8x8 2007 Annual Report Download - page 62

19. That offering triggered certain anti-dilution provisions included in warrants issued to investors in common stock offerings
completed during fiscal 2005. Accordingly, the Company modified a warrant to purchase 1,920,000 shares at an exercise price
of $3.00 to be exercisable for 2,000,000 shares at an exercise price of $2.88 per share. The Company also modified a warrant
to purchase 1,403,509 shares at an exercise price of $4.10 to be exercisable for 1,498,538 shares at an exercise price of $3.84
per share. No other terms of the warrants were modified. All of the warrants were outstanding as of March 31, 2007.
In October 2004, the Company sold 3,508,772 shares of its common stock at $3.42 per share for aggregate proceeds of
approximately $12,000,000, before placement fees and other offering expenses. The purchaser also received a five-year
warrant to purchase 1,403,509 shares of the Company’s common stock at an exercise price of $4.10 per share. The warrants
have been recorded as liabilities in accordance with EITF 00-19. The shares and warrants issued in that offering were issued
under a shelf registration statement previously filed with the Securities and Exchange Commission. The Company paid total
cash fees of six percent of the gross proceeds to the placement agents and issued three-year warrants to purchase 175,438
common shares at $3.42 per share and 70,175 common shares at $4.10 per share. The placement agent warrants have been
classified in equity in accordance with EITF 00-19. All of the warrants were outstanding as of March 31, 2007. Issuance costs
have been allocated between additional paid in capital and the warrant liability based on a relative fair value allocation.
In June 2004, the Company sold 4,800,000 shares of its common stock at $2.50 per share for aggregate proceeds of
approximately $12,000,000, before placement fees and other offering expenses. The purchaser also received a five-year
warrant to purchase 1,920,000 shares of the Company’s common stock at an exercise price of $3.00 per share. The warrants
have been recorded as liabilities in accordance with EITF 00-19. The shares and warrants issued in that offering were issued
under a shelf registration statement previously filed with the Securities and Exchange Commission. The Company paid total
cash fees of six percent of the gross proceeds to the placement agents and issued three-year warrants to purchase 240,000
common shares at $2.50 per share and 96,000 common shares at $3.00 per share. The placement agent warrants have been
classified in equity in accordance with EITF 00-19. All of the warrants were outstanding as of March 31, 2007. Issuance costs
have been allocated between additional paid in capital and the warrant liability based on a relative fair value allocation.
Fiscal year ended March 31, 2004
In November 2003, the Company completed a private placement of 2,639,773 shares of common stock at $2.83 per share for
aggregate net proceeds of approximately $7 million. The investors also received common stock warrants with terms of five
years to purchase 1,860,055 shares at $3.40 and 779,718 shares at $3.61. These warrants are classified in equity in accordance
with EITF 00-19. In addition, the investors were also granted certain preemptive rights allowing them to purchase additional
shares of common stock from the Company, in proportion to their ownership percentage, to the extent that shares of the
Company’s common stock are issued in connection with financing activities. The Company paid a five percent cash fee and
issued warrants to purchase 131,989 common shares at a price of $2.83 per share to its placement agent in the transaction.
These warrants are classified in equity in accordance with EITF 00-19. As of March 31, 2007, warrants for the purchase of
1,311,676 shares of common stock with an exercise price of $3.40 per share and warrants for the purchase of 770,597 of
common stock with an exercise price of $3.61 per share were outstanding. All of the warrants issued to the placement agent
were outstanding as of March 31, 2007.
In July 2003, the Company completed a private placement of 2,260,000 shares of common stock at $0.434 (the average closing
price for the five days prior to the sale) per share for aggregate net proceeds of $859,000. The investors also received warrants
with terms of five years to purchase 2,260,000 common shares at $0.60, 565,000 shares at $0.75 and 565,000 shares at $1.00.
These warrants are classified in equity in accordance with EITF 00-19. In addition, the investors were also granted certain
preemptive rights allowing them to purchase additional shares of common stock from the Company, in proportion to their
ownership percentage, to the extent that new shares of the Company’s common stock are issued in connection with financing
activities. The Company paid a five percent cash fee to its placement agent in the transaction. In December 2003, all of the
non-insider investors exercised their warrants using cashless exercise provisions, and as of December 31, 2003 the preemptive
rights had terminated. As a result of the cashless exercises, the Company cancelled warrants to purchase 342,928 shares, and
issued 2,882,072 shares of common stock for which it received no proceeds. As of March 31, 2007, warrants for the
purchase of 70,000 shares of common stock with an exercise price of $0.60 per share, warrants for the purchase of 17,500
shares of common stock with an exercise price of $0.75 per share and warrants for the purchase of 17,500 shares of common
stock with an exercise price of $1.00 per share were outstanding as of March 31, 2007.
4. TJF WARRANT
In connection with, and in consideration for, the execution of a marketing and distribution agreement with TJF Associates,
LLC ("TJF") on December 10, 2004, the Company agreed to issue a warrant to TJF for the purchase of up to 4,500,000 shares
of 8x8 common stock. The terms of the warrant provided that at any time prior to December 31, 2009, TJF or its transferees
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