8x8 2000 Annual Report Download - page 30

Download and view the complete annual report

Please find page 30 of the 2000 8x8 annual report below. You can navigate through the pages in the report by either clicking on the pages listed below, or by using the keyword search tool below to find specific information within the annual report.

Page out of 66

  • 1
  • 2
  • 3
  • 4
  • 5
  • 6
  • 7
  • 8
  • 9
  • 10
  • 11
  • 12
  • 13
  • 14
  • 15
  • 16
  • 17
  • 18
  • 19
  • 20
  • 21
  • 22
  • 23
  • 24
  • 25
  • 26
  • 27
  • 28
  • 29
  • 30
  • 31
  • 32
  • 33
  • 34
  • 35
  • 36
  • 37
  • 38
  • 39
  • 40
  • 41
  • 42
  • 43
  • 44
  • 45
  • 46
  • 47
  • 48
  • 49
  • 50
  • 51
  • 52
  • 53
  • 54
  • 55
  • 56
  • 57
  • 58
  • 59
  • 60
  • 61
  • 62
  • 63
  • 64
  • 65
  • 66

equipment, in May 2000. We are currently transitioning our video monitoring operations to Interlogix and expect no further revenues from this
business. See further discussion under "Recent Events" below.
We entered the market for embedded IP telephony products in December 1998 with the announcement of our Audacity Internet Telephony
Processor. The Audacity processor combines IP telephony protocol support with audio compression/decompression capability and runs
multiple simultaneous IP phone calls on a single integrated circuit. In April 1999, we announced our Netergy Media Hub (formerly known as
the Symphony module), an integrated system product that is based on the Audacity semiconductor and that connects up to four analog
telephone lines to an IP network. In September 1999, we announced our Audacity-T2 IP Phone Processor, which combines all the digital
processing required to implement an IP telephone onto a single integrated circuit. Our embedded IP telephony products target OEM
manufacturers of IP telephony equipment, such as voice-enabled cable and DSL modems, as well as IP phones and gateways.
In May 1999, we acquired Odisei S.A., a privately held developer of IP telephony software based in Sophia Antipolis, France. We have
leveraged the acquisition of Odisei to develop and market IP telephony solutions to service providers such as competitive local exchange
carriers (CLECs) and Internet service providers (ISPs). In March 2000 the Company announced its Netergy Advanced Telephony System
(ATS), an all-IP hosted iPBX solution that allows service providers to offer dial tone and advanced private branch exchange (PBX) services to
business customers over any broadband IP connection, including DSL, cable, T1/E1, frame relay and broadband wireless. The ATS makes use
of our embedded IP telephony products, including the Netergy Media Hub, semiconductors and embedded IP telephony software.
In March 2000, 8x8 announced that it would change its name, subject to shareholder approval, to Netergy Networks, Inc. The name change
reflects 8x8's strategic transition to the IP telephony market.
RECENT EVENTS
On May 19, 2000, the Company entered into a definitive agreement to acquire UForce, Inc. ("UForce"), a developer of IP-based software
stock in exchange for all of the outstanding shares of UForce. In addition, we will issue common stock options for approximately 1.0 million
shares in exchange for all outstanding UForce stock options. The transaction will be accounted for using the purchase method. The acquisition
is subject to certain closing conditions, and we anticipate completing the acquisition during our second fiscal quarter ending September 30,
2000.
assets and license certain technology related to the Company's video monitoring business. The Company is obligated to provide Interlogix with
future updates and upgrades to the licensed technology. The assets sold included certain accounts receivable, inventories, machinery,
equipment, and intangibles. Interlogix agreed to pay the Company $5.5 million, subject to certain adjustments, for the assets and the associated
technology license, which has an initial term of three years. Upon the earlier of six months from the date of the agreement or upon delivery of
certain remaining obligations, the Company will commence recognition of the resulting net gain over the remaining term of the technology
license.
RESULTS OF OPERATIONS
The following table sets forth consolidated statement of operations data for each of the years ended March 31, 2000, 1999 and 1998, as well as
the percentage of our total revenues represented by each item. Cost of product revenues is presented as a percentage of product revenues and
cost of license and other revenues is presented as a percentage of license and other revenues. You should read this information in conjunction
with
27