8x8 2007 Annual Report Download - page 50

8X8, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. THE COMPANY AND SIGNIFICANT ACCOUNTING POLICIES
THE COMPANY
8x8, Inc. (“8x8” or the “Company”) develops and markets communication technology and services for Internet protocol, or IP,
telephony and video applications. The Company was incorporated in California in February 1987, and in December 1996 was
reincorporated in Delaware. In August 2000, the Company changed its name from 8x8, Inc. to Netergy Networks, Inc. The
Company changed its name back to 8x8, Inc. in July 2001.
The Company offers the Packet8 broadband voice over Internet protocol, or VoIP, and video communications service, Packet8
Virtual Office service and videophone equipment and services. The Packet8 voice and video communications service
(“Packet8”) enables broadband Internet users to add digital voice and video communications services to their high-speed
Internet connection. Customers can choose a direct-dial phone number from any of the rate centers offered by the service, and
then use an 8x8-supplied terminal adapter to connect any telephone to a broadband Internet connection and make or receive
calls from a regular telephone number. All Packet8 telephone accounts come with voice mail, caller ID, call waiting, call
waiting caller ID, call forwarding, hold, line-alternate, 3-way conferencing, web access to account controls, and online billing.
In addition, 8x8 offers videophones for use with the Packet8 service. 8x8 has developed a suite of business services called
Packet8 Virtual Office that offer feature-rich communications services to small and medium-sized business that eliminate the
need for traditional telecommunications services and business phone systems. 8x8’s primary product focus is on replacing
private branch exchange, or PBX, telephone systems in the small business marketplace with a hosted business VoIP solution.
Packet8 Virtual Office can completely replace a company’s PBX infrastructure and deliver all telecom services over a managed
or unmanaged Internet connection. The Company also sells pre-programmed analog telephones with speakerphones and a
display screen, in conjunction with our Virtual Office service plans, which enable its business customers to access additional
features of Virtual Office through on-screen menus on the phone.
Substantially all of the Company’s revenues are generated from the sale, license and provisioning of VoIP products, services
and technology. Prior to fiscal 2004, the Company was focused on its VoIP semiconductor business and hosted iPBX solutions
business. In late fiscal 2003, the Company began to devote more of its resources to the promotion, distribution and
development of the Packet8 service than to its existing semiconductor business or hosted iPBX solutions business. The
Company completed several transactions during fiscal 2004 to license and sell technology and assets of these former
businesses, including the sale of its hosted iPBX research and development center in France, the sale and license of its next
generation video semiconductor development effort, and the license of technology and manufacturing rights for its VoIP
semiconductor products to other semiconductor companies. In addition, during January 2004, the Company announced the end
of life of its VoIP semiconductor products, and began accepting last time buy orders from customers. The Company continues
to own the voice and video technology related to the semiconductor and iPBX businesses, and utilizes this technology in the
Packet8 service offerings, and continues to sell or license this technology to third parties.
The Company’s fiscal year ends on March 31 of each calendar year. Each reference to a fiscal year in these notes to the
consolidated financial statements refers to the fiscal year ending March 31 of the calendar year indicated (for example, fiscal
2007 refers to the fiscal year ending March 31, 2007).
LIQUIDITY
The Company has sustained net losses and negative cash flows from operations since fiscal 1999 that have been funded
primarily through the issuance of equity securities and borrowings. Management believes that current cash, cash equivalents
and investments will be sufficient to finance the Company's operations for at least the next twelve months. However, the
Company continually evaluates its cash needs and may pursue additional equity or debt financing in order to achieve the
Company's overall business objectives. There can be no assurance that such financing will be available, or, if available, at a
price that is acceptable to the Company. Failure to generate sufficient revenues, raise additional capital or reduce certain
discretionary spending could have an adverse impact on the Company's ability to achieve its longer term business objectives.
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