September 28, 2005
Via EDGAR and Facsimile
Securities and Exchange Commission
Division of Corporation Finance
Mail Stop 3561
100 F Street, NE
Washington, D.C. 20549
Attention: Inessa Berenbaum
Re: 8x8, Inc.
Form 10-K for Fiscal Year Ended March 31, 2005
Filed June 14, 2005
Form 10-Q for Fiscal Quarter Ended June 30, 2005
File #0-21783
Ladies and Gentlemen:
This letter is in response to your letter dated September 15, 2005 setting forth the comments of the staff of the Securities and Exchange Commission (the "Staff") regarding the Form 10-K for the fiscal year ended March 31, 2005 and the Form 10-Q for the fiscal quarter ended June 30, 2005 filed by 8x8, Inc. For your convenience we have reproduced the Staff's comments in bold type and have followed each comment with our response. References in this letter to "we," "8x8," "the Company," "our" or "us" mean 8x8, Inc.
In connection with our responses to the Staff's comments, we acknowledge the following:
1. 8x8 is responsible for the adequacy and accuracy of the disclosures in the filings;
2. Staff comments or changes to disclosures in response to Staff comments do not foreclose the Securities and Exchange Commission (the "Commission") from taking any action with respect to the filings; and
3. 8x8 may not assert Staff comments as a defense in any proceeding initiated by the Commission or any person under the federal securities laws of the United States.
Item 9. Commitments and Contingencies
Legal Proceedings
As of June 30, 2005, we had accrued $271,000 of reserves for royalty exposures. As noted in our response letter dated August 10, 2005, we record reserves for royalty exposures, which we believe satisfy the criteria of paragraph 8 of SFAS No. 5. There has been substantial litigation in the communications, semiconductor, electronics, and related industries regarding intellectual property rights, and third parties claim infringement by us of their intellectual property rights. We have had experience where third parties have asserted patents against us or our customers. We believe that it is probable that we will be required to pay a royalty and the amount can be reasonably estimated. The amount reserved is based on published royalty rates computed on the quantity of units shipped.
We had not identified any other contingencies under SFAS No. 5 for which it is at least reasonably possible that a loss may have been incurred.
We did not disclose the royalty reserve contingency in our Form 10-Q for the quarter ended June 30, 2005 because we did not consider the reserved amount or the exposure to be material to our financial statements as of June 30, 2005. We evaluate the significance of the reserve amount on a quarterly basis, and will disclose the contingency and related amount when we believe it is material to our financial statements.
Item 9A. Controls and Procedures
We confirm that our disclosure controls and procedures are effective to ensure that information required to be disclosed in the reports that we file or submit under the Exchange Act is accumulated and communicated to our management, including our principal executive officer and principal financial officer, to allow timely decisions regarding required disclosure. In future filings, commencing with our Form 10-Q for the quarter ending September 30, 2005, we will include this statement in Item 4.
Exhibit 31.1
Exhibit 31.2
We acknowledge that the certifications filed as Exhibits 31.1 and 31.2 did not include the required language in paragraph 4. As soon as our independent registered public accounting firm completes their update procedures and issues the required consent, we will re-file our fiscal 2005 Form 10-K, including the revised Exhibits 31.1 and 31.2. We will notify the Staff when we complete the re-filing.
Form 10-Q for the fiscal quarter ended June 30, 2005
Item 4. Controls and Procedures
We confirm that our disclosure controls and procedures are designed to provide a reasonable level of assurance of reaching our desired control objectives. In future filings, commencing with our Form 10-Q for the quarter ending September 30, 2005, we will include this statement in Item 4.
Should the Staff have any additional comments or questions, please direct such questions to the undersigned by telephone at (408) 654-0924 or by fax at (408) 654-3322.
Very truly yours,
8X8, INC.
By: /s/ James Sullivan
James Sullivan
Chief Financial Officer
cc: 8x8, Inc.
Bryan R. Martin