8-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549

______________

FORM 8-K

CURRENT REPORT

PURSUANT TO SECTION 13 OR 15(d) OF

THE SECURITIES EXCHANGE ACT OF 1934

Date of Report (Date of earliest event reported): August 7, 2008

______________

iPass Inc.

(Exact name of Registrant as specified in its charter)

______________

Delaware	000-50327	93-1214598
(State or other jurisdiction	(Commission	(IRS Employer
of incorporation)	File Number)	Identification No.)

3800 Bridge Parkway, Redwood Shores, California		94065
(Address of principal executive offices)		(Zip Code)
	(650) 232-4100
	(Registrant’s telephone number, including area code)

______________

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):

o Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

o Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

o Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

o Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

TABLE OF CONTENTS

Item 2.02 - -- Results of Opertions and Financial Condition

Item 9.01 - -- Financial Statements and Exhibits

SIGNATURES

INDEX TO EXHIBITS

EXHIBIT 99.1 

Item 2.02.  Results of Operations and Financial Condition.

On August 7, 2008, iPass Inc. issued a press release announcing its second quarter 2008 financial results.  A copy of the press release is attached as Exhibit 99.1 to this current report and is incorporated herein by reference.

The information in this current report and in the accompanying exhibit shall not be deemed to be “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to the liabilities of that Section or Sections 11 and 12(a)(2) of the Securities Act of 1933, as amended.  The information contained in this current report and in the accompanying exhibit shall not be incorporated by reference into any filing with the U.S. Securities and Exchange Commission made by iPass Inc., whether made before or after the date hereof, regardless of any general incorporation language in such filing.

Item 9.01 Financial Statements and Exhibits.

Exhibit No.	Description
99.1	Press Release dated August 7, 2008, announcing iPass Inc.’s Second Quarter 2008 Financial Results.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

iPass Inc.
By:	/s/ Bruce K. Posey
	Name:	Bruce K. Posey
	Title:	Senior Vice President, General Counsel and Secretary

Dated:  August 7, 2008

Exhibit Index

Exhibit                      Description

99.1 Press Release, dated August 7, 2008, announcing iPass Inc.’s Second Quarter Financial Results.

EX-99.1

iPASS REPORTS SECOND QUARTER 2008 FINANCIAL RESULTS

Broadband, Software and Service Fee Represent 81% of Total Revenues

REDWOOD SHORES, Calif. — August 7, 2008 — iPass Inc. (Nasdaq: IPAS), a global provider of services that unify the management of enterprise mobility, today announced financial results for its second quarter ended June 30, 2008.

“Our revenues continued to grow as we benefited from our large international customer base, the recurring nature of our software and service fee revenues and our enhanced product portfolio,” said Ken Denman, chairman and CEO of iPass. “We continue to manage operating expenses, add new blue-chip customers despite a challenging economic environment, and achieve double-digit increases in mobile broadband revenues. Our growth, combined with stabilized gross margins, positions us to enhance shareholder value in the second half of the year.”

During the second quarter of 2008, broadband, software and service fee revenues increased 7 percent sequentially, contributing to a full 81 percent of total revenues, compared to 19 percent for dial. The company also continued to attract new global customers, signing eight new Forbes Global 2000 companies during the quarter along with other new business, representing over $20 million in new bookings during the quarter.

Financial Highlights (In millions, except per share amounts)		Q2’08			Q1’08			Q2’07
Total Revenues	$	48.6		$	48.1		$	47.6
Broadband Revenues	$	26.2		$	24.1		$	17.9
Software and Service Fee Revenues	$	13.0		$	12.5		$	11.4
Dial Revenues	$	9.4		$	11.5		$	18.4
Operating loss	$	(2.3	)	$	(2.2	)	$	(3.7	)
Non-GAAP Operating Income (loss)	$	(0.1	)	$	0.2		$	(1.1	)
GAAP Net loss	$	(1.4	)	$	(1.4	)	$	(2.3	)
GAAP Diluted EPS (loss)	$	(0.02	)	$	(0.02	)	$	(0.04	)
Non-GAAP Net Income (loss)	$	0.7		$	1.0		$	(0.1	)
Non-GAAP Diluted EPS (loss)	$	0.01		$	0.02		$	(0.00	)
Cash and Short Term Investments	$	70		$	70		$	81

Key User, Footprint and Customer Metrics

	Q2’08	Q1’08	Q2’07
iPass On-Network Users	537,000	547,000	635,000
iPass Off-Network Users	585,000	538,000	373,000
Total iPassConnect Software Users	1,122,000	1,085,000	1,008,000
Broadband Users	323,000	295,000	235,000
Dial Users	214,000	252,000	400,000
Total iPass On-Network Users	537,000	547,000	635,000
Broadband Venues	104,000	98,000	81,000
Total Forbes Global 2000 Customers	435	427	401

Share Repurchase Program - During the period April 1, 2008 through June 30, 2008, the company repurchased approximately $500,000 of its common stock, representing approximately 229,000 shares at an average cost of $2.18 per share.  These repurchases were made under the $30 million share repurchase plan that the company’s board of directors approved in February 2008.

Company Outlook

The following statements are based on information available to iPass today, and iPass does not assume any duty to update these numbers at any time during the quarter or thereafter. These statements are forward looking, and actual results may differ materially.

For the quarter ending September 30, 2008, iPass projects revenues of approximately $47 million to $50 million, fully diluted GAAP earnings (loss) per share of approximately ($0.01) to ($0.04) and fully diluted non-GAAP earnings per share of approximately $0.00 to $0.03. The difference between the projected fully diluted GAAP loss per share and the projected fully diluted non-GAAP earnings per share of approximately $0.04 is based on expected FAS 123R stock-based compensation of $1.5 million dollars and the expected amortization of intangibles of $1.1 million in the third quarter of 2008 which, when divided by an expected 62 million fully diluted shares outstanding, results in the $0.04 difference.

Conference Call

iPass will host a public conference call today to discuss this announcement at 5:00 p.m. Eastern Time (2:00 p.m. Pacific Time).

The call will be webcast on iPass’ web site at http://investor.ipass.com, and a replay of the webcast will be available on iPass' web site until iPass reports its third quarter 2008 financial results. A taped replay will also be available for two weeks following the date of the call. The dial-in numbers for the taped replay are 1-888-286-8010 (U.S. and Canada) and 1-617-801-6888 (international). The ID number for the replay call is 77102199.

Cautionary Statements

iPass’ projections of its third quarter 2008 financial results under the caption "Company Outlook," and in this press release are forward-looking statements. Actual results may differ materially from the expectations contained in these statements due to a number of risks and uncertainties, including: the rate of decline in use of narrowband/dial technology as a means of enterprise connectivity may be faster than iPass predicts; the risk that iPass will not be able to generate broadband revenues in the manner expected; rapidly emerging changes in the nature of markets served by iPass, which may not be compatible with iPass' services; increased competition, which may cause pricing pressure on the fees iPass charges; iPass could unexpectedly lose current integrated broadband access points if one or more current broadband access point providers perceive iPass’ services to be competing with the provider’s services in a manner that renders the relationship with iPass detrimental to the provider; iPass may not be able to establish additional relationships with broadband access point providers, including providers of 2.5G/3G Mobile Data, at the level iPass expects if it is unable to negotiate such relationships on terms acceptable to both iPass and the providers on the timeframe iPass currently expects for any number of reasons, including perceived competition with the providers; if bookings or sales are greater than iPass expects, then resulting sales commissions and/or other sales related expenses could cause iPass’ non-stock compensation expenses in the third quarter to be greater than currently expected;  and iPass may not be able to generate revenue from new services if market acceptance of those new services is not as iPass expects. Detailed information about potential factors that could potentially affect iPass' business, financial condition and results of operations is included in iPass' Quarterly Report on Form 10-Q under the caption " Factors Affecting Operating Results" in Part I, Item 2 of that report, filed with the Securities and Exchange Commission (the "SEC") on May 9, 2008 and available at the SEC's Web site at www.sec.gov. iPass undertakes no responsibility to update the information in this press release if any forward-looking statement later turns out to be inaccurate.

Information Regarding Non-GAAP Financial Measures

This press release contains financial measures that are not calculated in accordance with U.S. generally accepted accounting principles (GAAP). iPass management evaluates and makes operating decisions using various performance measures. In addition to iPass’ GAAP results, the company also considers non-GAAP net income (loss).  iPass further considers various components of non-GAAP net income (loss) such as non-GAAP earnings (loss) per share and non-GAAP operating income (loss). Non-GAAP net income (loss) is generally based on the revenues, network access expenses, network operations, research and development, sales and marketing and general and administrative expenses management considers in evaluating the company’s ongoing core operating performance. Non-GAAP net income (loss) consists of net income (loss) excluding equity plan-related compensation expenses, restructuring charges, amortization of intangible assets, the cumulative effect of change in accounting principle, and valuation allowance for deferred tax assets which are charges and gains which management does not consider reflective of the company’s core operating business. Equity plan-related compensation expenses represent the fair value of all share-based payments to employees, including grants of employee stock options, as required under SFAS No. 123 (revised 2004), "Share-Based Payment" (FAS 123R). Restructuring charges consist of severance and benefits, excess facilities and asset-related charges, and also include strategic reallocations or reductions of personnel resources. Intangible assets consist primarily of purchased technology, trade names, customer relationships, employment agreements and other intangible assets issued in connection with acquisitions. Cumulative effect of change in accounting principle consists of a one-time benefit relating to the adoption of FAS 123R. Management does not consider these expenses to be part of core operating performance.

For purposes of comparability across other periods and against other companies in the company’s industry, the company reports non-GAAP net income (loss) as adjusted by the amount of additional taxes or tax benefit that the company would accrue using a normalized effective tax rate applied to the non-GAAP results.

Non-GAAP net income (loss) and non-GAAP operating income (loss) are supplemental measures of our performance that are not required by, nor presented in accordance with, GAAP. Moreover, they should not be considered as an alternative to net income, operating income, or any other performance measure derived in accordance with GAAP, or as an alternative to cash flow from operating activities or as a measure of the company’s liquidity. The company presents non-GAAP net income (loss) and non-GAAP operating income (loss) because the company considers them to be important supplemental measures of the company’s performance.

Management excludes from its non-GAAP net income (loss) and non-GAAP operating income (loss) certain recurring items to facilitate its review of the comparability of the company's core operating performance on a period to period basis because such items are not related to the company's ongoing core operating performance as viewed by management. Management uses non-GAAP earnings per share as one of the components for measurement of incentive compensation. Management uses this view of the company’s operating performance for purposes of comparison with its business plan and individual operating budgets and allocations of resources. Additionally, when evaluating potential acquisitions, management excludes the items described above from its consideration of target performance and valuation. More specifically, management adjusts for the following excluded items:

a) stock-based compensation expense;

b) restructuring charges;

c) amortization charges for purchased technology and other intangible assets resulting from the company's acquisition transactions;

d) cumulative effect on change in accounting principle;

e) valuation allowance for deferred tax assets.

Management adjusts for the excluded items because management believes that, in general, these items possess one or more of the following characteristics: their magnitude and timing is largely outside of the company's control; they are unrelated to the ongoing operation of the business in the ordinary course; they are unusual and the company does not expect them to occur in the ordinary course of business; or they are non-operational, or non-cash expenses involving stock option grants.

iPass believes that the presentation of these non-GAAP financial measures is warranted for several reasons:

1) Such non-GAAP financial measures provide an additional analytical tool for understanding the company's financial performance by excluding the impact of items which may obscure trends in the core operating performance of the business;

2) Since the company has historically reported non-GAAP results to the investment community, the company believes the inclusion of non-GAAP numbers provides consistency and enhances investors' ability to compare the company's performance across financial reporting periods;

3) These non-GAAP financial measures are employed by the company's management in its own evaluation of performance and are utilized in financial and operational decision making processes, such as budget planning and forecasting;

4) These non-GAAP financial measures facilitate comparisons to the operating results of other companies in the company’s industry, which use similar financial measures to supplement their GAAP results, thus enhancing the perspective of investors who wish to utilize such comparisons in their analysis of the company's performance.

Set forth below are additional reasons why specific items are excluded from the company's non-GAAP financial measures:

a) While stock-based compensation calculated in accordance with FAS 123R constitutes an ongoing and recurring expense of the company, it is not an expense that typically requires or will require cash settlement by the company. The company therefore excludes these charges for purposes of evaluating core performance as well as with respect to evaluating any potential acquisition.

b) Restructuring charges are primarily related to severance costs and/or the disposition of excess facilities driven by modifications of business strategy. These costs are excluded because they are inherently variable in size, and are not specifically included in the company's annual operating plan and related budget due to the rapidly changing facts and circumstances typically associated with such modifications of business strategy;

c) Amortization charges for purchased technology and other intangible assets are excluded because they are inconsistent in amount and frequency and are significantly impacted by the timing and magnitude of the company's acquisition transactions. The company analyzes and measures the company’s operating results without these charges when evaluating the company’s core performance. Generally, the impact of these charges to the company's net income (loss) tends to diminish over time following an acquisition;

d) Cumulative effect on change in accounting principle is excluded because it is inconsistent in amount and frequency. iPass analyzes and measures operating results without this charge when evaluating core performance;

e) Valuation allowance for deferred tax assets is excluded because it is inconsistent in amount and frequency. iPass analyzes and measures operating results without this charge when evaluating core performance. The charge is not an expense that typically requires or will require cash settlement by the company;

f) Income tax expense (benefit) is adjusted in the non-GAAP tax-effected numbers by the amount of additional expense or benefit that the company would accrue if non-GAAP results were used instead of GAAP results in the calculation of tax liability, taking into consideration the company's long-term tax structure.

In the future, the company expects to continue reporting non-GAAP financial measures on a tax-effected basis excluding items described above and the company expects to continue to incur expenses similar to the non-GAAP adjustments described above. Accordingly, exclusion of these and other similar items in the company’s non-GAAP presentation should not be construed as an inference that these costs are unusual, infrequent or non-recurring.

As stated above, the company presents non-GAAP financial measures because it considers them to be important supplemental measures of performance. However, non-GAAP financial measures have limitations as an analytical tool and should not be considered in isolation or as a substitute for the company's GAAP results. In the future, the company expects to incur expenses similar to the non-GAAP adjustments described above and expects to continue reporting non-GAAP financial measures excluding such items. Some of the limitations in relying on non-GAAP financial measures are:

    - --  The company's stock option and stock purchase plans are important components of incentive compensation arrangements and will be reflected as expenses in the company’s GAAP results for the foreseeable future under FAS 123R.

    - -- Amortization of intangibles, though not directly affecting iPass’ current cash position, represents the loss in value as the technology in the company’s industry evolves, is advanced or is replaced over time. The expense associated with this loss in value is not included in the non-GAAP net income (loss) presentation and therefore does not reflect the full economic effect of the ongoing cost of maintaining the company’s current technological position in the company’s competitive industry which is addressed through the company’s research and development program.

    - -- Other companies, including other companies in iPass’ industry, may calculate non-GAAP financial measures differently than the company, limiting their usefulness as a comparative measure.

Pursuant to the requirements of SEC Regulation G, a detailed reconciliation between the company's GAAP and non-GAAP financial results is provided in this press release. Investors are advised to carefully review and consider this information strictly as a supplement to the GAAP results that are contained in this press release and in the company's SEC filings.

The reconciliation of non-GAAP financial measures set forth in this press release for the second quarter of 2008 and 2007 is set forth in the financial statements at the end of this press release. 

The reconciliation between GAAP and non-GAAP operating income (loss) for the first quarter of 2008 is as follows (in thousands):

GAAP operating income (loss)	$	(2,200	)
(a)  FAS 123R stock-based compensation		1,345
(b)  Restructuring charges		4
(c)  Amortization of intangibles		1,050
Non-GAAP operating income (loss)	$	199

The reconciliation between GAAP and non-GAAP net income (loss) for the first quarter of 2008 on a tax-effected basis is as follows (in thousands):

GAAP net income (loss)	$	(1,375	)
(a)  FAS 123R stock-based compensation		1,345
(b)  Restructuring charges		4
(c)  Amortization of intangibles		1,050
Non-GAAP net income (loss)	$	1,026

A reconciliation between GAAP and non-GAAP diluted net income (loss) per share for the first quarter of 2008 on a tax-effected basis is as follows:

GAAP diluted net income (loss) per share	$	(0.02	)
(a)  Per share effect of FAS 123R stock-based compensation, restructuring charges and amortization of intangibles	$	0.04
Non-GAAP diluted net income (loss) per share	$	0.02

Other non-GAAP financial measures set forth in the financial statements are reconciled following those statements.

About iPass Inc.

iPass helps enterprises unify the management of remote and mobile connectivity and devices. With iPass software and services, customers can create easy-to-use broadband solutions for their mobile workers, home offices and branch and retail locations, complete with device management, security validation and unified billing. iPass offerings are powered by its leading global virtual network, on-demand management platform, and award-winning client software. The iPass global virtual network unifies hundreds of wireless, broadband and dial-up providers in over 160 countries.  Hundreds of Global 2000 companies rely on iPass services, including General Motors, Nokia, and Reuters. Founded in 1996, iPass is headquartered in Redwood Shores, Calif., with offices throughout North America, Europe and Asia. For more information, visit www.ipass.com.

NOTE:  iPass(R) is a registered trademark of iPass Inc.

CONTACT:

Investor Relations

ir@iPass.com

650-232-4113

iPASS INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited, in thousands, except share and per share amounts)

	Three Months Ended June 30,						Six Months Ended June 30,
	2008			2007			2008			2007
Revenues	$	48,616		$	47,597		$	96,728		$	94,485
Operating expenses (a)
Network access		20,941			17,273			41,441			33,543
Network operations		8,725			8,783			17,399			16,981
Research and development		3,988			5,438			8,443			10,895
Sales and marketing		10,371			13,868			20,680			27,294
General and administrative		5,805			5,059			11,124			10,818
Restructuring Charges (b)		26			(169	)		30			(152	)
Amortization of intangibles (c)		1,050			1,050			2,100			2,100
Total operating expenses		50,906			51,302			101,217			101,479
Operating loss		(2,290	)		(3,705	)		(4,489	)		(6,994	)
Other income, net		367			851			956			1,600
Loss before income taxes		(1,923	)		(2,854	)		(3,533	)		(5,394	)
Benefit from income taxes		(478	)		(541	)		(715	)		(2,623	)
Net loss	$	(1,445	)	$	(2,313	)	$	(2,818	)	$	(2,771	)
Net loss per share:
Basic	$	(0.02	)	$	(0.04	)	$	(0.05	)	$	(0.04	)
Diluted	$	(0.02	)	$	(0.04	)	$	(0.05	)	$	(0.04	)
Number of shares used in per share calculations:
Basic		61,539,722			63,097,688			61,305,563			63,333,332
Diluted		61,539,722			63,097,688			61,305,563			63,333,332
Non-GAAP Diluted Shares		62,064,195			63,097,688			61,949,167			64,555,418

(a) FAS 123(R) stock-based compensation and amortization of deferred stock-based compensation included  in the expense line items:
Network operations		285			258		558		393
Research and development		41			327		230		601
Sales and marketing		(176	)		527		161		769
General and administrative		941			655		1,487		1,201
Total amortization of stock-based compensation	$	1,091		$	1,767	$	2,436	$	2,964

A reconciliation between operating loss on a GAAP basis and non-GAAP operating income (loss) is as follows:
GAAP operating loss	$	(2,290	)	$	(3,705	)	$	(4,489	)	$	(6,994	)
(a) Amortization of stock-based compensation		1,091			1,767			2,436			2,964
(b) Restructuring charges		26			(169	)		30			(152	)
(c) Amortization of intangibles		1,050			1,050			2,100			2,100
Non-GAAP operating income (loss)	$	(123	)	$	(1,057	)	$	77		$	(2,082	)

A reconciliation between net loss on a GAAP basis and non-GAAP net income (loss), net of tax effect, is as follows:
GAAP net loss	$	(1,445	)	$	(2,313	)	$	(2,818	)	$	(2,771	)
(a) Amortization of stock-based compensation		1,091			1,767			2,436			2,964
(b) Restructuring charges		26			(169	)		30			(152	)
(c) Amortization of intangibles		1,050			1,050			2,100			2,100
(1) Provision for income taxes		-			(391	)		-			(1,913	)
Non-GAAP net income (loss)	$	722		$	(56	)	$	1,748		$	228

A reconciliation between diluted net loss per share on a GAAP basis and non-GAAP diluted net income (loss) per share, net of tax effect, is as follows:
GAAP diluted net loss per share	$	(0.02	)	$	(0.04	)	$	(0.05	)	$	(0.04	)
Per share effect of FAS 123(R) stock-based compensation, restructuring charges, amortization of intangibles, and provision for income taxes.		0.03			0.04			0.08			0.04
Non-GAAP diluted net income (loss) per share	$	0.01		$	(0.00	)	$	0.03		$	0.00

(1) The estimated non-GAAP effective tax rate was 0% for the three and six months ended June 30, 2008, due to the establishment of a full valuation allowance on deferred tax assets. The estimated non-GAAP effective tax rate was (19)% and (49)% for the three and six months ended June 30, 2007, respectively and has been used to adjust the benefit from income taxes for non-GAAP purposes.

iPASS INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(In thousands)

	June 30, 2008			December 31, 2007
Assets
Current assets:
Cash and cash equivalents	$	52,130		$	70,907
Short-term investments		17,564			4,258
Accounts receivable, net		37,911			35,938
Prepaid expenses and other current assets		6,888			7,116
Short-term deferred income tax assets		575			575
Total current assets		115,068			118,794
Property and equipment, net		9,739			9,272
Other assets		6,305			4,876
Acquired intangibles, net		7,404			9,504
Goodwill		79,543			79,543
Total assets	$	218,059		$	221,989
Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable	$	19,152		$	15,923
Accrued liabilities		13,235			15,788
Short-term deferred revenue		5,749			6,606
Total current liabilities		38,136			38,317
Deferred tax liability-long term		575			575
Long-term deferred revenue		1,723			949
Other long-term liabilities		644			1,040
Total liabilities	$	41,078		$	40,881
Stockholders' equity:
Common stock		63			62
Additional paid-in capital		240,422			241,703
Accumulated other comprehensive income		(14	)		15
Accumulated deficit		(63,490	)		(60,672	)
Total stockholders' equity		176,981			181,108
Total liabilities and stockholders' equity	$	218,059		$	221,989