. HECKER Director March 21, 2000
- --------------------------------
Guy L. Hecker, Jr.
</TABLE>
II-4
<PAGE> 22
<TABLE>
<CAPTION>
<S> <C> <C>
SIGNATURE TITLE DATE
- -------------------------------- --------------------------------------------------- ----------------
/s/ JOE MARKEE Director March 21, 2000
- --------------------------------
Joe Markee
/s/ WILLIAM TAI Director March 21, 2000
- --------------------------------
William Tai
</TABLE>
II-5
<PAGE> 23
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
EXHIBIT NUMBER DESCRIPTION
- --------------- ----------------
<S> <C>
4.1 Securities Purchase Agreement, dated as of December 15, 1999 by
and among Wingate Capital Ltd., Fisher Capital Ltd. and the
Registrant with schedule and exhibits (Incorporated by reference
from Exhibit 4.1 of the Quarterly Report on Form 10-Q filed on
February 14, 2000)
4.2 Registration Rights Agreement, dated as of December 15, 1999,
by and among Registrant and the parties listed therein
(Incorporated by reference from Exhibit 4.2 of the Quarterly
Report on Form 10-Q filed on February 14, 2000)
5.1 Opinion of Latham & Watkins
23.1 Consent of PricewaterhouseCoopers LLP, Independent Accountants
23.2 Consent of Counsel (included as Exhibit 5.1)
24.1 Power of Attorney (included on page II-4)
</TABLE>
<PAGE> 1
EXHIBIT 5.1
March 21, 2000
8x8, Inc.
2445 Mission College Blvd.
Santa Clara, CA 95054
RE: REGISTRATION STATEMENT ON FORM S-3
Ladies and Gentlemen:
In connection with the registration of 1,378,119 shares of common stock of
the Company, par value $0.001 per share (the "Shares"), under the Securities Act
of 1933, as amended (the "Act"), by 8x8, Inc., a Delaware corporation (the
"Company"), on Form S-3 filed with the Securities and Exchange Commission (the
"Commission") on March 21, 2000, (the "Registration Statement"), you have
requested our opinion with respect to the matters set forth below.
In our capacity as your counsel in connection with such registration, we
are familiar with the proceedings taken by the Company in connection with the
authorization, issuance and sale of the Shares. In addition, we have made such
legal and factual examinations and inquiries, including an examination of
originals or copies certified or otherwise identified to our satisfaction of
such documents, corporate records and instruments, as we have deemed necessary
or appropriate for purposes of this opinion.
In our examination, we have assumed the genuineness of all signatures, the
authenticity of all documents submitted to us as originals, and the conformity
to authentic original documents of all documents submitted to us as copies.
We are opining herein as to the effect on the subject transaction only of
the General Corporation Law of the State of Delaware, including statutory and
reported decisional law thereunder and we express no opinion with respect to the
applicability thereto, or the effect thereon, of any other laws.
Subject to the foregoing, it is our opinion that the Shares have been duly
authorized, and, upon issuance, delivery and payment therefor in the manner
contemplated by the Registration Statement, will be validly issued, fully paid
and nonassessable.
We consent to your filing this opinion as an exhibit to the Registration
Statement and to the reference to our firm contained under the heading "Legal
Matters."
Very truly yours,
LATHAM & WATKINS
/s/ LATHAM & WATKINS
<PAGE> 1
EXHIBIT 23.1
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the incorporation by reference in this Registration
Statement on Form S-3 of our report dated April 27, 1999, except for Note 10,
which is as of May 13, 1999, relating to the consolidated financial statements
and financial statement schedule, which appears in 8x8, Inc.'s Annual Report on
Form 10-K for the year ended March 31, 1999. We also consent to the reference to
us under the heading "Experts" in such Registration Statement.
PricewaterhouseCoopers LLP
San Jose, California
March 20, 2000
