8x8 2011 Annual Report Download - page 23

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• lengthy sales cycles and/or regulatory approval cycles;
• new product introductions by us or our competitors;
• market acceptance of new or existing products;
• the cost and availability of components;
• the mix of our customer base and sales channels;
• the mix of products sold;
• the management of inventory;
• continued compliance with industry standards and regulatory requirements; and
• general economic conditions.
Due to these and other factors, we believe that period-to-period comparisons of our results of operations are not meaningful
and should not be relied upon as indicators of our future performance. It is possible that in some future periods our results of
operations may be below the expectations of public market analysts and investors. If this were to occur, the price of our
common stock would likely decline significantly.
We need to retain key personnel to support our products and ongoing operations.
The development and marketing of our VoIP services will continue to place a significant strain on our limited personnel,
management, and other resources. Our future success depends upon the continued services of our executive officers and other
key employees who have critical industry experience and relationships that we rely on to implement our business plan. None of
our officers or key employees are bound by employment agreements for any specific term. The loss of the services of any of
our officers or key employees could delay the development and introduction of, and negatively impact our ability to sell our
services which could adversely affect our financial results and impair our growth. We currently do not maintain key person life
insurance policies on any of our employees.
We may not be able to manage our inventory levels effectively, which may lead to inventory obsolescence that would
force us to incur inventory write-downs.
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. In addition, because we rely on third party vendors for the supply of components and contract
manufacturers to assemble our products, our inventory levels are subject to the conditions regarding the timing of purchase
orders and delivery dates that are not within our control. Excess inventory levels would subject us to the risk of inventory
obsolescence, while insufficient levels of inventory may negatively affect relations with customers. For instance, our customers
rely upon our ability to meet committed delivery dates, and any disruption in the supply of our products could result in legal
action from our customers, loss of customers or harm to our ability to attract new customers. Any of these factors could have a
material adverse effect on our business, financial condition or operating results.
We may need to raise additional capital to support our future operations.
As of March 31, 2011, we had cash and cash equivalents and investments of approximately $18.4 million. While we believe
these funds are sufficient to meet our current and anticipated liquidity requirements, we may need to raise additional capital.
We may not be able to obtain such additional financing as needed on acceptable terms, or at all, which may require us to
reduce our operating costs and other expenditures, including reductions of personnel and capital expenditures. If we issue
additional equity or convertible debt securities to raise funds, the ownership percentage of our existing stockholders would be
reduced and they may experience significant dilution. New investors may demand rights, preferences or privileges senior to
those of existing holders of our common stock. If we are not successful in these actions, we may be forced to cease operations.
Our stock price has been highly volatile.
The market price of the shares of our common stock has been and is likely to continue to be highly volatile. It may be
significantly affected by factors such as:
• actual or anticipated fluctuations in our operating results;
• announcements of technical innovations;
• future legislation or regulation of the Internet and/or VoIP;
• loss of key personnel;