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<STREET1>2445 MISSION COLLEGE BLVD
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<STATE>CA
<ZIP>95054
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<FORMER-CONFORMED-NAME>NETERGY NETWORKS INC
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<FORMER-CONFORMED-NAME>8X8 INC
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<HEAD>
<TITLE>082803 S3 DOC</TITLE>
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<body bgcolor=white>
<font FACE="Times New Roman" SIZE="2">


<font size="2" color="FF0000"><B><p align="right">
As filed with the Securities and Exchange Commission on August 28, 2003<br>
                                               Registration No. 333-________
</B></p></font>

<DIV align=left>
<HR align=left SIZE=2 width="100%">
</DIV>
<DIV align=left>
<HR align=left SIZE=2 width="100%">
</DIV>

<font size="3"><B><p align="center">
                        SECURITIES AND EXCHANGE COMMISSION<br>
                      Washington, D.C. 20549</P></font></B>

<HR align=center SIZE=2 width="25%">
<br>
<font size="5"><B><p align="center">FORM S-3</B></center></font>


<font size="3"><B><p align="center">
                             REGISTRATION STATEMENT<br><I>
                                    Under<br>
                       The Securities Act of 1933</I>
</B>

<HR align=center SIZE=2 width="25%">

<P ALIGN="CENTER"><IMG SRC="logo.gif"></P>
<font size="5" color="#0000FF"><B><U><p align="center">
                                    8X8, INC.
</U></B></font><br>
<font size="2">
                    (Exact name of Registrant as specified in its charter)



<P>&nbsp;
<TABLE COLS=2 WIDTH="100%" >
<TR>
<TD>
<font size="3"><B>
<CENTER><u>Delaware</u></CENTER>
</font></B>
</TD>
<TD>
<font size="3"><B>
<CENTER><u> 77-0142404 </u></CENTER>
</font></B>
</TD>
</TR>
<TR>
<TD>
<font size="2">
<CENTER>&nbsp; (State or Other Jurisdiction of Incorporation or Organization)&nbsp;</CENTER>
</font>
</TD>
<TD>
<font size="2">
<CENTER>(I.R.S. Employer Identification Number)</CENTER>
</font>
</TD>
</TR>
</TABLE>
<BR>

<font size="3"><B><p align="center">
                           2445 Mission College Blvd.
<BR><U>
                              Santa Clara, CA &nbsp;&nbsp;  95054
</U></B></font></u><br>

<font size="2">
       (Address, including zip code, and telephone number, including area code, of the <BR>
                     Registrant's principal executive offices) </P>

<font size="3">
<B><P ALIGN="CENTER">BRYAN R. MARTIN<BR>
                  CHIEF EXECUTIVE OFFICER<BR>
                  8X8, INC.<BR>
                  2445 MISSION COLLEGE BLVD.<BR>
                  SANTA CLARA, CA 95054 <BR>
</B>                  (408) 727-1885<BR>
<font size="2">
                  (Name, address, including zip code, and telephone number,
including area code,<BR>
                  of agent for service) </P>

<font size="3">
<B><P ALIGN="CENTER">Copies to:<BR>
                  JOHN T. SHERIDAN, ESQ.<BR>
                  WILSON, SONSINI, GOODRICH &amp; ROSATI <BR>
                  PROFESSIONAL CORPORATION<BR>
                  650 PAGE MILL ROAD <BR>
                  PALO ALTO, CA 94304 <BR>
</B>                  (650) 493-9300 </P>

<B><P ALIGN="CENTER">APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE
PUBLIC:<BR>
                  FROM TIME TO TIME AFTER THIS REGISTRATION STATEMENT BECOMES
EFFECTIVE.</P>
</B>

<font size="2">
<P>If the only securities being registered on this Form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box. [ &nbsp; ] </P>
<P>If any of the securities being registered on this form are to be offered on a
delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered only in connection with dividend or interest
reinvestment plans, check the following box. [X] </P>
<P>If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. [ &nbsp; ] </P>
<P>If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ &nbsp; ] </P>
<P>If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. [ &nbsp; ] </P>

<B>
<P ALIGN="CENTER">CALCULATION OF REGISTRATION FEE </P></B>

<TABLE BORDER CELLSPACING=1 CELLPADDING=7 WIDTH=655>
<TR><TD WIDTH="34%" VALIGN="BOTTOM" HEIGHT=25>
<FONT SIZE=2><P ALIGN="CENTER">TITLE OF EACH CLASS OF SECURITIES TO BE
REGISTERED</FONT></TD>
<TD WIDTH="18%" VALIGN="BOTTOM" HEIGHT=25>
<FONT SIZE=2><P ALIGN="CENTER">AMOUNT TO BE REGISTERED</FONT></TD>
<TD WIDTH="14%" VALIGN="BOTTOM" HEIGHT=25>
<FONT SIZE=2><P ALIGN="CENTER">PROPOSED MAXIMUM OFFERING PRICE PER SHARE
(1)</FONT></TD>
<TD WIDTH="16%" VALIGN="BOTTOM" HEIGHT=25>
<FONT SIZE=2><P ALIGN="CENTER">PROPOSED MAXIMUM AGGREGATE OFFERING PRICE
(1)</FONT></TD>
<TD WIDTH="18%" VALIGN="BOTTOM" HEIGHT=25>
<FONT SIZE=2><P ALIGN="CENTER">AMOUNT OF REGISTRATION FEE</FONT></TD>
</TR>
<TR><TD WIDTH="34%" VALIGN="TOP">
<FONT SIZE=2><P ALIGN="CENTER">Common Stock, $0.001 par value</FONT></TD>
<TD WIDTH="18%" VALIGN="TOP">
<FONT SIZE=2><P ALIGN="CENTER">5,650,000 shares</FONT></TD>
<TD WIDTH="14%" VALIGN="TOP">
<FONT SIZE=2><P ALIGN="CENTER">$1.365</FONT></TD>
<TD WIDTH="16%" VALIGN="TOP">
<FONT SIZE=2><P ALIGN="CENTER">$7,712,250</FONT></TD>
<TD WIDTH="18%" VALIGN="TOP">
<FONT SIZE=2><P ALIGN="CENTER">$623.92</FONT></TD>
</TR>
</TABLE>

<FONT SIZE=2>

<P>(1) Estimated solely for the purpose of computing the registration fee
required by Section 6(b) of the Securities Act and computed pursuant to Rule
457(c) under the Securities Act based upon the average of the high and low
prices of the Common Stock on August 25, 2003, as reported on the Nasdaq
SmallCap Market. </P>

<P>The Registrant hereby amends this Registration Statement on such date or
dates as may be necessary to delay its effective date until the Registrant shall
file a further amendment which specifically states that this Registration
Statement shall thereafter become effective in accordance with Section 8(a) of
the Securities Act of 1933 or until the Registration Statement shall become
effective on such date as the Commission, acting pursuant to said Section 8(a),
may determine. </P>


<br>
<br>
<br>
<HR WIDTH="85%">
<br>
<br>
<br>

<P>THE INFORMATION IN THIS PROSPECTUS IS NOT COMPLETE AND MAY BE AMENDED OR
CHANGED. THE SELLING STOCKHOLDERS MAY NOT SELL THESE SECURITIES PURSUANT TO THIS
PROSPECTUS UNTIL THE REGISTRATION STATEMENT FILED WITH THE SECURITIES AND
EXCHANGE COMMISSION IS EFFECTIVE. THIS PROSPECTUS IS NOT AN OFFER TO SELL THESE
SECURITIES AND IT IS NOT SOLICITING AN OFFER TO BUY THESE SECURITIES IN ANY
STATE WHERE THE OFFER OR SALE IS NOT PERMITTED. </P>

<B><P ALIGN="CENTER">SUBJECT TO COMPLETION, DATED AUGUST 28, 2003 </P>
</B>
<B><P>PROSPECTUS </P>
</B>
<B><P ALIGN="CENTER">5,650,000 SHARES OF COMMON STOCK </P>
</B>
<B><P ALIGN="CENTER">8X8, INC. </P>
</B>
<P>This prospectus relates to the resale of up to 5,650,000 shares of our common
stock by the selling stockholders listed in this Prospectus under the section
&quot;Selling Stockholders.&quot; These shares include: (i) an aggregate of
2,260,000 shares which were sold by us at the price of $0.434 per share in a
private purchase transaction which closed on July 29, 2003, (ii)  2,260,000
shares which are issuable upon exercise of warrants at an exercise price of
$0.60 per share, (iii)  565,000 shares which are issuable upon exercise of
warrants at an exercise price of $0.75 per share, and (iv)  565,000 shares which
are issuable upon exercise of warrants at an exercise price of $1.00 per share,
which were issued by us in the same private purchase transaction. </P>

<P>The prices at which the selling stockholders may sell the shares will be
determined by the prevailing market price for the shares or in negotiated
transactions. We will not receive any of the proceeds from the sale of the
shares by the selling stockholders. </P>

<P>Our common stock is quoted on the Nasdaq SmallCap Market under the symbol
&quot;EGHT.&quot;  On August     , 2003, the last sale price of our common stock
was $     per share. </P>

<P>The terms &quot;Company,&quot; &quot;8x8,&quot; &quot;Registrant,&quot;
&quot;we,&quot; &quot;us,&quot; and &quot;our&quot; in this prospectus refer to
8x8, Inc. and its subsidiaries.</P>

<P>THE SHARES OFFERED IN THIS PROSPECTUS INVOLVE A HIGH DEGREE OF RISK. YOU
SHOULD CAREFULLY CONSIDER THE RISK FACTORS COMMENCING ON PAGE 3 IN DETERMINING
WHETHER TO PURCHASE THE COMMON STOCK. </P>

<P>NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED OR DISAPPROVED THESE SECURITIES OR PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE. </P>

<B><P ALIGN="CENTER">THE DATE OF THIS PROSPECTUS IS AUGUST     , 2003</P>
</B>

<P>We have not authorized any person to make a statement that differs from what
is in this prospectus. If any person does make a statement that differs from
what is in this prospectus, you should not rely on it. This prospectus is not an
offer to sell, nor is it seeking an offer to buy, these securities in any state
in which the offer or sale is not permitted. The information in this prospectus
is complete and accurate as of its date, but the information may change after
that date. </P>

<P>No dealer, salesperson or other person has been authorized to give any
information or to make any representations other than those contained in or
incorporated by reference in this prospectus. If given or made, such information
or representations must not be relied upon as having been authorized by us or
the selling stockholders. This prospectus does not constitute an offer to sell,
or a solicitation of an offer to sell, or a solicitation of an offer to buy,
such securities by anyone in any jurisdiction where, or to any person to whom,
it is unlawful to make such offer or solicitation. Neither the delivery of this
prospectus nor any sale made hereunder shall, under any circumstances, create
any implication that there has been no change in the affairs of 8x8, Inc. since
the date as of which information is given in this prospectus. </P>
<B>
<P ALIGN="CENTER">WHERE YOU CAN FIND MORE INFORMATION </P>
</B>
<P>Because we are subject to the informational requirements of the Exchange Act,
we file reports, proxy statements and other information with the Securities and
Exchange Commission (SEC). You may read and copy these reports, proxy statements
and other information at the public reference facilities maintained by the SEC
at Room 1024, 450 Fifth Street, N.W., Washington, D.C. 20549. You may also
obtain copies of those materials at prescribed rates from the public reference
section of the SEC at 450 Fifth Street, Washington, D.C. 20549. The public may
obtain information on the operation of the public reference room by calling the
SEC at (800) SEC-0330. In addition, we are required to file electronic versions
of those materials with the SEC through the SEC's EDGAR system. The SEC
maintains a web site at http://www.sec.gov that contains reports, proxy and
information statements and other information regarding registrants that file
electronically with the SEC. We have filed with the SEC a registration statement
on Form S-3 under the Securities Act with respect to the securities offered with
this prospectus. This prospectus does not contain all of the information in the
registration statement, parts of which we have omitted, as allowed under the
rules and regulations of the SEC. You should refer to the registration statement
for further information with respect to us and our securities. Statements
contained in this prospectus as to the contents of any contract or other
document are not necessarily complete and, in each instance, we refer you to the
copy of each contract or document filed as an exhibit to the registration
statement. Copies of the registration statement, including exhibits, may be
inspected without charge at the SEC's principal office in Washington, D.C., and
you may obtain copies from this office upon payment of the fees prescribed by
the SEC. We will furnish without charge to each person to whom a copy of this
prospectus is delivered, upon written or oral request, a copy of the information
that has been incorporated by reference into this prospectus (except exhibits,
unless they are specifically incorporated by reference into this prospectus).
You should direct any requests for copies to: 8x8, Inc., 2445 Mission College
Blvd., Santa Clara, California 95054, Attention: Chief Financial Officer,
Telephone: (408) 727-1885. </P>

<B><P ALIGN="CENTER">DOCUMENTS INCORPORATED BY REFERENCE</P>
</B>
<P>The SEC allows us to incorporate by reference certain of our publicly-filed
documents into this prospectus, which means that information included in these
documents is considered part of this prospectus. We incorporate by reference in
this prospectus the information contained in the following documents: </P>

<UL>
<LI>our Annual Report on Form 10-K for the year ended March 31, 2003, filed with
the SEC on May 29, 2003;</LI>
<LI>our Proxy Statement dated June 23, 2003, filed with the SEC on June 19, 2003
in connection with our 2003 Annual Meeting of Stockholders;</LI>
<LI>our Quarterly Report on Form 10-Q for the quarterly period ended June 30,
2003, filed with the SEC on July 25, 2003;</LI>
<LI>our Current Report on Form 8-K, filed with the SEC on July 31, 2003;</LI>
<LI>the description of our common stock in our registration statement on Form 8-A
filed with the SEC on November 21, 1996, including any amendments or reports
filed for the purpose of updating such description; and</LI>
<LI>all documents that we file with the SEC under Sections 13(a), 13(c), 14 or
15 of the Exchange Act until all of the securities that we may offer with this
prospectus are sold. </LI></UL>


<P>We will furnish without charge to you, on written or oral request, a copy of
any or all of the documents incorporated by reference, other than the exhibits
to those documents. You may obtain copies of those documents from us, free of
cost, by contacting us at the address or telephone number provided in "Where You
Can Find More Information" immediately above. </P>

<P>Information that we file later with the SEC and that is incorporated by
reference in this prospectus will automatically update information contained in
this prospectus or that was previously incorporated by reference into this
prospectus. You will be deemed to have notice of all information incorporated by
reference in this prospectus as if that information was included in this
prospectus. </P>
<P>&nbsp;</P>
<B><P ALIGN="CENTER">FORWARD-LOOKING STATEMENTS</P>
</B></FONT><I><FONT SIZE=2>
<P>We have made forward-looking statements in this prospectus and in documents
that we incorporate by reference into this prospectus.  These forward-looking
statements are subject to risks and uncertainties.  Actual results may differ
materially from those expressed in these forward-looking statements.</P>

<P>Forward-looking statements include information concerning our possible or
assumed future results of operations as well as statements that include the
words &quot;believe,&quot; &quot;expect,&quot; &quot;anticipate,&quot;
&quot;intend&quot; or similar expressions.  You should understand that certain
important factors, including those set forth in &quot;Risk Factors&quot; below
and elsewhere in this prospectus and the documents that we incorporate by
reference into this prospectus, could affect our future results of operations
and could cause those results to differ materially from those expressed in our
forward-looking statements.  In connection with these forward-looking
statements, you should carefully review the risks set forth in this prospectus
and the documents we incorporate by reference into this prospectus</P>
</I>

<B><P ALIGN="CENTER">THE COMPANY</P>
</B>
<P ALIGN="JUSTIFY">8x8, Inc. and its subsidiaries (collectively, the Company)
develop and market communication technology for internet protocol or, IP,
telephony and video applications. 8x8 offers the Packet8 broadband telephone
service (</FONT><U><FONT SIZE=2 COLOR="#0000ff">www.packet8.net</U></FONT><FONT
SIZE=2>), consumer videophones, hosted iPBX solutions (through its subsidiary
Centile, Inc.), and voice and video semiconductors and related software (through
its subsidiary Netergy Microelectronics, Inc.). 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. </P>

<P>Our principal offices are located at 2445 Mission College Blvd., Santa Clara,
California 95054 and our telephone number is (408) 727-1885. Our web site is
www.8x8.com.</P>

<B><P ALIGN="CENTER">RISK FACTORS </P>
</B>
<P>Before you invest in our common stock, you should become aware of various
risks, including those described below. You should carefully consider these risk
factors, together with all of the other information included in this prospectus,
including the documents incorporated in this prospectus by reference, before you
decide whether to purchase shares of our common stock. The risks set out below
may not be exhaustive. </P>
<B><P ALIGN="JUSTIFY">We will need to raise additional capital to support our
operations, and failure to do so in a timely manner may cause us to implement
additional cost reduction strategies </P>
</B><P ALIGN="JUSTIFY">As of June 30, 2003, we had approximately $2.8 million in
cash and cash equivalents and short-term investments. The possibility that we
will not be able to meet our obligations as and when they become due over the
next twelve months raises substantial doubt about our ability to continue as a
going concern. Accordingly, we have been pursuing, and will continue to pursue,
the implementation of certain cost reduction strategies.  Additionally, we are
seeking additional financing and evaluating financing alternatives in order to
meet our cash requirements for fiscal 2004.  We may not be able to obtain
additional financing as needed on acceptable terms, or at all, which may require
us to further reduce our operating costs and other expenditures, including
additional reductions of personnel and capital expenditures.  Alternatively, or
in addition to such potential measures, we may elect to implement other cost
reduction actions as we may determine are necessary and in our best interests,
including the possible sale or cessation of certain of our business segments.
Any such actions undertaken might limit our opportunities to realize plans for
revenue growth and we might not be able to reduce our costs in amounts
sufficient to achieve break-even or profitable operations. 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.</P>
<B><P ALIGN="JUSTIFY">We have a history of losses and we are uncertain as to our
future profitability</P>
</B><P ALIGN="JUSTIFY">We recorded an operating loss of approximately $1.5
million in the quarter ended June 30, 2003 and we ended the period with an
accumulated deficit of $150 million.  In addition, we recorded operating losses
of $12 million, $10 million and $74.5 million for the fiscal years ended
March&nbsp;31, 2003, 2002 and 2001, respectively.  We expect that we will
continue to incur operating losses for the foreseeable future, and such losses
may be substantial.  We will need to generate significant revenue growth to
achieve an operating profit.  Given our history of fluctuating revenues and
operating losses, we cannot be certain that we will be able to achieve
profitability on either a quarterly or annual basis in the future.</P>
<B><P ALIGN="JUSTIFY">We may not be able to maintain our listing on the Nasdaq
SmallCap Market</P>
</B><P ALIGN="JUSTIFY">In April 2002, we were notified by the Nasdaq staff that
the bid price for our common stock must close at $1.00 per share or more for a
minimum of ten consecutive trading days during the ninety calendar day period
ending July 9, 2002 or we might be delisted.  As we were not in compliance under
the Nasdaq National Market minimum bid price listing standard by July 9, 2002,
we transferred to and began trading on the Nasdaq SmallCap Market on July 26,
2002. As a result of our transfer to the Nasdaq SmallCap Market, our delisting
determination was extended an additional ninety days until October 7, 2002.
Although our common stock did not achieve a closing bid price of $1.00 for at
least ten consecutive trading days before October 7, 2002, we met the initial
listing criteria for the Nasdaq SmallCap Market as of October 7, 2002. As a
result, we remained eligible to be quoted on the Nasdaq SmallCap Market for an
additional 180-calendar day grace period, which expired on April 7, 2003,
subject to our compliance with the continued listing requirements during the
extended grace period. On April 8, 2003, the Nasdaq staff notified us that we
had been granted an additional ninety days, or until July 7, 2003 to regain
compliance with the minimum bid price listing standard.  On July 11, 2003, the
Nasdaq staff notified us that we had not, by July 7, 2003, regained compliance
with the minimum $1.00 closing bid price per share requirement, as set forth in
Marketplace Rule 4310(c)(4), and that, accordingly, our securities would be
subject to delisting from The Nasdaq SmallCap Market at the opening of business
on July 22, 2003. Furthermore, we have been notified by the Nasdaq Staff that we
are not in compliance with Marketplace Rule 4310(c)(2)(B), which requires that
we have a minimum of $2,500,000 in stockholders' equity or $35,000,000 market
value of listed securities or $500,000 of net income from continuing operations
for the most recently completed fiscal year (or two of the three most recently
completed fiscal years). As we are entitled pursuant to the procedures set forth
in the Nasdaq Marketplace Rule 4800 Series, on July 18, 2003 we filed an appeal
of the Nasdaq Staff's determination to a Nasdaq Listing Qualifications Panel.
Our hearing before the Nasdaq Listing Qualifications Panel was held on August
20, 2003.  We expect to receive notification of the Panel's determination within
30 days from the hearing date.  There can be no assurance that our appeal will
be successful and that we will be able to remain listed on the Nasdaq SmallCap
Market.  </P>

<P ALIGN="JUSTIFY">Delisting could reduce the ability of our shareholders to
purchase or sell shares as quickly and as inexpensively as they have done
historically.  For instance, failure to obtain listing on another market or
exchange may make it more difficult for traders to sell our securities.  Broker-dealers
may be less willing or able to sell or make a market in our common
stock.  Not maintaining a listing on a major stock market may:</P>

<UL>
<P ALIGN="JUSTIFY"><LI>result in a decrease in the trading price of our common
stock;</LI></P>

<P ALIGN="JUSTIFY"><LI>lessen interest by institutions and individuals in
investing in our common stock; </LI></P>

<P ALIGN="JUSTIFY"><LI>make it more difficult to obtain analyst coverage;
and</LI></P>

<P ALIGN="JUSTIFY"><LI>make it more difficult for us to raise capital in the
future.</LI></P></UL>

<B><P ALIGN="JUSTIFY">Our stock price has been highly volatile </P>
</B><P ALIGN="JUSTIFY">The market price of the shares of our common stock has
been and is likely to be highly volatile.  It may be significantly affected by
factors such as: </P>

<UL>
<P ALIGN="JUSTIFY"><LI>actual or anticipated fluctuations in our operating
results;</LI></P>
<P ALIGN="JUSTIFY"><LI>announcements of technical innovations;</LI></P>
<P ALIGN="JUSTIFY"><LI>loss of key personnel;</LI></P>
<P ALIGN="JUSTIFY"><LI>new products or new contracts by us, our competitors or
their customers;</LI></P>
<P ALIGN="JUSTIFY"><LI>developments with respect to patents or proprietary
rights, general market conditions, changes in financial estimates by securities
analysts, and other factors which could be unrelated to, or outside our control;
and</LI></P>
<P ALIGN="JUSTIFY"><LI>the potential delisting of our common
stock.</LI></P></UL>

<P ALIGN="JUSTIFY">The stock market has from time to time experienced
significant price and volume fluctuations that have particularly affected the
market prices for the common stocks of technology companies and that have often
been unrelated to the operating performance of particular companies.  These
broad market fluctuations may adversely affect the market price of our common
stock.  In the past, following periods of volatility in the market price of a
company's securities, securities class action litigation has often been
initiated against the issuing company.  If our stock price is volatile, we may
also be subject to such litigation.  Such litigation could result in substantial
costs and a diversion of management's attention and resources, which would
disrupt business and could cause a decline in our operating results.  Any
settlement or adverse determination in such litigation would also subject us to
significant liability.</P>
<B><P ALIGN="JUSTIFY">If we fail to maintain effectiveness of a registration
statement for the resale of shares of our common stock issued in connection with
the redemption of our previously outstanding convertible debt, we may be forced
to pay a cash penalty or redeem all or a portion of the shares, causing our
business to suffer</P>
</B><P ALIGN="JUSTIFY">Under the terms of a registration rights agreement we
entered into in connection with the redemption of our outstanding convertible
debt, we agreed to register the 1,000,000 shares of our common stock issued to
the former note holders for resale. If we fail to maintain the effectiveness of
the registration statement through December 2003, we may be required to pay cash
penalties and may be required to redeem all or a portion of the shares of common
stock held by the former note holders. Under the agreement, the redemption price
would be the higher of $0.898 or the market price of our common stock at the
time of the redemption.  If we are required to pay a cash penalty or to redeem
any of the shares, this will deplete our cash reserves, which may cause
significant harm to our business, results of operations and financial
condition.</P>
<B><P ALIGN="JUSTIFY">The growth of our business and future profitability
depends on future IP telephony revenue</P>
</B><P ALIGN="JUSTIFY">We believe that our business and future profitability
will be largely dependent on widespread market acceptance of our IP telephony
technology and products.  Our videoconferencing semiconductor business has not
provided sufficient revenues to profitably operate our business, and we have
announced the end of life of these products and have substantially completed end
of life shipments. To date, we have not generated significant revenue from the
sale of our IP telephony products and services. If we are not able to generate
significant revenues selling into the IP telephony market, our business and
operating results would be seriously harmed.</P>
<P ALIGN="JUSTIFY">Success of our IP telephony strategy assumes that there will
be future demand for IP telephony systems and services.  In order for the IP
telephony market to continue to grow, several things need to occur.  Telephone
service providers must continue to invest in the deployment of high speed
broadband networks to residential and commercial customers.  IP networks must
improve quality of service for real-time communications, managing effects such
as packet jitter, packet loss, and unreliable bandwidth, so that toll-quality
service can be provided.  IP telephony equipment must achieve the 99.999%
reliability that users of the public switched telephone network have come to
expect from their telephone service.  IP telephony service providers must offer
cost and feature benefits to their customers that are sufficient to cause the
customers to switch away from traditional telephony service providers.  If any
or all of these factors fail to occur, our business may not grow. </P>

<B><P ALIGN="JUSTIFY">Our business has been adversely affected by the downturn
in the telecommunications industry and these developments will continue to
impact our revenues and operating results</P>
</B><P ALIGN="JUSTIFY">Through the end of 2000, the telecommunications market
was experiencing rapid growth spurred by a number of factors including
deregulation in the industry, entry of a large number of new emerging service
providers, growth in data traffic and the availability of significant capital
from the financial markets. In 2001, the telecommunications industry began a
reversal of some of these trends, marked by a dramatic reduction in current and
projected future capital expenditures by service providers, financial
difficulties and, in some cases, bankruptcies experienced by emerging service
providers, as well as a sharp contraction in the availability of capital. These
conditions caused a substantial reduction in demand for telecommunications
equipment and related software, which has had a resulting impact on demand for
Netergy's IP telephony semiconductor and software products and for Centile's
hosted iPBX solution. If our current or potential customers are forced to defer
or further curtail their capital spending programs, sales of our hosted iPBX
product and Packet8 IP telephone service to telecommunication service providers
and sales of our IP telephony semiconductors to manufacturers of
telecommunication equipment may continue to be adversely affected, which would
negatively impact our business, financial condition, and results of operations.
In addition, many of the industries in which telecommunication service providers
operate have experienced consolidation. The loss of one or more of our current
or potential telecommunication service provider or telecommunication equipment
OEM customers, through industry consolidation or otherwise, could reduce or
eliminate our sales to such a customer and consequently harm our business,
financial condition, and results of operations.</P>
<P ALIGN="JUSTIFY">We expect the developments described above to continue to
affect our business for at least the next several quarters in the following
manner:</P>

<UL>
<P ALIGN="JUSTIFY"><LI>our ability to accurately forecast revenue will be
diminished;</LI></P>
<P ALIGN="JUSTIFY"><LI>our revenues could be reduced; and</LI></P>
<P ALIGN="JUSTIFY"><LI>our losses may increase because operating expenses are
largely based on anticipated revenue trends and a high percentage of our
expenses are and will continue to be fixed in the short-term.</LI></P></UL>

<P ALIGN="JUSTIFY">Our business, operating results and financial condition could
be materially and adversely impacted by any one or a combination of the
above.</P>
<B><P ALIGN="JUSTIFY">Our future operating results may not follow past or
expected trends due to many factors and any of these could cause our stock price
to fall</P>
</B><P ALIGN="JUSTIFY">Our historical operating results have fluctuated
significantly and will likely continue to fluctuate in the future, and a decline
in our operating results could cause our stock price to fall.  On an annual and
a quarterly basis, there are a number of factors that may affect our operating
results, many of which are outside our control.  These include, but are not
limited to:</P>

<UL>
<P ALIGN="JUSTIFY"><LI>changes in market demand;</LI></P>
<P ALIGN="JUSTIFY"><LI>the timing of customer orders;</LI></P>
<P ALIGN="JUSTIFY"><LI>competitive market conditions;</LI></P>
<P ALIGN="JUSTIFY"><LI>lengthy sales cycles and/or regulatory approval
cycles;</LI></P>
<P ALIGN="JUSTIFY"><LI>new product introductions by us or our
competitors;</LI></P>
<P ALIGN="JUSTIFY"><LI>market acceptance of new or existing products;</LI></P>
<P ALIGN="JUSTIFY"><LI>the cost and availability of components;</LI></P>
<P ALIGN="JUSTIFY"><LI>the mix of our customer base and sales channels;</LI></P>
<P ALIGN="JUSTIFY"><LI>the mix of products sold;</LI></P>
<P ALIGN="JUSTIFY"><LI>the management of inventory;</LI></P>
<P ALIGN="JUSTIFY"><LI>the level of international sales;</LI></P>
<P ALIGN="JUSTIFY"><LI>continued compliance with industry standards;
and</LI></P>
<P ALIGN="JUSTIFY"><LI>general economic conditions.</LI></P></UL>

<P ALIGN="JUSTIFY">Our gross margin is affected by a number of factors including
product mix, the recognition of license and other revenues for which there may
be little or no corresponding cost of revenues, product pricing, the allocation
between international and domestic sales, the percentages of direct sales and
sales to resellers, and manufacturing and component costs.  The markets for our
products are characterized by falling average selling prices.  We expect that,
as a result of competitive pressures, our product end of life announcement, and
other factors, gross profit as a percentage of revenue for our videoconferencing
semiconductor products will continue to decrease. Average selling prices
realized to date for our IP telephony semiconductors have been lower than those
historically attained for our videoconferencing semiconductor products,
resulting in lower gross margins.  In the likely event that we encounter
significant price competition in the markets for our products, we could be at a
significant disadvantage compared to our competitors, many of whom have
substantially greater resources, and therefore may be better able to withstand
an extended period of downward pricing pressure. </P>

<P ALIGN="JUSTIFY">Variations in timing of sales may cause significant
fluctuations in future operating results. Because a significant portion of our
business may be derived from orders placed by a limited number of large
customers, including original equipment manufacturers, the timing of such orders
can cause significant fluctuations in our operating results.  Anticipated orders
from customers may fail to materialize.  Delivery schedules may be deferred or
canceled for a number of reasons, including changes in specific customer
requirements or economic conditions.  The adverse impact of a shortfall in our
revenues may be magnified by our inability to adjust spending to compensate for
such shortfall.  Announcements by our competitors or us of new products and
technologies could cause customers to defer purchases of our existing products,
which would also have a material adverse effect on our business and operating
results.  As a result of these and other factors, it is likely that in some or
all future periods our operating results will be below the expectations of
investors, which would likely result in a significant reduction in the market
price of our common stock.</P>
<B><P ALIGN="JUSTIFY">We depend on purchase orders from key customers and
failure to receive significant purchase orders in the future would cause a
decline in our operating results</P>
</B><P ALIGN="JUSTIFY">Historically, a significant portion of our sales has been
to relatively few customers, although the composition of these customers has
varied. Revenues from our ten largest customers for the quarters ended June 30,
2003 and 2002, accounted for approximately 80% of total revenues in each
quarter.  Revenues from our ten largest customers for the fiscal years ended
March&nbsp;31, 2003, 2002 and 2001, accounted for approximately 62%, 73% and
48%, respectively, of total revenues.  Substantially all of our product sales
have been made, and are expected to continue to be made, on a purchase order
basis.  None of our customers has entered into a long-term agreement requiring
it to purchase our products.  In the future, we will need to gain purchase
orders for our products to earn additional revenue.  Further, substantially all
of our license and other revenues are nonrecurring. </P>
<B><P ALIGN="JUSTIFY">The IP telephony market is subject to rapid technological
change and we depend on new product introduction in order to maintain and grow
our business</P>
</B><P ALIGN="JUSTIFY">IP telephony is an emerging market that is characterized
by rapid changes in customer requirements, frequent introductions of new and
enhanced products, and continuing and rapid technological advancement.  To
compete successfully in this emerging market, we must continue to design,
develop, manufacture, and sell new and enhanced semiconductor and IP telephony
software products and services that provide increasingly higher levels of
performance and reliability at lower cost.  These new and enhanced products must
take advantage of technological advancements and changes, and respond to new
customer requirements. Our success in designing, developing, manufacturing, and
selling such products and services will depend on a variety of factors,
including:</P>

<UL>
<P ALIGN="JUSTIFY"><LI>the identification of market demand for new
products;</LI></P>
<P ALIGN="JUSTIFY"><LI>the scalability of our IP telephony software
products;</LI></P>
<P ALIGN="JUSTIFY"><LI>product and feature selection;</LI></P>
<P ALIGN="JUSTIFY"><LI>timely implementation of product design and
development;</LI></P>
<P ALIGN="JUSTIFY"><LI>product performance;</LI></P>
<P ALIGN="JUSTIFY"><LI>cost-effectiveness of products under
development;</LI></P>
<P ALIGN="JUSTIFY"><LI>effective manufacturing processes; and</LI></P>
<P ALIGN="JUSTIFY"><LI>success of promotional efforts.</LI></P></UL>

<P ALIGN="JUSTIFY">Additionally, we may also be required to collaborate with
third parties to develop our products and may not be able to do so on a timely
and cost-effective basis, if at all.  We have in the past experienced delays in
the development of new products and the enhancement of existing products, and
such delays will likely occur in the future.  If we are unable, due to resource
constraints or technological or other reasons, to develop and introduce new or
enhanced products in a timely manner, if such new or enhanced products do not
achieve sufficient market acceptance, or if such new product introductions
decrease demand for existing products, our operating results would decline and
our business would not grow.</P>
<B><P ALIGN="JUSTIFY">The long and variable sales and deployment cycles for our
IP telephony products may cause our revenue and operating results to vary </P>
</B><P ALIGN="JUSTIFY">Our IP telephony software and semiconductor products,
including our hosted iPBX, Packet8 telephone service and our Audacity family of
semiconductors, have lengthy sales cycles, and we may incur substantial sales
and marketing expenses and expend significant management effort without making a
sale.  A customer's decision to purchase our products often involves a
significant commitment of its resources and a lengthy product evaluation and
qualification process. We do not possess the capital infrastructure required to
invest in extensive marketing or advertising campaigns that may be required in
order to sell these products. In addition, the length of our sales cycles will
vary depending on the type of customer to whom we are selling and the product
being sold.  Even after making the decision to purchase our products, our
customers may deploy our products slowly.  Timing of deployment can vary widely
and will depend on various factors, including:</P>

<UL>
<P ALIGN="JUSTIFY"><LI>the size of the network deployment;</LI></P>
<P ALIGN="JUSTIFY"><LI>the complexity of our customers' network
environments;</LI></P>
<P ALIGN="JUSTIFY"><LI>our customers' skill sets;</LI></P>
<P ALIGN="JUSTIFY"><LI>the hardware and software configuration and customization
necessary to deploy our products; and</LI></P>
<P ALIGN="JUSTIFY"><LI>our customers' ability to finance their purchase of our
products.</LI></P></UL>

<P ALIGN="JUSTIFY">As a result, it is difficult for us to predict the quarter in
which our customers may purchase our IP telephony products, and our revenue and
operating results may vary significantly from quarter to quarter.</P>
<B><P ALIGN="JUSTIFY">We need to retain key personnel to support our products
and ongoing operations </P>
</B><P ALIGN="JUSTIFY">The development and marketing of our IP telephony
products will continue to place a significant strain on our limited personnel,
management, and other resources.  While the pace of economic growth in the San
Francisco Bay Area (where our corporate headquarters are located) has slowed,
competition for highly-skilled engineering, sales, marketing, and support
personnel has remained strong. 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 products 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.</P>
<B><P ALIGN="JUSTIFY">We depend on contract manufacturers to manufacture
substantially all of our products, and any delay or interruption in
manufacturing by these contract manufacturers would result in delayed or reduced
shipments to our customers and may harm our business </P>
</B><P ALIGN="JUSTIFY">We outsource the manufacturing of our semiconductor
products to independent foundries and as such do not have internal manufacturing
capabilities to meet our customers' demands.  We have shifted the manufacture of
our voice over IP semiconductors to an affiliate of STMicroelectronics NV, or
STM, from Taiwan Semiconductor Manufacturing Corporation, or TSMC. STM or its
contract manufacturer, TSMC, will be the sole manufacturer of our semiconductor
products.   Furthermore, to the extent TSMC is utilized, Taiwan is always
subject to geological or geopolitical disturbances that could instantly cut off
such supply. We also rely on other third party manufacturers for packaging and
testing of our semiconductors.</P>
<P ALIGN="JUSTIFY">We do not have long-term purchase agreements with our
contract manufacturers or our component suppliers.  There can be no assurance
that our subcontract manufacturers will be able or willing to reliably
manufacture our products, in volumes, on a cost-effective basis or in a timely
manner. For our semiconductor products, the time to port our technology to
another foundry, the time to qualify the new versions of product, and the cost
of this effort as well as the tooling associated with wafer production would
have a material adverse effect on our business, operating results, and financial
condition. For our consumer videophones, IP telephones and media hub devices
that are used with our hosted iPBX and Packet8 voice and video IP telephone
service, we rely on the availability of these semiconductor products.  These
devices are also sourced solely from certain overseas contract manufacturers and
partners, and are not available from any other manufacturer.</P>
<B><P ALIGN="JUSTIFY">We may not be able to manage our inventory levels
effectively, which may lead to inventory obsolescence that would force us to
lower our prices</P>
</B><P ALIGN="JUSTIFY">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.
Excess inventory levels would subject us to the risk of inventory obsolescence
and the risk that our selling prices may drop below our inventory costs, 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, operating results, and financial condition.</P>
<B><P ALIGN="JUSTIFY">If our products do not interoperate with our customers'
networks, orders for our products will be delayed or canceled and substantial
product returns could occur, which could harm our business</P>
</B><P ALIGN="JUSTIFY">Many of the potential customers for our hosted iPBX
product and Packet8 voice and video IP telephone service have requested that our
products and services be designed to interoperate with their existing networks,
each of which may have different specifications and use multiple standards.  Our
customers' networks may contain multiple generations of products from different
vendors that have been added over time as their networks have grown and evolved.
Our products must interoperate with these products as well as with future
products in order to meet our customers' requirements.  In some cases, we may be
required to modify our product designs to achieve a sale, which may result in a
longer sales cycle, increased research and development expense, and reduced
operating margins.  If our products do not interoperate with existing equipment
or software in our customers' networks, installations could be delayed, orders
for our products could be canceled or our products could be returned.  This
could harm our business, financial condition, and results of operations. Our
Packet8 telephone service depends on the availability of third party network
service providers that provide telephone numbers and PSTN call termination and
origination services for our customers.  Many of these network service providers
are financially affected by the downturn in the telecommunications industry and
may be forced to terminate the services that we depend on.  The time to
interface our technology to another network service provider, if available, and
qualify this new service could have a material adverse effect on our business,
operating results, and financial condition. </P>
<B><P ALIGN="JUSTIFY">We may have difficulty identifying the source of the
problem when there is a problem in a network</P>
</B><P ALIGN="JUSTIFY">Our hosted iPBX and Packet8 IP telephone service must
successfully integrate with products from other vendors, such as gateways to
traditional telephone systems.  As a result, when problems occur in a network,
it may be difficult to identify the source of the problem.  The occurrence of
hardware and software errors, whether caused by our hosted iPBX solution,
Packet8 service or another vendor's products, may result in the delay or loss of
market acceptance of our products and any necessary revisions may force us to
incur significant expenses.  The occurrence of some of these types of problems
may seriously harm our business, financial condition and results of
operations.</P>
<B><P ALIGN="JUSTIFY">Intense competition in the markets in which we compete
could prevent us from increasing or sustaining our revenue and prevent us from
achieving profitability </P>
</B><P ALIGN="JUSTIFY">We expect our competitors to continue to improve the
performance of their current products and introduce new products or new
technologies.  If our competitors successfully introduce new products or enhance
their existing products, this could reduce the sales or market acceptance of our
products and services, increase price competition or make our products obsolete.
To be competitive, we must continue to invest significant resources in research
and development, sales and marketing, and customer support.  We may not have
sufficient resources to make these investments or to make the technological
advances necessary to be competitive, which in turn will cause our business to
suffer.</P>
<P ALIGN="JUSTIFY">In addition, our focus on developing a range of technology
products, including semiconductors and related embedded software, hosted iPBX
solutions, and the Packet8 telephone service products, places a significant
strain on our research and development resources. Competitors that focus on one
aspect of technology, such as software or semiconductors, may have a
considerable advantage over us.  In addition, many of our current and potential
competitors have longer operating histories, are substantially larger, and have
greater financial, manufacturing, marketing, technical, and other resources.
For example, certain competitors in the market for our semiconductor products
maintain their own semiconductor foundries and may therefore benefit from
certain capacity, cost and technical advantages.  Many also have greater name
recognition and a larger installed base of products than we have.  Competition
in our markets may result in significant price reductions.  As a result of their
greater resources, many current and potential competitors may be better able
than us to initiate and withstand significant price competition or downturns in
the economy.  There can be no assurance that we will be able to continue to
compete effectively, and any failure to do so would harm our business, operating
results, and financial condition.</P>
<B><P ALIGN="JUSTIFY">If we do not develop and maintain successful partnerships
for IP telephony products, we may not be able to successfully market our
solutions</P>
</B><P ALIGN="JUSTIFY">We are entering into new market areas and our success is
partly dependent on our ability to forge new marketing and engineering
partnerships.  IP telephony communication systems are extremely complex and few,
if any, companies possess all the required technology components needed to build
a complete end to end solution.  We will likely need to enter into partnerships
to augment our development programs and to assist us in marketing complete
solutions to our targeted customers.  We may not be able to develop such
partnerships in the course of our product development.  Even if we do establish
the necessary partnerships, we may not be able to adequately capitalize on these
partnerships to aid in the success of our business.</P>
<B><P ALIGN="JUSTIFY">Inability to protect our proprietary technology or our
infringement of a third party's proprietary technology would disrupt our
business</P>
</B><P ALIGN="JUSTIFY">We rely in part on trademark, copyright, and trade secret
law to protect our intellectual property in the United States and abroad.  We
seek to protect our software, documentation, and other written materials under
trade secret and copyright law, which afford only limited protection.  We also
rely in part on patent law to protect our intellectual property in the United
States and internationally.  We hold fifty-four United States patents and have a
number of United States and foreign patent applications pending.  We cannot
predict whether such pending patent applications will result in issued patents.
We may not be able to protect our proprietary rights in the United States or
internationally (where effective intellectual property protection may be
unavailable or limited), and competitors may independently develop technologies
that are similar or superior to our technology, duplicate our technology or
design around any patent of ours.  We have in the past licensed and in the
future expect to continue licensing our technology to others; many of who are
located or may be located abroad.  There are no assurances that such licensees
will protect our technology from misappropriation.  Moreover, litigation may be
necessary in the future to enforce our intellectual property rights, to
determine the validity and scope of the proprietary rights of others, or to
defend against claims of infringement or invalidity.  Such litigation could
result in substantial costs and diversion of management time and resources and
could have a material adverse effect on our business, financial condition, and
operating results.  Any settlement or adverse determination in such litigation
would also subject us to significant liability.</P>
<P ALIGN="JUSTIFY">There has been substantial litigation in the semiconductor,
electronics, and related industries regarding intellectual property rights, and
from time to time third parties may claim infringement by us of their
intellectual property rights.  Our broad range of technology, including systems,
digital and analog circuits, software, and semiconductors, increases the
likelihood that third parties may claim infringement by us of their intellectual
property rights.  If we were found to be infringing on the intellectual property
rights of any third party, we could be subject to liabilities for such
infringement, which could be material.  We could also be required to refrain
from using, manufacturing or selling certain products or using certain
processes, either of which could have a material adverse effect on our business
and operating results.  From time to time, we have received, and may continue to
receive in the future, notices of claims of infringement, misappropriation or
misuse of other parties' proprietary rights.  There can be no assurance that we
will prevail in these discussions and actions or that other actions alleging
infringement by us of third party patents will not be asserted or prosecuted
against the Company.</P>
<P ALIGN="JUSTIFY">We rely upon certain technology, including hardware and
software, licensed from third parties. There can be no assurance that the
technology licensed by us will continue to provide competitive features and
functionality or that licenses for technology currently utilized by us or other
technology which we may seek to license in the future will be available to us on
commercially reasonable terms or at all. The loss of, or inability to maintain
existing licenses could result in shipment delays or reductions until equivalent
technology or suitable alternative products could be developed, identified,
licensed and integrated, and could harm our business.  These licenses are on
standard commercial terms made generally available by the companies providing
the licenses.  The cost and terms of these licenses individually are not
material to our business.</P>
<B><P ALIGN="JUSTIFY">The failure of IP networks to meet the reliability and
quality standards required for voice and video communications could render our
products obsolete</P>
</B><P ALIGN="JUSTIFY">Circuit-switched telephony networks feature very high
reliability, with a guaranteed quality of service. In addition, such networks
have imperceptible delay and consistently satisfactory audio quality.  Emerging
broadband IP networks, such as LANs, WANs, and the internet, or emerging last
mile technologies such as cable, digital subscriber lines, and wireless local
loop, may not be suitable for telephony unless such networks and technologies
can provide reliability and quality consistent with these standards.<B> </P>
<P ALIGN="JUSTIFY">Our products must comply with industry standards, FCC
regulations, state, country-specific and international regulations, and changes
may require us to modify existing products</P>
</B><P ALIGN="JUSTIFY">In addition to reliability and quality standards, the
market acceptance of telephony over broadband IP networks is dependent upon the
adoption of industry standards so that products from multiple manufacturers are
able to communicate with each other. Our IP telephony products rely heavily on
standards such as SIP, H.323, MGCP and Megaco to interoperate with other
vendors' equipment.  There is currently a lack of agreement among industry
leaders about which standard should be used for a particular application, and
about the definition of the standards themselves. These standards, as well as
audio and video compression standards, continue to evolve. We also must comply
with certain rules and regulations of the Federal Communications Commission
(FCC) regarding electromagnetic radiation and safety standards established by
Underwriters Laboratories, as well as similar regulations and standards
applicable in other countries.  Standards are continuously being modified and
replaced.  As standards evolve, we may be required to modify our existing
products or develop and support new versions of our products.  The failure of
our products to comply, or delays in compliance, with various existing and
evolving industry standards could delay or interrupt volume production of our IP
telephony products, which would have a material adverse effect on our business,
financial condition and operating results.</P>
<B><P ALIGN="JUSTIFY">Future legislation or regulation of the internet and/or
voice and video over IP services could restrict our business or increase our
cost of doing business</P>
</B><P ALIGN="JUSTIFY">At present there are few laws, regulations or rulings
that specifically address access to or commerce on the internet, including IP
telephony.  We are unable to predict the impact, if any, that future
legislation, legal decisions or regulations concerning the internet may have on
our business, financial condition, and results of operations.  Regulation may be
targeted towards, among other things, assessing access or settlement charges,
imposing taxes related to internet communications, imposing tariffs or
regulations based on encryption concerns or the characteristics and quality of
products and services, imposing regulations and requirements related to the
handling of emergency 911 services, any of which could restrict our business or
increase our cost of doing business.  The increasing growth of the broadband IP
telephony market and popularity of broadband IP telephony products and services
heighten the risk that governments or other legislative bodies will seek to
regulate broadband IP telephony and the internet.  In addition, large,
established telecommunication companies may devote substantial lobbying efforts
to influence the regulation of the broadband IP telephony market, which may be
contrary to our interests. Recent federal legislation provides for a significant
deregulation of the U.S. telecommunications industry, including the local
exchange, long distance and cable television industries.  This legislation
remains subject to judicial review and additional Federal Communications
Commission, or FCC, rulemaking.  As a result, we cannot predict the
legislation's effect on our future operations.  Many regulatory actions are
under way or are being contemplated by federal and state authorities regarding
important items.  These actions could have a material adverse effect on our
business, financial condition and operating results. </P>

<B><P ALIGN="JUSTIFY">Potential regulation of internet service providers could adversely affect
our operations </P></B>

<P ALIGN="JUSTIFY">To date, the FCC has treated internet service providers as
data service providers. Data service providers are currently exempt from federal
and state regulations governing common carriers, including the obligation to pay
access charges and contribute to the universal service fund. The FCC is
currently examining the status of internet service providers and the services
they provide. If the FCC were to determine that internet service providers, or
the services they provide, are subject to FCC regulation, including the payment
of access charges and contribution to the universal service funds, it could have
a material adverse effect on our business, financial condition and operating
results. </P>
<B><P ALIGN="JUSTIFY">We may lose customers if we experience system failures that significantly
disrupt the availability and quality of the services that it provides </P></B>

<P ALIGN="JUSTIFY">The operation of our Packet8 voice and video service depends
on our ability to avoid and mitigate any interruptions in service or reduced
capacity for customers. Interruptions in service or performance problems, for
whatever reason, could undermine confidence in our services and cause us to lose
customers or make it more difficult to attract new ones. In addition, because
our services may be critical to the businesses of our customers, any significant
interruption in service could result in lost profits or other loss to our
customers. Although we attempt to disclaim liability in our service agreements,
a court might not enforce a limitation on liability, which could expose us to
financial loss. In addition, we may provide our customers with guaranteed
service level commitments. If we are unable to meet these guaranteed service
level commitments as a result of service interruptions, we may be obligated to
provide credits, generally in the form of free service for a short period of
time, to our customers, which could negatively affect our operating results.
</P>
<P ALIGN="JUSTIFY">The failure of any equipment or facility on our network, or
those of our partners or customers, could result in the interruption of customer
service until necessary repairs are made or replacement equipment is installed.
Network failures, delays and errors could also result from natural disasters,
terrorist acts, power losses, security breaches and computer viruses. These
failures, faults or errors could cause delays, service interruptions, expose us
to customer liability or require expensive modifications that could have a
material adverse effect on our business, financial condition and operating
results. </P>

<B><P ALIGN="JUSTIFY">We could be liable for breaches of security on our web site,
fraudulent activities of our users, or the failure of third-party vendors to
deliver credit card transaction processing services</P></B>

<FONT SIZE=2><P ALIGN="JUSTIFY"> A fundamental requirement for operating an
internet-based, worldwide voice and video telephone service and electronically
billing our Packet8 customers is the secure transmission of confidential
information over public networks.  Although we have developed systems and
processes that are designed to protect consumer information and prevent
fraudulent credit card transactions and other security breaches, failure to
mitigate such fraud or breaches may adversely affect our operating results.  The
law relating to the liability of providers of online payment services is
currently unsettled.  We rely on third party providers to process and guarantee
payments made by Packet8 subscribers up to certain limits, and we may be unable
to prevent our users from fraudulently receiving goods and services.  Our
liability risk will increase if a larger fraction of our Packet8 transactions
involve fraudulent or disputed credit card transactions.  Any costs we incur as
a result of fraudulent transactions could harm our business. In addition, the
functionality of our current billing system relies on certain third-party
vendors delivering services.  If these vendors are unable or unwilling to
provide services, we will not be able to charge for our Packet8 services in a
timely or scalable fashion.</P>
<B><P ALIGN="JUSTIFY">Intellectual property and proprietary rights of others could prevent us from
using necessary technology to provide IP voice and video services </P></B>
<P ALIGN="JUSTIFY">While we do not know of any technologies that are patented by
others that we believe are necessary for us to provide our services, this
necessary technology may in fact be patented by other parties either now or in
the future. If this technology were held under patent by another person, we
would have to negotiate a license for the use of that technology. We may not be
able to negotiate such a license at a price that is acceptable. The existence of
such a patent, or our inability to negotiate a license for any such technology
on acceptable terms, could force us to cease using the technology and offering
products and services incorporating the technology. </P>
<B><P ALIGN="JUSTIFY">We may transition to smaller geometry process technologies
and higher levels of design integration, which could disrupt our business</P>
</B><P ALIGN="JUSTIFY">We continuously evaluate the benefits, on an integrated
circuit, product-by-product basis, of migrating to smaller geometry process
technologies in order to reduce costs related to the development and production
of our semiconductors or to improve their performance.  We believe that the
transition of our products to increasingly smaller geometries will be important
for us to remain competitive.  We have in the past experienced difficulty in
migrating to new manufacturing processes - which has resulted and could continue
to result in reduced yields, delays in product deliveries, and increased expense
levels.  Moreover, we are dependent on relationships with our foundry and their
partners to migrate to smaller geometry processes successfully.  If any such
transition is substantially delayed or inefficiently implemented, we may
experience delays in product introductions and incur increased expenses.  As
smaller geometry processes become more prevalent, we expect to integrate greater
levels of functionality, as well as customer and third party intellectual
property, into our products.  We cannot predict whether higher levels of design
integration or the use of third party intellectual property will adversely
affect our ability to deliver new integrated products on a timely basis, or at
all.</P>
<B><P ALIGN="JUSTIFY">If we discover product defects, we may have product-related
liabilities which may cause us to lose revenues or delay market
acceptance of our products</P>
</B><P ALIGN="JUSTIFY">Products as complex as those we offer frequently contain
errors, defects, and functional limitations when first introduced or as new
versions are released.  We have in the past experienced such errors, defects or
functional limitations.  We sell products into markets that are extremely
demanding of robust, reliable, fully functional products.  Therefore, delivery
of products with production defects or reliability, quality or compatibility
problems could significantly delay or hinder market acceptance of such products,
which could damage our credibility with our customers and adversely affect our
ability to retain our existing customers and to attract new customers.
Moreover, such errors, defects or functional limitations could cause problems,
interruptions, delays or a cessation of sales to our customers.  Alleviating
such problems may require significant expenditures of capital and resources by
us.  Despite our testing, our suppliers or our customers may find errors,
defects or functional limitations in new products after commencement of
commercial production.  This could result in additional development costs, loss
of, or delays in, market acceptance, diversion of technical and other resources
from our other development efforts, product repair or replacement costs, claims
by our customers or others against us, or the loss of credibility with our
current and prospective customers.</P>
<B><P ALIGN="JUSTIFY">We have significant international operations, which
subject us to risks that could cause our operating results to decline</P>
</B><P ALIGN="JUSTIFY">In the first quarters of fiscal 2004 and 2003, sales to
customers outside of the United States represented 61% and 52% of our total
sales.  Sales to customers outside of the United States during the years ended
March&nbsp;31, 2003, 2002 and 2001 were 62%, 61% and 69% of total revenues,
respectively. The following table illustrates our net revenues by geographic
area expressed as a percentage of total revenues for the corresponding period.
Revenues are attributed to countries based on the destination of shipment:
</P>

<P ALIGN="CENTER">
<TABLE BORDER CELLSPACING=1 CELLPADDING=7 WIDTH=435>
<TR><TD WIDTH="60%" VALIGN="BOTTOM">
<FONT SIZE=2><P ALIGN="CENTER">&nbsp;</FONT></TD>
<TD WIDTH="40%" COLSPAN=3 VALIGN="BOTTOM">
<FONT SIZE=2><B><P ALIGN="CENTER">Three Months Ended <BR><U>&nbsp;&nbsp;&nbsp; June 30, &nbsp;&nbsp;&nbsp; </U></B></FONT></TD>
</TR>
<TR><TD WIDTH="60%" VALIGN="BOTTOM">
<FONT SIZE=2><P ALIGN="CENTER">&nbsp;</FONT></TD>
<TD WIDTH="19%" VALIGN="BOTTOM">
<FONT SIZE=2><B><U><P ALIGN="CENTER">&nbsp; 2003 &nbsp;</U></B></FONT></TD>
<TD WIDTH="2%" VALIGN="BOTTOM">
<FONT SIZE=2><P ALIGN="CENTER">&nbsp;</FONT></TD>
<TD WIDTH="19%" VALIGN="BOTTOM">
<FONT SIZE=2><B><U><P ALIGN="CENTER">&nbsp; 2002 &nbsp;</U></B></FONT></TD>
</TR>

<TR><TD WIDTH="60%" VALIGN="BOTTOM">
<FONT SIZE=2><P>United States</FONT></TD>
<TD WIDTH="19%" VALIGN="BOTTOM">
<FONT SIZE=2><P ALIGN="RIGHT"> 39% &nbsp;</FONT></TD>
<TD WIDTH="2%" VALIGN="BOTTOM">
<FONT SIZE=2><P ALIGN="CENTER">&nbsp;</FONT></TD>
<TD WIDTH="19%" VALIGN="BOTTOM">
<FONT SIZE=2><P ALIGN="RIGHT"> 48% &nbsp;</FONT></TD>
</TR>

<TR><TD WIDTH="60%" VALIGN="BOTTOM">
<FONT SIZE=2><P>Europe</FONT></TD>
<TD WIDTH="19%" VALIGN="BOTTOM">
<FONT SIZE=2><P ALIGN="RIGHT"> 25% &nbsp;</FONT></TD>
<TD WIDTH="2%" VALIGN="BOTTOM">
<FONT SIZE=2><P ALIGN="CENTER">&nbsp;</FONT></TD>
<TD WIDTH="19%" VALIGN="BOTTOM">
<FONT SIZE=2><P ALIGN="RIGHT"> 35% &nbsp;</FONT></TD>
</TR>

<TR><TD WIDTH="60%" VALIGN="BOTTOM">
<FONT SIZE=2><P>Asia Pacific</FONT></TD>
<TD WIDTH="19%" VALIGN="BOTTOM">
<FONT SIZE=2><P ALIGN="RIGHT"> 36% &nbsp;</FONT></TD>
<TD WIDTH="2%" VALIGN="BOTTOM">
<FONT SIZE=2><P ALIGN="CENTER">&nbsp;</FONT></TD>
<TD WIDTH="19%" VALIGN="BOTTOM">
<FONT SIZE=2><P ALIGN="RIGHT"> 17% &nbsp;</FONT></TD>
</TR>

<TR><TD WIDTH="60%" VALIGN="BOTTOM">
<FONT SIZE=2><P>&nbsp;</FONT></TD>
<TD WIDTH="19%" VALIGN="BOTTOM">
<FONT SIZE=2><P ALIGN="RIGHT"> 100% &nbsp;</FONT></TD>
<TD WIDTH="2%" VALIGN="BOTTOM">
<FONT SIZE=2><P ALIGN="CENTER">&nbsp;</FONT></TD>
<TD WIDTH="19%" VALIGN="BOTTOM">
<FONT SIZE=2><P ALIGN="RIGHT"> 100% &nbsp;</FONT></TD>
</TR>
</TABLE></P>

<P ALIGN="JUSTIFY">Substantially all
of our current semiconductor and system-level products are, and substantially
all of our future products will be, manufactured, assembled, and tested by
independent third parties in foreign countries.  International sales and
manufacturing are subject to a number of risks, including general economic
conditions in regions such as Asia, changes in foreign government regulations
and telecommunication standards, export license requirements, tariffs and other
trade barriers, potentially adverse tax consequences, fluctuations in currency
exchange rates, greater difficulty in collecting accounts receivable and longer
collection periods, the impact of recessions in economies outside of the United
States, and difficulty in staffing and managing foreign operations.  We are also
subject to geopolitical risks, such as political, social, and economic
instability, potential hostilities, and changes in diplomatic and trade
relationships, in connection with our international operations.  Taiwan in
particular is subject to a high rate of natural disasters, such as earthquakes
or typhoons, which could have significant impact on our suppliers and customers
due to a delay in operations within that country.  In addition, Taiwan's tenuous
relationship with mainland China is a source of continuing concern due to
potential hostilities.  A significant decline in demand from foreign markets
could have a material adverse effect on our business, operating results, and
financial condition.</P>
<B><P ALIGN="JUSTIFY">The location of our headquarters facility subjects us to
the risk of earthquakes</P>
</B><P ALIGN="JUSTIFY">Our corporate headquarters is located in the San
Francisco Bay area of Northern California, a region known for seismic activity.
A significant natural disaster, such as an earthquake, could have a material
adverse impact on our business, operating results, and financial condition.</P>
<B><P ALIGN="JUSTIFY">We may face interruption of production and services due to
increased security measures in response to recent and potential future terrorist
activities</P>
</B><P ALIGN="JUSTIFY">Our business depends on the free flow of products and
services through the channels of commerce.  Recently, in response to terrorists'
activities and threats aimed at the United States, transportation, mail,
financial and other services have been slowed or stopped altogether.  Further
delays or stoppages in transportation, mail, financial or other services,
particularly any such delays or stoppages which harm our ability to obtain an
adequate supply of products from our independent suppliers, could harm our
business, results of operations and financial condition.  Furthermore, we may
experience an increase in operating costs, such as costs for transportation,
insurance and security as a result of the terrorist activities and potential
activities.  We may also experience delays in receiving payments from customers
that have been affected by the terrorist activities and potential activities.
The United States economy in general is being adversely affected by terrorist
activities and potential terrorist activities.  Any economic downturn could
adversely impact our results of operations, impair our ability to raise capital
or otherwise adversely affect our ability to grow our business.  Moreover, we
cannot determine whether other attacks may occur in the future and the effects
of such attacks on our business.</P>
<B><P ALIGN="JUSTIFY">These risk factors could cause actual results to differ materially from the
results anticipated in forward-looking statements </P></B>

<P ALIGN="JUSTIFY">The reports that we file with the SEC and our other
communications may contain forward-looking statements that involve risks and
uncertainties. We consider forward-looking statements to be those statements
that describe intentions, beliefs, and current expectations with respect to
future operating performance. Our actual results could differ materially from
those anticipated in our forward-looking statements as a result of certain
factors. </P>

<B><P ALIGN="CENTER">USE OF PROCEEDS </P>
</B><P ALIGN="JUSTIFY">The proceeds from the sale of the common stock offered
pursuant to this prospectus are solely for the account of the selling
stockholders. Accordingly, we will not receive any proceeds from the sale of the
shares from the selling stockholders. However, we may receive the proceeds of
the exercise of the warrants held by these selling stockholders to the extent
that such warrants are exercised. There can be no assurance concerning the
number or the timing of the exercise of such warrants by the selling
stockholders at this date. </P>
<B><P ALIGN="CENTER">SELLING STOCKHOLDERS </P>
</B><P>The following table sets forth certain information known to us with
respect to the beneficial ownership of our common stock by the selling
stockholders, as of July 31, 2003. The following table assumes that the selling
stockholders sell all of their shares. We are unable to determine the exact
number of shares that will actually be sold. With the exception of Bryan R.
Martin, who is the chief executive officer and a director of the Company, Barry
Andrews, who is the president of the Company, Huw Rees, who is the vice
president of sales and marketing, and Marc-Petit-Huguenin, who is the vice
president of engineering and chief technology officer, none of the selling
shareholders listed in the table have held any position or office or have had a
material relationship with us or any of our affiliates within the past three
years. </P>
<P>The percentage of shares beneficially owned is based on 30,735,300 shares
outstanding at July 31, 2003 determined in accordance with Rule 13d-3 of the
Exchange Act, and the information is not necessarily indicative of beneficial
ownership for any other purpose. Under such rule, beneficial ownership includes
any shares as to which the individual has sole or shared voting power or
investment power and also any shares which the individual has the right to
acquire within sixty days of July 31, 2003 through the exercise of any warrants
or other right. Unless otherwise indicated in the footnotes, each person has
sole voting and investment power (or shares such powers with his or her spouse)
with respect to the shares shown as beneficially owned. </P>


<TABLE BORDER CELLSPACING=1 CELLPADDING=7 WIDTH=100%>
<TR><TD WIDTH="24%" VALIGN="BOTTOM">
<FONT SIZE=2><P ALIGN="CENTER">NAME OF SELLING STOCKHOLDER</FONT></TD>
<TD WIDTH="28%" VALIGN="BOTTOM" COLSPAN=2>
<FONT SIZE=2><P ALIGN="CENTER">NUMBER OF SHARES BENEFICIALLY OWNED PRIOR TO THE
OFFERING</FONT></TD>
<TD WIDTH="24%" VALIGN="BOTTOM">
<FONT SIZE=2><P ALIGN="CENTER">SHARES BEING OFFERED (1) (2)</FONT></TD>
<TD WIDTH="24%" VALIGN="BOTTOM" COLSPAN=2>
<FONT SIZE=2><P ALIGN="CENTER">SHARES BENEFICIALLY OWNED AFTER
OFFERING</FONT></TD>
</TR>
<TR><TD WIDTH="24%" VALIGN="TOP" HEIGHT=23><P></P></TD>
<TD WIDTH="17%" VALIGN="TOP" HEIGHT=23>
<FONT SIZE=2><P ALIGN="CENTER">NUMBER</FONT></TD>
<TD WIDTH="11%" VALIGN="TOP" HEIGHT=23>
<FONT SIZE=2><P ALIGN="CENTER">PERCENT</FONT></TD>
<TD WIDTH="24%" VALIGN="TOP" HEIGHT=23><P></P></TD>
<TD WIDTH="13%" VALIGN="TOP" HEIGHT=23>
<FONT SIZE=2><P ALIGN="CENTER">NUMBER</FONT></TD>
<TD WIDTH="11%" VALIGN="TOP" HEIGHT=23>
<FONT SIZE=2><P ALIGN="CENTER">PERCENT</FONT></TD>
</TR>
<TR><TD WIDTH="24%" VALIGN="TOP">
<FONT SIZE=2><P>Orin Hirschman</FONT></TD>
<TD WIDTH="17%" VALIGN="TOP">
<FONT SIZE=2><P ALIGN="CENTER">3,926,760</FONT></TD>
<TD WIDTH="11%" VALIGN="TOP">
<FONT SIZE=2><P ALIGN="CENTER">12.8%</FONT></TD>
<TD WIDTH="24%" VALIGN="TOP">
<FONT SIZE=2><P ALIGN="CENTER">3,834,500</FONT></TD>
<TD WIDTH="13%" VALIGN="TOP">
<FONT SIZE=2><P ALIGN="CENTER">92,260</FONT></TD>
<TD WIDTH="11%" VALIGN="TOP">
<FONT SIZE=2><P ALIGN="CENTER">*</FONT></TD>
</TR>
<TR><TD WIDTH="24%" VALIGN="TOP">
<FONT SIZE=2><P>Hershel Berkowitz</FONT></TD>
<TD WIDTH="17%" VALIGN="TOP">
<FONT SIZE=2><P ALIGN="CENTER">860,752</FONT></TD>
<TD WIDTH="11%" VALIGN="TOP">
<FONT SIZE=2><P ALIGN="CENTER">2.8%</FONT></TD>
<TD WIDTH="24%" VALIGN="TOP">
<FONT SIZE=2><P ALIGN="CENTER">840,500</FONT></TD>
<TD WIDTH="13%" VALIGN="TOP">
<FONT SIZE=2><P ALIGN="CENTER">20,252</FONT></TD>
<TD WIDTH="11%" VALIGN="TOP">
<FONT SIZE=2><P ALIGN="CENTER">*</FONT></TD>
</TR>
<TR><TD WIDTH="24%" VALIGN="TOP">
<FONT SIZE=2><P>Richard Grossman</FONT></TD>
<TD WIDTH="17%" VALIGN="TOP">
<FONT SIZE=2><P ALIGN="CENTER">250,000</FONT></TD>
<TD WIDTH="11%" VALIGN="TOP">
<FONT SIZE=2><P ALIGN="CENTER">*</FONT></TD>
<TD WIDTH="24%" VALIGN="TOP">
<FONT SIZE=2><P ALIGN="CENTER">250,000</FONT></TD>
<TD WIDTH="13%" VALIGN="TOP">
<FONT SIZE=2><P ALIGN="CENTER">0</FONT></TD>
<TD WIDTH="11%" VALIGN="TOP">
<FONT SIZE=2><P ALIGN="CENTER">*</FONT></TD>
</TR>
<TR><TD WIDTH="24%" VALIGN="TOP">
<FONT SIZE=2><P>Paul Packer</FONT></TD>
<TD WIDTH="17%" VALIGN="TOP">
<FONT SIZE=2><P ALIGN="CENTER">250,000</FONT></TD>
<TD WIDTH="11%" VALIGN="TOP">
<FONT SIZE=2><P ALIGN="CENTER">*</FONT></TD>
<TD WIDTH="24%" VALIGN="TOP">
<FONT SIZE=2><P ALIGN="CENTER">250,000</FONT></TD>
<TD WIDTH="13%" VALIGN="TOP">
<FONT SIZE=2><P ALIGN="CENTER">0</FONT></TD>
<TD WIDTH="11%" VALIGN="TOP">
<FONT SIZE=2><P ALIGN="CENTER">*</FONT></TD>
</TR>
<TR><TD WIDTH="24%" VALIGN="TOP">
<FONT SIZE=2><P>Joshua Hirsch</FONT></TD>
<TD WIDTH="17%" VALIGN="TOP">
<FONT SIZE=2><P ALIGN="CENTER">125,000</FONT></TD>
<TD WIDTH="11%" VALIGN="TOP">
<FONT SIZE=2><P ALIGN="CENTER">*</FONT></TD>
<TD WIDTH="24%" VALIGN="TOP">
<FONT SIZE=2><P ALIGN="CENTER">125,000</FONT></TD>
<TD WIDTH="13%" VALIGN="TOP">
<FONT SIZE=2><P ALIGN="CENTER">0</FONT></TD>
<TD WIDTH="11%" VALIGN="TOP">
<FONT SIZE=2><P ALIGN="CENTER">*</FONT></TD>
</TR>
<TR><TD WIDTH="24%" VALIGN="TOP">
<FONT SIZE=2><P>James Kardon</FONT></TD>
<TD WIDTH="17%" VALIGN="TOP">
<FONT SIZE=2><P ALIGN="CENTER">75,000</FONT></TD>
<TD WIDTH="11%" VALIGN="TOP">
<FONT SIZE=2><P ALIGN="CENTER">*</FONT></TD>
<TD WIDTH="24%" VALIGN="TOP">
<FONT SIZE=2><P ALIGN="CENTER">75,000</FONT></TD>
<TD WIDTH="13%" VALIGN="TOP">
<FONT SIZE=2><P ALIGN="CENTER">0</FONT></TD>
<TD WIDTH="11%" VALIGN="TOP">
<FONT SIZE=2><P ALIGN="CENTER">*</FONT></TD>
</TR>
<TR><TD WIDTH="24%" VALIGN="TOP">
<FONT SIZE=2><P>Bryan R. Martin</FONT></TD>
<TD WIDTH="17%" VALIGN="TOP">
<FONT SIZE=2><P ALIGN="CENTER">982,858 (3)</FONT></TD>
<TD WIDTH="11%" VALIGN="TOP">
<FONT SIZE=2><P ALIGN="CENTER">3.2%</FONT></TD>
<TD WIDTH="24%" VALIGN="TOP">
<FONT SIZE=2><P ALIGN="CENTER">100,000</FONT></TD>
<TD WIDTH="13%" VALIGN="TOP">
<FONT SIZE=2><P ALIGN="CENTER">882,858</FONT></TD>
<TD WIDTH="11%" VALIGN="TOP">
<FONT SIZE=2><P ALIGN="CENTER">2.9%</FONT></TD>
</TR>
<TR><TD WIDTH="24%" VALIGN="TOP">
<FONT SIZE=2><P>Barry Andrews</FONT></TD>
<TD WIDTH="17%" VALIGN="TOP">
<FONT SIZE=2><P ALIGN="CENTER">331,802 (4)</FONT></TD>
<TD WIDTH="11%" VALIGN="TOP">
<FONT SIZE=2><P ALIGN="CENTER">*</FONT></TD>
<TD WIDTH="24%" VALIGN="TOP">
<FONT SIZE=2><P ALIGN="CENTER">75,000</FONT></TD>
<TD WIDTH="13%" VALIGN="TOP">
<FONT SIZE=2><P ALIGN="CENTER">256,802</FONT></TD>
<TD WIDTH="11%" VALIGN="TOP">
<FONT SIZE=2><P ALIGN="CENTER">*</FONT></TD>
</TR>
<TR><TD WIDTH="24%" VALIGN="TOP">
<FONT SIZE=2><P>Huw Rees</FONT></TD>
<TD WIDTH="17%" VALIGN="TOP">
<FONT SIZE=2><P ALIGN="CENTER">316,776 (5)</FONT></TD>
<TD WIDTH="11%" VALIGN="TOP">
<FONT SIZE=2><P ALIGN="CENTER">*</FONT></TD>
<TD WIDTH="24%" VALIGN="TOP">
<FONT SIZE=2><P ALIGN="CENTER">50,000</FONT></TD>
<TD WIDTH="13%" VALIGN="TOP">
<FONT SIZE=2><P ALIGN="CENTER">266,776</FONT></TD>
<TD WIDTH="11%" VALIGN="TOP">
<FONT SIZE=2><P ALIGN="CENTER">*</FONT></TD>
</TR>
<TR><TD WIDTH="24%" VALIGN="TOP">
<FONT SIZE=2><P>Marc Petit-Huguenin</FONT></TD>
<TD WIDTH="17%" VALIGN="TOP">
<FONT SIZE=2><P ALIGN="CENTER">236,114 (6)</FONT></TD>
<TD WIDTH="11%" VALIGN="TOP">
<FONT SIZE=2><P ALIGN="CENTER">*</FONT></TD>
<TD WIDTH="24%" VALIGN="TOP">
<FONT SIZE=2><P ALIGN="CENTER">50,000</FONT></TD>
<TD WIDTH="13%" VALIGN="TOP">
<FONT SIZE=2><P ALIGN="CENTER">186,114</FONT></TD>
<TD WIDTH="11%" VALIGN="TOP">
<FONT SIZE=2><P ALIGN="CENTER">*</FONT></TD>
</TR>
<TR><TD WIDTH="24%" VALIGN="TOP">
<FONT SIZE=2><P ALIGN="CENTER">TOTAL</FONT></TD>
<TD WIDTH="17%" VALIGN="TOP">
<FONT SIZE=2><P ALIGN="CENTER">7,335,062 </FONT></TD>
<TD WIDTH="11%" VALIGN="TOP">
<FONT SIZE=2><P ALIGN="CENTER">23.9%</FONT></TD>
<TD WIDTH="24%" VALIGN="TOP">
<FONT SIZE=2><P ALIGN="CENTER">5,650,000</FONT></TD>
<TD WIDTH="13%" VALIGN="TOP">
<FONT SIZE=2><P ALIGN="CENTER">1,675,062</FONT></TD>
<TD WIDTH="11%" VALIGN="TOP">
<FONT SIZE=2><P ALIGN="CENTER">5.4%</FONT></TD>
</TR>
</TABLE>

<FONT SIZE=2><P>* Represents beneficial ownership of less than 1% of
common stock. </P>

<OL>

<LI>The foregoing table includes 2,260,000 shares issuable upon exercise of
warrants at the exercise price of $0.60 per share, 565,000 shares issuable upon
exercise of warrants at the exercise price of $0.75 per share, and 565,000
shares issuable upon exercise of warrants at the exercise price of $1.00 per
share. All of the warrants expire on July 29, 2008. </LI>

<LI>This registration statement also shall cover any additional shares of common
stock which become issuable in connection with the shares registered for sale
hereby by reason of any stock dividend, stock split, recapitalization or other
similar transaction effected without the receipt of consideration which results
in an increase in the number of 8x8's outstanding shares of common stock. </LI>

<LI>Includes 633,936 shares subject to outstanding stock options held by Mr.
Martin that were exercisable at or within sixty days after July 31, 2003 and
warrants to purchase 40,000 shares at a price of $0.60 per share, 10,000 shares
at a price of $0.75 per share and 10,000 shares at a price of $1.00 per
share.</LI>

<LI>Includes 99,284 shares subject to outstanding stock options held by Mr.
Andrews exercisable at or within sixty days after July 31, 2003 and warrants to
purchase 30,000 shares at a price of $0.60 per share, 7,500 shares at a price of
$0.75 per share and 7,500 shares at a price of $1.00 per share.</LI>

<LI>Includes 210,701 shares subject to outstanding stock options held by Mr.
Rees that were exercisable at or within sixty days after July 31, 2003 and
warrants to purchase 20,000 shares at a price of $0.60 per share, 10,000 shares
at a price of $0.75 per share and 10,000 shares at a price of $1.00 per
share.</LI>

<LI>Includes XX shares subject to outstanding stock options held by Mr. Petit-Huguenin
that were exercisable at or within sixty days after July 31, 2003 and
warrants to purchase 20,000 shares at a price of $0.60 per share, 10,000 shares
at a price of $0.75 per share and 10,000 shares at a price of $1.00 per
share.</LI></OL>


<P>We assume that the selling stockholders will seek to sell all of the shares
offered under this prospectus, but we are unable to determine the exact number
of shares that will actually be sold or whether and to what extent any of the
selling stockholders will exercise the Warrants referred to under "Selling
Stockholders." However, the right to purchase the shares under the warrants will
be forfeited unless exercised before July 29, 2008, the expiration date of such
warrants. </P>


<B><P ALIGN="CENTER">PLAN OF DISTRIBUTION </P>
</B>
<P>On July 29, 2003, we entered into a common stock unit subscription agreement
with the selling stockholders pursuant to which we sold 2,260,000 shares of our
common stock at a purchase price of $0.434 per share.  In addition, the selling
shareholders received warrants to purchase 2,260,000 shares of common stock at
an exercise price of $0.60 per share, warrants to purchase 565,000 shares of
common stock at an exercise price of $0.75 per share, and warrants to purchase
565,000 shares of common stock at an exercise price of $1.00 per share. In an
investor rights agreement entered into in connection with this sale, we agreed
to register the shares under the Securities Act for resale to the public. Under
such agreement, we must use commercially reasonable efforts to cause this
registration statement to be declared effective by the Securities and Exchange
Commission as soon as practicable after filing, but in no event later than one
hundred and twenty days after filing, and to keep this registration statement
continuously effective under the Securities Act until such date that is the
earlier of (i) July 29, 2005, (ii) the date when all of the shares registered
hereunder shall have been sold, or (iii) such time as all the shares held by the
selling stockholders can be sold pursuant to Rule 144(k) and without compliance
with the registration requirements of the Securities Act of 1933, as amended.
</P>

<P>We are registering the resale of the shares of the common stock on behalf of
the selling stockholders. As used in this prospectus, the term selling
stockholders includes pledgees, transferees or other successors-in-interest
selling shares received from the selling stockholders as pledgors, borrowers or
in connection with other non-sale-related transfers after the date of this
prospectus. This prospectus may also be used by transferees of the selling
stockholders, including broker-dealers or other transferees who borrow or
purchase the shares to settle or close out short sales of shares of common
stock. The selling stockholders will act independently of us in making decisions
with respect to the timing, manner, and size of each sale or non-sale related
transfer. We will not receive any of the proceeds of this offering. The selling
stockholders are offering shares of common stock that they received or will
receive in connection with the unit subscription agreement. This prospectus
covers their resale of up to 5,650,000 shares of common stock. </P>

<P>The shares of common stock covered by this prospectus may be offered and sold
from time to time by the selling stockholders. The selling stockholders may sell
the shares on the Nasdaq SmallCap Market, or in private sales at negotiated
prices. </P>

<P>The selling shareholders may sell shares of common stock from time to time in
one or more transactions: </P>

<UL>
<LI>at fixed prices that may be changed; </LI>
<LI>at market prices prevailing at the time of sale; or </LI>
<LI>at prices related to such prevailing market prices or at negotiated prices.
</LI></UL>


<P>The selling shareholders may offer their shares of common stock in one or
more of the following transactions: </P>

<UL>
<LI>on any national securities exchange or quotation service on which the common
stock may be listed or quoted at the time of sale, including the Nasdaq SmallCap
Market; </LI>
<LI>in the over-the-counter market;</LI>
<LI>in privately-negotiated transactions;</LI>
<LI>through options;</LI>
<LI>by pledge to secure debts and other obligations;</LI>
<LI>by a combination of the above methods of sale; or</LI>
<LI>to cover short sales made pursuant to this prospectus. </LI></UL>


<P>To the extent required, this prospectus may be amended or supplemented from
time to time to describe a specific plan of distribution. In effecting sales,
broker-dealers engaged by the selling stockholders may arrange for other broker-dealers to
participate in the resales. </P>

<P>The selling stockholders may enter into hedging transactions with broker-dealers in
connection with distributions of the shares or otherwise. In such
transactions, broker-dealers or other financial institutions may engage in short
sales of the shares of the shares in the course of hedging the positions they
assume with selling stockholders. The selling stockholders may also sell shares
short and deliver the shares to close out such short positions. The selling
stockholders may also enter into option or other transactions with broker-dealers,
which require the delivery to the broker-dealer of the shares. The
broker-dealer may then resell or otherwise transfer such shares pursuant to this
prospectus. The selling stockholders may also pledge or loan the shares to a
broker-dealer. The broker-dealer may sell the shares so loaned, or upon a
default, the broker-dealer may sell the pledged shares pursuant to this
prospectus. In addition, any shares that qualify for sale pursuant to Rule 144
may be sold under Rule 144 rather than pursuant to this prospectus. </P>

<P>In effecting sales, broker-dealers or agents engaged by the selling
stockholders may arrange for other broker-dealers or agents to participate.
Broker-dealers or agents may receive compensation in the form of commissions,
discounts or concessions from selling stockholders. Broker-dealers or agents may
also receive compensation from the purchasers of the shares for whom they act as
agents or to whom they sell as principals, or both. We will pay all expenses
incident to the offering and sale of the shares to the public other than any
commissions and discounts of underwriters, dealers or agents and any transfer
taxes. </P>

<P>The selling stockholders and any underwriter, broker-dealer or agent who
participate in the distribution of such shares may be deemed to be underwriters
under the Securities Act of 1933, and any discount, commission or concession
received by such persons might be deemed to be an underwriting discount or
commission under the Securities Act of 1933. </P>

<P>In order to comply with the securities laws of certain states, if applicable,
the shares must be sold in such jurisdictions only through registered or
licensed brokers or dealers. In addition, in certain states the shares may not
be sold unless they have been registered or qualified for sale in the applicable
state or an exemption from the registration or qualification requirement is
available and is complied with. </P>

<P>We have advised the selling stockholders that the anti-manipulation rules of
Regulation M under the Exchange Act may apply to sales of shares in the market
and to the activities of the selling stockholders and their affiliates. In
addition, we will make copies of this prospectus available to the selling
stockholders and we have informed them of the need for delivery of copies of
this prospectus to purchasers at or prior to the time of any sale of the shares
offered hereby. The selling stockholders may indemnify any broker-dealer that
participates in transactions involving the sale of the shares against certain
liabilities, including liabilities arising under the Securities Act of 1933.
</P>

<P>At the time a particular offer of shares is made, if required, a prospectus
supplement will be distributed that will set forth the number of shares being
offered and the terms of the offering, including the name of any underwriter,
dealer or agent, the purchase price paid by any underwriter, any discount,
commission and other item constituting compensation, any discount, commission or
concession allowed or reallowed or paid to any dealer, and the proposed selling
price to the public. </P>

<B><P ALIGN="CENTER">LEGAL MATTERS </P>
</B>
<P>The validity of the shares of common stock offered hereby will be passed upon
by Wilson, Sonsini, Goodrich &amp; Rosati, Professional Corporation, Palo Alto,
California, counsel to 8x8, Inc. </P>

<B><P ALIGN="CENTER">EXPERTS </P>
</B>
<P>The consolidated financial statements incorporated in this Prospectus by
reference to the Annual Report on Form 10-K of 8x8, Inc. for the year ended
March 31, 2003, have been so incorporated in reliance on the report (which
contains an explanatory paragraph relating to the Company's ability to continue
as a going concern as described in Note 1 to the consolidated financial
statements) of PricewaterhouseCoopers LLP, independent accountants, given on the
authority of said firm as experts in auditing and accounting. </P>

<P>&nbsp;</P>
<B><P ALIGN="CENTER">PART II </P>
</B>
<B><P ALIGN="CENTER">INFORMATION NOT REQUIRED IN THE PROSPECTUS </P>
</B>
<B><P>ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION </P>
</B>
<P>The Registrant will pay all expenses incident to the offering and sale to the
public of the shares being registered other than any commissions and discounts
of underwriters, dealers or agents and any transfer taxes. Such expenses are set
forth in the following table. All of the amounts shown are estimates except the
Securities and Exchange Commission (SEC) registration fee. </P>
</FONT>
<P ALIGN="CENTER"><CENTER><TABLE BORDER CELLSPACING=1 CELLPADDING=7 WIDTH=330>
<TR><TD WIDTH="75%" VALIGN="TOP">
<FONT SIZE=2><P ALIGN="CENTER">SEC registration fee</FONT></TD>
<TD WIDTH="25%" VALIGN="TOP">
<FONT SIZE=2><P ALIGN="RIGHT">$     624</FONT></TD>
</TR>
<TR><TD WIDTH="75%" VALIGN="TOP">
<FONT SIZE=2><P ALIGN="CENTER">Legal fees and expenses</FONT></TD>
<TD WIDTH="25%" VALIGN="TOP">
<FONT SIZE=2><P ALIGN="RIGHT">5,000</FONT></TD>
</TR>
<TR><TD WIDTH="75%" VALIGN="TOP">
<FONT SIZE=2><P ALIGN="CENTER">Accounting fees and expenses</FONT></TD>
<TD WIDTH="25%" VALIGN="TOP">
<FONT SIZE=2><P ALIGN="RIGHT">5,500</FONT></TD>
</TR>
<TR><TD WIDTH="75%" VALIGN="TOP">
<FONT SIZE=2><P ALIGN="CENTER">Miscellaneous expenses</FONT></TD>
<TD WIDTH="25%" VALIGN="TOP">
<FONT SIZE=2><P ALIGN="RIGHT">5,000</FONT></TD>
</TR>
<TR><TD WIDTH="75%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="25%" VALIGN="TOP">&nbsp;</TD>
</TR>
<TR><TD WIDTH="75%" VALIGN="TOP">
<FONT SIZE=2><P ALIGN="CENTER">Total</FONT></TD>
<TD WIDTH="25%" VALIGN="TOP">
<FONT SIZE=2><P ALIGN="RIGHT">$16,124</FONT></TD>
</TR>
</TABLE>
</CENTER></P>

<FONT SIZE=2>
<B><P>ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS </P>
</B>
<P>As permitted by Section 145 of the Delaware General Corporation Law, the
Registrant's Amended and Restated Certificate of Incorporation, includes a
provision that eliminates the personal liability of its directors for monetary
damages for breach or alleged breach of their duty of care. In addition, as
permitted by Section 145 of the Delaware General Corporation Law, Article VI of
the Bylaws of the Registrant provides that: (i) the Registrant is required to
indemnify its directors and officers and persons serving in such capacities in
other business enterprises (including, for example, subsidiaries of the
Registrant) at the Registrant's request, to the fullest extent permitted by
Delaware law, including in those circumstances in which indemnification would
otherwise be discretionary; (ii) the Registrant may, in its discretion,
indemnify employees and agents in those circumstances where indemnification is
not required by law; (iii) the Registrant is required to advance expenses, as
incurred, to its directors and officers in connection with defending a
proceeding (except that it is not required to advance expenses to a person
against whom the Registrant brings a claim for breach of the duty of loyalty,
failure to act in good faith, intentional misconduct, knowing violation of law
or deriving an improper personal benefit); (iv) the rights conferred in the
Bylaws are not exclusive, and the Registrant is authorized to enter into
indemnification agreements with its directors, officers and employees; and (v)
the Registrant may not retroactively amend the Bylaw provisions in a way that is
adverse to such directors, officers and employees. </P>

<P>The Registrant's policy is to enter into an indemnification agreement having
the form filed as Exhibit 10.1 to Registration Statement No. 333-15627 with each
of its directors and executive officers, that provide the maximum indemnity
allowed to directors and officers by Section 145 of the Delaware General
Corporation Law and the Bylaws, as well as certain additional procedural
protections. In addition, the indemnification agreements provide that directors
and officers will be indemnified to the fullest possible extent not prohibited
by law against all expenses (including attorney's fees) and settlement amounts
paid or incurred by them in any action or proceeding, including any action by or
in the right of the Registrant, arising out of such person's services as a
director or officer of the Registrant, any subsidiary of the Registrant or any
other company or enterprise to which such person provides services at the
request of the Registrant. The Registrant will not be obligated pursuant to the
indemnification agreements to indemnify or advance expenses to an indemnified
party with respect to proceedings or claims initiated by the indemnified party
and not by way of defense, except with respect to proceedings specifically
authorized by the Board of Directors or brought to enforce a right to
indemnification under the indemnification agreement, the Registrant's Bylaws or
any statute or law. Under the agreements, the Registrant is not obligated to
indemnify the indemnified party: </P>
<DIR>
<DIR>

<P>(a) if a court of competent jurisdiction, by final judgment or decree, shall
determine that (i) the claim or claims in respect of which indemnity is sought
arise from an indemnitee's fraudulent, dishonest or willful misconduct, or (ii)
such indemnity is not permitted under applicable law; or </P>


<P>(b) on account of any suit in which judgment is rendered for an accounting of
profits made from the purchase or sale by an indemnitee of securities of the
Registrant in violation of the provisions of Section 16(b) of the Securities
Exchange Act of 1934 and amendments thereto or similar provisions of any
federal, state or local statutory law; or </P>

<P>(c) for any acts or omissions or transactions from which a director may not
be relieved or liability under the Delaware General Corporation Law; or </P>

<P>(d) with respect to proceedings or claims initiated or brought voluntarily by
an indemnitee and not by way of defense, except (i) with respect to proceedings
brought in good faith to establish or enforce a right to indemnification under
the indemnification agreement or any other statute or law, or (ii) at the
Registrant's discretion, in specific cases if the Board of Directors of the
Registrant has approved the initiation or bringing of such suit; or </P>

<P>(e) for expenses or liabilities of any type whatsoever (including, but not
limited to, judgments, fines, ERISA excise taxes or penalties, and amounts paid
in settlement) which have been paid directly to an indemnitee by an insurance
carrier under a policy of directors' and officers' liability insurance
maintained by the Registrant; or </P>

<P>(f) on account of any suit brought against an indemnitee for misuse or
misappropriation of non-public information, or otherwise involving indemnitee's
status as an insider of the Registrant, in connection with any purchase or sale
by an indemnitee of securities of the Registrant. </P>
</DIR>
</DIR>

<P>The indemnification provisions in the Bylaws and the indemnification
agreements entered into between the Registrant and its directors and officers
may be sufficiently broad to permit indemnification of the Registrant's
directors and officers for liabilities arising under the Securities Act of 1933.
</P>

<B><P>ITEM 16. EXHIBITS </P>
</B></FONT>
<TABLE BORDER CELLSPACING=1 CELLPADDING=7 WIDTH=734>
<TR><TD WIDTH="6%" VALIGN="TOP">
<FONT SIZE=2><P>4.10</FONT></TD>
<TD WIDTH="94%" VALIGN="TOP">
<FONT SIZE=2><P>Unit Subscription Agreement dated July 29, 2003 by and among the
Registrant and the Investors party thereto (Incorporated by reference from
Exhibit 4.11 of the Current Report on Form 8-K filed on July 31,
2003).</FONT></TD>
</TR>
<TR><TD WIDTH="6%" VALIGN="TOP">
<FONT SIZE=2><P>4.11</FONT></TD>
<TD WIDTH="94%" VALIGN="TOP">
<FONT SIZE=2><P>Investor Rights Agreement dated July 29, 2003 by and among the
Registrant and the Investors party thereto (Incorporated by reference from
Exhibit 4.11 of the Current Report on Form 8-K filed on July 31,
2003).</FONT></TD>
</TR>
<TR><TD WIDTH="6%" VALIGN="TOP">
<FONT SIZE=2><P>4.12</FONT></TD>
<TD WIDTH="94%" VALIGN="TOP">
<FONT SIZE=2><P>Form of Common Stock Warrant issued to the Investors by the
Registrant (Incorporated by reference from Exhibit 4.11 of the Current Report on
Form 8-K filed on July 31, 2003).</FONT></TD>
</TR>
<TR><TD WIDTH="6%" VALIGN="TOP" HEIGHT=24>
<FONT SIZE=2><P>5.1</FONT></TD>
<TD WIDTH="94%" VALIGN="TOP" HEIGHT=24>
<FONT SIZE=2><P>Opinion of Wilson, Sonsini, Goodrich &amp; Rosati, Professional
Corporation.</P>
</FONT></TD>
</TR>
<TR><TD WIDTH="6%" VALIGN="TOP" HEIGHT=22>
<FONT SIZE=2><P>23.1</FONT></TD>
<TD WIDTH="94%" VALIGN="TOP" HEIGHT=22>
<FONT SIZE=2><P>Consent of PricewaterhouseCoopers LLP, Independent
Accountants.</P>
</FONT></TD>
</TR>
<TR><TD WIDTH="6%" VALIGN="TOP">
<FONT SIZE=2><P>23.2</FONT></TD>
<TD WIDTH="94%" VALIGN="TOP">
<FONT SIZE=2><P>Consent of Counsel (included as Exhibit 5.1).</FONT></TD>
</TR>
<TR><TD WIDTH="6%" VALIGN="TOP">
<FONT SIZE=2><P>24.1</FONT></TD>
<TD WIDTH="94%" VALIGN="TOP">
<FONT SIZE=2><P>Power of Attorney (included on page II-4).</FONT></TD>
</TR>
</TABLE>

<FONT SIZE=2>
<P>&nbsp;</P>
<B><P>ITEM 17. UNDERTAKINGS </P>
</B>
<B><P>A. UNDERTAKING REGARDING RULE 415 OFFERING </P>
</B><P>&nbsp;</P>
<P>(a) The undersigned registrant hereby undertakes:</P>
<OL>

<OL>

<LI>To file, during any period in which offers or sales are being made, a post-effective
amendment to this registration statement:</LI></OL>
</OL>

<OL TYPE="i">
<DIR>
<DIR>

<OL TYPE="i">

<LI>To include any prospectus required by Section 10(a)(3) of the Securities
Act;</LI>
<LI>To reflect in the prospectus any facts or events arising after the effective
date of the registration statement (or the most recent post-effective amendment
thereof) which, individually, or in the aggregate, represent a fundamental
change in the information set forth in the registration statement.
Notwithstanding the foregoing, any increase or decrease in volume of securities
offered (if the total dollar value of securities offered would not exceed that
which was registered) and any deviation from the low or high end of the
estimated maximum offering range may be reflected in the form of prospectus
filed with the SEC pursuant to Rule 424(b) if, in the aggregate, the changes in
volume and price represent no more than a 20% change in the maximum aggregate
offering price set forth in the &quot;Calculation of Registration Fee&quot;
table in the effective registration statement; and</LI>
<LI>To include any material information with respect to the plan of distribution
not previously disclosed in the registration statement or any material change to
such information in the registration statement;</LI></OL>
</DIR>
</DIR>
</OL>
<DIR>
<DIR>
<DIR>

<I><P>provided, however</I>, that the undertakings set forth in clauses (i) and
(ii) above shall not apply if the information required to be included in a post-effective
amendment by these clauses is contained in periodic reports filed by
the registrant pursuant to Section 13 or Section 15(d) of the Exchange Act that
are incorporated by reference in this registration statement.</P></DIR>
</DIR>
</DIR>

<OL>

<OL>

<LI>That, for the purpose of determining any liability under the Securities Act,
each such post-effective amendment shall be deemed to be a new registration
statement relating to the securities offered therein, and the offering of such
securities at that time shall be deemed to be the initial bona fide offering
thereof.</LI>
<LI>To remove from registration by means of a post-effective amendment any of
the securities being registered, which remain, unsold at the termination of the
offering.</LI></OL>
</OL>

<P>(b) The undersigned registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act, each filing of the
registrant's annual report pursuant to Section 13(a) or Section 15(d) of the
Exchange Act (and, where applicable, each filing of an employee benefit plan's
annual report pursuant to Section 15(d) of the Exchange Act) that is
incorporated by reference in the registration statement shall be deemed to be a
new registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof.</P>
<P>(c) Insofar as indemnification for liabilities arising under the Securities
Act may be permitted to directors, officers and controlling persons of the
registrant pursuant to the foregoing provisions, or otherwise, the registrant
has been advised that in the opinion of the SEC such indemnification is against
public policy as expressed in the Securities Act and is, therefore,
unenforceable.  In the event that a claim for indemnification against such
liabilities (other than the payment by the registrant of expenses incurred or
paid by a director, officer or controlling person of the registrant in the
successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Securities Act and will be governed by the final
adjudication of such issue.</P>

<P>&nbsp;</P>
<P ALIGN="CENTER">&nbsp;</P>
<P ALIGN="CENTER">&nbsp;</P>
<B><P ALIGN="CENTER">SIGNATURES </P>
</B>
<P>Pursuant to the requirements of the Securities Act of 1933, the Registrant
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-3 and has duly caused this registration
statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Santa Clara, State of California, on August 27, 2003.
</P>


<P ALIGN="CENTER"><CENTER><TABLE CELLSPACING=0 BORDER=0 WIDTH=324>
<TR><TD VALIGN="MIDDLE">
<B><P ALIGN="CENTER">8X8, INC. </P></B>
<I><FONT FACE="Times New Roman" SIZE=2>
<P>By: /s/ Bryan R. Martin</P>
<P>   -------------------------------------</P>
<P>   Bryan R.Martin, CHIEF EXECUTIVE OFFICER</P>

</I></FONT><FONT SIZE=2><P>&nbsp;</FONT></TD>
</TR>
</TABLE>
</CENTER></P>

<FONT SIZE=2>
<B><P ALIGN="CENTER">POWER OF ATTORNEY </P>
</B>
<P>Each person whose signature appears below constitutes and appoints Bryan R.
Martin and James Sullivan, and each of them, as his attorney-in-fact, each with
the power of substitution, in any and all capacities, to sign any amendment to
this Registration Statement and to file the same, with exhibits thereto and
other documents in connection therewith, with the Securities and Exchange
Commission, granting to same attorneys-in-fact, and each of them, full power and
authority to do and perform each and every act and thing requisite and necessary
to be done in connection therewith, as fully to all intents and purposes they
might or could do in person, hereby ratifying and confirming all that said
attorneys-in-fact or any of them, or their, his or her substitute or
substitutes, may lawfully do or cause to be done by virtue hereof. </P>

<P>Pursuant to the requirements of the Securities Act of 1933, this registration
statement has been signed below by the following persons on the dates indicated
in the capacities indicated. </P>


<TABLE BORDER CELLSPACING=1 BORDERCOLOR="#ffffff" CELLPADDING=8 WIDTH=648>
<TR><TD WIDTH="41%" VALIGN="TOP">
<B><FONT SIZE=2><P ALIGN="CENTER">Signature</P>
</B></FONT></TD>
<TD WIDTH="39%" VALIGN="TOP">
<B><FONT SIZE=2><P ALIGN="CENTER">Title</P>
</B></FONT></TD>
<TD WIDTH="20%" VALIGN="TOP">
<B><FONT SIZE=2><P ALIGN="CENTER">Date</P>
</B></FONT></TD>
</TR>
<TR><TD WIDTH="41%" VALIGN="TOP">
<U><FONT SIZE=2><P>/s/ Bryan R. Martin&#9;<BR>
</U>   &#9;Bryan R. Martin</FONT></TD>
<TD WIDTH="39%" VALIGN="TOP">
<FONT SIZE=2><P>Chief Executive Officer and Director</FONT></TD>
<TD WIDTH="20%" VALIGN="TOP">
<FONT SIZE=2><P>August 27, 2003</FONT></TD>
</TR>
<TR><TD WIDTH="41%" VALIGN="TOP">
<FONT SIZE=2>
<U><P>/s/ James Sullivan&#9;<BR>
</U>   &#9;James Sullivan</FONT></TD>
<TD WIDTH="39%" VALIGN="TOP">
<FONT SIZE=2>
<P>Chief Financial Officer, Vice President, Finance  and Secretary (Principal
Financial and Accounting Officer)</FONT></TD>
<TD WIDTH="20%" VALIGN="TOP">
<FONT SIZE=2><P>August 27, 2003</FONT></TD>
</TR>
<TR><TD WIDTH="41%" VALIGN="TOP">
<FONT SIZE=2>
<U><P>/s/ Bernd Girod&#9;<BR>
</U>   &#9;Bernd Girod</FONT></TD>
<TD WIDTH="39%" VALIGN="TOP">
<FONT SIZE=2>
<P>Director</FONT></TD>
<TD WIDTH="20%" VALIGN="TOP">
<FONT SIZE=2><P>August 27, 2003</FONT></TD>
</TR>
<TR><TD WIDTH="41%" VALIGN="TOP">
<FONT SIZE=2>
<U><P>/s/ Guy L. Hecker, Jr.&#9;<BR>
</U>   &#9;Guy L. Hecker, Jr.</FONT></TD>
<TD WIDTH="39%" VALIGN="TOP">
<FONT SIZE=2>
<P>Director</FONT></TD>
<TD WIDTH="20%" VALIGN="TOP">
<FONT SIZE=2><P>August 27, 2003</FONT></TD>
</TR>
<TR><TD WIDTH="41%" VALIGN="TOP">
<FONT SIZE=2>
<U><P>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<BR>
</U>   &#9;Christos Lagomichos</FONT></TD>
<TD WIDTH="39%" VALIGN="TOP">
<FONT SIZE=2>
<P>Director</FONT></TD>
<TD WIDTH="20%" VALIGN="TOP">
<FONT SIZE=2><P>&nbsp;</FONT></TD>
</TR>
<TR><TD WIDTH="41%" VALIGN="TOP">
<B><FONT SIZE=2>
</B><U><P>/s/ Joe Parkinson&#9;<BR>
</U>   &#9;Joe Parkinson</FONT></TD>
<TD WIDTH="39%" VALIGN="TOP">
<FONT SIZE=2>
<P>Chairman of the Board and<BR>
   Director</FONT></TD>
<TD WIDTH="20%" VALIGN="TOP">
<FONT SIZE=2><P>August 27, 2003</FONT></TD>
</TR>
</TABLE>

<FONT SIZE=2>
<B><P ALIGN="CENTER">INDEX TO EXHIBITS </P></B></FONT>
<TABLE BORDER CELLSPACING=1 CELLPADDING=7 WIDTH=734>
<TR><TD WIDTH="17%" VALIGN="TOP">
<FONT SIZE=2><P ALIGN="CENTER">EXHIBIT NUMBER</FONT></TD>
<TD WIDTH="83%" VALIGN="TOP">
<FONT SIZE=2><P>DESCRIPTION</FONT></TD>
</TR>
<TR><TD WIDTH="17%" VALIGN="TOP">
<FONT SIZE=2><P ALIGN="CENTER">4.10</FONT></TD>
<TD WIDTH="83%" VALIGN="TOP">
<FONT SIZE=2><P>Unit Subscription Agreement dated July 29, 2003 by and among the
Registrant and the Investors party thereto (Incorporated by reference from
Exhibit 4.11 of the Current Report on Form 8-K filed on July 31,
2003).</FONT></TD>
</TR>
<TR><TD WIDTH="17%" VALIGN="TOP">
<FONT SIZE=2><P ALIGN="CENTER">4.11</FONT></TD>
<TD WIDTH="83%" VALIGN="TOP">
<FONT SIZE=2><P>Investor Rights Agreement dated July 29, 2003 by and among the
Registrant and the Investors party thereto (Incorporated by reference from
Exhibit 4.11 of the Current Report on Form 8-K filed on July 31,
2003).</FONT></TD>
</TR>
<TR><TD WIDTH="17%" VALIGN="TOP">
<FONT SIZE=2><P ALIGN="CENTER">4.12</FONT></TD>
<TD WIDTH="83%" VALIGN="TOP">
<FONT SIZE=2><P>Form of Common Stock Warrant issued to the Investors by the
Registrant (Incorporated by reference from Exhibit 4.11 of the Current Report on
Form 8-K filed on July 31, 2003).</FONT></TD>
</TR>
<TR><TD WIDTH="17%" VALIGN="TOP">
<FONT SIZE=2><P ALIGN="CENTER">5.1</FONT></TD>
<TD WIDTH="83%" VALIGN="TOP">
<FONT SIZE=2><P>Opinion of Wilson, Sonsini, Goodrich &amp; Rosati, Professional
Corporation.</P>
</FONT></TD>
</TR>
<TR><TD WIDTH="17%" VALIGN="TOP">
<FONT SIZE=2><P ALIGN="CENTER">23.1</FONT></TD>
<TD WIDTH="83%" VALIGN="TOP">
<FONT SIZE=2><P>Consent of PricewaterhouseCoopers LLP, Independent
Accountants.</P>
</FONT></TD>
</TR>
<TR><TD WIDTH="17%" VALIGN="TOP">
<FONT SIZE=2><P ALIGN="CENTER">23.2</FONT></TD>
<TD WIDTH="83%" VALIGN="TOP">
<FONT SIZE=2><P>Consent of Counsel (included as Exhibit 5.1).</FONT></TD>
</TR>
<TR><TD WIDTH="17%" VALIGN="TOP">
<FONT SIZE=2><P ALIGN="CENTER">24.1</FONT></TD>
<TD WIDTH="83%" VALIGN="TOP">
<FONT SIZE=2><P>Power of Attorney (included on page II-4).</FONT></TD>
</TR>
</TABLE>


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<DOCUMENT>
<TYPE>EX-5.1
<SEQUENCE>4
<FILENAME>exh5-1.htm
<DESCRIPTION>OPINION
<TEXT>
<HTML>
<HEAD>
<TITLE>082803 S3 Exhibit 5.1</TITLE>
</head>
<body bgcolor=white>
<font FACE="Times New Roman" SIZE="2">


<B><FONT SIZE=3><P ALIGN="RIGHT">Exhibit 5.1</P></B>


<P ALIGN="CENTER">August 27, 2003</P>

<P>8x8, Inc.<BR>
   2445 Mission College Blvd.<BR>
   Santa Clara, CA 95054 </P>

<B><P ALIGN="CENTER">RE: REGISTRATION STATEMENT ON FORM S-3 </P>
</B>
<P>Ladies and Gentlemen: </P>

<P>In connection with the registration of 5,650,000 shares of common stock of
the Company, par value $0.001 per share (the Shares), under the Securities Act
of 1933, as amended (the Act), by 8x8, Inc., a Delaware corporation (the
Company), on Form S-3 to be filed with the Securities and Exchange Commission (the
Commission) on or about August 28, 2003, (the Registration Statement), you have requested
our opinion with respect to the matters set forth below. </P>

<P>In our capacity as your counsel in connection with such registration, we are
familiar with the proceedings taken by the Company in connection with the
authorization, issuance and sale of the Shares. In addition, we have made such
legal and factual examinations and inquiries, including an examination of
originals or copies certified or otherwise identified to our satisfaction of
such documents, corporate records and instruments, as we have deemed necessary
or appropriate for purposes of this opinion. </P>

<P>In our examination, we have assumed the genuineness of all signatures, the
authenticity of all documents submitted to us as originals, and the conformity
to authentic original documents of all documents submitted to us as copies. </P>

<P>We are opining herein as to the effect on the subject transaction only of the
General Corporation Law of the State of Delaware, including statutory and
reported decisional law thereunder and we express no opinion with respect to the
applicability thereto, or the effect thereon, of any other laws. </P>

<P>Subject to the foregoing, it is our opinion that the Shares have been duly
authorized, and, upon issuance, delivery and payment therefor in the manner
contemplated by the Registration Statement, will be validly issued, fully paid
and nonassessable. </P>

<P>We consent to your filing this opinion as an exhibit to the Registration
Statement and to the reference to our firm contained under the heading Legal
Matters. </P>
<P>&nbsp;</P>
<P>Very truly yours, </P>
<B><P>WILSON, SONSINI, GOODRICH &amp; ROSATI</P>
</B>

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<B><P ALIGN="RIGHT">Exhibit 23.1</P></B>

<B><P ALIGN="CENTER">CONSENT OF INDEPENDENT ACCOUNTANTS </P>
</B>
<P>We hereby consent to the incorporation by reference in this Registration
Statement on Form S-3 of our report dated May 2, 2003, relating to the
consolidated financial statements and financial statement schedule, which
appears in 8x8, Inc.'s Annual Report on Form 10-K for the year ended March 31,
2003. We also consent to the reference to us under the heading
&quot;Experts&quot; in such Registration Statement. </P>

<P>/s/ PricewaterhouseCoopers LLP</P>

<P>&nbsp;</P>
<P>San Jose, California<BR>
   August 27, 2003</P>

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