8x8 has agreed to sell 7,142,858 shares of common stock to two institutional investors at a purchase price of $2.10 per share for aggregate proceeds of approximately $15 million before placement fees and other offering expenses. The investors will also receive warrants to purchase 1,785,714 shares of common stock at an exercise price of $3.00 per share. The warrants contain weighted average anti-dilution provisions. The transaction is expected to close and fund on or about Monday, December 19, 2005.



The net proceeds of approximately $14 million from the offering will be used to provide additional capital to scale the Packet8 VoIP services and subscriber base to both retail and wholesale customers, as well as provide additional working capital for general corporate purposes.

"The market for VoIP services is one of the fastest growing segments in telecommunications and the demand for proven, scalable voice, video and Virtual Office business solutions is increasing," said Bryan R. Martin, Chairman and Chief Executive Office of 8x8. "The support shown by our investors provides us with a strong financial position to enable us to scale and take advantage of the global opportunities before us."

A.G. Edwards and Griffin Securities acted as placement agents for the offering. The shares in this offering are being issued under a shelf registration statement previously filed with and declared effective by the Securities and Exchange Commission. A prospectus supplement related to the offering will be filed with the Securities and Exchange Commission.

This press release shall not constitute an offer to sell or the solicitation of an offer to buy, nor shall there be any sale of these securities in any jurisdiction in which such offer, solicitation or sale would be unlawful.