Delaware | 000-50327 | 93-1214598 | ||
(State or other jurisdiction of incorporation) | (Commission File Number) | (IRS Employer Identification No.) |
3800 Bridge Parkway, Redwood Shores, California | 94065 | |
(Address of principal executive offices) | (Zip Code) |
¨ | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
¨ | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
¨ | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
¨ | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
Exhibit No. | Description | |
99.1 | Press Release dated August 11, 2014, announcing iPass Inc.’s Second Quarter 2014 Financial Results. |
iPass Inc. | ||
By: | /s/ Karen Willem | |
Name: | Karen Willem | |
Title: | Senior Vice President and Chief Financial Officer | |
(Principal Financial Officer) |
Exhibit No. | Description | |
99.1 | Press Release dated August 11, 2014, announcing iPass Inc.’s Second Quarter 2014 Financial Results. |
• | Thirteenth sequential quarter of OM revenue growth since launching the product over 3 years ago. |
• | OM Wi-Fi network users grew to 80,000, a 13% increase over the prior quarter. |
• | OM active platform users grew to 753,000, an 11% increase over the prior quarter. |
• | Launched its cloud-based Business Traveler Service 2.0 utilizing a Software-as-a-Service delivery model and automation techniques, coupled with an app-based approach to simplify the end user experience. |
• | Exited the quarter with several recently signed network access supply agreements with existing vendors that significantly improve our go-forward buying terms as iPass moves to a megabyte-based purchasing model in certain markets. |
• | Given the growing proliferation of outdoor, community, residential, and small business access points and coverage zones, with this quarter we will begin reporting the total number of hotspots that our supply network covers. Our global footprint currently has access to over 13 million hotspots which includes the traditional business traveler commercial |
(unaudited; in millions) | Q2'14 | Q1'14 | ||||||
Revenue: | ||||||||
Revenue from Continuing Operations | $17.8 | $17.6 | ||||||
Revenue from Discontinued Operations (1) | 7.7 | 7.7 | ||||||
Total Revenue | $25.5 | $25.3 | ||||||
Loss from Continuing Operations (pre-tax) | ($4.7 | ) | ($6.1 | ) | ||||
Tax Benefit (primarily related to Sale of Discontinued Operations) | $4.0 | $0.2 | ||||||
GAAP Net Loss from Continuing Operations | ($0.7 | ) | ($5.9 | ) | ||||
Cash and Cash Equivalents | $41.7 | $20.1 | ||||||
Shares of Common Stock Outstanding at Period End | 64.4 | 64.4 | ||||||
Adjusted EBITDA Loss (2): | ||||||||
New presentation (with Discontinued Operations) | ($3.4 | ) | ($4.8 | ) | ||||
Old presentation(1) | ($2.5 | ) | ($4.0 | ) |
(1) | The presentation of revenue on discontinued operations and Adjusted EBITDA as calculated "old presentation" is intended only for comparison against guidance presented in the prior quarter. |
(2) | The definition of Adjusted EBITDA and the reconciliation of Non-GAAP to GAAP financial measures are discussed below. |
Total Revenue | $ 16.2 – 18.2 million |
Adjusted EBITDA Income / (Loss) (1) | $ (3.5) – (2.0) million |
(1) | A reconciliation of Adjusted EBITDA income (loss) to GAAP net loss is provided in the attached schedules. The guidance for Adjusted EBITDA income (loss) for the third quarter of 2014 does not include the impact of any foreign exchange gains or losses. |
1) | To 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) | To provide consistency and enhance investors’ ability to compare the company’s performance across financial reporting periods; and |
3) | To facilitate comparisons to the operating results of other companies in the company’s industry, which may use similar financial measures to supplement their GAAP results. |
(unaudited; in millions) | Q2'14 | Q1'14 | Q2'13 | ||||||||
Revenue: | $17.8 | $17.6 | $20.3 | ||||||||
Open Mobile | 14.4 | 13.6 | 12.0 | ||||||||
Open Mobile Enterprise: | 13.8 | 12.8 | 11.4 | ||||||||
Network | 9.7 | 8.8 | 7.4 | ||||||||
Platform | 4.1 | 4.0 | 4.0 | ||||||||
Open Mobile Exchange | 0.6 | 0.8 | 0.6 | ||||||||
Legacy iPC: | 3.4 | 4.0 | 8.3 | ||||||||
Network Gross Margin (1) | 40.0 | % | 41.7 | % | 46.4 | % | |||||
Loss from Continuing Operations (pre-tax) | ($4.7 | ) | ($6.1 | ) | ($2.6 | ) | |||||
Tax Benefit (primarily related to Sale of Discontinued Operations) | $4.0 | $0.2 | $0.4 | ||||||||
GAAP Net Loss from Continuing Operations | ($0.7 | ) | ($5.9 | ) | ($2.2 | ) | |||||
Income from discontinued Operations (pre-tax) | $0.8 | $0.7 | $1.0 | ||||||||
Gain on sale of Discontinued Operations (Pre-tax) | 25.0 | — | — | ||||||||
Tax Expense on Discontinued Operations | (4.2 | ) | (0.3 | ) | (0.4 | ) | |||||
GAAP Net Income from Discontinued Operations | $21.6 | $0.4 | $0.6 | ||||||||
GAAP Net Income (Loss) | $20.9 | ($5.5 | ) | ($1.6 | ) | ||||||
Adjusted EBITDA Loss | ($3.4 | ) | ($4.8 | ) | ($1.3 | ) | |||||
Cash and Cash Equivalents | $41.7 | $20.1 | $25.0 | ||||||||
Shares of Common Stock Outstanding at End of Period | 64.4 | 64.4 | 63.9 |
(1) | Network Gross Margin is defined as (Mobility Network Revenue less Network Access Costs) divided by Mobility Network Revenue. |
Q2'14 | Q1'14 | Q2'13 | |||
Wi-Fi Network Users | 80,000 | 71,000 | 56,000 | ||
Active Platform Users | 753,000 | 681,000 | 517,000 |
June 30, 2014 | December 31, 2013 | ||||||
Assets | |||||||
Current assets: | |||||||
Cash and cash equivalents | $ | 41,670 | $ | 24,017 | |||
Accounts receivable, net of allowance for doubtful accounts of $597 and $1,010, respectively | 14,071 | 15,297 | |||||
Prepaid expenses and other current assets | 3,181 | 4,329 | |||||
Total current assets | 58,922 | 43,643 | |||||
Property and equipment, net | 7,429 | 8,442 | |||||
Other assets | 1,041 | 2,831 | |||||
Total assets | $ | 67,392 | $ | 54,916 | |||
Liabilities and Stockholders’ Equity | |||||||
Current liabilities: | |||||||
Accounts payable | $ | 8,484 | $ | 9,334 | |||
Accrued liabilities | 10,620 | 9,100 | |||||
Deferred revenue, short-term | 302 | 3,212 | |||||
Total current liabilities | 19,406 | 21,646 | |||||
Deferred revenue, long-term | 2 | 2,191 | |||||
Vendor financed property and equipment | 1,411 | 1,586 | |||||
Other long-term liabilities | 877 | 251 | |||||
Total liabilities | $ | 21,696 | $ | 25,674 | |||
Stockholders’ equity: | |||||||
Common stock | 65 | 65 | |||||
Additional paid-in capital | 219,229 | 218,103 | |||||
Accumulated deficit | (173,598 | ) | (188,926 | ) | |||
Total stockholders’ equity | 45,696 | 29,242 | |||||
Total liabilities and stockholders’ equity | $ | 67,392 | $ | 54,916 |
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||
2014 | 2013 | 2014 | 2013 | ||||||||||||
Revenue | $ | 17,762 | $ | 20,288 | $ | 35,399 | $ | 41,197 | |||||||
Cost of revenues and operating expenses: | |||||||||||||||
Network access costs | 7,671 | 7,445 | 14,878 | 14,850 | |||||||||||
Network operations | 3,336 | 3,075 | 7,053 | 6,117 | |||||||||||
Research and development | 2,877 | 3,414 | 6,261 | 7,028 | |||||||||||
Sales and marketing | 4,212 | 3,848 | 8,777 | 8,241 | |||||||||||
General and administrative | 4,230 | 4,998 | 9,001 | 10,921 | |||||||||||
Restructuring charges and related adjustments | 16 | 26 | 30 | 626 | |||||||||||
Total cost of revenue and operating expenses | 22,342 | 22,806 | 46,000 | 47,783 | |||||||||||
Operating loss | (4,580 | ) | (2,518 | ) | (10,601 | ) | (6,586 | ) | |||||||
Interest income (expense), net | (33 | ) | 3 | (66 | ) | 7 | |||||||||
Foreign exchange losses, net | (106 | ) | (114 | ) | (177 | ) | (187 | ) | |||||||
Loss from continuing operations before income taxes | (4,719 | ) | (2,629 | ) | (10,844 | ) | (6,766 | ) | |||||||
Benefit from income taxes | 4,004 | 417 | 4,183 | 683 | |||||||||||
Net loss from continuing operations | $ | (715 | ) | $ | (2,212 | ) | $ | (6,661 | ) | $ | (6,083 | ) | |||
Net income from discontinued operations | $ | 21,592 | $ | 626 | $ | 21,989 | $ | 1,122 | |||||||
Total net income (loss) | $ | 20,877 | $ | (1,586 | ) | $ | 15,328 | $ | (4,961 | ) | |||||
Total comprehensive net income (loss) | $ | 20,877 | $ | (1,586 | ) | $ | 15,328 | $ | (4,961 | ) | |||||
Income (loss) per share - basic and diluted | |||||||||||||||
Loss from continuing operations | $ | (0.01 | ) | $ | (0.04 | ) | $ | (0.10 | ) | $ | (0.10 | ) | |||
Income from discontinued operations | $ | 0.33 | $ | 0.01 | $ | 0.34 | $ | 0.02 | |||||||
Net income (loss) per share | $ | 0.32 | $ | (0.03 | ) | $ | 0.24 | $ | (0.08 | ) | |||||
Weighted average shares outstanding - basic and diluted | $ | 64,389,365 | $ | 63,381,344 | $ | 64,405,375 | $ | 62,639,498 |
Six Months Ended | |||||||
June 30 | |||||||
2014 | 2013 | ||||||
Cash flows from operating activities: | |||||||
Net income (loss) | $ | 15,328 | $ | (4,961 | ) | ||
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities: | |||||||
Gain on sale of discontinued operations | (25,014 | ) | — | ||||
Stock-based compensation | 978 | 1,586 | |||||
Depreciation and amortization | 1,727 | 1,255 | |||||
Deferred income taxes | (6 | ) | — | ||||
Loss on disposal of property and equipment | — | 2 | |||||
Provision for (recovery of) doubtful accounts | (113 | ) | 34 | ||||
Changes in operating assets and liabilities: | |||||||
Accounts receivable | (1,249 | ) | (835 | ) | |||
Prepaid expenses and other current assets | 724 | (56 | ) | ||||
Other assets | — | 494 | |||||
Accounts payable | (446 | ) | 1,312 | ||||
Accrued liabilities | (34 | ) | 432 | ||||
Deferred revenue | (577 | ) | (624 | ) | |||
Other liabilities | 485 | (111 | ) | ||||
Net cash used in operating activities | (8,197 | ) | (1,472 | ) | |||
Cash flows from investing activities: | |||||||
Purchases of property and equipment | (886 | ) | (1,246 | ) | |||
Proceeds from sale of discontinued operations | 26,750 | — | |||||
Change in restricted cash | 100 | — | |||||
Net cash provided by (used in) investing activities | 25,964 | (1,246 | ) | ||||
Cash flows from financing activities: | |||||||
Proceeds from issuance of common stock | 149 | 912 | |||||
Principal payments for vendor financed property and equipment | (263 | ) | — | ||||
Net cash provided by (used in) financing activities | (114 | ) | 912 | ||||
Net increase (decrease) in cash and cash equivalents | 17,653 | (1,806 | ) | ||||
Cash and cash equivalents at beginning of period | 24,017 | 26,822 | |||||
Cash and cash equivalents at end of period | $ | 41,670 | $ | 25,016 | |||
Supplemental disclosures of cash flow information: | |||||||
Net cash paid for taxes | $ | 121 | $ | 150 | |||
Accrued amounts for acquisition of property and equipment | $ | 64 | $ | 26 | |||
Vendor financing of property and equipment | $ | 501 | — |
Three Months Ended | |||||||||||||
June 30, 2014 | March 31, 2014 | June 30, 2013 | |||||||||||
I | Reconciliation of Adjusted EBITDA Loss to GAAP Net Income (Loss): | ||||||||||||
Adjusted EBITDA | $ | (3,446 | ) | $ | (4,794 | ) | $ | (1,273 | ) | ||||
(a) Interest income (expenses) | (33 | ) | (33 | ) | 3 | ||||||||
(b) Income tax benefit | 4,004 | 179 | 417 | ||||||||||
(c) Depreciation of property and equipment | (838 | ) | (713 | ) | (533 | ) | |||||||
(d) Stock-based compensation | (386 | ) | (571 | ) | (800 | ) | |||||||
(e) Restructuring charges and related adjustments | (16 | ) | (14 | ) | (26 | ) | |||||||
(f) Net income from discontinued operations | 21,592 | 397 | 626 | ||||||||||
GAAP Net Income (Loss) | $ | 20,877 | $ | (5,549 | ) | $ | (1,586 | ) | |||||
Adjusted EBITDA (calculated in an accordance with prior guidance) | (2,545 | ) | (3,991 | ) | (137 | ) | |||||||
Income from discontinued operations before income taxes | (809 | ) | (697 | ) | (1,002 | ) | |||||||
Depreciation | (87 | ) | (90 | ) | (98 | ) | |||||||
Stock Based Compensation | (5 | ) | (16 | ) | (36 | ) | |||||||
Adjusted EBITDA | (3,446 | ) | (4,794 | ) | (1,273 | ) |
Q3 2014 Guidance | ||||||||||||||
II | Reconciliation of Q3 2014 Adjusted EBITDA Loss to GAAP Net Loss: | (Unaudited, in millions) | ||||||||||||
Adjusted EBITDA Loss (1) | $ | (3.5 | ) | $ | (2.0 | ) | ||||||||
(a) Income tax expense | (0.1 | ) | ||||||||||||
(b) Depreciation of property and equipment | (0.9 | ) | ||||||||||||
(c) Stock-based compensation | (0.7 | ) | ||||||||||||
(d) Restructuring | (0.7 | ) | ||||||||||||
(e) Other | 0.4 | |||||||||||||
GAAP Net Loss | $ | (5.5 | ) | $ | (4.0 | ) |
(1) | The Q3 2014 Guidance for Adjusted EBITDA loss does not include the impact of any foreign exchange gains. |
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