Attached files
| file | filename |
|---|---|
| 8-K - 8-K - IPASS INC | unityagreement8-k.htm |
| EX-2.1 - EX-2.1 - IPASS INC | exhibit21.htm |
Exhibit 99.1
iPass Inc.
Unaudited Pro Forma Condensed Consolidated Financial Statements
On June 30, 2014, iPass Inc. (“iPass”) completed the sale of all membership interests in MNS Holdings LLC, the operating parent of iPass Unity Network Services (“Unity”), to Tolt Solutions, Inc. (“Buyer”), an affiliate of Clearlake Capital Group, L.P. for a purchase price of $28.2 million (the "Unity Sale”). The purchase price is also subject to adjustment based on the working capital of MNS Holdings at the closing of the transaction and certain other items. The sale was completed in accordance with that certain Purchase Agreement between iPass, MNS Holdings LLC and Buyer, dated June 30, 2014.
The following unaudited pro forma condensed consolidated financial statements are based on the historical consolidated financial statements of iPass after giving effect to the Unity Sale, the receipt of estimated proceeds from the Unity Sale, and the assumptions and adjustments described in the accompanying notes to the unaudited pro forma condensed consolidated financial statements.
The unaudited pro forma condensed consolidated balance sheet as of March 31, 2014, gives effect to the Unity Sale and adjustments as if it occurred on March 31, 2014.
The unaudited pro forma condensed consolidated statements of comprehensive loss for the fiscal years ended December 31, 2011, 2012, and 2013, and the quarter ended March 31, 2014, give effect to the Unity Sale and adjustments as if they had occurred on January 1, 2011 and carried forward through the latest period presented.
The unaudited Pro Forma Condensed Consolidated Statements of Comprehensive Loss for the years ended December 31, 2011, 2012 and 2013 have been derived primarily from the audited Consolidated Financial Statements of the Company included in its fiscal 2013 Annual Report on Form 10-K. The unaudited Pro Forma Condensed Consolidated Balance Sheet as of March 31, 2014, and the unaudited Pro Forma Condensed Consolidated Statement of Comprehensive Loss for the three months ended March 31, 2014 have been derived primarily from the unaudited Condensed Consolidated Financial Statements included in the Company’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2014. The unaudited pro forma financial statement information is based upon available information and assumptions that the Company believes are reasonable under the circumstances and was prepared to illustrate the estimated effects of the Unity Sale.
The unaudited pro forma financial statement information has been provided for informational purposes and should not be considered indicative of the financial condition or results of operations that would have been achieved had the Unity Sale occurred as of the periods presented. In addition, the unaudited pro forma financial statement information does not purport to indicate balance sheet data or results of operations as of any future date or for any future period. The unaudited pro forma financial statement information, including the notes thereto, should be read in conjunction with the historical financial statements of the Company included in its fiscal 2013 Annual Report on Form 10-K and its Quarterly Report on Form 10-Q for the quarter ended March 31, 2014, that were filed with the SEC.
IPASS INC.
PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
(In thousands)
March 31, 2014 | ||||||||||||||
As Reported (1) | Sale of Unity (2) | Pro Forma Adjustments | Pro Forma | |||||||||||
ASSETS | ||||||||||||||
Current assets: | ||||||||||||||
Cash and cash equivalents | $ | 20,089 | $ | 30 | $ | 26,750 | (3) | $ | 46,809 | |||||
Accounts receivable, net of allowance for doubtful accounts | 14,269 | 2,591 | 11,678 | |||||||||||
Prepaid expenses and other current assets | 3,808 | 1,897 | 1,400 | (4) | 3,311 | |||||||||
Total current assets | 38,166 | 4,518 | 28,150 | 61,798 | ||||||||||
Property and equipment, net | 8,215 | 495 | (218 | ) | (5) | 7,502 | ||||||||
Other assets | 2,800 | 2,389 | 411 | |||||||||||
Total assets | $ | 49,181 | $ | 7,402 | $ | 27,932 | $ | 69,711 | ||||||
LIABILITIES AND STOCKHOLDERS’ EQUITY | ||||||||||||||
Current liabilities: | ||||||||||||||
Accounts payable | $ | 8,450 | $ | 900 | $ | 2,033 | (6) | $ | 9,583 | |||||
Accrued liabilities | 9,915 | 803 | 9,112 | |||||||||||
Deferred revenue, short-term | 2,900 | 2,605 | 295 | |||||||||||
Total current liabilities | 21,265 | 4,308 | 2,033 | 18,990 | ||||||||||
Deferred revenue, long-term | 2,044 | 2,040 | 4 | |||||||||||
Vendor financed property and equipment | 1,367 | — | 1,367 | |||||||||||
Other long-term liabilities | 189 | 14 | 175 | |||||||||||
Total liabilities | $ | 24,865 | $ | 6,362 | $ | 2,033 | $ | 20,536 | ||||||
Stockholders' equity | 24,316 | — | 24,859 | (7) | 49,175 | |||||||||
Total liabilities and stockholders’ equity | $ | 49,181 | $ | 6,362 | $ | 26,892 | $ | 69,711 | ||||||
See Accompanying Notes to the Unaudited Pro Forma Condensed Consolidated Financial Statements
IPASS INC.
PRO FORMA CONDENSED CONSOLIDATED STATEMENTS OF
COMPREHENSIVE LOSS
(Unaudited)
(In thousands, except shares and per share amounts)
Three Months Ended March 31, 2014 | ||||||||||||
As Reported (8) | Sale of Unity (9) | Pro Forma | ||||||||||
Revenue | $ | 25,340 | $ | 7,702 | $ | 17,638 | ||||||
Cost of revenues and operating expenses: | ||||||||||||
Network access costs | 11,853 | 4,647 | 7,206 | |||||||||
Network operations | 5,417 | 1,700 | (10) | 3,717 | ||||||||
Research and development | 3,385 | 3,385 | ||||||||||
Sales and marketing | 4,952 | 388 | 4,564 | |||||||||
General and administrative | 5,042 | 414 | (11) | 4,628 | ||||||||
Restructuring charges and related adjustments | 14 | 14 | ||||||||||
Total cost of revenue and operating expenses | 30,663 | 7,149 | 23,514 | |||||||||
Operating income (loss) | (5,323 | ) | 553 | (5,876 | ) | |||||||
Interest expense, net | (33 | ) | — | (33 | ) | |||||||
Foreign exchange losses | (71 | ) | — | (71 | ) | |||||||
Income (Loss) before income taxes | (5,427 | ) | 553 | (5,980 | ) | |||||||
Provision (Benefit) for income taxes | 122 | 196 | (12) | (74 | ) | |||||||
Net income (loss) | $ | (5,549 | ) | $ | 357 | $ | (5,906 | ) | ||||
Comprehensive income (loss) | $ | (5,549 | ) | $ | 357 | $ | (5,906 | ) | ||||
Basic and diluted net loss per share | $ | (0.09 | ) | $ | (0.09 | ) | ||||||
Number of shares used in per share calculations: | ||||||||||||
Basic and diluted | 64,421,563 | 64,421,563 | ||||||||||
See Accompanying Notes to the Unaudited Pro Forma Condensed Consolidated Financial Statements
iPASS INC.
PRO FORMA CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS
(Unaudited)
(In thousands, except share and per share amounts)
For the Year Ended December 31, 2013 | ||||||||||||
As Reported (8) | Sale of Unity (9) | Pro Forma | ||||||||||
Revenues | $ | 111,115 | $ | 33,386 | $ | 77,729 | ||||||
Cost of revenues and operating expenses: | ||||||||||||
Network access costs | 49,490 | 20,237 | 29,253 | |||||||||
Network operations | 19,200 | 6,499 | (10) | 12,701 | ||||||||
Research and development | 13,317 | — | 13,317 | |||||||||
Sales and marketing | 18,315 | 1,919 | 16,396 | |||||||||
General and administrative | 21,340 | 2,100 | (11) | 19,240 | ||||||||
Restructuring charges and related adjustments | 653 | — | 653 | |||||||||
Total cost of revenues and operating expenses | $ | 122,315 | $ | 30,755 | $ | 91,560 | ||||||
Operating income (loss) | (11,200 | ) | 2,631 | (13,831 | ) | |||||||
Interest expense, net | (18 | ) | — | (18 | ) | |||||||
Foreign exchange losses | (507 | ) | — | (507 | ) | |||||||
Other expenses, net | (18 | ) | — | (18 | ) | |||||||
Income (Loss) before income taxes | (11,743 | ) | 2,631 | (14,374 | ) | |||||||
Provision (Benefit) for income taxes | 569 | 923 | (12) | (354 | ) | |||||||
Net income (loss) | $ | (12,312 | ) | $ | 1,708 | $ | (14,020 | ) | ||||
Comprehensive income (loss) | $ | (12,312 | ) | $ | 1,708 | $ | (14,020 | ) | ||||
Basic and diluted net loss per share | $ | (0.19 | ) | $ | (0.22 | ) | ||||||
Number of shares used in per share calculations | 63,411,162 | 63,411,162 | ||||||||||
See accompanying notes to the Unaudited Pro Forma Condensed Consolidated Financial Statements
iPASS INC.
PRO FORMA CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS
(Unaudited)
(In thousands, except share and per share amounts)
For the Year Ended December 31, 2012 | ||||||||||||
As Reported (8) | Sale of Unity (9) | Pro Forma | ||||||||||
Revenues | $ | 126,078 | $ | 33,548 | $ | 92,530 | ||||||
Cost of revenues and operating expenses: | ||||||||||||
Network access costs | 53,640 | 20,874 | 32,766 | |||||||||
Network operations | 20,806 | 7,281 | (10) | 13,525 | ||||||||
Research and development | 13,733 | — | 13,733 | |||||||||
Sales and marketing | 19,530 | 1,658 | 17,872 | |||||||||
General and administrative | 21,653 | 2,148 | (11) | 19,505 | ||||||||
Restructuring charges and related adjustments | 26 | — | 26 | |||||||||
Amortization of intangible assets | 169 | — | 169 | |||||||||
Total cost of revenues and operating expenses | $ | 129,557 | $ | 31,961 | $ | 97,596 | ||||||
Operating income (loss) | (3,479 | ) | 1,587 | (5,066 | ) | |||||||
Interest income, net | 19 | — | 19 | |||||||||
Foreign exchange losses | (288 | ) | — | (288 | ) | |||||||
Other income, net | 12 | — | 12 | |||||||||
Income (Loss) before income taxes | (3,736 | ) | 1,587 | (5,323 | ) | |||||||
Provision for income taxes | 642 | 557 | (12) | 85 | ||||||||
Net income (loss) | $ | (4,378 | ) | $ | 1,030 | $ | (5,408 | ) | ||||
Comprehensive income (loss) | $ | (4,378 | ) | $ | 1,030 | $ | (5,408 | ) | ||||
Basic and diluted net loss per share | $ | (0.07 | ) | $ | (0.09 | ) | ||||||
Number of shares used in per share calculations | 60,711,317 | 60,711,317 | ||||||||||
See accompanying notes to the Unaudited Pro Forma Condensed Consolidated Financial Statements
iPASS INC.
PRO FORMA CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS
(Unaudited)
(In thousands, except share and per share amounts)
For the Year Ended December 31, 2011 | ||||||||||||
As Reported (8) | Sale of Unity (9) | Pro Forma | ||||||||||
Revenues | $ | 140,761 | $ | 30,058 | $ | 110,703 | ||||||
Cost of revenues and operating expenses: | ||||||||||||
Network access costs | 65,766 | 19,607 | 46,159 | |||||||||
Network operations | 22,307 | 7,751 | (10) | 14,556 | ||||||||
Research and development | 14,368 | — | 14,368 | |||||||||
Sales and marketing | 20,702 | 850 | 19,852 | |||||||||
General and administrative | 20,009 | 2,053 | (11) | 17,956 | ||||||||
Restructuring benefits and related adjustments | (151 | ) | — | (151 | ) | |||||||
Amortization of intangible assets | 239 | — | 239 | |||||||||
Total cost of revenues and operating expenses | $ | 143,240 | $ | 30,261 | $ | 112,979 | ||||||
Operating loss | (2,479 | ) | (203 | ) | (2,276 | ) | ||||||
Interest income, net | 112 | — | 112 | |||||||||
Foreign exchange losses | (479 | ) | — | (479 | ) | |||||||
Other income, net | 128 | — | 128 | |||||||||
Loss before income taxes | (2,718 | ) | (203 | ) | (2,515 | ) | ||||||
Provision for income taxes | 290 | 2 | 288 | |||||||||
Net loss | $ | (3,008 | ) | $ | (205 | ) | $ | (2,803 | ) | |||
Comprehensive loss | $ | (3,008 | ) | $ | (205 | ) | $ | (2,803 | ) | |||
Basic and diluted net loss per share | $ | (0.05 | ) | $ | (0.05 | ) | ||||||
Number of shares used in per share calculations | 58,429,005 | 58,429,005 | ||||||||||
See accompanying notes to the Unaudited Pro Forma Condensed Consolidated Financial Statements
IPASS INC.
NOTES TO PRO FORMA CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
(1) Represents balances as reported on the unaudited Condensed Consolidated Balance Sheet included in the Company’s Form 10-Q for the quarter ended March 31, 2014.
(2) Represents the unaudited amounts of Unity assets and liabilities which were sold to Buyer as if the sale had occurred on March 31, 2014.
(3) Represents cash proceeds received from the Buyer on June 30, 2014 net of escrow. Additionally, there is a potential for an adjustment for working capital and certain other items post closing.
(4) Represents cash held in escrow per the Purchase Agreement ("Restricted Cash") to satisfy any claims for the indemnification obligations of iPass for breaches of representations, warranties and covenants and certain other specified matters.
(5) Represents impairment of developed enterprise resource planning software customized for Unity’s billing functionality. As a result of the Unity Sale, the customized billing module has no further utility for iPass.
(6) Represents estimated transaction costs incurred in connection with the Unity Sale.
(7) Represents estimated pre-tax gain on the Unity Sale. iPass is in a net operating loss carry forward position which is offset by a full valuation allowance. Tax expense has been offset with a valuation allowance and no payable will be recognized.
(8) Represents results of operations as reported on the Consolidated Statements of Comprehensive Loss included in the Company’s previous filings with the U.S. Securities and Exchange Commission ("SEC").
(9) Represents the elimination of results of operations of Unity.
(10) Includes costs of certain network operations services provided by iPass employees in India on a transitional basis for up to six months for the benefit of the Buyer in accordance with the terms and subject to the conditions of the Transition Services Agreement (“TSA”). As these costs will be reimbursed by the Buyer (approximately $40,000 per month) during the transition period and not remain with iPass once this TSA has completed, including these costs in the Unity Sale appropriately removes them from the historical financial statements of iPass.
(11) Includes costs of certain financial and administrative services provided by iPass employees on a transitional basis for up to six months for the benefit of the Buyer in accordance with the terms and subject to the conditions of the TSA. As these costs will be reimbursed by the Buyer (approximately $60,000 per month) during the transition period and not remain with iPass once this TSA has completed, including these costs in the Unity Sale appropriately removes them from the historical financial statement of iPass. Excludes certain other shared overhead costs that were previously allocated to Unity to arrive at segment operating income (loss) in the historical iPass financial statements included in the 2013 Annual Report on Form 10-K and the Quarterly Report on Form 10-Q for the quarter ended March 31, 2014, that were filed with the SEC.
(12) Represents the result of income tax expense allocation pertaining to the application of ASC paragraph 740-20-45-7 and the required presentation therein of discontinued operations.