As filed with the Securities and Exchange Commission on February 29, 2012

Registration No. 333-176586

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

AMENDMENT NO. 5

FORM S-1

REGISTRATION STATEMENT

Under

The Securities Act of 1933

MOBITV, INC.

(Exact name of registrant as specified in its charter)

Delaware

7371

94-3352422

(State or other jurisdiction of incorporation
or organization)

(Primary standard industrial code

number)

(I.R.S. employer identification no.)

6425 Christie Avenue, 5th Floor

Emeryville, CA 94608

(510) 450-5000

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

Charles A. Nooney

Chairman and Chief Executive Officer

MobiTV, Inc.

6425 Christie Avenue, 5th Floor

Emeryville, CA 94608

(510) 450-5000

(Name, address, including zip code, and telephone number, including area code, of agent for service)

Copies to:

Horace Nash

Cynthia Clarfield Hess

Fenwick & West LLP

801 California Street

Mountain View, CA 94041

(650) 988-8500

Ellen McDonald

General Counsel

MobiTV, Inc.

6425 Christie Avenue, 5th Floor

Emeryville, CA 94608

(510) 450-5000

Katharine A. Martin

Jose F. Macias

Lisa L. Stimmell

Wilson Sonsini Goodrich & Rosati, P.C.

650 Page Mill Road

Palo Alto, CA 94304

(650) 493-9300

Approximate date of commencement of proposed sale to the public: As soon as practicable after the effective date of this Registration Statement.

If any of the securities being registered on this Form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933 (the “Securities Act”), check the following box. ¨

If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. ¨

If this Form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. ¨

If this Form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. ¨

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 of 1934 (the “Exchange Act”). (Check one):

The Registrant hereby amends this Registration Statement on such date or dates as may be necessary to delay its effective date until the Registrant shall file a further amendment that specifically states that this Registration Statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933 or until the Registration Statement shall become effective on such date as the Commission, acting pursuant to said Section 8(a), may determine.

The information in this preliminary prospectus is not complete and may be changed. We may not sell these securities until the registration statement filed with the Securities and Exchange Commission is effective. This preliminary prospectus is not an offer to sell these securities, and we are not soliciting an offer to buy these securities in any state where the offer or sale is not permitted.

Subject to completion, dated February 29, 2012

Preliminary Prospectus

shares

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Common stock

This is an initial public offering of shares of our common stock. We are selling shares of our common stock. The estimated initial public offering price is between $ and $ per share.

We intend to apply for listing of our common stock on the New York Stock Exchange under the symbol “MBTV.”


	Per share	Total

Initial public offering price	$	$

Underwriting discounts and commissions	$	$

Proceeds to us, before expenses	$	$

We have granted the underwriters an option for a period of 30 days to purchase up to additional shares of our common stock at the initial public offering price, less the underwriting discounts and commissions.

Investing in our common stock involves a high degree of risk. See “Risk factors” beginning on page 10.

Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of these securities or passed on the adequacy or accuracy of this prospectus. Any representation to the contrary is a criminal offense.

The underwriters expect to deliver the shares of common stock to purchasers on .


J.P. Morgan		Deutsche Bank Securities

Baird	William Blair & Company	Pacific Crest Securities

, 2012

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Table of contents


	Page

Prospectus summary		1

Risk factors		10

Special note regarding forward-looking statements and industry data		30

Use of proceeds		31

Dividend policy		31

Capitalization		32

Dilution		34

Selected consolidated financial data		36

Management’s discussion and analysis of financial condition and results of operations		39

Business		63

Management		76

Executive compensation		86

Certain relationships and related person transactions		108

Principal stockholders		111

Description of capital stock		114

Shares eligible for future sale		119

Material U.S. federal income tax consequences to non-U.S. holders		121

Underwriting		126

Legal matters		132

Experts		132

Where you can find additional information		132

Index to consolidated financial statements		F-1

You should rely only on the information contained in this prospectus or in any free writing prospectus prepared by or on behalf of us and delivered or made available to you. We have not authorized anyone to provide you with information different from that contained in this prospectus. We are offering to sell and seeking offers to buy, shares of our common stock only in jurisdictions where offers and sales are permitted. The information contained in this prospectus is accurate only as of the date of this prospectus, regardless of the time of delivery of this prospectus or the time of any sale of our common stock. Our business, financial condition, results of operations and prospects may have changed since the date of this prospectus.

No action is being taken in any jurisdiction outside the United States to permit a public offering of our common stock or possession or distribution of this prospectus in that jurisdiction. Persons who come into possession of this prospectus in jurisdictions outside the United States are required to inform themselves about and to observe any restrictions regarding this offering and the distribution of this prospectus applicable in that jurisdiction.

Prospectus summary

This summary highlights selected information contained elsewhere in this prospectus; it does not contain all the information you should consider before investing in our common stock. You should read the entire prospectus carefully, including the section entitled “Risk factors” and our consolidated financial statements and related notes, before making an investment in our common stock. Unless otherwise indicated, the terms “MobiTV,” “we,” “us” and “our” refer to MobiTV, Inc., a Delaware corporation, together with its consolidated subsidiary.

Overview

MobiTV is a leading provider of comprehensive managed services that deliver live and on-demand television, downloadable video and related media content across Internet-enabled screens, including mobile devices, tablets and personal computers. Using our converged media platform, we are the exclusive national provider of mobile television services for AT&T U-verse Live TV, NFL Mobile on Verizon, Sprint TV and T-Mobile TV, among others. Our services are deployed on over 400 different types of mobile devices in use today, across wireless and broadband networks and all major operating systems, including Android, Apple iOS, BlackBerry OS and Windows. We license content from major television studios, including ABC, CBS, Disney, ESPN, Fox, MTV Networks and NBC. We deliver over 220 channels, including over 70 live channels, and in 2011 we delivered over 3,200 live events. We grew our mobile minutes streamed from 264 million minutes in 2007 to 1.6 billion minutes in 2011. Our TV everywhere services allow end users to access, view and manage their content any place, any time. Deutsche Telekom is using our converged media platform to extend television services outside the home and to deploy TV everywhere to phones, tablets, personal computers and other Internet-enabled devices.

Since our founding in 2000, we have developed our proprietary converged media platform to address the unique challenges of the complex wireless environment. Our platform reliably delivers high quality live television and video services, while ensuring efficient network and bandwidth utilization, for the benefit of end users and wireless carriers, network operators and other television service providers.

Our cloud-based solution is easy to integrate with our customers’ existing systems and networks, and quick to deploy. Our end-to-end platform includes all components necessary to deliver live and on-demand television and video services from the point of content ingestion on the server to the point of content delivery through our client software on end user devices. These platform components include software, systems integration and operational services. We provide a carrier-proven architecture that is secure, scalable and provides a consistent, high quality end user experience. As a result, our customers trust us to deliver television services under their brand names.

Our customers include all U.S. Tier 1 wireless carriers, consisting of AT&T, Sprint, T-Mobile and Verizon. We also provide our services to other U.S. and international customers, including Deutsche Telekom in Germany. Our services enable our customers to offer additional revenue-generating services and help them retain and grow their base of end users. Our total revenue was $66.8 million in 2010 and $85.1 million in 2011; our Adjusted EBITDA was $0.7 million in 2010 and $3.7 million in 2011; and our net loss was $14.7 million in 2010 and $11.8 million in 2011. We grew our managed services revenue from $61.7 million in 2010 to $85.1 million in 2011, an increase of 38%. See “—Summary consolidated financial data” below for a reconciliation of Adjusted EBITDA to net loss.

Industry background

The media landscape is evolving as consumers increasingly demand the ability to watch live and on-demand television and video anywhere, anytime, on any device. Advancements in wireless technology, network quality and availability, and digitization of media content, are changing the way consumers access and consume media. Traditionally, consumers watched live television and video primarily at fixed locations in the home; today they want to watch on a wide variety of screens, both inside and outside the home.

Changing wireless market dynamics

The number of wireless users and their consumption of mobile media continue to grow. In mature markets, users are upgrading to more advanced devices, such as smartphones and tablets, and using data-intensive services. In emerging markets, wireless carriers are rapidly adding new end users and connections, and in some emerging markets they are adopting broadband wireless networks without upgrading wireline or other existing networks. Gartner estimates that total mobile connections worldwide will grow from 5.0 billion connections in 2010 to over 7.3 billion in 2015⁽¹⁾. In response to the growing number of users and demand for data-intensive services, wireless carriers are rapidly building out 3G and 4G broadband wireless networks. In addition, improvements in device technology, including larger screen size, higher screen resolution and faster processors, are enabling users to more easily access advanced applications and rich-media content on their mobile devices and other Internet-enabled screens.

Worldwide, wireless carriers are expected to see a continued decline in average revenue per user, or ARPU, from voice services and are looking to data and related premium services to grow their total revenue and ARPU. Gartner estimates that worldwide carrier revenue from data services will grow from $257 billion in 2010 to $552 billion in 2015⁽²⁾. Video applications are the largest driver of mobile data usage. According to the Cisco Visual Networking Index (VNI), video services accounted for 50% of all mobile data usage worldwide in 2010⁽³⁾, and will grow to 71% in 2015⁽⁴⁾, and monthly worldwide mobile data usage for video services will grow from 118 petabytes in 2010⁽³⁾ to 4,882 petabytes in 2015⁽⁴⁾, representing a compounded annual growth rate, or CAGR, of 111%.

Shifting media landscape

Changes in television viewing habits and user demand to access content seamlessly across multiple screens have created a challenging environment for wireless carriers, network operators, other television service providers and content providers. In response to these changes, wireless carriers are offering additional services, including television and video, both inside and outside the home. Cable and satellite operators are also expanding their services, including offering mobile video and other services outside the home. Providers who distribute video content directly to consumers over third-party network connections, or over-the-top providers, have also emerged in recent years. Furthermore, content providers are exploring new distribution channels, including direct to consumer offerings and offerings through over-the-top providers.

(1)

Gartner, Inc., Forecast: Mobile Connections by Technology, Worldwide, 2008-2015, Stephanie Baghdassarian, et al, July 27, 2011.

(2)

Gartner, Inc., Forecast: Mobile Services, Worldwide, 2007-2015, 2Q11 Update, Jessica Ekholm, et al, June 9, 2011.

(3)

Cisco Visual Networks Index: Global Mobile Data Traffic Forecast Update, 2010-2015, February 1, 2011.

(4)

Cisco Visual Networks Index: Global Mobile Data Traffic Forecast Update, 2011-2016, February 14, 2012.

Challenges delivering television and video in a dynamic wireless environment

Factors that make it difficult to deliver live television and video services across multiple screens in a dynamic wireless environment include:

•

Many technology offerings are not comprehensive or flexible. Wireless carriers, network operators and other television service providers are generally offered individual components of a solution that they must then install, integrate and operate. These separate components may include content management, content delivery, security and application development technologies. As a result, considerable time and effort are required to build and deploy an integrated system, lengthening the time to market and often limiting service, quality, scalability and innovation.

•

Delivery of live television is uniquely challenging. Delivering high quality live television to millions of concurrent end users on wireless networks, especially outside the home, poses significant technological and operational challenges. These challenges include network hand-offs, device authentication, effective network and bandwidth utilization, and digital rights management. Live television requires a solution to these challenges in real time without degradation of quality or loss of service.

•

The wireless ecosystem is complex and dynamic. Differing network standards, operating systems, network quality, and the many different types of mobile devices make it difficult for providers to deliver television and video across platforms and devices. Providers of mobile video services must be able to integrate with and deploy on new devices quickly and efficiently, which is particularly difficult given the short time to market and rapid upgrade cycles typical of carriers and device manufacturers.

•

Wireless viewing experiences are unsatisfactory. Consumers expect a high quality viewing experience across all screens and locations, but television and video services generally are not optimized for viewing on mobile screens. Consumers find it difficult to discover, navigate, view and manage television and video on their mobile devices. In addition, consumers have limited access to real-time live events while they are on the go.

•

It is difficult to ensure scalability, efficiency and reliability. Wireless carriers require robust solutions that scale to support increasing numbers of end users and their rapidly increasing consumption of data services. This is particularly difficult because wireless networks are designed to deliver voice and data traffic without prioritization and are not specifically dedicated to live television delivery. Moreover, carriers are seeking to improve the efficient use of their networks and bandwidth, and their end users expect highly reliable services despite changing network conditions.

Benefits of our solution

We believe that our solution overcomes the challenges of delivering television and video in this evolving media and wireless landscape. Our managed services deliver live and on-demand

television, downloadable video and related media content across Internet-enabled screens, including mobile devices, tablets and personal computers. We believe that our solution provides a compelling way for wireless carriers, network operators and other television service providers to extend the reach of their content offerings to multiple screens beyond the in-home television, wherever their end users are located at any given time.

•

Comprehensive solution. Our end-to-end platform includes all components necessary to deliver live and on-demand television, downloadable video, and related media content for our customers. Our solution combines software, systems integration and operational services, simplifying customers’ ability to meet the demands of end users. Our solution is flexible, easy to deploy and can be tailored to our customers’ network infrastructure and specific needs.

•

High quality delivery of live television. We built our solution with a focus on delivering live television optimized for mobile devices, the most challenging problem of delivering mobile video. We solved such real-time technical challenges as network hand-offs, device authentication, quality optimization, bandwidth adaptation and digital rights management. We deliver over 220 channels, including over 70 live channels, and in 2011 we delivered over 3,200 live events.

•

Optimized viewing experience. Our solution provides end users with a high quality, personalized viewing experience for live, on-demand and downloadable content, including individual management and time-shifting or device-shifting of TV content across Internet-enabled screens both in the home and on the go. Key features of our solution include rapid launch, quick channel change and personalization tools such as search, recommendations, favorites, bookmarks, dynamic playlists, push alerts and notifications, social media integration and co-watching features.

•

Device, network and platform independent. Our solution works seamlessly across numerous wireless networks, platforms and devices. It is deployed on over 400 different types of mobile devices in use today across all major operating systems, and can be quickly integrated on any wireless carrier network. Our solution provides flexibility and reduced time to market for our customers so that these services can be rapidly deployed to their end users.

•

Additional customer revenue opportunities. Our solution enables our customers to enhance their services by offering high quality television and video experiences to end users. In addition, our platform enables us to provide customers with detailed analytics and reporting of aggregated usage and related data. Our services help our customers to attract and retain end users, increase ARPU and generate additional revenue. Further, our services are often pre-loaded on mobile devices, making it easy for end users to discover and access our services.

•

Carrier-proven performance on a highly scalable platform. Our cloud-based solution meets the stringent quality of service, availability and scalability requirements of our customers, while conserving their network and bandwidth capacity. Our architecture is highly scalable, designed to deliver live television and on-demand video services to millions of concurrent viewers. In addition, our operational experience allows us to anticipate, monitor and resolve issues in real time and meet the expectations of our customers during extreme conditions, including high profile, heavy volume, peak traffic live events. We grew our mobile minutes streamed from 264 million minutes in 2007 to 1.6 billion minutes in 2011.

Our strategy

Our goal is to extend our position as a leading provider of comprehensive managed services that deliver live and on-demand television, downloadable video and related media content across Internet-enabled screens, including mobile devices, tablets and personal computers. Key elements of our strategy include:

•

Expand our customer relationships and increase end user penetration. We work closely with our customers to promote and accelerate end user adoption of our services, including through deeper integration with our customers’ core service offerings. We plan to collaborate on their roadmaps to extend television and video offerings beyond the screens they have traditionally serviced within their networks, to include personal computers, set-top boxes and Internet-enabled televisions.

•

Pursue new domestic and international customer relationships. We plan to pursue relationships with additional wireless carriers, cable and satellite operators, and over-the-top content providers. We intend to pursue sales opportunities in the United States and internationally, in both mature and emerging markets. We also plan to help content providers quickly and efficiently provide content to end users across multiple devices.

•

Extend our technology advantages and broaden our managed services. We intend to continue investing in research and development to extend our technological lead in our market. We intend to introduce new features, functions and services to increase the value we provide to our customers and the quality of experience we provide to their end users.

•

Pursue opportunistic strategic acquisitions. We intend to pursue acquisition opportunities for complementary technologies and services that can accelerate the growth of our business, extend our technical capabilities and help us gain access to new customers both domestically and internationally.

Risks affecting us

Our business is subject to many risks, which are highlighted in the section entitled “Risk factors” immediately following this prospectus summary. These risks represent challenges to the successful implementation of our strategy and to the growth and future profitability of our business. Some of these risks are:

•

we have a limited operating history, a history of losses, and have recently adopted new business strategies;

•

we depend on four customers for most of our revenue;

•

our customers control their end user relationships and determine key aspects of the services we provide, including the pricing and other terms by which they offer our services to their end users;

•

the market in which we operate is rapidly evolving, fragmented and competitive, many of our current and potential competitors have greater resources than we do, and offerings by over-the-top providers may cause consumers to reduce their demand for mobile content through carrier-branded services or to demand carrier-branded services for free or at reduced pricing; and

•

our customers and our content providers have complex business needs and substantial negotiating leverage.

Corporate history and information

We were incorporated in Delaware in 2000. Our principal executive offices are located at 6425 Christie Avenue, 5th Floor, Emeryville, California 94608 and our telephone number is (510) 450-5000. Our website address is www.mobitv.com. The information on, or that can be accessed through, our website is not incorporated by reference into this prospectus and should not be considered to be a part of this prospectus.

MobiTV^®, the MobiTV logo and other trademarks or service marks of MobiTV appearing in this prospectus are the property of MobiTV. All other service marks, trademarks and trade names referred to in this prospectus are the property of their respective holders.

The offering

Common stock offered by us

Common stock to be outstanding after this offering

Use of proceeds

Risk factors

You should read the “Risk factors” section of this prospectus for a discussion of factors that you should consider carefully before deciding to invest in shares of our common stock.

Proposed symbol

MBTV

The number of shares of our common stock to be outstanding after this offering is based upon 64,873,163 shares outstanding as of December 31, 2011, and excludes:

•

14,743,813 shares of our common stock issuable upon the exercise of stock options outstanding as of December 31, 2011, with a weighted average exercise price of $1.35 per share;

•

2,421,635 shares of our common stock issuable upon the exercise of stock options granted between January 1, 2012 and February 29, 2012, with a weighted average exercise price of $3.33 per share;

•

174,169 shares of our convertible preferred stock issuable upon the exercise of warrants outstanding as of December 31, 2011, with a weighted average exercise price of $5.74 per share; and

•

shares of our common stock reserved for issuance under our 2012 Equity Incentive Plan, which will become effective immediately prior to the date of this prospectus, and shares of our common stock reserved for issuance under our 2012 Employee Stock Purchase Plan, which will become effective on the first day that our common stock is publicly traded, including in the case of each plan, provisions that automatically increase the share reserve of such plan each year, as described in “Executive compensation—Employee benefit plans.”

Except as otherwise indicated, all information in this prospectus assumes:

•

the automatic conversion of all outstanding shares of our convertible preferred stock into shares of our common stock immediately prior to the closing of this offering;

•

the conversion of all outstanding warrants to purchase 174,169 shares of our convertible preferred stock into warrants to purchase shares of our common stock;

•

a for reverse split of our common stock, to be effective immediately prior to the closing of this offering;

•

the filing of our certificate of incorporation and the effectiveness of our bylaws, which will occur immediately prior to the closing of this offering; and

•

no exercise of the underwriters’ over-allotment option.

Summary consolidated financial data

The following tables present summary consolidated financial data for our business. You should read this information together with “Selected consolidated financial data,” “Management’s discussion and analysis of financial condition and results of operations” and our consolidated financial statements and related notes, each appearing elsewhere in this prospectus.

We derived the consolidated statements of operations data for the years ended December 31, 2009, 2010 and 2011 from our audited consolidated financial statements included elsewhere in this prospectus. Our historical results are not necessarily indicative of the results to be expected in the future.

		$(00,000)			$(00,000)			$(00,000)
	Years ended December 31,
(in thousands, except per share data)	2009			2010(1)			2011


Consolidated statements of operations data:
Revenue	$	62,477		$	66,824		$	85,089

Operating expenses:
Cost of revenue(2)		22,324			32,145			41,394
Research and development(2)		19,837			15,975			21,870
Sales and marketing(2)		7,409			7,627			8,687
General and administrative(2)		17,287			15,247			14,021
Depreciation and amortization		9,298			9,819			10,355

Total operating expenses		76,155			80,813			96,327

Loss from operations		(13,678	)		(13,989	)		(11,238	)
Interest and other expense, net		(882	)		(618	)		(401	)

Loss before income taxes		(14,560	)		(14,607	)		(11,639	)
Income tax provision		(57	)		(82	)		(111	)

Net loss		(14,617	)		(14,689	)		(11,750	)
Accretion of redeemable convertible preferred stock		(838	)		(552	)		(260	)

Net loss attributable to common stockholders	$	(15,455	)	$	(15,241	)	$	(12,010	)

Net loss per share attributable to common stockholders, basic and diluted	$	(1.19	)	$	(1.10	)	$	(0.77	)

Weighted average shares used to compute net loss per share attributable to common stockholders, basic and diluted		13,006			13,862			15,680

Pro forma net loss per share, basic and diluted (3) (unaudited)							$

Weighted average shares used to compute pro forma net loss per share, basic and diluted (3) (unaudited)

		$(00,000)		$(00,000)		$(00,000)
Non-GAAP financial data	Years ended December 31,
(in thousands, unaudited)	2009		2010		2011

Adjusted EBITDA(4)	$	1,047	$	735	$	3,724

(1)

Includes the benefit of $5.0 million of revenue resulting from the settlement of an arbitration claim for underpayment of license fees from a legacy software arrangement.

(2)

Excludes depreciation and amortization expense. Includes stock-based compensation expense. See “Selected consolidated financial data.”

(3)

Pro forma basic and diluted net loss per share have been calculated by dividing net loss for the period by the weighted average number of shares of common stock outstanding during the period, giving effect immediately prior to the closing of this offering to (a) the automatic conversion of all outstanding shares of our convertible preferred stock into shares of common stock immediately prior to the closing of this offering and (b) the assumed conversion of the convertible preferred stock warrants into common stock warrants upon the closing of this offering, each as of the original date of issuance of the respective shares and preferred stock warrants. See Note 2 to our consolidated financial statements for more information on our calculation of pro forma net loss per share.

(4)

The following table presents a reconciliation of Adjusted EBITDA to net loss for each of the periods presented (unaudited):


	Years ended December 31,
(in thousands)	2009			2010			2011


Reconciliation of Adjusted EBITDA:
Net loss	$	(14,617	)	$	(14,689	)	$	(11,750	)
Net interest (income) expense(*)		813			534			171
Income tax provision		57			82			111
Depreciation and amortization		9,298			9,819			10,355
Stock-based compensation		5,496			4,989			4,837

Adjusted EBITDA	$	1,047		$	735		$	3,724

(*)

Interest and other expense, net in our statement of operations includes additional items which are not part of our Adjusted EBITDA reconciliation, such as gains and losses from foreign currency remeasurement, realized gains and losses from the sale of short-term investments, the change in fair value of our outstanding convertible preferred stock warrants and other miscellaneous expenses.

The following table presents consolidated balance sheet data as of December 31, 2011 on:

•

an actual basis;

•

a pro forma basis to reflect (i) the automatic conversion of all outstanding shares of our convertible preferred stock into shares of our common stock, and (ii) the reclassification of our convertible preferred stock warrant liability to additional paid-in capital upon the conversion of warrants to purchase shares of our convertible preferred stock into warrants to purchase shares of our common stock, each immediately prior to the closing of this offering; and

•

a pro forma as adjusted basis to give effect to the sale of the shares of our common stock offered by us in this offering at an assumed initial public offering price of $ per share, which is the midpoint of the range set forth on the cover page of this prospectus, after deducting the estimated underwriting discounts and commissions and estimated offering expenses.


December 31, 2011 (in thousands)	Actual			Pro forma	Pro forma as adjusted(1)

					(unaudited)

Consolidated balance sheet data:
Cash, cash equivalents and short-term investments	$	25,403		$	$
Working capital		12,095
Total assets		60,255
Equipment financing obligations(2)		1,202
Convertible preferred stock warrant liability		338
Redeemable convertible preferred stock		119,535
Common stock and additional paid-in capital		30,720
Total stockholders’ equity (deficit)		(89,233	)

(1)

Each $1.00 increase or decrease in the assumed initial public offering price of $ per share would increase or decrease, respectively, our pro forma as adjusted cash, cash equivalents and short-term investments, working capital, total assets and total stockholders’ equity by approximately $ million, assuming the number of shares offered by us, as set forth on the cover of this prospectus, remains the same and after deducting the estimated underwriting discounts and commissions.

(2)

In February 2012, we paid the remaining principal and interest balances of our outstanding equipment financing obligations in full.

Risk factors

Investing in our common stock involves a high degree of risk. You should carefully consider the risks and uncertainties described below, together with all of the other information in this prospectus, including the consolidated financial statements and the related notes appearing at the end of this prospectus, before deciding to invest in shares of our common stock. If any of the following risks actually occurs, our business, financial condition, results of operations and future prospects could be materially and adversely affected. In that event, the market price of our common stock could decline and you could lose part or even all of your investment.

Risks related to our business and industry

We have a limited operating history and a history of net operating losses, which may make it difficult for you to evaluate our business.

We were incorporated in January 2000 and began offering our services in November 2003. We have recently adopted new business strategies and expect to continue to adjust our business model to adapt to the changing competitive environment in which we operate. For instance, we recently began deployment of our TV everywhere services with Deutsche Telekom on a customer-hosted basis. The future revenue and earnings potential of our business is uncertain, and it is difficult to forecast our future results. We have incurred significant net operating losses since our incorporation. For 2009, 2010 and 2011, we had net losses of $14.6 million, $14.7 million and $11.8 million, respectively, and we had an accumulated deficit of approximately $120.0 million as of December 31, 2011. If we do not become profitable, our financial condition will deteriorate and we may be unable to achieve our business objectives. Further, we may incur additional expenses to support the growth of our business, which may cause us to incur additional operating losses.

Any evaluation of our business and prospects must be considered in light of our ability to do the following, among other things:

•

develop and execute upon our business strategies in a rapidly evolving industry;

•

maintain and develop the customer relationships upon which our business depends;

•

effectively port our technologies to new mobile devices, tablets, personal computers and other Internet-enabled screens;

•

continuously adapt our technology platform and infrastructure to facilitate reliable and flexible delivery of our managed services; and

•

maintain and develop relationships with media content providers.

If we fail to address these challenges, we may be unable to achieve our business objectives and our revenue and operating results would be harmed, which would likely cause the price of our common stock to decline.

We depend on four customers for most of our revenue and if any of those customers were to limit or terminate their relationship with us, or to replace our service with a competitor’s service or the customer’s own service, it could be difficult or impossible for us to replace that revenue.

We depend on our key customers, Sprint, T-Mobile, AT&T and Verizon, for the substantial majority of our revenue. In 2010, Sprint and AT&T represented 54% and 19% of our revenue,

respectively. In 2011, Sprint, T-Mobile, AT&T and Verizon represented 42%, 26%, 19% and 10% of our revenue, respectively. In February 2012, we extended the term of our agreement with Sprint to September 2014. Our T-Mobile agreement automatically renewed in December 2011 for a one-year term and our AT&T agreement expires in January 2013. Our NFL Mobile agreement for the 2011 NFL season with Verizon expires in July 2012. If we are unable to renew our agreements with these customers on favorable terms, or at all, or if any of these customers were to terminate our agreement for any reason, our revenue would decline and our operating results and financial condition would be harmed. If any one of these customers chose not to continue to use our services, or limited its use of our services, or if it replaced our services with a service provided by another company or by the customer itself, it would be difficult or impossible for us to replace that revenue. Any such development would harm our business, operating results and financial condition.

Our customers control their end user relationships and determine key aspects of the services we provide; if they make unfavorable decisions about our services or promotion of our services, our business could be harmed.

Our revenue is derived almost exclusively from our share of monthly service fees that end users pay our customers to access our services. Our agreements with customers provide that we receive revenue per end user, primarily as a percentage of revenue received by the customer. Our customers offer, distribute, market and promote our services to their end users, but they generally do not have contractual obligations with respect to these activities. Where we license content for a customer, we recommend the content blend but the customer generally has ultimate approval rights over the content to be included in our service. Our customers also control the relationship with equipment manufacturers and may influence whether our software is pre-loaded on supported mobile devices. For example, while our customers are able to pre-load our applications on most Android devices, to date Apple generally has not permitted third parties, including our customers, to pre-load applications on its mobile devices. These decisions by our customers and equipment manufacturers impact how broadly our services are discovered, utilized and accepted, and the rate of growth in end user usage of our services, which could harm our revenue and results of operations.

For example, our business could be harmed if our customers:

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discontinue the sale of our services;

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do not market or promote our services adequately;

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fail to acquire or approve compelling media content;

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promote the services of our competitors over our services, or offer their own competing services;

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do not require equipment manufacturers to provide us technical information and pre-load our client application on their mobile devices; or

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experience technical problems that disrupt delivery of or billing for our services.

Any such developments could limit our revenue and harm our operating results and financial condition.

Our customers may change the pricing or other terms by which they offer our services, which could reduce our revenue and increase end user turnover.

Our customers generally set the retail pricing of our services to their end users and are responsible for invoicing and collecting for those services. The pricing decisions that our customers make could reduce market acceptance of our services and our revenue. Our customers’ failure to accurately invoice and collect payment for our services could impact our revenue and operating results.

Several of our customers sell our services as part of fixed-fee data plans, or bundled plans. Their end users do not pay a separate monthly fee for our services specifically. Since the mobile media market is relatively new, it is unclear to what extent pricing of such data plans will impact end user adoption of such plans and therefore our services. In addition, if our customers eliminate our services from their bundled plans, end users would need to subscribe to our services separately, which could lead to a decline in end users.

Our customers may take other actions that reduce the number of end users of our services; for instance, they may decide to raise prices for their data plans, impose data usage caps or discontinue certain bundled plans, which could cause end users to move to less expensive or other plans that do not include our services. Some carriers, such as AT&T and Verizon are phasing out or have discontinued unlimited data plans. Because our services can be data-intensive, this change could increase costs to end users and decrease the attractiveness of our services.

These and other developments in the way our customers offer and price our services could reduce end user acceptance or usage of our services, which could reduce our revenue and harm our operating results.

The market in which we operate is rapidly evolving, fragmented and competitive, and many of our current and potential competitors have greater resources than we do.

The market for mobile television and video solutions is rapidly evolving, fragmented and competitive, and we expect competition to intensify in the future. This market is characterized by rapidly changing technologies and an abundance of current and potential market participants. As the market, technologies and industry evolve and as we introduce additional solutions, we expect to face significantly increased competition from other companies in the broader Internet media market, including large media companies, content aggregators, pure-play wireless media companies, wireless equipment vendors, wireless carriers, cable and satellite operators, and other television service providers with in-house developed solutions, including those with whom we currently have strategic relationships. Such increased competition could harm our revenue and operations.

In addition, we face indirect competition and potential competition from many sources. Competing technologies and competing market participants make it possible for consumers to obtain content from sources other than carriers, network operators and other television service providers. As a result, television and video content aggregators such as Amazon, Hulu and Netflix indirectly compete with us for consumer spending on mobile video content. Traditional television and video providers such as Comcast and DirectTV are also offering services to the mobile market. These developments may cause the demand for, and the prices of, our services to decline. In addition, we face potential competition from established technology companies, such as Apple, Google and Microsoft, that may seek to enter our market. We may not be able to fund or invest in new technologies to the same degree as our competitors and we may not have the financial

resources, technical expertise or marketing and support capabilities to compete successfully, which could harm our business and operating results.

We may also face increased competition due to the consolidation of operating systems, which has reduced the number of operating systems for which a competitor must develop services similar to ours. A limited number of operating systems, including Android, Apple iOS, BlackBerry OS, Symbian and Windows Mobile, power substantially all mobile devices. These operating systems also allow mobile device users to download standalone applications which can be used instead of carrier-branded services such as ours.

Moreover, our customers and content providers may develop or acquire a competitive service to replace our service, which could harm our competitive position, revenue and future operating results.

Over-the-top business models, which provide video content directly to consumers through third-party network connections, may reduce demand for our services.

Our revenue is largely derived from our customers’ end users accessing mobile content through carrier-branded mobile solutions that we provide. The emergence of over-the-top services that provide video content directly to consumers over third-party network connections, such as those offered by Amazon, Hulu and Netflix, may cause end users to reduce their demand for mobile content through carrier-branded services or to demand carrier-branded services for free or at reduced pricing. Carriers and other providers may fail to offer branded services that can compete with these over-the-top services. If end users do not find carrier-branded services, including ours, compelling, demand that our customers provide such services for free, or if we are unable to expand our service offerings to sell to potential customers in this market, demand for our services may be reduced, which would harm our business.

Our customers and our content providers have complex business needs and substantial negotiating leverage that result in complex contractual arrangements that may subject us to business, financial and operational risks.

We have contracts with large wireless carriers, network operators and content providers, which have complex business needs and substantial negotiating leverage as a result of their scale and positions in the marketplace. As a result, we typically negotiate contracts on a case-by-case basis and sometimes have been compelled to accept contract terms that favor the other party, including indemnities, representations and warranties, limitation of liability, refund, penalty or other terms that could expose us to significant financial or operational risks. If we cannot effectively negotiate, enforce and collect payment under contracts with our customers and content providers, our business and operating results could be harmed. In addition, during the course of our contractual relationships, various disputes can arise under these complex contractual arrangements. To the extent that we cannot amicably resolve these issues, our relationships with customers and content providers may be harmed.

Mergers, consolidations or other strategic transactions in the wireless communications industry could weaken our competitive position, reduce the number of our customers and harm our business.

The wireless communications industry continues to experience consolidation and increased alliance activity. Should one of our customers consolidate or enter into an alliance with another carrier, our business could be harmed. Our competitors may also acquire, establish or strengthen relationships

with their customers, sales channel partners or other parties with whom we have strategic relationships, thereby limiting our ability to promote our services to those parties. Any such alliance or consolidation, such as Google’s pending acquisition of Motorola Mobility, may lead to changes in the industry that could negatively affect our business. If we lose a key customer or if the number of end users for our services declines as a result of any such transaction we may not be able to expand our base of customers to offset any revenue decreases.

We rely on end user and other information related to revenue recognition that is provided to us by or on behalf of our customers, disruption of which could negatively affect our recognition of revenue.

Most of our revenue is determined on a per end user basis under our customer agreements, either calculated as a percentage of revenue received by the customer or as a fixed fee per end user. Our customers provide us information, generally on a daily basis, that we utilize to determine the timing and amount of revenue to record in any given period for the services we provide. We have established processes and controls to validate the accuracy and completeness of information our customers report to us, and occasionally discrepancies are identified. If we are unable to identify and resolve discrepancies in a timely manner, the timing of recognition of revenue and collection of payment from our customers could be affected. Delays in the timing of receipt, accuracy or completeness of reporting to us, or timing of resolution of discrepancies, could delay our financial reporting, recognition of revenue and negatively impact our results of operations and financial condition.

Our quarterly revenue and operating results have fluctuated in the past and may fluctuate in the future due to many factors, including seasonality. As a result, we may fail to meet or exceed the expectations of securities analysts or investors, which could cause our stock price to decline.

Our quarterly revenue and operating results have fluctuated in the past and are likely to fluctuate significantly in the future. Therefore, you should not rely on the results of any one quarter as an indication of future performance. Period to period comparisons of our revenue and operating results may not be meaningful. Our quarterly results of operations may fluctuate as a result of many factors, including those listed below, many of which are outside of our control:

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changes in the pricing of our services or services of our competitors and changes in the pricing and content of bundled offerings of our customers;

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loss of end users by our customers or a reduction in the number of their end users with access to plans that include our services;

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the timing and accuracy of information we receive from our customers;

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our customers failing to introduce, market and promote our services to end users;

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the timing and success of new mobile devices offered by our customers or the extent our services are pre-loaded on mobile devices;

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changes to existing customer arrangements or emergence of new arrangements under which customers directly license content;

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resolution of any disputes with our customers regarding amounts due;

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the timing and success of new service introductions by us or our competitors; and

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our or our customers’ ability to procure compelling media content.

Furthermore, our business may be seasonally influenced due to the timing of the availability of particular media content. For example, the majority of revenue derived from our NFL Mobile service provided through Verizon coincides with the National Football League season, which occurs in our third and fourth quarters and the beginning of our first quarter.

These factors, among others, make business forecasting difficult, may cause quarter to quarter fluctuations in our revenue and operating results and may impair our ability to predict financial results accurately, which could reduce the market price of our common stock.

Potential changes in how we provide our services make it difficult to evaluate our prospects and may increase the risk that we will not be successful.

The manner in which our services are offered and deployed may change over time in response to customer demands and the competitive environment in which we operate. One anticipated change is a shift away from our licensing of content in favor of our customers directly licensing content for distribution to their end users through our managed services. We also anticipate shifting toward a deployment model in which our customers host our managed services on their systems and we operate the services remotely from our network operations center. Changes of this nature may have an adverse impact upon our operations and financial results. For example, direct licensing of content by our customers will likely result in a decrease in average revenue per user that will lead to a decline in revenue if we are not able to increase the number of customers or end users. Where we continue to license content as part of our managed services, if prices for quality content rise we may be unable to obtain favorable financial terms from our customers or adjust the prices for our services accordingly, which could cause our margins for those services to deteriorate. Any such developments could harm our operating results and financial condition.

Our lengthy sales cycle makes it difficult for us to predict when we will generate revenue from new customers.

Our sales process is lengthy and complex. Integration and testing of our technologies with a prospective customer requires substantial time and expense before our services can be launched with that customer. In international markets, we expect our sales cycles will typically be longer and may involve additional challenges, such as language or government regulation/compliance requirements. Moreover, launch of our managed services by a customer typically will be timed to coincide with the launch of new mobile devices, which may be delayed. Because of this lengthy cycle, we may experience delays from the time we begin the sales process and incur increased costs and expenses to obtain a new customer and integrate our technologies until the time we generate revenue from that customer. These delays may make it difficult to predict when we will generate revenue from our new customers.

Our managed services depend on the availability of quality media content and, if we are unable to procure or distribute quality media content, our revenue from managed services and results of operations would be harmed.

Where we provide licensed content as part of our managed services we must license content from third parties. The success of our managed services depends upon the volume and quality of content and the inclusion of a variety of media and programming that end users find compelling, such as live television and video from major entertainment studios. We currently license content

from major television studios, including ABC, CBS, Disney, ESPN, Fox, MTV Networks and NBC. The license periods and the terms and conditions of our current content licenses vary. We may not be able to renew these licenses on terms that are favorable to us, or at all.

These content providers have flexibility in the terms under which they license content. They may elect to license content exclusively to one of our competitors, directly to our customers, or otherwise limit our use of their content. Additionally, with the introduction of new mobile platforms such as tablets, the market for content and its cost are currently in flux. Our rights to content and our content pricing are not uniform across customers and across such mobile platforms. Additionally, content providers have discretion in determining which specific content we may license and when such content will be available to us. If content providers adversely change their current terms and conditions, demand higher prices, or are no longer willing or able to license us content and we are unable to replace or supplement existing content with high quality media content, our ability to provide our managed services will be harmed, resulting in an adverse impact on our financial results.

Consumer preferences for media content are dynamic and unpredictable. If our managed services do not deliver popular media content, our business and operating results could be harmed.

Our business currently depends on distribution of media content through our managed services. Our success depends on consumer preferences and the availability of other consumer entertainment choices. If available content is not popular, or is not brought to market in a timely manner, demand for our managed services could decline and lead to fewer end users of our services. Consumer tastes and preferences can change in rapid and unpredictable ways. Consumer acceptance of new content offerings depends on the marketing, technical and other efforts of our customers and others, which are beyond our control. Even if content distributed through our managed services is successfully introduced and initially adopted, a subsequent shift in consumer preferences could cause a decline in the popularity of our managed service, which could reduce our revenue and harm our business, operating results and financial condition.

We may not be able to enhance our solutions to keep pace with technological and market developments, or develop new solutions in a timely manner or at competitive prices.

The market for mobile media services is characterized by rapid technological change, evolving industry standards, frequent device and service introductions and short life cycles. Our success depends upon our ability to enhance our current solutions and to develop and introduce new solutions and enhanced performance features and functionality on a timely basis at competitive prices. Our inability, for technological or other reasons, to enhance, develop, introduce or deliver compelling services in a timely manner, or at all, in response to changing market conditions, technologies or consumer expectations could harm our operating results or could result in our services becoming obsolete. Our ability to compete successfully will depend on our ability to maintain a technically skilled research, development and engineering team and to adapt to technological changes and advances in the industry, including providing for the continued compatibility of our technology platform with evolving industry standards and protocols and competitive network operating environments. In addition, we cannot assure you that the technologies and related solutions that we develop will be brought to market by our customers or others as quickly as anticipated or that they will achieve broad acceptance among our customers or their end users.

If we fail to deliver our solutions to coincide with the commercial introduction of new mobile device models, our sales may suffer.

We make product development decisions and allocate our limited resources well in advance of anticipated introductions of new mobile device models. These models may be delayed or cancelled, may not be commercially successful, may have a shorter life cycle than anticipated or may not be adequately promoted by carriers or the mobile device manufacturer. If the mobile device models for which we are developing applications are not released when expected, do not achieve broad market penetration, or have shorter than expected life cycles, our potential revenue will be limited and our business will suffer.

We must support numerous mobile device models and technologies, which are rapidly changing. This requires us to continue making investments in research and development. We depend on mobile device manufacturers and our customers to provide us with technical specifications needed to develop our solutions for new mobile devices. Some manufacturers have introduced mobile devices with closed operating systems, which limit the ability of end users to install third-party applications. If we cannot obtain technical specifications from mobile device manufacturers, or if they shift to offering devices with closed operating systems, our end user base could be limited and the development period for our applications could be lengthened, increasing our costs. If we fail to integrate our solutions on a mobile device prior to its commercial launch or if it is pre-loaded with another provider’s services or our solutions are not readily accessible through a virtual application store, we may lose a substantial opportunity to gain end users who purchase that device and our revenue may suffer.

Expansion into international markets is important to our long-term strategy, and as we expand internationally, our business will be susceptible to risks associated with international operations.

An important element of our business strategy is expansion of our business into international markets, particularly Europe and Asia. Our experience with carriers and other partners outside the United States is limited. That limited experience increases the risk that our international expansion efforts may not be successful. In particular, our business model or strategy may not be successful outside the United States for reasons that we currently do not anticipate. In addition, conducting international operations subjects us to new risks, including:

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fluctuations in currency exchange rates;

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government legal and regulatory requirements;

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potentially adverse tax consequences, including international value added tax systems, restrictions on the repatriation of earnings and changes in tax rates;

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dependence on international carriers with different pricing models;

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new competitors;

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availability of reliable 3G and 4G broadband wireless networks in international markets;

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greater fluctuations in sales to customers in developing countries, including longer payment cycles and greater difficulty collecting accounts receivable;

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increased financial accounting and reporting burdens and complexities;

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political, social and economic instability in some jurisdictions; and

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diminished protection of intellectual property rights in some countries.

The occurrence of any one of these risks could negatively affect the growth of our international business and, consequently, our ability to successfully expand. Additionally, operating in international markets requires significant management attention and financial resources, including the need to hire additional international sales personnel. We cannot be certain that the investment of additional resources required to establish, acquire or integrate international operations will produce anticipated levels of revenue or profitability.

We rely on network infrastructure provided by our customers for the delivery of our managed services to their end users.

We rely on our customers’ networks to deliver our managed services to their end users. We may be unable to provide high quality solutions if our customers’ networks perform poorly or experience delayed response times. Our future success and reputation will depend on the availability and quality of our customers’ networks to run our solutions, including the deployment and maintenance of reliable 3G and 4G broadband wireless networks. We do not establish or maintain these networks and have no control over interruptions or failures in the deployment and maintenance by our customers of their network infrastructure. In addition, this network infrastructure may be unable to support the demands placed on it if the number of end users increases, or if existing or future end users increase their use of bandwidth. Our reputation and market acceptance of our solutions will depend in part on the quality of the network infrastructure and the ability of our customers to effectively manage their end users’ expectations.

We provide service level and milestone commitments to some of our customers, which could cause us to incur financial penalties if these commitments are not met and could significantly reduce our revenue.

Our customer agreements often provide service level or milestone commitments, for example specifying the high level of availability of our managed services required by our customers, or dates by which an integration must be completed. If we are unable to meet the contractual commitments, for example due to extended periods of unavailability and/or degraded performance of our service, we may incur financial penalties or our customers could terminate our agreements. In such cases, our revenue could be significantly impacted.

If our technology platform does not scale as anticipated, our business will be harmed.

Despite frequent testing of the scalability of our technology platform in a test environment, it may not scale as expected. If our platform does not efficiently and effectively scale to support and manage a substantial increase in the use of our solutions or number of users while maintaining a high level of performance, our business will be seriously harmed. Further, as we develop and expand our services to be accessible across multiple media devices, end users will have greater access to our managed services. Consequently, the demands on our operational infrastructure and technology platform will increase. If we cannot scale our platform and operations, then our customers may terminate our services, which would harm the growth of our business, financial and operating results.

Undetected software errors in our technology platform may cause us to lose customers, damage our reputation or harm our business.

Software that is part of our technology platform may contain undetected errors that could adversely affect performance. We regularly update and enhance our platform, which may result in additional errors. The occurrence of errors in our platform may cause us to lose customers, damage our reputation or harm our business.

Network failures, disruptions, security breaches or capacity, constraints in our network operations center or third-party data center, or other vendor facilities, could impair the performance of our managed services and harm our reputation, our customer and content provider relationships and our revenue.

We host our managed services on our servers, housed at third-party data centers. In addition, we utilize third-party video uplink/downlink and content delivery network services. Our operations rely on the efficient and uninterrupted operation of such third-party data centers and other services. If such third parties experience service failures or capacity constraints, the performance of our services will be impaired. If we experience a significant increase in the number of end users or their usage of our services and we do not timely increase our capacity with such third parties, we may experience service failures and disruptions. Poor performance in or disruptions of our managed services could harm our reputation, delay market acceptance of our services and subject us to liabilities.

Our network operations center and third-party data centers, video uplink/downlink and content delivery network facilities are potentially vulnerable to damage or interruption from a variety of sources including natural disasters, power loss, systems failure, human error, terrorist acts or other events. We have not yet completed a comprehensive business continuity plan or developed fully redundant back up plans for failover from our primary co-location data center and there can be no assurance our current and future measures to manage risks related to network failures or disruptions in our resources will be adequate in the event of network failures or other disruptions. In particular, if we experience damage or interruptions to our network operations center, co-location data center, video uplink/downlink or content delivery network resources, our ability to provide efficient and uninterrupted operation of our managed services would be significantly impaired. Also, if our end user base grows significantly, additional load will be placed on our technology systems and networks, which may increase the risk of a network disruption. Any outage in a network or system, or other unanticipated problem that leads to an interruption or disruption of our managed services, could harm our reputation, relationships with our customers and content providers and financial results.

We have experienced rapid growth in recent periods. If we fail to manage our growth effectively, our financial performance may suffer.

In recent periods, we have substantially expanded our overall business, end user base, headcount and operations. We increased our total number of full time employees from 209 at December 31, 2010 to 276 at December 31, 2011. Our expansion has placed, and our expected future growth will continue to place, substantial strain on our managerial, administrative, operational, financial and other resources. If we are unable to manage our growth successfully, our profit margins will decline and our earnings could be materially harmed.

We may need to raise additional capital to grow our business and that capital may not be available on favorable terms, or at all.

We intend to continue to make investments to support our business growth and may require additional funds to respond to business challenges, including the need to develop and enhance new solutions or respond to increased competition or changes in the industry. Furthermore, we may be compelled to make capital expenditures including acquisition of servers, data storage and other data center equipment, and incur other costs, sooner than we plan.

Accordingly, we may need to engage in equity or debt financings to secure additional funds. If we raise additional funds through future issuances of equity or convertible debt securities, our existing stockholders could suffer significant dilution. If we issue new equity securities they could have rights, preferences and privileges superior to those of holders of our common stock, and a debt financing may involve restrictive covenants. If we are unable to obtain adequate financing or financing on terms satisfactory to us when we require it, our ability to continue to support our business growth and to respond to business challenges could be significantly impaired and our business may be harmed.

We rely on our management team and ability to attract new personnel to grow our business, so the loss of one or more key employees or our inability to attract and retain qualified personnel could harm our business.

Our success and future growth depend on the skills, working relationships and continued services of our senior management team and key personnel, including, in particular, our executive officers as identified under “Management—Executive officers and directors.” Our future success will depend on our ability to continue to retain our senior management, and on our ability to attract, retain and motivate highly skilled engineering, operations, product, design and finance personnel in the United States and internationally. All of our senior management and key employees are at-will employees, meaning they may terminate their employment with us at any time. Competition for qualified personnel is intense, particularly for engineering talent and particularly in the San Francisco Bay area where our principal office is located. As a result, we may be unable to attract or retain qualified personnel, which could harm our business.

If we are unable to integrate future acquisitions successfully, our operating results and prospects could be harmed.

We have not made any material acquisitions to date and we do not have any current plans, proposals or understandings relating to any material acquisitions. In the future, we may selectively pursue strategic acquisitions to improve our solutions or expand to new markets. Our future acquisition strategy will depend on our ability to identify, negotiate, complete and integrate acquisitions and, if necessary, to obtain satisfactory debt or equity financing to fund those acquisitions. Mergers and acquisitions are inherently risky and may not be successful. Any mergers and acquisitions we may pursue would involve many risks, including:

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difficulties integrating the companies’ operations, technologies and products;

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diversion of management attention from normal business operations;

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difficulties maintaining an acquired company’s key business relationships and personnel;

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uncertain entry into markets where we have limited or no prior experience;

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our responsibility for the anticipated and unanticipated liabilities of the businesses we acquire; and

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our inability to maintain internal standards, controls, procedures and policies.

Furthermore, the anticipated benefits of future acquisitions may not materialize. Future acquisitions could result in potentially dilutive issuances of our equity securities, the incurrence of debt, liabilities, amortization expenses, goodwill or write-offs, any of which could harm our financial condition.

Our business is subject to the risks of earthquakes, fires, floods and other natural catastrophic events and to interruption by man-made problems such as computer viruses or terrorism.

Our systems and operations are vulnerable to damage or interruption from earthquakes, fires, floods, power losses, telecommunications failures, terrorist attacks, acts of war, human errors, hacking or similar events. For example, a significant natural disaster, such as an earthquake, could harm our business, operating results and financial condition and our insurance coverage may be insufficient to compensate us for losses that may occur. Our principal executive offices and network operations center are located in the San Francisco Bay area, a seismically active region. In addition, acts of terrorism could cause disruptions in our business or the economy as a whole.

We currently have limited disaster recovery capability and our business interruption insurance may be insufficient to compensate us for losses that may occur. As we rely heavily on our servers, computer and communications systems to conduct our business and provide our managed services to end users, such disruptions could negatively impact our ability to run our business, result in the loss of current or potential customers or increased maintenance costs, which would harm our operating results and financial condition.

Risks related to our intellectual property and regulation

We are subject to intellectual property disputes that are costly to defend and may cause our business, operating results and financial condition to suffer.

We operate in an industry with extensive intellectual property litigation. From time to time we have faced, and we expect in the future to face, allegations that we have infringed the trademarks, copyrights, patents and other intellectual property rights of third parties, including patents held by our competitors or by non-practicing entities. Litigation may make it necessary to defend ourselves by determining the scope, enforceability and validity of third-party proprietary rights, or to establish our proprietary rights. Litigation may be brought by non-practicing entities that focus solely on extracting royalties and settlements by enforcing patent rights. These companies typically have little or no product revenue and therefore our patents may provide little or no deterrence against such companies filing patent infringement lawsuits against us. Regardless of whether claims that we are infringing patents or other intellectual property rights have any merit, the claims are time consuming, divert management attention and financial resources and are costly to evaluate and defend. Results of any such litigation are difficult to predict and may require us to stop offering certain features, purchase licenses or modify our products and features while we develop non-infringing substitutes, or may result in significant settlement costs.

In addition to liability for monetary damages against us, or in some circumstances against our customers or content providers, we may be prohibited from developing, commercializing or continuing to provide some of our services unless we obtain licenses from the holders of the

patents or other intellectual property rights. We cannot assure you that we will be able to obtain any such licenses on commercially reasonable terms, or at all. If we do not obtain such licenses, our business, operating results and financial condition could be harmed and we could, for example, be required to cease offering or materially alter our services, which could involve substantial costs and time to develop.

Indemnity provisions in some of our agreements potentially expose us to substantial liability for intellectual property infringement, damages caused by defective software and other losses.

Our agreements with our customers and content providers may include indemnification provisions under which we may agree to indemnify such parties for losses suffered or incurred in connection with our managed services, including as a result of intellectual property infringement, breaches of representations and warranties, violations of law, security breaches, damages caused by defects and damages caused by viruses, worms and other malicious software. The term of these indemnity provisions is generally perpetual after execution of the corresponding agreement and the maximum potential amount of future payments we could be required to make under these indemnification provisions is generally substantial and may be unlimited.

We have received, and expect to receive in the future, demands for indemnification under these agreements. When such demands arise, we may in some cases agree to defend and indemnify our customers and content providers in connection with the pending notifications or future demands, irrespective of whether we believe that we have an obligation to indemnify them or whether we believe that our managed services infringe the asserted intellectual property rights or otherwise gave rise to the claim. In such case we may incur substantial costs in defending such actions and pay substantial judgments awards or settlement amounts. Alternatively, we may reject some indemnity demands, which may lead to disputes with our customers or content providers and negatively impact our relationships with them or result in litigation against us. If, as a result of indemnity demands, we incur substantial costs, make substantial payments, our relationships with our customers or content providers are negatively impacted or if any of our customer or content agreements is terminated, our business, operating results and financial condition could be harmed.

If we are unable to protect our intellectual property and proprietary rights, our competitive position and our business could be harmed.

We rely primarily on a combination of patent, trademark, copyright and trade secrets laws, confidentiality procedures and contractual provisions to protect our proprietary technology. However, these protections may not be adequate. For example, patents may not issue from any of our current or any future applications and our issued patents and any future patents that may issue may not survive a legal challenge to their scope, validity or enforceability, or provide significant protection for us.

Monitoring unauthorized use of our intellectual property, especially where we license our software on a customer-hosted basis, is difficult and costly. The steps we have taken to protect our proprietary rights may not be adequate to prevent misappropriation of our intellectual property. We may not be able to detect unauthorized use of, or take appropriate steps to enforce, our intellectual property rights. Our competitors may also independently develop similar technology. In addition, the laws of many countries do not protect our proprietary rights to as great an extent as do the laws of the United States. Any failure by us to meaningfully protect our intellectual property could result in competitors offering products that incorporate our most

technologically advanced features, which could seriously reduce demand for our managed services. In addition, we may in the future need to initiate infringement claims or litigation. Litigation can be expensive, time consuming and may divert the efforts of our technical staff and managerial personnel, which could harm our business, whether or not such litigation results in a determination favorable to us.

In some cases we must maintain and pay license fees for music rights and we may have disputes with copyright holders.

In connection with the public performance of copyrighted music within some of the content we license, we must negotiate and enter into public performance licenses with the holders of copyrights in musical compositions and sound recordings, or their agents. The holders of copyrights in musical compositions are generally represented by performing rights organizations such as the American Society of Composers, Authors and Publishers, or ASCAP, Broadcast Music, Inc., or BMI, and SESAC, Inc. Licenses to copyrights in sound recordings, applicable only to our audio-only services, which represent a small proportion of our revenue, are statutorily determined under the Copyright Act and administered and collected by Sound Exchange. Each of these entities may require their licensees to comply with complex recordkeeping and reporting obligations.

Our performances of BMI-administered musical compositions are currently licensed under a Department of Justice consent decree letter, but the royalty rates have not yet been agreed upon. In 2010, the terms of our license with ASCAP were set following a proceeding brought by ASCAP in U.S. District Court to determine a reasonable royalty rate. ASCAP has appealed from the order of the District Court establishing the license fee. The license expired in December 2011 and we have entered into an interim extension of the license pending a determination of the appeal. We currently do not have a license agreement in place with SESAC. In the event that the ASCAP appeal has an outcome adverse to us, or if we are unable to renew our ASCAP license on a final basis, or if we cannot agree upon royalty rates with BMI, we may be subject to additional litigation regarding such royalty rates. If we are unable to reach an agreement with SESAC we may be subject to claims for copyright infringement and if the established statutory licensing scheme for the copyright in sound recording changes, we may not be able to obtain such licenses on favorable terms. In addition, we may not be able to comply with the complex recordkeeping and reporting obligations in connection with any of such rights. If any of these events occur, we may incur liability, for example for copyright infringement.

We use open source software in solutions that may subject our software code to general release or require us to re-engineer such code, which may cause harm to our business.

Some of our solutions incorporate and may in the future continue to incorporate software licensed under so-called “open source” licenses. Some open source licenses require that source code subject to the license be made publicly available and may require that any modifications or derivative works to open source software continue to be licensed under open source licenses. Few courts have interpreted or enforced open source licenses, so they remain subject to some uncertainty. If portions of our proprietary technology are determined to be subject to open source licenses, we could be required to release the affected portions of our source code, re-engineer all or a portion of our technologies, pay for substitute technology, or license our technologies and intellectual property rights (including providing cost free licenses to others). We may also be subject to claims from parties asserting ownership of code we believe to be open source code or claiming that the use of the open source code infringes their patents, and in such

cases, we may incur substantial costs of the defense and damages associated with such infringement claims. Any of these events could reduce or eliminate the value of our services and technologies and materially harm our business and results of operations.

Changes in government regulation of the wireless communications industry may adversely affect our business.

It is possible that laws and regulations may be adopted or revised, in the United States and elsewhere, that could restrict or alter the wireless communications industry, including laws and regulations regarding collection of personal data, privacy, taxation, content suitability, copyright and antitrust. If we are not able to comply with or if we become liable under these laws or regulations, we could be directly harmed, and we may be forced to implement new compliance measures and devote resources to reduce our exposure to this liability. In addition, changes in current laws or regulations or the imposition of new laws and regulations in the United States or elsewhere regarding the wireless communications industry may lessen the growth of wireless communications services and may materially reduce our ability to increase or maintain sales of our managed services.

Failure to comply with federal, state and international privacy laws and regulations, or the expansion of current or the enactment of new privacy laws or regulations, could harm our business.

In order to provide our managed services, we may collect, encrypt and store certain information about end users, including telephone numbers and location-based data and in the case of end users with accounts, logins and passwords. A variety of federal, state and international laws and regulations govern the collection, use, retention, sharing and security of consumer data. The existing privacy-related laws and regulations are evolving and subject to potentially differing interpretations. In addition, various federal, state and international legislative and regulatory bodies may expand current or enact new laws regarding privacy and data security matters. For example, in 2011, the U.S. Congress held hearings regarding the capture and use of location-based information relating to mobile devices. In addition, several states have adopted legislation that requires businesses to implement and maintain reasonable data security procedures and practices to protect sensitive personal information and to provide notice to consumers in the event of a security breach. Any failure, or perceived failure, by us to comply with our privacy policies or with any data-related federal, state or international privacy or consumer protection-related laws, regulations or industry self-regulatory principles could result in claims, proceedings or actions against us by governmental entities or others or other liabilities, which could harm our business. In addition, a failure, or perceived failure, to comply with industry standards or with our own privacy policies and practices could harm our reputation, result in a loss of customers and adversely affect our business.

If we are unable to manage the digital rights of content owners securely, we could be subject to liability and impair our customer and content provider relationships.

Digital rights management refers to a set of technologies employed for the benefit of copyright holders to restrict the use of their content. Our managed services involve the delivery of licensed content to end users and utilization of our proprietary digital rights management software to control that distribution. If we are unable to protect the security of content in our services, we could be subject to liability from our customers and content providers and could damage our relationships with those entities, resulting in harm to our business. In addition, we may be required to expend financial, operational and managerial resources to mitigate any such breaches.

If we become subject to third-party liability for content that we distribute through our managed services, our results of operations would be harmed.

As a result of our delivery of content to end users through our end-to-end technology platform and our managed services, we face potential third-party liability for claims for negligence, copyright or trademark infringement, defamation, obscenity, violations of law or other claims based on the nature of the media content that we deliver. Litigation to defend these claims could be costly and the expenses and damages arising from any liability could harm our results of operations. We may not be sufficiently insured or indemnified to cover claims of these types or liability that may be imposed on us.

Risks related to this offering and ownership of our common stock

Our stock price may be volatile and you may be unable to sell your shares at or above the initial public offering price.

The market price of our common stock could be subject to wide fluctuations in response to the risk factors listed in this section and others beyond our control, including:

•

actual or anticipated fluctuations in our financial condition and operating results;

•

changes in projected operational and financial results;

•

addition or loss of customers and/or key content providers;

•

changes in laws or regulations applicable to our managed services;

•

new entrants in the market offering competitive services and technologies;

•

announcements of technological innovations or new offerings by us or our competitors;

•

announcements by us or our competitors of significant acquisitions, strategic partnerships, joint ventures or capital-raising activities or commitments;

•

additions or departures of key management and personnel;

•

issuance of new or updated research or reports by securities analysts;

•

fluctuations in the valuation of companies perceived by investors to be comparable to us;

•

sales of our common stock by us or our stockholders;

•

share price and volume fluctuations attributable to inconsistent trading volume levels of our shares;

•

the expiration of contractual lock-up agreements; and

•

general economic and market conditions.

Furthermore, the stock markets have experienced price and volume fluctuations that have affected and continue to affect the market prices of equity securities of many companies. These fluctuations often have been unrelated or disproportionate to the operating performance of those companies. These broad market fluctuations, as well as general economic, systemic, political and market conditions, such as recessions, interest rate changes or international currency fluctuations, may negatively affect the market price of our common stock.

Because our estimated initial public offering price is substantially higher than the pro forma as adjusted net tangible book value per share of our outstanding common stock, new investors will incur immediate and substantial dilution.

The estimated initial public offering price of $ is substantially higher than the pro forma as adjusted net tangible book value per share of our common stock based on the total value of our tangible assets less our total liabilities immediately following this offering. Therefore, if you purchase common stock in this offering, you will experience immediate and substantial dilution of approximately $ per share, the difference between the price you pay for our common stock and its pro forma as adjusted net tangible book value after the closing of this offering. If all our outstanding options and warrants had been exercised for shares of our common stock, the pro forma net tangible book value as of December 31, 2011 would have been $ million, or $ per share and the pro forma net tangible book value after this offering would have been $ million, or $ per share, causing dilution to new investors of $ per share. In addition, if we raise funds by issuing additional securities, the newly-issued shares will further dilute your percentage ownership of our company.

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 or our published outlook, 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.

The requirements of being a public company may strain our resources and distract our management, which could make it difficult to manage our business.

Following the closing of this offering, we will be required to comply with various regulatory and reporting requirements, including those required by the Securities and Exchange Commission, or the SEC. Complying with these reporting and other regulatory requirements will be time-consuming and will result in increased costs to us and could harm our business, results of operations and financial condition.

As a public company, we will be subject to the reporting requirements of the Exchange Act. These requirements could strain our systems and resources. The Exchange Act requires that we file annual, quarterly and current reports with respect to our business and financial condition. The Exchange Act requires that we maintain effective disclosure controls and procedures and internal control over financial reporting. To maintain and improve the effectiveness of our disclosure controls and procedures and internal control over financial reporting, we will need to commit significant resources, hire additional staff and provide additional management oversight. We will be implementing additional procedures and processes for the purpose of addressing the standards and requirements applicable to public companies. Sustaining our growth also will require us to commit additional management, operational and financial resources to identify new professionals to join us and to maintain appropriate operational and financial systems to adequately support expansion. These activities may divert management’s attention from other

business concerns and could make it difficult to manage our business, which could harm our business, results of operations, financial condition and cash flows. In addition, if we find any material weakness in our internal control, we could lose investor confidence in the accuracy and completeness of our financial reports, which would cause the market price of our common stock to decline.

Future sales of our common stock in the public market could cause our share price to decline.

Sales of a substantial number of shares of our common stock in the public market after this offering, or the perception that these sales might occur, could depress the market price of our common stock and could impair our ability to raise capital through the sale of additional equity securities. Based on the total number of outstanding shares of our common stock as of December 31, 2011, upon closing of this offering, we will have shares of common stock outstanding.

All of the shares of common stock sold in this offering will be freely tradable without restrictions or further registration under the Securities Act of 1933, as amended, or the Securities Act, except for any shares held by our affiliates as defined in Rule 144 under the Securities Act. The remaining shares of common stock outstanding after this offering, based on shares outstanding as of December 31, 2011, will be restricted as a result of securities laws, lock-up agreements or other contractual restrictions that restrict transfers for at least 180 days after the date of this prospectus, subject to certain extensions.

J.P. Morgan Securities LLC and Deutsche Bank Securities Inc. may, in their sole discretion, release all or some portion of the shares subject to lock-up agreements prior to expiration of the lock-up period.

After this offering, the holders of shares of common stock, or % of our total outstanding common stock, based on shares outstanding as of December 31, 2011, will be entitled to rights with respect to registration of these shares under the Securities Act pursuant to an investors’ rights agreement. We intend to file a registration statement on Form S-8 under the Securities Act to register up to approximately shares of our common stock for issuance under our Amended and Restated 2000 Employee and Consultant Equity Incentive Plan, 2010 Employee and Consultant Equity Incentive Plan, and 2012 Equity Incentive Plan, and our 2012 Employee Stock Purchase Plan. Once we register these shares, they can be freely sold in the public market upon issuance and once vested, subject to a 180-day lock-up period and other restrictions provided under the terms of the applicable plan and/or the option agreements entered into with option holders.

Our securities have no prior market and an active trading market may not develop, which may cause our common stock to trade at a discount from the initial public offering price.

Prior to this offering, there has been no public market for our common stock. The initial public offering price for our common stock will be determined through negotiations between us and the representatives of the underwriters and may not be indicative of the market price of our common stock after this offering. If you purchase shares of our common stock, you may not be able to resell those shares at or above the initial public offering price. We cannot predict the extent to which investor interest in us will lead to the development of an active trading market, or how liquid that market might become. An active public market for our common stock may not develop or be sustained after this offering. If an active public market does not develop or is not sustained, it may cause our common stock to trade at a price lower than the initial public offering price and it may be difficult for you to sell your shares of common stock at a price that is attractive to you.

The concentration of ownership of our capital stock with insiders upon the closing of this offering will limit your ability to influence corporate matters.

We anticipate that our executive officers, directors, current 5% or greater stockholders and entities affiliated with them will together beneficially own (as determined in accordance with the rules of the SEC) approximately % of our common stock outstanding after this offering. This significant concentration of share ownership may reduce the trading price for our common stock because investors often perceive disadvantages in owning stock in companies with controlling stockholders. Also, these stockholders, acting together, will be able to control our management and affairs and matters requiring stockholder approval, including the election of directors and the approval of significant corporate transactions, such as mergers, consolidations or the sale of substantially all of our assets. Consequently, this concentration of ownership may have the effect of delaying or preventing a change of control, including a merger, consolidation or other business combination involving us, or discouraging a potential acquirer from making a tender offer or otherwise attempting to obtain control, even if that change of control would benefit our other stockholders.

We have broad discretion in the use of the net proceeds from this offering and we may invest or spend the proceeds of this offering in ways with which you may not agree or in ways which may not yield a return.

We cannot specify with certainty the uses to which we will apply the net proceeds that we will receive from this offering. Our management will have broad discretion in the application of the net proceeds, including working capital, possible acquisitions and other general corporate purposes and we may spend or invest these proceeds in a way with which our stockholders disagree. The failure by our management to apply these funds effectively could impair our ability to continue to maintain and expand our business. Until they are used, we may invest the net proceeds from this offering in a manner that does not produce income or that loses value. These investments may not yield a favorable return to our investors.

We do not intend to pay dividends for the foreseeable future.

We have never declared or paid any cash dividends on our common stock and do not intend to pay any cash dividends in the foreseeable future. In addition, the terms of our credit facility restrict our ability to pay dividends. We anticipate that we will retain all of our future earnings for use in the development of our business and for general corporate purposes. Any determination to pay dividends in the future will be at the discretion of our board of directors. Accordingly, investors must rely on sales of their common stock after price appreciation, which may never occur, as the only way to realize any future gains on their investments.

Delaware law and our certificate of incorporation and bylaws that will be in effect upon the closing of this offering could prevent a takeover that stockholders consider favorable and could also reduce the market price of our stock.

Our certificate of incorporation and our bylaws that will be in effect upon the closing of this offering will contain provisions that could delay or prevent a change of control of our company. These provisions could also make it more difficult for stockholders to elect directors and take other corporate actions. These provisions may include:

•

authorizing the board to issue, without stockholder approval, preferred stock with rights senior to those of our common stock;

•

prohibiting stockholder action by written consent;

•

classifying our board of directors in three classes, with staggered three-year terms;

•

permitting the removal of members of our board of directors only for cause;

•

requiring a supermajority vote of our outstanding shares of capital stock to amend our bylaws and certain provisions of our certificate of incorporation;

•

limiting the persons who may call special meetings of stockholders; and

•

requiring advance notification of stockholder nominations and proposals before an annual meeting of stockholders.

In addition, the provisions of Section 203 of the Delaware General Corporate Law govern us. These provisions may prohibit large stockholders, in particular those owning 15% or more of our outstanding voting stock, from merging or combining with us for a certain period of time without the consent of our board of directors.

These and other provisions in our certificate of incorporation and our bylaws that will be in effect upon the closing of this offering and under Delaware law could discourage potential takeover attempts, reduce the price that investors might be willing to pay in the future for shares of our common stock and result in the market price of our common stock being lower than it would be without these provisions.

Special note regarding forward-looking statements

and industry data

In addition to historical information, this prospectus contains forward-looking statements. We often use words such as “believe,” “anticipate,” “plan,” “expect,” “estimate,” “intend,” “continue,” “should,” “would,” “could,” “potentially,” “will” or “may,” or similar words and expressions that convey uncertainty about future events or outcomes, to identify these forward-looking statements. Forward-looking statements in this prospectus include, among other things, statements about:

•

our business strategy and business model;

•

our expectations about our future financial performance, including future revenue and expenses, and financial condition;

•

the effects of increased competition in our industry;

•

changes in our relationships with our customers and content providers; and

•

changes in consumer preferences and demand for mobile television and video services.

The outcome of the events described in these forward-looking statements is subject to known and unknown risks, uncertainties and other factors that could cause actual results to differ materially from the results anticipated by these forward-looking statements. These risks, uncertainties and factors include those we discuss in this prospectus under the caption “Risk factors.” You should read these risk factors and the other cautionary statements made in this prospectus as being applicable to all related forward-looking statements wherever they appear in this prospectus.

The forward-looking statements made in this prospectus relate only to events as of the date on which the statements are made. We undertake no obligation to update publicly any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by law.

This prospectus also contains estimates and other statistical data that we have obtained from industry publications and reports. These industry publications and reports generally indicate that they have obtained their information from sources believed to be reliable, but do not guarantee the accuracy and completeness of their information. This information involves a number of assumptions and limitations and you are cautioned not to give undue weight to these estimates, as there is no assurance that any of them will be reached. Although we have not independently verified the accuracy or completeness of the data contained in these industry publications and reports, based on our industry experience, we believe that the publications and reports are reliable and that the conclusions contained in the publications and reports are reasonable.

The Gartner Report(s) described herein, (the “Gartner Report(s)”) represent(s) data, research opinion or viewpoints published, as part of a syndicated subscription service, by Gartner, Inc. (“Gartner”), and are not representations of fact. Each Gartner Report speaks as of its original publication date (and not as of the date of this Filing) and the opinions expressed in the Gartner Report(s) are subject to change without notice.

Use of proceeds

We estimate that the net proceeds from our sale of shares of common stock in this offering will be approximately $ million at an assumed initial public offering price of $ per share, the midpoint of the price range set forth on the cover page of this prospectus, after deducting the estimated underwriting discounts and commissions and estimated offering expenses. If the underwriters’ option to purchase additional shares in this offering is exercised in full, based on the same assumptions, we estimate that our net proceeds will be approximately $ million. Each $1.00 increase or decrease in the assumed initial public offering price would increase or decrease, as applicable, the net proceeds to us by approximately $ million, assuming the number of shares offered by us, as set forth on the cover page of this prospectus, remains the same and after deducting the estimated underwriting discounts and commissions.

We expect to use the net proceeds of this offering for general corporate purposes, including working capital. We may use a portion of the net proceeds to expand internationally and acquire or invest in complementary businesses, products, services, technologies or assets. However, we do not have any agreements or commitments for any specific investments or acquisitions at this time. Accordingly, our management will have significant flexibility in applying the net proceeds from this offering and investors will be relying on the judgment of our management regarding the application of these net proceeds.

Pending the uses described above, we intend to invest the net proceeds to us of this offering in short-term, interest-bearing, investment-grade instruments. The goal with respect to the investment of these net proceeds will be capital preservation and liquidity so that these funds are readily available to fund our operations.

Dividend policy

We have never declared or paid any cash dividends on our capital stock and we do not currently intend to pay any cash dividends on our common stock in the foreseeable future. We expect to retain future earnings, if any, to fund the development and growth of our business. Any future determination to pay dividends on our common stock, if permissible, will be at the discretion of our board of directors and will depend upon, among other factors, our financial condition, operating results, current and anticipated cash needs, plans for expansion and other factors that our board of directors may deem relevant. In addition, the terms of our credit facility restrict our ability to pay dividends.

Capitalization

The following table sets forth our consolidated cash, cash equivalents and short-term investments and capitalization as of December 31, 2011 on:

•

an actual basis;

•

The information below is illustrative only and our capitalization following the closing of this offering will be adjusted based on the actual initial public offering price and other terms of this offering determined at the pricing of this offering. You should read this table together with our consolidated financial statements and related notes, “Selected consolidated financial data” and “Management’s discussion and analysis of financial condition and results of operations” included elsewhere in this prospectus.


December 31, 2011 (in thousands, except share and per share amounts)	Actual			Pro forma	Pro forma as adjusted(1)

					(unaudited)
Cash, cash equivalents and short-term investments	$	25,403		$	$

Equipment financing obligations(2)	$	1,202		$	$
Convertible preferred stock warrant liability		338
Redeemable convertible preferred stock, $0.001 par value, 48,669,133 shares authorized, 48,316,623 shares issued and outstanding, actual; no shares authorized, issued or outstanding, pro forma and pro forma as adjusted		119,535

Stockholders’ equity (deficit):
Preferred stock, $0.001 par value, no shares authorized, issued and outstanding, actual; shares authorized, no shares issued or outstanding, pro forma and pro forma as adjusted		—
Common stock, $0.001 par value, 81,287,000 shares authorized, 16,556,540 and shares issued and outstanding, actual and pro forma, respectively; shares authorized, shares issued and outstanding, pro forma as adjusted		16
Additional paid-in capital		30,704
Accumulated other comprehensive loss		(2	)
Accumulated deficit		(119,951	)

Total stockholders’ equity (deficit)		(89,233	)

Total capitalization	$	31,842		$	$

(1)

Each $1.00 increase or decrease in the assumed initial public offering price would increase or decrease, respectively, our pro forma as adjusted cash, cash equivalents and short-term investments, additional paid-in capital, total stockholders’ equity and total capitalization by approximately $ million, assuming the number of shares offered by us, as set forth on the cover page of this prospectus, remains the same and after deducting the estimated underwriting discounts and commissions. If the underwriters’ option to purchase additional shares of our common stock in this offering is exercised in full, the amount of pro forma as adjusted cash, cash equivalents and short-term investments, additional paid-in capital, total stockholders’ equity and total capitalization would increase by approximately $ and we would have shares of common stock issued and outstanding.

(2)

In February 2012, we paid the remaining principal and interest balances of our outstanding equipment financing obligations in full.

The number of shares shown as issued and outstanding in the table is based on the number of shares of our common stock outstanding as of December 31, 2011 and does not include:

•

14,743,813 shares of our common stock issuable upon the exercise of stock options outstanding as of December 31, 2011, with a weighted average exercise price of $1.35 per share;

•

2,421,635 shares of our common stock issuable upon the exercise of stock options granted between January 1, 2012 and February 29, 2012, with a weighted average exercise price of $3.33 per share;

•

174,169 shares of our convertible preferred stock issuable upon the exercise of warrants outstanding as of December 31, 2011, with a weighted average exercise price of $5.74 per share; and

•

shares of our common stock reserved for issuance under our 2012 Equity Incentive Plan, which will become effective immediately prior to the date of this prospectus, and shares of our common stock reserved for issuance under our 2012 Employee Stock Purchase Plan, which will become effective on the first day that our common stock is publicly traded, including in the case of each plan provisions that automatically increase the share reserve of such plan each year, as described in “Executive compensation—Employee benefit plans.”

Dilution

If you invest in our common stock in this offering, your interest will be diluted to the extent of the difference between the initial public offering price of our common stock and the pro forma as adjusted net tangible book value of our common stock after giving effect to this offering.

As of December 31, 2011, our pro forma net tangible book value was approximately $ , or $ per share of common stock. Our pro forma net tangible book value per share represents our tangible assets less our liabilities, reflecting the reclassification of the convertible preferred stock warrant liability to additional paid-in capital effective upon the closing of this offering, divided by our shares of common stock outstanding as of December 31, 2011 after giving effect to the conversion of all outstanding shares of our convertible preferred stock into shares of common stock immediately prior to the closing of this offering.

After giving effect to our sale of shares of common stock in this offering at the assumed initial public offering price of $ per share, which is the midpoint of the price range set forth on the cover page of this prospectus and after deducting estimated underwriting discounts and commissions and estimated offering expenses payable by us, our pro forma as adjusted net tangible book value as of December 31, 2011 would have been $ , or $ per share of common stock. This represents an immediate increase in pro forma as adjusted net tangible book value of $ per share to existing stockholders and an immediate dilution of $ per share to new investors.

The following table illustrates this dilution:



Assumed initial public offering price per share		$
Pro forma net tangible book value per share as of December 31, 2011	$

Increase per share attributable to this offering


Pro forma as adjusted net tangible book value per share after this offering

Net tangible book value dilution per share to new investors in this offering		$

If all our outstanding options and warrants had been exercised for shares of our common stock, the pro forma net tangible book value as of December 31, 2011 would have been $ million, or $ per share and the pro forma net tangible book value after this offering would have been $ million, or $ per share, causing dilution to new investors of $ per share.

A $1.00 increase or decrease in the assumed initial public offering price of $ per share, which is the midpoint of the price range set forth on the cover page of this prospectus, would increase or decrease, as applicable, our pro forma as adjusted net tangible book value per share by approximately $ , assuming the number of shares offered by us remains the same as set forth on the cover page of this prospectus and after deducting the estimated underwriting discounts and commissions and estimated offering expenses that we must pay.

If the underwriters’ over-allotment option to purchase additional shares from us is exercised in full, our pro forma as adjusted net tangible book value per share after this offering would be $ per share, the increase in pro forma as adjusted net tangible book value per share to existing stockholders would be $ per share and the dilution to new investors purchasing shares in this offering would be $ per share.

The following table summarizes, on a pro forma as adjusted basis as of December 31, 2011, the total number of shares of common stock purchased from us, the total consideration paid to us and the average price per share paid to us by existing stockholders and by new investors purchasing shares in this offering at the assumed initial public offering price of $ , the midpoint of the price range set forth on the cover page of this prospectus, before deducting estimated underwriting discounts and commissions and estimated offering expenses payable by us:


	Shares purchased				Total consideration				Average price per share
	Number	Percent			Amount	Percent			Average price per share

Existing stockholders				%	$			%	$
New investors

Total			100.0	%	$		100.0	%	$

A $1.00 increase or decrease in the assumed initial public offering price of $ per share, which is the midpoint of the price range set forth on the cover page of this prospectus, would increase or decrease, as applicable, total consideration paid to us by new investors and total consideration paid to us by all stockholders by approximately $ million, assuming the number of shares offered by us remains the same as set forth on the cover page of this prospectus and without deducting the estimated underwriting discounts and commissions and estimated offering expenses that we must pay.

If the underwriters’ over-allotment option to purchase additional shares from us is exercised in full, our existing stockholders would own % and our new investors would own % of the total number of shares of our common stock outstanding after this offering.

The foregoing calculations exclude:

•

14,743,813 shares of our common stock issuable upon the exercise of stock options outstanding as of December 31, 2011, with a weighted average exercise price of $1.35 per share;

•

2,421,635 shares of our common stock issuable upon the exercise of stock options granted between January 1, 2012 and February 29, 2012, with a weighted average exercise price of $3.33 per share;

•

174,169 shares of our convertible preferred stock issuable upon the exercise of warrants outstanding as of December 31, 2011, with a weighted average exercise price of $5.74 per share; and

•

shares of our common stock reserved for issuance under our 2012 Equity Incentive Plan, which will become effective immediately prior to the date of this prospectus, and shares of our common stock reserved for issuance under our 2012 Employee Stock Purchase Plan, which will become effective on the first day that our common stock is publicly traded, including in the case of each plan provisions that automatically increase the share reserve of such plan each year, as described in “Executive compensation—Employee benefit plans.”

Selected consolidated financial data

The following summary consolidated financial data should be read together with our consolidated financial statements, notes and the section entitled “Management’s discussion and analysis of financial condition and results of operations” appearing elsewhere in this prospectus. We have derived the following consolidated statements of operations data for the years ended December 31, 2009, 2010 and 2011 and consolidated balance sheet data as of December 31, 2010 and 2011 from our audited consolidated financial statements included elsewhere in this prospectus. We have derived the consolidated statements of operations data for the years ended December 31, 2007 and 2008 and the balance sheet data as of December 31, 2007, 2008 and 2009 from our audited consolidated financial statements not included in this prospectus. Our historical results are not necessarily indicative of the results to be expected in the future.


(in thousands, except per share data)	Years ended December 31,
(in thousands, except per share data)	2007			2008			2009			2010(1)			2011


Consolidated statements of operations data:
Revenue	$	50,385		$	55,632		$	62,477		$	66,824		$	85,089
Operating expenses:
Cost of revenue(2)		25,115			25,051			22,324			32,145			41,394
Research and development(2)		22,054			22,033			19,837			15,975			21,870
Sales and marketing(2)		12,097			9,825			7,409			7,627			8,687
General and administrative(2)		15,289			15,813			17,287			15,247			14,021
Depreciation and amortization		6,921			8,657			9,298			9,819			10,355

Total operating expenses		81,476			81,379			76,155			80,813			96,327

Loss from operations		(31,091	)		(25,747	)		(13,678	)		(13,989	)		(11,238	)
Interest and other expense, net		3,991			780			(882	)		(618	)		(401	)

Loss before income taxes		(27,100	)		(24,967	)		(14,560	)		(14,607	)		(11,639	)
Income tax provision		(117	)		(239	)		(57	)		(82	)		(111	)

Net loss		(27,217	)		(25,206	)		(14,617	)		(14,689	)		(11,750	)
Accretion of redeemable convertible preferred stock		(823	)		(831	)		(838	)		(552	)		(260	)

Net loss attributable to common stockholders	$	(28,040	)	$	(26,037	)	$	(15,455	)	$	(15,241	)	$	(12,010	)

Net loss per share attributable to common stockholders, basic and diluted	$	(2.33	)	$	(2.04	)	$	(1.19	)	$	(1.10	)	$	(0.77	)

Weighted average shares used to compute net loss per share attributable to common stockholders, basic and diluted		12,059			12,747			13,006			13,862			15,680

Pro forma net loss per share, basic and diluted(3) (unaudited)													$

Weighted average shares used to compute pro forma net loss per share, basic and diluted(3) (unaudited)

(1)

Includes the benefit of $5.0 million of revenue resulting from the settlement of an arbitration claim for underpayment of license fees from a legacy software arrangement.

(2)

Excludes depreciation and amortization expense. Includes stock-based compensation expense as follows:


	Years ended December 31,
(in thousands)	2007		2008		2009		2010		2011

Cost of revenue	$	197	$	317	$	245	$	157	$	156
Research and development		1,274		1,326		964		551		658
Sales and marketing		821		869		439		399		436
General and administrative		3,215		4,572		3,848		3,882		3,587

Total stock-based compensation	$	5,507	$	7,084	$	5,496	$	4,989	$	4,837

(3)

closing of this offering to (a) the automatic conversion of all outstanding shares of our convertible preferred stock into shares of common stock immediately prior to the closing of this offering and (b) the assumed conversion of the convertible preferred stock warrants into common stock warrants upon the closing of this offering, each as of the original date of issuance of the respective shares and preferred stock warrants. See Note 2 to our consolidated financial statements for more information on our calculation of pro forma net loss per share.


(in thousands)	Years ended December 31,
(in thousands)	2007			2008			2009			2010			2011


Non-GAAP financial data (unaudited):
Adjusted EBITDA	$	(18,699	)	$	(10,203	)	$	1,047		$	735		$	3,724



	December 31,
(in thousands)	2007			2008			2009			2010			2011


Consolidated balance sheet data:
Cash, cash equivalents and short-term investments	$	67,730		$	58,485		$	44,750		$	36,447		$	25,403
Working capital		59,259			45,114			36,363			23,951			12,095
Total assets		91,525			82,012			68,707			64,794			60,255
Equipment financing obligations		1,812			7,706			7,055			4,233			1,202
Convertible preferred stock warrant liability		178			266			272			288			338
Redeemable convertible preferred stock		117,054			117,885			118,723			119,275			119,535
Common stock and additional paid-in capital		7,210			14,299			19,473			24,833			30,720
Total stockholders' equity (deficit)		(46,466	)		(64,533	)		(74,034	)		(83,336	)		(89,233	)

Reconciliation of Adjusted EBITDA to net loss

We define Adjusted EBITDA as net loss plus net interest income and expense, provision for income taxes, depreciation and amortization and stock-based compensation expense. Adjusted EBITDA is not a financial measure calculated in accordance with accounting principles generally accepted in the United States, which we refer to as GAAP, and should be viewed as a supplement to, not a substitute for, our results of operations presented on the basis of GAAP. Adjusted EBITDA is not necessarily comparable to similarly-titled measures reported by other companies.

We believe Adjusted EBITDA is used by and is useful to investors and other users of our financial statements in evaluating our operating performance, because it is an additional tool which they may use to compare business performance across companies and across periods. We believe that:

•

EBITDA is widely used by investors to measure a company’s operating performance without regard to items such as net interest income and expense, taxes, depreciation and amortization, which can vary substantially from company to company depending upon accounting methods and book value of assets, capital structure and the method by which assets were acquired;

•

investors commonly adjust EBITDA to eliminate the effect of stock-based compensation expenses, which varies widely from company to company and may impair comparability; and

•

adjusting our net loss to exclude net interest income and expense, provision for income taxes, depreciation and amortization and stock-based compensation expense helps investors compare our operating performance with our operating results in prior periods. We believe that it is appropriate to exclude these items, as they are not necessarily indicative of our ongoing operating performance.

We use Adjusted EBITDA:

•

as a measure of operating performance to assist in comparing performance from period to period on a consistent basis;

•

as a measure of performance in our executive compensation arrangements; and

•

as a measure for planning and forecasting overall expectations and for evaluating actual results against such expectations.

The following table presents a reconciliation of Adjusted EBITDA to net loss for each of the periods presented (unaudited):


	Years ended December 31,
(in thousands)	2007			2008			2009			2010			2011


Reconciliation of Adjusted EBITDA:
Net loss	$	(27,217	)	$	(25,206	)	$	(14,617	)	$	(14,689	)	$	(11,750	)
Net interest (income) expense(1)		(4,027	)		(977	)		813			534			171
Income tax provision		117			239			57			82			111
Depreciation and amortization		6,921			8,657			9,298			9,819			10,355
Stock-based compensation		5,507			7,084			5,496			4,989			4,837

Adjusted EBITDA	$	(18,699	)	$	(10,203	)	$	1,047		$	735		$	3,724

(1)

Management’s discussion and analysis of

financial condition and results of operations

The following discussion and analysis of our financial condition and results of operations should be read in conjunction with our consolidated financial statements and related notes included elsewhere in this prospectus. In addition to historical consolidated financial information, the following discussion contains forward-looking statements that reflect our plans, estimates and beliefs. Our actual results could differ materially from those discussed in the forward-looking statements. Factors that could contribute to these differences include those discussed below and elsewhere in this prospectus, particularly in the section entitled “Risk factors.”

Overview

We manage the delivery of television and video services to our customers’ end users. In most cases this includes the delivery of video content licensed by us from television studios and other content providers; in other cases customers directly license the content that we then distribute to their end users through our services. For services that include content licensed by us, we generally receive higher revenue per end user and incur higher associated cost of revenue; for services where our customers directly license content, we generally receive lower revenue per end user and incur lower associated cost of revenue. We enter into service contracts with our customers and generate revenue based on the number of end users who can access our service, primarily in the form of monthly service fees, and typically we are paid and recognize revenue on a net revenue share basis. Our services are generally deployed for our customers on a MobiTV-hosted basis. Under this arrangement, we provide our managed services using our infrastructure, including equipment at co-location facilities, hosting facilities and network operations center, and we are responsible for the hardware and the provisioning of the services and facilities required for the television and video service. In the future, our services may also be deployed on a customer-hosted basis, where we remotely operate the services from our network operations center.

In 2010, Sprint and AT&T represented 54% and 19% of our revenue, respectively. In 2011, Sprint, T-Mobile, AT&T and Verizon represented 42%, 26%, 19% and 10% of our revenue, respectively.

In the second quarter of 2010, T-Mobile became a customer and its carrier-branded service was launched in the fourth quarter of that year. In the third quarter of 2010, we launched Verizon’s NFL Mobile service. AT&T has been a customer since 2004 and in the first quarter of 2011, AT&T launched its U-verse Live TV service, which we manage.

Our revenue and number of end users are subject to seasonal fluctuations. Historically, this seasonality has been primarily due to the majority of our revenue from Verizon for powering NFL Mobile on Verizon being recognized during the NFL season, which occurs in our third and fourth quarters and the beginning of our first quarter. We expect that as we expand our customer base, our revenue will be less impacted by these seasonal fluctuations. Sales to customers in the U.S. represented 98% of our revenue in 2011. Historically, our revenue has been primarily derived from sales of our mobile television services.

We expect that, over time, an increasing number of our existing customers will directly license the content to be delivered to their end users, rather than relying on content that we license as part of our managed service. We also expect that many new customers, particularly international customers, will directly license the content to be delivered to their end users. We expect that, as this shift takes place, both our content licensing costs and our average revenue per user will decline. As we grow, we expect our operating expenses generally to increase as we continue to build our infrastructure and add employees to support expected growth, develop new technology solutions, expand into international markets and operate as a publicly traded company. We also expect that over time an increasing number of our customers will elect to deploy our managed services on a customer-hosted basis. As these trends develop, we anticipate that our profitability and revenue will increase, and our operating margins will expand, as we add customers and end users, despite decreased average revenue per user and increased operating expenses. We expect customers outside the United States to represent a greater proportion of our revenue in the future. We expect to incur additional general and administrative costs in future periods as a result of becoming a public company, including higher legal, audit, tax and financial reporting expenses, as well as the costs of achieving and maintaining compliance with Section 404 of the Sarbanes-Oxley Act. We expect this to cause our expenses to increase in absolute dollars. However, we are currently unable to estimate these costs with an adequate degree of certainty.

Factors affecting comparability of our results

Beginning in September 2009, we assumed a broader role managing and licensing content for Sprint’s premium video services to its end users, primarily on a revenue share basis. As a result, fees we received for Sprint bundled services, which did not include content licensed by us, were changed in the fourth quarter of 2009 from a fee per end user to a fixed annual fee, which led to a decrease in the number of paid end users.

In 2009, we implemented workforce reductions, including the elimination of 57 positions. As a result, we recorded charges of $1.3 million and $0.2 million in 2009 and 2010, respectively. These costs were related to severance and other employee termination benefits and were recorded as operating expenses based upon the respective departments of the impacted employees.

Our general and administrative expenses have fluctuated significantly during the periods presented, primarily as a result of legal and other third-party professional services we required in connection with an ASCAP royalty proceeding, the arbitration for underpayment of license fees to us under a legacy software arrangement, and our becoming a public company. In the first quarter of 2010, we received a favorable trial court ruling in the ASCAP royalty proceeding, which is currently on appeal. In 2008, we filed an arbitration claim seeking compensation for underpayment of license fees related to a legacy software arrangement. This matter was settled for $5.0 million and recognized as revenue in the second quarter of 2010.

Components of our operating results

Revenue

We derive our revenue primarily from monthly fees under managed services contracts, which are generally based on a share of our customers’ revenue from their end users who can access our services. Most of our services include content licensed by us for use in connection with our managed services. Where our customers directly license content delivered through our managed services, we are generally paid a monthly fee based upon the number of the customer’s end users served by our platform. When we are paid on a revenue sharing basis, the amount we receive and recognize as revenue varies depending on several factors including the revenue share rate negotiated with the customer, the price charged to the end user by the customer and the features and capabilities of the service. Our customers generally have sole discretion about how to price our services to their end users. Our customers are responsible for billing and collecting the fees they charge their end users for the right to use our services. From time to time, we provide professional services to our customers to complement our other service offerings. Such services have represented less than 3% of our revenue for each of 2009, 2010 and 2011. In addition to the fees described above, we have recorded other revenue for license fees from a legacy software arrangement.

Operating expenses

We classify our operating expenses into five categories: cost of revenue; research and development; sales and marketing; general and administrative; and depreciation and amortization. We exclude depreciation and amortization from cost of revenue, research and development, sales and marketing and general and administrative expenses. Our operating expenses consist primarily of personnel costs, which include salaries, bonuses, payroll taxes, employee benefit costs and stock-based compensation expense, and fees we pay to content providers. In addition, our operating expenses include co-location data center operations hardware, software and related maintenance and support expenses, technology license fees, customer support, facilities, legal, audit, tax, consulting and other professional service fees. We allocate stock-based compensation expense based on the department in which the option holder works. We allocate overhead costs for facilities and information technology to each expense category based on headcount.

Cost of revenue. Cost of revenue consists primarily of fees we pay to content providers for use of content that is ingested and distributed through our managed services, and personnel costs. Cost of revenue also includes equipment costs associated with our co-location data center operations, customer support costs and technology license and other third party fees. Content fees are typically based on the number of our customers’ end users who have access to our services, or are sometimes based on a share of revenue we receive for a specified service or a fixed annual fee. We provide customer support primarily through a third-party provider, for whom we provide training and problem resolution assistance. We also provide continuous monitoring and optimization of our services through our network operations center in Emeryville, California. We use co-location data centers and industry standard hardware to provide our services. Some of our customer agreements require us to maintain high levels of scheduled uptime every month, which increases our costs. Cost of revenue also includes costs associated with providing professional services.

Research and development. Research and development expenses consist primarily of personnel costs, allocated overhead costs and costs of consultants. In addition, we capitalize certain expenditures related to the development and enhancement of internal use software related to our technology platform.

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

General and administrative. General and administrative expenses consist primarily of costs for our executive, finance, legal, human resources and administrative personnel, fees for consultants, legal, audit, tax and other professional services, and other corporate expenses.

Depreciation and amortization. Depreciation and amortization expenses consist primarily of depreciation on computer hardware and amortization of capitalized internal use software.

Interest and other expense, net

Interest and other expense, net consists of interest we earn on our cash, cash equivalents and short-term investments, interest expense associated with equipment financing obligations and expense resulting from the change in fair value of our outstanding convertible preferred stock warrants. We classify these warrants as a liability on our consolidated balance sheets and record changes in their fair value from period to period in our consolidated statements of operations.

Income tax provision

Our provision for income taxes consists primarily of state minimum taxes and provisions for foreign taxes associated with our foreign subsidiaries. Since inception, we have incurred net losses and have not recorded provisions for U.S. federal and state income taxes, except state minimum taxes. We have not reported a benefit for federal and state income taxes in the consolidated financial statements as the deferred tax asset arising from our net operating losses, credit carryforwards and other temporary differences has been offset by a valuation allowance because it was more likely than not that the tax benefit of the net operating losses may not be realized. We have recorded a provision for foreign taxes associated with our foreign subsidiaries. As of December 31, 2011, we had federal and state net operating loss carryforwards of $82.3 million and $79.2 million, respectively. If not utilized, the federal net operating loss carryforwards will begin to expire in 2021. The state net operating loss carryforwards began to expire in 2011. Our utilization of net operating losses may be subject to substantial annual limitation due to federal and state ownership limitations, which could result in the expiration of net operating losses before utilization. We prepared a study under Section 382 of the Internal Revenue Code through December 31, 2011 and determined that an insignificant amount of net operating losses and credit carryforwards will expire unused as a result of Section 382 limitations. As a result, the gross deferred tax asset related to these carryforwards has been reduced by this amount.

Key business metrics

In addition to traditional financial metrics, we monitor our operating performance using the following key business metrics:

Average paid end users. We review this metric to evaluate the end user adoption and retention of our services and to forecast future managed services revenue. We define paid end users as the number of instances for which we receive a fee for our service, which generally includes end users, active users or other usage-based metrics as defined in our customer agreements, but excludes end users under fixed fee arrangements. Average paid end users for a period is calculated by averaging the number of paid end users for each month in the period.

Average revenue per end user, or ARPU. We review this metric to evaluate our service offering mix and pricing strategies, and to forecast future managed service revenue. Average revenue is calculated by dividing managed services revenue by the number of months in the period. ARPU is calculated by dividing average revenue by average paid end users.

Results of operations

The following tables set forth our results of operations for the periods indicated. The period-to-period comparison of financial results is not necessarily indicative of future results.


	Years ended December 31,
(in thousands)	2009			2010(1)			2011

Consolidated statements of operations data:
Revenue	$	62,477		$	66,824		$	85,089

Operating expenses:
Cost of revenue(2)		22,324			32,145			41,394
Research and development(2)		19,837			15,975			21,870
Sales and marketing(2)		7,409			7,627			8,687
General and administrative(2)		17,287			15,247			14,021
Depreciation and amortization		9,298			9,819			10,355

Total operating expenses		76,155			80,813			96,327

Loss from operations		(13,678	)		(13,989	)		(11,238	)
Interest and other expense, net		(882	)		(618	)		(401	)

Loss before provision for income taxes		(14,560	)		(14,607	)		(11,639	)
Income tax provision		(57	)		(82	)		(111	)

Net loss	$	(14,617	)	$	(14,689	)	$	(11,750	)

(1)

Includes the benefit of $5.0 million of revenue resulting from the settlement of an arbitration claim for underpayment of license fees from a legacy software arrangement.

(2)

Excludes depreciation and amortization expense. Includes stock-based compensation expense as follows:


	Years ended December 31,
(in thousands)	2009		2010		2011

Cost of revenue	$	245	$	157	$	156
Research and development		964		551		658
Sales and marketing		439		399		436
General and administrative		3,848		3,882		3,587

Total stock-based compensation	$	5,496	$	4,989	$	4,837

Comparison of the years ended December 31, 2010 and 2011

Revenue


	Years ended December 31,				Change
(in thousands, except percentages and ARPU)	2010		2011		Amount			%


Revenue:
Managed services	$	61,673	$	85,089	$	23,416			38	%
Other		5,151		—		(5,151	)		(100	)

Total revenue	$	66,824	$	85,089	$	18,265			27


Key business metrics:
Average paid end users		1,774		2,402		628			35	%
ARPU	$	2.90	$	2.95	$	0.05			2

Managed services. The $23.4 million increase in managed services revenue was primarily due to the launch and subsequent growth in paid end users from new customer branded premium services: NFL Mobile on Verizon in the third quarter of 2010; T-Mobile TV in the fourth quarter of 2010; and AT&T U-verse Live TV in the first quarter of 2011. The net increase in ARPU of $0.05, or 2%, was primarily due to an increase in paid end users under arrangements where we license content, which carry higher revenue per end user, and an increase in professional services fees for one customer in 2011. These increases were partially offset by a higher proportion of paid end users accessing our service offerings under arrangements where we do not license content, for which we receive lower monthly fees per end user.

Other. The year ended December 31, 2010 included $5.0 million of revenue resulting from the settlement of an arbitration claim for underpayment of license fees under a legacy software arrangement.

Operating expenses


	Years ended December 31,
	2010					2011					Change
(in thousands, except percentages)	Amount		% of revenue			Amount		% of revenue			Amount			%


Operating expenses:
Cost of revenue(1)	$	32,145		48	%	$	41,394		49	%	$	9,249			29	%
Research and development(1)		15,975		24			21,870		26			5,895			37
Sales and marketing(1)		7,627		11			8,687		10			1,060			14
General and administrative(1)		15,247		23			14,021		16			(1,226	)		(8	)
Depreciation and amortization		9,819		15			10,355		12			536			5

Total operating expenses	$	80,813		121	%	$	96,327		113	%	$	15,514			19

(1)

Excludes depreciation and amortization expense.

Cost of revenue. The $9.2 million increase in cost of revenue was primarily a result of a $9.5 million increase in content licensing costs due to growth in the number of paid end users and costs associated with enhanced and improved programming for our customer branded managed services, a $0.3 million increase in delivery and hosting costs and a $0.3 million increase in hardware support costs, partially offset by a $0.9 million decrease in technology fees as a result of a renegotiated license contract. Cost of revenue increased from 48% of revenue in 2010 to 49% of revenue in 2011. Cost of revenue as a percentage of managed services revenue decreased from 52% in 2010 to 49% in 2011 due to increased revenue under arrangements where we do not license content.

Research and development. The $5.9 million increase in research and development expenses was primarily due to a $4.6 million increase in personnel related costs and a $1.0 million increase in allocated overhead costs, resulting from an increase in headcount, and a $0.3 million increase in third party development services.

Sales and marketing. The $1.1 million increase in sales and marketing expenses was primarily due to a $0.6 million increase in personnel related costs resulting from increased investment in our marketing and business development organizations, as well as a $0.5 million increase in tradeshow and other marketing expenses.

General and administrative. The $1.2 million decrease in general and administrative expenses was primarily due to a $1.7 million decrease in legal and outside consulting fees as a result of both our settlement of an arbitration claim we filed seeking compensation for underpayment of license fees and a favorable trial court ruling for our ASCAP royalty proceeding and a $1.1 million decrease in overhead costs due to increased allocations to other expense line items, driven by changes in headcount. These decreases were partially offset by a $1.2 million increase in personnel costs and a $0.3 million increase in hardware and software support costs.

Depreciation and amortization. The $0.5 million increase in depreciation and amortization expense reflects a $1.9 million increase in amortization of capitalized internal use software, partially offset by a $1.4 million decrease in depreciation expense as we reduced our capital expenditures.

Interest and other expense, net


	Years ended December 31,						Change
(in thousands, except percentages)	2010			2011			Amount		%

Interest and other expense, net	$	(618	)	$	(401	)	$	217		*

Not meaningful.

The change in interest and other expense, net was primarily due to a $0.4 million decrease in net interest expense resulting from a reduction in our equipment financing obligations, partially offset by a $0.2 million increase in foreign currency losses.

Comparison of the years ended December 31, 2009 and 2010

Revenue


	Years ended December 31,				Change
(in thousands, except percentages and ARPU)	2009		2010		Amount			%


Revenue:
Managed services	$	61,351	$	61,673	$	322			1	%
Other		1,126		5,151		4,025			357

Total revenue	$	62,477	$	66,824	$	4,347			7


Key business metrics:
Average paid end users		5,793		1,774		(4,019	)		(69	)%
ARPU	$	0.88	$	2.90	$	2.02			230

Managed services. We acquired new customers during 2010, resulting in a $7.4 million increase in managed services revenue which was largely offset by a decrease in revenue due to the amended and renewed agreement with Sprint. Average paid end users decreased from 5.8 million in 2009 to 1.8 million in 2010 and ARPU increased by $2.02, or 230% from 2009 to 2010, primarily due to the change in Sprint bundled services to a fixed annual fee.

Other. The $4.0 million increase in other revenue was primarily due to a $5.0 million settlement of an arbitration claim in our favor for underpayment of license fees from a legacy software arrangement.

Operating expenses


	Years ended December 31,
	2009					2010					Change
(in thousands, except percentages)	Amount		% of revenue			Amount		% of revenue			Amount			%


Operating expenses:
Cost of revenue(1)	$	22,324		36	%	$	32,145		48	%	$	9,821			44	%
Research and development(1)		19,837		32			15,975		24			(3,862	)		(19	)
Sales and marketing(1)		7,409		12			7,627		11			218			3
General and administrative(1)		17,287		27			15,247		23			(2,040	)		(12	)
Depreciation and amortization		9,298		15			9,819		15			521			6

Total operating expenses	$	76,155		122	%	$	80,813		121	%	$	4,658			6

(1)

Excludes depreciation and amortization expense.

Cost of revenue. The $9.8 million increase in cost of revenue resulted primarily from increased content licensing costs of $9.1 million due to the broader role we assumed in managing and licensing content for Sprint’s premium video services to its end users, as well as higher content licensing costs associated with enhancing other premium services offerings to other customers. The $0.7 million balance of the increase in cost of revenue reflects a $3.4 million increase in technology license and other third party fees, largely offset by a $2.7 million decrease in personnel related costs, equipment and other expenses resulting primarily from our 2009 workforce reductions. The $3.4 million increase in technology license and other third party fees reflects a $2.5 million reduction, recorded in 2009, of previously accrued amounts for the period from our inception through 2008, as a result of a favorable trial court ruling in the ASCAP royalty proceeding. Cost of revenue increased from 36% of revenue in 2009 to 48% of revenue in 2010 as a result of the higher content licensing costs. Cost of revenue increased from 36% of managed services revenue in 2009 to 52% of managed services revenue in 2010.

Research and development. The $3.9 million decrease in research and development expenses was primarily due to a $1.6 million decrease in personnel related costs and an additional $2.0 million decrease resulting from an increase in the capitalization of development costs related to internal use software. The increase in capitalization of development costs related to internal use software was driven primarily by expanding features and functionality of our technology platform, as well as other technological enhancements allowing improved scalability and reliability.

Sales and marketing. The $0.2 million increase in sales and marketing expenses was primarily due to a $0.4 million increase in personnel related and facilities costs driven by increases in headcount, partially offset by a $0.2 million reduction in marketing expenses.

General and administrative. The $2.0 million decrease in general and administrative expenses was primarily due to a $1.1 million reduction in legal and outside consulting fees, as well as a $0.4 million decrease in personnel related costs and a $0.6 million decrease in allocated overhead costs.

Depreciation and amortization. The $0.5 million increase in depreciation and amortization expense was primarily due to a $2.0 million increase in amortization of capitalized internal use software, partially offset by a $1.5 million decrease in depreciation expense as older assets became fully depreciated at a rate that exceeded capital asset additions.

Interest and other expense, net


	Years ended December 31,						Change
(in thousands, except percentages)	2009			2010			Amount		%

Interest and other expense, net	$	(882	)	$	(618	)	$	264		*

Not meaningful.

The change in interest and other expense, net was primarily due to a $0.4 million decrease in interest expense resulting from a reduction in our equipment financing obligations, partially offset by $0.1 million of lower interest income due to lower cash and cash equivalents and short-term investments balances.

Quarterly results of operations

The following tables set forth unaudited quarterly consolidated statements of operations data for 2010 and 2011. We have prepared the statement of operations for each of these quarters on the same basis as the audited consolidated financial statements included elsewhere in this prospectus and, in our opinion, it includes all adjustments, consisting solely of normal recurring adjustments, necessary for the fair statement of the results of operations for these periods. This information should be read in conjunction with our audited consolidated financial statements and related notes included elsewhere in this prospectus. These quarterly operating results are not necessarily indicative of our operating results for any future period.

Our revenue is subject to seasonal fluctuations, primarily because the majority of our revenue from Verizon for powering NFL Mobile on Verizon is recognized during the NFL season, which occurs in our third and fourth quarters and the beginning of our first quarter.


	Three months ended
(in thousands)	Mar. 31, 2010			June 30, 2010(1)			Sept. 30, 2010			Dec. 31, 2010			Mar. 31, 2011			June 30, 2011			Sept. 30, 2011			Dec. 31, 2011

	(unaudited)

Consolidated statements of operations data:
Revenue	$	12,582		$	18,877		$	16,664		$	18,701		$	17,865		$	19,086		$	22,922		$	25,216

Operating expenses:
Cost of revenue(2)		6,658			7,838			8,668			8,981			9,135			9,715			11,055			11,489
Research and development(2)		3,968			3,845			3,906			4,256			4,627			5,364			5,867			6,012
Sales and marketing(2)		1,965			1,774			1,797			2,091			2,388			2,081			2,105			2,113
General and administrative(2)		4,840			4,697			2,869			2,841			3,269			3,229			3,805			3,718
Depreciation and amortization		2,379			2,443			2,463			2,534			2,455			2,556			2,648			2,696

Total operating expenses		19,810			20,597			19,703			20,703			21,874			22,945			25,480			26,028

Loss from operations		(7,228	)		(1,720	)		(3,039	)		(2,002	)		(4,009	)		(3,859	)		(2,558	)		(812	)
Interest and other expense, net		(153	)		(209	)		(110	)		(146	)		(55	)		(92	)		(79	)		(175	)

Loss before provision for income taxes		(7,381	)		(1,929	)		(3,149	)		(2,148	)		(4,064	)		(3,951	)		(2,637	)		(987	)
Income tax provision		(23	)		(28	)		(4	)		(27	)		(28	)		(38	)		(20	)		(25	)

Net loss	$	(7,404	)	$	(1,957	)	$	(3,153	)	$	(2,175	)	$	(4,092	)	$	(3,989	)	$	(2,657	)	$	(1,012	)

(1)

Includes the benefit of $5.0 million of revenue resulting from the settlement of an arbitration claim for underpayment of license fees from a legacy software arrangement.

(2)

Excludes depreciation and amortization expense. Includes stock-based compensation expense as follows:


	Three months ended
(in thousands)	Mar. 31, 2010		June 30, 2010		Sept. 30, 2010		Dec. 31, 2010		Mar. 31, 2011		June 30, 2011		Sept. 30, 2011		Dec. 31, 2011

	(unaudited)
Cost of revenue	$	44	$	34	$	40	$	39	$	30	$	28	$	53	$	45
Research and development		160		133		126		132		158		177		163		160
Sales and marketing		105		92		93		109		119		117		126		74
General and administrative		1,025		945		1,025		887		878		895		926		888

Total stock-based compensation	$	1,334	$	1,204	$	1,284	$	1,167	$	1,185	$	1,217	$	1,268	$	1,167


	Three months ended
(in thousands)	Mar. 31, 2010			June 30, 2010		Sept. 30, 2010		Dec. 31, 2010		Mar. 31, 2011			June 30, 2011			Sept. 30, 2011		Dec. 31, 2011

	(unaudited)

Non-GAAP financial data
Adjusted EBITDA(1)	$	(3,537	)	$	1,854	$	723	$	1,695	$	(389	)	$	(98	)	$	1,310	$	2,901

(1)

The following table presents a reconciliation of Adjusted EBITDA to net loss for each of the periods presented:


	Three months ended
(in thousands)	Mar. 31, 2010			June 30, 2010			Sept. 30, 2010			Dec. 31, 2010			Mar. 31, 2011			June 30, 2011			Sept. 30, 2011			Dec. 31, 2011

	(unaudited)
Reconciliation of Adjusted EBITDA:
Net loss	$	(7,404	)	$	(1,957	)	$	(3,153	)	$	(2,175	)	$	(4,092	)	$	(3,989	)	$	(2,657	)	$	(1,012	)
Net interest income and expense(*)		131			136			125			142			35			80			31			25
Income tax provision		23			28			4			27			28			38			20			25
Depreciation and amortization		2,379			2,443			2,463			2,534			2,455			2,556			2,648			2,696
Stock-based compensation		1,334			1,204			1,284			1,167			1,185			1,217			1,268			1,167

Adjusted EBITDA	$	(3,537	)	$	1,854		$	723		$	1,695		$	(389	)	$	(98	)	$	1,310		$	2,901

(*)

Interest and other expense, net in our statement of operations includes additional items which are not part of our Adjusted EBITDA reconciliation, such as gains and losses from

foreign currency remeasurement, realized gains and losses from the sale of short-term investments, the change in fair value of our outstanding convertible preferred stock warrants and other miscellaneous expenses.

Liquidity and capital resources

The following table sets forth the major sources and uses of cash for each of the periods set forth below:


	Years ended December 31,
(in thousands)	2009			2010			2011

Net cash provided by (used in) operating activities	$	(5,329	)	$	5,010		$	4,979
Net cash provided by (used in) investing activities		(5,771	)		(14,326	)		8,117
Net cash used in financing activities		(3,154	)		(3,747	)		(3,645	)

Increase (decrease) in cash and cash equivalents	$	(14,254	)	$	(13,063	)	$	9,451

Since our inception, we have financed our operations primarily through private sales of our convertible preferred stock with aggregate net proceeds of $116.4 million and, in more recent periods, cash flow from operations. Our most recent sale of convertible preferred stock was our Series C convertible preferred stock in 2006.

Our accounts receivable are heavily concentrated in a few customers. As of December 31, 2011, our accounts receivable balance was approximately $14.4 million, of which T-Mobile, Sprint and Verizon represented approximately 43%, 32% and 22%, respectively.

Our future capital requirements will depend on many factors, including our growth rate, the timing and extent of expenditures to support development efforts, the expansion of research and development and sales and marketing activities, the introduction of our new and enhanced service and product offerings, the growth in our end user base and our international expansion. We believe our cash, cash equivalents and short-term investments, and anticipated cash flows from operations will be sufficient to satisfy our financial obligations through at least the next 12 months. However, we may experience lower than expected cash generated from operating activities, revenue that is lower than we anticipate, or greater than expected operating expenses. Our revenue and operating results could be lower than we anticipate if, among other reasons, any of our significant customers were to limit or terminate their relationships with us. In the future, we may acquire complementary businesses or technologies or license technologies from third parties and we may decide to raise additional capital through debt or equity financing to the extent we believe this is necessary to successfully complete these acquisitions or license these technologies. However, additional financing may not be available to us on favorable terms, or at all, which could have a material adverse effect on our business, operating results, financial condition and liquidity and cash position.

Net cash provided by (used in) operating activities. Operating activities provided $5.0 million of cash in 2011, primarily as a result of our net loss of $11.8 million, offset by depreciation and amortization of $10.4 million, stock based compensation of $4.8 million and a net decrease in our operating assets and liabilities of $1.3 million. Changes in operating assets and liabilities were driven primarily by an increase in accounts receivable of $2.6 million due to continued growth in the number of paid end

users for customer branded premium services and increased accounts payable and accrued liabilities of $3.9 million mainly due to timing of payments and increased content fees as a result of growth in the number of end users accessing our service offerings under arrangements where we license content.

Operating activities provided $5.0 million of cash in 2010, primarily as a result of our net loss of $14.7 million, offset by depreciation and amortization of $9.8 million, stock based compensation of $5.0 million and a net decrease in our operating assets and liabilities of $4.4 million. Changes in operating assets and liabilities were driven primarily by the increase in our deferred revenue of $4.6 million, primarily as a result of prepayments received under Sprint’s bundled services fee arrangement and the NFL Mobile on Verizon arrangement.

Operating activities used $5.3 million of cash in 2009, primarily as a result of our net loss of $14.6 million and a net increase in our operating assets and liabilities of $6.1 million, partially offset by depreciation and amortization of $9.3 million and stock based compensation of $5.5 million. Changes in operating assets and liabilities were driven primarily by the decrease in our accrued and other liabilities of $2.4 million resulting from a favorable trial court ruling from the ASCAP royalty proceeding and the increase in our accounts receivable of $2.1 million associated with the renegotiation of our agreement with Sprint.

Net cash provided by (used in) investing activities. Investing activities provided (used) net cash of $(5.8) million, $(14.3) million and $8.1 million during 2009, 2010 and 2011, respectively. Our investing activities have consisted primarily of capital expenditures to support our growth and purchases, sales and maturities of short-term investment securities. We expect to increase our capital expenditures in future periods as we continue to invest in the infrastructure needed to operate our services for an increasing end user base, as well as in equipment and facilities for our growing worldwide employee base as we expand our business both domestically and internationally.

Net cash used in financing activities. Financing activities used net cash of $(3.2) million, $(3.8) million and $(3.6) million during 2009, 2010 and 2011, respectively. Our financing activities have consisted primarily of principal payments on equipment financing obligations and payments for deferred offering costs, as well as proceeds from the exercise of options to purchase our common stock.

Revolving credit facility

In October 2011, we entered into a $10.0 million revolving credit facility with a financial institution. Under this facility, if we maintain at least $15.0 million of cash, cash equivalents or marketable securities with the financial institution, the amount available for borrowing is determined by a borrowing base calculation of up to 80% of our current accounts receivable plus $5.0 million, subject to interest at the prime rate plus 0.75%, with interest payable monthly and amounts borrowed payable upon maturity in October 2013. If we maintain less than $15.0 million of cash, cash equivalents or marketable securities with the financial institution, the amount available for borrowing is determined on an invoice by invoice basis of 80% of each eligible account receivable, subject to interest at the prime rate plus 1.75%, with interest and amounts borrowed payable upon receipt of proceeds from financed eligible accounts receivable. At all times, the aggregate amount of borrowings outstanding under this facility is limited to the lesser of the calculated amount or $10.0 million. As of the date of this prospectus, there have been no borrowings under this facility.

Contractual obligations, commitments and contingencies

We generally do not enter into long term minimum purchase commitments. However, we have agreed to obligations under facility leases primarily for office space in Emeryville, California, obligations under capital leases for equipment, and some of our agreements with third-party content providers provide for fixed annual fees and, in a few cases minimum guaranteed license fees.

The following table summarizes our outstanding contractual obligations as of December 31, 2011:


	Payments due by period
December 31, 2011			Less than						More than 5 years
(in thousands)	Total		1 year		1 - 3 years		3 - 5 years		More than 5 years

Operating lease obligations(1)	$	2,734	$	1,436	$	1,298	$	—	$	—
Equipment financing obligations(2)		1,265		1,164		101		—		—
Other purchase commitments(3)		8,840		6,480		2,360		—		—

Total	$	12,839	$	9,080	$	3,759	$	—	$	—

(1)

Consists of non-cancelable contractual obligations for office space.

(2)

In February 2012, we paid the remaining principal and interest balances of our outstanding equipment financing obligations in full.

(3)

Consists of purchase commitments for third-party content, co-location data centers, managed hosting and other services.

Warranties and indemnifications

In the ordinary course of business, we include warranties and indemnification provisions in most of our agreements with our customers and content providers. For example, we may warrant non-infringement and compliance with law. We may also provide indemnification for losses suffered or incurred in connection with our service, breach of representations or covenants, intellectual property infringement or other claims made against certain parties. We have in the past received indemnification requests or notices of their intent to seek indemnification in the future with respect to specific litigation claims in which our customers and content providers have been named as defendants. See “Business—Legal proceedings.”

Off-balance sheet arrangements

During 2009, 2010 and 2011, we did not have any relationships with unconsolidated organizations or financial partnerships, such as structured finance or special purpose entities, which would have been established for the purpose of facilitating off-balance sheet arrangements or other contractually narrow or limited purposes.

Critical accounting policies and estimates

We prepare our consolidated financial statements in accordance with accounting principles generally accepted in the United States, or GAAP. In many cases, the accounting treatment of a particular transaction is specifically dictated by GAAP and does not require our judgment in its application. In other cases, our judgment is required in selecting among available alternative

accounting policies that allow different accounting treatment for similar transactions. The preparation of consolidated financial statements also requires us to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenue, costs and expenses and related disclosures. We base our estimates on historical experience and various other assumptions that we believe are reasonable under the circumstances. In many instances, we could reasonably use different accounting estimates and in some instances changes in the accounting estimates are reasonably likely to occur from period to period. Accordingly, actual results could differ significantly from the estimates made by our management. To the extent that there are differences between our estimates and actual results, our future financial statement presentation, financial condition, results of operations and cash flows will be affected. We believe that the accounting policies discussed below are critical to understanding our historical and future performance, as these policies relate to the more significant areas involving our judgments and estimates.

Revenue recognition. We recognize revenue when persuasive evidence of an arrangement exists, the services have been provided to the customer, the fee is fixed or determinable and collectability is reasonably assured. Management considers a signed agreement to be evidence of an arrangement with a customer. We evaluate each customer agreement on an individual basis to determine the appropriate revenue recognition method under our current accounting policies. As our business strategies evolve and change, we will continue to evaluate each customer agreement and our accounting policies to determine the appropriate revenue recognition method and the resulting impact on our results of operations and financial position.

We recognize monthly fees related to managed services in the period we provide the services to the end user. We defer amounts received in advance of the service being provided and recognize the deferred amounts when the service has been provided. We recognize revenue net of any revenue sharing or other fees earned and deducted by our customers, primarily because we are not a party to the contracts between our customers and their end users and we do not set the price, terms and scope of services in the contracts with end-customers. Accordingly, based on our evaluation of our customer agreements we have determined that we are not the principal when selling our services through customers. We assess whether the fee is fixed or determinable based on the payment terms and whether any part of the fee is subject to refund or adjustment. We assess collectability based primarily on the creditworthiness of our customers as determined by credit checks and analyses as well as payment history of our customers. If we deem a customer not to be creditworthy, we defer all revenue from the arrangement until the payment is received and all other revenue recognition criteria have been met.

The majority of our customer agreements provide that we receive revenue per end user, either as a percentage of revenue received by the customer or as a fixed fee per end user. Our customers provide us information, generally on a daily basis, that we utilize to determine the timing and amount of revenue to record in any given period for the services we provide. We have established processes and controls to validate the accuracy and completeness of information our customers report to us, and occasionally discrepancies are identified. If we are unable to identify and resolve discrepancies in a timely manner, the timing of recognition of revenue and collection of payment from our customers could be affected. Any such delays in the timing of receipt, accuracy or completeness of reporting to us or timing of resolution of discrepancies could delay the recognition of revenue and negatively impact our results of operations and our financial condition. To date, we have not recorded any significant adjustments to revenue in a subsequent period.

We recognize software license and maintenance revenue under the residual method for multiple element software arrangements when vendor specific objective evidence, or VSOE, exists for all of the undelivered elements of the arrangement, but does not exist for one or more of the delivered elements in the arrangement. Under the residual method, at the outset of the arrangement with a customer, we defer revenue for the fair value of the arrangement’s undelivered elements such as post contract support, or PCS, and recognize revenue for the remainder of the arrangement fee attributable to the elements initially delivered, such as software licenses. To date, we have not recorded software license and maintenance revenue under the residual method as VSOE did not exist on certain non-PCS undelivered elements. Amounts are recorded in deferred revenue until such undelivered elements have been provided or VSOE of fair value for undelivered elements is established.

We adopted the revised guidance for accounting for multiple deliverable revenue arrangements that are outside of the scope of software revenue recognition guidance on January 1, 2009, using the prospective method for all arrangements entered into or materially modified from the date of adoption. In accordance with this guidance, we allocate arrangement consideration at the inception of an arrangement to all of its deliverables based on their relative selling prices. When VSOE and third-party evidence of selling price, or TPE, are not available for all deliverables, we use best estimated selling prices, or BESP, in our allocation of arrangement consideration. To date, we have utilized BESP which we determine by considering multiple factors including, but not limited to, prices we charge for similar offerings, sales volume, market conditions, competitive landscape and pricing practices. We recognize the relative fair value of the fees per end user as our managed services are delivered assuming all other revenue recognition criteria are met.

Software development costs. We account for the costs of computer software we develop for internal use by capitalizing qualifying costs, which are incurred during the application development stage and amortizing those costs over the application’s estimated useful life, which generally ranges from two to five years depending on the type of application. Costs incurred and capitalized during the application development stage generally include the costs of software configuration, coding, installation and testing. Such costs primarily include payroll and payroll related expenses for employees directly involved in the application development, as well as third-party developer fees. We expense preliminary evaluation costs as they are incurred before the application development stage, as well as post development implementation and operation costs, such as training, maintenance and minor upgrades. We begin amortizing capitalized costs when a project is ready for its intended use and we periodically reassess the estimated useful life of a project considering the effects of obsolescence, technology, competition and other economic factors which may result in a shorter remaining life.

We capitalized $5.3 million, $8.4 million and $9.1 million of software development costs during 2009, 2010 and 2011, respectively. Amortization expense related to these costs totaled $3.7 million, $5.6 million and $7.6 million for 2009, 2010 and 2011, respectively.

Stock option grants and common stock valuation. The table below summarizes all stock option grants since July 1, 2010:


Grant date	Number of shares underlying options		Exercise price per share		Common stock fair value per share at grant date

August 24, 2010		375,550	$	1.06	$	1.06
December 9, 2010		153,500	$	1.15	$	1.15
March 1, 2011		1,439,621	$	1.37	$	1.37
May 24, 2011		412,800	$	2.01	$	2.01
June 7, 2011		100,000	$	2.01	$	2.01
August 29, 2011		289,390	$	3.08	$	3.08
December 8, 2011		150,550	$	3.22	$	3.22
February 6, 2012		885,000	$	3.30	$	3.30
February 22, 2012		1,536,635	$	3.35	$	3.35

Our board of directors determined that the exercise price per share was equal to at least the fair value of our common stock at each grant date. In the absence of a public trading market, our board of directors considered numerous objective and subjective factors to determine its best estimate of the fair value of our common stock as of the date of each option grant, including, but not limited to, the following factors:

•

valuations of our common stock performed as of June 30, 2010, September 30, 2010, December 31, 2010, April 30, 2011, August 27, 2011, November 30, 2011, January 16, 2012 and February 10, 2012;

•

the rights, preferences and privileges of our outstanding convertible preferred stock;

•

the lack of marketability of our common stock;

•

secondary transactions in our common stock;

•

our operating and financial performance and current projections;

•

the likelihood of achieving a liquidity event for the shares of common stock underlying these stock options, such as an initial public offering or sale of our company, given prevailing market conditions;

•

the market performance of comparable companies; and

•

U.S. capital market conditions.

For the valuation of our common stock, we estimated the fair value of a minority interest in our common equity. For the valuation dates from June 2010 through April 2011, we primarily utilized the income approach in an option-pricing scenario, where we estimated the present value of total stockholders’ equity using a discounted cash flow analysis. Under this method, our projected after tax cash flows available to return to holders of total invested capital were discounted back to the valuation date. The key inputs under this model are our projections of cash flows for three years as of each valuation date, our determination of the terminal value, representing the present value of our future cash flows beyond the three year period covered by our forecasts, and the discount rate known as the weighted average cost of capital. The resulting equity value was allocated to the preferred and common stock using the option-pricing method. The option-

pricing method treats preferred stock and common stock as call options on our equity value to estimate the fair value of our common stock. The value of the call options is determined using the Black-Scholes option-pricing model.

We considered two option-pricing scenarios in determining the fair value of our common stock: one predicated on a merger or acquisition liquidity event, or the M&A Scenario, and one predicated on an initial public offering liquidity event, or the IPO Scenario. Each valuation assigned a probability weighting to the value per share determined under the M&A Scenario and IPO Scenario based on management’s discussion with our board of directors and our assessment of market conditions. This probability weighting was determined based on our plans for an initial public offering and the uncertainty of our ability to successfully complete an initial public offering given changes in market conditions and our ability to continue to execute against our business plan. For the valuations of our common stock in August 2011, November 2011, January 2012 and February 2012, we utilized both the income approach and the public company market multiple method of the market approach to estimate the present value of total stockholders’ equity. The resulting equity value was allocated to the preferred and common stock primarily using the probability-weighted expected return method because of the increased likelihood of an initial public offering. We considered the likelihood of various scenarios occurring around an initial public offering, merger or acquisition, remaining a private company or liquidation. The valuation assigned a probability weighting to the value per share determined under each scenario based on management’s discussion with our board of directors and our assessment of market conditions. This probability weighting was determined based on our plans for an initial public offering and the uncertainty of our ability to successfully complete an initial public offering given changes in market conditions and our ability to continue to execute against our business plan.

Our valuations also reflected an estimated marketability discount for our minority common stock holders, as they have no access to an active public market for their common shares and these minority members cannot force registration to create marketability. In addition, we considered third-party transactions in our determination of the fair value of common stock.

August 24, 2010 grants

In August 2010, the U.S. economy and the financial stock markets were in recovery following a challenging sales environment in 2009, and consumer spending was slowly increasing. We estimated our enterprise value with a discounted cash flow approach. Under the discounted cash flow approach, we analyzed the forecast of our expected future financial performance, and discounted the forecast to a present value using an appropriate discount rate which reflected our then-current cost of capital. We applied a marketability discount to reflect the fact that our common stockholders were unable to liquidate their holdings at will, or possibly at all. On August 24, 2010, our board of directors determined that the fair value of our common stock was $1.06 per share. As part of this determination, the board considered a third-party valuation analysis that concluded that the fair value of our common stock was $1.06 per share as of June 30, 2010. We concluded that it was appropriate to rely in part on the valuation analysis, which was dated as of June 30, 2010, for purposes of the August 24, 2010 option grants because there were no significant changes to the business, including our forecasted financial results and no significant changes to market conditions between June 30, 2010 and the date of the grants.

The valuation analysis as of June 30, 2010 estimated the present value of total stockholders’ equity based on our discounted projected cash flows. The probability weighting assigned to each

of the M&A Scenario and IPO Scenario was 50%, as management considered both scenarios equally likely. The discount for lack of marketability was estimated at 17.5% based upon the financial performance and nature of the company and an expected time to a liquidity event for our common stockholders of approximately one year, among other factors.

December 9, 2010 grants

Between August 2010 and December 2010, the U.S. economy and the financial stock markets continued their recovery, however our revenue declined in the quarter ended September 30, 2010 as compared to the prior quarter. On December 9, 2010, our board of directors determined that the fair value of our common stock was $1.15 per share. As part of this determination, the board considered a third-party valuation analysis that concluded that the fair value of our common stock was $1.15 per share as of September 30, 2010. We concluded that it was appropriate to rely in part on the valuation analysis, which was dated as of September 30, 2010, for purposes of the December 9, 2010 option grants because there were no significant changes to the business, including our forecasted financial results and no significant changes to market conditions between September 30, 2010 and the date of the grants.

The valuation analysis as of September 30, 2010 estimated the present value of total stockholders’ equity based on our discounted projected cash flows. The probability weighting assigned to each of the M&A Scenario and IPO Scenario was 50%, as management considered both scenarios equally likely. The discount for lack of marketability increased to 20% primarily due to an increase in the expected time until a liquidity event to 1.25 years, among other factors.

March 1, 2011 grants

Between December 2010 and March 2011, the U.S. economy and the financial stock markets continued their recovery. We experienced revenue growth and in addition, on December 22, 2010, we signed an agreement with AT&T to become the exclusive national provider of mobile television services for AT&T U-verse Live TV. On March 1, 2011, our board of directors determined that the fair value of our common stock was $1.37 per share. As part of this determination, the board considered a third-party valuation analysis that concluded that the fair value of our common stock was $1.37 per share as of December 31, 2010. We concluded that it was appropriate to rely in part on the valuation analysis, which was dated as of December 31, 2010, for purposes of the March 1, 2011 option grants because there were no significant changes to the business, including our forecasted financial results and no significant changes to market conditions between December 31, 2010 and the date of the grants.

The valuation analysis as of December 31, 2010 estimated the present value of total stockholders’ equity based on our discounted projected cash flows. The probability weighting assigned to each of the M&A Scenario and IPO Scenario remained at 50%, as management considered both scenarios equally likely. The discount for lack of marketability decreased to 17.5% primarily due to a decrease in the expected time until a liquidity event to one year, among other factors.

May 24, 2011 and June 7, 2011 grants

Between March 2011 and May 2011, the U.S. economy and the financial stock markets continued their recovery. In March and April 2011 our average paid end users showed steady growth, we commercially launched AT&T U-verse Live TV and our revenue increased. On May 24, 2011, our board of directors determined that the fair value of our common stock was $2.01 per share. As part of this determination, the board considered a third-party valuation analysis that concluded

that the fair value of our common stock was $2.01 per share as of April 30, 2011. We concluded that it was appropriate to rely in part on the valuation analysis, which was dated as of April 30, 2011, for purposes of the May 24, 2011 and June 7, 2011 option grants because there were no significant changes to the business, including our forecasted financial results and no significant changes to market conditions between April 30, 2011 and the dates of the grants.

The valuation analysis as of April 30, 2011 estimated the present value of total stockholders’ equity based on our discounted projected cash flows. The probability weighting assigned to the IPO Scenario increased to 80% and the probability assigned to the M&A Scenario decreased to 20%, as management had begun talking to investment bankers about a potential initial public offering and considered an initial public offering more likely. The discount for lack of marketability decreased to 15% primarily due to a decrease in the expected time until a liquidity event to nine months, among other factors.

August 29, 2011 grants

Between May 2011 and July 2011, the U.S. economy and the financial stock markets were relatively flat, with the stock markets declining and becoming more volatile in August 2011. Average paid end users continued to steadily increase in this period and our revenue increased. Our visibility over our business and forecast also increased, primarily due to continued growth in customer branded premium services and the resolution of the NFL owners’ lockout and labor dispute that had threatened the 2011 NFL season. On August 29, 2011, our board of directors determined that the fair value of our common stock was $3.08 per share. As part of this determination, the board considered a third party valuation analysis that concluded that the fair value of our common stock was $3.08 per share as of August 29, 2011. We concluded that it was appropriate to rely in part on the valuation analysis, which was dated August 27, 2011, for purposes of the August 29, 2011 option grants because there were no significant changes to the business, including our forecasted financial results and no significant changes to market conditions between August 27, 2011 and the date of the grants.

The valuation analysis as of August 27, 2011 estimated the present value of total stockholders’ equity based on our discounted projected cash flows and public company market multiples. The probability weighting assigned to IPO Scenarios was 80%, the probability assigned to a merger or acquisition and other scenarios was 20%. The discount for lack of marketability decreased from 15% in May 2011 to 12.5% in August due to consideration of the planned filing of our registration statement and progress towards an initial public offering.

December 8, 2011 grants

Between September 2011 and December 2011, uncertainty in the U.S. and European economies contributed to continued volatility in the financial stock markets. Increases in average paid end users for our customer branded premium services and NFL Mobile on Verizon during this period led to increased revenue. On December 8, 2011, our board of directors determined that the fair value of our common stock was $3.22 per share. As part of this determination, the board considered a third party valuation analysis that concluded that the fair value of our common stock was $3.22 per share as of November 30, 2011. We concluded that it was appropriate to rely in part on the valuation analysis, which was dated November 30, 2011, for purposes of the December 8, 2011 option grants because there were no significant changes to the business, including our forecasted financial results and no significant changes to market conditions between November 30, 2011 and the date of the grants.

The valuation analysis as of November 30, 2011 estimated the present value of total stockholders’ equity based on our discounted projected cash flows and public company market multiples. The probability weighting assigned to IPO Scenarios was 80%, the probability assigned to a merger or acquisition and other scenarios was 20%. The discount for lack of marketability was 12.5%.

February 6, 2012 grants

Between December 2011 and February 2012, continued increases in average paid end users for our customer branded premium services and NFL Mobile on Verizon led to increased revenue. On February 6, 2012, our board of directors determined that the fair value of our common stock was $3.30 per share. As part of this determination, the board considered a third party valuation analysis that concluded that the fair value of our common stock was $3.30 per share as of January 16, 2012. We concluded that it was appropriate to rely in part on the valuation analysis, which was dated January 16, 2012, for purposes of the February 6, 2012 option grants because there were no significant changes to the business, including our forecasted financial results and no significant changes to market conditions between January 16, 2012 and the date of the grants.

The valuation analysis as of January 16, 2012 estimated the present value of total stockholders’ equity based on our discounted projected cash flows and public company market multiples. The probability weighting assigned to IPO Scenarios was 80%, the probability assigned to a merger or acquisition and other scenarios was 20%. The discount for lack of marketability was 12.5%.

February 22, 2012 grants

Between January 2012 and February 2012, the U.S. economy and the financial stock markets improved slightly. On February 22, 2012, our board of directors determined that the fair value of our common stock was $3.35 per share. As part of this determination, the board considered a third party valuation analysis that concluded that the fair value of our common stock was $3.35 per share as of February 10, 2012. We concluded that it was appropriate to rely in part on the valuation analysis, which was dated February 10, 2012, for purposes of the February 22, 2012 option grants because there were no significant changes to the business, including our forecasted financial results and no significant changes to market conditions between February 10, 2012 and the date of the grants.

The valuation analysis as of February 10, 2012 estimated the present value of total stockholders’ equity based on our discounted projected cash flows and public company market multiples. The probability weighting assigned to IPO Scenarios was 80%, the probability assigned to a merger or acquisition and other scenarios was 20%. The discount for lack of marketability was 12.5%.

Income tax provision. We account for our income taxes using the asset and liability method, which requires the recognition of deferred tax assets and liabilities for the expected future tax consequences of events that have been recognized in our financial statements or in our income tax returns. Deferred income taxes are recognized for differences between financial reporting and tax bases of assets and liabilities at the enacted statutory income tax rates in effect for the years in which the temporary differences are expected to reverse. The effect on deferred taxes of a change in income tax rates is recognized in income in the period that includes the enactment date. We evaluate the realizability of our deferred tax assets and valuation allowances are provided when necessary to reduce net deferred tax assets to the amounts expected to be realized.

We operate in various tax jurisdictions and are subject to examination by various tax authorities. We provide tax contingencies whenever it is deemed probable that a tax asset has been impaired

or a tax liability has been incurred for events such as tax claims or changes in tax laws. Tax contingencies are based upon their technical merits, relevant tax law and the specific facts and circumstances as of each reporting period. Changes in facts and circumstances could result in material changes to the amounts recorded for such tax contingencies.

We recognize a tax benefit from an uncertain tax position only if it is more likely than not that the tax position will be sustained on examination by the taxing authorities, based on the technical merits of the position. The tax benefits recognized in the financial statements from such positions are then measured based on the largest benefit that has a greater than 50% likelihood of being realized upon settlement. We will recognize interest and penalties related to unrecognized tax benefits in our income tax (benefit) provision in the accompanying statement of operations.

We calculate our current and deferred income tax provision based on estimates and assumptions that could differ from the actual results reflected in income tax returns filed in subsequent years. Adjustments based on filed income tax returns are recorded when identified. The amount of income taxes we pay is subject to examination by U.S. federal and state tax authorities. Our estimate of the potential outcome of any uncertain tax issue is subject to management’s assessment of relevant risks, facts and circumstances existing at that time. To the extent that our assessment of such tax positions changes, the change in estimate is recorded in the period in which the determination is made.

Quantitative and qualitative disclosures about market risk

Interest rate sensitivity. The primary objectives of our investment activities are to preserve principal, provide liquidity and maximize income without significantly increasing risk. By policy, we do not enter into investments for trading or speculative purposes. Some of the securities we invest in are subject to market risk. This means that a change in prevailing interest rates may cause the principal amount of the investment to fluctuate. To minimize this risk, we invest in a variety of securities, which primarily consist of money market funds, commercial paper, certificates of deposit, United States agency bonds and notes and other debt securities of U.S. corporations. Due to the nature of these investments and relatively short duration of the underlying securities, we believe that we do not have any material exposure to changes in the fair value of our investment portfolio as a result of changes in interest rates. Declines in interest rates, however, will reduce future interest income. A 10% decrease in interest rates in 2009, 2010 and 2011 would have resulted in an insignificant decrease in our interest income.

Foreign currency risk. Substantially all of our revenue and expenses have been generated to date from our end users in the United States and, as such, our revenue and expenses have not been substantially exposed to fluctuations in currency exchange rates. However, certain of our expenses, including those incurred by our wholly-owned subsidiary in Sweden, and certain of our revenue contracts with our customers outside of the United States are denominated in currencies other than the U.S. dollar and therefore expose us to foreign currency risk. Should the revenue generated outside of the United States grow in absolute amounts and as a percentage of our revenue, we will increasingly be exposed to foreign currency exchange risks. Additionally, changes in foreign currency exchange rates may cause us to recognize transaction gains and losses in our statement of operations. As of December 31, 2010 and 2011, our foreign currency denominated receivables were insignificant.

To date, we have not used any foreign exchange forward contracts or similar instruments to attempt to mitigate our exposure to changes in foreign currency rates.

Recent accounting pronouncements

In June 2011, the FASB amended its guidance on the presentation of comprehensive income. Under the amended guidance, an entity has the option to present comprehensive income in either one or two consecutive financial statements. A single statement must present the components of net income and total net income, the components of other comprehensive income and total other comprehensive income and a total for comprehensive income. In a two-statement approach, an entity must present the components of net income and total net income in the first statement. That statement must be immediately followed by a financial statement that presents the components of other comprehensive income, a total for other comprehensive income and a total for comprehensive income. The option under current guidance that permits the presentation of other comprehensive income in the statement of changes in stockholders’ equity has been eliminated. In December 2011, the FASB further amended its guidance to defer changes related to the presentation of reclassification adjustments indefinitely as a result of concerns raised by stakeholders that the new presentation requirements would be difficult for preparers and add unnecessary complexity to financial statements. The amendment (other than the portion regarding the presentation of reclassification adjustments which, as noted above, has been deferred indefinitely) becomes effective retrospectively for our interim period ending March 31, 2012. Early adoption is permitted. The adoption of this guidance is not expected to have a material effect on our consolidated financial statements.

In May 2011, the FASB amended fair value measurement and disclosure guidance to achieve convergence with International Financial Reporting Standards, or IFRS. The amended guidance clarified existing fair value measurement guidance, revised certain measurement guidance and expanded the disclosure requirements concerning Level 3 fair value measurements. The guidance is effective for interim and annual periods beginning after December 15, 2011. The adoption of this guidance is not expected to have a material effect on our consolidated financial statements.

In January 2010, the FASB amended fair value measurement and disclosure guidance. This update provides amendments to guidance that require entities to disclose separately the amounts of significant transfers in and out of Level 1 and Level 2 fair value measurements and describe the reasons for the transfers. In addition, this update requires entities to present separately information about purchases, sales, issuances and settlements in the reconciliation for fair value measurements using significant unobservable inputs (Level 3). We adopted the disclosures related to Level 1 and Level 2 fair value measurements in 2010 and the disclosures related to Level 3 fair value measurements in 2011. The adoption of this guidance did not have a material effect on our consolidated financial statements.

In October 2009, the FASB issued guidance that reduces the types of transactions that fall within the current scope of software revenue recognition guidance. Existing software revenue recognition guidance requires that its provisions be applied to an entire arrangement when the sale of any products or services containing or utilizing software is considered more than incidental to the product or service. As a result of the amended guidance, many tangible products and services that rely on software will be accounted for under the multiple-element arrangements revenue recognition guidance rather than under the software revenue recognition guidance. The components that would be excluded from the scope of software revenue recognition guidance are the tangible element of the product, software products bundled with tangible products where the software components and non-software components function

together to deliver the product’s essential functionality, and undelivered components that relate to software that is essential to the tangible product’s functionality. The guidance also clarifies how to allocate transaction consideration when an arrangement contains both deliverables within the scope of software revenue guidance (software deliverables) and deliverables not within the scope of that guidance (non-software deliverables). We adopted the guidance effective January 1, 2009 and adoption did not have an impact on our consolidated financial statements.

In October 2009, the FASB amended the accounting for multiple-deliverable revenue arrangements. The amended guidance requires an entity to allocate consideration at the inception of an arrangement to all of its deliverables based on their relative selling prices. This consensus eliminates the use of the residual method of allocation and requires allocation using the relative-selling-price method in all circumstances in which an entity recognizes revenue for an arrangement with multiple deliverables. We adopted the amended guidance on January 1, 2009 and adoption did not have a material impact on our consolidated financial statements.

Business

Overview

MobiTV is a leading provider of comprehensive managed services that deliver live and on-demand television, downloadable video and related media content across Internet-enabled screens, including mobile devices, tablets and personal computers. Using our converged media platform, we are the exclusive national provider of mobile television services for AT&T U-verse Live TV, NFL Mobile on Verizon, Sprint TV and T-Mobile TV, among others. Our services are deployed on over 400 different types of mobile devices in use today, across wireless and broadband networks and on all major operating systems, including Android, Apple iOS, BlackBerry OS and Windows. We license content from major television studios, including ABC, CBS, Disney, ESPN, Fox, MTV Networks and NBC. We deliver over 220 channels, including over 70 live channels, and in 2011 we delivered over 3,200 live events. We grew our mobile minutes streamed from 264 million minutes in 2007 to 1.6 billion minutes in 2011. Our TV everywhere services allow end users to access, view and manage their content any place, any time. Deutsche Telekom is using our converged media platform to extend television services outside the home and to deploy TV everywhere to phones, tablets, personal computers and other Internet-enabled devices.

Since our founding in 2000, we have developed our proprietary converged media platform to address the unique challenges of the complex wireless environment. Our platform reliably delivers high quality live television and video services, while ensuring efficient network and bandwidth utilization, for the benefit of both end users and wireless carriers, network operators and other television service providers.

Our cloud-based solution is easy to integrate with our customers’ existing systems and networks and is quick to deploy. Our end-to-end platform includes all components necessary to deliver live and on-demand television and video services from the point of content ingestion on our servers to the point of content delivery on end users’ devices through our client software. These platform components include software, systems integration and operational services. We provide a carrier-proven architecture that is secure, scalable and provides a consistent, high quality end user experience. As a result, our customers trust us to deliver television services under their brand names.

Our customers include all U.S. Tier 1 wireless carriers, consisting of AT&T, Sprint, T-Mobile and Verizon. We also provide our services to other U.S. and international customers, including Deutsche Telekom in Germany. Our solution enables our customers to offer additional revenue-generating services and helps them to expand and retain their base of end users. Our total revenue was $66.8 million in 2010 and $85.1 million in 2011, our Adjusted EBITDA was $0.7 million in 2010 and $3.7 million in 2011, and our net loss was $14.7 million in 2010 and $11.8 million in 2011. We grew our managed services revenue from $61.7 million in 2010 to $85.1 million in 2011, an increase of 38%. See “Selected consolidated financial data” for a reconciliation of Adjusted EBITDA to net loss.

Industry background

way consumers access and consume media. Traditionally, consumers watched live television and video primarily at fixed locations in the home; today they want to watch on a wide variety of screens, both inside and outside the home.

Changing wireless market dynamics

The number of wireless users and their consumption of mobile media continue to grow. In mature markets, users are upgrading to more advanced devices, such as smartphones and tablets, and using data-intensive services. In emerging markets, wireless carriers are rapidly adding new end users and connections, and in some emerging markets they are adopting broadband wireless networks without upgrading wireline or other existing networks. Gartner estimates that total mobile connections worldwide will grow from 5.0 billion in 2010 to over 7.3 billion in 2015⁽¹⁾. In response to the growing number of users and demand for data-intensive services, wireless carriers are rapidly building out 3G and 4G broadband wireless networks. In addition, improvements in device technology, including larger screen size, higher screen resolution and faster processors, are enabling end users to more easily access advanced applications and rich-media content on their mobile devices and the delivery of live and on-demand television services across Internet-enabled screens.

Worldwide, wireless carriers are expected to see a continued decline in average revenue per user, or ARPU, from voice services and are looking to data and related premium services to grow their total revenue and ARPU. Gartner estimates that worldwide carrier revenue from data services will grow from $257 billion in 2010 to $552 billion in 2015⁽²⁾. Video applications are the largest driver of mobile data usage. According to the Cisco Visual Networking Index (VNI), video services accounted for 50% of all mobile data usage worldwide in 2010, and will grow to 71% in 2015, and monthly worldwide mobile data usage for video services will grow from 118 petabytes in 2010⁽³⁾, to 4,882 petabytes in 2015⁽⁴⁾, representing a CAGR of 111%.

Shifting media landscape

Consumers want to watch television and video seamlessly across multiple screens, including mobile devices, tablets, personal computers and televisions, with a consistently high quality user experience. Creating a personalized media experience requires user-centric technology that enables end users to conveniently access their content anytime, anywhere, on any device. Consumers are increasingly utilizing new methods of accessing content as an alternative to traditional video providers such as cable and satellite operators. According to SNL Kagan, U.S. basic cable and satellite operators lost approximately 6.6 million subscribers from 2007 to 2011, and losses are expected to continue through 2015⁽⁵⁾.

Changes in television viewing habits, and end user demand to access content seamlessly across multiple devices, have created a challenging environment for wireless carriers, cable and satellite operators, other television service providers and content providers. According to the Cisco VNI, global consumer mobile internet video viewing is expected to grow from 85 petabytes per month in 2010 to 3,333 petabytes per month in 2015, a 108% CAGR⁽⁶⁾. IDC estimates that U.S.

(1)

Gartner, Inc., Forecast: Mobile Connections by Technology, Worldwide, 2008-2015, Stephanie Baghdassarian, et al, July 27, 2011.

(2)

Gartner, Inc., Forecast: Mobile Services, Worldwide, 2007-2015, 2Q11 Update, Jessica Ekholm, et al, June 9, 2011.

(3)

Cisco Visual Networking Index: Global Mobile Data Traffic Forecast Update, 2010-2015, February 1, 2011.

(4)

Cisco Visual Networking Index: Global Mobile Data Traffic Forecast Update, 2011-2016, February 14, 2012.

(5)

SNL Kagan: U.S. Multichannel Industry Benchmarks, August 2011.

(6)

Cisco Visual Networking Index: Forecast and Methodology, 2010-2015, June 1, 2011.

smartphone users accessing video will increase from 19.5 million users in 2010 to 69.7 million users in 2015, a 29% CAGR; in addition, IDC estimates that the number of U.S. tablet users accessing video is expected to grow from 9.5 million in 2010 to 97.5 million in 2015, a 59% CAGR⁽⁷⁾. In response to this growth:

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Wireless carriers are offering additional services, including television and video, both inside and outside the home.

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Cable and satellite operators are expanding their services, including offering mobile video and other services outside the home to attract and retain end users.

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Providers who distribute video content directly to consumers over third-party network connections, or over-the-top providers, have emerged.

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Content providers are exploring new distribution channels, including direct-to-consumer offerings and offerings through over-the-top providers. To monetize these new models, content providers face the challenge of ensuring their content is widely distributed, while at the same time ensuring it remains controlled and protected.

Challenges delivering television and video in a dynamic wireless environment

Factors that make it difficult to deliver live television and video services across multiple screens in a dynamic wireless environment include:

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Many technology offerings are not comprehensive or flexible. Wireless carriers, network operators and other television service providers are generally offered individual components of a solution that they must then install, integrate and operate. These separate components may include content management, content delivery, security, and application development technologies. As a result, considerable time and effort are required to build and deploy an integrated system, lengthening the time to market and often limiting service, quality, scalability and innovation.

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The wireless ecosystem is complex and dynamic. Differing network standards, operating systems and network quality, and the many different types of mobile devices make it difficult for providers to deliver television and video across platforms and devices. Providers of mobile video services must be able to integrate with and deploy on all new devices quickly and efficiently, which is particularly difficult given the short time to market and rapid upgrade cycles typical of carriers and device manufacturers.

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Wireless viewing experiences are unsatisfactory. Consumers expect a high quality viewing experience across all screens and locations, but television and video services generally are not

(7)

IDC, U.S. Smartphones and Media Tablet Mobile Video Addressable Market and Users 2011 – 2015 Forecast , Greg Ireland, et al, September 2011.

optimized for viewing on mobile screens. Consumers find it difficult to discover, navigate, view and manage television and video on their mobile devices. In addition, consumers have limited access to real-time live events while they are on the go.

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It is difficult to ensure scalability, efficiency and reliability. Wireless carriers require robust solutions that scale to support increasing numbers of end users and their rapidly increasing consumption of data services. This is particularly difficult because wireless networks are designed to deliver all voice and data traffic without prioritization and are not specifically dedicated to live television delivery. Moreover, carriers are seeking to improve the efficient use of their networks and bandwidth, and end users expect highly reliable services despite changing network conditions.

Benefits of our solution

We believe that our solution overcomes the challenges of delivering television and video services in this evolving media and wireless landscape. Our managed services deliver live and on-demand television, downloadable video and related media content across Internet-enabled screens, including mobile devices, tablets and personal computers. Our flexible platform enables us to offer Mobile, TV everywhere and Mobile broadcast television services to a wide range of potential customers, whether they are operating on low capacity networks with limited device capabilities or on wireless broadband networks with high performance devices and equipment. In addition, we believe that our solution provides a compelling way for wireless carriers, network operators, and other television service providers to extend the reach of their content offerings beyond the in-home television to multiple screens, wherever their end users are located at any given time.

The key benefits of our solution include:

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Comprehensive solution. Our end-to-end platform includes all components necessary to deliver live and on-demand television, downloadable video and related media content for our customers. The components of our platform work together efficiently and seamlessly integrate with our customers’ existing systems. Our solution combines software, systems integration and operational services, simplifying customers’ ability to meet the demands of end users. Our solution is flexible, easy to deploy and can be tailored to our customers’ network infrastructure and specific needs.

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High quality delivery of live television. We built our solution with a focus on delivering live television optimized for mobile devices, the most challenging problem of delivering mobile video. We solved such real-time technical challenges as network hand-offs, device authentication, quality optimization and bandwidth adaptation and digital rights management. We deliver over 220 channels, including over 70 live channels, and in 2011 we delivered over 3,200 live events.

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Device, network and platform independent. Our solution works seamlessly across numerous wireless networks, platforms and devices. It is deployed on over 400 different types of mobile devices in use today across all major operating systems, and can be quickly integrated on any wireless customer network. Our solution provides flexibility and reduced time to market for our customers so that these services can be rapidly deployed to end users.

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Additional customer revenue opportunities. Our solution enables our customers to enhance their services by offering high quality television and video services to end users. It also enables us to provide our customers with detailed analytics and reporting of aggregated usage and related data. Our services help our customers attract and retain end users, increase ARPU and generate additional revenue. Our services are network efficient and leverage the investments our customers have made in their infrastructure to generate additional revenue. Further, our services are often pre-loaded on mobile devices, making it easy for end users to discover and access our services.

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Carrier-proven performance on a highly scalable platform. Our cloud-based solution meets the stringent quality of service and high availability requirements of our customers, while conserving their network and bandwidth capacity. Our architecture is highly scalable, designed to deliver live television and on-demand video services to millions of concurrent viewers by adding capacity of standard third-party content delivery networks as needed. Our cloud-based distribution is both cost- and network-efficient. In addition, our operational experience allows us to anticipate, monitor and resolve issues in real time and meet the expectations of our customers during extreme conditions, including high profile, heavy volume, peak traffic live events. We grew our mobile minutes streamed from 264 million minutes in 2007 to 1.6 billion minutes in 2011.

Our strategy

Key elements of our strategy include:

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Expand our customer relationships and increase end user penetration. We work closely with our customers to promote and accelerate end user adoption of our services, including through deeper integration with our customers’ core service offerings. We intend to broaden our relationships with our existing customer base, particularly the top four wireless carriers in the United States. We plan to collaborate with our customers on their roadmaps to extend television and video offerings beyond the screens they have traditionally serviced within their networks, to include personal computers, set-top boxes and Internet-enabled televisions.

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Our managed services

Through our converged media platform, we provide the following managed services to deliver television and video services across Internet-enabled screens in the home and on the go, on a fixed and wireless basis.

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Mobile television service. Our Mobile television service delivers live and on-demand television, downloadable video and related media content to a variety of mobile devices (primarily phones and tablets). We deliver Mobile television services under our customers’ brand names through an intuitive user interface, with carrier-proven scalability, reliability and security. Our rich feature set includes recommendations, search, pause, fast channel change, easy navigation, guide data, notifications, sports statistics and social media features, all designed to enhance the end user television viewing experience. We provide a high quality viewing experience by optimizing the video stream for the end user’s device and changing network conditions. We are the exclusive national provider of mobile television services for AT&T U-verse Live TV, NFL Mobile on Verizon, Sprint TV and T-Mobile TV, among others. Historically, we have primarily focused our business on providing Mobile television services.

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TV everywhere services. Our TV everywhere services enable our customers to deliver to their end users a comprehensive and personalized multi-screen television experience in and outside the home. These services allow the delivery of live and on-demand television to all Internet-enabled screens, including mobile devices, tablets, personal computers, televisions, gaming consoles and set-top boxes. Our TV everywhere services are user-centric rather than device-centric, which means that an end user can record on any platform, view on any platform and access personalized content and account settings on any platform. Our TV everywhere services feature:

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Screen shifting – End users can seamlessly move television viewing experience from device to device, including mobile viewing of content recorded on a network DVR.

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Location shifting – End users can access their television content both in the home and on the go, across all wired and wireless IP-networks.

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Time shifting – End users can access live and on demand content, record, play, pause, resume and manage their television seamlessly across multiple Internet-enabled screens.

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Quality shifting – We adjust the source and quality of the video stream to optimize for network conditions, screen size and device capability.

For example, using our TV everywhere services:

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a football fan can pause a live game on the living room television, and resume watching it on a tablet out at a barbeque in the park, without missing a play;

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an office worker can start an on-demand movie on a mobile device during a lunch break, and resume watching at home, on the living room big screen television;

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a family can pause a movie and different members can resume watching at different times on different devices; and

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a traveler can download and store a live talk show for offline viewing using a tablet on a flight.

Deutsche Telekom is using our converged media platform to extend television services outside the home and to deploy TV everywhere to phones, tablets, personal computers and other Internet-enabled devices.

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Mobile broadcast television service. Our converged media platform allows the integration of traditional local broadcast television into our other services. The service supports flexible content mixes, including a combination of free-to-air local affiliate television programming over the broadcast spectrum and premium television (including both live and on-demand) across the cellular network spectrum, all within an integrated user experience with seamless shifting between networks. Our service will power the Mobile Content Venture’s television service using both cellular networks and the ATSC-MH broadcast spectrum. The Mobile Content Venture is a consortium of local broadcast affiliates, including Fox and NBC, who are expected to launch our Mobile broadcast television service under the brand name “Dyle.”

Our services are generally deployed for our customers on a MobiTV-hosted basis. Under this arrangement, we use our infrastructure, including co-location data centers, hosting facilities and network operations center, to provide the services and we are responsible for the hardware and the provisioning of the services and facilities required for the television and video service. In the future our services may also be deployed on a customer-hosted basis, where we remotely operate the services from our network operations center. We expect that over time an increasing number of our customers will elect to deploy our managed services on a customer-hosted basis. For example, we recently began deployment of TV everywhere services with Deutsche Telekom on a customer-hosted basis.

For all our managed services, we adjust the source and quality of the video stream to optimize for network conditions, screen size and device capability. Using a cloud-based architecture, our services enable end users to manage and personalize their viewing and account preferences seamlessly across devices and networks.

In connection with our managed services, we also offer television and video content, which we license directly from major television studios, including ABC, CBS, Disney, ESPN, Fox, MTV Networks and NBC. This content includes live television, video-on-demand, movies, full-length episodes and other content. In cases where we have licensed the content directly from major television studios rather than our customers licensing the content themselves, we generally pay the content provider based on the number of end users, rather than the amount of content consumed. We expect that over time an increasing number of our existing customers will directly license the content to be delivered to their end users, rather than relying on content that we have licensed as part of our managed service. For example, Verizon licenses the NFL content directly from the NFL and AT&T licenses much of the television content that we deliver on their behalf directly from major television studios. We also expect that over time many of our new customers, particularly international customers, will directly license the content to be delivered to their end users.

Our converged media platform

Our converged media platform utilizes a standards-based, open architecture that integrates seamlessly with our customers’ networks and other third-party systems. We deliver our services in real time at carrier-proven levels of reliability and quality essential to our customers. We have designed this platform so that all the components of our technology are integrated and work together seamlessly, from the point of content ingestion on our servers to the point of content delivery by our client software on end user devices.

LOGO

Our technology platform consists of the following elements, which are integrated together for scalability, reliability, security and efficiency:

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Content management. Our content management system ingests and transcodes live and on-demand media and controls workflow and rights management in a fully automated, highly scalable, high volume environment.

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Access control management. Our access control management system provides authentication, subscription and user management, along with our cross platform digital rights management which has been approved by major U.S. television studios and certified by an independent third party.

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Media distribution system. Our media distribution system delivers adaptive video streaming over various Internet protocols, including HTTP, RTSP/RTP, in unicast mode (one stream to one user) and multicast mode (one stream to many users), allowing us to optimize quality and maximize network efficiency across all screens utilizing a stateless architecture, which does not require dedicated network resources.

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Application services. Our application services deliver personalization features, recommendations, guide data, search, favorites, co-watching (displaying statistics and other data related to the content of the video being streamed) and advertising.

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Client framework. Our client framework includes our own optimized media player, utilizes our highly scalable client application development and is deployable across any of our customers’ devices.

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Integration layer. We are deeply integrated with our customers’ billing and authentication systems. Our integration layer integrates with existing third-party systems by utilizing standardized, web-based points of integration. Our stateless architecture does not tax network resources and consumes bandwidth in an efficient manner on an as-needed basis.

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Operations. Our operations are designed to meet carrier standards of operational excellence, including 24/7 real-time monitoring across thousands of network monitoring points. We also provide deeply detailed customized analytics and reporting.

Our platform and operations include the following key technologies:

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HTTP adaptive streaming. Our cross platform media framework and media distribution ecosystem provides an optimized video quality experience over any mobile or broadband network. We use proprietary bandwidth adaptation technology and real-time network management tools. This allows us to optimize each video stream for the resolution and capabilities of each user’s device while actively adjusting and efficiently balancing viewing quality with bandwidth usage depending on real-time network capacity. The benefits of our technology also include seamless delivery of content across networks (enabling an uninterrupted user experience, despite network changes), fast channel change, personalized advertisement insertion and cost-efficient cloud-friendly media delivery for large scale, highly concurrent live events.

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Digital rights management. Our digital rights management, or DRM, system is available across multiple operating systems and supports secure live and on-demand streaming and local storage of media files for offline viewing. Our DRM utilizes cloud-based distribution, allowing for a scalable and network efficient distribution of encrypted content across multiple networks and devices. Our DRM has been approved by major television studios, including ABC, CBS, Disney, ESPN, Fox, MTV Networks and NBC, and our DRM is optimized for the types of processors used in mobile devices.

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Client-Side Interpreter. Client-Side Interpreter (our client application platform), or CSI, creates an abstraction layer to the native operating system allowing us to develop one application that is then deployed on all platforms, drastically reducing time to market. CSI also allows us to deliver over-the-air updates to devices that are already being used by end users.

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Authentication and authorization. TV everywhere services, allowing an end user to view personalized content anywhere, anytime, on any device, require identification of the end user and authorization across multiple platforms and systems. Rather than relying on device-based authentication and authorization, our technology is focused on end user authentication, bookmarking and cloud-based resource sharing, allowing for multiple end user accounts across shared devices, including family accounts and parental controls. Each end user will access the content he or she is authorized to view, regardless of system or device. This allows us to create shared viewing experiences (family viewing in the living room on Internet-enabled televisions and via set top boxes and consoles) and highly personalized viewing experiences (individual viewing on mobile and tablet devices) by managing the end user settings in the cloud.

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TV everywhere functionality. Our TV everywhere services enable screen, location, time and quality shifting. Our technology facilitates delivery of live and on-demand television, in the home and on the go. End user activities, such as search, personalization, user settings, recommendations and favorites, are managed in a cloud-based account management environment rather than tied to specific devices or local hardware. This cloud-based solution

includes authentication and access control, DRM and media delivery and playback of live, on-demand, rentals and downloaded content across mobile devices, tablets, personal computers, set-top boxes and Internet-enabled televisions. Features of our TV everywhere service include the ability to pause, resume and transfer content (including live programming) between devices and equipment and network digital video recording capabilities, allowing a user to time and place shift content between devices for live, on-demand and recorded programming. An end user can record on any platform, consume on any platform and access personalized content and account settings on any platform.

We seek to ensure continuous, uninterrupted and high quality delivery of television and other media across multiple networks, despite varying network conditions. We drive this process from our network operations center in Emeryville, California, where we continuously monitor, adjust and optimize our services worldwide, in real-time. Through unique, cross-network monitoring techniques, we perform at carrier-proven levels of service quality, even during extreme conditions, including high profile, heavy volume, peak traffic live events. Utilizing our stateless architecture that also leverages readily available network capacity from third-party vendors, we are designed to scale to meet demand in real time, to millions of concurrent viewers, both live and on-demand.

Research and development

Our continued investment in research and development is critical to our business. We have assembled teams of engineers with expertise in various fields, including television and video, wireless networks and mobile devices, consumer electronics and quality assurance. We have research and development personnel in Emeryville, California and Stockholm, Sweden. We had 173 full-time research and development employees as of December 31, 2011. We also utilize small teams of contractors in Emeryville to assist with deployment and targeted development efforts. Our research and development expenditures, excluding depreciation and amortization, were $19.8 million, $16.0 million and $21.9 million in 2009, 2010, 2011, respectively.

Customers

Our customers include all U.S. Tier 1 wireless carriers, consisting of AT&T, Sprint, T-Mobile and Verizon, and other network operators and other television service providers. We also provide our services to other U.S. and international customers, including Deutsche Telekom in Germany. Our agreements with our customers vary as to the services provided and fee arrangements, but our payments are typically structured as either a per end user fee or a percentage of revenue. Many of these agreements also contain service level agreements under which we commit to certain availability and performance metrics and are subject to financial penalties if we fail to perform at the agreed upon level. To date, such penalties have not been material. In addition, these agreements generally have multiple year terms with automatic renewal provisions following the end of the term and some agreements permit carriers to terminate for convenience. Our business is substantially dependent on our agreements with four of these customers. In 2010, Sprint and AT&T represented 54% and 19% of our revenue, respectively. In 2011, Sprint, T-Mobile, AT&T and Verizon represented 42%, 26%, 19% and 10% of our revenue, respectively.

Sales and marketing

Our sales team consists of senior sales personnel responsible for major accounts, supported by dedicated account managers for key customers, and business development personnel. These personnel are located at our headquarters in Emeryville, California and other locations close to our key customers in the United States and in Europe. To date, our primary sales focus has been on winning U.S. carrier customers. We are currently broadening our focus to include developing new carrier and operator customers in the United States, Europe, Asia, Latin America and Africa, and expanding our relationships with existing customers.

We primarily operate our services under our customers’ brands, enabling us to leverage the marketing efforts of our customers. Additionally, content providers extensively market our services to extend their reach beyond traditional screens. We focus the majority of our marketing efforts on building enabling tools and cross-carrier programs that maximize our customers’ marketing programs to promote our offerings to their end users. This strategy enables us to leverage the marketing resources of our customers and content partners, while minimizing our marketing costs.

Competition

The market for mobile television and video solutions is rapidly evolving, fragmented and competitive and we expect this competition to increase in the future. We compete with managed services providers, some of which offer narrow solutions and some of which may offer more comprehensive solutions, to some prospective customers. While some of these competitors may have greater financial and other resources, broader distribution and sales channels and greater economies of scale, we believe we are well positioned to compete on the basis of our ability to:

•

provide live television to high levels of concurrent users;

•

rapidly deploy new services for both existing and new customers;

•

deploy MobiTV-hosted and customer-hosted services based on customer needs and cost expectations;

•

adjust our services, features and functionality to meet the needs of our customers;

•

offer a full range of managed services; and

•

leverage our deep experience and relationships within our industry.

In addition, we face indirect competition and potential competition from a range of sources. For example, television and video content aggregators such as Amazon, Hulu and Netflix indirectly compete with us for consumer spending on mobile video content and traditional television and video providers such as Comcast and DirectTV are extending their broader offerings to the mobile market. We face potential competition from established technology companies such as Apple, Google and Microsoft, that may seek to enter our market. Further, our customers and content providers may seek to build their own in house solutions as an alternative to those being provided by us.

Facilities

Our corporate headquarters and network operations center is located in Emeryville, California and comprises approximately 46,000 square feet of space leased through November 2013. We occupy an office in Stockholm, Sweden primarily for the purpose of research and development under a lease that expires in September 2013. We believe that our existing properties are adequate to meet our needs for the foreseeable future and that, should it be needed, suitable additional or substitute space will be available to us on commercially reasonable terms to accommodate any expansion of our operations or expiration of our existing leases.

Employees

As of December 31, 2011, we had 276 full time employees, including 28 in operations, 173 in research and development, 24 in sales and marketing and 51 in general and administrative. None of our employees are covered by a collective bargaining agreement or are represented by a labor union. We consider our current employee relations to be good.

Intellectual property

We rely on a combination of patent, copyright, trademark and trade secret laws, as well as confidentiality procedures and contractual restrictions, to establish and protect our proprietary rights. These laws, procedures and restrictions provide only limited protection and the legal standards relating to the validity, enforceability and scope of protection of intellectual property rights are uncertain and still evolving. Furthermore, effective patent, trademark, copyright and trade secret protection may not be available in every country in which our services and products are available.

We seek to patent key concepts, components, protocols, processes and other inventions. As of December 31, 2011, we held 14 U.S. patents and one foreign patent expiring between September 2022 and August 2028 and had 60 U.S. and 27 foreign patent applications pending. These patents and patent applications cover claims associated with features and functions of our solution and the technology platform we use to provide it. We have filed, and will continue to file, patent applications in the United States and other countries where there exists a strategic technological or business reason to do so. Our patent applications may not result in issued patents. Additionally, any patents issued to us may be challenged, invalidated or circumvented, may not provide sufficiently broad protection or may not prove to be enforceable in actions against alleged infringers.

As of December 31, 2011, we were the owner of six trademarks registered with the U.S. Patent and Trademark office, including MobiTV, MobiRadio and the MobiTV logo, and 28 trademarks registered internationally. We also had two trademark applications pending internationally.

We endeavor to enter into agreements with our employees and contractors and with parties with which we do business in order to limit access to and disclosure of our proprietary information. We cannot be certain that the steps we have taken will prevent unauthorized use or unauthorized reverse engineering of our technology. Moreover, others may independently develop technologies that are competitive with ours and some of those competitive technologies may infringe our intellectual property. The enforcement of our intellectual property rights also depends on the success of our legal actions against these infringers, but these actions may not be successful, even when our rights have been infringed.

Legal proceedings

From time to time, we may be subject to legal proceedings and claims in the ordinary course of business. We have received, and may in the future continue to receive, claims from third parties asserting infringement of their intellectual property rights. Future litigation may be necessary to establish our proprietary rights or to defend ourselves and, in some cases, our customers or content partners by determining the scope, enforceability and validity of third-party proprietary rights. There can be no assurance with respect to the outcome of any current or future litigation brought by or against us or pursuant to which we have indemnification obligations, and the outcome of any such litigation could have a material adverse impact on our business, operating results and financial condition.

In May 2008, the American Society of Composers, Authors and Publishers, or ASCAP, filed an Application for Determination of Reasonable License Fees against us in the U.S. District Court for the Southern District of New York (Case No. 1:09-cv-07071-DLC). A bench trial was held in April 2010 and the District Court issued an Opinion and Order essentially adopting our proposed fee structure. ASCAP has filed an appeal from such holding to the U.S. Court of Appeals for the Second Circuit (Case No. 10-3161-cv(L), 10-3310-cv(CON). The matter has been fully briefed and oral arguments were presented on October 11, 2011.

In September 2010, EON Corp. IP Holdings, LLC, or EON, filed a complaint against us and sixteen other defendants in the U.S. District for the District of Delaware (Case No. 10-812-SLR). The suit alleges that certain of our products and/or services contribute to, induce or otherwise infringe U.S. Patent No. 5,663,757, or the ‘757 Patent. In July 2011, the court granted a Motion to Dismiss filed by defendants with respect to EON’s joint and indirect patent infringement claims, but denied the Motion to Dismiss with respect to the direct infringement claims. We filed an Answer and Counterclaims to the Amended Complaint in July 2011 and EON filed an Answer to our Counterclaims in August 2011. In September 2011, the plaintiff filed a Motion to Amend its complaint to add indirect infringement claims.

In May 2011, defendant Kyocera filed in the United States Patent and Trademark Office, or PTO, a request for reexamination of the ‘757 Patent. In January 2012, the PTO issued a final rejection of eight claims of the ‘757 Patent and allowed two claims as amended. In February 2012, the defendants filed a Motion to Stay the case pending completion of the reexamination proceedings, including any appeals. The parties are currently awaiting the court’s determination of EON’s September 2011 Motion to Amend and the defendants’ February 2012 Motion to Stay.

In addition, we have received, and expect to continue to receive, demands for indemnification from our customers or content partners, which demands can be very expensive to settle or defend and we have in the past incurred legal fees in connection with certain of these indemnity demands. Some of these indemnity demands, including demands relating to pending litigation, remain outstanding and unresolved as of the date of this prospectus. Furthermore, in response to these demands we may be required to assume control of and bear all costs associated with the defense of our customers or content partners in compliance with our contractual obligations.

Litigation is inherently unpredictable and outcomes are uncertain. Further, as the costs, outcome and status of these types of claims and proceedings have varied significantly in the past, including with respect to whether claims ultimately result in litigation, we believe our past experience does not provide any additional visibility or predictability to estimate additional loss or range of loss that may occur. As a result, we believe that an estimate of additional loss or range of loss for contingencies cannot be made at this time due to the inherent unpredictability of litigation. Accordingly, we are unable at this time to estimate the effects of these lawsuits on our financial condition, results of operations or cash flows.

Management

Executive officers and directors

The following table provides information about our executive officers and directors as of February 29, 2012:


Name	Age		Position(s)


Charles A. Nooney		56	Chairman, Chief Executive Officer and Director

Paul M. Scanlan		42	President, Co-Founder and Director

Kay G. Johansson		42	Chief Technology Officer

Anders Norström		48	Chief Operating Officer

Raymond A. DeRenzo		56	Chief Marketing Officer

William E. Losch		50	Chief Financial Officer

Richard C. Herman		48	Senior Vice President, Business and Corporate Development

Terri M. Falcone		43	Vice President, Finance and Chief Accounting Officer

Simon T. Bax(1)		52	Director

Jeffrey D. Brody(2)		52	Director

Bandel L. Carano(3)		50	Director

Steven R. Goodbarn(1)		54	Director

Admiral Bobby R. Inman(3)		80	Director

John W. Jarve(3)		56	Director

William T. Morrow		52	Director

Vernon J. Stevenson(1)(2)		55	Director

(1)

Member of the Audit Committee.

(2)

Member of the Compensation Committee.

(3)

Member of the Nominating and Governance Committee.

Executive officers

Charles A. Nooney has been our Chief Executive Officer, Chairman and a member of our board of directors since October 2007. From September 2005 to September 2007, Mr. Nooney served as President of Broadcast and Out-of-Home Media at Technicolor Network Services, a digital media distribution and network management company. From December 2005 to September 2007, Mr. Nooney also served as Chairman for ScreenVision Cinema Network, LLC, an in-theater advertising network company. From 2000 to 2005, Mr. Nooney served as Chief Executive Officer and a member of the board of directors of Premier Retail Networks, Inc., a digital media network service company, and as Chairman of the Board from 2002 to 2005. Mr. Nooney also spent 15 years at Disney/ABC Cable networks, where he most recently served as Executive Vice President of Affiliate Sales and Marketing. Mr. Nooney holds a B.A. in Urban Studies and Public Administration from the University of Alabama at Birmingham. We believe that Mr. Nooney

should serve as a member of our board of directors based on his knowledge of our company and operational expertise as our Chief Executive Officer, which brings continuity to our board of directors.

Paul M. Scanlan is one of our co-founders and has served as our President since January 2007 and as a member of our board of directors since 2002. Mr. Scanlan previously served as our Vice President, Marketing & Sales from 2000 to 2005 and as our Chief Operating Officer from 2005 to December 2006. From 1996 to 2000, Mr. Scanlan served as Managing Partner and Executive Vice President at Enterprise IG, Inc., a brand consultancy that was renamed The Brand Union Company, Inc. in 2007. In 1994, Mr. Scanlan helped start John Barnes & Company, an advertising agency in Chicago. From 1993 to 1994, Mr. Scanlan served as an account executive at Lucent Technologies. Mr. Scanlan holds a B.S. in Communications from the University of Wisconsin. We believe that Mr. Scanlan should serve as a member of our board of directors based on his knowledge of our company, his expertise in our carrier relationships, his vision for us in the future, as well as bringing continuity to our board of directors.

Kay G. Johansson has served as our Chief Technology Officer since September 2006. From 2000 to 2006, Mr. Johansson served as Chief Technology Officer of Popwire.com, Inc., a provider of software products to the media, broadcast and mobile industries, where he led development and product strategy. Prior to 2000, Mr. Johansson also held a number of management roles in the broadcast and media industry.

Anders Norström has served as our Chief Operating Officer since August 2009 and as Managing Director of MobiTV AB from June 2007 to August 2009. From November 2006 to May 2007, Mr. Norström founded and served as Chief Executive Officer of Terbis AB, a media development consulting company. From April 2006 to October 2006, Mr. Norström founded and led Pronadron Communication HB, a management consulting company. From 2000 to April 2006, Mr. Norström served as Chief Operating Officer of Popwire.com, Inc. From 1992 to 2000, Mr. Norström served as the head of Information Technology for a number of companies based in Sweden. Mr. Norström holds an M.B.A. in International Business Strategy from Stockholm University in Sweden.

Raymond A. DeRenzo has served as our Chief Marketing Officer since April 2009. Mr. DeRenzo previously served as our Senior Vice President, Product Programming & Marketing from October 2007 to April 2009 and was our Vice President of Business Development from 2004 to October 2007. From 2003 to 2004, Mr. DeRenzo served as Vice President, Business & Market Development at Telephia, Inc., a provider of syndicated consumer research to the telecom and mobile media market that was acquired by The Nielsen Company in 2007. From 1999 to 2003, Mr. DeRenzo served as Vice President and Chief Marketing Officer of the Global Platform and Internet Services group of Vodafone Americas, Inc., which developed and deployed the Vodafone Live! enabling technology. Mr. DeRenzo holds a B.A. in Urban Planning from San Francisco State University and an M.B.A. in International Business from St. Mary’s College of California.

William E. Losch has served as our Chief Financial Officer since June 2007. From October 2004 to May 2007, Mr. Losch served as Chief Accounting Officer at Dreamworks Animation SKG, Inc., a film and television animation studio. From 1998 to 2003, Mr. Losch held various finance positions at Yahoo! Inc., an Internet search company, most recently as Vice President of Finance and Chief Accounting Officer. Prior to 1998 Mr. Losch served in various financial and accounting positions at Universal Studios, Inc. and KPMG LLP. Mr. Losch holds a B.A. in Economics from the University of California, at Los Angeles and is a licensed C.P.A. (inactive).

Richard C. Herman has served as our Senior Vice President of Business and Corporate Development since May 2010. From July 2002 to May 2010, Mr. Herman worked at Sony Online Entertainment LLC, a game developer and publisher, where he most recently served as Senior Vice President, Business and Legal Affairs. From 2000 to 2002, Mr. Herman worked at At Home Corporation, an Internet portal and broadband network provider, including as Associate General Counsel. Mr. Herman holds a B.A. in Political Science from the University of Colorado at Boulder and a J.D. from Loyola Law School of Los Angeles.

Terri M. Falcone has served as our Chief Accounting Officer since August 2010 and our Vice President of Finance since March 2009. From March 2008 to February 2009, Ms. Falcone served as our Vice President and Controller. From 2005 to March 2008, Ms. Falcone served in various management roles within our finance and accounting departments, most recently as Director of Revenue. From 2002 to 2005, Ms. Falcone served as Controller at RagingWire Enterprise Solutions, Inc., a data center. From 2000 to 2002, Ms. Falcone held various management positions at At Home Corporation, most recently as Vice President, Controller and Acting Chief Financial Officer. From 1999 to 2000, Ms. Falcone served as Vice President of Finance at Xenote, Inc. From 1996 to 1999, Ms. Falcone held finance and accounting management positions at Pointcast, Inc. Ms. Falcone holds a B.S. in Business (with emphasis in accounting) from California Polytechnic State University, at San Luis Obispo, California and is a licensed C.P.A.

Board of directors

Simon T. Bax has served as a member of our board of directors since February 2007. Mr. Bax has served as Chief Executive Officer of Encompass Digital Media, Inc., a broadcast facilities provider, since March 2008. From 2004 to 2006, he served as Chief Financial Officer and Executive Vice President of Pixar Animation Studios. From May to December 2007, Mr. Bax served as member of the board of directors of ROO Group PLC, now KIT digital, Inc., a content syndicator for video-on-demand, and from October 2007 to December 2008, Mr. Bax served as a member of the board of directors of Panmure Gordon & Co., a corporate and institutional stockbroker. Mr. Bax graduated with a B.A. from the University of Cambridge in England and is qualified as a chartered accountant in England and Wales. We believe that Mr. Bax should be a member of our board of directors based on his extensive experience with media and entertainment industries and his financial reporting expertise as a former Chief Financial Officer of several companies.

Jeffrey D. Brody has served as a member of our board of directors since 2004. Mr. Brody has served as a partner of Redpoint Ventures, a venture capital firm, since its founding in 1999. Mr. Brody currently serves on the board of directors of HomeAway, Inc., an online marketplace of vacation rentals. From 2001 to 2007, Mr. Brody served on the board of LoopNet, Inc., an online commercial real estate listing service. Mr. Brody holds a B.S. in Engineering from the University of California, Berkeley and an M.B.A. from the Stanford University Graduate School of Business. We believe that Mr. Brody should be a member of our board of directors based on his extensive experience in the venture capital industry analyzing, investing in and serving on the board of directors of technology companies.

Bandel L. Carano has served as a member of our board of directors since 2006. Since 1987, Mr. Carano has been a managing partner of Oak Investment Partners, a venture capital firm. Mr. Carano serves on board of directors of Airspan Networks, Inc., a provider of broadband wireless access networks, NeoPhotonics Corporation, a designer and manufacturer of photonic integrated circuit based modules and subsystems, and Kratos Defense & Security Solutions, Inc., a national security systems provider. From 2004 to June 2008, Mr. Carano served as a member of

the board of directors of FiberTower Corporation, a wireless backhaul services provider. From 2004 to June 2008, Mr. Carano served as a member of the board of directors of Tele Atlas, N.V., a digital mapping and navigation company. He also serves on the Investment Advisory Board of the Stanford Engineering Venture Fund. Mr. Carano holds a B.S. and an M.S. in Electrical Engineering from Stanford University. We believe that Mr. Carano should be a member of our board of directors based on his extensive experience in the venture capital industry analyzing, investing in and serving on the boards of directors of public and private technology companies.

Steven R. Goodbarn has served as a member of our board of directors since February 2012. Mr. Goodbarn has served as Chief Executive Officer, President and Director of Secure 64 Software Corporation, a developer of secure infrastructure software he co-founded, since 2002. Since 2002, Mr. Goodbarn has served on the board of directors of Dish Network Corporation, a national provider of satellite television. From 2007 to 2008, Mr. Goodbarn served on the board of directors of EchoStar Corporation, a satellite and digital television solutions provider. From 1992 to 2000, Mr. Goodbarn served as Chief Financial Officer of Janus Capital Corporation, a global investment manager. Previously Mr. Goodbarn was a senior manager at Price Waterhouse (now PricewaterhouseCoopers LLP), a public accounting firm. Mr. Goodbarn holds a B.S. in Business Administration (emphasis in accounting) from University of Nebraska—Lincoln and is a licensed C.P.A. We believe that Mr. Goodbarn should be a member of our board of directors based on his extensive management and leadership experience, service on the boards of directors of public companies as well as his expertise in accounting, auditing, finance and risk management.

Admiral Bobby R. Inman, U.S. Navy (retired), has served as a member of our board of directors since 2002. Admiral Inman has been a professor at the LBJ School of Public Affairs at the University of Texas in Austin since 2001 and served as Interim Dean in 2005 and from 2009 to 2010. Admiral Inman previously served as Director of the National Security Agency and Deputy Director of the Central Intelligence Agency. Admiral Inman is a managing director of Gefinor Ventures, Inc. and Limestone Ventures, Inc., both venture capital firms and has over 25 years of experience in venture capital investments. Admiral Inman was a member of the board of directors of Massey Energy Company, a coal producer, from 2000 until it was acquired by Alpha Natural Resources in June 2011. Admiral Inman holds a B.A. in History from the University of Texas at Austin and is a graduate of the National War College. Admiral Inman was selected to serve as a member of our board of directors based on his extensive experience in the venture capital industry analyzing, investing in and serving on the boards of directors of public companies, his leadership experience in governmental agencies and his lengthy experience with our company.

John W. Jarve has served as a member of our board of directors since 2004. Since 1985, Mr. Jarve has held various positions with Menlo Ventures, a venture capital firm, where he currently serves as a Managing Director. From 2002 to 2009, Mr. Jarve served as a member of the board of directors of Cavium Networks, Inc., a provider of highly integrated semiconductor products. From 2004 to 2009, Mr. Jarve served on the Stanford Graduate School of Business Management Board, serving as Chairman from 2007 to 2009. Since 2007 Mr. Jarve has served as a Trustee of the Corporation of the Massachusetts Institute of Technology. Mr. Jarve received a B.S. and M.S. in Electrical Engineering from the Massachusetts Institute of Technology and an M.B.A. from the Stanford University Graduate School of Business. We believe that Mr. Jarve should be a member of our board of directors based on his extensive experience in the venture capital industry analyzing and investing in technology companies.

William T. Morrow has served as a member of our board of directors since February 2012. From March 2009 to March 2011, Mr. Morrow served as Chief Executive Officer of Clearwire Corp., a provider of wireless broadband networks in the U.S. and internationally. From September 2008 to March 2009 Mr. Morrow managed his personal investments. From July 2007 to September 2008, Mr. Morrow served as President, Chief Executive Officer and director of Pacific Gas & Electric Co., a public utility company and subsidiary of PG&E Corp., and from 2006 to June 2007, Mr. Morrow served as its President and Chief Operating Officer. From 2004 to 2006 Mr. Morrow served in various executive capacities in subsidiaries of Vodafone Group plc, a global mobile telecommunications company, for the Europe region, United Kingdom and Japan. From 2001 to 2004, he served as President of Japan Telecom Holdings Co., Inc. (now SoftBank Mobile Corp.), a mobile communications provider. Since 2008 Mr. Morrow has been a member of the board of directors of Broadcom Corporation, a semiconductor provider for wired and wireless communications. He formerly served as a member of the board of directors of Openwave Systems Inc., a telecommunications software infrastructure developer, from 2007 to 2010. Mr. Morrow holds an A.S. in Electrical Engineering from Condie College and a B.A. in Business Administration from National University in San Diego. We believe that Mr. Morrow should be a member of our board of directors based on his extensive management and leadership experience in the telecommunications industry in the U.S., Europe and Japan, as well as his experience as a director and chief executive officer of other public companies.

Vernon J. Stevenson has served as a member of our board of directors since 2002. Mr. Stevenson has served as President and Chief Operating Officer of MetricTest Equipment, Inc., a provider of test and measurement solutions, since 2003 and as President and Chief Executive Officer and a member of its board of directors since October 2011. From 2002 to 2003, Mr. Stevenson served as Chief Executive Officer and as a board member at Broadstorm Telecommunications, Inc., a developer of fixed, portable and fully mobile broadband wireless access technology. Mr. Stevenson holds a B.A. in Economics from the University of California, at Berkeley. We believe that Mr. Stevenson should be a member of our board of directors based on his extensive management and leadership experience as an executive of several technology companies and his significant experience in serving on the boards of directors of other technology companies.

Our executive officers are elected by and serve at the discretion of, our board of directors. There are no familial relationships among our directors and executive officers.

Board of directors composition

Our business and affairs are managed under the direction of our board of directors, which will consist of ten members upon completion of this offering.

In accordance with our certificate of incorporation that will be in effect upon the closing of this offering, our board of directors will be divided into three classes, serving staggered three-year terms. At each annual meeting of our stockholders, the successors to directors whose terms then expire will be elected to serve from the time of election and qualification until the third annual meeting following election. Our directors will be divided among the three classes as follows:

•

The Class I directors will be , , and , and their terms will expire at the annual meeting of stockholders to be held in 2013;

•

The Class II directors will be , , and , and their terms will expire at the annual meeting of stockholders to be held in 2014; and

•

The Class III directors will be , , and , and their terms will expire at the annual meeting of stockholders to be held in 2015;

As a result, only one class of directors will be elected at each annual meeting of our stockholders, with the other classes continuing for the remainder of their respective three-year terms.

In addition, our bylaws that will be in effect upon the closing of this offering provide that only the board of directors may fill vacancies on the board of directors until the next annual meeting of stockholders. Any additional directorships resulting from an increase in the number of directors will be distributed among the three classes so that, as nearly as possible, each class will consist of one-third of the total number of directors.

This classification of the board of directors and the provisions described above may have the effect of delaying or preventing changes in our control or management. See “Description of capital stock — Antitakeover provisions.”

Director independence

We intend to apply for listing of our common stock on the New York Stock Exchange. We believe that all of our non-employee directors, and a majority of the members of our board of directors, are independent as determined under the rules of the New York Stock Exchange. In making this determination, our board of directors considered our relationship with Encompass Media, of which Mr. Bax is the Chief Executive Officer.

Committees of our board of directors

Our board of directors has established an Audit Committee, a Compensation Committee and a Nominating and Governance Committee. The composition and responsibilities of each committee, as they will exist immediately prior to the closing of this offering, are described below. Following the closing of this offering, copies of the charters for each committee will be available without charge, upon request in writing to MobiTV, Inc., 6425 Christie Avenue, 5th Floor, Emeryville, California 94608, Attn: General Counsel or on the investor relations portion of our website, www.mobitv.com. Members serve on these committees until their resignations or until otherwise determined by the board of directors.

Audit Committee. The members of our Audit Committee are Mr. Bax, who is the chair of the Audit Committee, Mr. Stevenson and Mr. Goodbarn. The composition of our Audit Committee meets the requirements for independence under the current New York Stock Exchange rules and regulations. Each member of our Audit Committee is financially literate as required by current New York Stock Exchange listing standards. In addition, our board of directors has determined that each of Mr. Bax and Mr. Goodbarn is an audit committee financial expert within the meaning of Item 407(d) of Regulation S-K under the Securities Act. Our Audit Committee, among other things:

•

selects a firm to serve as independent registered public accounting firm to audit our financial statements;

•

helps to ensure the independence of the independent registered public accounting firm;

•

discusses the scope and results of the audit with the independent registered public accounting firm and reviews, with management and the independent accountants, our interim and year-end operating results;

•

develops procedures for employees to anonymously submit concerns about questionable accounting or audit matters;

•

considers the adequacy of our internal accounting controls and audit procedures; and

•

approves (or, as permitted, pre-approves) all audit and all permissible non-audit services, other than de minimis non-audit services, to be performed by the independent registered public accounting firm.

Compensation Committee. The members of our Compensation Committee are Mr. Stevenson, who is the chair of the Compensation Committee, and Mr. Brody. The composition of our Compensation Committee meets the requirements for independence under the current New York Stock Exchange listing standards and SEC rules and regulations. Each member of this committee is also a non-employee director, as defined pursuant to Rule 16b-3 promulgated under the Exchange Act and an outside director, as defined pursuant to Section 162(m) of the Internal Revenue Code of 1986, as amended, or the Code. The purpose of our compensation committee is to discharge the responsibilities of our board of directors relating to compensation of our executive officers. Our Compensation Committee, among other things:

•

reviews and determines, or makes recommendations to our board of directors regarding, the compensation of our executive officers;

•

administers our stock and equity incentive plans;

•

reviews and makes recommendations to our board of directors with respect to incentive compensation and equity plans; and

•

establishes and reviews general policies relating to compensation and benefits of our employees.

Nominating and Governance Committee. The members of our Nominating and Governance Committee are Admiral Inman, who is the chair of our Nominating and Governance Committee, Mr. Jarve and Mr. Carano. The composition of our Nominating and Governance Committee meets the requirements for independence under the current New York Stock Exchange listing standards and SEC rules and regulations. Our Nominating and Governance Committee, among other things:

•

identifies, evaluates and recommends nominees to our board of directors and committees of our board of directors;

•

conducts searches for appropriate directors;

•

evaluates the performance of our board of directors and of individual directors;

•

considers and makes recommendations to the board of directors regarding the composition of the board and its committees;

•

reviews developments in corporate governance practices;

•

evaluates the adequacy of our corporate governance practices and reporting; and

•

makes recommendations to our board of directors concerning corporate governance matters.

Code of ethics and business conduct

Our board of directors has adopted a code of ethics and business conduct that will become effective immediately prior to the closing of this offering. The code of ethics and business conduct will apply to all of our employees, officers and directors. Following the closing of this offering, the full text of our code of ethics and business conduct will be posted on the investor relations portion of our website at www.mobitv.com and will be available without charge, upon request in writing to MobiTV, Inc., 6425 Christie Avenue, 5th Floor, Emeryville, CA 94608, Attn: General Counsel. We intend to disclose future amendments to certain provisions of our code of ethics and business conduct, or waivers of those provisions, at the same location on our website identified above and also in public filings.

Compensation Committee interlocks and insider participation

During 2011, our Compensation Committee consisted of Mr. Stevenson, Mr. Brody and, until his resignation in August 2011, Mr. Mohn. None of the members of the Compensation Committee was at any time during 2011 an officer or employee of us or our subsidiaries. Mr. Mohn, who served as a member of our board of directors until August 2011, served as our interim Chief Executive Officer from April 2007 through October 2007. Otherwise, none have ever served as an officer or employee of us or our subsidiaries, and none have ever had any relationships with us of the type required to be disclosed under Item 404 of Regulation S-K. During 2011, none of our executive officers served or previously served as a member of the board of directors, compensation committee or similar committee of any entity that has one or more of its executive officers serving on our board of directors or our Compensation Committee.

Director compensation

In 2011, we provided equity awards to members of our board of directors who were not employees, founders or representatives of our venture capital investors. We also provided a cash retainer to the chairman of our Audit Committee. Other than as set forth in the table and described below, in 2011 we did not pay any compensation, make any equity awards or non-equity awards, or pay any other compensation, to any of the other members of our board of directors. We reimbursed some of our directors for travel expenses to attend board meetings as well as for approved minor business expenses. Mr. Nooney and Mr. Scanlan receive no compensation for their service as directors and are not included in this table. The compensation received by Mr. Nooney as Chief Executive Officer and Mr. Scanlan as President are presented in the “2011 Summary compensation table.”

After the completion of this offering, each non-employee member of the board of directors will be eligible to receive compensation for his or her service consisting of annual retainers and long term equity incentives. Eligible directors may elect to receive the equivalent value (based on the Black-Scholes formula) of their retainers in the form of stock options, with an exercise price equal to the fair market value per share of our common stock on the date of grant.


Position	Retainer

Board Member	$	22,500
Audit Committee Chair		20,000
Compensation Committee Chair		9,000
Nominating & Governance Committee Chair		5,000
Audit Committee Member		5,000
Compensation Committee Member		3,750
Nominating & Governance Committee Member		2,250

Equity awards will consist of an initial stock option grant, upon first appointment to our board of directors, with a Black-Scholes value of $150,000, and annual awards thereafter with a Black-Scholes value of $100,000. Such options will be granted with an exercise price equal to the fair market value of our common stock on the date of grant and vest over three years after the grant date (for initial grants) or one year after the grant date (for annual grants).

Members of our board of directors are also reimbursed for expenses incurred in connection with their service as a director.

2011 Director compensation table


Name	Fees earned or paid in cash			Option awards(1)(2)			Total

Simon T. Bax	$	40,000	(3)	$	31,328		$	71,328
Jarl Mohn(4)		—		$	31,328		$	31,328
Vernon J. Stevenson		—		$	62,475	(5)	$	62,475

(1)

The amounts reported in the “Option awards” column represent the grant date fair value of the stock options granted to the non-employee directors during 2011 as computed in accordance with ASC 718. The assumptions used in calculating the grant date fair value of the stock options reported in this column are set forth in Note 9 to the audited consolidated financial statements included in this prospectus. Note that the amounts reported in this column reflect the accounting cost for these stock options and do not correspond to the actual economic value that may be received by the non-employee directors from the options. All options granted to directors vest over a four-year period, with vesting commencing one month after the vesting commencement date and 1/48^th of the shares vesting monthly thereafter. Vesting is contingent on the optionee’s continued service with us.

(2)

The following table sets forth information on the stock-based awards granted in 2011 to each director who was not an employee, founder or representative of our venture capital investors and the aggregate number of shares of our common stock subject to outstanding stock options as of December 31, 2011:

Name

Grant date

Number of shares

Number of shares
underlying stock options
held as of December 31,
2011

Simon T. Bax

6/7/2011

25,000

220,000

Jarl Mohn

6/7/2011

25,000

—

Vernon J. Stevenson

6/7/2011

50,000

470,000

(3)

Reflects cash compensation paid to Mr. Bax for his service as the chairperson of the Audit Committee.

(4)

Mr. Mohn resigned from our board of directors in August 2011 and all of his outstanding options expired or were exercised prior to December 31, 2011.

(5)

Reflects stock option awards of 25,000 shares of our common stock for being an independent director and 25,000 shares of our common stock for being the chairperson of our Compensation Committee.

Executive compensation

Compensation discussion and analysis

This compensation discussion and analysis provides an overview of our executive compensation philosophy, the overall objectives of our executive compensation program and each component of compensation that we provide to our named executive officers. In addition, we explain how and why our Compensation Committee arrived at the specific compensation policies and decisions involving our named executive officers for 2011, as shown in the “2011 Summary compensation table” set forth below.

This compensation discussion and analysis should be read together with the compensation tables and disclosures that follow.

This compensation discussion and analysis provides an overview of the material components of our executive compensation program for:

•

Charles A. Nooney, our Chief Executive Officer, or CEO;

•

William E. Losch, our Chief Financial Officer;

•

Paul M. Scanlan, our President;

•

Kay G. Johansson, our Chief Technology Officer; and

•

Anders Norström, our Chief Operating Officer.

We refer to these executives as our “named executive officers.”

Executive compensation philosophy and objectives. We compete with many companies in seeking to attract and retain a skilled management team. To meet this challenge, we embrace a compensation philosophy of offering our executives a competitive total compensation program that recognizes and rewards individual performance and contributions to our success, allowing us to attract, retain and motivate talented executives with the skills and abilities needed to drive our desired business results.

We endeavor to use compensation programs that reward performance and align the interests of our executives with those of our stockholders. The specific objectives of our executive compensation program are to:

•

reward the achievement of our financial targets;

•

drive the development of a successful and profitable business;

•

attract, motivate, reward and retain highly-qualified executives who are important to our success;

•

provide competitive compensation incentives relating directly to our financial performance and long-term growth; and

•

reinforce our high standards for professional ethics and positive corporate citizenship.

Compensation program and design. Our 2011 executive compensation program reflected our stage of development as a privately-held company. The compensation of our executive officers, including our named executive officers, has consisted of base salary, an annual cash bonus opportunity, equity compensation in the form of stock options, employee benefits and certain post-employment arrangements.

A key component of our executive compensation program has been equity awards for shares of our common stock. As a privately-held company, we emphasized the use of equity to provide incentives for our executives to focus on our growth and our overall enterprise value creation for our stockholders. We use stock options as our primary equity award vehicle for all of our employees. Our stock options generally have a vesting requirement that is based on continued service with us, which helps to create a valuable long-term incentive that aligns their interests with the long-term interests of our stockholders. Going forward, we may use stock options, restricted stock units and other types of equity-based awards, as we deem appropriate, to offer our employees, including our executive officers, long term equity incentives that meet this objective.

We also offer cash compensation in the form of base salaries and annual cash bonus opportunities. We have structured our annual cash bonus opportunities to focus on the achievement of specific short-term financial and strategic objectives that will further our longer-term growth objectives. Equity compensation has been delivered on a discretionary basis with the goal to retain top talent and align the interests of our executive officers with the long-term interests of our stockholders.

The Compensation Committee reviews each component of executive compensation separately and takes into consideration the value of each executive’s compensation package as a whole, including long-term and short-term compensation, and the value of each executive’s compensation relative to our other executive officers.

Compensation-setting process

Role of our Compensation Committee. Pursuant to its charter, the Compensation Committee is responsible for reviewing, evaluating and approving the compensation arrangements, plans, policies and programs for our executive officers, including our named executive officers and directors, and overseeing our cash-based and equity-based compensation plans. In 2011 our board of directors determined our CEO’s compensation, based upon the recommendations of the Compensation Committee.

At the beginning of each year, the Compensation Committee, after consulting with management, makes decisions with respect to any base salary adjustments for executives, and establishes corporate performance objectives under our annual cash bonus program. Our human resources department works with the Compensation Committee to gather financial and performance data that the Compensation Committee reviews in making its decisions with respect to compensation. After year-end, the Compensation Committee assesses the performance of our executives to determine the payouts for the annual cash bonus opportunities for the previous year and to make equity awards.

The Compensation Committee may use its discretion to adjust components of compensation up or down to levels that it believes to be qualitatively commensurate with an executive’s individual qualifications, experience, responsibility level, functional role, knowledge, skills and individual performance. These adjustments may also reflect a subjective assessment of the executive’s performance during the relevant performance period, how challenging the performance objectives were to achieve, and the executive’s level of performance relative to those objectives.

The Compensation Committee periodically reviews our executive compensation program to determine whether any modifications are advisable, and to adopt or recommend to the board of directors new plans or arrangements.

Role of management. In carrying out its responsibilities, the Compensation Committee works with members of our management, including our CEO, who provide information on corporate and individual performance, market data, and management’s perspective and recommendations on compensation matters.

Historically, the initial compensation arrangements with our executives have been determined in negotiations with individual executives at the time they are first employed by us.

Typically, our CEO will make recommendations to the Compensation Committee regarding the compensation for our executive officers, other than with respect to his own compensation. He attends Compensation Committee meetings, other than those portions relating to his own compensation.

While the Compensation Committee solicits and reviews our CEO’s recommendations and proposals with respect to compensation-related matters, the Compensation Committee only uses these recommendations and proposals as one factor in making compensation decisions.

Role of compensation consultant. The Compensation Committee is authorized to retain the services of one or more executive compensation advisors from time to time, as it sees fit, in connection with carrying out its duties. In June 2011, the Compensation Committee engaged Compensia, a national compensation consulting firm, to assist it in developing executive compensation principles and to evaluate the competitiveness of our executive compensation arrangements, including the following:

•

assessment of our overall executive compensation program, including analysis of base salaries, cash bonuses, and equity compensation levels for 2012;

•

assistance with a review of our equity compensation strategy, including an analysis of market trends, development of award guidelines and aligning such strategy with competitive market practices;

•

review of considerations and market practices related to compensation plans for executives; and

•

review of market practices for director compensation among late-stage pre-IPO and recently public high-technology companies.

Use of survey data. To assess the competitiveness of our executive compensation program and to assist it in setting compensation levels, the Compensation Committee has referred to industry surveys, including the Radford Global Technology Survey, and other in-house resources. The Compensation Committee has not set compensation components to meet specific benchmarks, but has used this data as a point of reference so that it can set total compensation levels that it believes are reasonable.

Executive compensation program components

The components of our executive compensation program, the rationale for each component, and how compensation amounts and awards are determined are described below.

Base salary. Base salary is the primary fixed component of our executive compensation. We use base salary to compensate our executives for services rendered during the year and to remain competitive in attracting and retaining executive talent. The Compensation Committee conducts

an annual review of executive salaries and makes adjustments as it determines to be reasonable and necessary to reflect an executive’s performance, contributions, responsibilities, experience, position and market conditions.

In March 2011, the Compensation Committee reviewed the base salaries of our named executive officers, taking into consideration a compensation analysis performed by our human resources department, leveraging independent third party compensation benchmarking resources such as the Radford Global Technology Survey, and the base salary recommendations of our CEO, other than with respect to his own compensation, as well as the other factors described above, and reviewed and approved salary increases for all named executive officers. In the case of our CEO, our board of directors approved the Compensation Committee’s recommendation for a salary increase.

Annual cash bonuses. We use cash bonuses to motivate our executives to achieve annual financial and operational objectives, and to make progress towards our longer-term goals. Generally, the Compensation Committee approves payment of bonuses to our executives after the end of the year based on its evaluation of the achievement of one or more corporate targets and individual performance requirements, as described below.

The Compensation Committee adopts an annual bonus plan for our executives at the beginning of each year and selects one or more corporate financial and operational measures for use in determining executive bonuses. In addition, our Compensation Committee sets the target bonus opportunity for each executive.

In March 2011, the Compensation Committee approved the 2011 Employee Incentive Plan, which we refer to as the 2011 Bonus Plan, for our named executive officers.

2011 Target bonus opportunities. Under the 2011 Bonus Plan, target bonus opportunities for each executive were set as a percentage of base salary as follows, assuming the bonus pool was funded at 100% and no individual performance adjustments were made:


Name	Target bonus opportunity (% of base salary)

Charles A. Nooney		33	%
William E. Losch		40
Paul M. Scanlan		50
Kay G. Johansson		40
Anders Norström		40

These target bonus opportunities were established in consultation with our CEO (except with respect to his own target bonus) and were based on factors such as the scope of the executive’s performance, contributions, responsibilities, experience, prior years’ target bonus opportunities, position and market conditions. The factors were considered as a whole and no particular weight was given to any factor. Our board of directors established our CEO’s target bonus based on the recommendation of our Compensation Committee.

Financial measures determine size of bonus pool. The Compensation Committee established two financial measures of corporate performance under the 2011 Bonus Plan, which were revenue of $95.0 million and Adjusted EBITDA of $6.0 million, which the Compensation Committee believed would constitute exceptional performance, reflecting year over year revenue growth of 42%. For purposes of the 2011 Bonus Plan, Adjusted EBITDA was defined as earnings before interest, taxes, depreciation and amortization, including the cost of bonuses but excluding

stock-based compensation expense. These measures were equally weighted in measuring overall corporate performance, based on the Compensation Committee’s determination that each was critical to support our annual operating plan and enhance long-term value creation. The aggregate amount of the executive officer bonuses that could be paid under the 2011 Bonus Plan, which we refer to as the bonus pool, was determined by the level of corporate performance relative to the predetermined financial measures. The bonus pool for all executive officers in the aggregate would be funded at the 100% level if corporate performance metrics were achieved at the 100% level, at the maximum 150% level if corporate performance measures were above 120%, and at the minimum 50% level if corporate performance metrics were below 80%. For performance between 80% and 120%, the amount of the bonus pool would be interpolated between 80% and 120% on a straight line basis.

The Compensation Committee also instructed management that in order to meet our overall objectives for the year it would be important to emphasize the following strategic initiatives:

•

diversify revenue by deploying additional services with our customers;

•

deploy managed services with a new non-U.S. customer; and

•

initiate converged services deployment with U.S. and non-U.S. customers.

Determination of individual bonuses. The actual bonus paid to any executive officer could range from 0% to 200% of that individual officer’s target award, based on the assessment of his or her performance by the CEO (other than with respect to his own performance) and the Compensation Committee. The Compensation Committee alone assesses the performance of our CEO. However, the aggregate amount of bonuses for all our named executive officers under the 2011 Bonus Plan could not exceed the aggregate bonus pool determined by corporate performance based on the financial measures.

Award decisions and analysis. In February 2012, the Compensation Committee met to determine actual bonuses to be paid to our executives under the 2011 Bonus Plan. The Compensation Committee determined that our 2011 revenue was $85.1 million and our 2011 Adjusted EBITDA was $3.7 million, reflecting year over year revenue growth of 27%, resulting in corporate performance on the financial measures of 77%. As a result, the bonus pool for executives was funded at the minimum 50% level and each of the named executive officers earned a bonus equal to half of his target bonus opportunity.

The Compensation Committee also noted its authority under the 2011 Bonus Plan to make such other or additional awards as it might deem appropriate in its discretion. The Compensation Committee reviewed our financial and operating performance over the course of 2011 and noted substantial progress toward achievement of our strategic goals in a challenging business environment, including filing the registration statement for our initial public offering, high quality performance on customer accounts, achievement of significant revenue growth, and securing the Deutsche Telecom business relationship. The Compensation Committee then determined that it would grant additional discretionary bonuses to the named executive officers collectively in an amount equal to 30% of the target bonuses under the 2011 Bonus Plan, so that the total amount available for executive bonuses would be 80% of the target amount. Our CEO provided the Compensation Committee with his evaluation of the performance of each named executive officer (other than himself) with respect to our strategic initiatives and such other factors as he deemed relevant, and his recommendations for their respective discretionary bonus amounts. The recommended individual discretionary bonuses ranged from 26% to 38% of the individuals’ respective target bonuses. The Compensation Committee approved those

recommendations, and based on its evaluation of Mr. Nooney’s performance, recommended to the board that he receive a discretionary bonus in the amount of 30% of his target bonus, which the board subsequently approved.

Based on these considerations, we paid cash bonuses for our named executive officers for 2011, as follows:


Name	Amount		Percentage of base salary

Charles A. Nooney	$	125,928		26	%
William E. Losch		95,667		35
Paul M. Scanlan		101,153		38
Kay G. Johansson		83,888		32
Anders Norström		78,204		30

Equity compensation. We use equity awards to incentivize and reward our executives for long-term corporate performance based on the value of our common stock and to align the interests of our executives with those of our stockholders. We grant options to purchase shares of our common stock with exercise prices equal to the fair market value of our common stock on the date of grant, to provide a long-term incentive for our executives, since the stock options reward them only to the extent that our stock price grows and stockholders realize value following the option grant date.

We typically grant stock options to executives to create incentives to build stockholder value over the long-term and to attract and retain the executives with a competitive compensation package. The size and terms of stock options granted to our executives upon hiring historically have been established through negotiation at the time the individual executive was hired. In making these grants, our Compensation Committee typically considers the prospective role and responsibility of the individual executive, our subjective view of the market for similarly situated executives, the cash compensation provided to the executive, the need to create a meaningful opportunity for reward based on the creation of long-term stockholder value and other factors.

We typically make additional stock option grants to our executives as part of the Compensation Committee’s annual review of executive compensation. In making these awards, the Compensation Committee exercises its judgment, taking into consideration a compensation analysis performed by our human resources department, the equity award recommendations, the scope of an executive’s performance, contributions, responsibilities and experience, the amount of equity compensation held by the executive, internal equity and market conditions. Based upon these factors, the Compensation Committee sets each award at the level it considers appropriate to create a meaningful opportunity for reward predicated on the creation of long-term stockholder value.

On March 1, 2011, the Compensation Committee granted options to purchase shares of our common stock to our executives, in recognition of our financial results and each executive’s individual performance for 2010. In the case of our CEO, the Compensation Committee formulated an equity award recommendation based upon the factors described above, which was then submitted to our board of directors for approval. These options were granted with an exercise price equal to $1.37 per share, the fair market value of our common stock as determined by our board of directors on March 1, 2011, and have a seven-year maximum term. The stock option grants made to our named executive officers were as follows:


Name	Number of shares underlying stock option grant

Charles A. Nooney		125,000
William E. Losch		62,500
Paul M. Scanlan		62,500
Kay G. Johansson		62,500
Anders Norström		62,500

In determining the amount of each executive’s stock option grant, the Compensation Committee took into consideration a compensation analysis performed by our human resources department and the equity award recommendations of our CEO, other than with respect to his own equity award, as well as each executive’s performance, contributions, responsibilities, experience, existing equity holdings (including the current economic value of his or her unvested equity and the ability of these unvested holdings to satisfy our retention objectives), market conditions and internal equity.

The equity awards granted to our named executive officers during 2011 are set forth in the “2011 Summary compensation table” and the “2011 Grants of plan-based awards table” below.

Retirement and other broad-based employee benefits. We have established a tax-qualified Section 401(k) retirement plan for all employees, including our named executive officers, who satisfy certain eligibility requirements, including requirements relating to age and length of service. Eligible employees may elect to contribute pre-tax awards, up to a statutorily prescribed limit, to the 401(k) plan. We currently do not match any contributions made to the plan by our employees, including our executive officers. The plan qualifies under Section 401(a) of the Internal Revenue Code so that contributions by participants to the plan and income earned on plan contributions are not taxable to participants until withdrawn from the plan.

In addition, we provide other benefits to our named executive officers on the same basis as all of our full-time employees in the country in which they are resident. These benefits include medical, dental and vision benefits, medical and dependent care flexible spending accounts, short-term and long-term disability insurance, accidental death and dismemberment insurance and basic life insurance coverage.

We design our employee benefits programs to be affordable and competitive in relation to the market, as well as compliant with applicable laws and practices. We adjust our employee benefits programs as needed based upon regular monitoring of applicable laws and practices and the competitive market.

Perquisites. We generally do not view perquisites or other personal benefits as a significant component of our executive compensation program.

Post-employment compensation. Our current employment arrangements with our named executive officers provide for certain protections in the event of their termination of employment under specified circumstances, including following a change of control of us. A description of the potential payments and benefits to be paid upon a termination of employment or a change of control of us are described and quantified below in “—Potential payments upon termination or change of control.”

We believe that these protections assisted us in attracting these individuals to join us. We also believe that these protections serve our executive retention objectives by helping our named executive officers maintain continued focus and dedication to their responsibilities to maximize stockholder value, including in the event that there is a potential transaction that could involve a change of control of us.

For a summary of the material terms and conditions of these severance and change of control arrangements, see “—Potential payments upon termination or change of control” below.

Stock ownership guidelines. Currently, we have not implemented a policy regarding minimum stock ownership requirements for our executives.

Compensation recovery policy. Currently, we have not implemented a policy regarding retroactive adjustments to any cash or equity-based incentive compensation paid to our executives where the payments were predicated upon the achievement of financial results that were subsequently the subject of a financial restatement. We intend to adopt a general compensation recovery, or clawback, policy covering our annual and long-term incentive award plans and arrangements once the SEC adopts final rules implementing the requirement of Section 954 of the Dodd-Frank Wall Street Reform and Consumer Protection Act.

Tax and accounting considerations

Deductibility of executive compensation. Section 162(m) of the Internal Revenue Code generally disallows public companies a tax deduction for federal income tax purposes of remuneration in excess of $1 million paid to the chief executive officer and each of the three other most highly compensated executive officers (other than the chief financial officer) in any taxable year. Generally, remuneration in excess of $1 million may only be deducted if it is “performance-based compensation” within the meaning of the Code. In this regard, the compensation income realized upon the exercise of stock options granted under a stockholder-approved stock option plan generally will be deductible so long as the options are granted by a Compensation Committee whose members are non-employee directors and certain other conditions are satisfied.

As we are not currently publicly-traded, our board of directors has not previously taken the deductibility limit imposed by Section 162(m) into consideration in setting compensation for our executive officers. We expect that, where reasonably practicable, we will seek to qualify the variable compensation paid to our executive officers for the “performance-based compensation” exemption from the deductibility limit. As such, in approving the amount and form of compensation for our executive officers in the future, we will consider all elements of the cost to us of providing such compensation, including the potential impact of Section 162(m). In the future, the Compensation Committee may, in its judgment, authorize compensation payments that do not comply with an exemption from the deductibility limit when it believes that such payments are appropriate to attract and retain executive talent.

Taxation of “parachute” payments. Sections 280G and 4999 of the Internal Revenue Code provide that executive officers and directors who hold significant equity interests and certain other service providers may be subject to significant additional taxes if they receive payments or benefits in connection with a change of control of our company that exceeds certain prescribed limits, and that our company (or a successor) may forfeit a deduction on the amounts subject to this additional tax. We did not provide any executive officer, including any named executive officer, with a “gross-up” or other reimbursement payment for any tax liability that the executive might owe as a result of the application of Sections 280G or 4999 during 2010 and we have not agreed and are not otherwise obligated to provide any executive officer with such a “gross-up” or other reimbursement.

Accounting for stock-based compensation. We follow Financial Accounting Standard Board Accounting Standards Codification Topic 718, or ASC Topic 718, for our stock-based compensation awards. ASC Topic 718 requires companies to measure the compensation expense for all share-based payment awards made to employees and directors, including stock options and restricted stock awards, based on the grant date “fair value” of these awards. This calculation is performed for accounting purposes and reported in the compensation tables below, even though our employees and directors may never realize any value from their awards. ASC Topic 718 also requires companies to recognize the compensation cost of their stock-based compensation awards in their income statements over the period that an employee and/or director is required to render service in exchange for the option or other award.

2011 Summary compensation table

The following table presents summary information regarding the total compensation awarded to, earned by and paid to our Chief Executive Officer, Chief Financial Officer and the four most highly-compensated executive officers for services rendered in all capacities to us for 2011. We refer to these executive officers in this prospectus as our named executive officers.


Name and principal position	Year		Salary		Bonus(1)			Option awards(2)		Non-equity incentive plan compensation(3)		All other compensation(4)			Total

Charles A. Nooney		2011	$	477,000	$	47,223		$	108,075	$	78,705	$	135		$	711,138
Chief Executive Officer		2010		450,000		—			91,089		155,925		105,417	(5)		802,431

William E. Losch		2011		271,780		41,311			54,038		54,356		135			421,620
Chief Financial Officer		2010		254,000		—			51,827		116,840		335			423,002

Paul M. Scanlan		2011		266,193		34,605			54,038		66,548		135			421,519
President		2010		251,125		50,000	(6)		39,263		125,563		332			466,283

Kay G. Johansson		2011		262,150		31,458			54,038		52,430		132			400,208
Chief Technology Officer		2010		245,000		—			51,827		112,700		324			409,851

Anders Norström		2011		257,250		26,754			54,038		51,450		132			389,624
Chief Operating Officer		2010		245,000		—			51,827		98,000		324			395,151

(1)

Bonus paid under our 2011 Bonus Plan in the discretion of the Compensation Committee, unless otherwise noted.

(2)

Amounts reflect the grant date fair value of the option awards granted to our named executive officers during 2011 or 2010, as applicable, as computed in accordance with

Financial Accounting Standards Board Accounting Standards Codification Topic 718, or ASC 718. The assumptions used in calculating the grant date fair value of the option awards reported in this column are set forth in Note 9 to the audited consolidated financial statements included in this prospectus. Note that the amounts reported in this column reflect the accounting cost for these stock options and do not correspond to the actual economic value that may be realized upon exercise by our named executive officers.

(3)

Amount paid under our 2011 Bonus Plan based on corporate financial measures or under our 2010 Bonus Plan, as applicable.

(4)

Unless otherwise noted in these footnotes, all amounts referenced in this column represent life insurance premiums paid by us on behalf of each named executive officer during 2011 or 2010, as applicable.

(5)

Amounts represent our payment of auto, housing, relocation and other expenses for Mr. Nooney prior to his relocation to the San Francisco Bay area in 2010, as indicated in the following table.


All other compensation	2010 Payments

Auto allowance	$	9,000
Housing allowance		12,246
Relocation expenses		46,863
Travel expenses		5,072
Life insurance		568
Tax gross up		31,668

Total		105,417

(6)

Reflects a discretionary bonus paid to Mr. Scanlan for securing new business.

2011 Grants of plan-based awards table

The following table presents, for each of our named executive officers, information concerning each grant of a cash or equity award made during 2011. This information supplements the information about these awards set forth in the “2011 Summary compensation table.”


Name	Grant date		Estimated future payouts under non-equity incentive plan awards(1)						All other option awards: number of securities underlying options(2)		Exercise or base price of option awards		Grant date fair value of stock and option awards(3)
Name	Grant date		Minimum		Target		Maximum				Exercise or base price of option awards		Grant date fair value of stock and option awards(3)

Charles A. Nooney		March 1, 2011	$	78,705	$	157,410	$	236,115		125,000	$	1.37	$	108,075


William E. Losch		March 1, 2011		54,356		108,712		163,068		62,500		1.37		54,038


Paul M. Scanlan		March 1, 2011		66,548		133,096		199,645		62,500		1.37		54,038


Kay G. Johansson		March 1, 2011		52,430		104,860		157,290		62,500		1.37		54,038


Anders Norström		March 1, 2011		51,450		102,900		154,350		62,500		1.37		54,038

(1)

Amounts represent awards granted under our 2011 Bonus Plan which were based on achievement of certain financial objectives. These columns show the awards that were possible at the minimum, target and maximum levels of performance. The column titled

“Non-equity incentive plan compensation” in the “2011 Summary compensation table” shows the actual awards earned in 2011 by our named executive officers under our 2011 Bonus Plan based on achievement of corporate financial measures, reflecting adjustments approved by the Compensation Committee for individual officers’ performance in 2011. For more information about our 2011 Bonus Plan and the payments pursuant thereto, see “—Annual cash bonuses” in the Compensation Discussion and Analysis above.

(2)

The vesting schedules for these options are described in the footnotes to the “2011 Outstanding equity awards of fiscal year-end” table below.

(3)

Amounts reflect the grant date fair value of the stock-based awards granted in 2011, calculated in accordance with ASC 718. See footnote 1 in the “2011 Summary compensation table” for information about the assumptions made in determining the grant date fair value and compensation expense of the stock options. Note that the amounts reported in this column reflect the accounting cost for these stock options and do not correspond to the actual economic value that may be received by the named executive officers from the awards.

2011 Outstanding equity awards at fiscal year-end table

The following table presents, for each of our named executive officers, information regarding outstanding stock options and other equity awards held as of December 31, 2011.


Name	Number of securities underlying unexercised options(1)					Option exercise price		Vesting commencement date		Option expiration date
Name	Exercisable		Unexercisable			Option exercise price		Vesting commencement date		Option expiration date

Charles A. Nooney		2,974,302		525,698		$	1.32		10/15/2007		10/30/2014
		63,437		81,563	(2)		1.08		03/01/2010		03/01/2017
		—		125,000	(3)		1.37		03/01/2011		03/01/2018

William E. Losch		731,567		68,433			1.32		06/04/2007		06/12/2014
		36,093		46,407	(2)		1.08		03/01/2010		03/01/2017
		—		62,500	(3)		1.37		03/01/2011		03/01/2018

Paul M. Scanlan		230,000		—			0.26		06/23/2004		06/23/2014
		46,863		15,637			1.32		04/01/2008		03/25/2015
		27,343		35,157	(2)		1.08		03/01/2010		03/01/2017
		—		62,500	(3)		1.37		03/01/2011		03/01/2018

Kay G. Johansson		200,000		—			1.32		05/08/2006		05/08/2013
		84,960		15,040			1.32		10/30/2007		10/30/2014
		18,000		6,000			1.32		04/01/2008		03/25/2015
		169,394		80,606			1.32		08/11/2008		08/11/2015
		36,093		46,407	(2)		1.08		03/01/2010		03/01/2017
		—		62,500	(3)		1.37		03/01/2011		03/01/2018

Anders Norström		347,396		227,604	(2)		1.57		08/01/2009		08/06/2016
		36,093		46,407	(2)		1.08		03/01/2010		03/01/2017
		—		62,500	(3)		1.37		03/01/2011		03/01/2018

(1)

Unless otherwise noted, all stock options referenced in the table were granted pursuant to our Amended and Restated 2000 Employee and Consultant Equity Incentive Plan and vest over a five-year period, with vesting commencing on the one-year anniversary of the Vesting Commencement Date with respect to 1/48^th of the shares vesting monthly thereafter. Vesting is contingent on the optionee’s continued service with us. This vesting schedule replaced the original vesting schedule for these stock options, as described further in “Certain relationships and related person transactions—April 2009 option repricing” below.

(2)

These stock options vest over a four-year period, with vesting commencing one month after the vesting commencement date and 1/48th of the shares vesting monthly thereafter. Vesting is contingent on the optionee’s continued service with us.

(3)

This stock option was granted pursuant to our 2010 Employee and Consultant Equity Incentive Plan and vests over a four-year period, with 25% of the shares vesting on the one-year anniversary of the vesting commencement date and 1/48th of the shares vesting monthly thereafter. Vesting is contingent on the optionee’s continued service with us.

Employment arrangements

The initial terms and conditions of employment of each of our named executive officers other than our President are set forth in offer letters.

Each of these employment offer letters provided for an initial base salary, an annual cash bonus opportunity and an initial equity award in the form of a stock option to purchase shares of our common stock.

Our President entered into an employment agreement with us in June 2000. This employment agreement provided for an initial base salary, a bonus opportunity and the right to purchase restricted shares of our common stock. This employment agreement was amended and restated in full in November 2001 and was later amended in June 2004.

These arrangements may also contain provisions that provide for certain payments and benefits in the event of certain terminations of employment, including a termination of employment following a change of control of us. For a summary of the material terms and conditions of these post-employment compensation arrangements, as well as an estimate of the potential payments and benefits payable to our named executive officers under these arrangements, see “—Potential payments upon termination or change of control” below.

Potential payments upon termination or change of control

Our current employment arrangements provide that each of our named executive officers is eligible to receive certain payments and benefits in connection with his termination of employment, depending on the circumstances, including following a change of control. In addition to each named executive officer’s individual post-employment compensation arrangement, our named executive officers are eligible to receive any benefits accrued under our broad-based benefit plans, such as accrued vacation pay, in accordance with those plans and policies.

The tables below illustrate the potential payments and benefits payable to each named executive officer assuming a termination of employment occurred on December 31, 2011. For purposes of valuing the severance and vacation payments in the tables below, we used each executive officer’s base salary as in effect as of December 31, 2011 and the number of accrued but unused vacation days as of December 31, 2011. For purposes of valuing accelerated vesting of stock options, we used each named executive officers’ stock options that were outstanding as of December 31, 2011.

The actual amounts that would be paid or distributed to our named executive officers as a result of one of the termination events occurring in the future may be different than those presented below, because many factors, such as base salary or the value of our common stock, will affect the amount of any payments and benefits upon a termination of employment. Despite employment arrangements that provide payments and benefits to our named executive officers in connection with a termination of employment under particular circumstances, we, or an acquirer, may mutually agree with our named executive officers on severance terms that vary from those provided in these pre-existing arrangements. Finally, in addition to the amounts presented below, each named executive officer would also be able to exercise any previously-vested stock options that he held. For more information about our named executive officers’ outstanding equity awards as of December 31, 2011, see “2011 Outstanding equity awards at fiscal year-end table.”

Charles A. Nooney. Pursuant to the terms of our employment arrangement with Mr. Nooney, in the event of the termination of Mr. Nooney’s employment without cause or a constructive termination of employment at any time whereby he terminates his employment within six

months following such constructive termination, Mr. Nooney will receive continued payment of his then-current monthly base salary plus payment of COBRA premiums for him and his eligible dependents for a period of six months following his employment termination date.

In addition, if a change of control occurs and in connection with such change of control or within 12 months following such change of control Mr. Nooney’s employment is terminated without cause or a constructive termination of employment occurs and within six months of such constructive termination he terminates his employment, then, in addition to the payments and benefits described in the preceding paragraph, any unvested shares subject to the stock option granted in connection with his initial employment with the Company will vest immediately in full.

The table below summarizes the value of the termination payments to Mr. Nooney assuming a qualifying termination as of December 31, 2011.


	Termination without cause or constructive termination of employment
Benefit	No change of control		In connection with a change of control

Severance	$	238,500	$	238,500
Accelerated vesting of stock options(1)		—
COBRA premiums		9,623		9,623
Vacation payout		33,486		33,486


Total value	$	281,609	$

(1)

Represents the fair market value of 525,698 unvested shares that would be subject to accelerated vesting. The fair market value assumes an initial public offering price of $ per share, the midpoint of the price range set forth on the cover of this prospectus.

William E. Losch. Pursuant to the terms of our employment arrangement with Mr. Losch, if a change of control occurs and in connection with such change of control or within 12 months following such change of control, Mr. Losch’s employment is terminated without cause or a constructive termination of employment occurs and within six months of such constructive termination he terminates his employment, then any then-remaining unvested shares subject to the stock option granted in connection with his initial employment with us will vest immediately in full.

The table below summarizes the value of the termination payments to Mr. Losch assuming a qualifying termination as of December 31, 2011.


Benefit	Termination without cause or constructive termination of employment in connection with a change of control

Accelerated vesting of stock options(1)	$
Vacation payout		10,060

Total value	$

(1)

Represents the fair market value of 68,433 unvested shares that would be subject to accelerated vesting. The fair market value assumes an initial public offering price of $ per share, the midpoint of the price range set forth on the cover of this prospectus.

Paul M. Scanlan. Pursuant to the terms of our employment arrangement with Mr. Scanlan, in the event that his employment is terminated by us without cause or as the result of a constructive termination of employment, Mr. Scanlan will be entitled to receive payment of severance benefits equal to 12 months of his then-current base salary, payment of any bonus payable under our bonus plan and continuation of health insurance benefits at the same level of coverage provided prior to termination of employment for the 12-month severance period.

In the event that Mr. Scanlan’s employment is terminated as a result of his death or disability, he or his estate or representative, as applicable, will be entitled to receive all base salary and unpaid vacation accrued as of the date of his death or disability and any other benefits payable under our then-existing benefit plans and policies. In addition, Mr. Scanlan or his estate or representative, as applicable, will be entitled to receive the amount of his target bonus for the year of his death or disability to the extent that the bonus has been earned as of the date of his death or disability, as well as payment of severance benefits equal to 12 months of his then-current base salary.

The table below summarizes the value of the termination payments to Mr. Scanlan assuming a qualifying termination as of December 31, 2011.


Benefit	Termination without cause or constructive termination of employment		Death or disability

Severance(1)	$	399,289	$	399,289
Benefits plan payout		19,246		—
Vacation payout		20,124		20,124

Total value		438,659	$	419,413

(1)

Represents Mr. Scanlan’s annual base salary equal to $266,193, and annual cash bonus of $133,096.

Kay G. Johansson. Pursuant to the terms of our employment arrangement with Mr. Johansson, if a change of control occurs and in connection with such change of control or within 12 months following such change of control, Mr. Johansson’s employment is terminated without cause or a constructive termination of employment occurs and within six months of such constructive termination he terminates his employment, then any then-remaining unvested shares subject to the stock option granted in connection with his initial employment with us and his options granted in May 2006 for 200,000 shares and October 2007 for 100,000 shares will vest immediately in full.

The table below summarizes the value of the termination payments to Mr. Johansson assuming a qualifying termination as of December 31, 2011.


Benefit	Termination without cause or constructive termination of employment in connection with a change of control

Accelerated vesting of stock options(1)	$
Vacation payout		30,231

Total value	$

(1)

Represents the fair market value of 15,040 unvested shares that would be subject to accelerated vesting. The fair market value assumes an initial public offering price of $ per share, the midpoint of the price range set forth on the cover of this prospectus.

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Anders Norström. Pursuant to the terms of our employment arrangement with Mr. Norström, if a corporate transaction occurs and in connection with such change of control or within 12 months following such change of control, Mr. Norström’s employment is terminated without cause or a constructive termination of employment occurs and within six months of such constructive termination he terminates his employment, then any then-remaining unvested shares subject to the stock option granted in connection with his appointment as our Chief Operating Officer will vest immediately in full.

The table below summarizes the value of the termination payments to Mr. Norström assuming a qualifying termination as of December 31, 2011.


Benefit	Termination without cause or constructive termination of employment in connection with a change of control

Accelerated vesting of stock options(1)	$
Vacation payout		19,772

Total value	$

(1)

Represents the fair market value of 227,604 unvested shares that would be subject to accelerated vesting. The fair market value assumes an initial public offering price of $ per share, the midpoint of the price range set forth on the cover of this prospectus.

Employee benefit plans

Amended and Restated 2000 Employee and Consultant Equity Incentive Plan. Our board of directors adopted and our stockholders approved our Amended and Restated 2000 Employee and Consultant Equity Incentive Plan, or 2000 Equity Incentive Plan, on January 22, 2000, and our stockholders approved it on February 6, 2001. The 2000 Equity Incentive Plan has been amended from time to time, most recently in October 2008. The 2000 Equity Incentive Plan provides for the grant of both incentive stock options that qualify for favorable tax treatment to their recipients under Section 422 of the Internal Revenue Code of 1986, as amended, or the Code, and nonqualified stock options, as well as for the issuance of shares of restricted stock and stock bonuses. Incentive stock options may be granted only to our employees and employees of our subsidiaries. Nonqualified stock options may be granted to our employees, directors, consultants, independent contractors and advisors and those of our subsidiaries. The exercise price of incentive stock options must be at least equal to the fair market value of our common stock on the date of grant (110% of fair market value for ten percent stockholders) and the exercise price of nonqualified stock options must be at least equal to 85% of the fair market value of our common stock on the date of grant. The maximum permitted term of options granted under our 2000 Equity Incentive Plan is ten years (five years in the case of incentive stock options for ten percent stockholders). In the event of a change of control, the vesting of awards held by current employees, directors, consultants, independent contractors and advisors that are not assumed shall accelerate in full prior to the change of control and all unexercised awards shall expire on the consummation of the change of control. No shares of restricted stock or stock bonuses have been granted from the 2000 Equity Incentive Plan.

Our 2000 Equity Incentive Plan terminated on May 25, 2010, when our board of directors approved our 2010 Employee and Consultant Equity Incentive Plan. As of December 31, 2011, options to purchase 6,352,193 shares under the 2000 Equity Incentive Plan had been exercised,

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options to purchase 11,673,153 shares remained outstanding, and no shares remained available for future grant. The options outstanding as of December 31, 2011 had a weighted average exercise price of $1.28 per share and remain outstanding, subject to the terms of our 2000 Equity Incentive Plan and stock option agreements, until the options are exercised or expire by their terms.

2010 Employee and Consultant Equity Incentive Plan. On May 25, 2010, our board of directors adopted and our stockholders approved our 2010 Employee and Consultant Equity Incentive Plan, or 2010 Equity Incentive Plan. The 2010 Equity Incentive Plan provides for the grant of both incentive stock options that qualify for favorable tax treatment to their recipients under Section 422 of the Code and nonqualified stock options, as well as for the issuance of shares of restricted stock, restricted stock units and stock bonuses. Incentive stock options may be granted only to our employees and those of any of our subsidiaries. Nonqualified stock options may be granted to our employees, directors, consultants, independent contractors and advisors and those of any of our subsidiaries. The exercise price of incentive stock options must be at least equal to the fair market value of our common stock on the date of grant, and the exercise price of nonqualified stock options must be at least equal to the fair market value of our common stock on the date of grant, unless our Compensation Committee, who administers the 2010 Equity Incentive Plan, expressly determines otherwise in writing. The exercise price of incentive stock options granted to 10% stockholders must be at least equal to 110% of the fair market value of our common stock on the date of grant. The maximum permitted term of options granted under our 2010 Equity Incentive Plan is ten years, unless an incentive stock option is granted to a 10% stockholder in which case the maximum term is five years. In the event of a change of control, the 2010 Equity Incentive Plan provides that awards held by current employees, directors, consultants independent contractors and advisors that are not assumed shall have their vesting accelerate in full prior to that change of control and all unexercised awards expire on the consummation of the change of control. No shares of restricted stock, restricted stock units or stock bonuses have been granted under the 2010 Equity Incentive Plan.

As of December 31, 2011, we had reserved 5,429,641 shares of our common stock for issuance under our 2010 Equity Incentive Plan. As of December 31, 2011, options to purchase 17,497 shares had been exercised, options to purchase 3,070,660 shares remained outstanding, and 2,358,981 shares remained available for future grant. The options outstanding as of December 31, 2011 had a weighted average exercise price of $1.61. We expect to adopt a 2012 Equity Incentive Plan that will become effective on the first day that our common stock is publicly traded. As a result, we expect not to grant any additional options under the 2010 Equity Incentive Plan following that date and expect to terminate the 2010 Equity Incentive Plan. Any outstanding options granted under the 2010 Equity Incentive Plan would remain outstanding, subject to the terms of our 2010 Equity Incentive Plan and stock option agreements, until the options are exercised or until they terminate or expire by their terms.

2012 Equity Incentive Plan. We expect to adopt a 2012 Equity Incentive Plan that will become effective immediately prior to the date of this prospectus and will serve as the successor to our 2010 Equity Incentive Plan. We anticipate that we will reserve shares of our common stock to be issued under our 2012 Equity Incentive Plan. In addition, we anticipate that shares reserved but not issued or subject to outstanding grants under our 2010 Equity Incentive Plan on the date of this prospectus, and any shares issued under the 2010 Equity Incentive Plan that are forfeited or repurchased by us or that are issuable upon exercise of options that expire or become unexercisable for any reason without having been exercised in full, will be available for grant

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and issuance under our 2012 Equity Incentive Plan. We anticipate that the number of shares available for grant and issuance under the 2012 Equity Incentive Plan will be increased on January 1 of each of 2013 through 2019 by an amount equal to 4% of our shares outstanding on the immediately preceding December 31, unless our board of directors, in its discretion, determines to make a smaller increase. In addition, the following shares would again be available for grant and issuance under our 2012 Equity Incentive Plan:

•

shares subject to options granted under our 2012 Equity Incentive Plan that cease to be subject to the option for any reason other than exercise of the option;

•

shares subject to awards granted under our 2012 Equity Incentive Plan that are subsequently forfeited or repurchased by us at the original issue price; or

•

shares subject to awards granted under our 2012 Equity Incentive Plan that otherwise terminate without shares being issued.

We anticipate that our 2012 Equity Incentive Plan will terminate ten years from the date our board of directors approves the plan, unless it is terminated earlier by our board of directors. We expect our 2012 Equity Incentive Plan to authorize the award of stock options, restricted stock awards, stock appreciation rights, restricted stock units and stock bonuses. No person will be eligible to receive more than shares in any calendar year under our 2012 Equity Incentive Plan other than a new employee of ours or a new employee of any parent or subsidiary of ours, who will be eligible to receive no more than shares under the plan in the calendar year in which the employee commences employment.

Our 2012 Equity Incentive Plan will be administered by our Compensation Committee, all of the members of which are non-employee directors under applicable federal securities laws and outside directors as defined under applicable federal tax laws. The Compensation Committee will have the authority to construe and interpret our 2012 Equity Incentive Plan, grant awards and make all other determinations necessary or advisable for the administration of the plan.

We anticipate that our 2012 Equity Incentive Plan will provide for the grant of incentive stock options that qualify under Section 422 of the Code only to our employees and those of any parent or subsidiary of ours. All awards other than incentive stock options may be granted to our employees, directors, consultants, independent contractors and advisors or those of any parent or subsidiary of ours, provided the consultants, independent contractors and advisors render services not in connection with the offer and sale of securities in a capital-raising transaction. The exercise price of stock options must be at least equal to the fair market value of our common stock on the date of grant. The exercise price of incentive stock options granted to 10% stockholders must be at least equal to 110% of the fair market value of our common stock on the date of grant.

Our Compensation Committee may provide for options to be exercised only as they vest or to be immediately exercisable with any shares issued on exercise being subject to our right of repurchase that lapses as the shares vest. In general, options will vest over a four-year period. The maximum term of options granted under our 2012 Equity Incentive Plan will be ten years, unless an incentive stock option is granted to a 10% stockholder in which case the maximum term will be five years.

A restricted stock award is an offer by us to sell shares of our common stock subject to restrictions. The price (if any) of a restricted stock award will be determined by the Compensation

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Committee. Unless otherwise determined by the Compensation Committee at the time of award, vesting will cease on the date the participant no longer provides services to us and unvested shares will be forfeited to us.

Stock appreciation rights provide for a payment, or payments, in cash or shares of common stock, to the holder based upon the difference between the fair market value of our common stock on the date of exercise and the stated exercise price up to a maximum amount of cash or number of shares. Stock appreciation rights may vest based on time or achievement of performance conditions.

Restricted stock units represent the right to receive shares of our common stock at a specified date in the future, subject to forfeiture of that right because of termination of employment or failure to achieve certain performance conditions. If a restricted stock unit has not been forfeited, then on the date specified in the restricted stock unit agreement, we will deliver to the holder of the restricted stock unit whole shares of our common stock (which may be subject to additional restrictions), cash or a combination of our common stock and cash.

Stock bonuses would be granted as additional compensation for service and/ or performance, and therefore, not be issued in exchange for cash.

Awards granted under our 2012 Equity Incentive Plan may not be transferred in any manner other than by will or by the laws of descent and distribution or as determined by our Compensation Committee. Unless otherwise restricted by our Compensation Committee, awards that are nonqualified stock options may be exercised during the lifetime of the optionee only by the optionee, the optionee’s guardian or legal representative, or a family member of the optionee who has acquired the option by a permitted transfer. Awards that are incentive stock options may be exercised during the lifetime of the optionee only by the optionee or the optionee’s guardian or legal representative. Options granted under our 2012 Equity Incentive Plan generally may be exercised for a period of three months after the termination of the optionee’s service to us or any parent or subsidiary of ours. Options will generally terminate immediately upon termination of employment for cause.

2012 Employee Stock Purchase Plan. We expect to adopt a 2012 Employee Stock Purchase Plan, or ESPP, that will become effective on the first day that our common stock is publicly traded. The maximum aggregate number of shares that may be issued under our ESPP is shares of our common stock.

Our Compensation Committee or our board of directors will administer the ESPP and will have full and exclusive authority to interpret the terms of the ESPP and determine eligibility.

We expect all of our U.S.-based employees, including our executive officers, will be eligible to participate if they are customarily employed by us or any participating subsidiary for at least 20 hours per week and more than five months in any calendar year. However, an employee may not be granted rights to purchase stock under our ESPP if such employee: (i) immediately after the grant would own stock possessing 5% or more of the total combined voting power or value of all classes of our capital stock, or (ii) holds rights to purchase stock under our ESPP that would accrue at a rate that exceeds $25,000 worth of our stock, for each calendar year that the rights remain outstanding.

The ESPP is intended to qualify under Section 423 of the Code, and will generally provide for consecutive six-month offering periods. The offering periods will generally start on the first

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trading day on or after February 16th and August 16th of each year, except for the first offering period under the ESPP, which will start on the first trading day on or after the effective date of this offering and will end on either February 15th or August 15th, whichever occurs six months or more after the effective date. The ESPP administrator may, in its discretion, modify the terms of future offering periods.

Our ESPP will permit participants to purchase our common stock through payroll deductions of up to 10% of their eligible compensation, which generally includes a participant’s base salary or regular hourly wages, as well as overtime and shift premiums, but excludes commissions, bonuses and incentive compensation, and other similar compensation. A participant may purchase a maximum of shares during each offering period.

Participant contributions will be used to purchase shares at the end of each six-month offering period. The purchase price of the shares will be 85% of the lower of the fair market value of our common stock on the first trading day of the offering period or on the last day of the offering period. Participants may end their participation at any time during an offering period, and any payroll deductions credited the Participant’s account will be used to purchase shares. Participation will end automatically upon termination of employment with us.

A participant may not transfer or assign rights granted under the ESPP other than by will, the laws of descent and distribution or as otherwise provided under the ESPP.

In the event of our merger or change in control, as defined under the ESPP, a successor corporation may assume or substitute each outstanding purchase right. If the successor corporation does not assume or substitute for the outstanding purchase rights, the offering period then in progress will be shortened, and a new exercise date will be set.

Our ESPP will remain in effect until terminated by the ESPP administrator in accordance with the terms of the ESPP. Our board of directors has the authority to amend, suspend or terminate our ESPP, at any time and for any reason.

401(k) plan. We sponsor a retirement plan qualified for favorable tax treatment under Section 401(k) of the Code. Employees who have attained at least 21 years of age are generally eligible to participate in the plan on the first day of their employment with us. Participants may make pre-tax contributions to the plan from their eligible earnings up to the statutorily prescribed annual limit on pre-tax contributions under the Code. Participants who are 50 years of age or older may contribute additional amounts based on the statutory limits for catch up contributions. Pre-tax contributions by participants and any employer contributions that we make to the plan and the income earned on those contributions are generally not taxable to participants until withdrawn. Employer contributions that we make to the plan are generally deductible when made. Participant contributions are held in trust as required by law. No minimum benefit is provided under the plan. An employee’s interest in his or her pre-tax deferrals is 100% vested when contributed. We have not contributed and are not currently contributing to the plan.

Limitation of liability and indemnification of directors and officers

Our certificate of incorporation that will be in effect upon the closing of this offering contains provisions that limit the liability of our directors for monetary damages to the fullest extent permitted by Delaware law. Consequently, our directors will not be personally liable to us or our

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stockholders for monetary damages for any breach of fiduciary duties as directors, except for liability:

•

for any breach of their duty of loyalty to our company or our stockholders;

•

for any act or omission not in good faith or that involves intentional misconduct or a knowing violation of law;

•

for any unlawful payments of dividends or unlawful stock repurchases or redemptions as provided in Section 174 of the Delaware General Corporation Law; or

•

for any transaction from which they derived an improper personal benefit.

Any amendment to or repeal of these provisions will not eliminate or reduce the effect of these provisions in respect of any act, omission or claim that occurred or arose prior to that amendment or repeal. If the Delaware General Corporation Law is amended to provide for further limitations on the personal liability of directors of corporations, then the personal liability of our directors will be further limited to the greatest extent permitted by the Delaware General Corporation Law.

Our bylaws that will be in effect at the closing of this offering provide that we will indemnify, to the fullest extent permitted by law, any person who is or was a party or is threatened to be made a party to any action, suit or proceeding by reason of the fact that he or she is or was one of our directors or officers or is or was serving at our request as a director or officer of another corporation, partnership, joint venture, trust or other enterprise. Our bylaws provide that we may indemnify to the fullest extent permitted by law any person who is or was a party or is threatened to be made a party to any action, suit or proceeding by reason of the fact that he or she is or was one of our employees or agents or is or was serving at our request as an employee or agent of another corporation, partnership, joint venture, trust or other enterprise. Our bylaws also provide that we must advance expenses incurred by or on behalf of a director or officer in advance of the final disposition of any action or proceeding, subject to very limited exceptions.

We have entered into indemnity agreements with each of our directors and executive officers that may be broader than the specific indemnification provisions contained in the Delaware General Corporation Law. These indemnity agreements require us, among other things, to indemnify our directors and executive officers against liabilities that may arise by reason of their status or service. These indemnity agreements also require us to advance all expenses incurred by the directors and executive officers in investigating or defending any such action, suit or proceeding. We believe that these agreements are necessary to attract and retain qualified individuals to serve as directors and executive officers.

The limitation of liability and indemnification provisions in our certificate of incorporation and bylaws or in these indemnity agreements may discourage stockholders from bringing a lawsuit against our directors for breach of their fiduciary duty. They may also reduce the likelihood of derivative litigation against our directors and officers, even though an action, if successful, might benefit us and other stockholders. Further, a stockholder’s investment may be adversely affected to the extent that we pay the costs of settlement and damage awards against directors and officers as required by these indemnification provisions. At present, we are not aware of any pending litigation or proceeding involving any person who is or was one of our directors, officers, employees or other agents or is or was serving at our request as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise,

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for which indemnification is sought, and we are not aware of any threatened litigation that may result in claims for indemnification.

We have obtained insurance policies under which, subject to the limitations of the policies, coverage is provided to our directors and officers against loss arising from claims made by reason of breach of fiduciary duty or other wrongful acts as a director or officer, including claims relating to public securities matters, and to us with respect to payments that may be made by us to these officers and directors pursuant to our indemnification obligations or otherwise as a matter of law.

Certain of our non-employee directors may, through their relationships with their employers, be insured and/or indemnified against certain liabilities incurred in their capacity as members of our board of directors.

The underwriting agreement provides for indemnification by the underwriters of us and our officers, directors and employees for certain liabilities arising under the Securities Act or otherwise.

Insofar as indemnification for liabilities arising under the Securities Act may be permitted to directors, officers or persons controlling our company pursuant to the foregoing provisions, we have been informed that, in the opinion of the SEC, such indemnification is against public policy as expressed in the Securities Act and is therefore unenforceable.

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Certain relationships and related person transactions

In addition to the compensation arrangements, including employment, termination of employment and change of control arrangements and indemnification arrangements, discussed, when required, above under “Management” and “Executive compensation,” and the registration rights described below under “Description of capital stock—Registration rights,” the following is a description of each transaction since January 1, 2009 and each currently proposed transaction in which:

•

we have been or are to be a participant;

•

the amount involved exceeded or exceeds $120,000; and

•

any of our directors, executive officers or holders of more than 5% of our capital stock, or any immediate family member of or person sharing the household with any of these individuals, had or will have a direct or indirect material interest.

April 2009 option repricing

In April 2009, our board of directors approved an offer to allow then-current employees and other service providers, including our executive officers and directors, to tender eligible options under our 2000 Equity Incentive Plan for replacement. Each replacement option (i) is exercisable to purchase the same number of shares underlying the tendered option, (ii) has a reduced exercise price per share equal to the fair market value of our common stock on the expiration date of the offer, (iii) expires seven years from the initial date of grant of the tendered option, (iv) imposes a prohibition on the transfer of the shares issuable upon exercise of the tendered stock option, (v) has a post-termination exercise period of 90 days, (vi) does not permit early exercise to purchase unvested shares and (vii) becomes vested and exercisable pursuant to a new vesting schedule that has a vesting period equal to the remaining vesting period of the tendered option extended by 12 months. Upon the expiration of the offer, we replaced stock options for an aggregate of 9,340,916 shares of our common stock granted under our 2000 Equity Incentive Plan. Each such replacement option had an exercise price of $1.32 per share.

The Board of Directors approved the 2009 option repricing because the fair value of our common stock declined substantially in that period, leaving stock options granted in earlier periods with exercise prices substantially greater than the fair value of our common stock, which in turn diminished the value of those stock options as retention and incentive motivation tools.

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The table below sets forth the stock options granted under our 2000 Equity Incentive Plan to our executive officers and directors that were tendered for replacement in the offer.


Name	Date of grant		Shares		Original exercise price per share		April 2009 exercise price per share

Charles A. Nooney		10/30/2007		3,500,000	$	4.50	$	1.32
Paul M. Scanlan		3/25/2008		62,500		4.00		1.32
Kay G. Johansson		5/8/2006		200,000		2.33		1.32
		10/30/2007		100,000		4.50		1.32
		3/25/2008		24,000		4.00		1.32
		8/11/2008		250,000		3.00		1.32
William E. Losch		6/12/2007		800,000		5.00		1.32
Raymond A. DeRenzo		1/31/2007		40,000		5.00		1.32
		3/25/2008		33,000		4.00		1.32
		8/4/2008		25,000		3.00		1.32
Terri M. Falcone		8/23/2006		25,000		4.18		1.32
		9/13/2007		25,000		5.00		1.32
		3/25/2008		3,651		4.00		1.32
		3/25/2008		100,000		4.00		1.32
Simon T. Bax		1/31/2007		120,000		5.00		1.32
		8/27/2008		25,000		3.00		1.32
Jarl Mohn(1)		6/12/2007		150,000		5.00		1.32
		6/12/2007		100,000		5.00		1.32
		10/30/2007		132,500		4.50		1.32
Vernon J. Stevenson		8/30/2006		100,000		4.18		1.32
		12/15/2006		20,000		5.00		1.32
		8/4/2008		50,000		3.00		1.32
		8/4/2008		50,000		3.00		1.32

(1)

Mr. Mohn resigned from our board of directors in August 2011.

Voting Agreement

We entered into a voting agreement with holders of our convertible preferred stock, giving them the right to appoint and elect members of our board of directors. Under this agreement, each of Admiral Inman, Mr. Jarve, Mr. Brody and Mr. Carano were appointed and elected to our board of directors and each will continue to serve on our board of directors until his resignation or until his successor is duly elected by the holders of our common stock. The voting agreement will terminate immediately prior to the closing of this offering.

Agreement with Encompass Digital Media

In March 2009, we entered into an agreement for the provision of video uplink/downlink services with Encompass Digital Media, Inc., or Encompass Digital Media. Simon Bax, a member of our board of directors, is the chief executive officer of Encompass Digital Media. Pursuant to the agreement, we are required to pay minimum guaranteed fees to Encompass Digital Media of an aggregate of $3.6 million over the five year term of the agreement. Payments to Encompass Digital Media totaled $418,000, $775,000 and $786,000 during 2009, 2010 and 2011, respectively.

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The terms of this agreement were disclosed to and approved by our board of directors. Mr. Bax recused himself from the discussion, deliberations and approval of this agreement by our board of directors.

Review, approval or ratification of transactions with related parties

Our policy and the charter of the Audit Committee adopted by our board of directors require that any transaction with a related party that must be reported under applicable rules of the SEC (other than compensation-related matters) must be reviewed and approved or ratified by the Audit Committee.

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Principal stockholders

The following table presents information with respect to the beneficial ownership of our common stock as of December 31, 2011, and as adjusted to reflect the sale of our common stock in this offering by:

•

each stockholder known by us to be the beneficial owner of more than 5% of our common stock;

•

each of the members of our board of directors;

•

each of our named executive officers; and

•

all of our directors and executive officers as a group.

We have determined beneficial ownership is determined in accordance with the rules of the SEC and thus it represents sole or shared voting or investment power with respect to our securities. Unless otherwise indicated below, to our knowledge, the persons and entities named in the table have sole voting and sole investment power with respect to all shares that they beneficially owned, subject to community property laws where applicable. We have deemed shares of our common stock subject to options or warrants that are currently exercisable or exercisable within 60 days of December 31, 2011, to be outstanding and to be beneficially owned by the person holding the option or warrant for the purpose of computing the percentage ownership of that person but have not treated them as outstanding for the purpose of computing the percentage ownership of any other person.

We have based percentage ownership of our common stock before this offering on 64,873,163 shares of our common stock outstanding on December 31, 2011, which includes 48,316,623 shares of common stock resulting from the automatic conversion of all outstanding shares of our convertible preferred stock, assuming a 1-to-1 conversion ratio, immediately prior to the closing of this offering, as if this conversion had occurred as of December 31, 2011. Unless otherwise indicated, the address of each of the individuals and entities named below that owns 5% or more of our common stock is c/o MobiTV, Inc., 6425 Christie Avenue, 5th Floor, Emeryville, California 94608.


	Shares beneficially owned prior to the offering				Shares beneficially owned after the offering
Name	Number		Percentage		Number	Percentage

Named executive officers and directors:
Charles A. Nooney(1)		3,148,913		4.6			%
Paul M. Scanlan(2)		2,123,257		3.3
William E. Losch(1)		771,097		1.2
Kay G. Johansson(1)		523,692		*
Anders Norström(1)		410,883		*
Simon T. Bax(3)		431,837		*
Jeffrey D. Brody(4)		8,486,508		13.1
Bandel L. Carano(5)		12,820,308		19.8
Admiral Bobby R. Inman(6)		11,783,177		18.2
John W. Jarve(7)		8,486,509		13.1
Vernon J. Stevenson(1)		389,700		*
All executive officers and directors as a group (14 persons)(8)		50,201,206		70.3

5% Stockholders:
Gefinor Ventures and related entities(9)		14,742,451		22.7
Oak Investment Partners XII, L.P.(10)		12,820,308		19.8
Menlo Ventures and related entities(11)		8,486,509		13.1
Redpoint Ventures and related entities(12)		8,486,508		13.1
Phillip Alvelda and related entity(13)		3,416,385		5.3			%

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Represents beneficial ownership of less than 1%.

(1)

Represents shares subject to options.

(2)

Includes (i) 1,534,495 shares beneficially owned by Mr. Scanlan, (ii) 222,562 shares beneficially owned by the Paul Scanlan and Patricia E. Striglos Trust DTD July 6, 2006, of which Mr. Scanlan is a co-trustee, (iii) 27,438 shares beneficially owned by the P. Scanlan & P. Striglos TTEE Scanlan Family Trust U/A DTD 5/12/2006, of which Mr. Scanlan is a co-trustee, (iv) 30,000 shares beneficially owned by EBX IV, LLC, of which Mr. Scanlan retains voting and investment power, and (v) 308,762 shares subject to options.

(3)

Includes (i) 252,000 shares beneficially owned by The Simon and Briony Bax Trust, of which Mr. Bax is a co-trustee, and (ii) 179,837 shares subject to options.

(4)

Represents shares beneficially owned by the Redpoint Funds, as described further in footnote 12. Mr. Brody is a managing member of the general partner of the Redpoint Funds.

(5)

Represents shares beneficially owned by Oak Investment Partners XII, Limited Partnership, or Oak LP-XII, as described further in footnote 10. Mr. Carano is a managing member of Oak Associates XII, LLC, its general partner.

(6)

Includes (i) 360,837 shares beneficially owned by Admiral Inman, (ii) 9,367,905 shares held by Gefus SBIC, L.P. or Gefus SBIC, (iii) 709,486 shares held by Gefus Capital Partners I, L.P. or Gefus-I LP, and (iv) 1,344,949 shares held by Inman Ventures I, L.P., or Inman Ventures. Gef Acquisition II LLC, or Gef-II LLC, is the general partner of Gefus SBIC and as such has sole voting and investment power. Admiral Inman, Mohamed Ousseimi, Greg Carlisle and William J. Beckett are the principals of Gef-II LLC and share this power. Gef Acquisition I, LLC, or Gef-I LLC, is the general partner of Gefus-I LP and Inman Ventures and as such has sole voting and investment power. Admiral Inman, Mohammed Ousseimi, Greg Carlisle and William J. Beckett are the principals of Gef-I LLC and share this power. Each of Gefus SBIC, Gefus-I LP and Inman Ventures is located at 375 Park Avenue, Suite 3607, New York, New York 10152.

(7)

Represents shares beneficially owned by the Menlo Funds, as described further in footnote 11. Mr. Jarve is a managing member of the general partner of the Menlo Funds.

(8)

Includes a total of 6,558,209 shares subject to options that are held by our executive officers and directors as a group.

(9)

Includes (i) 9,367,905 shares held by Gefus SBIC, (ii) 3,320,111 shares held by Gefus Strategic Partners I, LLC, or Gefus Strategic-I LLC, (iii) 709,486 shares held by Gefus-I LP, and (iv) 1,344,949 shares held by Inman Ventures. Gef-II LLC is the general partner of Gefus SBIC and as such has sole voting and investment power. Admiral Inman, Mohamed Ousseimi, Greg Carlisle and William J. Beckett are the principals of Gef-II LLC and share this power. Gefinor (USA), Inc., or Gefinor USA, is the managing member of Gefus Strategic-I LLC and has sole voting and investment power. Mohamed Ousseimi and William J. Beckett are the officers of Gefinor USA and share this power. Gef-I, LLC is the general partner of Gefus-I LP and Inman Ventures and as such has sole voting and investment power. Admiral Inman, Mohammed Ousseimi, Greg Carlisle and William J. Beckett are the principals of Gef-I LLC and share this power. Each of Gefus SBIC, Gefus Strategic-I LLC, Gefus-I LP and Inman Ventures is located at 375 Park Avenue, Suite 3607, New York, New York 10152.

(10)

Represents shares beneficially owned by Oak LP-XII. Oak Associates XII, LLC, or Oak LLC-XII, is the general partner of Oak LP-XII and as such has sole voting and investment power. Mr. Carano, Frederic W. Harman, Ann H. Lamont, Edward F. Glassmeyer, Iftikar A. Ahmed

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and Warren B. Riley are the managing members of Oak LLC-XII and share voting and investment power. Oak LP-XII is located at 525 University Avenue, Suite 1300, Palo Alto, California 94301.

(11)

Includes (i) 8,036,646 shares held by Menlo Ventures IX, L.P. or MV-IX, (ii) 265,209 shares held by Menlo Entrepreneurs Fund IX, L.P. or MEF-IX, (iii) 33,715 shares held by Menlo Entrepreneurs Fund IX(A), L.P. or MEF-IX(A), and (iv) 150,939 shares held by MMEF IX, L.P. or MMEF-IX. We refer to MV-IX, MEF-IX, MEF-IX(A) and MMEF-IX collectively as the “Menlo Funds.” MV Management IX, L.L.C., or MVM-IX, is the sole general partner of the Menlo Funds and as such has sole voting and investment power. Mr. Jarve, Mark A. Siegel, H.D. Montgomery, Douglas C. Carlisle, Sonja H. Perkins, Pravin A. Vazirani and Shawn T. Carolan are the managing members of MVM-IX and share voting and investment power. Each of the Menlo Funds is located at 3000 Sand Hill Road, Building 4, Menlo Park, California 94025.

(12)

Includes (i) 1,250,982 shares held by Redpoint Ventures I, L.P. or Redpoint LP-I, (ii) 32,080 shares held by Redpoint Associates I, LLC or Redpoint LLC-I, (iii) 6,981,933 shares held by Redpoint Ventures II, L.P. or Redpoint LP-II, (iv) 161,446 shares held by Redpoint Associates II, LLC or Redpoint LLC-II, (v) 8,270 shares held by Redpoint Technology Partners A-1, L.P. or Redpoint A-1, and (vi) 51,797 shares held by Redpoint Technology Partners Q-1, L.P. or Redpoint Q-1. We refer to Redpoint LP-I, Redpoint LLC-I, Redpoint LP-II, Redpoint LLC-II, Redpoint A-1 and Redpoint Q-1 collectively as the “Redpoint Funds.” Redpoint Ventures I, LLC, or RV-I, is the general partner of Redpoint LP-1. Redpoint Ventures II, LLC, or RV-II, is the general partner of Redpoint LP-II. Mr. Brody, R. Thomas Dyal, Timothy Haley, G. Bradford Jones, John Walecka and Geoffrey Yang are the managing members of RV-I, RV-II, Redpoint LLC-I, Redpoint LLC-II, Redpoint A-1 and Redpoint Q-2, and share voting and investment power. The Redpoint Funds, RV-I and RV-II are located at 3000 Sand Hill Road, Building 2, Menlo Park, California 94025.

(13)

Includes (i) 2,984,853 shares held by Philip Alvelda, and (ii) 431,532 shares held by Alvelda Associates LLC, or Alvelda LLC. Philip Alvelda is the managing member of Alvelda LLC and as such has sole voting and investment power. Mr. Alvelda and Alvelda LLC are located at 5900 Hollis Street, Suite W, Emeryville, California 94608.

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Description of capital stock

Immediately prior to the closing of this offering and the filing of our certificate of incorporation, our authorized capital stock will consist of shares of common stock, $0.001 par value per share, and shares of undesignated preferred stock, $0.001 par value per share. The following description summarizes the most important terms of our capital stock. Because this is only a summary, it does not contain all the information that may be important to you. For a complete description, you should refer to our certificate of incorporation and bylaws, which are included as exhibits to the registration statement of which this prospectus forms a part, and to the provisions of applicable Delaware law.

Common stock

As of December 31, 2011, there were 64,873,163 shares of our common stock outstanding, held by 154 stockholders of record, and no shares of preferred stock outstanding, assuming the conversion of all outstanding shares of our preferred stock into shares of our common stock, assuming a 1-to-1 conversion ratio, which will occur immediately prior to the closing of this offering. After this offering, there will be shares of our common stock outstanding, or shares if the underwriters exercise in full their option to purchase additional shares of common stock in this offering.

Dividend rights. Subject to preferences that may apply to any shares of preferred stock outstanding at the time, the holders of outstanding shares of our common stock are entitled to receive dividends out of funds legally available if our board of directors, in its discretion, determines to issue dividends and only then at the times and in the amounts that our board of directors may determine. See “Dividend policy” above.

Voting rights. Each holder of common stock is entitled to one vote for each share of common stock held on all matters submitted to a vote of stockholders. Cumulative voting for the election of directors is not provided for in our certificate of incorporation, which means that the holders of a majority of our shares of common stock voted can elect all of the directors then standing for election.

No preemptive or similar rights. Our common stock is not entitled to preemptive rights and is not subject to conversion, redemption or sinking fund provisions.

Right to receive liquidation distributions. Upon our liquidation, dissolution or winding-up, the assets legally available for distribution to our stockholders would be distributable ratably among the holders of our common stock and any participating preferred stock outstanding at that time after payment of liquidation preferences, if any, on any outstanding shares of preferred stock and payment of other claims of creditors, if any.

Fully paid and non-assessable. All of our outstanding shares of common stock are, and the shares of our common stock to be issued pursuant to this offering will be, fully paid and non-assessable.

Preferred stock

Following this offering, no shares of preferred stock will be outstanding but our board of directors will be authorized, subject to limitations prescribed by Delaware law, to issue preferred stock in one or more series, to establish from time to time the number of shares to be included in each series, to fix the designation, powers, preferences and rights of the shares of each series and

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any of its qualifications, limitations or restrictions, in each case without further action by our stockholders. Our board of directors can also increase or decrease the number of shares of any series of preferred stock, but not below the number of shares of that series then outstanding, unless approved by the affirmative vote of the holders of a majority of our capital stock entitled to vote, or such other vote as may be required by the certificate of designation establishing the series. The issuance of our preferred stock could adversely affect the voting power of holders of common stock and the likelihood that such holders will receive dividend payments and payments upon liquidation. In addition, the issuance of preferred stock could have the effect of delaying, deferring or preventing a change of control of our company or other corporate action. We have no current plan to issue any shares of preferred stock.

Warrants

As of December 31, 2011, we had two outstanding warrants, to purchase 68,807 shares and 14,679 shares of Series B preferred stock, respectively, each with an exercise price of $5.45 per share. Each of these warrants has a net exercise provision under which the holder in lieu of payment of the exercise price in cash, can surrender the warrant and receive a net number of shares of Series B preferred stock based on the fair market value of such stock at the time of exercise of the warrant after deduction of the aggregate exercise price. Unless earlier exercised, these warrants will expire upon the earlier of the fifth anniversary of the closing of this offering or in April 2013 or February 2015, respectively.

As of December 31, 2011, we had outstanding warrants to purchase (i) 37,438 shares and (ii) 53,245 shares of Series C preferred stock, each, with an exercise price of $6.01 per share. These warrants have a net exercise provision under which the holder in lieu of payment of the exercise price in cash can surrender the warrant and receive a net number of shares of Series C preferred stock based on the fair market value of such stock at the time of exercise of the warrant after deduction of the aggregate exercise price. Unless earlier exercised, these warrants will expire in (i) February 2018 and (ii) upon the earlier of February 2015 or the fifth anniversary of the closing of this offering, respectively. The warrant for 37,438 shares shall be deemed net exercised upon the occurrence of (a) a reclassification or change to the class of securities issuable upon exercise of this warrant, or a merger that results in a reclassification or change to the class of securities issuable upon exercise of this warrant, where the consideration received by the holders of the securities issuable upon exercise of this warrant is all cash, if (b) the per share cash consideration exceeds the per share exercise price (if the per share cash consideration is less than the per share exercise price, this warrant terminates).

Any warrants to purchase shares of our convertible preferred stock that remain outstanding will, immediately prior to the closing of this offering, become exercisable for a like number of shares of our common stock.

Registration rights

Pursuant to the terms of our second amended and restated investor rights agreement, upon the closing of this offering, the holders of approximately 48,316,623 shares of our common stock outstanding as of December 31, 2011 will be entitled to rights with respect to the registration of these shares under the Securities Act, as described below.

Demand registration rights. At any time beginning 180 days after the closing of this offering, the holders of more than 60% of the then-outstanding shares having registration rights can

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request that we file a registration statement covering registrable securities with an anticipated gross proceeds of at least $20.0 million. We will only be required to file up to three registration statements upon exercise of these demand registration rights. We may postpone the filing of a registration statement in connection with the exercise of such right for up to 90 days once in a 12-month period if we determine that it would be seriously detrimental to us and our stockholders for the filing of such registration statement to be effected at such time.

Piggyback registration rights. If we register any of our securities for purposes of a public offering other than this offering, holders of shares having registration rights will have the right to include their shares in the registration statement. However, this right does not apply to a registration relating to any of our employee benefit plans, a registration relating to a corporate reorganization or acquisition or a registration in which the only common stock being registered is common stock issuable upon conversion of debt securities that are also being registered. The underwriter or underwriters of any underwritten offering will have the right to limit, because of marketing reasons, the number of shares registered by these holders, in which case the number of shares to be registered will be apportioned pro rata among these holders, according to the total amount of securities entitled to be included by each holder. However, the number of shares to be registered by these holders cannot be reduced below 25% of the total shares covered by the registration statement.

Form S-3 registration rights. The holders of then-outstanding shares with registration rights can request that we register all or part of their shares on Form S-3 if we are eligible to file a registration statement on Form S-3 and if the aggregate price to the public of the shares offered is at least $0.5 million. The stockholders may only require us to file up to two registration statements on Form S-3 in any calendar year. We may postpone the filing of a registration statement on Form S-3 for up to 90 days once in a 12-month period if we determine that filing such registration statement at such time would be seriously detrimental to us and our stockholders.

Expenses of registration rights. We will pay all expenses, other than underwriting discounts and commissions, incurred in connection with the registrations described above.

Expiration of registration rights. The registration rights described above will expire on a change of control and, with respect to any particular holder of these rights, on the earlier of the fifth anniversary of the closing of this offering or when that holder can sell all of its registrable securities without registration under Rule 144 of the Securities Act.

Anti-takeover provisions

The provisions of Delaware law, our certificate of incorporation and our bylaws may have the effect of delaying, deferring or discouraging another person from acquiring control of our company. These provisions, which are summarized below, may have the effect of discouraging takeover bids. They are also designed, in part, to encourage persons seeking to acquire control of us to negotiate first with our board of directors. We believe that the benefits of increased protection of our potential ability to negotiate with an unfriendly or unsolicited acquirer outweigh the disadvantages of discouraging a proposal to acquire us because negotiation of these proposals could result in an improvement of their terms.

Delaware law. We are governed by the provisions of Section 203 of the Delaware General Corporation Law. In general, Section 203 prohibits a public Delaware corporation from engaging in a “business combination” with an “interested stockholder” for a period of three years after

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the date of the transaction in which the person became an interested stockholder, unless the business combination is approved in a prescribed manner. A business combination includes mergers, asset sales or other transactions resulting in a financial benefit to the stockholder. An interested stockholder is a person who, together with affiliates and associates, owns, or within three years did own, 15% or more of the corporation’s outstanding voting stock. These provisions may have the effect of delaying, deferring or preventing a change in our control.

Certificate of incorporation and bylaw provisions. We anticipate that our certificate of incorporation and our bylaws, each as in effect upon the closing of this offering, will include a number of provisions that could deter hostile takeovers or delay or prevent changes of control of our management team, including the following:

•

Board of directors vacancies. Our certificate of incorporation and bylaws, each as in effect upon the closing of this offering, authorize only our board of directors to fill vacant directorships, including newly created seats. In addition, the number of directors constituting our board of directors is permitted to be set only by a resolution adopted by a majority vote of our entire board of directors. These provisions would prevent a stockholder from increasing the size of our board of directors and then gaining control of our board of directors by filling the resulting vacancies with its own nominees. This makes it more difficult to change the composition of our board of directors but promotes continuity of management.

•

Staggered board of directors. Our certificate of incorporation, as in effect upon the closing of this offering, provides for a classified board of directors with staggered three-year terms. This could delay the ability of our stockholders to change the membership of a majority of our board of directors or effect a change of control of our management.

•

Stockholder action; special meeting of stockholders. Our certificate of incorporation, as in effect upon the closing of this offering, provides that our stockholders may not take action by written consent, but may only take action at annual or special meetings of our stockholders. As a result, a holder controlling a majority of our capital stock would not be able to amend our bylaws or remove directors without holding a meeting of our stockholders called in accordance with our bylaws. Our bylaws further provide that special meetings of our stockholders may be called only by a majority of our board of directors, the chairman of our board of directors, our chief executive officer or our president, thus prohibiting a stockholder from calling a special meeting. These provisions might delay the ability of our stockholders to force consideration of a proposal or for holders controlling a majority of our capital stock to take any action, including the removal of directors.

•

Advance notice requirements for stockholder proposals and director nominations. Our bylaws, as in effect upon the closing of this offering, provide advance notice procedures for stockholders seeking to bring business before our annual meeting of stockholders or to nominate candidates for election as directors at our annual meeting of stockholders. Our bylaws also specify certain requirements regarding the form and content of a stockholder’s notice. These provisions might preclude our stockholders from bringing matters before our annual meeting of stockholders or from making nominations for directors at our annual meeting of stockholders if the proper procedures are not followed. We expect that these provisions might also discourage or deter a potential acquirer from conducting a solicitation of proxies to elect the acquirer’s own slate of directors or otherwise attempting to obtain control of our company.

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•

No cumulative voting. Our certificate of incorporation and bylaws, as in effect upon the closing of this offering, do not provide for cumulative voting. Cumulative voting allows a stockholder to vote a portion or all of its shares for one or more candidates for seats on the board of directors. Without cumulative voting, a minority stockholder may not be able to gain as many seats on our board of directors as the stockholder would be able to gain if cumulative voting were permitted. The absence of cumulative voting makes it more difficult for a minority stockholder to gain a seat on our board of directors to influence our board’s decision regarding a takeover.

•

Directors removed only for cause. Our certificate of incorporation, as in effect upon the closing of this offering, provides that stockholders may remove directors only for cause.

•

Amendment of charter provisions. Any amendment of the above provisions in our certificate of incorporation, as in effect upon the closing of this offering, would require approval by holders of at least two-thirds of our outstanding common stock.

•

Issuance of undesignated preferred stock. Our board of directors has the authority, without further action by the stockholders, to issue up to 5,000,000 shares of undesignated preferred stock with rights and preferences, including voting rights, designated from time to time by our board of directors. The existence of authorized but unissued shares of preferred stock would enable our board of directors to render more difficult or to discourage an attempt to obtain control of us by means of a merger, tender offer, proxy contest or other means.

Listing

We intend to apply for the listing of our common stock on the New York Stock Exchange under the symbol “MBTV.”

Transfer agent and registrar

The transfer agent and registrar for our common stock is Computershare, Inc.

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Shares eligible for future sale

Prior to this offering, there has been no public market for our common stock, and we cannot predict the effect, if any, that market sales of shares of our common stock or the availability of shares of our common stock for sale will have on the market price of our common stock prevailing from time to time. Nevertheless, sales of substantial amounts of our common stock, including shares issued upon exercise of outstanding options or warrants, in the public market after this offering could adversely affect market prices prevailing from time to time and could impair our ability to raise capital through the sale of our equity securities.

Upon the closing of this offering, based on the number of shares outstanding as of December 31, 2011, we will have shares of common stock outstanding. Of these outstanding shares, all of the shares sold in this offering will be freely tradable, except that any shares held by our affiliates, as that term is defined in Rule 144 under the Securities Act, may only be sold in compliance with the limitations described below.

The remaining outstanding shares of our common stock will be deemed restricted securities as defined under Rule 144. Restricted securities may be sold in the public market only if registered or if they qualify for an exemption from registration under Rule 144 or Rule 701 promulgated under the Securities Act, which rules are summarized below. In addition, all of our stockholders have entered into market standoff agreements with us and substantially all of our stockholders have entered into lock-up agreements with the underwriters under which they agreed, subject to specific exceptions, not to sell any of their stock for at least 180 days following the date of this prospectus. Subject to the provisions of Rule 144 or Rule 701, based on an assumed offering date of , 2012, shares will be available for sale in the public market as follows:

•

beginning on the date of this prospectus, the shares sold in this offering will be immediately available for sale in the public market; and

•

beginning 180 days after the date of this prospectus, additional shares will become eligible for sale in the public market, of which shares will be freely tradable under Rule 144, shares will be held by affiliates and subject to the volume and other restrictions of Rule 144, as described below, and the remaining shares will be held by non-affiliates and subject to the volume and other restrictions of Rule 144.

Lock-up agreements

All of our directors and officers and substantially all of our security holders are subject to lock-up agreements or market standoff provisions that, subject to exceptions described under “Underwriting,” prohibit them from offering for sale, selling, contracting to sell, granting any option for the sale of, transferring or otherwise disposing of any shares of our common stock, options or warrants to acquire shares of our common stock or any security or instrument related to this common stock, option or warrant for a period of at least 180 days following the date of this prospectus without the prior written consent of each of J.P. Morgan Securities LLC and Deutsche Bank Securities Inc.

Rule 144

In general, under Rule 144 as currently in effect, once we have been subject to public company reporting requirements for at least 90 days, a person who is not deemed to have been one of our affiliates for purposes of the Securities Act at any time during the 90 days preceding a sale and

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who has beneficially owned the shares proposed to be sold for at least six months, including the holding period of any prior owner other than our affiliates, is entitled to sell those shares without complying with the manner of sale, volume limitation or notice provisions of Rule 144, subject to compliance with the public information requirements of Rule 144. If such a person has beneficially owned the shares proposed to be sold for at least one year, including the holding period of any prior owner other than our affiliates, then that person is entitled to sell those shares without complying with any of the requirements of Rule 144.

In general, under Rule 144, as currently in effect, our affiliates or persons selling shares on behalf of our affiliates are entitled to sell upon expiration of the lock-up agreements described above, within any three-month period beginning 90 days after the date of this prospectus, a number of shares that does not exceed the greater of:

•

1% of the number of shares of common stock then outstanding, which will equal approximately shares immediately after this offering; or

•

the average weekly trading volume of the common stock during the four calendar weeks preceding the filing of a notice on Form 144 with respect to that sale.

Sales under Rule 144 by our affiliates or persons selling shares on behalf of our affiliates are also subject to certain manner of sale provisions and notice requirements and to the availability of current public information about us.

Rule 701

Rule 701 generally allows a stockholder who purchased shares of our common stock pursuant to a written compensatory plan or contract and who is not deemed to have been an affiliate of our company during the immediately preceding 90 days to sell these shares in reliance upon Rule 144, but without being required to comply with the public information, holding period, volume limitation or notice provisions of Rule 144. Rule 701 also permits affiliates of our company to sell their Rule 701 shares under Rule 144 without complying with the holding period requirements of Rule 144. All holders of Rule 701 shares, however, are required to wait until 90 days after the date of this prospectus before selling those shares pursuant to Rule 701.

Stock options

As soon as practicable after the closing of this offering, we intend to file one or more registration statements on Form S-8 under the Securities Act covering all of the shares of our common stock subject to outstanding options and the shares of our common stock reserved for issuance under our stock plans. In addition, we intend to file a registration statement on Form S-8 or such other form as may be required under the Securities Act for the resale of shares of our common stock issued upon the exercise of options that were not granted under Rule 701. We expect to file this registration statement as soon as permitted under the Securities Act. However, the shares registered on Form S-8 may be subject to the volume limitations and the manner of sale, notice and public information requirements of Rule 144 and will not be eligible for resale until expiration of the lock-up agreements to which they are subject.

Registration rights

We have granted demand registration rights, rights to participate in offerings that we initiate and Form S-3 registration rights to certain of our stockholders to sell our common stock. For a further description of these rights, see “Description of capital stock—Registration rights.”

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Material U.S. federal income tax

consequences to non-U.S. holders

The following is a summary of certain material U.S. federal income tax and estate tax consequences of the ownership and disposition of our common stock to non-U.S. holders (as defined below), but does not purport to be a complete analysis of all the potential tax considerations relating thereto. This summary is based upon the provisions of the Internal Revenue Code, Treasury regulations promulgated thereunder, administrative rulings and judicial decisions, all as of the date hereof. These authorities may be changed at any time, possibly retroactively, or the Internal Revenue Service, the IRS, might interpret the existing authorities differently, so as to result in U.S. federal income or estate tax consequences different from those set forth below. As a result, we cannot assure you that the tax consequences described in this discussion will not be challenged by the IRS or will be sustained by a court if challenged by the IRS.

This summary does not address the tax considerations arising under the laws of any non-U.S., state or local jurisdiction or under U.S. federal gift and estate tax laws, except to the limited extent below. In addition, this discussion does not address tax considerations applicable to an investor’s particular circumstances or to investors that may be subject to special tax rules, including, without limitation:

•

banks, insurance companies or other financial institutions;

•

real estate investment trusts or regulated investment companies;

•

partnerships or arrangements treated as partnerships or other pass-through entities for U.S. federal tax purposes (or investors in such entities);

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certain former citizens or long-term residents of the United States;

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a “controlled foreign corporation” or “passive foreign investment company;”

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a corporation that accumulates earnings to avoid U.S. federal income tax;

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persons subject to the alternative minimum tax;

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tax-exempt organizations or tax-qualified retirement plans;

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dealers in securities or currencies;

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traders in securities that elect to use a mark-to-market method of accounting for their securities holdings;

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persons that own, or are deemed to own, more than five percent of our capital stock (except to the extent specifically set forth below);

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certain former citizens or long term residents of the United States;

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persons who hold our common stock as a position in a hedging transaction, “straddle,” “conversion transaction” or other risk reduction transaction;

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persons whose functional currency is other than the U.S. dollar;

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persons who acquired our common stock as compensation for services;

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persons who do not hold our common stock as a capital asset within the meaning of Section 1221 of the Internal Revenue Code (generally, for investment purposes); or

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persons deemed to sell our common stock under the constructive sale provisions of the Internal Revenue Code.

In addition, if a partnership or entity classified as a partnership for U.S. federal income tax purposes holds our common stock, the tax treatment of a partner generally will depend on the status of the partner and upon the activities of the partnership. Accordingly, partnerships that hold our common stock, and partners in such partnerships, should consult their tax advisors.

The following discussion is for information purposes only. You are urged to consult your tax advisor with respect to the application of the U.S. federal income tax laws to your particular situation, as well as any tax consequences of the purchase, ownership and disposition of our common stock arising under the U.S. federal estate or gift tax rules or under the laws of any state, local, non-U.S. or other taxing jurisdiction or under any applicable tax treaty.

Non-U.S. holder defined

For purposes of this discussion, you are a non-U.S. holder if you are any holder that is not:

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an individual citizen or resident of the United States;

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a corporation or other entity taxable as a corporation for U.S. federal income tax purposes created or organized in the United States or under the laws of the United States or any political subdivision thereof;

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an estate whose income is subject to U.S. federal income tax regardless of its source; or

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a trust (x) whose administration is subject to the primary supervision of a U.S. court and which has one or more U.S. persons who have the authority to control all substantial decisions of the trust or (y) which has made a valid election in effect under applicable U.S. Treasury Regulations to be treated as a U.S. person.

If you are a non-U.S. holder that is an individual, you may be deemed to be a resident alien, as opposed to a non-resident alien, by virtue of being present in the United States for at least 31 days in the calendar year and for an aggregate of at least 183 days during a three-year period ending in the current calendar year. For these purposes, all the days present in the current year, one-third of the days present in the immediately preceding year, and one-sixth of the days present in the second preceding year are counted. Resident aliens are subject to U.S. federal income tax as if they were U.S. citizens. Such an individual is urged to consult his or her own tax advisor regarding the U.S. federal income tax consequences of the sale, exchange or other disposition of our common stock. See “—Gain on disposition of common stock.”

Distributions

We have not made any distributions on our common stock, and we do not plan to make any distributions for the foreseeable future. However, if we do make distributions on our common stock, those payments will constitute dividends for U.S. tax purposes to the extent paid from our current or accumulated earnings and profits, as determined under U.S. federal income tax principles. To the extent those distributions exceed both our current and our accumulated

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earnings and profits, they will constitute a return of capital and will first reduce your basis in our common stock, but not below zero, and then will be treated as gain from the sale of stock.

Any dividend paid to you generally will be subject to U.S. withholding tax either at a rate of 30% of the gross amount of the dividend or such lower rate as may be specified by an applicable income tax treaty between the United States and your country of residence. In order to receive a reduced treaty rate, you must provide us or our paying agent with an IRS Form W-8BEN or other appropriate version of IRS Form W-8BEN or other appropriate version of IRS Form W-8 properly certifying qualification for the reduced rate. You should consult your tax advisors regarding your entitlement to benefits under a relevant income tax treaty. If the holder holds the stock through a financial institution or other agent acting on the holder’s behalf, the holder will be required to provide appropriate documentation to the agent. The holder’s agent will then be required to

provide certification to us or our paying agent, either directly or through other intermediaries. For payments made to a partnership or other pass-through entity, the certification requirements generally apply to the partners or other owners rather than to the partnership or other entity, and the partnership or other entity must provide the partners’ or other owners’ documentation to us or our paying agent.

Large accelerated filer ¨

Accelerated filer ¨

Non-accelerated filer x

Smaller reporting company ¨

(Do not check if a smaller reporting company)

MOBITV INC S-1/A