Voltari Corp - FORM 10-K - March 31, 2015

Voltari Corp - FORM 10-K - March 31, 2015

Attached files

Attached files

Voltari Corp Reports

file	filename
EX-31.2 - 302 CERTIFICATION - CFO - Voltari Corp	vltc20141231ex312.htm
EX-32.1 - 906 CERTIFICATION - ACTING CEO - Voltari Corp	vltc20141231ex321.htm
EXCEL - IDEA: XBRL DOCUMENT - Voltari Corp	Financial_Report.xls
EX-32.2 - 906 CERTIFICATION - CFO - Voltari Corp	vltc20141231ex322.htm
EX-31.1 - 302 CERTIFICATION - ACTING CEO - Voltari Corp	vltc20141231ex311.htm

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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-K

(Mark One)



x	ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended December 31, 2014 OR



o	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission file number: 333-186564

Voltari Corporation

(Exact Name of Registrant as Specified in its Charter)




Delaware		90-0933943
(State of Incorporation)		(IRS Employer Identification No.)

601 W. 26^th Street, Suite 415

New York, NY 10001

(212) 388-5500

(Address, including zip code, and telephone number, including area code, of registrant’s principal executive offices)

Securities registered pursuant to Section 12(b) of the Act:




Title of each class		Name of each exchange on which registered
Common Stock, par value $0.001 per share		NASDAQ

Securities registered pursuant to Section 12(g) of the Act:

13% Redeemable Series J Preferred Stock, par value $0.001 per share

Warrants, each to purchase one share of Common Stock at $6.50

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes o No x

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes o No x

Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x No o

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes x No o

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Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (§229.405) is not contained herein, and will not be contained, to the best of Registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes o No x

At June 30, 2014, the last business day of the Registrant’s most recently completed second fiscal quarter, the aggregate market value of the voting and non-voting common equity held by non-affiliates of the Registrant (based upon the closing sale price of such shares on NASDAQ on June 30, 2014) was approximately $7.8 million. Shares of Registrant’s common stock held by each executive officer and director and by each entity or person that, to the Registrant’s knowledge, owned 5% or more of Registrant’s outstanding common stock as of June 30, 2014 have been excluded because such persons may be deemed to be affiliates of the Registrant. This determination of affiliate status is not necessarily a conclusive determination for other purposes.

Indicate the number of shares outstanding of each of the Registrant’s classes of common stock as of March 10, 2015:




Title of Class		Number of Shares
Common Stock, $0.001 par value		4,763,358

DOCUMENTS INCORPORATED BY REFERENCE

Portions of the Registrant’s Definitive Proxy Statement for its 2015 Annual Meeting of Stockholders to be filed within 120 days of the close of the fiscal year ended December 31, 2014 are incorporated by reference into Part III (Items 10, 11, 12, 13 and 14) of this Annual Report Form 10-K.

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Special Note Regarding Forward-Looking Statements

Some of the statements contained in this Annual Report on Form 10-K contain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 12E of the Securities Exchange Act of 1934 regarding our plans, objectives, expectations and intentions. Such statements include, without limitation, any statements regarding various estimates we have made in preparing our financial statements, statements that refer to projections of our future operating performance, the realignment of our strategic path, including future product offerings, the sufficiency of our capital resources to meet our cash needs, and the anticipated growth and trends in our businesses, including developments the market for our products. These forward-looking statements are subject to known and unknown risks, uncertainties that could cause actual results to differ materially from those anticipated.

Risks and uncertainties that could adversely affect our business and prospects include without limitation:


•	any financial or other information included herein based upon or otherwise incorporating judgments or estimates based upon future performance or events;


•	our ability to raise additional capital or generate the cash necessary to continue and expand our operations;


•	our ability to raise additional capital or generate the cash necessary to redeem our Series J preferred stock if required to do so;


•	our ability to protect and make use of our substantial net operating loss carry-forwards;


•	our ability to compete in the highly competitive nature of the digital advertising and marketing industry;


•	the market for our services, including the continued growth in usage of smartphones, tablets and other mobile connected devices;


•	our ability to keep pace with technological and market developments;


•	our ability to attract and maintain customers;


•	our ability to collect and use data;


•	the impact of government regulation, legal requirements or industry standards relating to consumer privacy and data protection;


•	our ongoing leadership transition;


•	our ability to protect the confidentiality of our proprietary information;


•	any systems failures of software errors; and


•	the impact and costs and expenses of any litigation we may be subject to now or in the future.

In some cases, you can identify forward-looking statements by terms such as “may,” “will,” “should,” “could,” “would,” “expects,” “plans,” “anticipates,” “believes,” “estimates,” “projects,” “predicts,” “potential” and similar expressions intended to identify forward-looking statements. Our actual results could be different from the results described in or anticipated by our forward-looking statements due to the inherent uncertainty of estimates, forecasts and projections and may be materially better or worse than anticipated. Given these uncertainties, you should not place undue reliance on these forward-looking statements. Forward-looking statements represent our estimates and assumptions only as of the date of this report. We expressly disclaim any duty to provide updates to forward-looking statements, and the estimates and assumptions associated with them, after the date of this report, in order to reflect changes in circumstances or expectations or the occurrence of unanticipated events except to the extent required by applicable securities laws. All of the forward-looking statements are qualified in their entirety by reference to the factors discussed above and under “Risk Factors” set forth in Part I Item 1A of this Annual Report on Form 10-K, as well as the risks and uncertainties discussed elsewhere in this Annual Report on Form 10-K. We qualify all of our forward-looking statements by these cautionary statements. We caution you that these risks are not exhaustive. We operate in a continually changing business environment and new risks emerge from time to time.

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		Page
	PART I

Item 1.	Business	4
Item 1A.	Risk Factors	10
Item 1B.	Unresolved Staff Comments	26
Item 2.	Properties	26
Item 3.	Legal Proceedings	26
Item 4.	Mine Safety Disclosures	27

	PART II

Item 5.	Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities	28
Item 6.	Selected Financial Data	29
Item 7.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	29
Item 7A.	Quantitative and Qualitative Disclosures About Market Risk	41
Item 8.	Consolidated Financial Statements and Supplemental Data	42
	Report of Independent Registered Accounting Firm - Grant Thornton LLP	42
	Consolidated Balance Sheets as of December 31, 2014 and 2013	43
	Consolidated Statements of Operations for the years ended December 31, 2014 and 2013	44
	Consolidated Statements of Comprehensive Loss for the years ended December 31, 2014 and 2013	45
	Consolidated Statements of Changes in Stockholders’ Equity for the years ended December 31, 2014 and 2013	46
	Consolidated Statements of Cash Flows for the years ended December 31, 2014 and 2013	47
	Notes to Consolidated Financial Statements	48
	Schedule II - Valuation and Qualifying Accounts	66
Item 9.	Changes in and Disagreements with Accountants on Accounting and Financial Disclosure	66
Item 9A.	Controls and Procedures	66
Item 9B.	Other Information	67

	PART III

Item 10.	Directors, Executive Officers and Corporation Governance	68
Item 11.	Executive Compensation	68
Item 12.	Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters	68
Item 13.	Certain Relationships and Related Transactions, and Director Independence	68
Item 14.	Principal Accounting Fees and Services	68

	PART IV
Item 15.	Exhibits, Financial Statement Schedules	69

	Signatures	70
	Exhibits	71

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PART I



Item 1.	Business.

Overview

Business Overview

Voltari Corporation ("Voltari" or the "Company") empowers our customers (including brands, marketers and advertising agencies) to maximize the reach and economic potential of the mobile ecosystem through the delivery of relevance-driven merchandising, digital marketing and advertising solutions, primarily over smartphones and other mobile devices. Voltari uses advanced predictive analytics capabilities and real-time data management (including sophisticated data curation and modeling) to deliver the right content to the right person at the right time. Voltari’s unique combination of technology, expertise and go-to-market approach delivers return-on-investment for our customers.

Voltari, a Delaware corporation, was incorporated, under the name “Mobile Systems Corp.,” on December 14, 2012, as a wholly-owned subsidiary of Motricity, Inc. (“Motricity”), and changed its name to “Voltari Corporation” on January 16, 2013. On April 9, 2013, pursuant to the consummation of the Reorganization (as defined below) Motricity became a wholly-owned subsidiary of Voltari. Motricity was incorporated on March 17, 2004 under the name “Power By Hand, Inc.,” and on October 29, 2004 changed its name to Motricity, Inc. On June 23, 2010, Motricity completed its offering of 6,000,000 shares of common stock in an initial public offering (our “IPO”).

On April 9, 2013, Motricity and Voltari consummated a transaction intended to protect the long-term value of Motricity’s net operating loss carryforwards ("NOLs"), referred to herein as the “Reorganization,” pursuant to an agreement and plan of reorganization by and among Motricity, Voltari and Voltari Merger Sub, Inc. The agreement and plan of reorganization and the transactions contemplated thereby were approved and adopted by Motricity’s stockholders on April 9, 2013. Upon completion of the Reorganization, Motricity became our wholly-owned subsidiary, and we replaced Motricity as the publicly held corporation. Further, our common stock was deemed to be registered under Section 12(b) of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), pursuant to rule 12g-3(a) promulgated thereunder. For purposes of Rule 12g-3(a), we are the successor issuer to Motricity. As of April 10, 2013, shares of our common stock commenced trading on NASDAQ under the symbol “VLTC.”

On April 23, 2013, the Company effected a one-for-ten reverse stock split of the outstanding shares of our common stock after the Reorganization. The number of shares of our common stock outstanding has been adjusted retrospectively to reflect the reverse stock split in all periods presented. In addition, the exercise price and the number of common shares issuable under our share-based compensation plans and upon exercise of our outstanding warrants to purchase common stock, as well as the issued and outstanding share capital, have been correspondingly adjusted to reflect the reverse stock split.

Recent Developments

Rights offering—On February 27, 2015, we commenced a rights offering of up to an aggregate of 4,300,000 shares of our common stock. Under the terms of the rights offering, we distributed to stockholders of record at the close of business on February 13, 2015 transferable subscription rights to purchase 0.9027 shares of common stock for every share of common stock owned on the record date. The rights offering included an over-subscription privilege, which permitted each subscriber that exercised its basic subscription right in full the option to purchase additional shares of common stock that remained unsubscribed at the expiration of the offering. If a subscriber exercised its basic subscription right or over-subscription privilege to purchase less than 1,300,000 shares in the rights offering, the subscriber paid a price of $0.97 per whole share. If a subscriber exercised its basic subscription right or over-subscription privilege to purchase 1,300,000 shares or more in the rights offering and owned 33% or more of our issued and outstanding common stock following completion of the rights offering, the subscriber paid a price of$1.36 per whole share.

The rights offering was fully subscribed and closed on March 30, 2015. We received approximately $4.6 million in net proceeds from the rights offering and we intend to use these proceeds for general corporate and working capital purposes. Following the completion of the rights offering on March 30, 2015, entities affiliated with Mr. Carl C. Icahn, the Company’s largest stockholder, became the owner of approximately 52.3% of our common stock. Entities affiliated with Mr. Icahn also own warrants to purchase an additional 9.7% of our common stock, which warrants are currently unexercisable by Mr. Icahn and such affiliated entities.

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Cost Saving Measures—In January of 2015, we significantly reduced the size of our engineering department and terminatedoperations at our Seattle Data Center as part of an effort to reduce our operating expenses, particularly the cost of research and development and advertising delivery. As a result we are making increased use of third-party vendors in the placement of mobile advertising and are exploring with those vendors additional service offerings including the placement of advertising on desktop computers, so-called smart TV’s and other non-mobile devices.

Non-Compliance with NASDAQ Continued Listing Requirements—Our common stock is currently listed on the NASDAQ Capital Market. On May 22, 2014, we received a letter from the NASDAQ Stock Market LLC (“NASDAQ”) advising that we did not meet the minimum $2.5 million stockholders’ equity value requirement for continued listing on the NASDAQ Capital Market and we did not satisfy the alternative requirements for continued listing based on market value of listed securities or net income from continuing operations pursuant to applicable NASDAQ Marketplace Rules. In July 2014, we submitted a plan for compliance to NASDAQ and NASDAQ notified us that we had until November 18, 2014 to implement that plan and regain compliance with the requirements for continued listing. On November 19, 2014, NASDAQ notified us that, based on our continued noncompliance with the applicable $2.5 million stockholders’ equity value requirement for continued listing on NASDAQ, our securities would be subject to delisting by NASDAQ unless we timely requested a hearing before the Listing Qualifications Panel. We timely requested a hearing before the Listings Qualifications Panel, at which hearing we requested an extension of time to develop and execute a plan to regain compliance with the applicable requirements for continued listing on NASDAQ. The Listing Qualifications Panel has granted us an extension of time until May 18, 2015 to solidify a plan and to regain compliance with the minimum $2.5 million stockholders’ equity value requirement for continued listing on the NASDAQ Capital Market. Our common stock will continue to trade on NASDAQ under the symbol “VLTC” pending completion of the expiration of the extension period granted by the Listing Qualifications Panel. If we are unable to regain compliance with the $2.5 million stockholders’ equity value requirement or if we otherwise fail to evidence and sustain compliance with all applicable requirements for continued listing on NASDAQ, our common stock may be subject to delisting by NASDAQ.

On March 17, 2015, we received written notice from the NASDAQ notifying us that for the preceding 30 consecutive business days, our common stock did not maintain a minimum closing bid price of $1.00 per share, as required by NASDAQ Listing Rule 5550(a)(2). The notice has no immediate effect on the listing or trading of our common stock and the common stock will continue to trade on The NASDAQ Capital Market under the symbol “VLTC.” NASDAQ stated in its letter that in accordance with the NASDAQ Listing Rules, we will be provided 180 calendar days, or until September 14, 2015, to regain compliance with the minimum bid price requirement. If at any time before September 14, 2015 the bid price of our common stock closes at $1.00 per share or more for a minimum of ten consecutive business days, the NASDAQ staff will provide us with written notification that it has achieved compliance with the minimum bid requirement. If we do not regain compliance with the minimum bid price requirement by September 14, 2015, we may be eligible for additional time to comply with the minimum bid price requirement. In order to be eligible for such additional time, we will be required to meet the continued listing requirement for market value of publicly held shares and all other initial listing standards for The NASDAQ Capital Market, and must notify NASDAQ in writing of its intention to cure the deficiency during the second compliance period. However, if it appears to NASDAQ that we will not be able to cure the deficiency, or if we are not otherwise eligible for additional time, the NASDAQ staff will provide us with written notification that our common stock will be subject to delisting from The NASDAQ Capital Market.

For more information, see “Risk Factors—If we cannot meet NASDAQ’s continued listing requirements, NASDAQ may delist our common stock, which could have an adverse impact on the liquidity and market price of our common stock.”

Strategic Realignment—We have undergone significant changes over the past two years as described in more detail below. We are now fully focused on our digital media and marketing business.

In October 2014, we announced the expansion of our mobile advertising product suite with the formation of Emporia, an independent and transparent mobile channel for the purchase and sale of premium publisher inventory by a select group of advertisers. We are working with specialized data providers and the premiere hosts of rich media and video ad units to create unique behaviorally relevant vertical data sets for exclusive use on the Emporia platform and to formulate corresponding descriptors, which we refer to as Audience Shortcuts, of those mobile users included in participating advertisers’ target audience who have a real-time propensity for engagement with high-impact ad units (e.g., video and other rich media) at the time of service. Through Emporia, we hope to offer an intuitive self-service interface that will allow advertising agencies and their trading desks to activate users defined by Audience Shortcuts at the time, and only at the time, those users are available and predicted to engage with the advertiser’s content. We are in continuing discussions with publishers, advertisers, agencies, ad tech service

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providers and specialty data providers with respect to the establishment of the Emporia channel. There can be no assurance that these discussions will be successful or that the Emporia channel will be commercially viable.

Prior to July 1, 2013, most of our revenue was derived from providing hosting services to wireless carriers. Starting in 2012, we began our exit from most of our international carrier business and, on June 30, 2013, concluded our U.S. carrier business. On October 31, 2013, we completed the sale of our Gen5 business. On May 30, 2014, we completed the sale of our U.S. and Canadian messaging business. Further, on September 1, 2014, we completed the sale of our wireless carrier business in the UK. We are now fully focused on our digital media and marketing business and are planning to expand our product offerings to add online and display solutions to our suite of mobile data marketing services. Our carrier, messaging and Gen5 businesses are reported as discontinued operations in the consolidated financial statements for all periods presented. The assets and liabilities related to our U.S. and Canadian messaging business, as well as U.K. carrier business, are reported as assets and liabilities held for sale on the consolidated balance sheet at December 31, 2013. See Note 4 - Discontinued Operations.

Sustainability of Business Model—The placement of advertising on websites and in mobile apps has largely been effected through a series of intermediaries between the publishers owning the sites and apps and the advertisers. These intermediaries include “supply-side” businesses aggregating publisher inventory, “neutral” media exchanges and “demand-side” businesses such as ours acting on behalf of advertisers either directly or through their advertising agencies. A significant portion of the money spent by digital advertisers goes to these intermediaries in the form of resale profits or fees, which has the effect of both increasing the costs to advertisers and reducing publisher yields on inventory. Increasingly, advertisers and publishers are taking steps to reduce the number of intermediaries included in the digital ad chain with many advertisers using in-house resources to place advertising directly with publishers or through direct participation in media exchanges. This trend is likely to continue and significantly reduce our and our competitors’ revenue opportunities. We need to identify and exploit new revenue-generating opportunities and we are exploring the entry into new businesses, but there can be no assurance that we will be successful in these endeavors.

To address the challenges presented by the market conditions and the other risks and uncertainties facing our business and to realign our strategic path, we have continued to implement cost saving measures, including reductions in our workforce, the delay or cancellation of some hiring plans, and a restructuring of our facilities and data centers. We continue to review our cost structure and may implement further cost saving initiatives. These measures are designed to realign our strategic path, streamline our business and improve the quality of our product offerings while reducing costs. Our success will depend on our ability to successfully execute one or more financing alternatives, successfully develop and use new technologies and adapt our current and planned services to new customer requirements or emerging industry standards and expand our customer base, which are all subject to the risks and uncertainties discussed in Part I, Item 1A - Risk Factors.

This realignment of our strategic path and consideration of financing options will continue to require management time and resources, while we simultaneously focus on developing new product offerings and reducing costs. We cannot assure that we will be successful in our efforts in obtaining financing, realigning our strategic path, or growing our digital media and marketing business. The uncertainty inherent in our strategic realignment can be difficult to manage, may cause concerns from current and potential customers, suppliers and other third parties with whom we do business, and may increase the likelihood of turnover of officers and key employees.

As a result of the above factors, and other changes in our business, our historical results of operations, including periods prior to the periods presented herein, are not necessarily indicative of the operating results to be expected in the future as discussed in Part I, Item 1A - Risk Factors.

Our solutions and services

Advertisers pay us to deliver their ads to mobile users, and we pay website and mobile application owners (or their proxies) for the use of their ad space. Our technology and data management platform and the audience targeting services provided by certain of our vendors allow us to analyze and augment the information accompanying web and mobile advertising opportunities and deliver highly targeted and engaging ad content to consumers in both programmatic and mediated environments. Our platform, and that of certain of our vendors, uses mass volumes of data along with ad response and location data and, when available, first-party consumer data to generate, in real time, a score for each unique advertising opportunity which can be measured against an advertiser’s creative materials and campaign goals. To date, we have identified more than 200 million server-side unique device profiles, many of which link multiple mobile devices to a single user. We continually collect additional anonymous data about

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users, audiences and their responses to mobile advertisements, which, in turn, refines our targeting and improves our placement choices.

Sales and marketing

We market and sell a wide range of mobile marketing and advertising solutions to brands and agencies through our sales organization. As of December 31, 2014, our sales and marketing organization consisted of 13 employees.

Sales. We have a team focused on selling to brands and agencies. Employees in our sales support and sales engineering group are engaged during the design and implementation process to offer insight into customer requirements, technical solutions and cost evaluation.

Marketing and product management. Our marketing and product management organizations focus on defining our product requirements, educating media and industry analysts on our managed services approach, building brand awareness and supporting the efforts of the sales organization. We market our solutions through industry events, public relations efforts, sales materials and our Internet site. In addition, we work with brands and agencies to help them better understand the opportunity and value that mobile solutions bring to their go-to-market approaches and offerings. We believe the combination of these efforts creates awareness of our business, solutions and managed services approach, which helps drive our overall business growth.

Customers and vendors

Customers

We offer our mobile services to customers based on a variety of pricing models, including cost-per-thousand ("CPM"), cost-per-click ("CPC"), cost-per-action ("CPA") and cost-per-installation ("CPI"). Under performance-driven CPA and CPC pricing models, from which we currently derive a significant portion of our revenue, customers only pay us if we provide the results they specify. These results-based pricing models differ from fixed-rate pricing models, like CPM, under which the fee is based on the number of times the ad is shown, without regard to its effectiveness. As a result, under our contracts with customers that provide for us to be paid on a CPC, CPA or CPI basis, we must be able to develop effective ad campaigns that result in the desired actions being taken by consumers.

Vendors

We utilize strategic relationships with offshore and domestic vendors to increase technical resource capacity in the areas of technical development and quality assurance. We have expanded these relationships to assist in the growing of our product development efforts. On an as needed basis, these vendors can also be utilized to assist in sales engineering and demonstration development. We also use vendors which provide access to publisher advertising inventory through advertising exchanges or other sources. Advertising inventory is available through numerous sources and historically we have not been dependent on any one or few vendors. We have agreements in place with our vendors that allow us to properly manage and oversee vendor activities across the organization.

Research and Development

We have committed significant resources to research and development. Research and development expenses for the years ended December 31, 2014 and 2013 were $2.6 million and $1.4 million, respectively. We anticipate reduced needs in certain areas of our business for research and development as part of an effort to reduce our operating expenses.

Competition

The market for mobile data related products and services continues to be competitive and fragmented. The widespread and rising adoption of open industry standards, rapidly changing technology trends and burgeoning consumer demand has made it easier for new market entrants, existing competitors and non-traditional players to introduce new products and services that compete with our products. With the rapid growth and adoption of mobile data services, along with the increased demand for mobile marketing and advertising solutions, we expect competition to increase. As such, we believe there are a number of important factors to compete effectively in our market, including:


•	strong mobile data expertise;


•	scalable and highly reliable products and services;

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•	advanced user interface capabilities and subscriber insight;


•	continued innovation to stay ahead of the market and the technology curve;


•	knowledge and delivery capabilities across a wide array of content and applications;


•	service integration capabilities across a wide range of devices, networks and standards;


•	sufficient scale and operational efficiencies to be able to offer the most cost effective solutions;


•	high level of customer support;


•	ability to onboard a wide range of devices and content;


•	adaptability to rapidly changing demand, technology and products external to our offerings;


•	comprehensive premium semi-blind ad network;


•	rich media ad creation; and


•	reporting capabilities.

The market for digital media and marketing services is highly competitive, with numerous companies providing competing services. We compete with, among many others, Millennial Media, Conversant and AdTheorent in our mobile advertising and ad network business. Additionally, we face the risk that our customers may seek to develop in-house products as an alternative to those currently being provided by us. Traditional digital players and major mobile ecosystem providers, such as Google, Microsoft, Apple and Yahoo, are in fierce competition over market share in the digital media and marketing space. See Part I, Item 1A - Risk Factors.

Governmental Regulation

As the digital media industry continues to evolve, we believe greater regulation by federal, state or foreign governments or regulatory authorities becomes more likely. We believe, for example, that increased regulation is likely in the area of data privacy, and laws and regulations applying to the solicitation, collection, processing or use of personal or consumer information and other mobile marketing regulations could affect our and our customers’ ability to use and share data, potentially reducing our ability to utilize this information for the purpose of continued improvement of the overall mobile subscriber experience. Any regulation of the requirement to treat all content and application provider services the same over the mobile Internet, sometimes referred to as net neutrality regulation, could reduce our customers' ability to make full use of the value of our services. Further, taxation of services provided over the Internet or other charges imposed by government agencies or by private organizations to access the Internet may be imposed. Any regulation imposing greater fees for Internet use or restricting information exchange over the Internet could result in a decline in the use of the mobile Internet and the viability of mobile data service providers, which could harm our business and operating results. Finally, any further or more restrictive regulation of the ability of wireless carriers to include charges for goods and services in a mobile subscriber’s bill or their ability to offer up these capabilities to third parties, such as ourselves, on a bill-on-behalf-of basis could negatively affect our business. See Part I, Item 1A - Risk Factors.

Intellectual property

Our intellectual property is an essential element of our business. We rely on a combination of trademark, copyright, trade secret, patent and other intellectual property laws of the U.S. and other countries, as well as confidentiality agreements and license agreements to protect our intellectual property. Our intellectual property includes trademarks, patents, copyrights, and trade secrets, and we are involved in licensing arrangements. Our employees and independent contractors are required to sign agreements acknowledging that all inventions, trade secrets, works of authorship, developments and other processes generated by them on our behalf are our property, and assigning to us any ownership that they may claim in those works.

We are the owner of trademarks registered with the United States Patent and Trademark office and internationally, including Voltari and V-Connect.

Employees

As of December 31, 2014, we had a total of 64 employees, including 58 full-time employees. None of our employees is represented by a labor union or is covered by a collective bargaining agreement. We have never experienced any employment-related work stoppages. As a result of our cost savings measures, in January of 2015 we significantly reduced the size of our

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engineering department and terminated operations at our Seattle Data Center as part of an effort to reduce our operating expenses, particularly the cost of research. As of March 15, 2015, we had a total of 31 full-time employees.

Available Information

We maintain a website at www.voltari.com. The information on or available through our website is not, and should not be considered, a part of this report. You may access our annual report on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K and amendments to these reports, as well as other reports relating to us that are filed with or furnished to the Securities and Exchange Commission (the "SEC") free of charge at our website as soon as reasonably practicable after such material is electronically filed with, or furnished to, the SEC. In addition, you may read and copy any materials we file with the SEC at the SEC’s Public Reference Room at 100 F Street, NE, Washington, DC 20549. Information on the operation of the Public Reference Room may be obtained by calling the SEC at 1-800-SEC-0330. The SEC also maintains an Internet site, www.sec.gov, that contains reports, proxy and information statements, and other information that we file electronically with the SEC.

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Item 1A.	Risk Factors.

The following risk factors should be considered carefully in addition to the other information contained in this Annual Report on Form 10-K. This Annual Report on Form 10-K contains forward-looking statements that involve risks and uncertainties. See "Special Statement Regarding Forward-Looking Statements" appearing at the beginning of this report. Our actual results could differ materially from those contained in the forward-looking statements. Factors that may cause such differences include, but are not limited to, those discussed below as well as those discussed elsewhere in this Annual Report on Form 10-K. Additional risks and uncertainties that management is not aware of or that are currently deemed immaterial may also adversely affect our business operations. If any of the following risks materialize, our business, financial condition or operating results could be materially adversely affected. We undertake no obligations to update or revise publicly any forward-looking statements, whether as a result of new information, future events or otherwise.

We are focused on our mobile media business and have discontinued our wireless carrier business and our messaging business in the U.S. and Canada. If we are unable to successfully realign our business to focus on our mobile media business, our business, financial condition, results of operations and cash flows could be materially and adversely affected.

Historically, we depended on a limited number of significant wireless carriers, such as AT&T and Verizon, for a substantial portion of our revenues and cash flows. The discontinuation of our carrier and messaging business could result in lower revenues than expected and increased business development, marketing and sales expenses, and cause our business to be less profitable and our results of operations to be adversely affected. There can be no assurance that we will be able to grow our mobile media business and generate sufficient revenues from our other customers.

We have a history of net operating losses and may continue to suffer losses in the future.

For the years ended December 31, 2010, 2011, 2012, 2013 and 2014, we had net losses of approximately $7.0 million, $195.4 million, $34.2 million, $10.3 million and $29.3 million, respectively. If we cannot become profitable, our financial condition will deteriorate further, and we may be unable to achieve our business objectives.

Our product development investments may not lead to successful new services or enhancements.

We expect to continue to invest in research and development for the introduction of new products and enhancements to existing services designed to improve the quality of the services delivered to our customers. Particularly with our increased emphasis on the mobile enterprise and marketing business, we must also continue to provide new products and services while we continue to develop existing features based on specific customer requests and anticipated market needs. Research and development in the mobile data services industry, however, is complex, expensive and uncertain. We believe that we must continue to dedicate resources to research and development efforts to maintain our competitive position. If we are not able to expend sufficient capital on such research and development or if our efforts do not lead to the successful introduction of service enhancements that are competitive in the marketplace, there could be a material adverse effect on our business, operating results, financial condition and market share.

We operate in an intensely competitive industry, and we may not be able to compete successfully.

The market for digital media and marketing services is highly competitive, with numerous companies providing competing services. We compete with, among others, Google Inc. and Apple Inc., both of which are significantly larger than we are and have more capital to invest in their digital media and marketing businesses. They, or other companies that offer competing digital media solutions, may establish or strengthen cooperative relationships with their mobile operator partners, brand advertisers, app developers or other parties, thereby limiting our ability to promote our services and generate revenue. Competitors could also seek to gain market share from us by reducing the prices they charge to advertisers and other customers. Other companies that offer analytics, mediation, exchange or other third-party services may also become intermediaries between mobile advertisers and thereby compete with us. Any of these developments would make it more difficult for us to sell our services and could result in increased pricing pressure, reduced profit margins, increased sales and marketing expenses or the loss of market share.

The market for mobile media and marketing services may deteriorate or develop more slowly than expected, which could harm our business.

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Advertising and marketing using mobile connected devices is still a relatively new business activity. Advertisers have historically spent a smaller portion of their marketing and advertising budgets on mobile media as compared to traditional methods, such as television, newspapers, radio and billboards, or online advertising over the internet, such as placing banner ads on websites. Future demand and market acceptance for mobile media services is uncertain. Many advertisers still have limited experience with mobile advertising and may continue to devote larger portions of their advertising budgets to more traditional offline or online personal computer-based advertising, instead of shifting additional advertising resources to mobile advertising. In addition, our current and potential advertiser and marketing clients may ultimately find mobile media services to be less effective than traditional advertising media or marketing methods or other technologies for promoting their products and services, and may, consequently, reduce their spending on mobile media from current levels. If the market for mobile advertising deteriorates, or develops more slowly than we expect, we may not be able to increase our revenue.

The rights offering resulted in Mr. Carl C. Icahn becoming the beneficial owner of more than 50% of the voting power of our company, which constitutes a redemption event under the terms of our Series J Preferred Stock, pursuant to which the holders of the Series J preferred stock may require us to redeem their shares, which may cause our common stockholders to lose their entire investment.

The holders of our Series J preferred stock may require us to redeem their shares of Series J preferred stock at a redemption price equal to 100% of the liquidation preference per share in effect at such time plus accrued and unpaid dividends through the next dividend payment date after the redemption date, in connection with a redemption event, including a change in control which results in a person becoming the beneficial owner of at least 50% of the voting power of the Company. Following the completion, and as a result of, the rights offering on March 30, 2015, entities affiliated with Mr. Carl C. Icahn, the Company’s largest stockholder, became the owner of approximately 52.3% of the voting power of our common stock, which constitutes a change of control, which in turn constitutes a redemption event pursuant to the terms of the Series J preferred stock. As a result, each holder of shares of the Series J preferred stock has the right to require us to redeem its shares of Series J preferred stock. Mr. Carl C. Icahn beneficially owns approximately 95.5% of the Series J preferred stock. Mr. Carl C. Icahn has agreed to waive the right to require the Company to redeem shares of Series J preferred stock that he beneficially owns. As of March 31, 2015 the liquidation preference on the outstanding shares of Series J preferred stock is $41.2 million and the the redemption price of the Series J preferred stock is $34.37 per share. If all holders of shares of Series J preferred stock, except for entities affiliated with Mr. Carl C. Icahn, require us to redeem their shares of Series J preferred stock, we will be required to pay an aggregate redemption price equal to $1.8 million as of March 30, 2015, subject to the State of Delaware law governing distributions to stockholders. Shares of Series J preferred stock which are not redeemed, at the option of the holder, will remain outstanding and will continue to accrue quarterly dividends equal to 3.25% of the liquidation preference then in effect. Dividends declared or accrued on the Series J preferred stock reduce the amount of net earnings that are available to common stockholders.

Our business is dependent on the continued growth in usage of smartphones, tablets and other mobile connected devices.

Our business depends on the continued proliferation of mobile connected devices, such as smartphones and tablets, that can connect to the internet over a cellular, wireless or other network, as well as the increased consumption of content through those devices. Consumer usage of these mobile connected devices may be inhibited for a number of reasons, such as:


•	inadequate network infrastructure to support advanced features beyond just mobile web access;


•	users' concerns about the security of these devices;


•	inconsistent quality of wireless connections;


•	unavailability of cost-effective, high-speed internet service; and


•	changes in network carrier pricing plans that charge device users based on the amount of data consumed.

For any of these reasons, users of mobile connected devices may limit the amount of time they spend on these devices and the number of apps they download on these devices. If user adoption of mobile connected devices and consumer consumption of content on those devices do not continue to grow, our total addressable market size may be significantly limited, which could compromise our ability to increase our revenue and to become profitable.

If mobile connected devices, their operating systems or content distribution channels develop in ways that prevent our services from being delivered to their users, our ability to grow our business will be impaired.

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Our business model depends upon the continued compatibility of our service offerings with most mobile connected devices, as well as the major operating systems that run on them and the thousands of apps that are downloaded onto them. The design of mobile devices and operating systems is controlled by third parties with whom we do not have any formal relationships. These parties frequently introduce new devices, and from time to time they may introduce new operating systems or modify existing ones. Network carriers, such as Verizon, AT&T or T-Mobile, may also take steps to limit their customers' ability to download apps or access specified content on mobile devices.

In some cases, the parties that control the development of mobile connected devices and operating systems include companies that are our competitors. For example, Apple controls two of the most popular mobile devices, the iPhone and the iPad, as well as the iOS operating system that runs on them. Apple also controls the App Store for downloading apps that run on Apple's mobile devices. Similarly, Google controls the Android operating system. If we were unable to service these devices or operating systems, either because of technological constraints or because a maker of these devices or developer of these operating systems wished to impair our ability to provide ads on them, our ability to generate revenue could be significantly harmed.

Our industry is undergoing rapid change, and our business model is also evolving, which makes it difficult to predict our future prospects.

The placement of advertising on websites and in mobile apps has largely been effected through a series of intermediaries between the publishers owning the sites and apps and the advertisers. These intermediaries include “supply-side” businesses aggregating publisher inventory, “neutral” media exchanges and “demand-side” businesses such as ours acting on behalf of advertisers either directly or through their advertising agencies. A significant portion of the money spent by digital advertisers goes to these intermediaries in the form of resale profits or fees, which has the effect of both increasing the costs to advertisers and reducing publisher yields on inventory. Increasingly, advertisers and publishers are taking steps to reduce the number of intermediaries included in the digital ad chain with many advertisers using in-house resources to place advertising directly with publishers or through direct participation in media exchanges. This trend is likely to continue and significantly reduce our and our competitors’ revenue opportunities. We need to identify and exploit new revenue-generating opportunities and we are exploring the entry into new businesses, but there can be no assurance that we will be successful in these endeavors.

We may not be able to enhance our service offerings to keep pace with technological and market developments.

The market for digital media services is characterized by rapid technological change, evolving industry standards and frequent new service introductions. To keep pace with technological developments, satisfy increasing customer requirements, maintain the attractiveness and competitiveness of our solutions and ensure compatibility with evolving industry standards and protocols, we will need to regularly enhance our current services and to develop and introduce new services on a timely basis. Our inability, for technological, business or other reasons, to enhance, develop, introduce and deliver compelling services in response to changing market conditions and technologies or evolving expectations of advertisers or device users could hurt our ability to grow our business and could result in our platform becoming obsolete.

We do not control the mobile networks over which we provide our mobile services.

Our mobile media and marketing business is dependent on the reliability of network operators and carriers who maintain sophisticated and complex mobile networks, as well as our ability to deliver ads and services on those networks at prices that enable us to realize a profit. Mobile networks have been subject to rapid growth and technological change, particularly in recent years. We do not control these networks.

Mobile networks could fail for a variety of reasons, including new technology incompatibility, the degradation of network performance under the strain of too many mobile consumers using the network, a general failure from natural disaster or a political or regulatory shut-down. Individuals and groups who develop and deploy viruses, worms and other malicious software programs could also attack mobile networks and the devices that run on those networks. Any actual or perceived security threat to mobile devices or any mobile network could lead existing and potential device users to reduce or refrain from mobile usage or reduce or refrain from responding to the services offered by our customers. If the network of a mobile operator should fail for any reason, we would not be able to effectively provide our services to our clients through that mobile network. This in turn could hurt our reputation and cause us to lose significant revenue.

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Mobile carriers may also increase restrictions on the amounts or types of data that can be transmitted over their networks. We currently generate different amounts of revenue from our customers based on the kinds of ads we deliver, such as display ads, rich media ads or video ads. In some cases, we are paid by advertisers on a cost-per-thousand, or CPM, basis depending on the number of ads shown. In other cases, we are paid on a cost-per-click (CPC), cost-per-action (CPA) or cost-per-installation (CPI) basis depending on the actions taken by the mobile device user. Different types of ads or services consume differing amounts of bandwidth and network capacity. If a network carrier were to restrict the amounts of data that can be delivered on that carrier's network, or otherwise control the kinds of content that may be downloaded to a device that operates on the network, it could negatively affect our pricing practices and inhibit our ability to deliver targeted advertising or marketing to that carrier's users, both of which could impair our ability to generate revenue.

Mobile connected device users may choose not to allow advertising on their devices.

The success of our mobile media and marketing business depends on our ability to deliver targeted, highly relevant ads and services to consumers on their mobile connected devices. Targeting is effected primarily through analysis of data, much of which is collected on the basis of user-provided permissions. This data might include a device's location or data collected when device users view an ad, a message or a video or when they click on or otherwise engage with an ad. Users may elect not to allow data sharing for a number of reasons, such as privacy concerns, or pricing mechanisms that may charge the user based upon the amount or types of data consumed on the device. Users may also elect to opt out of receiving targeted advertising or marketing. The designers of mobile device operating systems are increasingly promoting features that allow device users to disable some of the functionality, which may impair or disable the delivery of ads or services on their devices, and device manufacturers may include these features as part of their standard device specifications. Although we are not aware of any such products that are widely used in the market today, as has occurred in the online advertising industry, companies may develop products that enable users to prevent ads or messages from appearing on their mobile device screens. If any of these developments were to occur, our ability to deliver effective campaigns on behalf of our advertising clients would suffer, which could hurt our ability to generate revenue and become profitable.

Our mobile media business depends on our ability to collect and use data, and any limitation on the collection and use of this data could significantly diminish the value of our services and cause us to lose clients and revenue.

When we deliver an ad or a service to a mobile device, we or our vendors are often able to collect anonymous information and the reactions of the mobile device user, such as whether the user visited a landing page or watched a video; we refer to this data as “Response Data.” We and our vendors may also be able to collect information about the user's mobile location; we refer to this data as "Location Data." As we and our vendors collect and aggregate Location and Response data provided by billions of ad impressions, it is analyzed in order to optimize the placement and scheduling of ads and the offer of services. For example, the collected information may be used to limit the number of times a specific ad or opportunity is presented to the same mobile device, to provide an ad or opportunity to only certain types of mobile devices, or to provide a report to an advertiser client on the number of its ads that were clicked.

Although the Location and Response Data is not personally identifiable information, clients, vendors and mobile ad exchanges might decide not to allow the collection, or might limit its use. Any limitation on the collection and use of Location and Response Data could make it more difficult for us to deliver effective mobile advertising programs that meet the demands of our clients.

Although our contracts with advertisers generally permit us to aggregate data from advertising campaigns, these clients might nonetheless request that we discontinue using data obtained from their campaigns that have already been aggregated with other clients' campaign data. It would be difficult, if not impossible, to comply with these requests, and these kinds of requests could also cause us to spend significant amounts of resources. Interruptions, failures or defects in our data collection, mining, analysis and storage systems, as well as privacy concerns and regulatory restrictions regarding the collection of data, could also limit our ability to aggregate and analyze mobile device user data from our clients' advertising campaigns. If that happens, we may not be able to optimize the placement of advertising or opportunities, which could make our services less valuable, and, as a result, we might lose clients and our revenue could decline.

Our business depends in part on our ability to collect and use location-based information about mobile connected device users.

Our business model depends in part upon the collection and use of Location Data to provide effective targeted advertising on behalf of our advertising clients. The use of Location Data could be restricted by a number of factors, including new laws or

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regulations, technology or consumer choice. Limitations on the collection or use of Location Data could limit our ability to target ads.

Our business practices with respect to data could give rise to liabilities or reputational harm as a result of governmental regulation, legal requirements or industry standards relating to consumer privacy and data protection.

In the course of providing our services, we and our vendors transmit and store information related to mobile devices, the ads we place and the services we deliver including Location and Response Data for the purpose of delivering targeted location-based ads or opportunities to the user of the device. Federal, state and international laws and regulations govern the collection, use, retention, sharing and security of data that we and our vendors collect. We strive to comply with all applicable laws, regulations, policies and legal obligations relating to privacy and data protection. It is possible, however, that these requirements may be interpreted and applied in a manner that is inconsistent from one jurisdiction to another and may conflict with other rules or our practices. Any failure, or perceived failure, by us to comply with U.S. federal, state, or international laws, including laws and regulations regulating privacy or consumer protection, could result in proceedings or actions against us by governmental entities or others. We are aware of several ongoing lawsuits filed against companies in our industry alleging various violations of privacy-related laws. These proceedings could hurt our reputation, force us to spend significant amounts in defense of these proceedings, distract our management, increase our costs of doing business, adversely affect the demand for our services and ultimately result in the imposition of monetary liability. We may also be contractually liable to indemnify and hold harmless our clients from the costs or consequences of inadvertent or unauthorized disclosure of data that we store or handle as part of providing our services.

The regulatory framework for privacy issues worldwide is evolving, and various government and consumer agencies and public advocacy groups have called for new regulation and changes in industry practices, including some directed at the mobile industry in particular. It is possible that new laws and regulations will be adopted in the United States and internationally, or existing laws and regulations may be interpreted in new ways, that would affect our business, particularly with regard to location-based services, collection or use of data to target ads and communication with consumers via mobile devices.

The U.S. government, including the Federal Trade Commission, or FTC, and the Department of Commerce, has announced that it is reviewing the need for greater regulation of the collection of consumer information, including regulation aimed at restricting some targeted advertising practices. The FTC has also proposed revisions to the Children's Online Privacy Protection Act, or COPPA, that could, if adopted, create greater compliance burdens on us. COPPA imposes a number of obligations, such as obtaining parental permission, on website operators to the extent they collect certain information from children who are under 13 years old. The proposed changes would broaden the applicability of COPPA, including the types of information that would be subject to these regulations, and could apply to information that we or our clients collect through mobile devices or apps that is not currently subject to COPPA.

Seasonal fluctuations in digital advertising and marketing activity could adversely affect our cash flows.

Our cash flows from operations could vary from quarter to quarter due to the seasonal nature of our customers' spending. For example, many advertisers devote the largest portion of their budgets to the fourth quarter of the calendar year, to coincide with increased holiday purchasing. Our operating cash flows could fluctuate materially from period to period as a result.

We do not have long-term agreements with our customers, and we may be unable to retain key customers, attract new customers or replace departing customers with customers that can provide comparable revenue to us.

Our success requires us to maintain and expand our current client relationships and to develop new relationships. Our contracts with our digital media customers generally do not include long-term obligations requiring them to purchase our services and are cancelable upon short or no notice and without penalty. As a result, we may have limited visibility as to our future media revenue streams. There can be no assurance that our customers will continue to use our services or that we will be able to replace, in a timely or effective manner, departing customers with new customers that generate comparable revenue.

Our media sales efforts require significant time and expense.

Attracting new media clients requires substantial time and expense, and we may not be successful in establishing new relationships or in maintaining or advancing our current relationships. For example, it may be difficult to identify, engage and market to potential advertiser clients who do not currently spend on digital or mobile advertising or are unfamiliar with our current services or platform. Furthermore, many of our clients' purchasing and design decisions typically require input from

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multiple internal constituencies. As a result, we must identify those involved in the purchasing decision and devote a sufficient amount of time to presenting our services to each of those individuals.

We often need to spend substantial time and effort educating potential mobile media clients about our offerings, including providing demonstrations and comparisons against other available services. This process can be costly and time-consuming. If we are not successful in streamlining our sales processes with advertisers, our ability to grow our business may be adversely affected.

If we do not achieve satisfactory results under performance-based pricing models, we could lose clients and our revenue could decline.

We offer our digital media services to customers based on a variety of pricing models, including CPM, CPA, CPC and CPI. We currently derive a significant portion of our media revenue from the CPM pricing model. Under performance-driven CPA and CPC pricing models, customers only pay us if we provide the results they specify. These results-based pricing models differ from fixed-rate pricing models, like CPM, under which the fee is based on the number of times the ad is shown, without regard to its effectiveness. As a result, under our contracts with customers that provide for us to be paid on a CPC, CPA or CPI basis, we must be able to develop effective ad campaigns that result in the desired actions being taken by consumers. If we are not able to perform effectively under these arrangements, it could hurt our reputation and could cause our revenues to decline.

If we fail to detect click fraud or other invalid clicks on ads or messages, we could lose the confidence of our mobile media clients, which would cause our business to suffer.

Our digital media business relies on delivering positive results to our clients. We are exposed to the risk of fraudulent and other invalid clicks or conversions that clients may perceive as undesirable. Because of their smaller sizes as compared to personal computers, mobile device usage could result in a higher rate of accidental or otherwise inadvertent clicks by a user. Invalid clicks could also result from click fraud, where a mobile device user intentionally clicks on ads for reasons other than to access the underlying content of the ads. If fraudulent or other malicious activity is perpetrated by others, and we are unable to detect and prevent it, the affected customers may experience or perceive a reduced return on their investment. High levels of invalid click activity could lead to dissatisfaction with our services, refusals to pay, refund demands or withdrawal of future business. Any of these occurrences could damage our brand and lead to a loss of customers and revenue.

System failures could significantly disrupt our operations and cause us to lose customers or advertising inventory.

Our success depends on the continuing and uninterrupted performance of our own internal systems, as well as those of our vendors, which we utilize to place ads and opportunities, monitor the performance of advertising and marketing campaigns and manage our inventory of advertising space. Our revenue depends on the technological ability to deliver ads and opportunities and measure them on a CPM, CPC, CPA or CPI basis. Sustained or repeated system failures that interrupt our ability to provide services to clients, including technological failures affecting our ability to deliver ads quickly and accurately and to process mobile device users' responses to ads and opportunities, could significantly reduce the attractiveness of our services to advertisers and reduce our revenue. Our systems and our vendors' systems are vulnerable to damage from a variety of sources, including telecommunications failures, power outages, malicious human acts and natural disasters. In addition, any steps we take to increase the reliability and redundancy of our systems may be expensive and may not be successful in preventing system failures.

Activities of our customers could damage our reputation or give rise to legal claims against us.

Our customers' promotion of their products and services may not comply with federal, state and local laws, including, but not limited to, laws and regulations relating to mobile communications. Failure of our clients to comply with federal, state or local laws or our policies could damage our reputation and expose us to liability under these laws. We may also be liable to third parties for content in the ads we deliver if the artwork, text or other content involved violates copyrights, trademarks or other intellectual property rights of third parties or if the content is defamatory, unfair and deceptive, or otherwise in violation of applicable laws. Although we generally receive assurance from our advertisers that their ads are lawful and that they have the right to use any copyrights, trademarks or other intellectual property included in an ad, and although we are normally indemnified by the advertisers, a third party or regulatory authority may still file a claim against us. Any such claims could be costly and time-consuming to defend and could also hurt our reputation within the mobile advertising industry. Further, if we are exposed to legal liability, we could be required to pay substantial fines or penalties, redesign our business methods, discontinue some of our services or otherwise expend significant resources.

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Competition for our employees is intense and failure to retain and recruit skilled personnel could negatively affect our financial results as well as our ability to maintain relationships with clients, service existing and new contracts, and drive future growth.

We provide sophisticated data delivery platforms and services to our customers. To attract and retain customers and service our existing and new contracts, we believe we need to demonstrate professional acumen and build trust and strong relationships, and that we must retain, identify, recruit, and motivate new hardware and software engineers, programmers, technical support personnel and marketing and sales representatives. Competition is intense for skilled personnel with engineering, product development, technical and marketing and sales experience, and we may not be able to retain and/or recruit individuals that possess the necessary skills and experience, or we may not be able to employ these individuals on acceptable terms and conditions, or at all. Moreover, competition has been increasing the cost of hiring and retaining skilled professionals as, among other reasons, other companies in the technology sector may offer more compensation, particularly in the form of equity awards. Recent business challenges, the realignment of our strategic path, reductions in force and changes in our executive management team have also increased turnover of our skilled personnel and we may continue to experience such turnover in the future. Our business and growth may suffer if we are unable to retain current personnel and hire other skilled personnel.

Our failure to raise additional capital or generate the cash flows necessary to maintain and expand our operations and invest in our services could reduce our ability to continue normal operations. This could adversely affect our ability to continue normal operations and could result in the loss of your entire investment.

Our ability to execute on our short term and longer term business plan is contingent on our ability to raise additional capital. Further, our ability to execute our short term and longer term business plan is based on a number of assumptions which involve significant judgments and estimates of future performance, borrowing capacity and credit and equity finance availability, which cannot at all times be assured. Accordingly, we cannot assure that cash flows from operations and other internal and external sources of liquidity will at all times be sufficient for our cash requirements. Our ability to fund our capital needs also depends on our future operating performance, our ability to compensate for the loss of the substantial cash generated by our discontinued operations, our ability to successfully realign our costs and strategic path, the effect of any financing alternatives we may pursue and our ability to meet financial covenants under any indebtedness we may incur. We may also need to raise additional capital to execute our business plan, including capital to complete planned upgrades and enhancements to our products and services, increase our investment in capital equipment to support new and existing customers, extend our marketing and sales efforts, and make strategic acquisitions if attractive opportunities become available. Our future capital requirements will depend on many factors, including our future operating performance, our ability to successfully realign our costs and strategic path, the time and cost of our service enhancements, the rate of growth of the digital media and marketing business, the rate of mobile data subscriber growth, the acceptance rate of mobile devices as multifunctional computing platforms, the demand for wireless applications, the time and cost of successfully entering into new customer contracts and the amount of investment needed to achieve our sales and marketing objectives. If necessary, we may need to consider actions and steps to improve our cash position and mitigate any potential liquidity shortfall, such as modifying our business plan, pursuing additional financing to the extent available, reducing capital expenditures, pursuing and evaluating other alternatives and opportunities to obtain additional sources of liquidity and other potential actions to reduce costs. We cannot assure that any of these actions would be successful, sufficient or available on favorable terms. Any inability to generate or obtain sufficient levels of liquidity to meet our cash requirements at the level and times needed could have a material adverse impact on our business and financial position.

If we raise additional capital in an equity financing, our stockholders may experience significant dilution of their ownership interests and the per share value of our common stock and/or Series J preferred stock could decline. If we engage in debt financing, we may be required to accept terms that further restrict our ability to incur additional indebtedness and force us to maintain specified liquidity or other ratios. We may not be able to raise any additional capital that we may require on terms acceptable to us or at all. Our failure to do so could result in, among other things, a loss of our customers and a loss of your entire investment.

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Our historical financial statements may not be indicative of future performance.

Our operating history includes business in geographic areas in which we are no longer active, all of which has resulted in revenue and profitability that may not be indicative of our future results of operations. As a result, the price of our common stock may be volatile.

In 2013, AT&T terminated material revenue-generating contracts with us, effective June 30, 2013. We assigned all of our rights and interests under our Verizon Portal Agreement to Opalhaven Corporation, also effective June 30, 2013. On October 31, 2013, we completed the sale of our Gen5 business. All operations related to our U.S. carrier and Gen5 businesses are reported as discontinued operations in the consolidated financial statements for the year ended December 31, 2013.

On May 30, 2014 we completed the sale of our messaging business in the U.S. and Canada. We completed the sale of our United Kingdom wireless carrier business on September 1, 2014. All of the operations related to the messaging business in the U.S. and Canada, as well as the UK wireless carrier business, are reported as discontinued operations in the consolidated financial statements for the years ended December 31, 2014 and 2013. Assets and liabilities of the messaging business in the U.S. and Canada, as well as the UK wireless carrier business are classified as held for sale at December 31, 2013.

As a result of the recent significant changes in our company, the termination of our carrier business, the sale of Gen5, our messaging business, and the UK wireless carrier business, the realignment of our strategic path and enhanced focus on our digital media and marketing business, our exploration of financing alternatives and other changes in our business, our historical results of operations are not necessarily indicative of the operating results of any future period.

We may not be able to realize value from our NOLs.

As of December 31, 2014, we had federal and state NOLs of $410.3 million and $67.5 million, respectively, that begin to expire in 2019 for U.S. federal income tax purposes and in the current year for state income tax purposes. If we had an “ownership change” as defined in section 382 of the Internal Revenue Code (“Section 382”), our NOLs generated prior to the ownership change would be subject to annual limitations, which could reduce, eliminate, or defer the utilization of these losses. Generally, an ownership change occurs if one or more stockholders, each of whom owns 5% or more in value of a corporation’s stock, increase their aggregate percentage ownership by 50 percentage points or more as compared to the lowest percentage of stock owned by such stockholders at any time during the preceding three year period. Based upon a review of past changes in our ownership, we do not believe that we have experienced an ownership change (as defined under Section 382) that would result in any limitation on our future ability to use these NOLs. There can be no assurance however that the IRS or some other taxing authority will not disagree with our position and contend that we have already experienced such an ownership change, which would severely limit our ability to use our NOLs to offset future taxable income.

On April 9, 2013, our stockholders approved a holding company reorganization in which each share of what was then Motricity common stock was exchanged for one share of our common stock. Shares of our common stock are subject to transfer restrictions contained in our certificate of incorporation. In general, the transfer restrictions prohibit transfers having the effect of increasing without our consent the ownership of our common stock by (i) any person from less than 5% to 5% or more or (ii) any person owning or deemed to own 5% of more of our common stock.

While we expect that the transfer restrictions will help guard against an ownership change occurring under Section 382 of the Code and the related rules, because we may use our common stock as consideration to make acquisitions and because we may decide (or need) to sell additional shares of our common stock in the future to raise capital for our business, we cannot guarantee that an ownership change will not occur in the future. Further, because our common stock warrants are not subject to the same exercise limits imposed on the subscription rights, the exercise of those common stock warrants or transfer of those common stock warrants to a person who would control the Company could result in an ownership change under Section 382 of the Code. Unlike if we issued common stock as consideration in an acquisition or to raise additional capital, the exercise of the common stock warrants and, therefore, the resulting ownership shift, are out of our control.

We may engage in acquisitions, dispositions and exits that could disrupt our business, cause dilution to our stockholders and harm our business, operating results or financial condition.

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We may make selective domestic and international acquisitions of, and investments in, businesses that offer new products, services and technologies, augment our market coverage, and/or enhance our technological capabilities. Acquisitions and investments outside of the U.S. involve unique risks related to integration of operations across different cultures and languages, currency risks and the particular economic, political and regulatory risks associated with specific countries. We have ceased doing business in India, the Asia Pacific region, France, the Netherlands, Canada and the United Kingdom. Such dispositions or closures may have an adverse effect on our business. Acquisitions, dispositions and exits in the high-technology sector are inherently risky and subject to many factors outside of our control, and no assurance can be given that our previous or future acquisitions, dispositions or exits will be successful and will not materially adversely affect our business and operations. In addition, the integration of any business we acquire may require that we incur significant restructuring charges. Acquisitions involve numerous risks, including difficulties in integrating the operations, management information systems and internal controls, technologies, products, and personnel of the acquired companies, particularly companies with overlapping business segments and widespread operations and/or complex products. Integration may be a difficult, drawn out process further complicated by such factors as geographic distances, lack of experience operating in the geographic market or industry sector of the acquired business, delays and challenges associated with integrating the business with our existing businesses, diversion of management's attention from daily operations of the business, potential loss of key employees and customers of the acquired business, the potential for deficiencies in internal controls at the acquired business, performance problems with the acquired business' technology, difficulties in entering markets in which we have no or limited direct prior experience, exposure to unanticipated liabilities of the acquired business, insufficient revenues to offset increased expenses associated with the acquisition, and our ability to achieve the growth prospects and synergies expected from any such acquisition. Even when an acquired business has already developed and marketed products and services, there can be no assurance that product or service enhancements will be made in a timely fashion or that all pre-acquisition due diligence will have identified all possible issues that might arise with respect to such acquired assets.

Any acquisition may also cause us to assume liabilities, record goodwill and non-amortizable intangible assets that will be subject to impairment testing and potential impairment charges, incur amortization expense related to certain intangible assets, increase our expenses and working capital requirements, and subject us to litigation, which would reduce our return on invested capital. Failure to manage and successfully integrate the acquisitions we make could materially harm our business and operations. Any future acquisitions may require additional debt or equity financing, which in the case of debt financing, will increase our leverage and, in the case of equity financing, would be dilutive to our existing stockholders. Any decline in our perceived credit-worthiness associated with an acquisition could adversely affect our ability to borrow and result in more restrictive borrowing terms. As a result of the foregoing, we also may not be able to complete acquisitions or strategic transactions in the future to the same extent as in the past, or at all. These and other factors could harm our ability to achieve anticipated levels of profitability at acquired operations or realize other anticipated benefits of an acquisition or disposition, and could adversely affect our business, operating results, and financial condition.

Our ongoing leadership transition could have a material adverse impact on our business, operating results or financial condition.

On March 26, 2013, Nathan Fong notified the Company that he would resign from his positions as Chief Financial Officer and Chief Operating Officer, effective April 12, 2013. On August 14, 2013, John Breeman commenced serving as the Company’s Chief Financial Officer. On December 20, 2013, Richard Stalzer resigned as Chief Executive Officer of the Company. Following the receipt of Mr. Stalzer's resignation, Richard Sadowsky, who had, since November 15, 2012 been serving as our Chief Administrative Officer as well as General Counsel, was appointed Acting Chief Executive Officer of the Company. In connection with this appointment, Mr. Sadowsky relinquished his titles of Chief Administrative Officer and General Counsel. The uncertainty inherent in our ongoing leadership transition can be difficult to manage, may cause concerns from current and potential customers, suppliers and other third parties with whom we do business, and may increase the likelihood of turnover of other key officers and employees. Our ongoing leadership transition could have a material adverse impact on our business, operating results or financial condition.

We implemented cost saving measures in 2012, 2013 and 2015 and may implement additional cost saving measures in the future. If we are not successful in implementing future cost savings initiatives, our operating results and financial condition could be adversely affected. We may also experience an adverse impact on our business as a result of the reduction in force.

In the first quarter of 2012, we implemented a reduction in our global workforce as part of the overall realignment of our strategic path, our exit from India and the Asia Pacific region and our decision to sell our France and Netherlands subsidiaries. During the first half of 2013, we reduced, and by August of 2013 had eliminated, the portion of our workforce servicing the U.S. carrier

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business. In early 2015, we significantly reduced the size of our workforce providing engineering and information technology services. We continue to review our cost structure and may implement further cost saving initiatives. We cannot guarantee that we will be successful in implementing such initiatives, or that such efforts will not interfere with our ability to achieve our business objectives. Moreover, a reduction in force can be difficult to manage, may cause concerns from current and potential customers, suppliers and other third parties with whom we do business, may increase the likelihood of turnover of other key employees, and may have an adverse impact on our business.

Any material weaknesses in our internal controls over financial reporting or failure to maintain proper and effective internal controls could impair our ability to produce accurate and timely financial statements and investors' views of us could be harmed.

Ensuring that we have adequate internal financial and accounting controls and procedures in place so that we can manage our business and produce accurate financial statements on a timely basis is a costly and time-consuming effort. Our internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements in accordance with U.S. GAAP. We are required to comply with Section 404(a) of the Sarbanes-Oxley Act of 2002, which requires annual management assessment of the effectiveness of our internal control over financial reporting and, until 2013 when we became a smaller reporting company under Section 404(b) of the Sarbanes-Oxley Act, we were required to provide a report by our independent registered public accounting firm addressing this assessment. Our compliance with Section 404 has required and will continue to require that we incur additional expense and expend management time on compliance-related issues. If we fail to maintain proper internal controls, our business could be adversely affected, our ability to predict our cash needs, and the market's confidence in our financial statements could decline and the market price of our common stock could be adversely affected.

If we are unable to protect the confidentiality of our proprietary information, the value of our technology could be adversely affected.

Our business relies upon certain unpatented or unregistered intellectual property rights and proprietary information. Consequently, although we take measures to keep our key intellectual property rights and proprietary information confidential, we may not be able to protect our technology from independent invention by third parties. We currently attempt to protect most of our key intellectual property through a combination of trade secret, copyright and other intellectual property laws and by entering into employee, contractor and business partner confidentiality agreements. Such measures, however, provide only limited protection, and under certain circumstances we may not be able to prevent the disclosure of our intellectual property, or the unauthorized use or reverse engineering or independent development of our technology. This may allow our existing and potential competitors to develop products and services that are competitive with, or superior to, our services. Further, we may choose to expand our international presence. Many of these countries' intellectual property laws are not as stringent as those of the U.S. Effective patent, copyright, trademark and trade secret protections may be unavailable or limited in some foreign countries. As a result, we may not be able to effectively prevent competitors in these countries from using or infringing our intellectual property rights, which would reduce our competitive advantage and ability to compete in these regions or otherwise harm our business. In the future, we may also have to resort to litigation to enforce our intellectual property rights, which could result in substantial costs and divert our management's attention and resources. There can be no assurance that such litigation will be successful.

We may not be able to make use of the existing tax benefits of the NOLs because we may not generate taxable income.

The use of the NOLs is subject to uncertainty because it is dependent upon the amount of taxable income generated by us and our consolidated subsidiaries. Through December 31, 2014 we have not generated taxable income on an annual basis, and there can be no assurance that we will have sufficient taxable income in future years to use the NOLs before they begin expiring at varying dates starting in 2019 for U.S. federal income tax purposes and in the current year for state income tax purposes.

Future legislation may impede our ability to realize the tax benefits of the NOLs.

It is possible that legislation or regulations will be adopted that would limit our ability to use the tax benefits associated with the NOLs. We are not aware, however, of any proposed changes in the tax laws or regulations that would materially affect our ability to use the NOLs.

The IRS could challenge the amount of the NOLs or claim that we experienced an ownership change, which could reduce the amount of NOLs that we can use.

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The amount of the NOLs has not been audited or otherwise validated by the IRS. The IRS could challenge the amount of the NOLs, which could result in an increase in our future income tax liability. In addition, calculating whether an ownership change has occurred is subject to uncertainty, both because of the complexity and ambiguity of Section 382 and because of limitations on a publicly traded company's knowledge as to the ownership of, and transactions in, its securities. Therefore, we cannot assure you that a governmental authority will not claim that we experienced an ownership change and attempt to reduce or eliminate the benefit of the NOLs even if we are successful in implementing the protective measures subjecting our stock to transfer restrictions.

We use datacenters to deliver our platform and services and any disruption of service at these facilities could harm our business.

We host our services and serve all of our customers (either directly or through third-party vendors) from various datacenter facilities located around the U.S. Several of our datacenter facilities are operated by third parties. We do not control the operations at the third-party facilities. All of these facilities are vulnerable to damage or interruption from earthquakes, hurricanes, floods, fires, terrorist attacks, power losses, telecommunications failures and similar events. They also could be subject to break-ins, computer viruses, denial of service attacks, sabotage, intentional acts of vandalism and other misconduct. The occurrence of a natural disaster or an act of terrorism, a decision to close the third-party facilities without adequate notice or other unanticipated problems could result in lengthy interruptions in our services. Although we maintain off-site tape backups of our customers' data, we do not currently operate or maintain a backup datacenter for any of our services, which increases our vulnerability to interruptions or delays in our services. Interruptions in our services might harm our reputation, reduce our revenue, cause us to incur financial penalties, subject us to potential liability and cause customers to terminate their contracts.

Capacity constraints could disrupt access to our services, which could affect our revenue and harm our reputation.

Our service goals of performance, reliability and availability require that we and our vendors have adequate capacity in computer systems to cope with the volume of traffic through service delivery platforms. If we are successful in growing the size and scope of our operations, we will need to improve and upgrade our systems and infrastructure, or purchase services from vendors with sufficient capacity, to offer our customers and their subscribers enhanced services, capacity, features and functionality. This may require us to commit substantial financial, operational and technical resources before the volume of our business rises, with no assurance that our revenue will grow. If our systems cannot be expanded in a timely manner or the requisite services purchased to cope with increased traffic we could experience disruptions in service, lower customer and subscriber satisfaction and delays in the introduction of new services. Any of these problems could impair our reputation and cause our revenue to decline.

If we are successful in realigning our strategic path and grow our business yet fail to manage such future growth effectively, our business could be harmed.

Our revenue from continuing operations has grown. This growth places significant demands on our management, operational and financial infrastructure. If we are to be able to grow effectively in the future and to manage such growth, if achieved, we must succeed in the realignment of our strategic path and improve and continue to enhance our managerial, operational and financial controls, and train and manage our employees. We must also manage new and existing relationships with customers, suppliers, business partners and other third parties. These activities will require significant expenditures and allocation of valuable management resources. If we fail to maintain the efficiency of our organization during periods of growth, our profit margins may decrease, and we may be unable to achieve our business objectives.

Our business involves the use, transmission and storage of confidential information, and the failure to properly safeguard such information could result in significant reputational harm and monetary damages.

Our business activities involve the use, transmission and storage of confidential information. We believe that we take commercially reasonable steps to protect the security, integrity and confidentiality of the information we collect and store, but there is no guarantee that inadvertent or unauthorized disclosure will not occur or that third parties will not gain unauthorized access to this information despite our efforts. If such unauthorized disclosure or access does occur, we may be required, under existing and proposed laws, to notify persons whose information was disclosed or accessed. We may also be subject to claims of breach of contract for such disclosure, investigation and penalties by regulatory authorities and potential claims by persons whose information was disclosed. The unauthorized disclosure of information may result in the termination of one or more of our commercial relationships and/or a reduction in customer confidence and usage of our services, which would have a material adverse effect on our business, operating results and financial condition.

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We may be subject to liability for our use or distribution of information that we receive from third parties.

As part of our business, we obtain content and commercial information from third parties. When we distribute this information, we may be liable for the data contained in that information. There is a risk that we may be subject to claims related to the distribution of such content such as defamation, negligence, intellectual property infringement, violation of privacy or publicity rights and product or service liability, among others. Laws or regulations of certain jurisdictions may also deem some content illegal, which may expose us to additional legal liability. We also gather personal information from subscribers in order to provide personalized services. Gathering and processing this personal information may subject us to legal liability for, among other things, defamation, negligence, invasion of privacy and product or service liability. We are also subject to laws and regulations, both in the U.S. and abroad, regarding the collection and use of subscriber information. If we do not comply with these laws and regulations, we may be exposed to legal liability. Some of the agreements by which we obtain content do not contain indemnity provisions in our favor. Even if a given contract does contain indemnity provisions, they may not cover a particular claim or type of claim or the party granting indemnity may not have the financial resources to cover the claim. Our insurance coverage may be inadequate to cover fully the amounts or types of claims that might be made. Any liability that we incur as a result of content we receive from third parties could adversely affect our results of operations.

Actual or perceived security vulnerabilities in mobile devices and privacy concerns related to mobile device technology could negatively affect our business.

The security of mobile devices and wireless networks is critical to our business. Individuals or groups may develop and deploy viruses, worms and other malicious software programs that attack mobile devices and wireless networks. Security experts have identified computer worms targeted specifically at mobile devices. Security threats could lead some mobile subscribers to reduce or delay their purchases of mobile content and applications in an attempt to protect their data privacy and reduce the security threat posed by viruses, worms and other malicious software. Wireless carriers and device manufacturers may also spend more on protecting their wireless networks and mobile devices from attack, which could delay adoption of new mobile devices that tend to include more features and functionalities that facilitate increased use of mobile data services. Actual or perceived security threats, and reactions to such threats, could reduce our revenue or require unplanned expenditures on new security initiatives.

Lawsuits have been filed against us and certain of our current and former directors and officers, which could divert management's attention and adversely affect our business, results of operations and cash flows.

Lawsuits have been filed against us and certain of our current and former directors and officers in the U.S. District Court, Western District of Washington at Seattle, alleging various violations of federal securities laws and of state law, including breaches of fiduciary duties and unjust enrichment, relating to alleged false and misleading statements and omissions made by us in our registration statement for our initial public offering, subsequent reports filed with the SEC and other press releases and public statements. Although some of these cases have been dismissed, the others are at an early stage and we are not able to predict the probability of the outcome or estimate of loss, if any, related to these matters. These types of litigation often are expensive and divert management's attention and resources. As a result, any of those claims, whether or not ultimately successful, could adversely affect our business, results of operations and cash flows.

Claims by others that we infringe their intellectual property rights could force us to incur significant costs.

We cannot be certain that our services do not and will not infringe the intellectual property rights of others. Many parties in the telecommunications and software industries have begun to apply for and obtain patent protection for innovative proprietary technologies and business methods. Given that our platform interacts with various participants in the mobile data ecosystem, existing or future patents protecting certain proprietary technology and business methods may preclude us from using such proprietary technology or business methods, or may require us to pay damages for infringement or fees to obtain a license to use the proprietary technology or business methods (which may not be available or, if available, may be on terms that are unacceptable), or both, which would increase our cost of doing business. In addition, litigation concerning intellectual property rights and the infringement of those rights, including patents, trademarks and copyrights, has grown significantly over the last several years and is likely to grow further in the future. If we become the subject of infringement claims, we may be forced into litigation, which will require us to devote significant resources and management's time and attention to defend against such infringement claims. If it is determined that our services infringe the intellectual property rights of a third party, we may be required to pay damages or enjoined from using that technology or forced to obtain a license (which may not be available or, if available, may be on terms that are unacceptable) and/or pay royalties to continue using that technology. The assertion of intellectual property infringement claims against our technology could have a material adverse effect on our business, operating results and financial condition.

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Government regulation of digital media is evolving, and unfavorable changes or our failure to comply with regulations could harm our business and operating results.

As the digital media industry continues to evolve, we believe greater regulation by federal, state or foreign governments or regulatory authorities becomes more likely. We believe, for example, that increased regulation is likely in the area of data privacy, and laws and regulations applying to the solicitation, collection, processing or use of personal or consumer information and other mobile marketing regulations could affect our and our customers' ability to use and share data, potentially reducing our ability to utilize this information for the purpose of continued improvement of the overall mobile subscriber experience. Any regulation of the requirement to treat all content and application provider services the same over the mobile Internet, sometimes referred to as net neutrality regulation, could reduce our customers' ability to make full use of the value of our services. Further, taxation of services provided over the Internet or other charges imposed by government agencies or by private organizations to access the Internet may be imposed. Any regulation imposing greater fees for Internet use or restricting information exchange over the Internet could result in a decline in the use of the mobile Internet and the viability of mobile data service providers, which could harm our business and operating results.

Our use of open source software could limit our ability to commercialize our services.

We have incorporated open source software into our services. Although we closely monitor our use of open source software, the terms of many open source licenses to which we are subject have not been interpreted by U.S. or foreign courts, and there is a risk that such licenses could be construed in a manner that imposes unanticipated conditions or restrictions on our ability to commercialize our services. In that event, we could be required to seek licenses from third parties in order to continue offering our services, to re-engineer our products or to discontinue sales of our services, any of which could materially adversely affect our business.

Mr. Carl C. Icahn indirectly owns a majority of our common stock and Series J preferred stock, he has a relationship with one of our directors, our certificate of incorporation waives the corporate opportunity doctrine as it relates to funds affiliated with him and he may have interests that diverge from those of other stockholders.

Following the completion, and as a result of, the rights offering on March 30, 2015, entities affiliated with Mr. Carl C. Icahn, the Company’s largest stockholder, became the beneficial owner, and has voting control over, of approximately 52.3% of our common stock. Entities affiliated with Mr. Icahn also own warrants to purchase an additional 9.7% of our common stock, which warrants are currently unexercisable by Mr. Icahn and such entities. Further, he holds 95.5% of our Series J preferred stock, which has limited voting rights. Mr. Icahn is able to control and exert substantial influence over us, including the election of our directors and controlling most matters requiring board or stockholder approval, including business strategies, mergers, business combinations, acquisitions or dispositions of significant assets, issuances of common stock, incurrence of debt or other financing and the payment of dividends. The existence of a controlling stockholder may have the effect of making it difficult for, or may discourage or delay, a third party from seeking to acquire a majority of our outstanding common stock, which could adversely affect the market price of our stock. Mr. Carl Icahn owns, controls and has an interest in many companies, some of which may compete directly or indirectly with us. As a result, his interests may not always be consistent with our interests or the interests of our other stockholders.

In our certificate of incorporation, we renounce and provide for a waiver of the corporate opportunity doctrine as it relates to the funds affiliated with Koala Holding LP, an affiliate of Mr. Carl C. Icahn, Technology Crossover Ventures, and any person or entity affiliated with these investors. As a result, Mr. Carl C. Icahn and entities controlled by him will have no fiduciary duty to present corporate opportunities to us. These exempted persons are in the business of making investments in companies and may, from time to time, acquire and hold interests in businesses that compete directly or indirectly with us. They may also pursue, for their own accounts, acquisition opportunities that may be complementary to our business, and, as a result, those acquisition opportunities may not be available to us. These potential conflicts of interest could have a material adverse effect on our business, financial condition, results of operations or prospects if attractive corporate opportunities are directed by the exempted persons to themselves or their other affiliates instead of to us. As a result, corporate opportunities that may benefit us may not be available to us. To the extent that conflicts of interest may arise between us, Mr. Carl Icahn and his affiliates, those conflicts may be resolved in a manner adverse to us or our other shareholders.

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As a result of the implementation of measures designed to protect the use of our NOLs by restricting transfers of our common stock to the extent such transfers would affect the percentage of stock that is treated as owned by a five-percent stockholder, your ability to transfer your shares of common stock and your opportunity to receive a premium on our stock may be limited.

On April 9, 2013, our stockholders approved a holding company reorganization in which each share of what was then Motricity common stock was exchanged for one share of Voltari common stock. As a result of this transaction, shares of our common stock are subject to transfer restrictions contained in our certificate of incorporation. In general, the transfer restrictions prohibit transfers having the effect of increasing the ownership of our common stock by (i) any person from less than 5% to 5% or more or (ii) any person owning or deemed to own 5% of more of our common stock without our consent. Consequently, your ability to transfer your shares of common stock may be limited.

Even if our board of directors consented to a significant stock acquisition, a potential buyer might be deterred from acquiring our common stock while we still have significant tax losses being carried forward, because such an acquisition might trigger an ownership change and severely impair our ability to use our NOLs against future income. Thus, this potential tax situation could have the effect of delaying, deferring or preventing a change in control and, therefore, could affect adversely our shareholders' ability to realize a premium over the then prevailing market price for our common stock in connection with a change in control. The transfer restrictions that apply to shares of our common stock, although designed as a protective measure to avoid an ownership change, may have the effect of impeding or discouraging a merger, tender offer or proxy contest, even if such a transaction may be favorable to the interests of some or all of our shareholders. This effect might prevent our stockholders from realizing an opportunity to sell all or a portion of their common stock at a premium to the prevailing market price. In addition, the transfer restrictions may delay the assumption of control by a holder of a large block of our common stock and the removal of incumbent directors and management, even if such removal may be beneficial to some or all of our stockholders.

If we cannot meet NASDAQ’s continued listing requirements, NASDAQ may delist our common stock which could have an adverse impact on the liquidity and market price of our common stock.

Our common stock is currently listed on the Nasdaq Capital Market. We are required to meet certain qualitative and financial tests to maintain the listing of our common stock on the Nasdaq Capital Market.

On May 22, 2014, we received a letter from the NASDAQ Stock Market LLC (“NASDAQ”) advising that we did not meet the minimum $2.5 million stockholders’ equity value requirement for continued listing on the NASDAQ Capital Market and we did not satisfy the alternative requirements for continued listing based on market value of listed securities or net income from continuing operations pursuant to applicable NASDAQ Marketplace Rules. In July 2014, we submitted a plan for compliance to NASDAQ and NASDAQ notified us that we had until November 18, 2014 to implement that plan and regain compliance with the requirements for continued listing. On November 19, 2014, NASDAQ notified us that, based on our continued noncompliance with the applicable $2.5 million stockholders’ equity value requirement for continued listing on NASDAQ, our securities would be subject to delisting by NASDAQ unless we timely requested a hearing before the Listing Qualifications Panel. We timely requested a hearing before the Listings Qualifications Panel, at which hearing we requested an extension of time to develop and execute a plan to regain compliance with the applicable requirements for continued listing on NASDAQ. The Listing Qualifications Panel has granted us an extension of time until May 18, 2015 to solidify a plan and to regain compliance with the minimum $2.5 million stockholders’ equity value requirement for continued listing on the NASDAQ Capital Market. Our common stock will continue to trade on NASDAQ under the symbol “VLTC” pending completion of the expiration of the extension period granted by the Listing Qualifications Panel. If we are unable to regain compliance with the $2.5 million stockholders’ equity value requirement or if we otherwise fail to evidence and sustain compliance with all applicable requirements for continued listing on NASDAQ, our common stock may be subject to delisting by NASDAQ.

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In order to be eligible for such additional time, we will be required to meet the continued listing requirement for market value of publicly held shares and all other initial listing standards for The NASDAQ Capital Market, and must notify NASDAQ in writing of its intention to cure the deficiency during the second compliance period. However, if it appears to NASDAQ that we will not be able to cure the deficiency, or if we are not otherwise eligible for additional time, the NASDAQ staff will provide us with written notification that our common stock will be subject to delisting from The NASDAQ Capital Market.

If we are unable to regain compliance with the minimum bid price requirement, the $2.5 million stockholders’ equity value requirement or if we otherwise fail to evidence and sustain compliance with all applicable requirements for continued listing on NASDAQ, our common stock may be subject to delisting by NASDAQ. This could inhibit the ability of our common stockholders to trade their shares in the open market, thereby severely limiting the liquidity of such shares. Although stockholders may be able to trade their shares of common stock on the over-the-counter market, there can be no assurance that this would occur. Further, the over-the-counter market provides significantly less liquidity than NASDAQ and other national securities exchanges, is thinly traded and highly volatile, has fewer market makers and is not followed by analysts. As a result, your ability to trade or obtain quotations for these securities may be more limited than if they were quoted on NASDAQ or other national securities exchanges.

Our common stock is ranked junior to our Series J preferred stock with respect to cash dividends and amounts payable in the event of our dissolution, liquidation or winding up.

With respect to the payment of cash dividends and amounts payable in the event our liquidation, dissolution or winding up, our common stock is ranked junior to our Series J preferred stock. This means that, unless full cumulative dividends have been paid or set aside for payment on all outstanding Series J preferred stock for all accrued dividends, no cash dividends may be declared or paid on our common stock. Likewise, in the event of our voluntary or involuntary liquidation, dissolution or winding up, no distribution of our assets may be made to holders of our common stock until we have paid to our Series J preferred stockholders the liquidation preference relating to such preferred stock, plus in each case any accrued and unpaid dividends. In the event of our voluntary or involuntary liquidation, dissolution or winding up, our asset value would first inure to the benefit of holders of our Series J preferred stock, up to the value of the Series J preferred stock liquidation preference plus any accrued and unpaid dividends thereon, before holders of our common stock would realize any benefits from such increase.

We have not paid or declared common stock cash dividends in the past, and do not plan to pay or declare common stock cash dividends in the future, and, as a result, your only opportunity to achieve a return on an investment in our common stock is if the price of our common stock appreciates.

We have never declared or paid any dividends on our common stock other than the distribution of subscription rights in the rights offerings that closed in October 2012 and March 2015. We do not expect to declare or pay dividends on our common stock in the foreseeable future. Instead, we anticipate that all of our earnings in the foreseeable future will be used in the operation and growth of our business and the payment of dividends on our Series J preferred stock. Any determination to pay dividends on our common stock in the future will be at the discretion of our board of directors. In addition, our ability to pay dividends on our common stock is currently limited by the terms of our Series J preferred stock and may be further restricted by the terms of any future debt or preferred securities. Accordingly, your only opportunity to achieve a return on your investment in our common stock may be if the market price of our common stock appreciates and you sell your shares at a profit. The market price for our common stock may never exceed, and may fall below, the price that you paid for such common stock.

We currently have fewer than 300 stockholders of record and, therefore, are eligible to terminate the registration of our common stock under the Exchange Act and, correspondingly, delist our shares from NASDAQ.

As a public company with fewer than 300 stockholders of record, we currently register our shares of common stock under the Exchange Act, on a voluntary basis. Section 12(g)(4) of the Exchange Act allows for the registration of any class of securities to be terminated 90 days after a company files a certification with the SEC that the number of holders of record of such class of security is fewer than 300 persons. Accordingly we are eligible to deregister our common stock under the Exchange Act. Upon the effectiveness of the termination of registration under Section 12, we would not be required to comply with certain disclosure requirements under the Exchange Act, including, but not limited to, proxy statement filings and filings by insiders to disclose the acquisition and disposition of our securities. Even if we were to deregister, however, Section 15(d) of the Exchange Act would require us to continue to file annual, quarterly and current reports until no earlier than when we file our next annual report on Form 10-K. At such time, you may not have access to current information about our Company. Although we do not currently have plans to deregister, the current number of record holders of our common stock enables us to do so.

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We expect that our revenue will fluctuate, which could cause our stock price to decline.

Any significant delays in the deployment of our services, unfavorable sales trends in our existing service categories, or changes in the spending behavior of our customers could adversely affect our revenue growth. If our revenue fluctuates or does not meet the expectations of securities analysts and investors, our stock price would likely decline.

The market price of our common stock and our common stock warrants may be highly volatile or may decline regardless of our actual operating performance.

Broad market and industry factors may adversely affect the market price of our common stock and our common stock warrants, regardless of our actual operating performance. Factors that could cause wide fluctuations in the stock price may include, among other things:


•	actual or anticipated variations in our financial condition and operating results;


•	overall conditions or trends in our industry;


•	addition or loss of significant customers;


•	competition from existing or new products;


•	changes in the market valuations of companies perceived by investors to be comparable to us;


•	announcements by us or our competitors of technological innovations, new services or service enhancements;


•	announcements by us or our competitors of significant acquisitions, strategic partnerships, divestitures or capital commitments;


•	announcements of investigations or regulatory scrutiny of our operations or lawsuits filed against us;


•	additions or departures of key personnel;


•	a Redemption Event occurring;


•	changes in the estimates of our operating results or changes in recommendations by any securities or industry analysts that elect to follow our common stock; and


•	sales of our common stock by us or our stockholders, including sales by our directors and officers.

The stock market in general, and the market for technology companies in particular, has experienced extreme price and volume fluctuations that have often been unrelated or disproportionate to the operating performance of those companies. Our common stock price has declined significantly since Motricity's initial public offering in 2010 and may continue to do so as a result of the above described factors as well as general economic, political and market conditions such as recessions, interest rate changes or international currency fluctuations. In the past, following periods of volatility in the overall market and the market price of a particular company's securities, securities class action litigation has often been instituted against these companies. We are subject to this type of litigation and may be the target of additional litigation of this nature. Such securities litigation could result in substantial costs and a diversion of our management's attention and resources, whether or not we are successful in such litigation.

If securities or industry analysts do not publish research or reports about our business, if they adversely change their recommendations regarding our common stock, or if our operating results do not meet their expectations, our stock price and trading volume could decline.

The trading market for our common stock will be influenced by the research and reports that securities or industry analysts publish about us or our business. We do not have any control over these reports or analysts. If any of the analysts who cover our company downgrades our stock, or if our operating results do not meet the analysts' expectations, our stock price could decline. Moreover, if any of these analysts ceases coverage of our company or fails to publish regular reports on our business, we could lose visibility in the financial markets, which in turn could cause our stock price and trading volume to decline.

We are required by the terms of the common stock warrants to use our reasonable best efforts to maintain an effective registration statement covering the issuance of the shares of common stock underlying the common stock warrants at the time that our warrant holders exercise their warrants. The exercise of our common stock warrants may also be limited by state securities laws. We cannot guarantee that a registration statement will be effective, in which case our warrant holders may not be able to exercise their common stock warrants.

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Holders of our common stock warrants will be able to exercise the common stock warrants only if a registration statement under the Securities Act of 1933, as amended (the "Securities Act"), relating to the shares of our common stock underlying the warrants is then effective. We have a contractual obligation to use our reasonable best efforts to maintain a current registration statement covering the shares of common stock underlying the warrants to the extent registration at the time of exercise is required by federal securities laws, and we intend to, but may not be able to, comply with our undertaking. Our common stock warrants expire if they are not exercised in connection with certain corporate transactions, but if a registration statement covering the shares underlying the common stock warrants is not effective at the time of such transaction, you will not be able to exercise your warrants and they will expire without your being able to exercise them. Therefore, the value of the warrants may be greatly reduced if a registration statement covering the shares of common stock issuable upon the exercise of the warrants is not kept current.

If you do not exercise your common stock warrants, they will terminate and have no further rights or value.

Our common stock warrants provide that they terminate if they are not exercised on or before October 11, 2017 or in connection with a capital reorganization, reclassification of our securities, consolidation or merger of our company resulting in a change of 50% of the voting power of the company, a sale of substantially all of our assets or a similar transaction requiring stockholder approval shall be effected. If you do not exercise your common stock warrants in connection with such a transaction, the warrants will terminate and be of no further value. There can be no assurance that any such transaction would provide value for the common stock received upon the exercise of the common stock warrants at or in excess of the exercise price of such warrants.

We are a “controlled company” under applicable NASDAQ Marketplace Rules and, therefore, we qualify for exemptions from certain of NASDAQ’s corporate governance requirements.



Item 1B.	Unresolved Staff Comments.

None.



Item 2.	Properties.

Our corporate headquarters is located in New York, New York and comprises approximately 8,000 square feet of space leased through November 30, 2018. We also perform a range of business functions out of offices located in Chicago, Dallas and Los Angeles. Prior to February 2015 we also operated one datacenter facility located in Washington State and an office located in Phoenix. We now use third-party operated datacenters located in other U.S. states to provide services to our customers. We believe that our existing properties are in good condition and sufficient and suitable for the conduct of our business. All of our properties are leased. As our existing leases expire, we believe that suitable space will be available to us on commercially reasonable terms.



Item 3.	Legal Proceedings

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Inc., Goldman, Sachs & Co., Deutsche Bank Securities Inc., RBC Capital Markets Corporation, Robert W. Baird & Co Incorporated, Needham & Company, LLC and Pacific Crest Securities LLC. The complaint alleged violations under Sections 11 and 15 of the Securities Act and Section 20(a) of the Exchange Act, by all defendants and under Section 10(b) of the Exchange Act by Motricity and those of our former and current officers who are named as defendants. The complaint sought, inter alia, damages, including interest and plaintiff’s costs and rescission. A second putative securities class action complaint was filed by Mark Couch in October 2011 in the same court, also related to alleged violations under Sections 11 and 15 of the Securities Act, and Sections 10(b) and 20(a) of the Exchange Act. On November 7, 2011, the class actions were consolidated, and lead plaintiffs were appointed pursuant to the Private Securities Litigation Reform Act. On December 16, 2011, plaintiffs filed a consolidated complaint which added a claim under Section 12 of the Securities Act to its allegations of violations of the securities laws and extended the putative class period from August 9, 2011 to November 14, 2011. The plaintiffs filed an amended complaint on May 11, 2012 and a second amended complaint on July 11, 2012. On August 1, 2012, we filed a motion to dismiss the second amended complaint, which was granted on January 17, 2013. A third amended complaint was filed on April 17, 2013. On May 30, 2013, we filed a motion to dismiss the third amended complaint, which was granted by the Court on October 1, 2013. On October 31, 2013, the plaintiffs filed a notice of appeal of the dismissal to the United States Court of Appeals for the Ninth Circuit. On April 25, 2014, the plaintiffs filed their opening appellate brief and on July 24, 2014 we filed our answering brief.

From time to time, we are subject to claims in legal proceedings arising in the normal course of business. We do not believe that we are currently party to any pending legal action that could reasonably be expected to have a material adverse effect on our business, financial condition, results of operations or cash flows.



Item 4.	Mine Safety Disclosure

None.

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PART II



Item 5.	Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities.

Market Information

Our common stock currently trades on NASDAQ under the symbol “VLTC.” Our common stock began trading under the symbol “MOTR” at the time of our initial public offering (“IPO”) on June 18, 2010, at $10.00 per share. As a result of the Reorganization that was consummated on April 9, 2013 (as described herein), we became the successor entity to Motricity. Prior to our IPO, there was no public market for our common stock. Further, on April 23, 2013, we effected a one-for-ten reverse split of our common stock. Trading on NASDAQ of our common stock reflecting the one-for-ten reverse stock split commenced on April 24, 2013.

We are authorized to issue up to 625,000,000 shares of common stock, par value $0.001. Total shares of common stock outstanding as of March 10, 2015 were 4,763,358, and we had 164 stockholders of record. The number of stockholders of record does not reflect beneficial owners whose shares are held in the names of various securities brokers, dealers and registered clearing agencies.

The following table sets forth the high and low sales prices of our common stock per share, as reported by NASDAQ, for each of the periods presented. As of March 10, 2015, the closing sales price of our common stock was $0.86 per share. All prices of our common stock per share listed below have been adjusted to reflect the one-for-ten reverse stock split implemented on April 23, 2013.



	High		Low
Fiscal Year Ending December 31, 2014
Fourth Quarter	$	1.69	$	0.65
Third Quarter	$	2.35	$	1.45
Second Quarter	$	3.67	$	1.60
First Quarter	$	4.43	$	3.25
Fiscal Year Ending December 31, 2013
Fourth Quarter	$	5.56	$	3.90
Third Quarter	$	7.22	$	3.39
Second Quarter	$	7.50	$	3.40
First Quarter	$	5.40	$	3.30

Unregistered Sales of Equity Securities

In the fiscal year ended December 31, 2014, we did not issue any unregistered securities.

Dividend Policy

We are not required to pay any dividends and have not declared or paid any dividends on our common stock other than the distribution of subscription rights in our rights offerings that closed on October 11, 2012 and March 30, 2015. We do not anticipate paying any cash dividends on our common stock in the foreseeable future. Any future dividends will be at the discretion of our board of directors and will depend upon our operating results, strategic plans, capital requirements, financial condition, provisions of any of our borrowing arrangements, applicable law and other factors our board of directors considers relevant.

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Item 6.	Selected Financial Data.

We are not required to provide selected financial data disclosures because we are a smaller reporting company.



Item 7.	Management's Discussion and Analysis of Financial Condition and Results of Operations.

Forward-Looking Statements

The following discussion should be read in conjunction with our consolidated financial statements included elsewhere herein. Unless otherwise noted, all dollar amounts in tables are in thousands.

This annual report on Form 10-K, including this Management's Discussion and Analysis of Financial Condition and Results of Operations, contains forward-looking statements that are based on management's current expectations, estimates, forecasts, and projections about our business and operations. Our actual results may differ materially and adversely from those currently anticipated and expressed in any such forward-looking statements, including as a result of the factors we describe under “Risk Factors” and elsewhere in this annual report. See “Special Note Regarding Forward-Looking Statements” appearing at the beginning of this report and “Risk Factors” set forth in Part I - Item 1A of this report.

Business Overview

We empower our customers (including brands, marketers and advertising agencies) to maximize the reach and economic potential of the mobile ecosystem through the delivery of relevance-driven merchandising, digital marketing and advertising solutions, primarily over smartphones and other mobile devices. Voltari uses advanced predictive analytics capabilities and real-time data management (including sophisticated data curation and modeling) to deliver the right content to the right person at the right time. Voltari’s unique combination of technology, expertise and go-to-market approach delivers return-on-investment for our customers.

Advertisers pay us to deliver their ads to mobile users, and we pay website and mobile application owners (or their proxies) for the use of their ad space. We have undergone significant changes over the past two years as described in more detail below. We are now fully focused on our digital media and marketing business. In January of 2015, we significantly reduced the size of our engineering department and terminated operations at our Seattle Data Center as part of an effort to reduce our operating expenses, particularly the cost of research and development and the delivery of advertising. As a result we are making increased use of third-party vendors in the placement of mobile advertising and are exploring with those vendors additional service offerings including the placement of advertising on desktop computers, so-called smart TV’s and other non-mobile devices.

Prior to July 1, 2013, most of our revenue was derived from providing hosting services to wireless carriers. Starting in 2012,

we began our exit from most of our international carrier business and, on June 30, 2013, concluded our U.S. carrier business.

On October 31, 2013, we completed the sale of our Gen5 business. On May 30, 2014, we completed the sale of our U.S. and

Canadian messaging business. Further, on September 1, 2014, we completed the sale of our wireless carrier business in the

UK. We are now fully focused on our digital media and marketing business and are planning to expand our product offerings

to add online and display solutions to our suite of mobile data marketing services. We are also offering predictive analytics

services to, and are in active discussions with, mobile website and application owners, mobile advertising trading desks and

mobile ad exchanges. Our carrier, messaging and Gen5 businesses are reported as discontinued operations in the consolidated financial statements for all periods presented. The assets and liabilities related to our U.S. and Canadian messaging business, as

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well as U.K. carrier business, are reported as assets and liabilities held for sale on the consolidated balance sheets at December 31, 2013. See Note 4 - Discontinued Operations to our consolidated financial statements for more information.

As a result of the recent significant changes in our company, the termination and sale of our legacy businesses, the

realignment of our strategic path and enhanced focus on our digital media and marketing business, our exploration of

financing alternatives, and other changes in our business, our historical results of operations, including periods prior to the periods presented herein, are not necessarily indicative of the operating results to be expected in the future.

Key components of our results of operations

Sources of revenue

Our revenue is earned under contracts in our advertising business, which generally have durations shorter than six months. Our advertising contracts require us to deliver a number of impressions to identified audience segments in a fixed period of time. The metrics for these contracts vary based on the content of the advertising campaign.

Operating expenses

We classify our operating expenses into six categories: direct third-party, datacenter and network operations, product development and sustainment, sales and marketing, general and administrative and depreciation and amortization. Our operating expenses consist primarily of personnel costs, which include salaries, bonuses, commissions, payroll taxes, employee benefit costs and stock-based compensation expense. Other operating expenses include datacenter and office facility expenses, computer hardware, software and related maintenance and support expenses, bandwidth costs, and marketing and promotion, legal, audit, tax consulting and other professional service fees. We charge stock-based compensation expense resulting from the amortization of the fair value of stock options and restricted stock grants to each stock award holders' functional area.

Direct third-party expenses. Direct third-party expenses for our mobile media business include the costs to publish advertisements across various publisher platforms.

Datacenter and network operations. Datacenter and network operations expenses consist primarily of personnel and outsourcing costs for operating our datacenter. Additional expenses include facility rents, power, bandwidth capacity and software maintenance and support.

Product development and sustainment. Product development expenses primarily consist of personnel costs and costs from our development vendors. Our product development efforts include improving and extending the functionality and performance of our service delivery platform, developing new solutions, customizing and implementing our solution set for our customers and providing other service and support functions for our solutions. Product development costs related to software used solely on an internal basis to provide our services, which we refer to as internal-use software, are capitalized and amortized over the expected asset life. Over time, product development expenditures may increase in absolute dollars as we continue to enhance and expand our suite of solutions and services. However, due to the transformation of our business, changes in market requirements, lack of resources and funding or a change in our business strategy, we may not be in a position to or may decide not to increase our product development costs in the near or long term.

Sales and marketing. Sales and marketing expenses primarily consist of personnel costs for our sales and marketing staff, commissions earned by our sales personnel and the cost of marketing programs.

General and administrative. General and administrative expenses ("G&A"), primarily consist of personnel costs for our executive, finance, legal, human resources and administrative personnel, as well as legal, accounting and other professional fees.

Depreciation and amortization. Depreciation and amortization expenses consist primarily of depreciation of internal-use software, computer hardware and leasehold improvements in our datacenter, and amortization of capitalized software development costs, and purchased intangibles.

Other income (expense), net

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Other income (expense), net, consists of interest we earn on our cash and cash equivalents, interest expense we incur as a result of our borrowings, if any, and non-operating income and expenses.

Provision (benefit) for income taxes

No provision for income taxes was recorded in 2013 or 2014. Due to our history of operating losses, we have accumulated substantial net operating losses, which constitute the majority of our deferred tax assets. Because of our history of operating losses, we maintain full valuation allowances against our deferred tax assets and consequently are not recognizing any tax benefit related to our current pre-tax losses. If we achieve sustained profitability, subject to certain provisions of the U.S. federal tax laws that may limit our use of our accumulated losses, we will continue to evaluate whether we should record a valuation allowance, based on a more likely than not standard, which would result in immediate recognition of a tax benefit and we would begin recording income tax provisions based on our earnings and applicable statutory tax rates going forward. Due to our large net operating loss carryforwards, we do not expect to pay U.S. federal income taxes in the next several years.

Results of Operations

The following tables set forth components of our results of operations for the periods indicated:



	Year Ended December 31,
(in thousands)	2014			2013
Total revenues	$	12,240		$	8,791
Operating expenses
Direct third-party expenses	7,942			6,699
Datacenter and network operations, excluding depreciation	5,162			2,416
Product development and sustainment, excluding depreciation	3,375			1,557
Sales and marketing, excluding depreciation	5,210			6,089
General and administrative, excluding depreciation	6,083			12,088
Depreciation and amortization	4,165			3,785
Impairment charges	8,406			—
Total operating expenses	40,343			32,634
Operating loss	(28,103		)	(23,843		)
Other expense, net
Other expense	12			(100		)
Interest and investment income, net	5			23
Interest expense	—			(1,342		)
Other expense, net	17			(1,419		)
Loss before income taxes	(28,086		)	(25,262		)
Benefit for income taxes	—			—
Net loss from continuing operations	(28,086		)	(25,262		)
Net (loss) income from discontinued operations	(1,194		)	14,948
Net loss	$	(29,280	)	$	(10,314	)

Depreciation and amortization by function:



	Year Ended December 31,
(in thousands)	2014		2013
Datacenter and network operations	$	3,097	$	2,334
Product development and sustainment	121		340
Sales and marketing	876		925
General and administrative	71		186
Total depreciation and amortization	$	4,165	$	3,785

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As a percentage of revenues from continuing operations:



	Year Ended December 31,
	2014		2013
Total revenues	100	%	100	%
Operating expenses
Direct third-party expenses	65		76
Datacenter and network operations, excluding depreciation	42		27
Product development and sustainment, excluding depreciation	28		18
Sales and marketing, excluding depreciation	42		69
General and administrative, excluding depreciation	50		138
Depreciation and amortization	34		43
Impairment charges	69		—
Total operating expenses	330		371
Operating loss	(230	)	(271	)
Other expense, net	—		(16	)
Loss before income taxes	(230	)	(287	)
Benefit for income taxes	—		—
Net loss from continuing operations	(230	)	(287	)
Net (loss) income from discontinued operations	(9	)	170
Net loss	(239	)%	(117	)%

Year ended December 31, 2014 compared to the year ended December 31, 2013

Total revenues



	Year Ended
	December 31,
	2014		2013		$ Change		% Change
	(Dollars in thousands)
Total revenues	$	12,240	$	8,791	$	3,449	39.2	%

Total revenues for the year ended December 31, 2014 increased $3.4 million, or 39.2%, compared to the year ended December 31, 2013. This change is due to an increase in revenue from our advertising business resulting from new customer acquisitions and an increase in sales to existing customers. Customers individually comprising more than 10% of revenue totaled 27% in 2014, down from 40% in 2013, reflecting a broader customer base in 2014.

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Operating expenses



	Year ended
	December 31,
	2014		2013		$ Change			% Change
	(Dollars in thousands)
Direct third-party expenses	$	7,942	$	6,699	$	1,243		18.6	%
Datacenter and network operations*	5,162		2,416		2,746			113.7
Product development and sustainment*	3,375		1,557		1,818			116.8
Sales and marketing*	5,210		6,089		(879		)	(14.4	)
General and administrative*	6,083		12,088		(6,005		)	(49.7	)
Depreciation and amortization	4,165		3,785		380			10.0
Impairment charges	8,406		—		8,406			—
Total operating expenses	$	40,343	$	32,634	$	7,709		23.6	%

* excluding depreciation

Direct third-party expenses

For the year ended December 31, 2014, direct third-party expenses increased $1.2 million, or 18.6%, compared to the year ended December 31, 2013. This change was attributable to an increase in costs associated with our mobile media and advertising business. Direct third-party costs were 65% and 76% of revenues in 2014 and 2013, respectively. In 2015 we expect to make greater use of third-party vendors to support the placement of mobile advertising as part of an effort to reduce overall operating costs, principally by terminating the Seattle datacenter operations and reducing product development costs.

Datacenter and network operations, excluding depreciation

Datacenter and network operations expense, excluding depreciation, consists primarily of personnel and outsourcing costs to operate our datacenter, as well as rent, power, bandwidth capacity and software maintenance and support. During 2014, these costs amounted to $5.5 million, of which $5.2 million is included in net loss from continuing operations. During 2013, these costs amounted to $8.2 million, of which $2.4 million is included in operating loss from continuing operations. In the first quarter of 2015 we terminated our Seattle datacenter operations in order to reduce operating costs.

For the year ended December 31, 2014, datacenter and network operations expense, excluding depreciation, increased $2.7 million, or 113.7%, compared to the year ended December 31, 2013. This increase was primarily driven by certain continuing costs previously borne by discontinued carrier and messaging operations. These costs include:


•	$2.2 million increase in bandwidth expenses, including hosting, infrastructure and server costs;


•	$0.3 million increase in salaries and benefits, facilities and equipment costs, and higher software maintenance primarily related to supporting our carrier-grade data center; and


•	$0.2 million increase in facilities and equipment costs, primarily related to software, maintenance and support as well as consulting fees.

Product development and sustainment, excluding depreciation

For the year ended December 31, 2014, product development and sustainment expense, excluding depreciation, increased $1.8 million, or 116.8%, compared to the year ended December 31, 2013. During 2014, we incurred greater non-capitalizable costs, primarily third-party consulting services, in connection with increased development of our Voltari-Connect platform, as well as Emporia product development. In the first quarter of 2015 we significantly reduced the size of our engineering staff in order to reduce operating costs.

Sales and marketing, excluding depreciation

For the year ended December 31, 2014, sales and marketing expense, excluding depreciation, decreased $0.9 million, or 14.4%, compared to the year ended December 31, 2013. This decrease was primarily due to a $0.9 million reduction in personnel and related costs and $0.5 million decrease in facilities and equipment costs, partially offset by a $0.5 million increase in advertising and marketing costs, primarily related to the Emporia product introduction.

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General and administrative, excluding depreciation

For the year ended December 31, 2014, general and administrative expense, excluding depreciation, decreased $6.0 million, or 49.7%, compared to the year ended December 31, 2013. This decrease was primarily due to:


•	$2.6 million decrease in salaries and benefits and other employee related costs, primarily driven by a reduction in personnel and reduced use of contractors;


•	$3.3 million decrease in professional services fees, principally legal, accounting and other costs that were higher in the prior year due to work on various SEC filings in the first half of 2013 related to a reorganization transaction and the one-for-ten reverse stock split; and


•	$0.1 million net reduction in facilities, business taxes and other expense.

Depreciation and amortization

For the year ended December 31, 2014, depreciation and amortization expense increased $0.4 million, or 10.0%, compared to the year ended December 31, 2013. The increase is primarily due to a $1.3 million increase in amortization of capitalized software costs, as additional software under development became available for use and began amortization in 2014. This increase was partially offset by lower depreciation of $0.9 million in 2014 due to a greater number of fixed assets reaching the end of their depreciable lives in 2014.

Impairment charges

In the fourth quarter of 2014 we determined that our goodwill, capitalized software and certain fixed and intangible assets were impaired and recorded impairment charges of $8.4 million. We did not recognize any impairment charges during the year ended December 31, 2013. See Note 6 - Impairment Charges to our consolidated financial statements for more information.

Other expense, net



	Year ended
	December 31,
	2014		2013			$ Change			% Change
	(Dollars in thousands)
Other income (expense)	$	12	$	(100	)	$	112		112.0	%
Interest and investment income, net	5		23			(18		)	(78.3	)
Interest expense	—		(1,342		)	1,342			100.0
Total other income (expense), net	$	17	$	(1,419	)	$	1,436		101.2	%

For the year ended December 31, 2014, interest expense decreased $1.3 million, or 100.0%, due to the repayment of our term loan with High River in August 2013. See Note 8 - Debt Facilities to our consolidated financial statements and Management's Discussion and Analysis of Financial Condition and Results of Operations - Liquidity and Capital Resources for more information.

Net (Loss) Income from discontinued operations



	Year ended
	December 31,
	2014			2013		$ Change			% Change
	(Dollars in thousands)
Net (loss) income from discontinued operations	$	(1,194	)	$	14,948	$	(16,142	)	(108.0	)%

Net loss from discontinued operations for the year ended December 31, 2014 includes the results of our UK carrier operations and our messaging business in the U.S. and Canada. Net income from discontinued operations for the year ended December 31, 2013 includes the results of our carrier operations in North America, as well as Gen5 and our messaging business in the U.S. and Canada. The $15.4 million increase in loss from discontinued operations is due primarily to the termination of the profitable

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North America carrier operations in 2013. See Note 4 - Discontinued Operations to our consolidated financial statements for more information.

Net loss



	Year ended
	December 31,
	2014			2013			$ Change			% Change
	(Dollars in thousands)
Net loss	$	(29,280	)	$	(10,314	)	$	(18,966	)	(183.9	)%

For the year ended December 31, 2014, our net loss was $29.3 million, compared to net loss of $10.3 million for the year ended December 31, 2013. The $19.0 million increase in net loss is primarily due to:


•	increased loss from discontinued operations of $16.1 million; and


•	2014 impairment charges of 8.4 million.

These reductions were partially offset by:


•	increased revenue of $3.4 million;


•	decreased operating expenses from continuing operations of $0.7 million; and


•	decreased other expenses, primarily interest expense, of $1.4 million.

Liquidity and Capital Resources

General

Our principal needs for liquidity have been to fund operating losses, working capital requirements, capital expenditures, debt service, restructuring expenses, international activity, acquisitions and integration. Our principal sources of liquidity as of December 31, 2014 consisted of cash and cash equivalents of $6.4 million.

Over the near term, we expect that the cost of operations and working capital requirements will continue to be our principal need for liquidity. In the long term, working capital requirements are expected to increase if we succeed in executing our longer-term business plan and growing our digital media and advertising business and new predictive analytics service offerings. Our cash flows may be affected by many factors including the economic environment, competitive conditions in the digital marketing and advertising industries and the success of our strategic realignment. We have seen a positive response to our strategic realignment of focusing on our core digital advertising and marketing business. In early 2015, we significantly reduced the size of our workforce providing engineering and information technology services. We continue to review our cost structure and may implement further cost saving initiatives. We believe we will have adequate resources to fund our operations, capital expenditures and working capital needs for the next 12 months using our cash and cash equivalents on hand and through access to the capital markets, including our rights offering, described below. Our short-term liquidity may be adversely affected if, and to the extent that, our Series J preferred stock becomes redeemable. See Redemption of Series J preferred stock below.

Our ability to achieve our business and cash flow plans is based on a number of assumptions which involve significant judgments and estimates of future performance, borrowing capacity and credit and equity finance availability, which cannot at all times be assured. Accordingly, we cannot assure that cash flows from operations and other internal and external sources of liquidity will at all times be sufficient for our cash requirements. If necessary, we may need to consider actions and steps to improve our cash position and mitigate any potential liquidity shortfall, such as modifying our business plan, pursuing additional financing to the extent available, reducing capital expenditures, pursuing and evaluating other alternatives and opportunities to obtain additional sources of liquidity and other potential actions to reduce costs. We cannot assure that any of these actions would be successful,

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sufficient or available on favorable terms. Any inability to generate or obtain sufficient levels of liquidity to meet our cash requirements at the level and times needed could have a material adverse impact on our business and financial position.

Our ability to obtain any additional financing depends upon many factors, including our then existing level of indebtedness (if any) and restrictions in any debt facilities we may establish in the future, historical business performance, financial projections, prospects and creditworthiness and external economic conditions and general liquidity in the credit and capital markets. Any financing (or subsequent refinancing) could also be extended only at costs and require us to satisfy restrictive covenants, which could further limit or restrict our business and results of operations, or be dilutive to our stockholders.

Rights Offering - On February 27, 2015, we commenced a rights offering of up to an aggregate of 4,300,000 shares of our common stock. The rights offering was fully subscribed and closed on March 30, 2015. We received approximately $4.6 million in net proceeds from the rights offering and we intend to use these proceeds for general corporate and working capital purposes.

Following the completion of the rights offering on March 30, 2015, entities affiliated with Mr. Carl C. Icahn, the Company’s largest stockholder, became the owner of approximately 52.3% of our common stock. Entities affiliated with Mr. Icahn also own warrants to purchase an additional 9.7% of our common stock, which warrants are currently unexercisable by Mr. Icahn and such affiliated entities.

Redemption of Series J preferred stock - In connection with the change of control of the Company, and pursuant to the Company’s Amended and Restated Certificate of Incorporation, as amended (the “Certificate of Designations”), on March 30, 2015, the Company gave written notice to holders of its 13% Redeemable Series J Preferred Stock, $0.001 par value per share (the “Series J Preferred Stock”) of their right to redeem the Series J Preferred Stock held by such holders.

As disclosed herein, acquisition of Common Stock in the Rights Offering by entities affiliated with Mr. Carl C. Icahn resulted in a change of control of the Company, which constituted a redemption event pursuant to the terms and conditions of the Certificate of Designations (the “Rights Offering Redemption Event”). Upon the occurrence of a redemption event, and subject to certain conditions, each holder of shares of Series J Preferred Stock (each, a "Holder") has the right, at such Holder’s option, to require the Company to redeem all or a portion of such Holder’s shares of Series J Preferred Stock (the “Holder Redemption Option”) in accordance with the terms, procedures, and conditions set forth in the Certificate of Designations.

The Company will be required to redeem those shares of Series J Preferred Stock properly requested to be redeemed by the Holder. If all Holders of Series J Preferred Stock require the Company to redeem their shares, except for entities affiliated with Mr. Icahn, who have waived the Holder Redemption Option, the Company will be required to pay an aggregate Redemption Price of approximately $1.8 million, subject to State of Delaware law governing distributions to stockholders.

Cash Flows

As of December 31, 2014 and 2013, we had cash and cash equivalents of $6.4 million and $25.6 million, respectively, including cash of $0.9 million related to businesses held for sale at December 31, 2013. The decrease of $19.2 million primarily reflects $16.5 million of cash used in operating activities, $2.0 million of cash used in investing activities of and cash used in financing activities of $0.5 million.

Net Cash Used in Operating Activities

For the year ended December 31, 2014, net cash of $16.5 million was used in operating activities. Operating activities from continuing operations used $15.9 million of cash, consisting primarily of our net loss from continuing operations of $28.1 million, less significant non-cash impairment charges of $8.4 million, depreciation and amortization of $4.2 million, and stock compensation expense of $0.4 million. The $0.9 million use of cash due to the change in our operating assets and liabilities was primarily driven by an increase in accounts receivable, resulting from increased fourth quarter 2014 revenue as compared to 2013, as well as a decrease in accounts payable and accrued expenses, resulting from lower costs in 2014. Operating activities from discontinued operations used $0.6 million of cash during the year ended December 31, 2014.

Net Cash Used in Investing Activities

For the year ended December 31, 2014, net cash of $2.0 million was used in investing activities. During the period, we capitalized software development costs of $2.3 million, primarily associated with our Voltari-Connect platform, including costs to

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develop new software products and significant enhancements to existing software products. We also used $0.1 million of cash to purchase property and equipment for our network operations.

In the fourth quarter of 2014 we determined that our goodwill, capitalized software and certain fixed and intangible assets were impaired and recorded impairment charges of $8.4 million. Due to the transformation of our business, changes in market requirements, lack of resources and funding or a change in our business strategy, in the near or long term we may not be in a position to or may decide not to continue or increase our product development costs which result in capitalized software development costs.

Proceeds from the sale of messaging and UK carrier businesses provided cash from discontinued operations of approximately $0.4 million cash during 2014.

Net Cash Used in Financing Activities

For the year ended December 31, 2014, $0.5 million of cash was used in financing activities, which consisted primarily of legal and other costs related to our 2015 rights offering.

Off-Balance Sheet Arrangements

As of December 31, 2014, we do not have any off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity and capital resources that are material to investors. In accordance with our normal business practices we indemnify our officers and our directors. We also indemnify customers under our contract terms from any copyright and patent infringement claims that may arise from use of our software technology.

Critical Accounting Policies and Estimates

Our consolidated financial statements are prepared in accordance with accounting principles generally accepted in the U.S. The preparation of our financial statements and related disclosures requires us to make estimates, assumptions and judgments that affect the reported amount of assets, liabilities, revenue, costs and expenses, and related disclosures. We base our estimates and assumptions on historical experience and other factors that we believe to be reasonable under the circumstances. We evaluate our estimates and assumptions on an ongoing basis. Our actual results may differ from these estimates under different assumptions and conditions and in certain cases the difference may be material.

The following critical accounting policies are those accounting policies that, in our view, are most important in the portrayal of our financial condition and results of operations. Our critical accounting policies and estimates include those involved in recognition of revenue, software development costs, valuation of goodwill, valuation of long-lived and intangible assets, provision for income taxes, accounting for stock-based compensation and accounting for our redeemable preferred stock. Note 2 - Summary of Significant Accounting Policies to our consolidated financial statements included elsewhere in this Form 10-K provides additional information about these critical accounting policies, as well as our other significant accounting policies.

Revenue recognition

Our advertising revenues are derived principally from the sale of online advertisements. Advertising revenues on contracts are recognized as “impressions” (i.e., the number of times that an advertisement appears in web pages) are delivered, or as “clicks” (which are generated each time users on our websites click through our text-based advertisements to an advertiser's designated website) are provided to advertisers.

Revenues related to discontinued operations are derived from contracts which include individual or varying combinations of our managed services and often include professional service fees to customize and implement the specific software platform solutions required by the customer. We recognize revenue when all of the following conditions are satisfied: (i) there is persuasive evidence of an arrangement; (ii) delivery has occurred; (iii) the fee is fixed or determinable; and (iv) collectibility of the fee is reasonably assured. Certain of our arrangements include customer acceptance clauses or penalties for late delivery which we assess to determine whether revenue can be recognized ahead of the acceptance or delivery. The timing of revenue recognition in each case depends upon a variety of factors, including the specific terms of each arrangement and the nature of our deliverables and obligations.

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Our UK carrier customer contracts, also reflected in revenue from discontinued operations, primarily consist of a fixed monthly managed service fee to host the software platform solution. Certain arrangements also include minimum monthly fee provisions, monthly fees for providing additional managed services required by the customer and/or service level requirements related to the hosted solutions which often entail financial penalties for non-compliance. We account for the managed services revenue on a monthly basis as earned. Our UK carrier contract does not include the right to self-host.

Software development costs

Effective January 1, 2013, we began capitalizing certain software development costs associated with our Voltari-Connect platform and other software system projects, which include the costs to develop new software products or significant enhancements to existing software products, which are developed or obtained for internal use. Costs associated with preliminary project stage activities, training, maintenance and all post-implementation stage activities are expensed as incurred. We capitalize software development costs when application development begins, it is probable that the project will be completed and the software will be used as intended. These capitalized costs are included within Property and equipment, net, on our condensed consolidated balance sheets and amortized on a straight-line basis over the estimated useful life of the related asset, which is generally three years.

During the fourth quarter of 2014, previously capitalized internally developed software was taken out of service and the related costs are included in impairment charges.

Valuation of goodwill

Our business acquisitions typically result in the recording of goodwill, and we periodically assess whether the recorded value of goodwill has become impaired. We test for potential impairment annually, in the fourth quarter of each year, and whenever events or changes in circumstances indicate that the carrying amount of goodwill may not be recoverable. Testing for impairment of goodwill involves estimating the fair value of the associated reporting unit and comparing it to its carrying value. If the estimated fair value is lower than the carrying value, then a more detailed assessment is performed comparing the carrying value of the goodwill in the reporting unit to its implied fair value. If the implied fair value of goodwill is less than the carrying amount of that goodwill, then an impairment charge is recognized to reduce the carrying value of goodwill by the difference. Any impairment losses relating to goodwill are recognized in the consolidated financial statements. For additional information, see Note 6 - Impairment Charges to our consolidated financial statements included elsewhere in this Form 10-K.

The process of evaluating the potential impairment of goodwill is highly subjective and requires significant judgment. We use valuation techniques consistent with the market approach and income approach to measure fair value for purposes of impairment testing. An estimate of fair value can be affected by many assumptions, requiring that management make significant judgments in arriving at these estimates, including the expected operational performance of our businesses in the future, market conditions and other factors. Although there are inherent uncertainties in this assessment process, the estimates and assumptions we use to estimate future cash flows—including sales volumes, pricing, market penetration, competition, technological obsolescence and discount rates—are consistent with our internal planning.

Valuation of long-lived and intangible assets

We periodically evaluate events or changes in circumstances that indicate the carrying amount of our long-lived and intangible assets may not be recoverable or that the useful lives of the assets may no longer be appropriate. Factors which could trigger an impairment review or a change in the remaining useful life of our long-lived and intangible assets include significant underperformance relative to historical or projected future operating results, significant changes in our use of the assets or in our business strategy, loss of or changes in customer relationships and significant negative industry or economic trends. When indications of impairment arise for a particular asset or group of assets, we assess the future recoverability of the carrying value of the asset (or asset group) based on an undiscounted cash flow analysis. If carrying value exceeds projected, net, undiscounted cash flows, an additional analysis is performed to determine the fair value of the asset (or asset group), typically a discounted cash flow analysis, based on an income and/or cost approach, and an impairment charge is recorded for the excess of carrying value over fair value. Any impairment losses relating to long-lived and intangible assets are recognized in the consolidated financial statements. For additional information, see Note 6 - Impairment Charges to our consolidated financial statements included elsewhere in this Form 10-K.

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The process of assessing potential impairment of our long-lived and intangible assets is highly subjective and requires significant judgment. An estimate of future undiscounted cash flow can be affected by many assumptions, requiring that management make significant judgments in arriving at these estimates. Although there are inherent uncertainties in this assessment process, the estimates and assumptions we use to estimate future cash flows including sales volumes, pricing, market penetration, competition and technological obsolescence are consistent with our internal planning. Significant future changes in these estimates or their related assumptions could result in additional impairment charges related to individual or groups of these assets.

Provision (benefit) for income taxes

We are subject to federal and various state income taxes in the U.S., and to a lesser extent, income-based taxes in various foreign jurisdictions, including, but not limited to Canada. In 2012, we effected a restructuring of our workforce and other cost savings initiatives. As a part of this process we commenced the exit from our operations in India, the Asia Pacific region, France and the Netherlands. Deferred tax assets, related valuation allowances, current tax liabilities and deferred tax liabilities are determined separately by tax jurisdiction. In making these determinations, we calculate tax assets, related valuation allowances, current tax liabilities and deferred tax liabilities, and we assess temporary differences resulting from differing treatment of items for tax and accounting purposes. We recognize only tax positions that are “more likely than not” to be sustained based solely on their technical merits. Although we believe that our tax estimates are reasonable, the ultimate tax determination involves significant judgment that is subject to audit by tax authorities in the ordinary course of business.

At December 31, 2014, our gross deferred tax assets consisted primarily of domestic net operating losses and book to tax differences in tangible and intangible assets, as well as research and development credit carryforwards. As of December 31, 2014, we had U.S. federal and state net operating loss carryforwards of approximately $410.3 million and $67.5 million, respectively, which begin to expire at varying dates starting in 2020 for U.S. federal income tax purposes and in the current year for state income tax purposes. Because of our history of generating operating losses, we maintain full valuation allowances against these deferred tax assets and consequently do not recognize tax benefits for our current operating losses. If we determine it is more likely than not that all or a portion of the deferred tax assets will be realized, we will eliminate or reduce the corresponding valuation allowances which would result in immediate recognition of an associated tax benefit. Going forward, we will reassess the need for any remaining valuation allowances or the necessity to recognize additional valuation allowances. In the event we do eliminate all or a portion of the valuation allowances in the future, we will begin recording income tax provisions based on our earnings and applicable statutory tax rates from that time forward.

Stock-based compensation

We measure and recognize stock-based compensation expense using a fair value-based method for all share-based awards made to employees and nonemployee directors, including grants of stock options and other stock-based awards. We estimate the fair value of share-based awards, including stock options, using the Black-Scholes option-pricing model for awards with service-based conditions and the Monte Carlo Simulation pricing model for awards with market-based conditions. Determining the fair value of share-based awards using both pricing models requires the use of subjective assumptions, including the expected term of the award, expected stock price volatility and risk free interest rate. The assumptions used in calculating the fair value of share-based awards granted since January 1, 2013, are set forth below:



	Year ended December 31,
	2014		2013
Expected life of options granted	6 years		3.9 - 5 years
Expected volatility	58	%	58.7% - 75%
Range of risk-free interest rates	1.9	%	0.7% - 1.3%
Expected dividend yield	—	%	—	%

The assumptions used in determining the fair value of share-based awards represent our best estimates, but these estimates involve inherent uncertainties. As a result, if factors change, and we use different assumptions, our share-based compensation could be materially different in the future. The risk-free interest rate used for each grant is based on a U.S. Treasury instrument with a term similar to the expected term of the share-based award. The expected term of options has been estimated utilizing the vesting period of the option, the contractual life of the option and our option exercise history. Because there was no public market for our common stock prior to our IPO in 2010, we lacked company-specific historical and implied volatility information. Therefore, in estimating our expected stock volatility, we have taken into account volatility information of publicly-traded peer

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companies, and we expect to continue to use this methodology until such time as we have adequate historical data regarding the volatility of our publicly-traded stock price. Also, we recognize compensation expense for only the portion of share-based awards that are expected to vest. Accordingly, we estimated forfeitures of stock options and stock awards based on our historical forfeiture rate, taking into account any unusual events, and our expectations for forfeitures in the future. If our actual forfeiture rate varies from our historical rates and estimates, additional adjustments to compensation expense may be required in future periods.

The exercise prices of our common stock option grants are based on the closing price of our common stock traded on NASDAQ under the symbol VLTC. All of our employee stock options are granted at exercise prices equal to or greater than the fair value of common stock as of the grant date.

Redeemable preferred stock and common stock warrants

In October 2012, we issued 1,199,643 shares of Series J preferred stock and (after giving effect to the one-for-ten reverse stock split) 1,014,982 warrants to purchase our common stock. Net proceeds from the rights offering of $27.8 million were allocated between Series J preferred stock and common stock warrants based on their estimated relative fair market values at the date of issuance as determined with the assistance of a third party valuation specialist. Our Series J preferred stock contains certain redemption features which are outside of our control. Accordingly, our Series J preferred stock is classified as mezzanine equity and reported as Redeemable preferred stock on our consolidated balance sheet, net of issuance costs, at December 31, 2014. The difference between the carrying value of the Series J preferred stock and its liquidation value is being accreted over an anticipated redemption period of five years using the effective interest method. Holders of the Series J preferred stock are entitled to an annual dividend of 13%, which is payable in-cash or in-kind, at the discretion of the Company, on a quarterly basis. Dividends declared on the Series J preferred stock and accretion associated with the Series J preferred stock reduce the amount of net earnings that are available to common stockholders and are presented as separate amounts on the consolidated statements of operations. The common stock warrants are recorded as Additional paid-in capital on our consolidated balance sheet at December 31, 2014.

Recent Accounting Pronouncements

In August 2014, the FASB issued ASU No. 2014-15, Presentation of Financial Statements - Going Concern (Subtopic 205-40): Disclosure of Uncertainties about an Entity’s Ability to Continue as a Going Concern. The new standard requires management to evaluate for each reporting period whether there are conditions or events that raise substantial doubt about an entity’s ability to continue as a going concern and provide related footnote disclosure in certain circumstances. The new standard is effective for the annual period ending after December 15, 2016, and for annual and interim periods thereafter. Early application is permitted. The Company expects to adopt this standard for our annual period ending December 31, 2016 and is currently evaluating the impact of the adoption of the new standard on our consolidated financial statements.

In May 2014, the FASB issued ASU No. 2014-09, Revenue from Contracts with Customers. The guidance in this ASU supersedes nearly all existing revenue recognition guidance under U.S. GAAP and creates a single, principle-based revenue recognition framework that is codified in a new FASB ASC Topic 606. The core principle of this guidance is for the recognition of revenue to depict the transfer of goods or services to customers at an amount that reflects the consideration to which the company expects to be entitled in exchange for those goods or services. The ASU also requires additional disclosure about the nature, amount, timing and uncertainty of revenue and cash flows arising from customer contracts, including significant judgments and changes in judgments and assets recognized from costs incurred to obtain or fulfill a contract. The new revenue standard is effective for annual reporting periods beginning after December 15, 2016, and interim periods within those years. Early adoption is not permitted. The new standard allows for either full retrospective or modified retrospective adoption. The Company is currently evaluating the transition method that will be elected and the potential effects of the adoption of the new standard on our consolidated financial statements.

In April 2014, the FASB issued ASU No. 2014-08, which amends FASB ASC Topic 205, Presentation of Financial Statements and FASB ASC Topic 360, Property, Plant, and Equipment. This standard amends the definition of a discontinued operation and requires new disclosures of both discontinued operations and certain other disposals that do not meet the definition of a discontinued operation. This guidance is effective on a prospective basis for annual periods beginning on or after December 15, 2014, and interim periods within those years. Early adoption is permitted, but only for disposals that have not been reported in

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financial statements previously issued or available for issuance. The Company expects to adopt this standard on a prospective basis beginning January 1, 2015. Adoption is not expected to have a material impact on our consolidated financial statements.

In July 2013, the FASB issued ASU No. 2013-11, Presentation of an Unrecognized Tax Benefit When a Net Operating Loss Carryforward, a Similar Tax Loss, or a Tax Credit Carryforward Exists. This guidance is effective for interim and annual reporting periods beginning after December 15, 2013, with early adoption permitted. We adopted this standard on January 1, 2014, and such adoption did not have an impact on our consolidated financial statements.

In March, 2013 The FASB issued ASU No. 2013-05, Foreign Currency Matters (Topic 830): Parent’s Accounting for the Cumulative Translation Adjustment upon Derecognition of Certain Subsidiaries or Groups of Assets within a Foreign Entity or of an Investment in a Foreign Entity (a consensus of the FASB Emerging Issues Task Force). This guidance resolves diversity in practice around the release of the cumulative translation adjustment into net income when a parent either sells a part or all of its investment in a foreign entity or no longer holds a controlling financial interest in a subsidiary or group of assets that is a nonprofit activity or a business within a foreign entity. The amendments in this ASU are effective prospectively for annual and interim reporting periods beginning after December 15, 2013. Provisions of this ASU, which are consistent with our past practice, became applicable and were adopted during the fourth quarter of 2014.



Item 7A.	Qualitative and Quantitative Disclosures about Market Risk.

We are not required to provide qualitative and quantitative disclosures about market risk because we are a smaller reporting company.

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Item 8.	Consolidated Financial Statements.

Report of Independent Registered Public Accounting Firm

Board of Directors and Shareholders

Voltari Corporation

We have audited the accompanying consolidated balance sheets of Voltari Corporation (a Delaware corporation) and subsidiaries (collectively, the “Company”) as of December 31, 2014 and 2013, and the related consolidated statements of operations, comprehensive loss, changes in stockholders’ equity, and cash flows for each of the two years in the period ended December 31, 2014. Our audits of the basic consolidated financial statements included the financial statement schedule listed in the index appearing under Item 15(a)(2). These financial statements and financial statement schedule are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements and financial statement schedule based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. We were not engaged to perform an audit of the Company’s internal control over financial reporting. Our audits included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of Voltari Corporation and subsidiaries as of December 31, 2014 and 2013, and the results of their operations and their cash flows for each of the two years in the period ended December 31, 2014 in conformity with accounting principles generally accepted in the United States of America. Also in our opinion, the related financial statement schedule, when considered in relation to the basic consolidated financial statements taken as a whole, presents fairly, in all material respects, the information set forth therein.

/s/ Grant Thornton LLP

Seattle, Washington

March 31, 2015

Voltari Corporation

Consolidated Balance Sheets

(in thousands, except share data)



	December 31, 2014			December 31, 2013
Assets
Current assets
Cash and cash equivalents	$	6,448		$	24,745
Accounts receivable, net of allowance for doubtful accounts of $109 and $26, respectively	3,494			3,002
Prepaid expenses and other current assets	1,533			1,215
Assets held for sale	—			2,149
Total current assets	11,475			31,111
Property and equipment, net	667			5,815
Goodwill	—			2,416
Intangible assets, net	—			2,766
Other assets	188			296
Total assets	$	12,330		$	42,404

Liabilities, redeemable preferred stock and stockholders’ equity
Current liabilities
Accounts payable and accrued expenses	$	3,386		$	4,358
Accrued compensation	721			1,098
Other current liabilities	1,451			1,157
Liabilities held for sale	—			568
Total current liabilities	5,558			7,181
Other non-current liabilities	29			21
Total liabilities	5,587			7,202

Commitments and contingencies

Redeemable preferred stock, $0.001 par value; 1,199,643 shares issued and outstanding at December 31, 2014 and 2013, respectively. Redemption value: $39,950 and $35,152 at December 31, 2014 and 2013, respectively.	36,380			31,124

Stockholders’ equity
Common stock, $0.001 par value; 625,000,000 shares authorized; 4,763,358 and 4,698,108 shares issued and outstanding at December 31, 2014 and 2013, respectively	5			5
Additional paid-in capital	563,643			568,714
Accumulated deficit	(593,316		)	(564,036		)
Accumulated other comprehensive income (loss)	31			(605		)
Total stockholders’ equity	(29,637		)	4,078
Total liabilities, redeemable preferred stock and stockholders’ equity	$	12,330		$	42,404

The accompanying notes are an integral part of these consolidated financial statements.

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Voltari Corporation

Consolidated Statements of Operations

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



	Year Ended December 31,
	2014			2013

Revenue	$	12,240		$	8,791

Operating expenses
Direct third-party expenses	7,942			6,699
Datacenter and network operations, excluding depreciation	5,162			2,416
Product development and sustainment, excluding depreciation	3,375			1,557
Sales and marketing, excluding depreciation	5,210			6,089
General and administrative, excluding depreciation	6,083			12,088
Depreciation and amortization	4,165			3,785
Impairment charges	8,406			—
Total operating expenses	40,343			32,634
Operating loss	(28,103		)	(23,843		)
Other expense, net
Other expense	12			(100		)
Interest and investment income, net	5			23
Interest expense	—			(1,342		)
Total other expense, net	17			(1,419		)
Loss from continuing operations before income taxes	(28,086		)	(25,262		)
Benefit for income taxes	—			—
Net loss from continuing operations	(28,086		)	(25,262		)
Net (loss) income from discontinued operations	(1,194		)	14,948
Net loss	$	(29,280	)	$	(10,314	)
Accretion of redeemable preferred stock	(611		)	(525		)
Series J redeemable preferred stock dividends	(4,798		)	(4,221		)
Net loss attributable to common stockholders	$	(34,689	)	$	(15,060	)

Net income (loss) per share attributable to common stockholders - basic and diluted:
Continuing operations	$	(7.17	)	$	(6.45	)
Discontinued operations	(0.26		)	3.21
Total net loss per share attributable to common stockholders (1)	$	(7.43	)	$	(3.24	)

Weighted-average common shares outstanding – basic and diluted	4,668,844			4,650,920

Depreciation and amortization by function
Datacenter and network operations	$	3,097		$	2,334
Product development and sustainment	121			340
Sales and marketing	876			925
General and administrative	71			186
Total depreciation and amortization	$	4,165		$	3,785

The accompanying notes are an integral part of these consolidated financial statements.

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Voltari Corporation

Consolidated Statements of Comprehensive Loss

(in thousands)



	Year Ended December 31,
	2014			2013
Net loss	$	(29,280	)	$	(10,314	)
Other comprehensive income:
Reclassification adjustment for realization of cumulative translation adjustment included in Net loss	759			(8		)
Foreign currency translation adjustment	(123		)	44
Other comprehensive income	636			36
Comprehensive loss	$	(28,644	)	$	(10,278	)

The accompanying notes are an integral part of these consolidated financial statements.

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Voltari Corporation

Consolidated Statements of Changes in Stockholders’ Equity

(in thousands, except share data)



	Common Stock					Additional Paid-in Capital			Accumulated Deficit			Accumulated Other Comprehensive Income (Loss)
	Shares (1)		Amount			Additional Paid-in Capital			Accumulated Deficit			Accumulated Other Comprehensive Income (Loss)			Total
Balance as of December 31, 2012	4,673,275		$	47		$	573,166		$	(553,722	)	$	(641	)	18,850
Net loss	—		—			—			(10,314		)	—			(10,314		)
Other comprehensive income	—		—			—			—			36			36
Redeemable preferred stock dividends	—		—			(4,221		)	—			—			(4,221		)
Accretion of redeemable preferred stock	—		—			(525		)	—			—			(525		)
Adjustment for reverse stock split	(135	)	(42		)	42			—			—			—
Restricted stock activity	24,968		—			(97		)	—			—			(97		)
Stock-based compensation expense	—		—			349			—			—			349
Balance as of December 31, 2013	4,698,108		5			568,714			(564,036		)	(605		)	4,078
Net loss	—		—			—			(29,280		)	—			(29,280		)
Other comprehensive income	—		—			—			—			636			636
Redeemable preferred stock dividends	—		—			(4,797		)	—			—			(4,797		)
Accretion of redeemable preferred stock	—		—			(611		)	—			—			(611		)
Restricted stock activity	65,250		—			(15		)	—			—			(15		)
Stock-based compensation expense	—		—			352			—			—			352
Balance as of December 31, 2014	4,763,358		$	5		$	563,643		$	(593,316	)	$	31		$	(29,637	)

(1) Prior period disclosures have been adjusted to reflect the impact of the one-for-ten reverse stock split that took effect on April 23, 2013, as discussed in Note 2.

The accompanying notes are an integral part of these consolidated financial statements.

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Voltari Corporation

Consolidated Statements of Cash Flows

(in thousands)



	Year Ended December 31,
	2014			2013
Cash flows from operating activities:
Net loss	$	(29,280	)	$	(10,314	)
Loss (Income) from discontinued operations	1,194			(14,948		)
Adjustments to reconcile net loss to net cash provided by (used in) operating activities:
Depreciation and amortization	4,165			3,785
Stock-based compensation expense	352			349
Impairment charges	8,406			—
Other non-cash adjustments	207			(155		)
Changes in operating assets and liabilities:
Accounts receivable	(596		)	(1,019		)
Prepaid expenses and other current assets	352			732
Other assets	(18		)	(18		)
Accounts payable and accrued expenses	(683		)	(3,854		)
Net cash used in operating activities - continuing operations	(15,901		)	(25,442		)
Net cash (used in) provided by operating activities - discontinued operations	(573		)	23,125
Net cash used in operating activities	(16,474		)	(2,317		)

Cash flows from investing activities:
Purchases of property and equipment	(74		)	(545		)
Capitalization of software development costs	(2,308		)	(3,262		)
Net cash used in investing activities - continuing operations	(2,382		)	(3,807		)
Net cash provided by (used in) investing activities - discontinued operations	363
Net cash used in investing activities	(2,019		)	(3,807		)

Cash flows from financing activities:
Repayments of debt facilities	—			(20,000		)
Rights offering costs	(521		)	(149		)
Cash paid for tax withholdings on restricted stock	(15		)	(98		)
Restricted short-term investments	—			406
Net cash provided by (used in) financing activities - continuing operations	(536		)	(19,841		)
Effect of exchange rate changes on cash and cash equivalents	(123		)	36
Net decrease in cash and cash equivalents	(19,152		)	(25,929		)
Cash and cash equivalents at beginning of period	24,745			49,738
Cash reclassified to assets held for sale at beginning of period	855			1,791
Cash reclassified to assets held for sale at end of period	—			(855		)
Cash and cash equivalents at end of period	$	6,448		$	24,745

Supplemental schedule of cash flow information:
Cash Paid for Interest	$	—		$	3,796

The accompanying notes are an integral part of these consolidated financial statements.

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Voltari Corporation

Notes to Consolidated Financial Statements

1. Organization

Voltari Corporation (“Voltari” or the “Company”), a Delaware corporation, was incorporated in December, 2012 as a wholly-owned subsidiary of Motricity, Inc. (“Motricity”). Through a reorganization, Motricity became a wholly-owned subsidiary of Voltari in April, 2013. In April, 2013 the Company effected a one-for-ten reverse stock split of the outstanding shares of our common stock. The number of shares of our common stock outstanding has been adjusted retrospectively to reflect the reverse stock split in all periods presented. In addition, the exercise price and the number of common shares issuable under our share-based compensation plans and upon exercise of our outstanding warrants to purchase common stock, as well as the issued and outstanding share capital, have been correspondingly adjusted to reflect the reverse stock split.

Advertisers pay us to deliver their ads to mobile users, and we pay website and mobile application owners (or their proxies) for the use of their ad space. Our proprietary technology and data management platform allows us to analyze and augment the information accompanying web and mobile advertising opportunities and quickly deliver highly targeted and engaging ad content to consumers in both programmatic and mediated environments. Our platform and that of our third-party vendors, uses mass volumes of third-party data along with ad response and location data and, when available, first-party consumer data to generate, in real time, a score for each unique advertising opportunity which can be measured against an advertiser's creative materials and campaign goals.

2. Summary of Significant Accounting Policies

Basis of Presentation

The consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries. Intercompany balances and transactions have been eliminated upon consolidation.

In April, 2013, the Company effected a one-for-ten reverse stock split of its common stock. As a result, the number of shares of our common stock outstanding has been adjusted retrospectively to reflect the reverse stock split in all periods presented. In addition, the exercise price and the number of common shares issuable under our share-based compensation plans and upon exercise of our outstanding warrants to purchase common stock, as well as the issued and outstanding share capital have been correspondingly adjusted to reflect the reverse stock split. See Note 1 - Organization for more information.

Liquidity

As of December 31, 2014, we have a total stockholders’ deficit of $29.6 million and incurred a net loss of $34.7 million for the year then ended. Cash and cash equivalents totaled $6.4 million as of December 31, 2014, a decrease of $18.3 million from December 31, 2013.

Management believes that we have sufficient cash and cash equivalents at December 31, 2014 coupled with the completion of our Rights Offering (See Note 16 - Subsequent Event) to support forecasted operating results, working capital requirements, capital expenditures, and commitments at least through December 31, 2015.

Reclassifications

Prior to July 1, 2013, most of our revenue was derived from providing hosting services to wireless carriers. In 2012, we began to exit from our international carrier business in India and the Asia Pacific region and in 2012 completed the divestitures of our France and Netherlands subsidiaries. Effective June 30, 2013, AT&T terminated material revenue generating contracts with us and we assigned all of our rights and interests under our Verizon Portal Agreement to Opalhaven Corporation (“Opalhaven”), resulting in our exit from the U.S. carrier business. On October 31, 2013, we completed the sale of our Gen5 business. On May 30, 2014, we completed the sale of our U.S. and Canadian messaging business. Further, on September 1, 2014, we completed the sale of our wireless carrier business in the UK. Our carrier, messaging and Gen5 businesses are reported as discontinued operations in the consolidated financial statements for all periods presented. The assets and liabilities related to our U.S. and Canadian messaging business, as well as U.K. carrier business, are reported as assets and liabilities held for sale on the consolidated balance sheets at December 31, 2013. See Note 4 - Discontinued Operations for more information.

Use of Estimates

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Voltari Corporation

Notes to Consolidated Financial Statements

The preparation of consolidated financial statements in conformity with the generally accepted accounting principles in the United States (“U.S. GAAP”) requires management to make estimates and assumptions in certain circumstances that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. The more significant estimates include the allowance for doubtful accounts, valuation of deferred tax assets, the recoverability or impairment of goodwill and long-lived assets, including property and equipment and intangible assets, stock-based compensation, litigation and other loss contingencies. Actual results could differ from those estimates.

Revenue Recognition

Our advertising revenues are derived principally from the sale of online advertisements. Advertising revenues on contracts are recognized as “impressions” (i.e., the number of times that an advertisement appears in web pages) are delivered, or as “clicks” (which are generated each time users on our websites click through our advertisements to an advertiser's designated website) are provided to advertisers.

Cash and Cash Equivalents

We consider all highly liquid investments with remaining maturities of three months or less at the date of purchase to be cash and cash equivalents. At December 31, 2014 and 2013, we had cash and cash equivalents held in foreign bank accounts of $0.1 million and $1.2 million, respectively. Cash and cash equivalents includes restricted short-term investments of $0.1 million and $0.2 million at December 31, 2014 and 2013, respectively, comprised of cash set aside to secure certain leases.

Accounts Receivable and Allowance for Doubtful Accounts

Accounts receivable are presented at their face amount, less an allowance for doubtful accounts, on the consolidated balance sheet. Accounts receivable consist of amounts billed and currently due from customers and revenues earned but not yet billed. We evaluate the collectibility of accounts receivable based on a combination of factors. We recognize reserves for bad debts based on estimates developed using standard quantitative measures which incorporate historical write-offs and current economic conditions. Although, in circumstances where we are aware of a specific customer’s inability to meet its financial obligations, a specific reserve is recorded to reduce the related accounts receivable to an amount we believe is collectible. Delinquent accounts are written off when they are determined to be uncollectible.

Long-Lived Assets

Long-lived assets include assets such as property and equipment and intangible assets, other than those with indefinite lives. We assess the carrying value of our long-lived asset groups when indicators of impairment exist and recognize an impairment loss when the carrying amount of a long-lived asset is not recoverable from the undiscounted cash flows expected to result from the use and eventual disposition of the asset. Indicators of impairment include significant underperformance relative to historical or projected future operating results, significant changes in our use of the assets or in our business strategy, loss of or changes in customer relationships and significant negative industry or economic trends. When indications of impairment arise for a particular asset or group of assets, we assess the future recoverability of the carrying value of the asset (or asset group) based on an undiscounted cash flow analysis. If carrying value exceeds projected net undiscounted cash flows, an additional analysis is performed to determine the fair value of the asset (or asset group), typically a discounted cash flow analysis, and an impairment charge is recorded for the excess of carrying value over fair value. See Note 6 - Impairment Charges for more information.

Property and equipment are recorded at historical cost less accumulated depreciation, unless impaired. Depreciation is charged to operations over the estimated useful lives of the assets using the straight-line method or a variable method reflecting the pattern in which the economic benefits are anticipated to be utilized. Upon retirement or sale, the historical cost of assets disposed of and

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Notes to Consolidated Financial Statements

the related accumulated depreciation are removed from the accounts and any resulting gain or loss is recognized. Expenditures for repairs and maintenance are charged to expense as incurred.

All costs related to the development of internal-use software other than those incurred during the application development stage are expensed, including costs for minor upgrades and enhancements when there is no reasonable cost-effective way to separate these costs from maintenance activities. Costs incurred during the application development stage are capitalized and amortized over the estimated useful life of the software, which is generally three years.

Identifiable intangible assets are recorded at cost or, when acquired as part of a business acquisition, estimated fair value. The recorded amount is amortized to expense over the estimated useful life of the asset using the straight-line method or a variable method reflecting the pattern in which the economic benefits are anticipated to be realized. At each balance sheet date, the unamortized costs for all intangible assets are reviewed by management and reduced to net realizable value when necessary.

Goodwill

Goodwill represents the excess of the purchase price of an acquired enterprise or assets over the fair value of the identifiable net assets acquired. We test goodwill for impairment in the fourth quarter of each year, and whenever events or changes in circumstances arise during the year that indicate the carrying amount of goodwill may not be recoverable. In evaluating whether an impairment of goodwill exists, we first compare the estimated fair value of a reporting unit to its carrying value, including goodwill. If the estimated fair value is lower than the carrying value, then a more detailed assessment is performed comparing the carrying value of the goodwill in the reporting unit to its implied fair value. If the implied fair value of goodwill is less than the carrying amount of that goodwill, then an impairment charge is recognized to reduce the carrying value of goodwill by the difference. See Note 6 - Impairment Charges for more information.

Comprehensive Loss

Comprehensive loss includes net loss as currently reported under U.S. GAAP and other comprehensive loss. Other comprehensive loss considers the effects of additional economic events, such as foreign currency translation adjustments, that are not required to be recorded in determining net loss, but rather are reported as a separate component of stockholders’ equity. Accumulated other comprehensive income consists of foreign currency translation adjustments.

Advertising Costs

The costs of advertising are either expensed as incurred or fully expensed the first time the advertising takes place. Advertising expenses totaled $0.1 million for each of the years ended December 31, 2014 and 2013, respectively.

Software Development Costs

Our software development expenses consist primarily of salaries and fees paid to outside vendors. Costs incurred in connection with research activities are charged to operating expenses as incurred and are included within product development and sustainment, excluding depreciation, in the consolidated statements of operations. Research and development expenses for the years ended December 31, 2014 and 2013 were $2.6 million and $1.4 million, respectively.

Stock-Based Compensation

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Notes to Consolidated Financial Statements

of share-based awards, including stock options, using the Black-Scholes option-pricing model for awards with service-based conditions and the Monte Carlo Simulation pricing model for option awards with market-based conditions. The application of this standard requires significant judgment and the use of estimates, particularly with regards to assumptions such as stock price volatility, expected option lives and risk-free interest rate, all of which are utilized to value equity-based compensation. We recognize stock compensation expense, net of estimated forfeitures, using a straight line method over the requisite service period of the individual grants, which generally equals the vesting period.

Income Taxes

We utilize the balance sheet method of accounting for income taxes. Accordingly, we are required to estimate our income taxes in each of the jurisdictions in which we operate as part of the process of preparing our consolidated financial statements. This process involves estimating our actual current tax exposure, including assessing the risks associated with tax audits, together with assessing temporary differences resulting from the different treatment of items for tax and accounting purposes. These differences result in deferred tax assets and liabilities. Due to the evolving nature and complexity of tax rules combined with the number of jurisdictions in which we operate, it is possible that our estimates of our tax liability could change in the future, which may result in additional tax liabilities and adversely affect our results of operations, financial condition and cash flows.

We follow the authoritative accounting guidance prescribing a threshold and measurement attribute for the financial recognition and measurement of a tax position taken or expected to be taken in a tax return. The guidance defines the level of assurance that a tax position must meet in order to be recognized in the financial statements and also provides for de-recognition of tax benefits, classification on the balance sheet, interest and penalties, accounting in interim periods, disclosure and transition. The guidance utilizes a two-step approach for evaluating uncertain tax positions. Step one, recognition, requires a company to determine if the weight of available evidence indicates that a tax position is more likely than not to be sustained upon audit, including resolution of related appeals or litigation processes, if any. If a tax position is not considered “more likely than not” to be sustained, no benefits of the position are recognized. Step two, measurement, is based on the largest amount of benefit which is more likely than not to be realized on effective settlement.

Net Loss Per Share Attributable to Common Stockholders

Basic and diluted net loss per share attributable to common stockholders is computed by dividing net loss attributable to common stockholders by the weighted-average number of common shares outstanding during the period. Our net loss attributable to common stockholders was not allocated to preferred stock using the two-class method, as the preferred stock does not have a contractual obligation to share in the net loss attributable to common stockholders.

Our potentially dilutive shares, which include outstanding common stock options, restricted stock, redeemable preferred stock and common stock warrants, have not been included in the computation of diluted net loss per share attributable to common stockholders for all periods presented, as the results would be anti-dilutive. Such potentially dilutive shares are excluded when the effect would be to reduce net loss per share. See Note 13 - Net Loss Per Share Attributable to Common Stockholders.

Operating Segment

The authoritative guidance for disclosures about segments of an enterprise establishes standards for reporting information about operating segments. It defines operating segments as components of an enterprise about which separate financial information is available that is evaluated regularly by the chief operating decision-maker (“CODM”) in deciding how to allocate resources and in assessing performance. We currently operate and manage our business as a single segment. Our CODM allocates resources and assesses performance of the business at the consolidated level. Our CODM reviews revenue by customer and by type of service to understand and evaluate revenue trends. We have one business activity, and there are no segment managers who are held accountable for operations, operating results or components below the consolidated unit level. Accordingly, we consider ourselves to be in a single operating and reportable segment structure.

We generated substantially all revenue from continuing operations in the U.S. during the years ended December 31, 2014 and 2013, respectively. For the year ended December 31, 2014, two customers comprised 17% and 12%, respectively, of revenue from continuing operations and for the year ended December 31, 2013 two customers comprised 25% and 15%, respectively, of revenue from continuing operations. As of December 31, 2014 and 2013, the majority of our long-lived assets were located in the U.S.

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Notes to Consolidated Financial Statements

Fair Value of Financial Instruments

As of December 31, 2014 and 2013, we had cash and cash equivalents of $6.4 million and $24.7 million, respectively. The carrying amount of certain financial instruments, including accounts receivable, accounts payable and accrued expenses, approximates fair value due to their short maturities.

There were no transfers between levels in the fair value hierarchy during the years ended December 31, 2014 or 2013.

Concentration of Credit Risk

Financial instruments that potentially subject us to concentrations of credit risk consist primarily of cash and cash equivalents, to the extent balances exceed limits that are insured by the Federal Deposit Insurance Corporation, and accounts receivable.

At December 31, 2014, two customers each comprised 10% of invoiced accounts receivable and at December 31, 2013 three customers comprised 12%, 10% and 10%, respectively, of invoiced accounts receivable.

Foreign Currency

The functional currencies of our international subsidiaries are the local currencies. We translate the financial statements of our international subsidiaries to U.S. dollars using end-of-period exchange rates for assets and liabilities and average currency exchange rates for revenues and expenses. Translation adjustments resulting from this process are included in Other comprehensive income (loss) and are reflected as a separate component of stockholders’ equity. Realized and unrealized transaction gains and losses are included in Other income (expense), net in the period in which they occur, except on intercompany balances considered to be long-term, and have not been significant for any periods presented. Transaction gains and losses on intercompany balances considered to be long-term are recorded in Other comprehensive income (loss).

Recent Accounting Pronouncements

In August 2014, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") No. 2014-15, Presentation of Financial Statements - Going Concern (Subtopic 205-40): Disclosure of Uncertainties about an Entity’s Ability to Continue as a Going Concern. The new standard requires management to evaluate for each reporting period whether there are conditions or events that raise substantial doubt about an entity’s ability to continue as a going concern and provide related footnote disclosure in certain circumstances. The new standard is effective for the annual period ending after December 15, 2016, and for annual and interim periods thereafter. Early application is permitted. The Company expects to adopt this standard for our annual period ending December 31, 2016 and is currently evaluating the impact of the adoption of the new standard on our consolidated financial statements.

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Notes to Consolidated Financial Statements

3. Property and Equipment, net

Information related to our major categories of our property and equipment, net, is as follows (dollars in thousands):



	Useful Life	As of December 31,
	(in years)	2014			2013
Capitalized software	3	$	51,682		$	49,498
Computer software and equipment	3-5	19,532			24,357
Leasehold improvements	4-10	5,569			5,569
Equipment, furniture and fixtures	7	763			1,474
Total property and equipment		77,546			80,898
Less: Accumulated depreciation and amortization		(41,849		)	(44,002		)
Less: Accumulated impairments		(35,030		)	(31,081		)
Property and equipment, net		$	667		$	5,815

There was no capitalized interest associated with property and equipment for the years ended December 31, 2014 and 2013. We capitalized software development costs of $2.3 million and $3.5 million during the years ended December 31, 2014 and 2013, respectively. Depreciation expense from continuing operations was $3.4 million and $3.1 million for the years ended December 31, 2014 and 2013, respectively.

We determined our property and equipment, including capitalized software, was impaired in the fourth quarter of 2014, primarily due to planned termination of our Seattle datacenter operations and changes in the use of those assets, consistent with efforts to reduce operating costs. The impairment charge associated with property and equipment for the year ended December 31, 2014 was $3.9 million, including $3.8 million related to capitalized software. See Note 6 - Impairment Charges for more information.

4. Discontinued Operations

U.S. Carrier Operations

We decided to wind down our U.S. carrier operations as a result of the termination of two material revenue generating agreements with AT&T effective June 30, 2013. Accordingly, all operations related to our U.S. carrier business are reported as discontinued operations in the consolidated financial statements for the year ended December 31, 2013.

Gen5 and Messaging Operations

On October 31, 2013, we completed the sale of our Gen5 business and on May 30, 2014, we completed the sale of our U.S. and Canadian messaging business. The operations related to the Gen5 business are reported as discontinued operations in the

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consolidated financial statements for the year ended December 31, 2013. The U.S. and Canadian messaging business are reported as discontinued operations in the consolidated financial statements for the years ended December 31, 2014 and 2013.

UK Wireless Carrier Operations

On September 1, 2014, we completed the sale of our UK carrier business. The operations related to our UK carrier business are reported as discontinued operations in the consolidated financial statements for the years ended December 31, 2014 and 2013.

Discontinued operations on the consolidated statement of operations for the year ended December 31, 2014 is as follows (in thousands):



	Year Ended December 31, 2014
		U.S. Messaging & Other			Canadian Messaging & Gen5			UK Carrier			Total
Revenue		$	372		$	451		$	793		$	1,616
Operating income (loss)		$	(386	)	$	(87	)	$	226		$	(247	)
Gain on sale		74			21			163			258
Other income (expense)		(74		)	1			4			(69		)
Loss on realization of cumulative translation adjustment reclassified out of Accumulated Other Comprehensive Loss		—			(229		)	(530		)	(759		)
Pre-tax income (loss)		(386		)	(294		)	(137		)	(817		)
Provision for income taxes		377			—			—			377
Net income (loss) from discontinued operations		$	(763	)	$	(294	)	$	(137	)	$	(1,194	)

Discontinued operations on the consolidated statement of operations for the year ended December 31, 2013 is as follows (in thousands):



	Year Ended December 31, 2013
		U.S. Carrier		U.S. Messaging & Other			Canadian Messaging & Gen5			UK Carrier			Total
Revenue		$	28,759	$	922		$	3,665		$	1,494		$	34,840
Operating income (loss)		$	15,245	$	(511	)	$	(444	)	$	915		$	15,205
Loss on sale of Gen5		—		—			(470		)	—			(470		)
Other income (expense)		—		510			399			(4		)	905
Pre-tax income (loss)		15,245		(1		)	(515		)	911			15,640
Provision for income taxes		—		692			—			—			692
Net income (loss) from discontinued operations		$	15,245	$	(693	)	$	(515	)	$	911		$	14,948

As of December 31, 2014, we had substantially liquidated all assets and liabilities associated with our subsidiaries in Canada and the UK and there were no assets or liabilities associated with discontinued operations included on our consolidated balance sheet as of December 31, 2014. As of December 31, 2013, assets and liabilities related to our UK carrier business, as well as messaging business in the U.S. and Canada were classified as held for sale on our consolidated balance sheets and consisted of the following (in thousands):

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	December 31, 2013
Assets:
Cash and cash equivalents	$	855
Accounts receivable, net of allowance for doubtful accounts of $49	1,048
Prepaid expenses and other current assets	22
Property and equipment, net	2
Intangible assets, net	199
Other assets	23
Total assets	$	2,149
Liabilities:
Accounts payable and accrued expenses	207
Accrued compensation	122
Deferred revenue	—
Other current liabilities	239
Total liabilities	$	568

5. Goodwill and Intangible Assets

The changes in the carrying amount of our goodwill for the years ended December 31, 2014 and 2013 are as follows (in thousands):



Goodwill balance as of December 31, 2012	$	2,416
Goodwill balance as of December 31, 2013	2,416
Impairment of goodwill	(2,416		)
Goodwill balance as of December 31, 2014	$	—

In the fourth quarter of 2014, we performed our annual impairment testing and determined our goodwill was impaired, primarily due to continued operating losses, change in our strategic direction, as well as a sustained decline in our stock price and as a result of our analysis of discounted future cash flows. Our impairment charge associated with goodwill for the year ended December 31, 2014 was $2.4 million. See Note 6 - Impairment Charges for more information.

No impairment of goodwill was identified during the year ended December 31, 2013 based on the results of our annual impairment test.

Intangible Assets

The following tables provide information regarding our intangible assets, net for the periods presented (dollars in thousands):

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Notes to Consolidated Financial Statements



	As of December 31, 2014
	Gross Carrying Amount		Accumulated Amortization			Impairment			Net Carrying Amount
Customer relationships	$	13,288	$	(13,282	)	$	(6	)	$	—
Technology	8,413		(6,378		)	(2,035		)	—
Total intangible assets, net	$	21,701	$	(19,660	)	$	(2,041	)	$	—



	As of December 31, 2013
	Gross Carrying Amount		Accumulated Amortization			Net Carrying Amount		Weighted-Average Amortization Period (in years)
Customer relationships	$	14,228	$	(14,054	)	$	174	1.2
Technology	8,693		(5,902		)	2,791		4.0
Total	22,921		(19,956		)	2,965
Less: Held for Sale	1,220		(1,021		)	199
Total intangible assets, net	$	21,701	$	(18,935	)	$	2,766

Intangible assets include assets capitalized as a result of our acquisitions. Amortization expense included in continuing operations was $0.7 million for each of the years ended December 31, 2014 and 2013, respectively. Based on the results of our impairment testing conducted in 2014, we recognized impairment charges related to our intangible assets of $2.0 million for the year ended December 31, 2014. See Note 6 - Impairment Charges for more information.

6. Impairment Charges

Based upon a combination of factors and developments, including continuing operating losses and a sustained decline in our stock price, we had strong indications that our goodwill was likely impaired as of December 2014. In addition, expected changes in use of certain of our capitalized software and other property and equipment required an impairment analysis and resulted in impairment charges which are described in greater detail below.

Long-Lived Assets

As a result of termination of our Seattle datacenter operations in the first quarter of 2015 and planned changes in the use of assets consistent with efforts to reduce operating costs, we determined our property and equipment, including capitalized software, as well as intangible assets, were impaired in the fourth quarter of 2014. Certain capitalized software and other long-lived assets classified as property and equipment, net, are no longer used in our operations and carrying value of those assets exceeds the expected net sales proceeds. We have consequently recognized impairment charges of $3.9 million in 2014, including $3.8 million related to capitalized software costs.

Goodwill

As a result of continuing operating losses, a sustained decline in our stock price, a discounted cash flow analysis and market value analysis, we determined there was not sufficient value to support the carrying value of the reporting unit's goodwill. Consequently, we recorded a $2.4 million goodwill impairment charge in the fourth quarter of 2014.

Fiscal 2014

The following table outlines our impairment charges for 2014:

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Notes to Consolidated Financial Statements



Goodwill	$	2,416
Intangible assets	2,041
Property and equipment	3,949
Total impairment charges	$	8,406

Fiscal 2013

The annual goodwill impairment test is a two-step process. First, we determine if the carrying value exceeds the fair value of the reporting unit. Fair value is calculated by a combination of a discounted cash flow model, a market approach model, and a market approach based on an option-pricing backsolve method. If the fair value exceeds the carrying amount, goodwill is not considered impaired. If the carrying amount exceeds the fair value, the second step must be performed to measure the amount of the impairment loss, if any. In the second step, we compare the implied fair value of the reporting unit’s goodwill with the carrying amount of that goodwill. An impairment loss would be recognized in an amount equal to the excess of the carrying amount of the goodwill over the implied fair value of the goodwill.

The discounted cash flow analysis requires us to make various judgments, estimates and assumptions, many of which are interdependent, about future revenues, operating margins, growth rates, capital expenditures, working capital and discount rates. The starting point for the assumptions used in our discounted cash flow analysis is the annual long-range financial forecast. The annual planning process that we undertake to prepare the long-range financial forecast takes into consideration a multitude of factors, including historical growth rates and operating performance, related industry trends, macroeconomic conditions, and marketplace data, among others. Assumptions are also made for perpetual growth rates for periods beyond the long-range financial forecast period. Our estimates of fair value are sensitive to changes in all of these variables, certain of which relate to broader macroeconomic conditions outside our control.

The market approach analysis includes applying a multiple, based on comparable market transactions, to certain operating metrics of the reporting unit.

We used the Option-Pricing Method backsolve ("OPM backsolve") to calculate the fair value of our equity, including preferred stock. The OPM backsolve method derives the implied equity value for the reporting unit from arm’s length transactions in the Company’s common stock. We used assumptions including exercise price, risk-free rate, expected term of liquidity, volatility, dividend yield and solved for the value of equity such that the publicly quoted common stock price is equal to the OPM backsolve value. The OPM treats preferred stock, common stock, options, and warrants as series of call options on the total equity value of a company, with the exercise price based on the liquidation preference of the preferred stock. Therefore, the common stock has value only if the funds available for distribution to the stockholders exceed the value of the liquidation preference at the time of a liquidity event such as a merger, sale, or initial public offering, assuming the company has funds available to make a liquidation preference meaningful and collectible by the stockholders. The OPM uses the Black-Scholes option-pricing model to price the call options.

The results of our annual impairment test performed in the fourth quarter of 2013 indicated that the fair value of our reporting unit exceeded its carrying amount by 33.5% and therefore our goodwill was not impaired.

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Notes to Consolidated Financial Statements

7. Debt Facilities

We entered into a $20 million term loan with High River on September 16, 2011, and subsequently amended the terms on November 14, 2011 and on February 28, 2012. The term loan accrued interest at 9% per year, which was paid-in-kind quarterly through capitalizing interest and adding it to the principal balance. We repaid the term loan in full, approximately $23.8 million in principal and accrued interest, on August 19, 2013. See Note 14 - Related Party Transactions for further information.

8. Commitments and Contingencies

Operating Leases

We lease office space and equipment under various non-cancellable operating lease agreements. Rent expense for non-cancellable operating leases with scheduled rent increases and landlord incentives is recognized on a straight-line basis over the lease term, beginning with the effective lease commencement date. Our leasing agreements have varying renewal options.

Estimated future minimum net rentals payable under these agreements at December 31, 2014 are as follows (in thousands):



Year Ending December 31,
2015	436
2016	444
2017	387
2018	292
2019	—
Total	$	1,559

The table was prepared assuming the maximum commitments currently outstanding, but such commitments could decrease based on termination negotiations. Minimum net rentals payable under non-cancellable operating lease agreements are presented net of tenant allowances, if any.

Rental expense under operating lease agreements included in continuing operations for the years ended December 31, 2014 and 2013 was $1.6 million and $1.7 million, respectively.

Other Contractual Arrangements

We have entered into several agreements with various vendors who provide additional operational support and services to the Company. The arrangements are primarily of a duration of twelve months or less or cancellable with short-term notice. We have no material contractual arrangements beyond 2015.

Litigation

9. Redeemable Preferred Stock

Upon successful completion of our rights offering in October 2012, we issued 1,199,643 shares of Series J preferred stock and (after giving effect to the one-for-ten reverse stock split) 1,014,982 common stock warrants in exchange for approximately $30 million in cash proceeds. Net proceeds from the rights offering of approximately $27.8 million were allocated between Series J preferred stock and common stock warrants based on their estimated relative fair market values at the date of issuance as determined by management with the assistance of a third party valuation specialist. The portion of the net proceeds from the rights offering attributable to the Series J preferred stock was determined to be approximately $26.4 million and is included in Redeemable preferred stock on our consolidated balance sheets at December 31, 2014 and 2013.

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Notes to Consolidated Financial Statements

Our Series J preferred stock contains certain redemption features and is classified as mezzanine equity at December 31, 2014 and 2013 since the shares are (i) redeemable at the option of the holder upon the occurrence of certain events and (ii) have conditions for redemption which are not solely within our control. Our Series J preferred stock is redeemable at the option of the holder if the Company undergoes a change in control, which includes a person becoming a beneficial owner of securities representing at least 50% of the voting power of our company, a sale of substantially all of our assets, and certain business combinations and mergers which cause a change in 20% or more of the voting power of our company, and if we experience an ownership change (within the meaning of Section 382), which results in a substantial limitation on our ability to use our net operating losses and related tax benefits. The difference between the carrying value of the Series J preferred stock and its liquidation value is being accreted over an anticipated redemption period of 5 years using the effective interest method. The shares of Series J preferred stock have limited voting rights and are not convertible into shares of our common stock or any other series or class of our capital stock.

Holders of the Series J preferred stock are entitled to an annual dividend of 13%, which is payable in-cash or in-kind at our discretion, on a quarterly basis. To date, we have elected to pay all quarterly dividend payments on our Series J preferred stock, in the cumulative amount of $10.0 million, in-kind rather than in-cash. Accordingly, we have increased the carrying value of our redeemable preferred stock for the amount of the paid-in-kind dividend payments made on each January 1, April 1, July 1, and October 1 since issuance. Dividends on the Series J preferred stock and the accretion increase the amount of net loss that is attributable to common stockholders and are presented as separate amounts on the consolidated statements of operations.

Our Series J preferred stock has a preference upon dissolution, liquidation or winding up of the Company in respect of assets available for distribution to stockholders. The liquidation preference of the Series J preferred stock is initially $25 per share. If the dividend on the Series J preferred stock is paid in-kind, which has been the case to date, the liquidation preference is adjusted and increased quarterly (i) until October 11, 2017, by an amount equal to 3.5% of the liquidation preference per share, as in effect at such time and (ii) thereafter by an amount equal to 3.5% of the liquidation preference per share, as in effect at such time. The quarterly accretion will continue until the shares are redeemed, or until the Company's affairs are liquidated, dissolved or wound-up.

As of December 31, 2014, our Series J preferred stock has an aggregate redemption value of approximately $39.9 million, including paid-in-kind dividends of $8.7 million and accrued dividends of $1.3 million which are included within Other current liabilities on our consolidated balance sheet. We recorded accretion associated with our Series J preferred stock of $0.6 million and $0.5 million for the years ended December 31, 2014 and 2013, respectively.

10. Stock Options, Restricted Stock and Warrants

Overview

Pursuant to the 2010 Long-Term Incentive Plan (“2010 LTIP”), we may grant equity awards up to an aggregate of 636,562 shares under the 2010 LTIP. Awards granted under the 2010 LTIP may include incentive stock options or nonqualified stock options, stock appreciation rights, restricted stock and other stock-based or cash-based awards. Option terms may not exceed 10 years and the exercise price cannot be less than 100% of the estimated fair market value per share of our common stock on the grant date. The maximum number of shares subject to any performance award granted to any participant during any fiscal year shall be 26,666 shares. The maximum cash payment made under a performance award granted to any participant with respect to any fiscal year shall be $5.4 million.

All shares, stock options, restricted stock, restricted stock awards, restricted stock units and warrants have been adjusted to reflect the impact of the one-for-ten reverse stock split that took effect on April 23, 2013, as discussed in Note 2.

Stock Options

Stock-based compensation expense associated with stock options was $0.1 million for each of the years ended December 31, 2014 and 2013, respectively.

As of December 31, 2014, there was $0.1 million of total unrecognized stock-based compensation costs, net of estimated forfeitures, related to unvested options that are expected to be recognized over a weighted-average period of 2.24 years.

The following table summarizes all stock option activity for the year ended December 31, 2014:

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Stock Options	Shares		Weighted-Average Exercise Price Per Share		Remaining Average Contractual Term (Years)	Aggregate Intrinsic Value
Outstanding, December 31, 2013	107,330		$	17.58	5.22	$	—
Granted	181,000		3.40
Forfeited	(26,505	)	5.80
Expired	(11,686	)	64.18
Outstanding, December 31, 2014	250,139		$	6.39	4.38	$	—

Exercisable at December 31, 2014	10,652		$	57.02	6.97	$	—
Vested and expected to vest at December 31, 2014	85,902		$	11.65	5.35	$	—

The weighted-average grant date fair value of stock options granted during the years ended December 31, 2014 and 2013 was $1.04 and $1.46, respectively. There were no options exercised during 2013.

We granted a total of 181,000 stock options to executives and various employees during 2014. The stock option awards will vest based upon a combination of employee service and the achievement of certain specified market conditions as follows: (i) twenty-five percent (25%) of the shares subject to the option will vest in four (4) equal tranches on each anniversary of the vesting commencement date (i.e., 6.25%); and (ii) the remaining seventy-five percent (75%) of the shares subject to the option will vest on the third (3rd) anniversary of the applicable vesting commencement date, subject to the achievement of the following performance targets: thirty three percent (33%) of seventy-five percent (75%) of the shares of our common stock subject to the option must achieve a target price of $7.00; thirty-three percent (33%) of seventy-five percent (75%) of the shares of our common stock subject to the option must achieve a target price of $10.50; and (iii) thirty-three percent (33%) of seventy-five percent (75%) of the shares of our common stock subject to the option must achieve a target price of $14.00. The target price of our common stock will be determined based upon the average of the closing prices of our shares of common stock on a nationally recognized securities exchange over a ninety (90) day period and if the shares are not so listed, the fair market value will be determined by our board of directors. We utilized the Black-Scholes model to determine the fair value of the 25% of the shares which will vest on each anniversary of the vesting commencement date and utilized the Monte Carlo Simulation model to value the remaining 75% of the shares subject to the option which will vest based upon the achievement of specified stock price performance targets.

In determining the compensation cost of stock options awards, the fair value of each option grant is estimated on the date of grant using the Black-Scholes option-pricing model for awards with service-based conditions and the Monte Carlo Simulation pricing model for awards with market-based conditions. The assumptions used in these calculations are summarized as follows:



	Year ended December 31,
	2014		2013
Expected term	6 years		3.9 - 5 years
Expected volatility	58%		58.7% - 75%
Range of risk-free interest rates	1.9%		0.7% - 1.3%
Expected dividend yield	—	%	—	%

We estimate the expected term based on the historical exercise behavior of our employees. We calculate expected volatility for stock options using historical volatility for a peer group of companies together with the closing prices of our publicly-traded stock. The risk-free interest rate for the expected terms of the stock options is based on the U.S. Treasury constant maturities in effect at the time of grant. We have not paid and do not expect to pay dividends on our common stock. Consequently, we use an expected dividend yield of zero.

Restricted Stock Awards and Restricted Stock Units

Stock-based compensation expense associated with restricted stock awards and restricted stock units was $0.3 million for each of the years ended December 31, 2014 and 2013, respectively, and is included in datacenter and network operations, product development and sustainment, sales and marketing and general and administrative expenses.

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As of December 31, 2014, there was approximately $0.1 million of unamortized stock-based compensation expense related to unvested restricted stock awards, which is expected to be recognized over a weighted-average period of 0.65 years. The total fair value of restricted stock awards and restricted stock units vested during the years ended December 31, 2014 and 2013 was $0.2 million and $0.3 million, respectively.

Restricted Stock Awards

The following table summarizes all restricted stock award activity for the year ended December 31, 2014:



Restricted Stock Awards	Shares		Weighted Average Grant Date Fair Value
Unvested at December 31, 2013	42,633		$	5.88
Granted	73,525		1.70
Vested	(42,633	)	5.88
Forfeited	—		—
Unvested at December 31, 2014	73,525		$	1.70

Restricted stock awards have voting and dividend rights upon grant and are then considered outstanding. When the restricted stock award is vested, it is then included in weighted-average common shares outstanding. These rights are forfeited should the stock not vest. In August 2014, we granted a total of 73,525 restricted stock awards to our non-employee directors in connection with their service to the Company. These restricted stock awards will vest in August 2015.

Restricted Stock Units

The following table summarizes all restricted stock unit activity for the year ended December 31, 2014:



Restricted Stock Units	Shares		Weighted Average Grant Date Fair Value
Unvested at December 31, 2013	404		$	241.36
Vested	(404	)	241.36
Unvested at December 31, 2014	—

Warrants

In October 2012, we issued 1,014,982 warrants to purchase common stock at an exercise price of $6.50 per share in connection with the closing of our 2012 rights offering. Net proceeds from the rights offering of approximately $27.8 million were allocated between Series J preferred stock and common stock warrants based on their estimated relative fair market values at the date of issuance as determined with the assistance of a third party valuation specialist. The portion of the net proceeds from the rights offering attributable to the common stock warrants was determined to be approximately $1.3 million and is recorded in Additional paid-in capital on our consolidated balance sheets at December 31, 2014 and 2013. As of December 31, 2014, 1,014,982 warrants to purchase common stock were outstanding, expiring October 11, 2017.

11. Income Taxes

Substantially all pre-tax loss from continuing operations is derived from the U.S. No tax expense was recorded for the years ended December 31, 2014 and 2013. We maintain a full valuation allowance against our net deferred tax assets, which precludes us from recognizing a tax benefit for our current operating losses. Our historical lack of profitability is a key factor in concluding that there is insufficient evidence to support the realizability of our deferred tax assets.

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Significant components of our deferred tax assets and liabilities consist of the following as of December 31 (in thousands):



	Year Ended December 31,
	2014			2013
Domestic net operating loss carryforwards	$	142,820		$	119,803
Amortization of intangible assets	23,785			30,324
Foreign net operating loss carryforwards	9,120			3,086
Research and development credits	5,436			5,165
Other	5,806			6,413
Deferred tax assets	186,967			164,791
Valuation allowance	(186,967		)	(164,791		)
Net deferred tax assets	$	—		$	—

As of December 31, 2014, the Company provided a full valuation allowance against its gross deferred tax assets because realization of these benefits could not be reasonably assured. The $22.2 million increase in the valuation allowance for the period December 31, 2013 to December 31, 2014 was related to the generation of operating losses during the current year, coupled with the write off of foreign tax attributes. The deferred tax assets include net assets acquired in business combinations.

We have research and development credit carryforwards of $5.4 million at December 31, 2014, that will begin to expire in 2021.

As of December 31, 2014, the Company had federal and state net operating loss carryforwards of $410.3 million and $67.5 million, respectively. These net operating loss carryforwards begin to expire in 2019 for U.S. federal income tax purposes and in the current year for state income tax purposes. The ultimate availability of the federal and state net operating loss carryforwards to offset future income may be subject to limitation under the rules regarding changes in stock ownership as determined by the Internal Revenue Code.

The Company has determined that there are no unrecognized tax benefits as of December 31, 2014 and 2013. Historically, the Company has not incurred interest or penalties associated with unrecognized tax benefits and no interest or penalties were recognized during the years ended December 31, 2014 or 2013. The Company has adopted a policy whereby amounts related to interest and penalties associated with unrecognized tax benefits are classified as income tax expense when incurred.

Taxes computed at the statutory federal income tax rate of 34% are reconciled to the income tax provision as follows:



	Year Ended December 31,
	2014		2013
United States federal tax at statutory rate	34.0	%	34.0	%
Change in valuation allowance	(79.6	)	(30.9	)
Foreign entity liquidation	43.6		—
State taxes (net of federal tax benefit)	2.0		(3.3	)
Other	—		0.2
Effective rate	—	%	—	%

We did not make any income tax payments related to our continuing operations in 2014 or 2013. The Company files income tax returns in the U.S. federal jurisdiction, and various state and foreign jurisdictions. With few exceptions, due to the generation of net operating losses, all tax years for which the Company filed a tax return remain open.

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12. Net Loss Per Share Attributable to Common Stockholders

The following table sets forth the computation of basic and diluted net loss per share attributable to common stockholders for the period indicated (dollars in thousands):



	Year Ended December 31,
	2014			2013
Net loss attributable to common stockholders	$	(34,689	)	$	(15,060	)
Weighted-average common shares outstanding - basic and diluted	4,668,844			4,650,920
Net loss per share attributable to common stockholders - basic and diluted	$	(7.43	)	$	(3.24	)

Basic and diluted net loss per share attributable to common stockholders has been computed based on net loss and the weighted-average number of common shares outstanding during the applicable period. We have excluded warrants and options to purchase common stock, when the potentially issuable shares covered by these securities are antidilutive. The following table presents the outstanding antidilutive securities excluded from the calculation of net loss per share attributable to common stockholders:



	Year Ended December 31,
	2014	2013
Warrants to purchase common stock	1,014,982	1,215,660
Options to purchase common stock	250,139	107,330
Restricted stock	73,525	43,037
Total securities excluded from net loss per share attributable to common stockholders	1,338,646	1,366,027

13. Defined Contribution Plan

We maintain a defined contribution plan (“401(k) Savings Plan”) for eligible employees. The 401(k) Savings Plan assets are held in trust and invested as directed by the plan participants, and shares of our common stock are not an eligible investment election. We provide a match on a specified portion of eligible employees’ contributions as approved by our board of directors. Historically, we have made matching contributions equal to 50% of the portion of contributions that do not exceed 6% of eligible pay. Our matching contributions, included in General and Administrative expenses, totaled $0.1 million in 2014 and 2013, respectively.

14. Related Party Transactions

We repaid the term loan from High River in full on August 19, 2013 (see Note 8 - Debt Facilities for further information). High River is beneficially owned by Carl C. Icahn, who, as of March 10, 2015, beneficially owns approximately 28.7% of the Company's outstanding shares of common stock, controls approximately 14.2% of the voting power of our common stock and beneficially owns approximately 95.5% of our Series J preferred stock.

On July 18, 2014, an entity affiliated with Carl C. Icahn, Koala Holding LP, the record holder of 977,136 shares, or approximately 81.45%, of our issued and outstanding Series J preferred stock, executed and delivered a written consent approving an amendment to Exhibit A to our Amended and Restated Certificate of Incorporation, which we refer to as the Amendment, which sets forth the rights, privileges and restrictions granted to and imposed on the Series J preferred stock. Pursuant to the Amendment, the Company may declare and distribute dividends on its securities that rank junior to the Series J preferred stock, consisting solely of warrants or other rights to acquire newly issued shares of our common stock against the payment of a cash purchase price to the Company, without declaring or setting apart for payment dividends on the Series J preferred stock.

Insight Portfolio Group LLC, owned by a number of other entities with which Mr. Carl C. Icahn has a relationship, was formed in order to maximize the potential buying power of participating companies in negotiating with a wide range of suppliers of goods, services and tangible and intangible property at negotiated rates. The Company was a member of the buying group in 2014 and 2013 and pays a fee of $50,000 per year for the services of Insight Portfolio Group.

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Voltari Corporation

Notes to Consolidated Financial Statements

15. Legal Proceedings

Putative Securities Class Action. We previously announced that Joe Callan filed a putative securities class action complaint in the U.S. District Court, Western District of Washington at Seattle on behalf of all persons who purchased or otherwise acquired common stock of Motricity between June 18, 2010 and August 9, 2011 or in Motricity’s initial public offering. Motricity, which was our predecessor registrant, is now our wholly-owned subsidiary and has changed its name to Voltari Operating Corp. The defendants in the case were Motricity, certain of our current and former directors and officers, including Ryan K. Wuerch, James R. Smith, Jr., Allyn P. Hebner, James N. Ryan, Jeffrey A. Bowden, Hunter C. Gary, Brett Icahn, Lady Barbara Judge CBE, Suzanne H. King, Brian V. Turner; and the underwriters in Motricity’s initial public offering, including J.P. Morgan Securities, Inc., Goldman, Sachs & Co., Deutsche Bank Securities Inc., RBC Capital Markets Corporation, Robert W. Baird & Co Incorporated, Needham & Company, LLC and Pacific Crest Securities LLC. The complaint alleged violations under Sections 11 and 15 of the Securities Act of 1933, as amended, (the “Securities Act”) and Section 20(a) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), by all defendants and under Section 10(b) of the Exchange Act by Motricity and those of our former and current officers who are named as defendants. The complaint sought, inter alia, damages, including interest and plaintiff’s costs and rescission. A second putative securities class action complaint was filed by Mark Couch in October 2011 in the same court, also related to alleged violations under Sections 11 and 15 of the Securities Act, and Sections 10(b) and 20(a) of the Exchange Act. On November 7, 2011, the class actions were consolidated, and lead plaintiffs were appointed pursuant to the Private Securities Litigation Reform Act. On December 16, 2011, plaintiffs filed a consolidated complaint which added a claim under Section 12 of the Securities Act to its allegations of violations of the securities laws and extended the putative class period from August 9, 2011 to November 14, 2011. The plaintiffs filed an amended complaint on May 11, 2012 and a second amended complaint on July 11, 2012. On August 1, 2012, we filed a motion to dismiss the second amended complaint, which was granted on January 17, 2013. A third amended complaint was filed on April 17, 2013. On May 30, 2013, we filed a motion to dismiss the third amended complaint, which was granted by the Court on October 1, 2013. On October 31, 2013, the plaintiffs filed a notice of appeal of the dismissal to the United States Court of Appeals for the Ninth Circuit. On April 25, 2014, the plaintiffs filed their opening appellate brief and on July 24, 2014 we filed our answering brief.

16. Subsequent Event

Rights Offering - On February 27, 2015, we commenced a rights offering of up to an aggregate of 4,300,000 shares of our common stock. Under the terms of the rights offering, we distributed to stockholders of record at the close of business on February 13, 2015 transferable subscription rights to purchase 0.9027 shares of common stock for every share of common stock owned on the record date. The rights offering included an over-subscription privilege, which permitted each subscriber that exercised its basic subscription right in full the option to purchase additional shares of common stock that remained unsubscribed at the expiration of the offering. If a subscriber exercised its basic subscription right or over-subscription privilege to purchase less than 1,300,000 shares in the rights offering, the subscriber paid a price of $0.97 per whole share. If a subscriber exercised its basic subscription right or over-subscription privilege to purchase 1,300,000 shares or more in the rights offering and owned 33% or more of our issued and outstanding common stock following completion of the rights offering, the subscriber paid a price of$1.36 per whole share.

The rights offering was fully subscribed and closed on March 30, 2015. We received approximately $4.6 million in net proceeds from the rights offering, including approximately 96% from entities affiliated with Mr. Carl C. Icahn. We intend to use these proceeds for general corporate and working capital purposes. Prepaid expenses and other current assets at December 31, 2014 includes costs related to the rights offering of $0.7 million.

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Voltari Corporation

Notes to Consolidated Financial Statements

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SCHEDULE II—VALUATION AND QUALIFYING ACCOUNTS



	Year Ended December 31,
(in thousands)	2014			2013
Tax Valuation Allowance:
Beginning balance	$	164,791		$	165,008
Charged to net loss	22,176			(217		)
Ending balance	186,967			164,791

Allowance for Doubtful Accounts:
Beginning balance	$	75		$	287
Charged to costs and expenses	73			(11		)
Charges utilized/write-offs	(39		)	(201		)
Effect of foreign currency translation	—			—
Total	109			75
Less: Held for Sale	—			(49		)
Ending Balance	$	109		$	26



Item 9.	Changes in and Disagreements with Accountants on Accounting and Financial Disclosure.

None.



Item 9A.	Controls and Procedures.

Evaluation of Disclosure Controls and Procedures

Our management evaluated, with the participation of our Acting Chief Executive Officer and Chief Financial Officer, the effectiveness of our disclosure controls and procedures as of the end of the period covered by this annual report on Form 10-K. Based on this evaluation, our Acting Chief Executive Officer and Chief Financial Officer have concluded that our disclosure controls and procedures are effective to ensure that information we are required to disclose in reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission's rules and forms and that such information is accumulated and communicated to our management, including our Acting Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure.

Management's Report on Internal Control Over Financial Reporting

Management is responsible for establishing and maintaining adequate internal control over financial reporting (as defined in Rule 13a-15(f) under the Exchange Act). Our internal control over financial reporting is designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. Our internal control over financial reporting includes those policies and procedures that: (i) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of our assets; (ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that our receipts and expenditures are being made only in accordance with authorizations of management and our directors; and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of our assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect all misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

Management conducted an evaluation of the effectiveness of our internal control over financial reporting as of December 31, 2014, using the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission ("COSO") in Internal Control - Integrated Framework (2013).

Based on this evaluation, management concluded that our internal control over financial reporting was effective as of December 31, 2014.

Changes in Internal Control Over Financial Reporting

There were no changes in our internal control over financial reporting that occurred during the quarter ended December 31, 2014 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.



Item 9B.	Other Information.

None.

PART III



Item 10.	Directors, Executive Officers and Corporate Governance.

The information required by this Item is incorporated by reference to our Proxy Statement for the 2015 Annual Meeting of Stockholders to be filed with the SEC within 120 days after the end of our fiscal year ended December 31, 2014.



Item 11.	Executive Compensation.



Item 12.	Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters.



Item 13.	Certain Relationships and Related Transactions, and Director Independence.



Item 14.	Principal Accountant Fees and Services.

PART IV



Item 15.	Exhibits and Financial Statement Schedules.

(a) The following documents are filed as part of this report:

1. Financial Statements

The following consolidated financial statements are submitted in Part II, Item 8 of this annual report:



	Page
Audited Consolidated Financial Statements
Report of Independent Registered Public Accounting Firm - Grant Thornton LLP	42
Consolidated Balance Sheets as of December 31, 2014 and 2013	43
Consolidated Statements of Operations for the years ended December 31, 2014 and 2013	44
Consolidated Statements of Comprehensive Loss for the years ended December 31, 2014 and 2013	45
Consolidated Statements of Changes in Stockholders’ Equity for the years ended December 31, 2014 and 2013	46
Consolidated Statements of Cash Flows for the years ended December 31, 2014 and 2013	47
Notes to Consolidated Financial Statements	48

2. Financial Statement Schedules



Schedule II - Valuation and Qualifying Accounts	66

All other financial statement schedules have been omitted because the required information is either included in the financial statements or the notes thereto or is not applicable.

3. Exhibits

The exhibits listed on the accompanying Exhibit Index are filed or incorporated by reference as part of this report.

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) 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, thereunto duly authorized.



			VOLTARI CORPORATION

Date:	March 31, 2015	By:	/s/ Richard Sadowsky
			Richard Sadowsky
			Acting Chief Executive Officer

Pursuant to the requirements of the Securities Exchange Act of 1934, the following persons on behalf of the registrant and in the capacities and on the dates indicted have signed this report below.




Signature	Title	Date


/s/ Richard Sadowsky	Acting Chief Executive Officer, Principal Executive Officer	March 31, 2015
Richard Sadowsky	Acting Chief Executive Officer, Principal Executive Officer	March 31, 2015

/s/ John Breeman	Chief Financial Officer, Principal Financial and Accounting Officer	March 31, 2015
John Breeman		March 31, 2015

/s/ James L. Nelson	Chairman of the Board	March 31, 2015
James L. Nelson		March 31, 2015

/s/ Hunter C. Gary	Director	March 31, 2015
Hunter C. Gary		March 31, 2015

/s/ Andrew Roberto	Director	March 31, 2015
Andrew Roberto		March 31, 2015

/s/ Jaffrey A. Firestone	Director	March 31, 2015
Jaffrey A. Firestone		March 31, 2015

/s/ Kevin Lewis	Director	March 31, 2015
Kevin Lewis		March 31, 2015

EXHIBIT INDEX



		Incorporated by Reference
Exhibit Number	Exhibit Description	Form	Filing Date	Filed by
2.2	Agreement and Plan of Reorganization, dated as of February 8, 2013, by and among Motricity, Inc., Voltari Merger Sub, Inc., and Voltari Corporation	S-4	02/11/2013	Voltari

3.1	Amended and Restated Certificate of Incorporation of Voltari Corporation	S-4	02/11/2013	Voltari

3.2	Certificate of Amendment to the Amended and Restated Certificate of Incorporation of Voltari Corporation	8-K	04/23/2013	Voltari

3.3	Amended and Restated Bylaws of Voltari Corporation	S-4	02/11/2013	Voltari

3.3	Certificate of Amendment to the Amended and Restated Certificate of Incorporation of Voltari Corporation	8-K	09/12/2014	Voltari

4.1	Specimen Stock Certificate for Voltari Corporation Common Stock	S-4	02/11/2013	Voltari

4.2	Specimen Stock Certificate for Voltari Series J Preferred Stock	S-4	02/11/2013	Voltari

4.3	Form of Warrant for Voltari Corporation	S-4	02/11/2013	Voltari

4.4	Warrant Agreement by and between Motricity, Inc. and American Stock Transfer & Trust Company, dated October 11, 2012	8-K	10/12/2012	Motricity

10.4	Form of First Amendment to Employment Offer Letter Agreement of Executive Officers#	S-1/A	06/02/2010	Motricity

10.5	Amended and Restated 2004 Stock Incentive Plan of Motricity, Inc., as amended through August 4, 2005#	S-1/A	01/22/2010	Motricity

10.6	Motricity, Inc. 2010 Amended and Restated Corporate Incentive Plan ‡#	S-1/A	06/02/2010	Motricity

10.7	Motricity, Inc. 2010 Long-Term Incentive Plan#	S-1/A	04/26/2010	Motricity

10.8	Form of Stock Option Agreement under 2004 Plan#	S-1/A	04/26/2010	Motricity

10.9	Form of Restricted Stock Grant Agreement under 2004 Plan#	S-1/A	04/26/2010	Motricity

10.10	Form of Motricity, Inc. Indemnification Agreement#	S-1/A	01/22/2010	Motricity

10.11	Form of Stock Option Agreement under the 2010 Long-Term Incentive Plan#	S-1/A	06/02/2010	Motricity

10.12	Certificate of Amendment to the 2004 Stock Incentive Plan of Motricity, Inc.#	S-1/A	06/02/2010	Motricity

10.13	Form of Restricted Stock Agreement under the 2010 Long-Term Incentive Plan#	10-Q	08/06/2010	Motricity

10.16	2011 Corporate Incentive Plan#	10-Q	05/05/2011	Motricity

10.17	Motricity, Inc. Executive Officer Severance/Change in Control Plan#	8-K	10/05/2011	Motricity

10.18	Motricity, Inc. 2010 Long-Term Incentive Plan, as amended#	8-K	11/02/2011	Motricity

10.19	Motricity, Inc. Amended and Restated 2011 Corporate Incentive Plan‡#	10-Q	11/21/2011	Motricity



10.21	Amended and Restated Promissory Note issued by Motricity, Inc. in favor of High River Limited Partnership, dated February 28, 2012	10-K	03/13/2012	Motricity

10.22	Amended and Restated Security Agreement by and between Motricity, Inc. and mCore International, Inc. with and in favor of High River Limited Partnership dated February 28, 2012	10-K	03/13/2012	Motricity

10.23	First Amendment to Amended and Restated Promissory Note by and between High River Limited Partnership and Motricity, Inc., dated May 10, 2012	10-Q	5/10/2012	Motricity

10.24	2012 Corporate Incentive Plan‡#	8-K/A	06/21/2012	Motricity

10.27	Motricity, Inc. Amended and Restated Severance/Change in Control Plan, as amended#	8-K	05/31/2012	Motricity

10.28	2012 Form of Named Executive Officer Option Agreement under the 2012 Long-Term Incentive Plan#	8-K	05/31/2012	Motricity

10.30	Limited Waiver from High River Limited Partnership, dated September 12, 2012	10-Q	11/08/2012	Motricity

10.36	Offer Letter by and between Motricity, Inc. and Richard Sadowsky, dated November 15, 2012#	8-K	11/21/2012	Motricity

10.38	Offer Letter by and between Voltari Corporation and John Breeman, dated August 14, 2013#	8-K	08/21/2013	Voltari

10.39	Release Agreement by and between Voltari Corporation and Richard Stalzer, dated December 18, 2013#	8-K	12/27/2013	Voltari

10.40	Amendment to the Offer Letter by and between Voltari Corporation and Richard Sadowsky, dated December 20, 2013#	8-K	12/27/2013	Voltari

10.41	2013-2014 Corporate Incentive Plan‡‡#	8-K	3/31/2014	Voltari

10.42	Amended and Restated 2013 - 14 Corporate Incentive Plan	8-K	5/27/2014	Voltari

10.43	Waiver Letter, dated as of March 30, 2015, from High River Limited Partnership and Koala Holdings LP.	8-K	03/30/2015	Voltari

21.1	Subsidiaries of Voltari Corporation	10-K	3/31/2014	Voltari

31.1	Certification pursuant to Securities Exchange Act Rules 13a-14(a) and 15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 - Acting Chief Executive Officer.*

31.2	Certification pursuant to Securities Exchange Act Rules 13a-14(a) and 15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 - Chief Financial Officer.*

32.1	Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 - Acting Chief Executive Officer**

32.2	Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 - Chief Financial Officer**

101.INS	XBRL Instance Document*

101.SCH	XBRL Taxonomy Extension Schema Document*

101.CAL	XBRL Taxonomy Extension Calculation Linkbase Document*

101.LAB	XBRL Taxonomy Extension Label Linkbase Document*



101.PRE		XBRL Taxonomy Extension Presentation Linkbase Document*

101.DEF		XBRL Taxonomy Extension Definition Linkbase Document*



*	Filed herewith.

**	Furnished herewith.

‡	Confidential treatment was granted for certain provisions of this Exhibit pursuant to Exchange Act Rule 24b-2. These provisions have been omitted from the filing and submitted separately to the Securities and Exchange Commission.

‡‡	Confidential treatment was requested for certain provisions of this Exhibit pursuant to Exchange Act Rule 24b-2. These provisions have been omitted from the filing and submitted separately to the Securities and Exchange Commission.

#	Indicates a management contract or compensatory plan or arrangement.

(1)	If not filed herewith, filed as an exhibit to the document referred to above by either Motricity, Inc. (CIK# 0001336691) or Voltari Corporation (CIK# 0001568319), as indicated.

o Large Accelerated Filer

o Accelerated Filer

o Non-accelerated Filer
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