8x8 2006 Annual Report Download - page 5

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During fiscal 2006, we completed one equity financing transaction for gross proceeds of approximately $15 million.
As of March 31, 2006, we had cash, cash equivalents and investments of approximately $23 million as compared to
$31.8 million at March 31, 2005.
Available Information
We maintain a corporate Internet website with the address http://www.8x8.com. The contents of this website are not
incorporated in or otherwise to be regarded as part of this Annual Report. We file reports with the Securities and
Exchange Commission, or SEC, which are available on our website free of charge. These reports include annual
reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K and amendments to such
reports, each of which is provided on our website as soon as reasonably practicable after we electronically file such
materials with or furnish them to the SEC. You can also read and copy any materials we file with the SEC at the
SEC’s Public Reference Room at 450 Fifth Street, NW, Washington, DC 20549. You can obtain additional
information about the operation of the Public Reference Room by calling the SEC at 1.800.SEC.0330. In addition,
the SEC maintains a website (www.sec.gov) that contains reports, proxy and information statements, and other
information regarding issuers that file electronically with the SEC, including us.
Industry Background
VoIP is a technology that enables communications over the Internet through the compression of voice, video and/or
other media into data packets that can be efficiently transmitted over data networks and then converted back into the
original media at the other end. Data networks, such as the Internet or local area networks, or LANs, have always
utilized packet-switched technology to transmit information between two communicating terminals (for example, a
PC downloading a page from a web server, or one computer sending an e-mail message to another computer). The
most common protocol used for communicating on these packet switched networks is IP. VoIP allows for the
transmission of voice along with other data over these same packet switched networks, and provides an alternative
to traditional telephone networks, which use a fixed electrical path to carry voice signals through a series of switches
to a destination.
As a result of the potential cost savings and added features of VoIP, consumers, enterprises, traditional
telecommunication service providers and cable television providers are viewing VoIP as the future of
telecommunications. VoIP has experienced significant growth in recent years due to:
• Demand for lower cost telephone service;
• Improved quality and reliability of VoIP calls due to technological advances, increased network
development and greater bandwidth capacity; and
• New product innovations that allow VoIP providers to offer services not currently offered by traditional
telephone companies.
Technology research firms and analysts predict that VoIP telephony services will grow from less than 1,000,000
U.S. households at the end of 2004 to up to 20 million U.S. households by 2009.
The traditional telephone networks maintained by many local and long distance telephone companies were designed
solely to carry low-fidelity audio signals with a high level of reliability. Although these traditional telephone
networks are very reliable for voice communications, these networks are not well suited to service the explosive
growth of digital communication applications for the following reasons:
• They are expensive to build because each subscriber's telephone must be individually connected to the
central office switch, which is usually several miles away from a typical subscriber's location;
• They transmit data at very low rates and resolutions, making them poorly suited for delivering high-fidelity
audio, entertainment-quality video or other rich multimedia content;
• They use dedicated circuits for each telephone call, which allot fixed bandwidth throughout the duration of
each call, whether or not voice is actually being transmitted; and