iPass Reports Third Quarter 2012 Financial Results

iPass Reports Third Quarter 2012 Financial Results 
REDWOOD SHORES, CA -- (Marketwire) -- 11/07/12 --  iPass Inc.
(NASDAQ: IPAS), the global Wi-Fi roaming leader for enterprises and
telecom service providers, today announced financial results for the
third quarter ended September 30, 2012.  
"We're pleased to see things moving in the right direction across a
number of fronts with our core Open Mobile platform and global Wi-Fi
businesses as we delivered another quarter of strong user growth and
customer wins. We've reached an important milestone where more than
60% of the iPass platform revenue and more than one-third of our
Wi-Fi network revenue are now driven by Open Mobile with visibility
for Wi-Fi revenue to grow again in total," said Evan Kaplan,
president and CEO of iPass. "The global demand for Wi-Fi roaming
continues to gain momentum and importance with carriers and
subscribers worldwide and we're seeing solid adoption of our unique
OMX Wi-Fi roaming platform." 
"We delivered a solid quarter of positive adjusted EBITDA and
positive free cash flow as the economic flywheel of Open Mobile
begins to take hold," said Steven Gatoff, senior vice president and
CFO of iPass. "As we head into the fourth quarter, we continue to
focus on driving value for our stockholders and are on track to
deliver on our commitment of positive adjusted EBITDA and free cash
flow generation for the full-year 2012." 
iPass reported revenues of $30.8 million for Q3 2012 compared to
$32.2 million for Q2 2012.  
iPass reported a GAAP net loss of $0.8 million for Q3 2012 compared
to a GAAP net loss of $0.9 million for Q2 2012. Adjusted EBITDA was
$0.7 million for Q3 2012 compared to $0.4 million for Q2 2012.  
Operating Highlights
 Mobility Services: 
 Strong Continued User
Growth in Open Mobile Enterprise Business (iPass OME):  

--  Grew Open Mobile Wi-Fi Network users by approximately 21% sequentially
    despite the seasonally lower summer quarter, to end Q3 with 32,000
    Open Mobile Wi-Fi network users which comprised approximately 36% of
    total Wi-Fi Network users.
--  Grew Active monetized users on the Open Mobile platform to 293,000 at
    September 30, 2012, a growth of more than 38% sequentially from June
    30, 2012. This represents approximately 50% of the total number of
    Active monetized platform users at September 30, 2012, compared to 5%
    in the prior year.
--  Grew Gross Open Mobile Enterprise monetized platform users to
    approximately 758,000 at September 30, 2012, an increase of 54% or
    267,000 users from June 2012.
--  Delivered sixth sequential quarter of growth in Open Mobile-driven
    Wi-Fi Network revenue and achieved greater visibility to near-term
    growth in total company Wi-Fi Network revenue. Open Mobile-driven
    Wi-Fi Network revenue represented approximately 34% of total Wi-Fi
    Network revenue in Q3 2012.
--  Signed more than 80 enterprise customers onto Open Mobile during the
    quarter, including Fujitsu, Nestle, Abeam Consulting, Laureate
    Education, Sumitomo Electric, Forrester, BMC, Sabic, Xilinx,
    Verimetrix, Thermo Fisher, Cisco, Kraft Foods, Affymetrix, Harmonic,
    Australia Post, Enel, John Holland, Mellanox, and BoConcept.
--  Recently partnered with Singapore Telecommunications Limited
    (SingTel), a leading Asia-Pac communications provider, to offer Wi-Fi
    roaming services to enterprises in Singapore and across Asia using
    iPass Open Mobile.
--  Expanded our Open Mobile enterprise offerings by launching end-user
    billing and payment capabilities which enables enterprise customers to
    offer a compelling IT-sponsored global Wi-Fi service to their mobile
    workforce. This new service offering pioneers a simple way for
    enterprise IT departments with Bring Your Own Device (BYOD) programs
    to offer employees a direct credit card billing option for seamless
    global Wi-Fi access on smartphones and tablets.
--  Continued to deliver version upgrades to our Open Mobile client, with
    features including International Inflight Support on select
    transcontinental flights and Connection Quality Advisor and Speed Test
    allowing users visibility to the quality and capability of their
    Internet connection. Recent client version launches also include
    support for devices running Windows 8 or Windows RT, further expanding
    our coverage of the BYOD market under our connectivity management

Continued Momentum in iPass Open Mobile Exchange (iPass OMX):  

--  Continued to build-out the iPass OMX Wi-Fi ecosystem by signing new
    platform relationships with large global carrier and network partners
    including mobile operators and telecommunication service providers;
    iPass continues to play a central role in defining the role of global
    Wi-Fi and the business model with leading industry players, further
    positioning the company to capitalize on the highly attractive and
    fast-growing global Wi-Fi mobility market opportunities.
--  Added 4 large new carriers to iPass OMX during the quarter, including
    providers in the Middle East, China and Greater Asia, as well as
    AlwaysOn, South Africa's largest Wi-Fi provider, to provide their
    subscribers with global Wi-Fi data roaming and zero click access to
    the world's largest commercial Wi-Fi network.
--  Recently announced that Etisalat, the Middle East's largest telecom
    operator with over 167 million subscribers in its markets, joined
    iPass OMX to offer their consumer customers global Wi-Fi data roaming
--  OMX partners Zain Kuwait and China Telecom launched their first global
    Wi-Fi data roaming solutions based on iPass OMX, to their subscriber

Expansion of Market-Leading iPass Global Wi-Fi Network:  

--  Nearly doubled the iPass global Wi-Fi network footprint since the
    beginning of 2012. iPass has the largest global commercial Wi-Fi
    hotspot network with more than 1.1 million hotspots in over 110
    countries globally; this unique asset includes leading strategic Wi-Fi
    venues covering over 90% of world's top 100 airports, convention
    centers, commercial airlines, hotels, restaurants, retail and small
    business locations with infrastructure that is integrated with more
    than 140 leading global Wi-Fi operators.
--  Focused key resources on driving end-user Wi-Fi experience through new
    footprint monitoring and hotspot quality control where guiding user
    experience to reliable, fast, and secure networks improves the iPass
    value proposition, especially around intelligent connectivity.

Managed Network Services: 
 Consistent Revenue Growth at iPass Managed
Network Services (iPass MNS):  

--  Grew revenue by approximately 13% year-over-year through continued
    customer growth with iPass' high bandwidth, highly available WAN
    Connect VPN, managed Broadband and managed Wi-Fi solutions in the
    financial, insurance, retail and healthcare markets.
--  Continued traction with MNS' managed Wi-Fi service offering including
    support for an in-store Wi-Fi network for a large nationwide clothier
    with over 700 locations.
--  Recently signed a long-term renewal with Sterling Jewelers for
    value-add MNS services across their 1,300 nation-wide retail
--  Ended Q3 2012 with more than 23,600 endpoints at Branch/Retail
    customers in North America, an increase of 6% since the end of Q3

Financial Highlights                                                        
(unaudited; in millions)                                 Q3'12      Q2'12   
                                                       ---------  --------- 
  Mobility Services(1)                                 $    22.4  $    23.9 
    Network Revenue                                         16.0       18.0 
    Platform Revenue                                         5.3        5.4 
    Other Fees                                               1.1        0.5 
  Managed Network Services                                   8.4        8.3 
                                                       ---------  --------- 
Total Revenue                                          $    30.8  $    32.2 
GAAP Net Loss                                          $    (0.8) $    (0.9)
Adjusted EBITDA (2)                                    $     0.7  $     0.4 
Cash and Cash Equivalents (Period End)                 $    26.5  $    25.3 
Shares of Common Stock Outstanding (Period End)             61.3       61.0 
(1) iPass Mobility Services includes (i) the company's Enterprise Mobility  
    Services business (which consists of its iPass Open Mobile Enterprise   
    offering and the legacy Mobile Office offering), and (ii) the iPass Open
    Mobile Exchange offerings ("iPass OMX"). iPass OMX revenue of           
    approximately $0.2 million for both Q3 2012 and Q2 2012 are included in 
    Mobility Services revenue.                                              
(2) The definition of Adjusted EBITDA and the reconciliation of Non-GAAP to 
    GAAP financial measures are discussed below.                            
Selected Operating Metrics                                                  
AVERAGE MONTHLY MONETIZED USERS:                                            
                                                         Q3'12      Q2'12   
                                                       ---------  --------- 
Total Users(1)                                           629,000    584,000 
    Total Network Users                                  112,000    131,000 
    Total Platform Users                                 590,000    545,000 
Open Mobile Users:(1)                                                       
    Wi-Fi Network Users                                   27,000     22,000 
    Platform Users:                                                         
        Active (2)                                       270,000    176,000 
        Gross (3)                                        689,000    437,000 
Legacy Users:(1)                                                            
    Wi-Fi Network Users                                   54,000     76,000 
    Other Network Users (4)                               31,000     33,000 
    Platform Users                                       320,000    369,000 
NETWORK GROSS MARGIN:(5)                                    48.6%      47.5%
(1) Average Monthly Monetized Users (AMMU) metric is based on the number of 
    active users of iPass' network and/or platform services across both its 
    legacy Mobile Office offering and new Open Mobile Enterprise offerings. 
    The AMMU number represents the average number of users per month, during
    the quarter, for which a fee was billed by iPass to a customer for such 
    users. Note that there is some overlap for total users that may be      
    active users of both Network and Platform services in a given month.    
(2) Represents the average number of Open Mobile Enterprise ("OME") users in
    the periods presented who were billed platform fees and who have used or
    deployed Open Mobile.                                                   
(3) Represents the average number of Open Mobile Enterprise users in the    
    periods presented for which Open Mobile platform fees were billed for   
    the period. The difference between Gross and Active Open Mobile platform
    users is represented by Paying, Undeployed users for which Open Mobile  
    platform fees were billed for the period but that have not yet used Open
    Mobile or deployed.                                                     
(4) Represents users of dial-up and 3G networks.                            
(5) Network Gross Margin is defined as (Mobility Network Revenue plus MNS   
    Revenue less Network Access Costs) divided by (Mobility Network Revenue 
    plus MNS Revenue).                                                      

Q4 2012 Guidance
 For the fourth quarter of 2012 ending December 31,
2012, iPass anticipates total revenue and adjusted EBITDA income
(loss) to be in the following ranges:  

Total Revenue                             $28 - 32 million                  
Adjusted EBITDA Income / (Loss) (1)       $(1.25) - 0.25 million            
(1) A reconciliation of Adjusted EBITDA income (loss) to GAAP net loss is   
    provided in the attached schedules. The guidance for Adjusted EBITDA    
    income (loss) for the fourth quarter of 2012 does not include the impact
    of any foreign exchange gains or losses.                                

Today's Conference Call and Webcast Information
 iPass will host a
live conference call today at 2:00 PM Pacific Time (5:00 PM Eastern
 The conference call will be accessible by telephone,
toll-free at 888-417-8533 or direct dial at 719-325-2329 with a
participant confirmation code of 5453220. The conference call will
also be available live via webcast on the Company's web site at
http://investor.ipass.com. The webcast will be available for replay
until iPass reports its fourth quarter 2012 results.  
The dial-in number for a telephone replay of the conference call is
888-203-1112 and 719-457-0820 and will be available until December
31, 2012. The confirmation code for the replay is 5453220. 
Upcoming Investor Conferences
 iPass management will be presenting at
the IDEAS Investor Conference on November 14, 2012 in Dallas, at the
LD Micro Conference on December 5, 2012 in Los Angeles, and at the
Needham Growth Conference in Ja
nuary 2013 in New York. Evan Kaplan,
president and CEO and Steven Gatoff, senior vice president and CFO of
iPass, will provide an overview of the company's business, growth
strategy and financial fundamentals. 
Upcoming Industry Wi-Fi Conferences
 iPass management will also be
presenting at the Wireless Broadband Alliance Wi-Fi Global
Conference, the world's largest carrier grade Wi-Fi event that brings
together over 300 industry leaders, on November 7 and 8, 2012 in San
Francisco. Evan Kaplan, president and CEO, Steve Livingston, Senior
Vice President of Carrier Development and Marcio Avillez, Vice
President of Network Services, will be providing insights on the
growing role of Wi-Fi and participating in defining operator
iPass management will also be present at the Mobile Roaming World
Summit November 13-14, 2012 in London along with leading service
provider operators providing insights and contributing to the
emerging Wi-Fi roaming business models through the strong and
continued growth in mobile data usage, Wi-Fi roaming, LTE, roaming in
M2M, and multi-IMSI solutions bundling.  
Cautionary Information About Forward-Looking Statements 
statements in this press release regarding iPass' expectations and
belief that it has achieved greater visibility to near-term growth in
total company Wi-Fi network revenue, that global demand for Wi-Fi
continues to gain momentum and importance with carriers and
subscribers, that it is on track to deliver on its commitments for
positive Adjusted EBITDA and positive free cash flow, that it is
further positioned to capitalize on the highly attractive and
fast-growing global Wi-Fi mobility market opportunities and iPass'
projections of its fourth quarter 2012 financial results under the
caption "Q4 2012 Guidance" are forward-looking statements. Actual
results may differ materially from the expectations contained in
these statements due to a number of risks and uncertainties,
including the following: the risk that the "End of Life" of the
legacy Mobile Office product may negatively impact customer retention
and mobility revenues; the risk that the Open Mobile platform and
Open Mobile Exchange will not achieve the market acceptance iPass
expects; the risk that iPass customers and partners may not be
willing to agree to minimum purchase and resale commitments at the
rate iPass expects; the risk of material reductions in iPass
customers' existing minimum commitments more than iPass currently
expects; the risk that iPass carrier and channel partners do not
successfully market iPass services to their customers; the risk that
iPass does not accurately predict usage for its Enterprise Flat Rate
price plan which could result in iPass expenses exceeding revenues
for these plans; the risk that iPass customers do not widely deploy
iPass Open Mobile on smartphones, tablets and other mobile handheld
devices; the risk that demand for mobility services does not grow as
iPass expects; the risk of facing strong competition in the market
for mobility services and managed network services; the risk that
iPass fails to address market requirements, evolving standards and
technological changes in the mobility services industry; and the risk
that a meaningful portion of iPass business is international, which
subjects iPass business to additional risks. Detailed information
about these and other risk factors that could potentially affect
iPass' business, financial condition and results of operations are
included in iPass' Annual Report on Form 10-K filed with the SEC on
March 7, 2012, and available at the SEC's Web site at www.sec.gov and
the company's website at http://investor.ipass.com. iPass undertakes
no responsibility to update the information in this press release if
any forward-looking statement later turns out to be an inaccurate
prediction of the actual results. 
Information Regarding Non-GAAP Financial Measures 
 This press
release also contains financial measures that are not calculated in
accordance with U.S. generally accepted accounting principles (GAAP).
The company considers Adjusted EBITDA as a supplemental measure of
the company's performance that is not required by, nor presented in
accordance with GAAP.  
The company defines Adjusted EBITDA as net income (loss) before
interest, income taxes, depreciation and amortization, stock-based
compensation expense, restructuring charges, and certain state sales
and federal tax charges. The company believes Adjusted EBITDA
provides a meaningful comparison between its core operating results,
on a consistent basis, over different periods of time. Accordingly,
management uses this financial measure for evaluating and making
operating decisions and for purposes of comparison with its strategic
plan, operating budgets and allocation of resources.  
Furthermore, the company believes the use of Adjusted EBITDA is
useful to investors: 
1) To provide an additional analytical tool for understanding the
company's financial performance by excluding the impact of items
which may obscure trends in the core operating performance of the
2) To provide consistency and enhance investors' ability to compare
the company's performance across financial reporting periods; and 
3) To facilitate comparisons to the operating results of other
companies in the company's industry, which use similar financial
measures to supplement their GAAP results. 
Adjusted EBITDA should not be considered in isolation, or construed
as an alternative to net income, or any other performance measure
derived in accordance with GAAP, or as an alternative to cash flow
from operating activities or as a measure of the company's liquidity. 
About iPass Inc.
 iPass helps enterprises and telecom service
providers ensure their employees and subscribers stay well connected.
Founded in 1996, iPass delivers the world's largest commercial-grade
Wi-Fi network and trusted connectivity platform. With more than 1.1
million Wi-Fi hotspots across 113 countries and territories, iPass
gives its customers always-on, frictionless connectivity anywhere in
the world -- simply, securely and cost effectively. Additional
information is available at www.ipass.com or on Smarter Connections,
the iPass blog. 
NOTE: iPass(R) is a registered trademark of iPass Inc. Open Mobile,
OME, Open Mobile Express, Open Mobile Exchange and OMX are trademarks
of iPass Inc. Wi-Fi(R) is a registered trademark of the Wi-Fi
Alliance. Other company names, logos and product or service names
mentioned herein are the trademarks owned by their respective owners. 

                                 iPASS INC.                                 
                   CONDENSED CONSOLIDATED BALANCE SHEETS                    
                         (Unaudited, in thousands)                          
                                               September 30,   December 31, 
                                                    2012           2011     
                                               -------------  ------------- 
Current assets:                                                             
  Cash and cash equivalents                    $      26,500  $      25,439 
  Accounts receivable, net of allowance for                                 
   doubtful accounts of $1,071 and $1,605,                                  
   respectively                                       19,395         21,307 
  Prepaid expenses and other current assets            5,651          5,938 
                                               -------------  ------------- 
Total current assets                                  51,546         52,684 
  Property and equipment, net                          6,516          4,013 
  Intangible assets, net                                   -            169 
  Other assets                                         4,699          6,239 
                                               -------------  ------------- 
Total assets                                   $      62,761  $      63,105 
                                               =============  ============= 
Liabilities and Stockholders' Equity                                        
Current liabilities:                                                        
  Accounts payable                             $       8,090  $       8,701 
  Accrued liabilities                                  9,856          9,502 
  Deferred revenue, short-term                         3,871          3,852 
                                               -------------  ------------- 
Total current liabilities                             21,817         22,055 
  Deferred revenue, long-term                          2,987          3,134 
  Other long-term liabilities                            531            469 
                                               -------------  ------------- 
Total liabilities                              $      25,335  $      25,658 
                                               -------------  ------------- 
Stockholders' equity:                                                       
  Common stock                                            61             59 
  Additional paid-in capital                         212,527        209,624 
  Accumulated deficit                               (175,162)      (172,236)
                                               -------------  ------------- 
Total stockholders' equity                            37,426         37,447 
                                               -------------  ------------- 
Total liabilities and stockholders' equity     $      62,761  $      63,105 
                                               =============  ============= 
                                 iPASS INC.                                 
                    CONDENSED CONSOLIDATED STATEMENTS OF                    
                     OPERATIONS AND COMPREHENSIVE LOSS                      
         (Unaudited, in thousands, except share and per share data)         
                            Three Months Ended         Nine Months Ended    
                               September 30,             September 30,      
                         ------------------------  ------------------------ 
                             2012         2011         2012         2011    
                         -----------  -----------  -----------  ----------- 
Revenues                 $    30,818  $    34,411  $    96,356  $   106,326 
Cost of revenues and                                                        
 operating expenses:                                                        
  Network access costs        12,574       15,647       41,049       50,249 
  Network operations           5,126        5,427       15,932       16,845 
  Research and                                                              
   development                 3,300        3,715       10,447       10,843 
  Sales and marketing          4,547        5,350       14,981       16,053 
  General and                                                               
   administrative              5,645        5,092       16,147       15,120 
  Restructuring charges                                                     
   (benefits) and                                                           
   related adjustments            10           (7)          16         (162)
  Amortization of                                                           
   intangible assets              50           60          169          179 
                         -----------  -----------  -----------  ----------- 
    Total cost of                                                           
     revenues and                                                           
     operating expenses       31,252       35,284       98,741      109,127 
                         -----------  -----------  -----------  ----------- 
Operating loss                  (434)        (873)      (2,385)      (2,801)
  Interest income                  4            5           10          104 
  Foreign exchange gains                                                    
   (losses), net                 (66)          66         (129)        (395)
                         -----------  -----------  -----------  ----------- 
Loss before income taxes        (496)        (802)      (2,504)      (3,092)
  Provision for income                                                      
   taxes                         275            1          422          246 
                         -----------  -----------  -----------  ----------- 
Net loss                 $      (771) $      (803) $    (2,926) $    (3,338)
                         ===========  ===========  ===========  =========== 
Comprehensive Loss       $      (771) $      (803) $    (2,926) $    (3,338)
                         ===========  ===========  ===========  =========== 
Basic and diluted net                                                       
 loss per share          $     (0.01) $     (0.01) $     (0.05) $     (0.06)
Weighted average number                                                     
 of common shares                                                           
- Basic and Diluted (1)   61,094,346   58,776,585   60,450,920   58,346,859 
(1) Given the net loss for the period, none of the potentially dilutive     
 securities were included in the calculation of diluted earnings per share  
 since the effect would have been anti-dilutive.                            
                                 iPASS INC.                                 
                         (Unaudited, in thousands)                          
                                                     Nine Months Ended      
                                                       September 30,        
                                                    2012           2011     
                                               -------------  ------------- 
Cash flows from operating activities:                                       
Net loss                                       $      (2,926) $      (3,338)
Adjustments to reconcile net loss to net cash                               
 provided by/(used in) operating activities:                                
  Stock-based compensation                             1,781          1,348 
  Amortization of intangible assets                      169            179 
  Depreciation and amortization                        1,660          1,731 
  Loss on disposal of property and equipment               3             87 
  Provision for (recovery of) doubtful                                      
   accounts                                             (203)           369 
  Change in sales tax liability estimation                 -           (395)
Changes in operating assets and liabilities:                                
  Accounts receivable                                  2,115          1,469 
  Prepaid expenses and other current assets              787            439 
  Other assets                                           569            481 
  Accounts payable                                      (681)        (3,027)
  Accrued liabilities                                    354         (3,915)
  Deferred revenues                                     (128)           589 
  Other liabilities                                       62           (207)
                                               -------------  ------------- 
Net cash provided by/(used in) operating                                    
 activities                                            3,562         (4,190)
                                               -------------  ------------- 
Cash flows from investing activities:                                       
  Purchases of property and equipment                 (4,096)        (1,253)
  Change in restricted cash pledged for letter                              
   of credit                                             471            286 
                                               -------------  ------------- 
Net cash used in investing activities                 (3,625)          (967)
                                               -------------  ------------- 
Cash flows from financing activities:                                       
  Proceeds from issuance of common stock               1,194            708 
  Stock repurchase                                       (70)             - 
                                               -------------  ------------- 
Net cash provided by financing activities              1,124            708 
                                               -------------  ------------- 
Net increase/(decrease) in cash and cash                                    
 equivalents                                           1,061         (4,449)
Cash and cash equivalents at beginning of                                   
 period                                               25,439         30,746 
                                               -------------  ------------- 
Cash and cash equivalents at end of period     $      26,500  $      26,297 
                                               =============  ============= 
Supplemental disclosures of cash flow                                       
Net cash paid for taxes                        $         310  $         490 
Accrued amounts for acquisition of property                                 
 and equipment                                 $         458  $         206 
                                 iPASS INC.                                 
                 RECONCILIATION OF NON-GAAP TO GAAP METRICS                 
                         (Unaudited, in thousands)                          
                             Three Months Ended          Nine Months Ended  
                       ------------------------------  -------------------- 
                       September    June    September  September  September 
                        30, 2012  30, 2012   30, 2011   30, 2012   30, 2011 
                       ---------  --------  ---------  ---------  --------- 
I  Reconciliation of                                                        
    Adjusted EBITDA                                                         
    Income (Loss) to                                                        
    GAAP Net Loss:                                                          
   Adjusted EBITDA                                                          
    Income (Loss)      $     693  $    377  $    (272) $   1,104  $  (1,348)
     (a) Interest                                                           
      income                   4         3          5         10        104 
     (b) Income tax                                                         
      expense               (275)      (10)        (1)      (422)      (246)
     (c) Depreciation                                                       
      of property and                                                       
      equipment             (505)     (532)      (531)    (1,660)    (1,731)
     (d) Amortization                                                       
      of intangible                                                         
      assets                 (50)      (60)       (60)      (169)      (179)
     (e) Stock-based                                                        
      compensation          (637)     (615)      (392)    (1,781)    (1,348)
     (f) Restructuring                                                      
      benefits and                                                          
      adjustments            (10)       (9)         7        (16)       162 
     (g) Certain state                                                      
      sales and federal                                                     
      tax items and                                                         
      other discrete                                                        
      items                    9       (35)       441          8      1,248 
                       ---------  --------  ---------  ---------  --------- 
   GAAP Net Loss       $    (771) $   (881) $    (803) $  (2,926) $  (3,338)
                       ---------  --------  ---------  ---------  --------- 
   Q4 2012 Guidance                                                         
II Reconciliation of Q4                                                     
    2012 Adjusted                                                           
    EBITDA Income                                                           
    (Loss) to GAAP Net                                                      
    Loss:                 (Unaudited, in millions)                          
   Adjusted EBITDA                                                          
    Income (Loss) (1)  $    (1.3)           $     0.3                       
    (a) Income tax                                                         
      expense                         (0.2)                                 
     (b) Depreciation                                                       
      of property and                                                       
      equipment                       (0.5)                                 
     (c) Stock-based                                                        
      compensation                    (0.6)                                 
                       ---------  --------  ---------                       
   GAAP Net Loss       $    (2.6)           $    (1.0)                      
                       ---------            ---------                       
   (1) The Q4 2012 Guidance for Adjusted EBITDA income (loss) does not      
   include the impact of any foreign exchange gains or losses.              

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