8-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 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): December 16, 2015

REACHLOCAL, INC.

(Exact name of Registrant as specified in its charter)

Delaware	001-34749	20-0498783
(State or other jurisdiction of incorporation)	(Commission File No.)	(I.R.S. Employer Identification No.)

21700 Oxnard Street, Suite 1600, Woodland Hills, California	91367
(Address of principal executive offices)	(Zip Code)

Registrant’s telephone number, including area code: (818) 274-0260

Not Applicable

(Former name or former address if changed since last report)

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:

☐ 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))

Item 1.01 Entry into a Material Definitive Agreement.

Amendment to Hercules Term Loan Agreement

On December 17, 2015, ReachLocal, Inc., and certain of its affiliates entered into a Third Amendment to Loan and Security Agreement with Hercules Technology Growth Capital, Inc. (“Hercules”), as administrative agent and lender. The loan amendment amends the Loan and Security Agreement, dated April 30, 2015, among the parties to, among other things, reduce the amount of cash and cash equivalents ReachLocal must maintain in North America from $17.5 million to $15.0 million, while preserving its ability to further lower the minimum cash requirement to $12.5 million if it achieves certain EBITDA levels described in the Loan Agreement.

The above description of the Third Amendment to Loan and Security Agreement is qualified in its entirety by reference to that agreement, a copy of which will be filed as an exhibit to ReachLocal’s next Annual Report on Form 10-K.

4.00% Convertible Secured Subordinated Notes

The information set forth in Item 2.03 of this Current Report on Form 8-K is incorporated herein by reference in this Item 1.01.

Item 2.02 Results of Operations and Financial Condition.

The information set forth in Item 8.01 of this Current Report on Form 8-K is incorporated herein by reference in this Item 2.02. For the nine months ended September 30, 2015, ReachLocal reported revenues of $20.2 million and an Adjusted EBITDA loss of $1.8 million attributable to our operations in the U.K. The U.K. exit is expected to have an immaterial impact on Adjusted EBITDA in the fourth quarter. A reconciliation table showing ReachLocal’s historical pro forma performance excluding the U.K. for 2014 and the first three quarters of 2015 is attached hereto as Exhibit 99.2.

The information under this Item 2.02 and in Exhibit 99.2 will not be deemed to be “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, and is not incorporated by reference into any filing with the Securities and Exchange Commission, whether made before, on or after the date hereof, regardless of any general incorporation language in such filing.

Item 2.03 Creation of a Direct Financial Obligation or an Obligation under an Off-Balance Sheet Arrangement of a Registrant.

4.00% Convertible Secured Subordinated Notes

On December 17, 2015, ReachLocal issued $5 million aggregate principal amount of its 4.00% Convertible Secured Subordinated Notes (the “Convertible Notes”) for cash in an amount equal to their principal amount pursuant to the terms of a note purchase agreement also dated December 17, 2015 among ReachLocal and certain affiliates of VantagePoint Capital Partners (“VantagePoint”). The note purchase agreement also provides for the issuance and sale of up to an additional $5 million aggregate principal amount of Convertible Notes, upon mutual agreement of ReachLocal and VantagePoint. VantagePoint and its affiliates beneficially own approximately 45% of ReachLocal’s common stock immediately after the issuance of $5 million principal amount of the Convertible Notes, and Alan Salzman, VantagePoint’s Chief Executive Officer and Managing Partner, is a member of ReachLocal’s Board of Directors.

The Convertible Notes bear interest at 4% per annum. ReachLocal is required to begin making quarterly interest and principal payments on April 15, 2017, subject to a subordination agreement with Hercules. The Convertible Notes mature on April 15, 2018, and all principal and unpaid interest is due at that time. The holders of the Convertible Notes have the right to convert any portion of their Convertible Notes into shares of ReachLocal common stock, par value $0.00001 per share, at an initial conversion rate of 200.0000 shares of common stock per $1,000 principal amount of Convertible Notes (which represents an initial conversion price of $5.00 per share), subject to adjustment. The conversion rate is subject to customary anti-dilution adjustments for stock dividends, splits and combinations, certain distributions on the common stock, including cash dividends, spin-offs and certain tender or exchange offers for the common stock.

The Convertible Notes include events of default, including any event of default under the Loan and Security Agreement with Hercules. In the event ReachLocal undergoes a change in control, all outstanding principal and interest will become payable immediately prior to such transaction.

The above description of the Convertible Notes and the note purchase agreement is qualified in its entirety by reference to those agreements, copies of which will be filed as an exhibit to ReachLocal’s next Annual Report on Form 10-K.

Amendment to Hercules Term Loan Agreement

The information set forth in Item 1.01 of this Current Report on Form 8-K is incorporated herein by reference in this Item 2.03.

Item 3.01 Notice of Delisting or Failure to Satisfy a Continued Listing Rule or Standard; Transfer of Listing.

On December 17, 2015, ReachLocal received a letter from the NASDAQ indicating that over the 30 business day period ended December 16, 2015, ReachLocal’s common stock failed to comply with the minimum public float requirement, as required by Nasdaq Rule 5450(b)(3)(c). A minimum public float of $15 million is required. Public float is defined as the closing bid price for the company’s shares, multiplied by the number of outstanding shares held by persons other than its directors, its officers and holders of 10% or more of outstanding shares.

As provided in the NASDAQ rules, ReachLocal has 180 calendar days, or until June 14, 2016, to regain compliance or its common stock would be subject to delisting. Based on the December 16, 2015 closing price of $1.00 per share, ReachLocal had a public float, so defined, of approximately $10 million. Based on ReachLocal’s current directors, officers and holders of 10% stockholders, to regain compliance the closing bid price would need to equal or exceed approximately $1.56 per share for 10 consecutive trading days prior to June 17, 2016. There can be no assurance as to the price(s) at which ReachLocal’s stock may trade.

The letter does not impact ReachLocal’s listing on the Nasdaq Global Select Market at this time and ReachLocal’s common stock will continue to trade under the symbol “RLOC.” ReachLocal will continue to monitor the closing bid price of its common stock and is considering several alternatives that could be taken to maintain a listing of its common stock in the event it does not regain compliance by June 14, 2016.

Item 3.02 Unregistered Sales of Equity Securities.

The information set forth in Item 2.03 of this Current Report on Form 8-K is incorporated herein by reference in this Item 3.02. The offer and sale of the Convertible Notes are exempt from the registration requirements of the Securities Act of 1933, as amended (the “Securities Act”), pursuant to Section 4(a)(2) of the Securities Act as an offer and sale not involving a public offering.

Item 7.01 Regulation FD Disclosure.

On December 18, 2015, ReachLocal publicly disseminated a press release announcing a series of strategic actions, including the items otherwise described herein, updating its fourth quarter 2015 outlook and providing an initial outlook for Adjusted EBITDA for 2016.

A copy of the press release is attached hereto as Exhibit 99.1 and incorporated herein by reference. The information under this Item 7.01 and in Exhibit 99.1 will not be deemed to be “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, and is not incorporated by reference into any filing with the Securities and Exchange Commission, whether made before, on or after the date hereof, regardless of any general incorporation language in such filing.

Item 8.01 Other Events.

On December 18, 2015, ReachLocal publicly disseminated a press release announcing, among other things, its decision to exit the U.K. market, consistent with its previously stated strategy of focusing only on markets with the potential for positive, sustainable economics and contribution margin. ReachLocal’s U.K. subsidiary, ReachLocal UK Limited, entered administration on December 16, 2015, to allow for an orderly exit from the market.

A copy of the press release is attached hereto as Exhibit 99.1.

Item 9.01 Financial Statements and Exhibits.

(d)     Exhibits

Exhibit No.	Description of Exhibit
99.1	Press Release dated December 18, 2015
99.2	Supplemental Financial Information

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.

Date: December 18, 2015	REACHLOCAL, INC.
	By:	/s/Ross G. Landsbaum
	Name:	Ross G. Landsbaum
	Title:	Chief Financial Officer

EX-99.1

Exhibit 99.1

ReachLocal Announces Strategic Actions to Improve Adjusted EBITDA and Enhance Liquidity

Raises Fourth Quarter Adjusted EBITDA Outlook and Provides Initial Outlook for 2016

WOODLAND HILLS, Calif., Dec. 18, 2015 -- ReachLocal, Inc. (RLOC), a leader in powering online marketing for local businesses, today raised its outlook for fourth quarter 2015 Adjusted EBITDA and announced a series of strategic actions to improve Adjusted EBITDA and its liquidity position in order to provide a foundation for future growth. The Company:

● Entered into a new financing agreement with affiliates of VantagePoint Capital Partners and amended its existing agreement with Hercules Technology Growth Capital to provide additional liquidity.

● Estimates that operating expenses for 2015 will be approximately 25% lower than 2014 levels, and that additional already-implemented and planned efficiency programs will further reduce operating expenses in 2016 by at least 15% over 2015 levels.

● Revised terms with its key publishers to improve its ability to earn performance bonuses following up on winning top honors with Google's Innovator Award for its ReachEdge™ solution and winning Google's Quality Score Champion Award for North America and LATAM.

● Exited direct sales in the UK market in line with its goal of eliminating unprofitable revenues.

“We have taken a number of proactive, strategic steps to reduce costs and improve our cash position and are pleased to raise our Adjusted EBITDA outlook for the fourth quarter and provide an initial view of our Adjusted EBITDA for next year,” said Sharon Rowlands, ReachLocal’s Chief Executive Officer. “One of our goals for 2015 was to progressively improve Adjusted EBITDA throughout the year, and today’s upward revision is evidence that we are moving in the right direction. Our revised outlook is driven primarily by more aggressive expense management and business optimization initiatives and incremental upside expected from recently revised publisher rebate agreements.”

Financing Agreements

ReachLocal has entered into a $10 million financing arrangement with affiliates of its largest shareholder, VantagePoint Capital Partners, for the immediate issuance of $5 million of Convertible Secured Subordinated Notes and the possibility of an additional $5 million of notes to be issued upon mutual agreement. The notes bear interest at a rate of 4 percent, mature in April 2018 and may be converted into ReachLocal common stock at a conversion price of $5 per share at the holder’s option.

“VantagePoint Capital Partners is pleased to provide this facility. Based on our analysis, the $5 million we are providing today, together with the company’s other resources, provides sufficient liquidity to fully support the company's 2016 operating plan,” said VantagePoint CEO Alan Salzman. “We have confidence that the ReachLocal management team has implemented the right strategic, cost-cutting, and operational steps so that the company can focus on enhancing Adjusted EBITDA and increasing shareholder value during 2016.”

In addition, Hercules Technology Growth Capital has agreed to reduce the amount of restricted cash required by the Hercules term loan from $17.5 million to $15.0 million. The amended loan agreement with Hercules also provides that the restricted cash will be reduced to $12.5 million as soon as May 2016 if ReachLocal achieves certain profitability targets as provided in the Hercules term loan.

ReachLocal anticipates ending 2015 with cash, cash equivalents and restricted cash of at least $30 million, including $15 million of restricted cash under the Hercules loan agreement.

Operating Expenses

As discussed on its quarterly earnings calls, throughout 2015 ReachLocal has implemented a number of actions designed to lower operating expenses and promote operating efficiencies. ReachLocal now estimates that these programs will result in an expected 25% decrease in 2015 operating expenses compared to 2014. Additional cost-focused activities already implemented should result in a further reduction of at least 15% in 2016 operating expenses below 2015 levels.

Publisher Agreements and Awards

ReachLocal has also agreed to revised terms with key publishers to give it the ability to optimize media costs through improved performance bonuses.

As previously announced, ReachLocal won Google's Innovator Award for its ReachEdge™ Solution awarded to the Premier SMB Partner delivering outstanding technology innovations in their digital advertising solutions. The Company also won Google's Quality Score Champion Award for North America and LATAM. This prestigious award recognizes the Premier SMB Partner with the highest average AdWords Quality Score during the judging period, indicating the superior quality of ReachSearch technology and ReachLocal’s service platform.

Exit from Direct Sales in the U.K. Market

ReachLocal has decided to exit from direct sales in the U.K. market, consistent with its previously stated strategy of focusing only on markets with the potential for positive, sustainable economics and contribution margin. For the nine months ended September 30, 2015, ReachLocal reported revenues of $20.2 million and an Adjusted EBITDA loss of $1.8 million attributable to operations in the UK. The impact of the transaction to exit the UK will have an immaterial impact on Adjusted EBITDA in the fourth quarter. A reconciliation table showing historical pro forma performance of excluding the UK for 2014 and the first three quarters of 2015 will be posted on ReachLocal’s investor relations site.

Business Outlook

The actions detailed above enable ReachLocal to:

- Raise its Adjusted EBITDA guidance for the fourth quarter of 2015 to the range of $2.4 million to $3.0 million, up from the prior range of $0.8 million to $1.4 million. The Company’s prior revenue outlook of $88 million to $92 million for the fourth quarter of 2015 is unchanged.

- ReachLocal anticipates ending 2015 with cash, cash equivalents and restricted cash of at least $30 million, including $15 million of restricted cash under the Hercules loan agreement.

- Provide an initial outlook for Adjusted EBITDA of $15 to $17 million for the full year 2016.

“Taken together, these strategic actions improve our financial position and substantially increase our liquidity as we work to return ReachLocal to growth.   We are comfortable that we have the liquidity to achieve our plans and have strong confidence in getting to cash flow positive in the second half of 2016. Our confidence in our business, leading edge technology and superior service is supported by our three recent awards from Google – Quality Score Champion in North America and Latin America and the Innovator Award for Canada. ReachLocal has made great strides in improving client experience and expanding our software solutions during 2015 and we expect to continue these trends in 2016,” concluded Rowlands.

About ReachLocal, Inc.

ReachLocal, Inc. (RLOC) helps local businesses grow and operate their business better with leading technology and expert service for our clients’ lead generation and conversion. ReachLocal is headquartered in Woodland Hills, Calif. and operates in four regions: Asia-Pacific, Europe, Latin America and North America.

For more information please visit ReachLocal at www.reachlocal.com, follow us at www.reachlocal.com/social or email info@reachlocal.com.

Use of Non-GAAP Measures

ReachLocal management evaluates and makes operating decisions using various financial and operational metrics. In addition to the Company's GAAP results, management also considers non-GAAP measures including Adjusted EBITDA. Management believes that these non-GAAP measures provide useful information about the Company's core operating results and thus are appropriate to enhance the overall understanding of the Company's past financial performance and its prospects for the future. Adjusted EBITDA is defined as net income (loss) from continuing operations before interest, income taxes, depreciation and amortization expenses, excluding, when applicable, stock-based compensation, the effects of accounting for business combinations (including any impairment of acquired intangibles and goodwill), restructuring charges, and other non-operating income or expense. Non-GAAP measures, while having utility, also have limitations as an analytical tool, and should not be considered in isolation or as a substitute for analysis of the Company's results as reported under GAAP. Some of these limitations are:

● Adjusted EBITDA does not reflect the Company’s cash expenditures for capital equipment or other contractual commitments;

● Although depreciation and amortization are non-cash charges, the assets being depreciated and amortized may have to be replaced in the future, and Adjusted EBITDA does not reflect capital expenditure requirements for such replacements;

● Adjusted EBITDA does not reflect changes in, or cash requirements for, the Company’s working capital needs;

● Adjusted EBITDA does not consider the potentially dilutive impact of issuing equity-based compensation to the Company’s management and other employees;

● Adjusted EBITDA does not reflect the potentially significant interest expense or the cash requirements necessary to service interest or principal payments on indebtedness that the Company may incur in the future;

● Adjusted EBITDA does not reflect income and expense items that relate to the Company’s financing and investing activities, any of which could significantly affect the Company’s results of operations or be a significant use of cash;

● Adjusted EBITDA does not reflect costs or expenses associated with accounting for business combinations; and

● Adjusted EBITDA does not reflect certain tax payments that may represent a reduction in cash available to the Company.

Other companies, including companies in the same industry, calculate Adjusted EBITDA measures differently, which reduces their usefulness as a comparative measure.

Adjusted EBITDA is not intended to replace operating income (loss), net income (loss) and other measures of financial performance reported in accordance with GAAP. Rather, Adjusted EBITDA is a measure of operating performance that may be considered in addition to those measures. Because of these limitations, Adjusted EBITDA should not be considered as a measure of discretionary cash available to the Company to invest in the growth of the business.

Caution Concerning Forward-Looking Statements

Statements in this press release regarding the Company’s outlook for future periods and the quotes from management constitute “forward-looking” statements within the meaning of the Securities Exchange Act of 1934. These statements reflect the Company’s current views about future events and involve known and unknown risks, uncertainties and other factors that may cause our actual results, levels of activity, performance or achievement to materially differ from those expressed or implied by the forward-looking statements. Actual events or results could differ materially from those expressed or implied by these forward-looking statements as a result of various factors, including: (i) the Company’s ability to increase productivity of its sales operations; (ii) the Company’s ability to obtain the cost savings contemplated by its cost reduction initiatives and maintain sufficient liquidity; (iii) the Company’s ability to purchase media and receive rebates from Google, Yahoo! and Microsoft under commercially reasonable terms; (iv) the Company’s ability to recruit, train and retain its salespeople; (v) the Company’s ability to attract and retain customers and compete with a wide range of competitors on both price and product offerings; (vi) the Company’s ability to satisfy the covenants under its various financing arrangements, some which have required amendments in the past; (vii) the Company’s ability to manage its international operations; (viii) the Company’s ability to successfully develop and offer new products and services in the highly competitive online advertising industry; (ix) the impact of worldwide economic conditions, including the resulting effect on advertising budgets; and (x) the Company’s ability to comply with government regulation affecting our business, including regulations or policies governing consumer privacy. More information about these factors and other potential factors that could affect the Company's business and financial results is contained in its Annual Report on Form 10-K, Quarterly Reports on Form 10-Q, and Current Reports on Form 8-K. The Company does not intend, and undertakes no duty, to update this information to reflect future events or circumstances.

Investor Relations: Alex Wellins The Blueshirt Group (415) 217-5861 alex@blueshirtgroup.com Media Contact:
Amber Seikaly 
Vice President Corporate Communications
(214) 294-0242
amber.seikaly@reachlocal.com

EX-99.2

Exhibit 99.2

REACHLOCAL, INC.

UNAUDITED RECONCILIATION OF PRO-FORMA FINANCIAL INFORMATION EXCLUDING THE UNITED KINGDOM

(in thousands)

	Three Months Ended									Three Months Ended
	March 31, 2015									March 31, 2014
	As Reported			United Kingdom			Pro-Forma			As Reported		United Kingdom		Pro-Forma
Revenue by Channel (North America) (1):
Direct Local	$	45,926			-		$	45,926		$	56,264		-	$	56,264
National Brands, Agencies and Resellers (NBAR)		17,573			-			17,573			20,824		-		20,824
Revenue by Channel (International):
Direct Local		32,809			6,496			26,313			42,303		10,432		31,871
National Brands, Agencies and Resellers (NBAR)		3,255			294			2,961			5,345		818		4,527
Consolidated Revenue	$	99,563			6,790		$	92,773		$	124,736		11,250	$	113,486
Consolidated Adjusted EBITDA (2)	$	(3,785	)		(1,913	)	$	(1,872	)	$	2,261		905	$	1,356

	Three Months Ended							Three Months Ended
	June 30, 2015							June 30, 2014
	As Reported		United Kingdom			Pro-Forma		As Reported			United Kingdom			Pro-Forma
Revenue by Channel (North America) (1):
Direct Local	$	46,189		-		$	46,189	$	54,944			-		$	54,944
National Brands, Agencies and Resellers (NBAR)		17,787		-			17,787		22,024			-			22,024
Revenue by Channel (International):
Direct Local		31,085		6,380			24,705		42,218			8,215			34,003
National Brands, Agencies and Resellers (NBAR)		3,715		187			3,528		4,367			683			3,684
Consolidated Revenue	$	98,776		6,567		$	92,209	$	123,553			8,898		$	114,655
Consolidated Adjusted EBITDA (2)	$	715		(22	)	$	737	$	(1,904	)		(1,753	)	$	(151	)

	Three Months Ended						Three Months Ended
	September 30, 2015						September 30, 2014
	As Reported		United Kingdom		Pro-Forma		As Reported			United Kingdom			Pro-Forma
Revenue by Channel (North America) (1):
Direct Local	$	45,007		-	$	45,007	$	49,842			-		$	49,842
National Brands, Agencies and Resellers (NBAR)		17,276		-		17,276		21,438			-			21,438
Revenue by Channel (International):
Direct Local		28,580		6,703		21,877		42,072			8,177			33,895
National Brands, Agencies and Resellers (NBAR)		4,419		161		4,258		4,271			530			3,741
Consolidated Revenue	$	95,282		6,864	$	88,418	$	117,623			8,707		$	108,916
Consolidated Adjusted EBITDA (2)	$	1,629		32	$	1,597	$	(3,843	)		(559	)	$	(3,284	)

	Three Months Ended
	December 31, 2014
	As Reported			United Kingdom			Pro-Forma
Revenue by Channel (North America) (1):
Direct Local	$	47,408			-		$	47,408
National Brands, Agencies and Resellers (NBAR)		20,351			-			20,351
Revenue by Channel (International):
Direct Local		37,771			7,226			30,545
National Brands, Agencies and Resellers (NBAR)		3,479			360			3,119
Consolidated Revenue	$	109,009			7,586		$	101,423
Consolidated Adjusted EBITDA (2)	$	(5,924	)		(1,521	)	$	(4,403	)

	Nine Months Ended								Nine Months Ended
	September 30, 2015								September 30, 2014
	As Reported			United Kingdom			Pro-Forma		As Reported			United Kingdom			Pro-Forma
Revenue by Channel (North America) (1):
Direct Local	$	137,118			-		$	137,118	$	161,050			-		$	161,050
National Brands, Agencies and Resellers (NBAR)		52,639			-			52,639		64,286			-			64,286
Revenue by Channel (International):
Direct Local		92,474			19,578			72,896		126,593			26,824			99,769
National Brands, Agencies and Resellers (NBAR)		11,389			642			10,747		13,983			2,031			11,952
Consolidated Revenue	$	293,620			20,220		$	273,400	$	365,912			28,855		$	337,057
Consolidated Adjusted EBITDA (2)	$	(1,442	)		(1,903	)	$	461	$	(3,486	)		(1,407	)	$	(2,079	)

(1) North America includes the United States and Canada. International includes all other countries.

(2) Adjusted EBITDA is defined as net income (loss) from continuing operations before interest, income taxes, depreciation and amortization expenses, excluding, when applicable, stock-based compensation, the effects of accounting for business combinations (including any impairment of acquired intangibles and goodwill), restructuring charges, and other non-operating income or expense.

REACHLOCAL, INC.

UNAUDITED RECONCILIATION OF PRO-FORMA FINANCIAL INFORMATION EXCLUDING THE UNITED KINGDOM

(in thousands)

	Three Months Ended									Three Months Ended
	March 31, 2015									March 31, 2014
	As Reported			United Kingdom			Pro-Forma			As Reported			United Kingdom		Pro-Forma
Operating loss	$	(12,527	)		(1,973	)	$	(10,554	)	$	(8,369	)		828	$	(9,197	)
Add:								-								-
Depreciation and amortization		5,134			60			5,074			4,222			77		4,145
Stock-based compensation		2,146			-			2,146			4,571			-		4,571
Acquisition and integration costs		7			-			7			14			-		14
Restructuring charges		1,455			-			1,455			1,823			-		1,823
Adjusted EBITDA (1)	$	(3,785	)		(1,913	)	$	(1,872	)	$	2,261			905	$	1,356

	Three Months Ended									Three Months Ended
	June 30, 2015									June 30, 2014
	As Reported			United Kingdom			Pro-Forma			As Reported			United Kingdom			Pro-Forma
Operating loss	$	(9,785	)		(174	)	$	(9,611	)	$	(11,626	)		(1,828	)	$	(9,798	)
Add:								-									-
Depreciation and amortization		5,149			58			5,091			4,018			75			3,943
Stock-based compensation		2,214			-			2,214			3,476			-			3,476
Acquisition and integration costs		4			-			4			2			-			2
Restructuring charges		3,133			94			3,039			2,226			-			2,226
Adjusted EBITDA (1)	$	715			(22	)	$	737		$	(1,904	)		(1,753	)	$	(151	)

	Three Months Ended									Three Months Ended
	September 30, 2015									September 30, 2014
	As Reported			United Kingdom			Pro-Forma			As Reported			United Kingdom			Pro-Forma
Operating loss	$	(34,063	)		(39	)	$	(34,024	)	$	(11,457	)		(628	)	$	(10,829	)
Add:																	-
Depreciation and amortization		4,712			57			4,655			4,355			69			4,286
Stock-based compensation		2,195			-			2,195			2,671			-			2,671
Acquisition and integration costs		2			-			2			70			-			70
Restructuring charges		983			14			969			518			-			518
Impairment of goodwill		27,800			-			27,800			-			-			-
Adjusted EBITDA (1)	$	1,629			32		$	1,597		$	(3,843	)		(559	)	$	(3,284	)

	Three Months Ended
	December 31, 2014
	As Reported			United Kingdom			Pro-Forma
Operating loss	$	(14,660	)		(1,620	)	$	(13,040	)
Add:								-
Depreciation and amortization		4,799			61			4,738
Stock-based compensation		2,542			-			2,542
Acquisition and integration costs		35			-			35
Restructuring charges		1,360			38			1,322
Adjusted EBITDA (1)	$	(5,924	)		(1,521	)	$	(4,403	)

	Nine Months Ended									Nine Months Ended
	September 30, 2015									September 30, 2014
	As Reported			United Kingdom			Pro-Forma			As Reported			United Kingdom			Pro-Forma
Operating loss	$	(56,376	)		(2,186	)	$	(54,190	)	$	(31,452	)		(1,628	)	$	(29,824	)
Add:
Depreciation and amortization		14,995			175			14,820			12,595			221			12,374
Stock-based compensation		6,556			-			6,556			10,718			-			10,718
Acquisition and integration costs		12			-			12			86			-			86
Restructuring charges		5,571			108			5,463			4,567			-			4,567
Impairment of goodwill		27,800			-			27,800			-			-			-
Adjusted EBITDA (1)	$	(1,442	)		(1,903	)	$	461		$	(3,486	)		(1,407	)	$	(2,079	)

(1) Adjusted EBITDA is defined as net income (loss) from continuing operations before interest, income taxes, depreciation and amortization expenses, excluding, when applicable, stock-based compensation, the effects of accounting for business combinations (including any impairment of acquired intangibles and goodwill), restructuring charges, and other non-operating income or expense.