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) February 28, 2012
Motricity, Inc.
(Exact name of registrant as specified in its charter)
Delaware |
001-34781 |
20-1059798 |
(State or other jurisdiction of incorporation) |
(Commission File Number) | (IRS Employer Identification No.) |
601 108th Avenue Northeast Suite 800 Bellevue, WA 98004 |
|
(Address of principal executive offices and zip code) |
(425) 957-6200
(Registrants telephone number, including area code)
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.
On February 28, 2012, Motricity, Inc. (the "Company" or "Motricity") amended the terms of its $20 million term loan from High River Limited Partnership dated September 16, 2011 as amended by entering into an amended and restated promissory note (the "Term Loan") and an amended and restated security agreement. In connection with this, mCore International, Inc. and Motricity Canada Inc., two of the Company's subsidiaries, agreed to guarantee the Company's obligations under the Term Loan and Motricity Canada Inc. entered into security agreement covering certain of its assets. The Term Loan, which is secured by a first lien on substantially all of the Company's assets, accrues interest at 9% per year, which is paid-in-kind quarterly through capitalizing interest and adding it to the principal balance. The principal amount of $20.8 million reflects the capitalized interest since September 16, 2011. The maturity date for the Term Loan was extended from June 14, 2012 to August 28, 2013 and provides High River Limited Partnership with a right to accelerate the repayment of the Term Loan if the Company experiences an ownership change (within the meaning of Section 382 of the United States Internal Revenue Code of 1986 as amended) that results in a substantial limitation on the Company's ability to use its net operating losses and related tax benefits, other than ownership changes resulting from certain trading activities by High River Limited Partnership or its affiliates, or if shares of any of the Company's preferred stock that it may issue become redeemable at the option of the holders or if the Company is required to pay the liquidation preference for such shares.
Subject to certain exceptions, the Term Loan restricts, among other things, the Company's ability to incur indebtedness, create or permit liens on the Company's assets, declare or pay dividends and certain other restricted payments, or enter into certain extraordinary transactions. Subject to certain limited exceptions, the Term Loan is subject to mandatory prepayment (without premium or penalty) from the net proceeds of corporate transactions, including dispositions of assets outside of the ordinary course of business or the issuance of additional debt or equity securities (other than securities that may be issued in the Company's proposed rights offering). The Company may prepay the loan in whole or in part at any time without premium or penalty.
High River Limited Partnership is beneficially owned by Carl C. Icahn, a beneficial holder of approximately 16.6% of the Company's outstanding shares. Brett C. Icahn, a director of the Company, is the son of Carl C. Icahn, and Hunter C. Gary, a director of the Company, is married to Carl C. Icahn's wife's daughter. The amendment to the Company's agreement with High River Limited Partnership was unanimously approved by a committee of disinterested directors of the Company's Board of Directors on the basis that the terms of the Term Loan as amended were no less favorable than those that would have been obtained from an independent third party.
Item 2.02. Results of Operations and Financial Condition.
On March 1, 2012, the Company issued a press release announcing its financial results for the fourth quarter and year ended December 31, 2011. A copy of the press release is attached hereto as Exhibit 99.1 and is incorporated herein in its entirety by reference.
Limitation on Incorporation by Reference. The information furnished in this Item 2.02, including the press release attached hereto as Exhibit 99.1, shall not be deemed "filed" for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to the liabilities of that section, nor shall such information be deemed incorporated by reference in any filing under the Securities Act of 1933, as amended, except as shall be expressly set forth by specific reference in such a filing.
Cautionary Note Regarding Forward-Looking Statements. Except for historical information contained in the press release attached as an exhibit hereto, the press release contains forward-looking statements which involve certain risks and uncertainties that could cause actual results to differ materially from those expressed or implied by these statements. Please refer to the cautionary note in the press release regarding these forward-looking statements.
Item 2.03. Creation of a Direct Financial Obligation or an Obligation Under an Off-Balance Sheet Arrangement of a Registrant.
The information set forth in Item 1.01 of this Form 8-K is hereby incorporated by reference into this Item 2.03.
Item 9.01. Financial Statements and Exhibits.
(d)
Exhibits.
Exhibit
No.
Description
99.1
Press release dated March 1, 2012 of Motricity, Inc. announcing its financial results for the fourth quarter and year ended December 31, 2011.
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
Motricity, Inc. (Registrant) |
||
March 1, 2012 (Date) |
By: | /s/ JAMES R. SMITH, JR. James R. Smith, Jr. President and Interim Chief Executive Officer |
EXHIBIT 99.1
BELLEVUE, Wash., March 1, 2012 (GLOBE NEWSWIRE) -- Motricity (Nasdaq:MOTR), a leading provider of mobile Internet services, today announced financial results for the fourth quarter and full year ended December 31, 2011.
Management Commentary:
"While change at Motricity is still underway, the fourth quarter marked a period of very meaningful execution against the priorities we set forth last quarter. Motricity exited the majority of its international businesses, significantly streamlined its operations, lowered expenses and continued to strengthen its balance sheet, while also adding resources in strategic areas of the business, including new leadership for our mobile marketing and advertising business," said Jim Smith, interim chief executive officer. "We are very pleased with the progress of the transformation thus far. With a business that has been right-sized to align with its revenue base, we are poised to execute on the growing opportunities in mobile."
Revenue:
Revenue in the fourth quarter of 2011 was $24.5 million as compared to $36.0 million in the fourth quarter of 2010. Managed services revenue for the quarter decreased $0.3 million, or 1%, and professional services revenue decreased $11.2 million, or 105%, compared to the prior year period. Mobile Marketing and Advertising revenue was $5.9 million for the fourth quarter of 2011.
For full year 2011, revenue decreased $11.7 million, or 9%, to $121.7 million from $133.4 million for 2010. Managed services revenue for 2011 was $105.1 million compared to $93.3 million in 2010, while professional services revenue was $16.5 million compared to $40.1 million in 2010. The year-over-year decrease in revenue is primarily attributable to the $23.6 million decrease of professional services revenue, partially offset by the $11.8 million increase of managed services revenue.
Impairment and Restructuring Charges:
Fourth quarter 2011 results include $0.4 million of impairment and $0.2 million in restructuring charges. Full year 2011 results include $162.7 million of impairment related to goodwill and certain tangible and intangible assets and $5.3 million in restructuring charges. The restructuring charges relate primarily to severance payments and stock-based compensation charges associated with the acceleration of equity awards given to employees that were terminated.
Net Income (Loss):
Net loss for the fourth quarter of 2011 was $(10.5) million, compared with net income of $2.9 million for the fourth quarter of 2010. Net loss per share was $(0.23) compared to a net income of $0.06 per share for the fourth quarter of 2010.
For full year 2011, net loss was $(195.4) million, compared with net loss of $(7.0) million for 2010. Net loss per share was $(4.36) compared to a net loss of $(0.88) per share for 2010.
Adjusted EBITDA:
Adjusted EBITDA loss for the fourth quarter of 2011 was $(2.7) million, as compared to Adjusted EBITDA of $9.4 million in the fourth quarter of 2010. The decrease in Adjusted EBITDA was primarily due to $11.5 million of decreased revenue and the inclusion of results for the acquired Adenyo business which operated at an Adjusted EBITDA loss for the period. Adjusted EBITDA loss for the full year 2011 was $(2.1) million, as compared to Adjusted EBITDA of $27.9 million for 2010.
The following table reconciles Adjusted EBITDA to net loss for the quarter and year ended December 31, 2011:
Q4 2011 | FY 2011 | |
(in millions) | (in millions) | |
Net loss | $ (10.5) | $ (195.4) |
Other income (expense), net | 0.4 | 0.5 |
Provision for income taxes | 1.4 | (5.9) |
Depreciation and amortization | 4.0 | 17.3 |
Restructuring | 0.2 | 5.3 |
Impairment charges | 0.4 | 162.7 |
Stock-based compensation | 1.2 | 7.2 |
Acquisition transaction and integration costs | 0.2 | 6.2 |
Adjusted EBITDA | $ (2.7) | $ (2.1) |
Adjusted Net Income (Loss):
Adjusted Net Loss for the fourth quarter of 2011 was $(6.3) million, or $(0.14) of Adjusted EPS1, compared to Adjusted Net Income of $5.7 million, or $0.14 of Adjusted EPS, for the fourth quarter of 2010. The year-over-year decline in Adjusted Net Income is primarily due to $11.5 million of decreased revenue and the inclusion of results for the Adenyo business which operated at an Adjusted Net Loss for the period. Adjusted Net Loss for the full year 2011 was $(17.1) million, or $(0.38) of Adjusted EPS, as compared to Adjusted Net Income of $16.0 million, or $0.39 of Adjusted EPS, for 2010.
The following table reconciles Adjusted Net Income to net loss for the quarter and year ended December 31, 2011:
Q4 2011 | FY 2011 | |
(in millions) | (in millions) | |
Net loss | $ (10.5) | $ (195.4) |
Amortization of purchased intangibles | 1.0 | 3.3 |
Restructuring | 0.2 | 5.3 |
Impairment charges | 0.4 | 162.7 |
Stock-based compensation | 1.2 | 7.2 |
Non-cash tax expense | 1.2 | (6.4) |
Fair value adjustment of warrants in other income | -- | -- |
Acquisition transaction and integration costs | 0.2 | 6.2 |
Adjusted Net Loss | $ (6.3) | $ (17.1) |
Balance Sheet
Motricity ended the fourth quarter and full year 2011 with $13.2 million of cash and cash equivalents. The Company recently extended its $20 million term loan financing until August 2013. Management believes that is has sufficient capital on-hand to fund operations, however the Company is continuing to review strategic alternatives, including financing options and a sale of all or parts of the business.
1Adjusted EPS reflects Adjusted Net Income divided by Adjusted Shares Outstanding. See the Use of Non-GAAP Measures section for related reconciliations.
Conference Call and Webcast Information:
The Motricity fourth quarter and fiscal year 2011 teleconference and webcast is scheduled to begin at 2:00 p.m., Pacific Time, on Thursday, March 1, 2012. To participate on the live call, analysts and investors should dial 877-941-4774 at least ten minutes prior to the call. Motricity will also offer a live and archived webcast of the conference call, accessible from the "Investors" section of the Company's website at www.motricity.com.
Supplemental Data Schedule
March 31, 2010 |
June 30, 2010 |
September 30, 2010 |
December 31, 2010 |
March 31, 2011 |
June 30, 2011 |
September 30, 2011 |
December 31, 2011 |
|
Revenue | ||||||||
Managed services | $ 20.9 | $ 21.9 | $ 25.2 | $ 25.3 | $ 26.3 | $ 27.6 | $ 26.3 | $ 25.0 |
Professional services | 8.2 | 8.5 | 12.7 | 10.7 | 5.9 | 7.0 | 4.1 | (0.5) |
Total revenues | $ 29.1 | $ 30.4 | $ 37.9 | $ 36.0 | $ 32.2 | $ 34.6 | $ 30.4 | $ 24.5 |
Revenue details | ||||||||
Managed services | $ 18.3 | $ 19.4 | $ 21.7 | $ 20.0 | $ 20.3 | $ 19.3 | $ 19.1 | $ 18.1 |
Professional services | 7.9 | 7.3 | 3.8 | 4.1 | 1.6 | 2.5 | 0.6 | 1.2 |
Total North American carrier revenue | 26.2 | 26.7 | 25.5 | 24.1 | 21.9 | 21.8 | 19.7 | 19.3 |
Managed services | 0.2 | 0.1 | 1.2 | 3.0 | 3.9 | 3.4 | 1.3 | 2.1 |
Professional services | 0.2 | 1.2 | 8.9 | 6.6 | 4.2 | 3.7 | 2.3 | (2.8) |
Total international carrier revenue | 0.4 | 1.3 | 10.1 | 9.6 | 8.1 | 7.1 | 3.6 | 0.7 |
Managed services | 2.4 | 2.4 | 2.3 | 2.3 | 2.1 | 4.9 | 5.9 | 4.8 |
Professional services | 0.1 | -- | -- | -- | 0.1 | 0.8 | 1.2 | 1.1 |
Total mobile marketing and advertising revenue | 2.5 | 2.4 | 2.3 | 2.3 | 2.2 | 5.7 | 7.1 | 5.9 |
Percentage of managed services revenue that varies with number of users and transactions | 52% | 55% | 60% | 60% | 61% | 63% | 60% | 60% |
Adjusted EBITDA | $ 3.1 | $ 6.3 | $ 9.0 | $ 9.4 | $ 5.3 | $ 6.4 | $ (11.1) | $ (2.7) |
Adjusted EBITDA margin | 11% | 21% | 24% | 26% | 16% | 18% | -37% | -11% |
Adjusted Net Income (Loss) | $ 0.5 | $ 3.7 | $ 6.1 | $ 5.7 | $ 1.3 | $ 2.0 | $ (14.1) | $ (6.3) |
Adjusted Net Income (Loss) margin | 2% | 12% | 16% | 16% | 4% | 6% | -46% | -26% |
Adjusted EPS (using Adjusted Shares Outstanding) | $ 0.01 | $ 0.09 | $ 0.15 | $ 0.14 | $ 0.03 | $ 0.04 | $ (0.31) | $ (0.14) |
Capital expenditures | ||||||||
Purchased property and equipment | $ (1.2) | $ (3.2) | $ (0.9) | $ (3.0) | $ (4.6) | $ (2.7) | $ (2.0) | $ (0.3) |
Capitalization of software development costs | $ (1.2) | $ (2.8) | $ (2.7) | $ (2.4) | $ (2.2) | $ (2.8) | $ (1.2) | $ (1.4) |
Use of Non-GAAP Measures
This press release includes non-GAAP financial measures such as Adjusted EBITDA, Adjusted Net Income, and Adjusted EPS (Adjusted Net Income per Adjusted Shares Outstanding). Adjusted EBITDA, Adjusted Net Income and Adjusted EPS are not measures of financial performance or liquidity calculated in accordance with accounting principles generally accepted in the U.S., referred to herein as GAAP, and should be viewed as a supplement to, not a substitute for, our results of operations presented on the basis of GAAP. Reconciliations of each of these non-GAAP financial measures to the most directly comparable GAAP financial measures are detailed in tables below.
Our non-GAAP measures should be read in conjunction with the corresponding GAAP measures. Adjusted EBITDA and Adjusted Net Income have limitations as analytical tools and you should not consider them in isolation from, or as a substitute for, analysis of our results as reported in accordance with GAAP. Adjusted EBITDA and Adjusted Net Income do not purport to represent cash flow provided by, or used in, operating activities as defined by GAAP.
We define Adjusted EBITDA as net income (loss) before interest expense, provision for income taxes, depreciation and amortization, restructuring expenses, asset impairments and stock-based compensation expense, acquisition transaction and integration costs, interest income and other income (expense), net. We define Adjusted Net Income as net income (loss) before amortization of purchased intangibles, stock compensation expense, restructuring expenses, asset impairments, acquisition transaction and integration costs, non-cash tax expense and the impact from changes in the fair value of warrants. We define Adjusted EPS as Adjusted Net Income divided by Adjusted Shares Outstanding. Adjusted Shares Outstanding reflect the weighted-average common shares outstanding as if the IPO and other adjustments occurred at the beginning of the respective period and also reflect the Series H preferred stock as if it is converted to common stock at the beginning of the relevant period. All outstanding shares of the Series H preferred stock have converted to common stock as of January 3, 2011. Furthermore, Adjusted EBITDA, Adjusted Net Income and Adjusted EPS are not necessarily comparable to similarly-titled measures reported by other companies.
We believe Adjusted EBITDA, Adjusted Net Income and Adjusted EPS are useful to management, investors and other users of our financial statements in evaluating our operating performance because these financial measures are an additional tool to compare business performance across companies and across periods. We believe that:
We use Adjusted EBITDA and Adjusted Net Income:
The following is a reconciliation of Adjusted EBITDA to net income (loss), the most directly comparable GAAP measure, for each of the quarters ended:
March 31, 2010 |
June 30, 2010 |
September 30, 2010 |
December 31, 2010 |
March 31, 2011 |
June 30, 2011 |
September 30, 2011 |
December 31, 2011 |
|
(in millions) | ||||||||
Net income (loss) | $ (1.5) | $ (11.6) | $ 3.3 | $ 2.9 | $ (6.1) | $ (4.3) | $ (174.5) | $ (10.5) |
Other income (expense), net | 0.3 | (3.8) | ---- | 0.2 | -- | -- | 0.1 | 0.4 |
Provision for income taxes | 0.5 | 0.5 | 0.7 | 0.5 | 0.5 | 0.2 | (8.0) | 1.4 |
Depreciation and amortization | 2.9 | 3.0 | 3.0 | 3.5 | 4.4 | 5.5 | 3.4 | 4.0 |
Restructuring | 0.4 | -- | -- | -- | 0.3 | 0.2 | 4.6 | 0.2 |
Impairment charges | -- | -- | -- | -- | -- | -- | 162.3 | 0.4 |
Stock-based compensation | 0.5 | 18.2 | 2.0 | 2.3 | 2.1 | 2.7 | 1.2 | 1.2 |
Acquisition transaction and integration costs | -- | -- | -- | -- | 4.1 | 2.1 | (0.2) | 0.2 |
Adjusted EBITDA | $ 3.1 | $ 6.3 | $ 9.0 | $ 9.4 | $ 5.3 | $ 6.4 | $ (11.1) | $ (2.7) |
*- Stock-based compensation for the quarter ended June 30, 2010 includes $17.5 million related to vesting of restricted stock granted previously based upon completion of Motricity's initial public offering. |
The following is a reconciliation of Adjusted Net Income to net income (loss), the most directly comparable GAAP measure, for each of the quarters ended:
March 31, 2010 |
June 30, 2010 |
September 30, 2010 |
December 31, 2010 |
March 31, 2011 |
June 30, 2011 |
September 30, 2011 |
December 31, 2011 |
|
(in millions) | ||||||||
Net income (loss) | $ (1.5) | $ (11.6) | $ 3.3 | $ 2.9 | $ (6.1) | $ (4.3) | $ (174.5) | $ (10.5) |
Amortization of purchased intangibles | 0.4 | 0.4 | 0.4 | 0.4 | 0.4 | 1.3 | 0.6 | 1.0 |
Restructuring | 0.4 | -- | -- | -- | 0.3 | 0.2 | 4.6 | 0.2 |
Impairment charges | -- | -- | -- | -- | -- | -- | 162.3 | 0.4 |
Stock-based compensation | 0.5 | 18.2 | 2.0 | 2.3 | 2.1 | 2.7 | 1.2 | 1.2 |
Non-cash tax expense | 0.5 | 0.5 | 0.4 | 0.1 | 0.5 | -- | (8.1) | 1.2 |
Fair value adjustment of warrants in other income | 0.2 | (3.8) | -- | -- | -- | -- | -- | -- |
Acquisition transaction and integration costs | -- | -- | -- | -- | 4.1 | 2.1 | (0.2) | 0.2 |
Adjusted Net Income (Loss) | $ 0.5 | $ 3.7 | $ 6.1 | $ 5.7 | $ 1.3 | $ 2.0 | $ (14.1) | $ (6.3) |
*- Stock-based compensation for the quarter ended June 30, 2010 includes $17.5 million related to vesting of restricted stock granted previously based upon completion of Motricity's initial public offering. |
The following is a reconciliation of Adjusted EPS to EPS, the most directly comparable GAAP measure, for each of the quarters ended:
March 31, 2010 |
June 30, 2010 |
September 30, 2010 |
December 31, 2010 |
March 31, 2011 |
June 30, 2011 |
September 30, 2011 |
December 31, 2011 |
|
Net income (loss) per share | $ (1.38) | $ (1.95) | $ 0.07 | $ 0.06 | $ (0.15) | $ (0.09) | $ (3.80) | $ (0.23) |
Accretion of redeemable preferred stock and preferred stock dividends | 1.11 | 0.66 | 0.01 | 0.01 | -- | -- | -- | -- |
Amortization of purchased intangibles | 0.07 | 0.04 | 0.01 | 0.01 | 0.01 | 0.03 | 0.01 | 0.02 |
Restructuring | 0.07 | -- | -- | -- | 0.01 | -- | 0.10 | 0.01 |
Impairment charges | -- | -- | -- | -- | -- | 3.53 | 0.01 | |
Stock-based compensation | 0.09 | 2.04 | 0.05 | 0.06 | 0.05 | 0.06 | 0.03 | 0.03 |
Non-cash tax expense | 0.08 | 0.05 | 0.01 | 0.01 | 0.01 | -- | (0.18) | 0.02 |
Fair value adjustment of warrants in other income | 0.05 | (0.43) | -- | -- | -- | -- | -- | -- |
Acquisition transaction and integration costs | -- | ---- | -- | -- | 0.10 | 0.04 | -- | -- |
Share count adjustments assuming IPO occurred at the beginning of the year | (0.08) | (0.32) | (0.01) | (0.01) | -- | -- | -- | -- |
Adjusted EPS | $ 0.01 | $ 0.09 | $ 0.15 | $ 0.14 | $ 0.03 | $ 0.04 | $ (0.31) | $ (0.14) |
The following is a reconciliation of Adjusted Shares Outstanding to Basic Shares Outstanding, the most directly comparable GAAP measure, for each of the quarters ended:
March 31, 2010 |
June 30, 2010 |
September 30, 2010 |
December 31, 2010 |
March 31, 2011 |
June 30, 2011 |
September 30, 2011 |
December 31, 2011 |
|
(in millions) | ||||||||
Basic shares outstanding for the quarter ended | 5.7 | 8.9 | 38.0 | 38.6 | 42.3 | 45.3 | 45.9 | 46.0 |
Assume IPO occurred at the beginning of the year | 6.0 | 5.1 | -- | -- | -- | -- | -- | -- |
Assume preferred stock conversion occurred at the beginning of the year | 26.1 | 23.8 | -- | -- | -- | -- | -- | -- |
As converted impact of Series H | 2.4 | 2.4 | 2.4 | 2.4 | -- | -- | -- | -- |
Vested restricted stock | 0.8 | 0.9 | 1.0 | 1.0 | -- | -- | -- | -- |
Adjusted Shares Outstanding for the quarter ended | 41.0 | 41.1 | 41.4 | 42.0 | 42.3 | 45.3 | 45.9 | 46.0 |
Forward-Looking Statements
Statements made in this release and related statements that express Motricity's or its management's intentions, indications, beliefs, expectations, guidance, estimates, forecasts or predictions of the future constitute forward-looking statements, as defined by the Private Securities Litigation Reform Act of 1995, and relate to matters that are not historical facts. They include, without limitation, statements regarding: our view of general economic and market conditions and opportunities in mobile; our exploration and review of strategic and financing options; estimates of impairment charges and our ability to develop, produce, market, license or sell our products, solutions and services, compete domestically and internationally, reduce or control expenses and the effects thereof, improve efficiency, realign resources, continue operational improvement, and about the applicability of accounting policies used in our financial reporting. These statements represent beliefs and expectations only as of the date they were made. We may elect to update forward-looking statements but we expressly disclaim any obligation to do so, even if our beliefs and expectations change. Actual results may differ from those expressed or implied in our forward-looking statements.
Such forward-looking statements involve and are subject to certain risks and uncertainties that may cause our actual results to differ materially from those discussed in a forward looking statement. These include, but are not limited to: the sufficiency of our liquidity and capital resources and our ability to raise additional capital or generate the cash flows necessary to repay our term loan; our reliance on a limited number of customers for a substantial portion of our revenues, including the pressures on pricing and contract terms from customers with substantial purchasing power and further consolidations in the telecommunications industry; our ability to realign our business to focus on our mobile advertising and enterprise business and obtain customers for that business; the highly competitive nature of the mobile services industry in which many of our competitors have significantly greater resources, which they are using to support significantly discounted pricing; the rapid technological changes in the mobile data services industry, which could render our existing services obsolete; our ability to attract and retain key employees and qualified personnel; impact of the recent departure of members of our executive team and our ongoing leadership transition; our ability to recognize the expected benefits from the reduction in force implemented in 2011 and the beginning of 2012; the possibility that the process of exploring strategic or financing options will not lead to any strategic transaction or additional financing on favorable terms or at all and the length, complexity and cost of such process; risks of new product offerings reducing our customers' influence over access to mobile data services; our ability to integrate our acquisition of Adenyo and any future acquisitions and business combinations effectively; the impact of worldwide economic conditions and related uncertainties and the health of and prospects for the overall mobile services industry; risks related to the use and protection of proprietary information, including our ability to safeguard third party confidential information; our ability to develop strategies to address our markets successfully and to meet customer demands with respect to products, services, support and service level commitments; disruptions in datacenters services and other capacity constraints; uncertainties inherent in the development of new products and services and the enhancement of existing products and services, including technical risks, cost overruns and delays; our ability to tailor our complex solutions to our customers' needs; our ability to utilize net operating losses; our ability to maintain proper and effective internal controls; our reliance on third parties to develop content and applications, customer acceptance of such offerings and our liability with respect to such content; undetected software errors in our products and indemnity obligations and claims relating to our products and services; our ability to manage growth; impairment losses related to goodwill, intellectual property and equipment; risks and diversion of resources related to the litigation against us and our current and former directors and officers; actual or perceived security vulnerabilities in mobile devices; the impact of changing governmental regulations and our ability to comply therewith; risks related to the commercialization of open source software we use; the influence and control our principal stockholder may exert; and other uncertainties described more fully in our filings with the Securities and Exchange Commission.
About Motricity
Motricity (Nasdaq:MOTR) empowers mobile operators, brands and advertising agencies to maximize the reach and economic potential of the mobile ecosystem through the delivery of relevance-driven merchandising, marketing and advertising solutions. Motricity leverages advanced predictive analytics capabilities to deliver the right content, to the right person at the right time. Motricity provides their entire suite of mobile data service solutions through one, integrated, highly scalable managed service platform. Motricity's unique combination of technology, expertise and go-to-market approach delivers return-on-investment for our mobile operator, brand and advertising agency customers. For more information, visit www.motricity.com or follow @motricity on Twitter.
The Motricity, Inc. logo is available at http://www.globenewswire.com/newsroom/prs/?pkgid=7813
Motricity, Inc. | ||
Condensed Consolidated Balance Sheets | ||
(in thousands, except share data) | ||
(unaudited) | ||
December 31, 2011 | December 31, 2010 | |
Assets | ||
Current assets | ||
Cash and cash equivalents | $ 13,225 | $ 78,519 |
Restricted short-term investments | 434 | 335 |
Accounts receivable, net of allowance for doubtful accounts of $1,300 and $446 respectively |
45,384 | 29,438 |
Prepaid expenses and other current assets | 6,097 | 6,698 |
Total current assets | 65,140 | 114,990 |
Property and equipment, net | 16,415 | 24,339 |
Goodwill | 25,928 | 74,658 |
Intangible assets, net | 10,120 | 17,693 |
Other assets | 509 | 134 |
Total assets | $ 118,112 | $ 231,814 |
Liabilities, redeemable preferred stock and stockholders' equity | ||
Current liabilities | ||
Accounts payable and accrued expenses | $ 37,381 | $ 16,822 |
Accrued compensation | 5,956 | 13,666 |
Deferred revenue, current portion | 2,081 | 746 |
Debt facilities, current portion | 20,902 | -- |
Other current liabilities | 1,145 | 981 |
Total current liabilities | 67,465 | 32,215 |
Deferred revenue, net of current portion | -- | 131 |
Deferred tax liability | 262 | 5,328 |
Debt facilities, net of current portion | 474 | -- |
Other non-current liabilities | 786 | 714 |
Total liabilities | 68,987 | 38,388 |
Redeemable preferred stock | -- | 49,862 |
Stockholders' equity | ||
Common stock, $0.001 par value, 625,000,000 shares authorized; 46,226,797 and 40,721,754 shares issued and outstanding as of December 31, 2011 and 2010, respectively |
46 | 41 |
Additional paid-in capital | 570,331 | 467,565 |
Accumulated deficit | (519,480) | (324,088) |
Accumulated other comprehensive income (loss) | (1,772) | 46 |
Total stockholders' equity | 49,125 | 143,564 |
Total liabilities, redeemable preferred stock and stockholders' equity | $ 118,112 | $ 231,814 |
Motricity, Inc. | ||||
Condensed Consolidated Statements of Operations | ||||
(in thousands, except share data and per share amounts) | ||||
(unaudited) | ||||
Three Months Ended | Twelve Months Ended | |||
December 31, | December 31, | |||
2011 | 2010 | 2011 | 2010 | |
Revenues | ||||
Managed services | $ 25,022 | $ 25,298 | $ 105,102 | $ 93,292 |
Professional services | (541) | 10,707 | 16,548 | 40,087 |
Total revenues | 24,481 | 36,005 | 121,650 | 133,379 |
Operating expenses | ||||
Direct third party expenses | 4,954 | 5,031 | 19,398 | 17,044 |
Datacenter and network operations, excluding depreciation | 6,778 | 7,624 | 26,491 | 30,749 |
Product development and sustainment, excluding depreciation | 6,604 | 5,766 | 38,110 | 25,955 |
Sales and marketing, excluding depreciation | 4,327 | 3,453 | 18,684 | 13,769 |
General and administrative, excluding depreciation | 5,772 | 6,975 | 28,346 | 41,034 |
Depreciation and amortization | 3,971 | 3,515 | 17,246 | 12,595 |
Impairment charges | 419 | -- | 162,724 | -- |
Acquisition transaction and integration costs | 170 | -- | 6,165 | -- |
Restructuring | 214 | -- | 5,348 | 407 |
Total operating expenses | 33,209 | 32,364 | 322,512 | 141,553 |
Operating income (loss) | (8,728) | 3,641 | (200,862) | (8,174) |
Other income (expense), net | ||||
Other income (expense) | 77 | (190) | 93 | 3,357 |
Interest and investment income, net | 1 | (1) | 28 | 3 |
Interest expense | (455) | (111) | (644) | (111) |
Other income, net | (377) | (302) | (523) | 3,249 |
Loss before income taxes | (9,105) | 3,339 | (201,385) | (4,925) |
Provision for income taxes | 1,339 | 487 | (5,993) | 2,090 |
Net income (loss) | (10,444) | 2,852 | (195,392) | (7,015) |
Accretion of redeemable preferred stock | -- | (78) | -- | (12,093) |
Series H redeemable preferred stock dividends | -- | (425) | -- | (868) |
Series D1 preferred dividends | -- | -- | -- | (332) |
Net income (loss) attributable to common stockholders | $ (10,444) | $ 2,349 | $ (195,392) | $ (20,308) |
Net income (loss) per share attributable to common stockholders - basic | ($0.23) | $0.06 | ($4.36) | ($0.88) |
Net income (loss) per share attributable to common stockholders - basic and diluted | ($0.23) | $0.06 | ($4.36) | ($0.88) |
Weighted-average common shares outstanding - basic | 45,957,314 | 38,598,211 | 44,859,734 | 22,962,555 |
Weighted-average common shares outstanding - diluted | 45,957,314 | 39,675,866 | 44,859,734 | 22,962,555 |
CONTACT: Media Contact: Meghan Graves 425-638-8211 Meghan.Graves@motricity.com Investor Relations Contact: Alex Wellins (415) 217-5861 alex@blueshirtgroup.com