Boingo Wireless, Inc.
BOINGO WIRELESS INC (Form: 10-K, Received: 03/11/2016 14:40:32)

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TABLE OF CONTENTS
TABLE OF CONTENTS 2
Item 15. Exhibits, Financial Statement Schedules


UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 10-K

(Mark One)    

ý

 

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

For the fiscal year ended December 31, 2015

OR

o

 

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

Commission File Number: 001-35155

BOINGO WIRELESS, INC.
(Exact name of registrant as specified in its charter)

DELAWARE
(State of other jurisdiction of
incorporation or organization)
  95-4856877
(I.R.S. Employer
Identification Number)

10960 Wilshire Blvd., 23 rd  Floor
Los Angeles, California 90024
(Address of principal executive offices, Zip Code)

(310) 586-5180
(Registrant's telephone number, including area code)

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

Common Stock, $0.0001 par value   The NASDAQ Stock Market LLC
(Title of each class)   (Name of each exchange on which registered)

         Securities registered pursuant to Section 12(g) of the Act: None

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

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

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

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

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

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

Large accelerated filer  o   Accelerated filer  ý   Non-accelerated filer  o
(Do not check if a
smaller reporting company)
  Smaller reporting company  o

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

         The aggregate market value of the Registrant's voting and non-voting common equity held by non-affiliates of the Registrant as of the last day of the Registrant's most recently completed second fiscal quarter was $298,970,014 based on the last reported sale price of $8.26 per share on the NASDAQ Global Market on June 30, 2015, the last trading day of the most recently completed second fiscal quarter.

         As of March 1, 2016, 37,443,601 shares of Common Stock were outstanding.

DOCUMENTS INCORPORATED BY REFERENCE

         Portions of the Company's definitive Proxy Statement for the Annual Meeting of Stockholders to be filed within 120 days of the Company's year ended December 31, 2015 are incorporated by reference into Part III of this Form 10-K where indicated.

   


Table of Contents


BOINGO WIRELESS, INC.
ANNUAL REPORT ON FORM 10-K FOR
THE YEAR ENDED DECEMBER 31, 2015

TABLE OF CONTENTS

 
   
  Page  

PART I

 

Item 1.

 

Business

    2  

Item 1A.

 

Risk Factors

    12  

Item 1B.

 

Unresolved Staff Comments

    26  

Item 2.

 

Properties

    26  

Item 3.

 

Legal Proceedings

    26  

Item 4.

 

Mine Safety Disclosures

    26  

PART II

 

Item 5.

 

Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities

    27  

Item 6.

 

Selected Financial Data

    29  

Item 7.

 

Management's Discussion and Analysis of Financial Condition and Results of Operations

    32  

Item 7A.

 

Quantitative and Qualitative Disclosures About Market Risk

    52  

Item 8.

 

Financial Statements and Supplementary Data

    52  

Item 9.

 

Changes in and Disagreements with Accountants on Accounting and Financial Disclosure

    52  

Item 9A.

 

Controls and Procedures

    52  

Item 9B.

 

Other Information

    53  

PART III

 

Item 10.

 

Directors, Executive Officers and Corporate Governance

    54  

Item 11.

 

Executive Compensation

    54  

Item 12.

 

Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters

    54  

Item 13.

 

Certain Relationships and Related Transactions, and Director Independence

    54  

Item 14.

 

Principal Accounting Fees and Services

    54  

PART IV

 

Item 15.

 

Exhibits

    55  

Consolidated Financial Statements

    F-1  

Signatures

    F-49  

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Forward-Looking Statements

         We have made forward-looking statements in this Annual Report on Form 10-K that are subject to risks and uncertainties. Forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, are subject to the "safe harbor" created by those sections. The forward-looking statements in this report are based on our management's beliefs and assumptions and on information currently available to our management. In some cases, you can identify forward-looking statements by terms such as "anticipates," "aspires," "believes," "can," "continue," "could," "estimates," "expects," "intends," "may," "plans," "projects," "seeks," "should," "will" or "would" or the negative of these terms and similar expressions intended to identify forward-looking statements. These statements involve known and unknown risks, uncertainties and other factors, which may cause our actual results, performance, time frames or achievements to be materially different from any future results, performance, time frames or achievements expressed or implied by the forward-looking statements. We discuss many of these risks, uncertainties and other factors in this document in greater detail under the heading "Risk Factors." We believe it is important to communicate our expectations to our investors. However, there may be events in the future that we are not able to predict accurately or over which we have no control. The risks described in "Risk Factors" included in this report, as well as any other cautionary language in this report, provide examples of risks, uncertainties and events that may cause our actual results to differ materially from the expectations we describe in our forward-looking statements. Before you invest in our common stock, you should be aware that the occurrence of the events described in "Risk Factors" and elsewhere in this report could harm our business.

         Given these risks, uncertainties and other factors, you should not place undue reliance on these forward-looking statements. Also, these forward-looking statements represent our estimates and assumptions only as of the date of this filing. You should read this document completely and with the understanding that our actual future results may be materially different from what we expect. We hereby qualify our forward-looking statements by these cautionary statements. Except as required by law, we assume no obligation to update these forward-looking statements publicly, or to update the reasons actual results could differ materially from those anticipated in these forward-looking statements, even if new information becomes available in the future.

         Unless the context otherwise requires, we use the terms "Boingo," "company," "we," "us" and "our" in this Annual Report on Form 10-K to refer to Boingo Wireless, Inc. and, where appropriate, its subsidiaries.


PART I

Item 1.    Business

    Company Overview

        Boingo helps the world stay connected.

        We have established a global footprint of wireless networks that provide high-speed, high-bandwidth wireless connectivity to smartphones, tablets, laptops, wearables, the Internet of Things ("IoT"), and other wireless-enabled devices. Wireless infrastructure systems include low-powered radio access nodes that operate in licensed and unlicensed spectrum, with a range of 10 meters to 1 to 2 kilometers. These wireless networks include more than 1.5 million distributed antenna system ("DAS"), femto-cell, and Wi-Fi locations that reach more than one billion consumers annually. With the proliferation of wireless devices, and the growth of mobile data from high-bandwidth activities like streaming media, cloud-based applications, online gaming and mobile apps, we expect these wireless networks to play a significant role in helping meet the ever-increasing data demands of on-the-go connected consumers.

        Our wireless networks include DAS, femto-cell, and Wi-Fi networks that we manage and operate ourselves, which we refer to as our "managed and operated" locations, as well as Wi-Fi networks

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managed and operated by third-parties with whom we contract for access, which we refer to as our "roaming" networks. Our managed and operated locations are typically located in large venues with big audiences, such as airports, stadiums, arenas, military bases, universities, big box retailers, convention centers, and office buildings. We install wireless network infrastructure in these locations, which generally have exclusive multi-year agreements, and then monetize these networks in a number of ways. Our roaming networks comprise more than 1.5 million commercial Wi-Fi hotspots in 100 countries around the world. We also sell advertising on other Wi-Fi networks that are not part of our network on behalf of the network owner.

        We generate revenue through wholesale offerings, retail and military sales, and advertising. We have direct customer relationships with users who have purchased our services, and we also provide wireless connectivity access solutions to enterprise customers, which include telecom operators, cable companies, technology companies, enterprise software and services companies, financial institutions, and communications service providers. Our wholesale solutions enable these companies to offer wireless connectivity access to their customers. Our software solution—which provides one-click access to our global footprint of hotspots—has been rebranded for wholesale partners, in addition to being marketed under the Boingo brand. In combination with our back-end system infrastructure, it creates a global roaming solution for operators, carriers, other service providers and other businesses.

        We generate wholesale revenue from telecom operators that pay us build-out fees and recurring access fees so that their cellular customers may use our DAS or femto-cell networks at locations where we manage and operate the wireless network. DAS revenue accounts for approximately 33% of our revenue. In addition, our enterprise customers pay us usage-based Wi-Fi network access and software licensing fees to allow their customers' access to our footprint worldwide. Wholesale Wi-Fi revenue also includes financial institutions who provide Boingo as a value-added service for their customers. Wholesale Wi-Fi revenue accounts for approximately 16% of our revenue.

        Retail revenue, which is driven by consumers who purchase one-time Wi-Fi access or a recurring monthly subscription plan, accounts for approximately 23% of our total revenue. As of December 31, 2015, our retail subscriber base was approximately 204,000, a decrease of approximately 20% over the prior year. Military revenue, which is driven by military personnel who purchase broadband and Internet Protocol television ("IPTV") services on military bases served by Boingo accounts for approximately 14% of our total revenue. As of December 31, 2015, we have grown our military subscriber base to approximately 57,000 from approximately 20,000 in the prior year period.

        We also generate revenue from advertisers that seek to reach consumers via sponsored Wi-Fi access, promotional programs and online display advertising. Advertising and other revenue accounts for approximately 14% of our revenue.

        Our advertising business is seasonal, with the highest percentage of advertising sales typically occurring in the fourth quarter of each year. Our customer agreements for certain DAS networks include both a fixed and variable fee structure with the highest percentage of sales typically occurring in the fourth quarter of each year and the lowest percentage of sales occurring in the first quarter of each year. We expect these trends to continue. Our other products have not experienced any significant seasonal impact.

        We were incorporated in the State of Delaware in April 2001 under the name Project Mammoth, Inc. and changed our name to Boingo Wireless, Inc. in October 2001. Our principal executive offices are located in Los Angeles, California. Our website address is www.boingo.com. The information on, or that can be accessed through, our website is not part of this Annual Report on Form 10-K.

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    Industry Overview

        Today, consumers own multiple connected devices—smartphones, laptops, tablets, wearables, etc. According to Cisco's Visual Networking Index ("CVNI"), by 2020, there will be 5.5 billion expected mobile users, representing 70% of the world's population. The adoption, growth and innovation of mobile devices are key catalysts for the acceleration of high-speed and high-bandwidth mobile Internet usage. The improved computing power, rich graphical user interfaces and Internet capabilities of these devices enable mobile users to engage in high-bandwidth activities like making video calls or streaming high definition movies, uploading photos and videos to social media sites, engaging in online gaming or streaming music apps—even live streaming and broadcasting video through apps like Periscope. In return, mobile data is growing unabated. According to CVNI, it is anticipated that global mobile data traffic will increase nearly eightfold between 2015 and 2020. Mobile video will have the highest growth rate of any mobile application accounting for approximately 75% of the world's mobile data traffic by 2020. Average global mobile network speeds are also expected to increase 3.2-fold from 2015 (2.0 Mbps) to 2020 (6.5 Mbps).

        To cope with the significant increase in expected global mobile Internet data traffic, network operators are rapidly expanding their capacity and investing in technologies such as 4G cellular networks. However, these investments are only a short-term solution as they are not capable of meeting the long-term demand for data usage. To ease the strain of cellular networks by off-loading data, network operators have also been investing in Wi-Fi and cellular DAS and femto-cells that enhance spectrum coverage and density in large venues to increase overall capacity. In a recent market study, ABI Research forecasted the in-building wireless market to more than double in revenue by 2020, with the market anticipated to top $9 billion by 2020. Further, according to CVNI, by 2020, 38.1 exabytes of Wi-Fi offload traffic will be generated each month and voice over Wi-Fi ("VoWiFi") will account for 53% of all mobile IP voice traffic.

        Wi-Fi provides higher speed and higher bandwidth per user in high density locations, and is simpler and less expensive to deploy than additional cellular network capacity. The benefits and consumer demand for Wi-Fi have led hardware manufacturers to include Wi-Fi as a standard feature on smart devices, laptops and tablets and the IoT. Wi-Fi has become the standard protocol for residential and office wireless networks and is increasingly prevalent in public venues, such as airports, hotels, big box retailers, coffee shops, convention centers, shopping malls, arenas, stadiums, campuses and office buildings.

    Challenges Facing Our Industry

        The mobile Internet is a complex and constantly evolving ecosystem comprised of over a billion mobile Internet-enabled devices from dozens of manufacturers, which are powered by many different operating systems. Devices use different network technologies and must be configured with the appropriate software to detect and optimize a connection to the mobile Internet. This complexity is amplified as new device models and operating systems are released, new categories of devices become Internet-enabled, and new network technologies emerge. The increasing number of mobile Internet-enabled devices in this ecosystem is causing an even more rapid increase in data consumption on capacity-strained networks.

    Our Strategy

        We believe we are the leading global provider of neutral-host commercial mobile Wi-Fi Internet solutions and indoor DAS services for carriers and venues. Key elements of our strategy to extend that lead are to:

    Expand our footprint of managed and operated and aggregated networks.   We intend to continue to grow our global network of managed and operated DAS, femto-cell, and Wi-Fi networks by

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      pursuing new opportunities at large venues such as airports, arenas, stadiums, military bases, office buildings and universities. We also plan to enter into new roaming agreements with additional network and hotspot operators to maximize the reach of our aggregated network, which creates a more attractive offering for our retail and military customers and wholesale enterprise customers.

    Leverage our neutral-host business model to accelerate wholesale roaming and carrier offload partnerships.   Our neutral-host model enables us to partner with venue operators because we allow their customers to access a venue's network regardless of the customers' service provider. We also partner with telecom operators that are attracted to us because we do not compete for cellular subscribers. We intend to expand our neutral-host managed and operated network by partnering with additional venues, network operators, telecom operators and technology companies.

    Maximize advertising sell-through for our inventory of advertising-enabled networks.   We will seek to leverage our ad sales team to engage leading brands and media buying and advertising agencies acting on their behalf to maximize sell-through of our advertising inventory. These networks represent high-traffic, high-demand locations with broad appeal. We also expect to enhance existing ad products and develop new ones to provide appealing options to advertisers looking for innovative ways to engage potential customers.

    Increase our brand awareness.   We will continue to seek new ways to promote our brand through our managed and operated hotspots. We intend to enhance our brand through low-cost co-marketing arrangements with our partners and through periodic promotional and sponsorship activities and by continuing to leverage the reach of social media and public relations to interact with our customers.

    Services

        Our solution makes it easy, convenient and cost effective for consumers to access the mobile Internet.

        DAS or Femto-Cell.     We offer our telecom operator partners access to our DAS or femto-cell infrastructure at certain of our managed and operated locations. We deploy our DAS or femto-cell infrastructure within airports and other large venues with big audiences that require additional signal strength to improve the quality of cellular services.

        Wholesale—Wi-Fi.     Our integrated hardware and software platform allows us to provide a range of enhanced services to network operators, device manufacturers, technology companies, enterprise software and services companies, venue operators and financial services companies.

    Roaming and carrier offload services.   We offer roaming and carrier offload services across our entire network of more than 1.5 million hotspot locations to our partners who can then provide mobile Internet services to their customers at these locations.

    Turn-key solutions.   We offer our venue partners the ability to implement a turn-key Wi-Fi solution through a Wi-Fi network infrastructure that we install, manage and operate. Our turn-key solutions include a variety of service models that are supported through a mix of retail, military, wholesale Wi-Fi and advertising revenue.

    Comes With Boingo.   We offer access to our entire network of more than 1.5 million hotspot locations to our enterprise customers who then offer them as an added-value customer benefit to their service.

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        Retail.     We enable individuals to purchase Internet access at our managed and operated hotspots and select partner locations around the world. We offer a selection of recurring monthly subscriptions and single-use access plans. Our most common plans are the $9.95 monthly subscription and the single-use Boingo AsYouGo at $7.95 per day. Our single-use access plans provide unlimited access on a single device at a specific hotspot for a defined period of time, tolled from the time the user first logs on to the network. We will continue to launch other flexible plans to meet the evolving needs of our customers.

        Military.     We provide broadband and IPTV services for troops stationed on military bases. We offer a selection of recurring monthly subscriptions and shorter-term plans. We offer Standard Internet (5Mbps) and Blazing Internet (30 Mbps) services with plans available on hourly, daily, weekly, and monthly schedules, as well as IPTV services with plans available on a monthly schedule. Military personnel can add a movie tier and premium channels to enhance their IPTV service. We also offer discounted service options when both Internet and IPTV services are bundled in a combo package. These services are only available on certain military bases.

        Advertising.     Our platform provides a valuable opportunity for advertisers to reach consumers with sponsored Wi-Fi access, promotional programs and display advertising. We provide brands and advertisers the opportunity to sponsor wireless connectivity to individuals at locations where we manage and operate the Wi-Fi network and locations where we solely provide authorized access to a partner's Wi-Fi network through sponsored access and promotional programs. Our advertising solution is easily integrated into Wi-Fi networks not directly managed by Boingo, expanding the addressable market.

    Our Network

        Through our managed and operated hotspots and our strategic partnership arrangements, users have access to more than 1.5 million hotspots worldwide in venues such as airports, hotels, big box retailers, office buildings, convention centers, arenas, stadiums and quick service restaurants. We design, build, monitor and maintain the Wi-Fi network at our managed and operated hotspot locations primarily located in the United States, Europe and Asia. Our strategic partnership arrangements with 95 network operators allow us to extend our global network to 100 countries worldwide. In 2013, we acquired Electronic Media Systems, Inc. and Advanced Wireless Group, LLC and its network of 17 managed and operated networks (collectively, "AWG").

        Boingo hotspot locations by region as of December 31, 2015 included:

Region
  Airport   Café / Retail   Convention
Center
  Hotel   Other(1)   Total  

North America

    58     45,603     46     2,911     112,341     160,959  

Latin America

    85     5,369     4     268     7,070     12,796  

Europe, Middle East and Africa

    243     43,039     459     11,540     254,589     309,870  

Asia

    264     259,884     3,464     44,752     678,586     986,950  

Total

    650     353,895     3,973     59,471     1,052,586     1,470,575  

(1)
Includes schools and universities, offices, hospitals and public spaces.

    Marketing and Business Development

        Our marketing and business development efforts are designed to cost effectively attract and retain new retail and military customers, expand our footprint of Wi-Fi hotspots, DAS and advertising locations and identify business partners that could leverage our network to provide mobile Internet services to their customers. We focus on efficient customer acquisition through our online presence,

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social media, public relations, influencer marketing, experiential and event marketing, market research, and other promotional activities.

        We seek to maximize customer lifetime value by managing subscriber acquisition cost, extending customer life and determining appropriate pricing. We use information about subscriber behavior to help us retain customers and determine premium offerings. Our segmentation is focused at the product level, so that we provide the right product, plan and price for our retail and military customers. Our consumer plans are available for essentially all Wi-Fi enabled devices and are priced on a month-to-month or per-use basis.

        We issue regular press releases announcing important partnerships and product developments and continually update our website with information about our network and services. We leverage our blog and social media accounts to further promote Boingo's product availability and applicability for travelers, military men and women, digital elite and consumers on-the-go.

    Development

        Our development efforts are focused primarily on supporting our networks and the businesses that run across these networks. These efforts include developing web applications for ease of connecting to our managed and operated locations and aggregate partner networks, integrating our software client with our wholesale partners, continuing to adapt our technology to new operating systems and platforms, continuing to develop an advertising system and business and operations support system for monetizing network service, continuing to develop an IPTV platform for delivering IPTV services to our military bases and optimizing our networks and backend systems for roaming and carrier offload. Our development model is based on Agile development practices so any deviations can be promptly corrected to improve reliability in our network or services and enhance customer satisfaction. For the years ended December 31, 2015, 2014 and 2013, development and technology expenses were $19.1 million, $14.9 million and $11.4 million, respectively.

    Technology

        Over the past 15 years, we have developed proprietary systems that include the Boingo software client and software development kit ("SDK"); authentication, authorization and tracking systems; mediation and billing systems; IPTV management and delivery platform; free user monetization media and advertising platform; and a real-time operational support and software configuration and messaging infrastructure.

    Boingo Software Client and SDK

        The Boingo software client and SDK are installed on Wi-Fi enabled devices such as smartphones, laptops and tablets to enable our customers and our partners customers to access our network. The key features of the Boingo software client include:

    Simple user interface.   The Boingo software client provides individuals with an uncomplicated, user-friendly interface designed to streamline the Wi-Fi network connection process. The software finds hotspots and monitors the availability of Wi-Fi hotspots in the Boingo network, presents a notification message of the hotspot identified and allows one-click user connections. In some devices, connection to a Boingo Wi-Fi hotspot occurs in the background, providing the user with a seamless, notification-free connectivity experience.

    Support for all major operating system platforms.   The Boingo software client and SDK support the Android, iOS, Mac OS and Windows operating systems, which represents the majority of all devices connecting to our managed and operated venues.

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    Automatic updates.   The Boingo software client automatically receives identification information for new hotspot locations as they are added to the Boingo network, including any information needed to automatically identify and login to the network. Location information, allowing a user to find Boingo hotspots from the client, is also automatically updated. On all but embedded platforms, software updates are also automatically offered to a user when available.

    Custom branding and flexible integration alternatives.   We offer wholesale customers the ability to integrate the Boingo software client into their products and services as a SDK. Additionally, we offer wholesale customers the option to utilize a custom, rebranded reference design of the software client used in our retail customer offering.

    Authentication, Authorization and Tracking System

        Our proprietary authentication, authorization and tracking system enables the reliable, scalable and secure initiation and termination of user Wi-Fi sessions on our network. This system authenticates our network users across a wide variety of hotspots and network operators, through a normalized authentication protocol. Through the authorization process, custom business rules ensure user access based on specific service parameters such as location, type of device, service plan and account information. Our system also captures duration, data traffic, location, and type of device. We normalize and process this data from disparate providers for our use and for our wholesale partners. This system has been enhanced to include support for secure Next Generation Hotspot roaming, which leverages Passpoint-certified devices and network hardware to establish seamless secure connections for customers.

    Mediation and Billing System

        Our mediation and billing system records and analyzes individual usage sessions required to bill for Wi-Fi usage. Users are charged based on variables such as pricing plan, device type, location, time and amount of use. Our system consolidates usage session information, determines the user identity and applies the appropriate aggregation and flagging to ensure proper usage processing. Our system handles exceptions automatically. Exceptions that cannot be solved automatically are brought to the attention of the operations staff for rectification of any discrepancies. The billing system provides billing based on roaming relationship, user type, device type and account type. Our retail and military customer mediation and billing is handled by the same infrastructure used for wholesale customer and billing, resulting in efficiencies of scale and operation.

    IPTV Management and Delivery Platform

        Our IPTV system enables us to deliver content to our military subscribers. The Boingo digital rights management ("DRM") system allows for live linear commercial content to be delivered securely through our encrypted network links that connect our primary IPTV data center and the military bases. The IPTV central content management system allows for regional content delivery and multiple programming bundle offers. To enhance the viewing experience for mobile and tablet devices, the Boingo IPTV delivery system uses HTTP Live Streaming distribution protocol that will accommodate playing content at different network speeds by dynamically reducing content size.

    Free User Monetization Media and Advertising Platform

        The Boingo Media platform enables brand advertisers to reach a captive audience through high engagement Wi-Fi sponsorships in premium locations worldwide. It delivers engaging advertising experiences, and our partners can place their messaging in the right context to their target audience. It also allows a combination of branding with direct response in a single high-impact format. Frequent

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travelers can be reached in a way they appreciate—by supporting free Wi-Fi access when they need it most.

    Software Configuration and Messaging System

        Our software configuration system provides real-time network configuration updates for 2,370 networks and 33 detection and login methodologies used by the Boingo software client to access our network. Our software configuration system automatically registers new network definitions and login methodologies to allow individuals to connect to our hotspot locations. All supported platforms use a single configuration, providing a high level of operational and test efficiency. Our messaging system enables real-time customer notification and system interaction at login, based on location, network, user, account type, device and usage. This approach enables us and our partners to deliver custom marketing or service messages.

    Operations

        We provide significant operational support for our managed and operated wireless infrastructure and the related technical systems in our network. For our managed and operated networks, we design, build, monitor and maintain the network. For roaming partners, we monitor network and related system uptime and report issues so that they can be quickly remedied. We have service level agreements with our roaming partners specifying minimum network uptime requirements and specified quality of service levels for different services that run across the wireless network infrastructure.

        Our Wi-Fi deployments are based on the IEEE 802.11a, b, g, n and ac standards and operate in the 2.4 GHz and 5 GHz unlicensed spectrum bands. We design, build, and operate DAS and femto-cell networks that provide 2G, 3G, and 4G-LTE services across multiple licensed-frequency bands for all major telecom operators.

    Customers

        We generate revenue primarily from our retail and military customers and wholesale partners. Our retail and military customers either purchase month-to-month subscription plans that automatically renew, or single-use access to our network. We acquire our retail and military customers primarily from users passing through our managed and operated locations, where we generally have exclusive multi-year agreements. Some of our wholesale Wi-Fi customers license our software and pay usage-based network access fees to allow their customers access to our global Wi-Fi network and other wholesale Wi-Fi partners pay us to provide Wi-Fi services in their venue locations under a service provider arrangement. Our DAS customers are telecom operators who pay us one-time build-out fees and recurring access fees for our DAS network, enabling their cellular customers to access these networks. Our wholesale customer relationships are generally governed by multi-year contracts. We acquire our wholesale customers through our business development efforts. We also generate revenue from advertisers that seek to reach visitors seeking Wi-Fi access at our managed and operated network locations with online advertising, promotional and sponsored programs. For the years ended December 31, 2015 and 2014, entities affiliated with AT&T Inc. accounted for 17% and 15%, respectively, of total revenue. For the year ended December 31, 2013, two groups of entities affiliated with Verizon Communications, Inc. and AT&T Inc. each accounted for 14% of total revenue. The loss of these groups and the customers could have a material adverse impact on our consolidated statements of operations.

    Key Business Metrics

        In addition to monitoring traditional financial measures, we also monitor our operating performance using key performance indicators. In 2014, we updated our presentation of revenue

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sources to differentiate our individual users based on the nature of the users—retail users who purchase Internet access at our managed and operated hotspots and select partner locations or military users who purchase Internet access or IPTV services for individual use on military bases. Accordingly, we have disaggregated our subscribers between our retail and military users. We have also removed monthly churn, which was defined as the number of subscribers who canceled their subscriptions in a given month, expressed as a percentage of the average subscribers in that month, as a key performance indicator as we no longer view monthly churn as a key business metric. Our key performance indicators follow:

 
  Year Ended December 31,  
 
  2015   2014   2013  
 
  (in thousands)
 

Subscribers—retail

    204     254     308  

Subscribers—military

    57     20     2  

Connects

    105,335     81,413     50,830  

DAS nodes

    10.9     8.4     6.3  

        Subscribers—retail and subscribers—military.     This metric represents the number of paying customers who are on a month-to-month subscription plan at a given period end.

        Connects.     This metric shows how often individuals connect to our global Wi-Fi network in a given period. The connects include retail and wholesale customers in both customer pay locations and customer free locations where we are a paid service provider or receive sponsorship or promotional fees. We count each connect as a single connect regardless of how many times that individual accesses the network at a given venue during their 24 hour period. This measure is an indicator of paid activity throughout our network.

        DAS nodes.     This metric represents the number of active DAS nodes as of the end of the period. A DAS node is a single communications endpoint, typically an antenna, which transmits or receives radio frequency signals wirelessly. This measure is an indicator of the reach of our DAS network.

    Retail and Military Customer Support Services

        We provide support services to our retail and military customers 24 hours per day, 7 days per week, 365 days per year, by phone, chat or email. Our website also contains a comprehensive list of responses to frequently asked questions and a customer knowledge base, and we monitor and respond to social media communications regarding our services. We provide support services through our internal customer care department and we rely on a third-party provider for most of our standard customer support.

    Competition

        The market for mobile Internet services and solutions is fragmented and competitive. We believe the principal competitive factors in our industry include the following:

    price;

    ease of access and use;

    quality of service;

    geographic reach;

    bundled service offerings;

    venue exclusivity;

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    brand name recognition; and

    flexible pricing plans.

        We believe we face no material direct competitors to our service offerings. Indirect competitors include telecom operators, cable companies, self-managed venue networks and smaller wireless Internet service providers. Some of these competitors have substantially greater resources, larger customer bases, longer operating histories and greater name recognition than we have. Others offer bundled data services with primary service offerings that we do not offer such as landline and cellular telephone service, and cable or satellite television. Many of our indirect competitors are also partners from whom we receive revenue when their customers access our network. We believe that we compete favorably based on brand recognition, geographic coverage, network reliability, quality of service, ease of use, cost, and our neutral host business model.

    Intellectual Property

        Our ongoing success will depend in part upon our ability to protect our core technology and intellectual property. To accomplish this, we rely on a combination of intellectual property rights, including trade secrets, patents, copyrights and trademarks, as well as contractual restrictions.

        We have four issued U.S. patents, two of which expire in 2022, and the others of which expire in 2030 and 2033. We have six patent applications pending in the United States. One of the pending U.S. patent applications is also pending in Europe. We have two issued Japanese patents and two issued Chinese patents, each of which has a maximum term that expires in 2027.

        Our registered trademarks in the United States and the European Union include "Boingo", "Boingo Wi-Finder", and "Don't just go. Boingo.", and in the United States, "Boingo Broadband", "Cloud 9 Media", "Concourse Communications", and "AWG-WIFI". We own additional registrations and have filed other trademark applications in the United States and other countries.

        In addition to the foregoing protections, we control access to, and use of, our proprietary software and other confidential information through the use of internal and external controls, including contractual protections with employees, contractors, customers and partners. Our software is protected by United States and international copyright laws.

    Employees

        As of December 31, 2015, we had 286 employees, including 76 in development and technology, 114 in operations, 61 in sales and marketing and 35 in general and administrative. All of our employees are full-time employees except for two part-time employees. None of our employees are represented by a labor union except for four international employees who are covered by a collective bargaining agreement. We have never experienced any employment related work stoppages and consider relations with our employees to be good. As of December 31, 2015, we also had arrangements with a third party call center provider that provided us with approximately 50 full-time equivalent contractors for retail and military customer support service and similar functions.

    Financial Information about Segments and Geographic Areas

        Reference to our segments and the geographic areas where we operate is contained in Note 2 to our accompanying consolidated financial statements included in Part II, Item 8 of this report.

    Available Information

        Our filings with the United States Securities and Exchange Commission or SEC, including this Annual Report on Form 10-K, quarterly reports on Form 10-Q, and current reports on Form 8-K are

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available free of charge through the Investor Relations section of our website at http://www.boingo.com and are accessible as soon as reasonably practicable after being electronically filed with or furnished to the SEC. The information on, or that can be accessed through, our website is not part of this Annual Report on Form 10-K.

        Copies of this report are also available free of charge from Boingo Corporate Investor Communications, 10960 Wilshire Boulevard, 23 rd  Floor, Los Angeles, California 90024. In addition, our Corporate Governance Guidelines, Code of Business Conduct and Ethics and written charters of the committees of the Board of Directors are accessible through the Corporate Governance tab in the Investor Relations section of our website and are available in print to any stockholder who requests a copy.

        You may read and copy materials that we file with the SEC at the SEC's Public Reference facilities at 100 F Street, N.E., Room 1580, Washington, DC 20549. Information on the operation of the Public Reference facilities is available by calling the SEC at 1-800-SEC-0330. The SEC maintains a website that contains reports and other information we file, and proxy statements to be filed with the SEC. The address of the SEC's website is http://www.sec.gov .

Item 1A.    Risk Factors

         Investing in our common stock involves a high degree of risk. You should consider carefully the risks and uncertainties described below, together with all of the other information in this report on Form 10-K, including our accompanying consolidated financial statements and the related notes, before deciding whether to purchase shares of our common stock. If any of the following risks actually occur, our business, financial condition, results of operations and prospects could be materially and adversely affected. The price of our common stock could decline and you could lose part or all of your investment.

Risks Related to Our Business

         A significant portion of our revenue is dependent on our relationships with our venue and network partners, and if these relationships are impaired or terminated, or if our partners do not perform as expected, our business and results of operations could be materially and adversely affected.

        We depend on our relationships with venue partners, particularly key airport venue partners and military bases, in order to manage and operate DAS, femto-cell, and Wi-Fi networks. These relationships generate a significant portion of our revenue and allow us to generate wholesale revenues and new retail and military customers. Our agreements with our venue partners, telecom operators, and wholesale customers are for defined periods and of varying durations. In order to maintain our relationships with venue partners, we may need to upgrade our networks, which would require significantly higher initial capital expenditures than we have historically incurred, and if we are unsuccessful, our relationships could be impaired. If our venue partners terminate or fail to renew these agreements, our ability to generate and retain wholesale, retail and military customers would be diminished, which might result in a significant disruption of our business and adversely affect our operating results. Further, any delays in our ability to complete the upgrade of our networks or build-out new networks can adversely affect our operating results.

        We depend on our relationships with network partners to allow users to roam across networks that we do not manage or operate. A significant portion of our revenue depends on maintaining these relationships with network partners. Some network partners may compete with us for retail customers and may decide to terminate our partnerships and instead develop competing retail products and services. Our network partner agreements are for defined periods and of varying durations. If our network partners terminate these agreements, or fail to renew these agreements, our ability to retain retail customers could be diminished and our network reach could be reduced, which could result in a significant disruption of our business and adversely affect our operating results.

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         Our operating results may fluctuate unexpectedly, which makes them difficult to predict and may cause us to fail to meet the expectations of investors, adversely affecting our stock price.

        We operate in a highly dynamic industry and our future quarterly operating results may fluctuate significantly. Our revenue and operating results may vary from quarter-to-quarter due to many factors, many of which are not within our control. As a result, comparing our operating results on a period-to-period basis may not be meaningful. Further, it is difficult to accurately forecast our revenue, margin and operating results, and if we fail to match our expected results or the results expected by financial analysts, the trading price of our common stock may be adversely affected.

        Factors that contribute to fluctuations in our operating results from quarter-to-quarter include those described in this risk factor section including:

    our gain or loss of a key venue partner, military partner, roaming partner or platform services partner;

    the rate at which individuals adopt and continue to use our solutions;

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

    the growing prevalence of free Wi-Fi models and our ability to adapt and compete with free Wi-Fi;

    the number of air travel passengers, particularly business travelers;

    intellectual property disputes; and

    general economic conditions in our domestic and foreign markets.

        Due to these and other factors, quarter-to-quarter comparisons of our historical operating results should not be relied upon as accurate indicators of our future performance.

         Our business depends upon demand for connected services that rely on wireless network infrastructure. Our ability to adapt to the speed of changes and anticipate market adoption of new technologies may adversely impact our business.

        Our future success depends upon growing demand for wireless connected services. The demand for wireless connectivity may decrease or may grow more slowly than expected. Any such decrease in the demand or slowing rate of growth could have a material adverse effect on our business. The continued demand for wireless connectivity services depends on the continued proliferation of smartphones, tablets and other wireless connection enabled devices. We derive retail revenue from users who purchase subscriptions or single-use access. We may face challenges as we seek to increase the revenue generated from the usage on smartphones, tablets and other wireless connected devices.

        A portion of our business depends on the continued integration of Wi-Fi as a standard feature in wireless connected devices. If Wi-Fi ceases to be a standard feature in wireless connected devices, or if the rate of integration of Wi-Fi on devices decreases or is slower than expected, the market for our services may be substantially diminished.

        Competing technologies pose a risk to the continued use of Wi-Fi as a mobile wireless connectivity technology. The introduction and market acceptance of emerging wireless technologies such as 4G/LTE, 5G, LTE-U and Super Wi-Fi, could cause significant disruption to our Wi-Fi business, which may result in a loss of customers, users and revenue. If users find emerging wireless technologies to be sufficiently fast, convenient or cost effective, we may not be able to compete effectively, and our ability to attract or retain users will be impaired. Additionally, one or more of our partners may deploy emerging wireless technologies that could reduce the partner's need to work with us, and may result in significant loss of revenue and reduction of the Wi-Fi hotspots in our network.

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        We deliver value to our users by providing simple access to Wi-Fi hotspots, regardless of whether we manage and operate the hotspot, or the hotspot is operated by a partner. As a result, our business depends on our ability to anticipate and quickly adapt to changing technological standards and advances. If technological standards change and we fail to adapt accordingly, our business and revenue may be adversely affected. Furthermore, the proliferation of new mobile devices and operating platforms poses challenges for our research and development efforts. If we are unable to create simple solutions for a particular device or operating platform, we will be unable to effectively attract users of these devices or operating platforms and our business will be adversely affected.

         The growth of free Wi-Fi networks may compete with our paid mobile Wi-Fi Internet solutions.

        Many venues, including airports, coffee shops and hotels, offer free mobile Wi-Fi as an incentive or value-added benefit to their customers. Free Wi-Fi may reduce retail customer demand for our services, and put downward pressure on the prices we charge our retail customers. In addition, telecom operators may offer free mobile Wi-Fi as part of a home broadband or other service contract, which also may force down the prices we charge our retail customers. If we are unable to effectively offset this downward pressure on our prices by being a Wi-Fi service provider, or if we are unable to acquire and retain retail customers, we will have lower profit margins and our operating results and financial condition may be adversely impacted.

         Negotiations with prospective wholesale partners can be lengthy and unpredictable, which may cause our operating results to vary.

        Our negotiations with prospective partners to acquire Wi-Fi hotspots to operate or to acquire roaming rights on partners' networks, or for new partners to implement our solutions, can be lengthy, and in some cases can last over 12 months. Because of the lengthy negotiation cycle, the time required to reach a final agreement with a partner is unpredictable and may lead to variances in our operating results from quarter to quarter. Negotiations with prospective partners also require substantial time, effort and resources. We may ultimately fail in our negotiations, resulting in costs to our business without any associated benefits.

         We may be unsuccessful in expanding into new venue types, which could harm the growth of our business, operating results and financial condition.

        We are negotiating with existing and prospective partners to expand our managed and operated Wi-Fi network footprint in venue types where we historically have had only a limited presence. Expansion into these venue types, and in particular, shopping malls, stadiums, hospitals and quick service restaurants, may require significantly higher initial capital expenditures than we have historically incurred. In contrast to Wi-Fi network build-outs at venues such as airports, where telecom operators typically pay the substantial expense of laying cable or fiber, we may be required to incur the initial capital expense of access points and related hardware and cabling at tens of thousands of quick serve restaurant locations and hundreds of shopping malls, hospitals and stadium locations. We may not be able to execute on our strategy or there may not be returns on these investments in the near future or at all. As a result, our business, financial condition and results of operations could be materially and adversely affected.

         We operate relatively new businesses in a rapidly evolving industry, so an investment in our company involves more risk than an investment in a more mature company in an established industry.

        We derive nearly all of our revenue from mobile Internet services, which are new and highly dynamic businesses, which face significant challenges. You should consider our business and prospects in light of the risks, uncertainties and difficulties we will encounter as an emerging company in a new

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and rapidly evolving market. We may not be able to address these risks, uncertainties and difficulties successfully, which could materially harm our business and operating results.

         Worldwide economic conditions, and their impact on travel and consumer spending, may adversely affect our business, operating results and financial condition.

        Global economic conditions have recently weakened and levels of travel and consumer spending have been particularly depressed. Our business is impacted by travel and consumer spending, because users seek to access the mobile Internet while they are on-the-go, and because spending on Internet access is often a consumer discretionary spending decision. Factors that tend to negatively impact levels of travel include high unemployment, high energy prices, low business and consumer confidence, the fear of terrorist attacks, war and other macroeconomic factors. Economic conditions that tend to negatively impact levels of discretionary consumer spending include high unemployment, high consumer debt, reductions in net worth, depressed real estate markets, increased taxation, high energy prices, high interest rates, low consumer confidence and other macroeconomic factors. If the global economic recovery is slower than expected, or if it weakens, our retail and military customer base, new retail and military customer acquisition and usage-based revenue could be materially harmed, and our results of operations would be adversely affected.

         We may not maintain recent rates of revenue growth.

        Although our revenue has increased substantially over the last few years, we may not be able to maintain historical rates of revenue growth. We believe that our continued growth will depend, among other factors, on successfully implementing our business strategies, including our ability to:

    attract new users, convert users of our single-use services into subscribers and keep existing subscribers actively using our services;

    develop new sources of revenue from our users and partners;

    react to changes in the way individuals access and use the mobile Internet;

    expand into new markets;

    increase the awareness of our brand;

    retain our existing partners and attract new partners; and

    provide our users with a superior experience, including customer support and payment experiences.

        However, we cannot guarantee that we will successfully implement any of these business strategies.

         The U.S. government may modify, curtail or terminate one or more of our contracts.

        We have dedicated a significant amount of resources to building out broadband and IPTV networks for troops stationed on military bases pursuant to our contracts with the U.S. government. The investment of these resources will occur in advance of experiencing any direct benefit from them including generation of revenues and will make it difficult to determine if we are allocating our resources efficiently. As a result of these investments, we do not expect to be profitable in the near future. The U.S. government may modify, curtail or terminate its contracts with us, either at its convenience or for default based on performance. Any such modification, curtailment, or termination of one or more of our government contracts could have a material adverse effect on our earnings, cash flow and/or financial position.

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         System failures could harm our business.

        Although we seek to reduce the possibility of disruptions or other outages, our business may be disrupted by problems with our technology and systems, such as an access point failure at one of our managed and operated wireless infrastructure networks, or a backhaul disruption. We have experienced system failures from time to time, and any interruption in the ability of users to access our solution could harm our business and reputation.

        Our systems may be vulnerable to damage or interruption from telecommunications failures, computer denial-of-service attacks, power loss, computer viruses, earthquakes, floods, fires, terrorist attacks and similar events. Some of our systems are not fully redundant, and our disaster recovery planning is not sufficient for all eventualities. Our systems may also be damaged by break-ins, sabotage, and acts of vandalism. Despite any precautions we may take, the occurrence of a natural disaster or other unanticipated problems could result in lengthy interruptions in the availability of the Boingo solution. We do not carry business interruption insurance to compensate us for all losses that may result from service interruptions caused by system failures. If we are unable to resolve service interruptions quickly, our ability to acquire and retain customers will be impaired and our operating results and business could be adversely affected.

         We may be unsuccessful in expanding our international operations, which could harm the growth of our business, operating results and financial condition.

        Our ability to expand internationally involves various risks, including the need to invest significant resources in unfamiliar markets, and the possibility that there may not be returns on these investments in the near future or at all. In addition, we have incurred and expect to continue to incur expenses before we generate any material revenue in these new markets. Our expansion plans will require significant management attention and resources. We have limited experience in selling our solutions in international markets or in conforming to local cultures, standards or policies. We may not be able to compete successfully in these international markets. Our ability to expand will also be limited by the demand for mobile Internet in international markets. Different privacy, censorship and liability standards and regulations and different intellectual property laws in foreign countries may cause our business and operating results to suffer.

        Any future international operations may fail to succeed due to risks inherent in foreign operations, including:

    different technological solutions for mobile Internet than those used in North America;

    varied, unfamiliar and unclear legal and regulatory restrictions;

    unexpected changes in international regulatory requirements and tariffs;

    legal, political, social or systemic restrictions on the ability of U.S. companies to do business in foreign countries;

    currency fluctuations;

    Foreign Corrupt Practices Act compliance and related risks;

    difficulties in staffing and managing foreign operations;

    difficulties in enforcing contracts and collecting accounts receivable, and longer payment cycles, especially in emerging markets;

    reduced protection for intellectual property rights in some countries; and

    potential adverse tax consequences.

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        Some of our business partners also have international operations and are subject to the risks described above. Even if we are able to successfully manage the risks of international operations, our business may be adversely affected if our business partners are not able to successfully manage these risks.

        As a result of these obstacles, we may find it difficult or prohibitively expensive to expand internationally or we may be unsuccessful in our attempt to do so, which could harm our business, operating results and financial condition.

         Our industry is competitive and if we do not compete successfully, we could lose market share, experience reduced revenue or suffer losses.

        The market for commercial wireless infrastructure solutions is competitive and impacted by technological change, and we expect competition with our current and potential competitors to intensify in the future. In particular, some of our competitors have taken steps or may decide to more aggressively compete against us, particularly in the market for venue build-outs of Wi-Fi, DAS, and femto-cell solutions.

        Our competitors, many of whom are also our partners, include a variety of telecom operators and network operators, including AT&T, T-Mobile, Cablevision, Comcast and local operators. These and other competitors have developed or may develop technologies that compete directly with our solutions. Many of our competitors are substantially larger than we are and have substantially longer operating histories. We may not be able to fund or invest in certain areas of our business to the same degree as our competitors. Many have substantially greater product development and marketing budgets and other financial and personnel resources than we do. Some also have greater name and brand recognition and a larger base of subscribers or users than we have. In addition, our competitors may provide services that we do not, such as cellular, local exchange and long distance services, voicemail and digital subscriber line. Users that desire these services may choose to also obtain mobile wireless connectivity services from a competitor that provides these additional services rather than from us.

        Furthermore, we rely on several of our competitors as partners in roaming agreements. The roaming agreements provide that our retail customers and our wholesale partners' customers may use the Wi-Fi networks of our partners. One or more of our partners may deploy competing technologies that could reduce the partner's need to work with us under a roaming agreement. If our partners decide to terminate our roaming agreements, our network of Wi-Fi hotspots and cellular nodes (DAS or femto-cells) may be reduced, which may result in a significant disruption to our business.

        Competition could increase our selling and marketing expenses and related customer acquisition costs. We may not have the financial resources, technical expertise or marketing and support capabilities to continue to compete successfully. A failure to respond to established and new competitors may adversely impact our business and operating results.

         The regulation of Internet communications, products and services is currently uncertain, which poses risks for our business from changes in laws, regulations, and interpretation or enforcement of existing laws or regulations.

        The current regulatory environment for Internet communications, products and services is uncertain. Many laws and regulations were adopted prior to the advent of the Internet and related technologies and often do not contemplate or address the specific issues associated with the Internet and related technologies. The scope of laws and regulations applicable to the Internet remains uncertain and is subject to statutory or interpretive change. We cannot be certain that we, our partners or our users are currently in compliance with regulatory or other legal requirements in the numerous countries in which our service is used. Our failure or the failure of our partners, users and others with

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whom we transact business, or to whom we license the Boingo solution, to comply with existing or future regulatory or other legal requirements could materially adversely affect our business, financial condition and results of operations. Regulators may disagree with our interpretations of existing laws or regulations or the applicability of existing laws or regulations to our business, and existing laws, regulations and interpretations may change in unexpected ways.

        We believe that the Boingo solution is on the forefront of wireless infrastructure connectivity, and therefore it may face greater regulatory scrutiny than other communications products and services. We cannot be certain what positions regulators may take regarding our compliance with, or lack of compliance with, current and future legal and regulatory requirements or what positions regulators may take regarding any past or future actions we have taken or may take in any jurisdiction. Regulators may determine that we are not in compliance with legal and regulatory requirements, and impose penalties, or we may need to make changes to the Boingo solution, which could be costly and difficult. Any of these events would adversely affect our operating results and business.

         If we lose key personnel or are unable to attract and retain personnel on a cost effective basis, our business could be harmed.

        Our performance is substantially dependent on the continued services and performance of our senior management and our highly qualified team of engineers, many of whom have numerous years of experience and specialized expertise in our business. If we are not successful in hiring and retaining highly qualified engineers, we may not be able to extend or maintain our engineering and technological expertise and our future product and service development efforts could be adversely affected. Additionally, the process of attracting and retaining suitable replacements for any executive officers or any of our highly qualified engineers we lose in the future would result in transition costs and would divert the attention of other members of our senior management from our existing operations. Additionally, such a loss could be negatively perceived in the capital markets. If we lose members of our senior management, this may significantly delay or prevent the achievement of our strategic objectives and adversely affect our operating results.

        Our future success also depends on our ability to identify, attract, hire, train, retain and motivate highly skilled managerial, operations, business development and marketing personnel. We have in the past maintained a rigorous, highly selective and time-consuming hiring process. We believe that our approach to hiring has significantly contributed to our success to date. However, our highly selective hiring process has made it more difficult for us to hire a sufficient number of qualified employees, and, as we grow, our hiring process may prevent us from hiring the personnel we need in a timely manner. Moreover, the cost of living in the Los Angeles area, where our corporate headquarters is located, has been an impediment to attracting new employees in the past, and we expect that this will continue to impair our ability to attract and retain employees in the future. If we fail to attract, integrate and retain the necessary personnel, we may not be able to grow effectively and our business could suffer significantly.

         Our failure to properly maintain our customers' confidential information and protect our network against security breaches, including cyber-security breaches, could harm our business and operating results.

        Advances in computer capabilities, new discoveries in the field of cryptography or other cyber-security developments may result in a compromise or breach of the technology we use to protect user transaction data. Cyber-security risks such as malicious software and attempts to gain unauthorized access to data are rapidly evolving and could lead to disruptions in our network, unauthorized release of confidential or otherwise protected information or corruption of data. Any compromises of our security could damage our reputation and brand and expose us to possible liability such as litigation claims, which would substantially harm our business and operating results. We may need to expend significant resources to protect against security breaches or to address problems caused by breaches.

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        Many countries, such as European Union member countries as a result of the 2006 E.U. Data Retention Directive, are introducing, or have already introduced into local law some form of traffic and user data retention requirements, which are generally applicable to providers of electronic communications services. Retention periods and data types vary from country to country, and the various local data protection and other authorities may implement traffic and user retention requirements regarding certain data in different and potentially overlapping ways. Although the constitutionality of the 2006 E.U. Data Retention Directive has been questioned, we may be required to comply with data retention requirements in one or more jurisdictions, or we may be required to comply with these requirements in the future as a result of changes or modifications to the Boingo solution or changes or modifications to the technological infrastructure on which the Boingo solution is based. Failure to comply with these retention requirements may result in the imposition of costly penalties. Compliance with these retention requirements can be difficult and costly from a legal, operational and technical perspective and could harm our business and operational results.

         We rely on our credit facility to fund a significant portion of our capital expenditures and other capital needs. If we are unable to achieve compliance with the credit facility covenants, or interest rates increase significantly, our business would be negatively impacted.

        In November 2014, we entered into a Credit Agreement (the "Credit Agreement") and related agreements with Bank of America, N.A. acting as agent for lenders named therein. The Credit Agreement places restrictions on our ability to take certain actions and sets standards for minimum financial performance. In addition to maintaining compliance with the covenants set forth in the Credit Agreement, our ability to increase the amount available for borrowing under our revolving line of credit depends on our ability to meet certain financial targets. In February 2016, we increased the amount of our available revolving line of credit under the Credit Agreement from $46.5 million to $69.75 million. If we fail to comply with the terms and conditions of this Credit Agreement, then the line of credit may be withdrawn, we may be required to immediately repay any outstanding obligation, and the additional funds will not be available to us to fund our capital needs.

         We rely on a third-party customer support service provider for the majority of our customer support calls. If this service provider experiences operational difficulties or disruptions, our business could be adversely affected.

        We depend on a third-party customer support service provider to handle most of our routine retail and military customer support cases. While we maintain limited customer support operations in our Los Angeles headquarters, if our relationship with our customer support service provider terminates unexpectedly, or if our customer service provider experiences operational difficulties, we may not be able to respond to customer support calls in a timely manner and the quality of our customer service would be adversely affected. This could harm our reputation and brand image and make it difficult for us to attract and retain users. In addition, the loss of the customer support service provider would require us to identify and contract with alternative sources, which could prove time-consuming and expensive.

         Material defects or errors in our software could harm our reputation, result in significant costs to us and impair our ability to sell the Boingo solution.

        The software underlying the Boingo solution is inherently complex and may contain material defects or errors, particularly when the software is first introduced or when new versions or enhancements are released. We have from time to time found defects or errors in our software, and defects or errors in our existing software may be detected in the future. Any defects or errors that cause interruptions to the availability of our services could result in:

    a reduction in sales or delay in market acceptance of the Boingo solution;

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    sales credits or refunds to our users and wholesale partners;

    loss of existing users and difficulty in attracting new users;

    diversion of development resources;

    harm to our reputation and brand image; and

    increased insurance costs.

        The costs incurred in correcting any material defects or errors in our software may be substantial and could harm our operating results.

         If we are not successful in developing our mobile application for new devices and platforms, or if those solutions are not widely adopted, our results of operations and business could be adversely affected.

        As new mobile devices and platforms are developed, we may encounter problems in developing products for such new mobile devices and platforms, and we may need to devote significant resources to the creation, support, and maintenance of such products. In addition, if we experience difficulties integrating our mobile applications into mobile devices, or if we face increased costs to distribute our mobile applications, our future growth and our results of operations could suffer.

         If we fail to maintain relationships with providers of mobile operating systems or mobile application download stores, our business could be adversely affected.

        We rely on the integration of our software into mobile operating systems to allow mobile devices to connect to our network of Wi-Fi hotspots. If problems arise with our relationships with providers of mobile operating systems or mobile application download stores, such as the Apple App Store and Google Play, or if our mobile application receives unfavorable treatment compared to the promotion and placement of competing applications, such as the order of our products in the mobile application download stores, we may fail to attract or retain customers or partners, and our business could be adversely affected.

         Our business depends on strong brands, and if we do not cost effectively develop, maintain and enhance our brand, our financial condition and operating results could be harmed.

        We believe that the Boingo brand is a critical part of our business and that developing and maintaining awareness of our brand is important to achieving widespread acceptance of the Boingo solution, and is an important element in attracting and retaining customers and partners. We continue to seek new ways to promote our brand through our managed and operated hotspots. We intend to enhance our brand through low-cost co-marketing arrangements with our partners and through periodic promotional and sponsorship activities and by continuing to leverage the reach of social media to interact with our customers. In order to maintain strong relationships with our venue and network partners, we may have to reduce the visibility of the Boingo brand or make other decisions that do not promote and maintain the Boingo brand, such as our custom branding alternatives that we offer to wholesale clients. If we fail to promote and maintain the Boingo brand, or if we incur significant expenses to promote the brand and are still unsuccessful in maintaining a strong brand, our financial condition and operating results could be harmed.

        Additionally, we believe that developing this brand in a cost effective manner is important in meeting our expected margins. Brand promotion activities may not result in increased revenue, and any increased revenue resulting from these promotion activities may not offset the expenses we incurred in building our brand. If we fail to cost effectively build and maintain our brand, we may fail to attract or retain customers or partners, and our financial condition and results of operations could be harmed.

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Risks Related to Our Intellectual Property

         Claims by others that we infringe their proprietary technology could harm our business.

        In recent years there has been significant litigation involving intellectual property rights in many technology-based industries, including the wireless communications industry. While we have not been specifically targeted, companies similar to us have been subject to patent lawsuits. As we face increasing competition and gain an increasingly high profile, the possibility of intellectual property rights claims against us grows. We may be subject to third-party claims in the future. The costs of supporting these litigations and disputes are considerable, and there can be no assurance that a favorable outcome will be obtained. We may be required to settle these litigations and disputes on terms that are unfavorable to us, given the complex technical issues and inherent uncertainties in intellectual property litigation. Claims that the Boingo solution infringes third-party intellectual property rights, regardless of their merit or resolution, could also divert the efforts and attention of our management and technical personnel. The terms of any settlements or judgments may require us to:

    cease distribution and back-end operation of the Boingo solution;

    pay substantial damages for infringement;

    expend significant resources to develop non-infringing solutions;

    license technology from the third-party claiming infringement, which may not be available on commercially reasonable terms, or at all;

    cross-license our technology to a competitor to resolve an infringement claim, which could weaken our ability to compete with that competitor; or

    pay substantial damages to our partners to discontinue their use of or to replace infringing solutions sold to them with non-infringing solutions.

        Any of these unfavorable outcomes could have a material adverse effect on our business, financial condition and results of operations.

         If we are unable to protect our intellectual property rights, our competitive position could be harmed, or we could be required to incur significant expenses to enforce our rights.

        Our business depends on our ability to protect our proprietary technology. We rely on trade secret, patent, copyright and trademark laws and confidentiality agreements with employees and third parties, all of which offer only limited protection. We own four patents and have applications for six additional patents pending in the United States. Despite our efforts, the steps we have taken to protect our proprietary rights may not be adequate to prevent the use or misappropriation of our proprietary information or infringement of our intellectual property rights. Our ability to police the use, misappropriation or infringement of our intellectual property is uncertain, particularly in countries other than the United States. Further, we do not know whether any of our pending patent applications will result in the issuance of patents or whether the examination process will require us to narrow our claims. Even if patents are issued, they may be contested, circumvented, or invalidated in the future. Moreover, the rights granted under any issued patents may not provide us with complete proprietary protection or any competitive advantages, and, as with any technology, competitors may be able to develop similar or superior technologies on their own now or in the future. Protecting against the unauthorized use of our solutions, trademarks, and other proprietary rights is expensive, difficult and, in some cases, impossible. Litigation may be necessary in the future to enforce or defend our intellectual property rights, to protect our trade secrets, or to determine the validity and scope of the proprietary rights of others. Litigation could result in substantial costs and diversion of management resources, either of which could harm our business. Furthermore, many of our current and potential competitors have the ability to dedicate substantially greater resources to enforce their intellectual

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property rights than we do. Accordingly, despite our efforts, if the protection of our proprietary rights is inadequate to prevent use or misappropriation by third parties, the value of our brand and other intangible assets may be diminished and competitors may be able to more effectively mimic our service and methods of operations. Any of these events would have a material adverse effect on our business, financial condition and results of operations.

         Our use of open source software could limit our ability to commercialize the Boingo solution.

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

         We utilize unlicensed spectrum in certain of our offerings, which is subject to intense competition, low barriers of entry and slowdowns due to multiple users.

        We presently utilize unlicensed spectrum to provide our Wi-Fi Internet solutions. Unlicensed or "free" spectrum is available to multiple users and may suffer bandwidth limitations, interference and slowdowns if the number of users exceeds traffic capacity. The availability of unlicensed spectrum is not unlimited and others do not need to obtain permits or licenses to utilize the same unlicensed spectrum that we currently, or may in the future, utilize. The inherent limitations of unlicensed spectrum could potentially threaten our ability to reliably deliver our services. Moreover, the prevalence of unlicensed spectrum creates low barriers to entry in our industry.

Risks Related to Ownership of Our Common Stock

         The market price of our common stock may be volatile, which could result in substantial losses for investors.

        Fluctuations in market price and volume are particularly common among securities of technology companies. As a result, you may be unable to sell your shares of common stock at or above the price you paid. The market price of our common stock may fluctuate significantly in response to the factors described in this risk factor section as well as the following factors, among others, many of which are beyond our control:

    general market conditions;

    domestic and international economic factors unrelated to our performance;

    actual or anticipated fluctuations in our quarterly operating results;

    changes in or failure to meet publicly disclosed expectations as to our future financial performance;

    changes in securities analysts' estimates of our financial performance or lack of research and reports by industry analysts;

    changes in market valuations or earnings of similar companies;

    announcements by us or our competitors of significant products, contracts, acquisitions, or strategic partnerships;

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    developments or disputes concerning patents or proprietary rights, including increases or decreases in litigation expenses associated with intellectual property lawsuits we may initiate, or in which we may be named as defendants;

    termination of a relationship with a venue partner;

    failure to complete significant sales;

    any future sales of our common stock or other securities; and

    additions or departures of key personnel.

         If securities or industry analysts publish misleading or unfavorable research about our business, our stock price and trading volume could decline.

        The trading market for our common stock depends in part on the research and reports that securities or industry analysts publish about us or our business. If one or more of these analysts downgrades our stock or publishes misleading or unfavorable research about our business, our stock price would likely decline. If one or more of these analysts ceases coverage of our company or fails to publish reports on us regularly, demand for our stock could decrease, which could cause our stock price or trading volume to decline. Announcements by analysts that may have a significant impact on the market price of our common stock may relate to:

    our operating results or forecasts;

    new issuances of equity, debt or convertible debt by us;

    developments in our relationships with corporate customers;

    announcements by our customers or competitors;

    changes in regulatory policy or interpretation;

    governmental investigations;

    changes in the ratings of our stock by rating agencies or securities analysts;

    our acquisitions of complementary businesses; or

    our operational performance.

         As a public company, we are subject to financial and other reporting and corporate governance requirements that may be difficult for us to satisfy, and may divert resources and management attention from operating our business.

        We are required to file annual, quarterly and other reports with the SEC. We must prepare and timely file financial statements that comply with SEC reporting requirements. We are also subject to other reporting and corporate governance requirements, under the listing standards of the NASDAQ Stock Market, or NASDAQ, which imposes significant compliance obligations upon us. We are required, among other things, to:

    prepare and file periodic reports, and distribute other stockholder communications, in compliance with the federal securities laws and NASDAQ rules; and

    evaluate and maintain our system of internal control over financial reporting, and report on management's assessment thereof, in compliance with rules and regulations of the SEC and the Public Company Accounting Oversight Board. Further, we are required to obtain an opinion on the effectiveness of our internal control over financial reporting as of December 31st each year from our independent registered public accounting firm.

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         If we fail to comply with the rules of Section 404 of the Sarbanes-Oxley Act of 2002 related to accounting controls and procedures, or, if we discover material weaknesses and deficiencies in our internal control and accounting procedures, we may be subject to sanctions by regulatory authorities and our stock price could decline.

        Section 404 of the Sarbanes-Oxley Act (the "Act") requires that we evaluate and determine the effectiveness of our internal control over financial reporting and requires an attestation and report by our external auditing firm on our internal control over financial reporting. We believe our system and process evaluation and testing comply with the management certification and auditor attestation requirements of Section 404. We cannot be certain, however, that we will be able to satisfy the requirements in Section 404 in all future periods, especially as we grow our business. If we are not able to continue to meet the requirements of Section 404 in a timely manner or with adequate compliance, we may be subject to sanctions or investigation by regulatory authorities, such as the SEC or the NASDAQ Stock Market. Any such action could adversely affect our financial results or investors' confidence in us and could cause our stock price to fall. Moreover, if we are not able to comply with the requirements of Section 404 in a timely manner, or if we or our independent registered public accounting firm identifies deficiencies in our internal controls that are deemed to be material weaknesses, we may be required to incur significant additional financial and management resources to achieve compliance.

         If we need additional capital in the future, it may not be available on favorable terms, or at all.

        We may require additional capital from equity or debt financing in the future to fund our operations, or respond to competitive pressures or strategic opportunities. We may not be able to secure timely additional financing on favorable terms, or at all. The terms of additional financing may place limits on our financial and operating flexibility. If we raise additional funds through further issuances of equity, convertible debt securities or other securities convertible into equity, our existing stockholders could suffer significant dilution in their percentage ownership of our company, and any new securities we issue could have rights, preferences and privileges senior to those of holders of our common stock. If we are unable to obtain adequate financing or financing on terms satisfactory to us, if and when we require it, our ability to grow or support our business and to respond to business challenges and opportunities could be significantly limited.

         The price of our common stock may continue to be volatile, which could lead to losses by investors and costly securities litigation, which could divert management's attention and adversely affect our results of operations.

        The stock market in general and market prices for the securities of technology companies like ours in particular, have from time to time experienced volatility that often has been unrelated to the operating performance of the underlying companies. A certain degree of stock price volatility can also be attributed to being an emerging company in an evolving industry. These broad market and industry fluctuations may adversely affect the market price of our common stock, regardless of our operating performance. In several recent situations where the market price of a stock has been volatile, holders of that stock have instituted securities class action litigation against the company that issued the stock. If any of our stockholders were to bring a lawsuit against us, the defense and disposition of the lawsuit could be costly and divert the time and attention of our management and harm our operating results.

         Investors may experience dilution of their ownership interests because of the future issuance of additional shares of our capital stock.

        We are authorized to issue 100,000,000 shares of common stock and 5,000,000 shares of preferred stock. As of December 31, 2015, there were approximately 37,325,000 shares of our common stock issued and outstanding and no shares of preferred stock outstanding. In addition, as of December 31, 2015, we had approximately 1,819,000 unvested restricted stock units, approximately 3,175,000 exercisable stock options, and approximately 5,978,000 shares available for grant under the 2011 Plan.

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        In the future, we may issue additional authorized but previously unissued equity securities resulting in the dilution of the ownership interests of our present stockholders. We may also issue additional shares of our capital stock or other securities that are convertible into or exercisable for our capital stock in connection with hiring or retaining employees or for other business purposes, including future sales of our securities for capital raising purposes. The future issuance of any such additional shares of capital stock may create downward pressure on the trading price of our common stock.

         Anti-takeover provisions in our charter documents and Delaware law could discourage, delay, or prevent a change in control of our company and may affect the trading price of our common stock.

        We are a Delaware corporation and the anti-takeover provisions of the Delaware General Corporation Law may discourage, delay, or prevent a change in control by prohibiting us from engaging in a business combination with an interested stockholder for a period of three years after the person becomes an interested stockholder, even if a change of control would be beneficial to our existing stockholders. In addition, our amended and restated certificate of incorporation and amended and restated bylaws may discourage, delay, or prevent a change in our management or control over us that stockholders may consider favorable. Institutional shareholder representative groups, shareholder activists and others may disagree with our corporate governance provisions or other practices, such as those listed below. We generally will consider recommendations of institutional shareholder representative groups, but we will make decisions based on what our board and management believe to be in the best long term interests of our company and stockholders. These groups could make recommendations to our stockholders against our practices or our board members if they disagree with our positions. Our amended and restated certificate of incorporation and amended and restated bylaws include provisions that:

    authorize the issuance of "blank check" preferred stock that could be issued by our board of directors to thwart a takeover attempt;

    establish a classified board of directors, as a result of which the successors to the directors whose terms have expired will be elected to serve from the time of election and qualification until the third annual meeting following their election;

    require that directors only be removed from office for cause and only upon a majority stockholder vote;

    provide that vacancies on the board of directors, including newly-created directorships, may be filled only by a majority vote of directors then in office;

    limit who may call special meetings of stockholders;

    prohibit stockholder action by written consent, thereby requiring all actions to be taken at a meeting of the stockholders; and

    require supermajority stockholder voting to effect certain amendments to our amended and restated certificate of incorporation and amended and restated bylaws.

         We have incurred substantial losses in past and current years and may incur additional losses in the future.

        As of December 31, 2015, our accumulated deficit was $85.2 million. We generated a net loss in 2015 and we are also currently investing in our future growth through expanding our network and buildouts, investing in our software, and consideration of future business acquisitions. As a result, we will incur higher depreciation and other operating expenses, as well as potential acquisition costs, that may negatively impact our ability to achieve profitability in future periods unless and until these growth efforts generate enough revenue to exceed their operating costs and cover our additional overhead

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needed to scale our business for this anticipated growth. The current global financial condition may also impact our ability to achieve profitability if we cannot generate sufficient revenue to offset the increased costs. In addition, costs associated with the acquisition and integration of any acquired companies may also negatively impact our ability to achieve profitability. Finally, given the competitive and evolving nature of the industry in which we operate, we may not be able to achieve or increase profitability.

         We do not intend to pay dividends on our common stock and, consequently, your ability to achieve a return on your investment will depend on appreciation in the price of our common stock.

        We do not intend to declare and pay dividends on our capital stock for the foreseeable future. We currently intend to invest our future earnings, if any, to fund our growth. Therefore, you are not likely to receive any dividends on your common stock for the foreseeable future and the success of an investment in shares of our common stock will depend upon any future appreciation in their value.

Item 1B.    Unresolved Staff Comments

        None.

Item 2.    Properties

        As of December 31, 2015, we leased approximately 52,000 square feet of space for our corporate headquarters in Los Angeles, CA. As of December 31, 2015, we also leased an approximately 16,000 additional square feet in aggregate office space in Brea, California; San Francisco, California; Oak Brook, Illinois; Lake Success, New York; New York, New York; McKinney, Texas; Seattle, Washington; Allentown, Pennsylvania; Sao Paolo, Brazil; and Dubai, United Arab Emirates. We believe that our office facilities will be adequate for the foreseeable future.

Item 3.    Legal Proceedings

        From time to time, we may be involved in or subject to claims, suits, investigations and proceedings arising out of the normal course of business. We are not currently a party to any litigation that we believe could have a material adverse effect on our business, financial position, results of operations or cash flows.

Item 4.    Mine Safety Disclosures

        Not applicable.

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PART II

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

    Market Information

        Our common stock is traded on the NASDAQ Global Market under the symbol "WIFI." The following table sets forth the high and low sales prices of our common stock as reported by the NASDAQ Global Market for the periods indicated.

 
  2015  
 
  High   Low  

First quarter

  $ 8.62   $ 6.80  

Second quarter

  $ 9.22   $ 7.43  

Third quarter

  $ 10.42   $ 7.07  

Fourth quarter

  $ 8.49   $ 5.89  

 

 
  2014  
 
  High   Low  

First quarter

  $ 7.03   $ 5.06  

Second quarter

  $ 7.43   $ 5.86  

Third quarter

  $ 7.70   $ 5.48  

Fourth quarter

  $ 8.14   $ 6.25  

    Registered Stockholders

        As of March 1, 2016, there were 22 stockholders of record of our common stock. Stockholders of record do not include a substantially greater number of "street name" holders or beneficial holders of our common stock whose shares are held of record by banks, brokers and other financial institutions.

    Dividends

        We have never declared or paid cash dividends on our common stock, and currently do not anticipate paying cash dividends in the foreseeable future. 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.

    Recent Sales of Unregistered Securities; Use of Proceeds from Sale of Registered Securities

        We did not sell any equity securities not registered under the Securities Act during the year ended December 31, 2015.

    Issuer Purchases of Equity Securities

        On April 1, 2013, the Company approved a stock repurchase program to repurchase up to $10,000,000 of the Company's common stock in the open market, exclusive of any commissions, markups or expenses. The stock repurchased will be retired and will resume the status of authorized but unissued shares of common stock. The Company did not repurchase any of our common stock during the years ended December 31, 2015 and 2014. As of December 31, 2015, the remaining approved amount for repurchases was approximately $5,180,000.

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    Equity Compensation Plan Information

        On April 17, 2015, the Company filed a registration statement on Form S-8 to register 1,631,737 shares representing additional shares authorized as of January 1, 2015 under the Evergreen Provision of the 2011 Equity Incentive Plan. On January 1, 2016, an additional 1,679,635 shares under the Evergreen Provision of the 2011 Equity Incentive Plan were authorized and the Company is filing a registration statement on Form S-8 to register these additional shares on or around the date hereof.

    Performance Measurement Comparison

        The following performance graph shows the total stockholder return of an investment of $100 in cash made on May 4, 2011 in each of (i) our common stock, (ii) a broad equity market index, the securities comprising the Nasdaq Composite Index, and (iii) issuers with similar market capitalizations, the securities comprising the Russell 2000 index.

        The performance graph assumes that $100 was invested on May 4, 2011 in our common stock at the closing price of $12.10 and in each index, and that all dividends were reinvested. No dividends have been declared nor paid on our common stock. The comparisons in the graph below are required by the SEC and are not intended to forecast or be indicative of possible future performance of our common stock.


COMPARISON OF 56 MONTHS CUMULATIVE TOTAL RETURN*
Among Boingo Wireless, Inc., The NASDAQ Composite Index and The Russell 2000 Index**

GRAPHIC

 
  05/04/11   12/31/11   12/31/12   12/31/13   12/31/14   12/31/15  

NASDAQ Composite Index

  $ 100.00   $ 92.11   $ 106.76   $ 147.68   $ 167.46   $ 177.05  

Russell 2000 Index

  $ 100.00   $ 88.96   $ 101.98   $ 139.71   $ 144.64   $ 136.38  

Boingo

  $ 100.00   $ 71.07   $ 62.40   $ 52.98   $ 63.39   $ 54.71  

*
The material in this section is not "soliciting material" and is not deemed "filed" with the SEC. It is not to be incorporated by reference into any filing of Boingo Wireless, Inc. made under the Securities Act of 1933, as amended, or the Exchange Act, whether made before or after the date hereof and irrespective of any general incorporation language in any such filing, except to the extent we specifically incorporate this section by reference.

**
We chose the Russell 2000 index because it is comprised of issuers with similar market capitalizations. We do not believe that we can reasonably identify a peer group of issuers or an industry or line-of-business index.

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        In September 2015, we filed and the SEC declared effective a shelf registration statement on Form S-3, which permits us to offer up to $125.0 million of common stock, preferred stock, debt securities and warrants in one or more offerings and in any combination, including in units from time to time. In February 2016, we filed a post-effective amendment to terminate the shelf registration statement and remove from registration the securities registered pursuant to the shelf registration statement.

ITEM 6.    SELECTED FINANCIAL DATA

        The following selected consolidated financial data should be read in conjunction with "Management's Discussion and Analysis of Financial Condition and Results of Operations" in Part II, Item 7 and our accompanying consolidated financial statements in Part II, Item 8 of this report.

        The consolidated statements of operations data set forth below for years 2015, 2014 and 2013 and the consolidated balance sheets data as of the end of years 2015 and 2014 are derived from, and qualified by reference to, the audited consolidated financial statements included in Item 8 of this report. The consolidated statements of operations data for years 2012 and 2011 and the consolidated balance sheets data as of the end of years 2013, 2012 and 2011 are derived from the audited financial statements previously filed with the SEC on Form 10-K. The results of businesses acquired in a business combination are included in the Company's consolidated financial statements from the date of the acquisition. Refer to Note 3 in our accompanying consolidated financial statements in Part II, Item 8 of this report for a discussion of our business combinations for 2013. On August 6, 2012, we acquired the assets of Cloud 9 Wireless, Inc. ("Cloud 9") for $3.5 million plus the assumption of certain liabilities. Cloud 9 provides Wi-Fi sponsorship and location-based advertising at airports, hotels, bars and restaurants, and recreational areas in the U.S. and Canada. Cloud 9 was consolidated into our results of operations starting August 6, 2012, the acquisition date. Cloud 9 has been integrated into our product offering; therefore, it is not practical to disclose actual and pro forma financial results for Cloud 9 since the acquisition. There were no business combinations for 2015, 2014 and 2011.

        We early adopted Financial Accounting Standards Board ("FASB") Accounting Standards Update ("ASU") 2015-17, Balance Sheet Classification of Deferred Taxes , on a retrospective basis as of December 31, 2015. As a result, we reclassified $787,000 and $1,192,000 from current deferred tax assets to noncurrent deferred tax liabilities as of December 31, 2014 and 2013, respectively, as the deferred tax assets and liabilities were related to the same tax-paying jurisdictions. We also reclassified $1,204,000 and $2,366,000 from current deferred tax assets to noncurrent deferred tax assets as of December 31, 2012 and 2011, respectively.

        Prior to August 4, 2015, we had a 70% ownership of Concourse Communications Detroit, LLC. On August 4, 2015, we purchased the remaining 30% ownership interest from the non-controlling interest owners for $1,150,000. We accounted for this transaction as an acquisition of the remaining interest of an entity that had already been majority-owned by the Company. The purchase resulted in a reduction to additional paid-in capital of $1,150,000, representing excess purchase price over the carrying amount of the non-controlling interests. Prior to this purchase, we had a controlling interest in this subsidiary, and therefore, this subsidiary had been and will continue to be consolidated with the Company's operations.

        During the year ended December 31, 2014, we finalized our purchase price allocation for our acquisition of Electronic Media Systems, Inc. and all membership interests in its subsidiary, Advanced Wireless Group, LLC (collectively, "AWG"). The consolidated balance sheets data as of December 31, 2013 and the consolidated statement of operations for 2013 have been retrospectively adjusted to reflect the final purchase price allocation for the AWG acquisition including a $28,000 decrease in goodwill, a $147,000 increase in accrued expenses and other liabilities, and a $175,000 increase in income tax expenses and accumulated deficit.

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        The consolidated statement of operations for the year 2013 includes certain out-of-period adjustments that decreased net loss attributable to common stockholders by $217,000. The impact of these out-of-period adjustments are not considered material, individually and in the aggregate, to any of the current or prior annual periods.

 
  Year Ended December 31,  
 
  2015   2014   2013   2012   2011  
 
  (in thousands, except per share amounts)
 

Consolidated Statements of Operations Data:

                               

Revenue

  $ 139,626   $ 119,297   $ 106,746   $ 102,506   $ 94,558  

Costs and operating expenses:

                               

Network access

    62,988     59,411     47,245     42,289     37,082  

Network operations

    33,537     25,475     18,402     14,541     15,849  

Development and technology

    19,147     14,879     11,432     10,772     9,433  

Selling and marketing

    19,653     16,382     14,244     10,255     7,409  

General and administrative

    22,356     17,460     15,067     12,700     11,953  

Amortization of intangible assets

    3,576     3,716     2,250     1,103     1,655  

Total costs and operating expenses

    161,257     137,323     108,640     91,660     83,381  

(Loss) income from operations

    (21,631 )   (18,026 )   (1,894 )   10,846     11,177  

Interest and other (expense) income, net

    (66 )   (41 )   37     143     (176 )

(Loss) income before income taxes

    (21,697 )   (18,067 )   (1,857 )   10,989     11,001  

Income tax expense

    481     700     1,461     2,965     4,064  

Net (loss) income

    (22,178 )   (18,767 )   (3,318 )   8,024     6,937  

Net income attributable to non-controlling interests

    114     754     650     729     642  

Net (loss) income attributable to Boingo Wireless, Inc. 

    (22,292 )   (19,521 )   (3,968 )   7,295     6,295  

Accretion of convertible preferred stock

                    (1,633 )

Net (loss) income attributable to common stockholders

  $ (22,292 ) $ (19,521 ) $ (3,968 ) $ 7,295   $ 4,662  

Net (loss) income per share attributable to common stockholders:

                               

Basic

  $ (0.60 ) $ (0.55 ) $ (0.11 ) $ 0.21   $ 0.19  

Diluted

  $ (0.60 ) $ (0.55 ) $ (0.11 ) $ 0.20   $ 0.17  

Other Financial Data:

                               

Operating cash flows

  $ 98,575   $ 21,207   $ 20,671   $ 24,596   $ 29,529  

Investing cash flows

    (101,502 )   (39,199 )   (40,403 )   (62,468 )   (7,335 )

Financing cash flows

    8,843     (480 )   (11,068 )   2,077     46,018  

Adjusted EBITDA(1)

    29,636     20,300     23,802     30,642     28,556  

 

 
  As of December 31,  
 
  2015   2014   2013   2012   2011  
 
  (in thousands)
 

Consolidated Balance Sheets Data:

                               

Cash and cash equivalents

  $ 14,718   $ 8,849   $ 27,338   $ 58,138   $ 93,933  

Marketable securities

        1,614     32,962     41,558      

Working capital

    (31,802 )   (14,489 )   31,748     81,503     73,837  

Total assets

    341,012     218,615     214,323     202,532     188,920  

Deferred revenue, net of current portion

    106,825     27,267     21,591     24,123     27,754  

Long-term debt

    16,750     2,625              

Long-term portion of capital leases

    2,217     381     473     136     197  

Total liabilities

    228,977     91,185     73,890     58,033     59,841  

Total stockholders' equity

    112,035     127,430     140,433     144,499     129,079  

(1)
We define Adjusted EBITDA as net (loss) income attributable to common stockholders plus depreciation and amortization of property and equipment, accretion of convertible preferred stock, income tax expense, amortization of intangible assets, stock-based compensation expense, non-controlling interests and interest and other expense (income), net.

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    We believe that Adjusted EBITDA is useful to investors and other users of our financial statements in evaluating our operating performance because it provides them with an additional tool to compare business performance across companies and across periods. We believe that:

    Adjusted EBITDA provides investors and other users of our financial information consistency and comparability with our past financial performance, facilitates period-to-period comparisons of operations and facilitates comparisons with other companies, many of which use similar non-generally accepted accounting principles in the United States ("GAAP") financial measures to supplement their GAAP results; and

    it is useful to exclude non-cash charges, such as accretion of preferred stock, depreciation and amortization of property and equipment, amortization of intangible assets and stock-based compensation, from Adjusted EBITDA because the amount of such expenses in any specific period may not directly correlate to the underlying performance of our business operations, and these expenses can vary significantly between periods as a result of full amortization of previously acquired tangible and intangible assets or the timing of new stock-based awards.

    We use Adjusted EBITDA in conjunction with traditional GAAP measures as part of our overall assessment of our performance, for planning purposes, including the preparation of our annual operating budget and quarterly forecasts, to evaluate the effectiveness of our business strategies and to communicate with our board of directors concerning our financial performance.

    We do not place undue reliance on Adjusted EBITDA as our only measure of operating performance. Adjusted EBITDA should not be considered as a substitute for other measures of financial performance reported in accordance with GAAP. There are limitations to using non-GAAP financial measures, including that other companies may calculate these measures differently than we do.

    We compensate for the inherent limitations associated with using Adjusted EBITDA through disclosure of these limitations, presentation of our financial statements in accordance with GAAP and reconciliation of Adjusted EBITDA to the most directly comparable GAAP measure, net (loss) income attributable to common stockholders.

        The following provides a reconciliation of net (loss) income attributable to common stockholders to Adjusted EBITDA:

 
  Year Ended December 31,  
 
  2015   2014   2013   2012   2011  
 
  (in thousands)
 

Net (loss) income attributable to common stockholders

  $ (22,292 ) $ (19,521 ) $ (3,968 ) $ 7,295   $ 4,662  

Depreciation and amortization of property and equipment

    38,293     27,446     18,940     15,958     12,301  

Income tax expense

    481     700     1,461     2,965     4,064  

Stock-based compensation expense

    9,398     7,164     4,506     2,735     3,423  

Amortization of intangible assets

    3,576     3,716     2,250     1,103     1,655  

Accretion of convertible preferred stock

                    1,633  

Non-controlling interests

    114     754     650     729     642  

Interest and other expense (income), net

    66     41     (37 )   (143 )   176  

Adjusted EBITDA

  $ 29,636   $ 20,300   $ 23,802   $ 30,642   $ 28,556  

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ITEM 7.    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 together with "Selected Consolidated Financial Data" and our audited consolidated financial statements and accompanying notes included elsewhere in this filing. This discussion contains forward-looking statements, based on current expectations and related to our plans, estimates, beliefs and anticipated future financial performance. These statements involve risks and uncertainties and our actual results may differ materially from those anticipated in these forward-looking statements as a result of many factors, including those set forth under "Risk Factors," "Forward-Looking Statements" and elsewhere in this filing.

    Overview

        We believe we are the leading global provider of commercial mobile Wi-Fi Internet solutions and indoor DAS services for carriers. Our software applications and solutions enable individuals to access our extensive global Wi-Fi networks that cover more than 1.5 million hotspots. We manage and operate an indoor DAS network, which contains 10,900 nodes. Our offerings provide compelling cost and performance advantages to our customers and partners.

        We grew revenue from $119.3 million in 2014 to $139.6 million in 2015, an increase of 17.0%. We grew revenue from $106.7 million in 2013 to $119.3 million in 2014, an increase of 11.8%. We generated a net loss attributable to common stockholders of $22.3 million in 2015 compared to $19.5 million in 2014. Adjusted EBITDA increased from $20.3 million in 2014 to $29.6 million in 2015, an increase of 46.0%. For a discussion of Adjusted EBITDA and a reconciliation of net (loss) income attributable to common stockholders to Adjusted EBITDA, see footnote 1 to "Selected Financial Data" in Part II, Item 6.

        The proliferation of smartphones, tablets, laptops, wearables, the internet of things ("IoT") and other Wi-Fi enabled devices—in conjunction with the increased consumption of high-bandwidth activities like streaming media, cloud-based applications, and online gaming and mobile apps—has created a demand for high-speed, high-bandwidth Internet access in public places both large and small. These data intensive activities are driving a global surge in mobile Internet data traffic that is expected to increase nearly eightfold between 2015 and 2020, according to Cisco's Visual Networking Index. We believe these trends present us with opportunities to generate significant growth in revenue and profitability.

    Critical Accounting Policies and Estimates

        The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America ("GAAP") and rules and regulations of the United States Securities and Exchange Commission ("SEC") requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities, as well as the disclosure of contingent assets and liabilities, at the date of the financial statements. Such estimates and assumptions also affect the reported amounts of revenues and expenses during the reporting period. Although we believe these estimates are reasonable, actual results could differ from these estimates. On a regular basis, we evaluate our assumptions, judgments and estimates. We also discuss our critical accounting policies and estimates with the Audit Committee of the Board of Directors.

        We believe that the assumptions and estimates associated with revenue recognition, business combinations, goodwill, measuring recoverability of long-lived assets, stock-based compensation and income taxes have the greatest potential impact on our consolidated financial statements. Therefore, we believe the accounting policies discussed below are paramount to understanding our historical and future performance, as these policies relate to the more significant areas involving our management's judgments, assumptions and estimates.

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    Revenue Recognition

        We generate revenue from several sources including: (i) retail and military customers under subscription plans for month-to-month network access that automatically renew, and retail and military single-use access from sales of hourly, daily or other single-use access plans, (ii) DAS customers that are telecom operators under long-term contracts for access to our DAS at our managed and operated locations, (iii) arrangements with wholesale Wi-Fi customers that provide software licensing, network access, and/or professional services fees, and (iv) display advertisements and sponsorships on our walled garden sign-in pages. Software licensed by our wholesale Wi-Fi platform services customers can only be used during the term of the service arrangements and has no utility to them upon termination of the service arrangement.

        We recognize revenue when an arrangement exists, services have been rendered, fees are fixed or determinable, no significant obligations remain related to the earned fees and collection of the related receivable is reasonably assured. Revenue is presented net of any sales and value added taxes.

        Subscription fees from retail and military customers are paid monthly in advance and revenue is deferred for the portions of monthly recurring subscription fees collected in advance. We provide refunds for our retail and military services on a case-by-case basis. These amounts are not significant and are recorded as contra-revenue in the period the refunds are made. Subscription fee revenue is recognized ratably over the subscription period. Revenue generated from retail and military single-use access is recognized when access is provided.

        Revenue generated from access to our DAS networks consists of build-out fees and recurring access fees under certain long-term contracts with telecom operators. Build-out fees paid upfront are generally deferred and recognized ratably over the term of the estimated customer relationship period, once the build-out is complete. Periodically, we install and sell Wi-Fi and DAS networks to customers where we do not have service contracts or remaining obligations beyond the installation of those networks and we recognize build-out fees for such projects as revenue when the installation work is completed and the network has been accepted by the customer. Minimum monthly access fees for usage of the DAS networks are non-cancellable and generally escalate on an annual basis. These minimum monthly access fees are recognized ratably over the term of the telecom operator agreement. The initial term of our contracts with telecom operators generally range from five to twenty years and the agreements generally contain renewal clauses. Revenue from DAS network access fees in excess of the monthly minimums is recognized when earned.

        Services provided to wholesale Wi-Fi partners generally contain several elements including: (i) a term license to use our software to access our Wi-Fi network, (ii) access fees for Wi-Fi network usage, and/or (iii) professional services for software integration and customization and to maintain the Wi-Fi service. The term license, monthly minimum network access fees and professional services are billed on a monthly basis based upon predetermined fixed rates. Once the term license for integration and customization are delivered, the fees from the arrangement are recognized ratably over the remaining term of the service arrangement. The initial term of the license agreements is generally between one to five years and the agreements generally contain renewal clauses. Revenue for Wi-Fi network access fees in excess of the monthly minimum amounts is recognized when earned. All elements within existing service arrangements are generally delivered and earned concurrently throughout the term of the respective service arrangement.

        In instances where the minimum monthly Wi-Fi and DAS network access fees escalate over the term of the wholesale service arrangement, an unbilled receivable is recognized when performance is within our control and when we have reasonable assurance that the unbilled receivable balance will be collected.

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        We adopted the provisions of ASU 2009-13, Revenue Recognition (Topic 605)—Multiple-Deliverable Revenue Arrangements ("ASU 2009-13"), on a prospective basis on January 1, 2011. For multiple-deliverable arrangements entered into prior to January 1, 2011 that are accounted for under Financial Accounting Standards Board ("FASB") Accounting Standards Codification ("ASC") 605-25, Revenue Recognition—Multiple-Deliverable Revenue Arrangements , we defer recognition of revenue for the full arrangement and recognize all revenue ratably over the wholesale service period for Wi-Fi platform service arrangements and the term of the estimated customer relationship period for DAS arrangements, as we did not have evidence of fair value for the undelivered elements in the arrangement. For multiple-deliverable arrangements entered into or materially modified after January 1, 2011 that are accounted for under ASC 605-25, we evaluate whether or not separate units of accounting exist and then allocate the arrangement consideration to all units of accounting based on the relative selling price method using estimated selling prices if vendor specific objective evidence and third-party evidence is not available. We recognize the revenue associated with the separate units of accounting upon completion of such services or ratably over the wholesale service period for Wi-Fi platform service arrangements and the term of the estimated customer relationship period for DAS arrangements.

        Advertising revenue is generated from advertisements on our managed and operated or partner networks. In determining whether an arrangement exists, we ensure that a binding arrangement is in place, such as a standard insertion order or a fully executed customer-specific agreement. Obligations pursuant to our advertising revenue arrangements typically include a minimum number of units or the satisfaction of certain performance criteria. Advertising and other revenue is recognized when the services are performed.

    Business Combinations

        We allocate the total purchase price of a business combination to the assets acquired and the liabilities assumed based on their estimated fair values at the acquisition date, with the excess purchase price recorded as goodwill. An income, market or cost valuation method may be utilized to estimate the fair value of the assets acquired or liabilities assumed in a business combination. The income valuation method represents the present value of future cash flows over the life of the asset using (i) discrete financial forecasts, which rely on management's estimates of revenue and operating expenses, (ii) long- term growth rates, (iii) an appropriate discount rate and (iv) an appropriate royalty rate, where applicable. The market valuation method uses prices paid for a reasonably similar asset by other purchasers in the market, with adjustments relating to any differences between the assets. The cost valuation method is based on the replacement cost of a comparable asset at prices at the time of the acquisition reduced for depreciation of the asset.

    Goodwill

        Goodwill represents the excess of purchase price over fair value of net assets acquired. Goodwill is not amortized but instead is tested annually for impairment, or more frequently when events or changes in circumstances indicate that fair value of the reporting unit has been reduced to less than its carrying value. We perform our impairment test annually as of December 31 st . Entities have the option to first assess qualitative factors to determine whether it is more likely than not that the fair value of a reporting unit is less than its carrying amount as a basis for determining whether it is necessary to perform the two-step goodwill impairment test described in ASC 350, Intangibles—Goodwill and Other . If, after assessing qualitative factors, an entity determines it is not more likely than not that the fair value of a reporting unit is less than its carrying amount, then performing the two-step impairment test is unnecessary. If deemed necessary, a two-step test is used to identify the potential impairment and to measure the amount of goodwill impairment, if any. The first step is to compare the fair value of the reporting unit with its carrying amount, including goodwill. If the fair value of the reporting unit

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exceeds its carrying amount, goodwill is considered not impaired; otherwise, there is an indication that goodwill may be impaired and the amount of the loss, if any, is measured by performing step two. Under step two, the impairment loss, if any, is measured by comparing the implied fair value of the reporting unit goodwill with the carrying amount of goodwill.

        At December 31, 2015 and 2014, we tested our goodwill for impairment using a market based approach and no impairment was identified as the fair value of our sole reporting unit was substantially in excess of its carrying amount. To date, we have not recorded any goodwill impairment charges.

    Measuring Recoverability of Long-Lived Assets

        We perform an impairment review of long-lived assets held and used whenever events or changes in circumstances indicate that the carrying value may not be recoverable. Factors we consider important that could trigger an impairment review include, but are not limited to, significant under-performance relative to projected future operating results, significant changes in the manner of our use of the acquired assets or our overall business and/or product strategies and significant industry or economic trends. When we determine that the carrying value of a long-lived asset may not be recoverable based upon the existence of one or more of these indicators, we determine the recoverability by comparing the carrying amount of the asset to net future undiscounted cash flows that the asset is expected to generate or other indices of fair value. We would then recognize an impairment charge equal to the amount by which the carrying amount exceeds the fair market value of the asset.

    Stock-based Compensation

        Stock-based compensation consists of stock options and restricted stock units ("RSUs"), which are granted to employees and non-employees. We recognize compensation expense equal to the grant date fair value on a straight-line basis, net of estimated and actual forfeitures, over the employee requisite service period. We recognize stock-based compensation expense for performance-based RSUs when we believe that it is probable that the performance objectives will be met. The grant date fair value of our stock option awards is determined using the Black-Scholes option pricing model.

    Income Taxes

        Income taxes are provided based on the liability method, which results in income tax assets and liabilities arising from temporary differences. Temporary differences are differences between the tax basis of assets and liabilities and their reported amounts in the financial statements that will result in taxable or deductible amounts in future years. The liability method requires the effect of tax rate changes on current and accumulated deferred income taxes to be reflected in the period in which the rate change was enacted. The liability method also requires that deferred tax assets be reduced by a valuation allowance unless it is more likely than not that the assets will be realized.

        We may recognize the tax benefit from uncertain tax positions only if it is at least 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 a position should be measured based on the largest benefit that has a greater than 50% likelihood of being realized upon settlement with the taxing authorities.

        We establish valuation allowances when necessary to reduce deferred tax assets to the amounts expected to be realized. We evaluate the need for, and the adequacy of, valuation allowances based on the expected realization of our deferred tax assets. The factors used to assess the likelihood of realization include historical earnings, our latest forecast of taxable income and available tax planning strategies that could be implemented to realize the net deferred tax assets.

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        Our effective tax rates are primarily affected by changes in our valuation allowances, the amount of our taxable income or losses in the various taxing jurisdictions in which we operate, the amount of federal and state net operating losses and tax credits, the extent to which we can utilize these net operating loss carryforwards and tax credits and certain benefits related to stock option activity.

    Recent Accounting Pronouncements

        Information regarding recent accounting pronouncements is contained in Note 2 "Significant Accounting Policies" to the accompanying consolidated financial statements included in Part II, Item 8, which is incorporated herein by this reference.

    Key Business Metrics

        In addition to monitoring traditional financial measures, we also monitor our operating performance using key performance indicators. In 2014, we updated our presentation of revenue sources to differentiate our individual users based on the nature of the users—retail users who purchase Internet access at our managed and operated hotspots and select partner locations or military users who purchase Internet access or IPTV services for individual use on military bases. Accordingly, we have disaggregated our subscribers between our retail and military users. We have also removed monthly churn, which was defined as the number of subscribers who canceled their subscriptions in a given month, expressed as a percentage of the average subscribers in that month, as a key performance indicator as we no longer view monthly churn as a key business metric. Our key performance indicators follow:

 
  Year Ended December 31,  
 
  2015   2014   2013  
 
  (in thousands)
 

Subscribers—retail

    204     254     308  

Subscribers—military

    57     20     2  

Connects

    105,335     81,413     50,830  

DAS nodes

    10.9     8.4     6.3  

        Subscribers retail and subscribers military.     This metric represents the number of paying customers who are on a month-to-month subscription plan at a given period end.

        Connects.     This metric shows how often individuals connect to our global Wi-Fi network in a given period. The connects include retail and wholesale customers in both customer pay locations and customer free locations where we are a paid service provider or receive sponsorship or promotion fees. We count each connect as a single connect regardless of how many times that individual accesses the network at a given venue during their 24 hour period. This measure is an indicator of paid activity throughout our network.

        DAS nodes.     This metric represents the number of active DAS nodes as of the end of the period. A DAS node is a single communications endpoint, typically an antenna, which transmits or receives radio frequency signals wirelessly. This measure is an indicator of the reach of our DAS network.

    Key Components of our Results of Operations

    Revenue

        Our revenue consists of retail revenue, military revenue, DAS revenue, wholesale revenue, and advertising and other revenue. In 2014, we updated our presentation of revenue sources to provide increased visibility into the revenue streams that are the focus of our current and future operational and development efforts. Our retail revenue sources were previously differentiated based on our retail

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plan types—subscription or single-use. We believe that it is more relevant to differentiate our individual users based on the nature of the users—retail users who purchase Internet access at our managed and operated hotspots and select partner locations or military users who purchase Internet access and/or IPTV services for individual use on military bases. We also previously combined our wholesale DAS and Wi-Fi revenues and we believe that it is better to disaggregate these wholesale product revenues going forward by DAS and Wi-Fi given the current development of these products.

        Retail and military.     We generate revenue from sales to retail and military individuals of month-to-month network access subscriptions that automatically renew, primarily through charge card transactions. We also generate revenue from sales of hourly, daily or other single-use access to retail and military individuals primarily through charge card transactions.

        DAS.     We generate revenue from telecom operator partners that pay us network build-out fees, inclusive of network upgrades, and access fees for our DAS networks.

        Wholesale— Wi-Fi.    We generate revenue from wholesale Wi-Fi partners that license our software and pay usage-based monthly network access fees to allow their customers to access our global Wi-Fi network. Usage-based network access fees may be measured in minutes, connects, megabytes or gigabytes, and in most cases are subject to minimum volume commitments. Other wholesale Wi-Fi partners pay us monthly fees to provide a Wi-Fi infrastructure that we install, manage and operate at their venues for their customers under a service provider arrangement.

        Advertising and other.     We generate revenue from advertisers that seek to reach visitors to our landing pages at our managed and operated network locations with online advertising, promotional and sponsored programs and at locations where we solely provide authorized access to a partner's Wi-Fi network through sponsored access and promotional programs. In addition, we receive revenue from partners in certain venues where we manage and operate the Wi-Fi network.

        For the years ended December 31, 2015 and 2014, entities affiliated with AT&T Inc. accounted for 17% and 15%, respectively, of total revenue. For the year ended December 31, 2013, two groups of entities affiliated with Verizon Communications, Inc. and AT&T Inc. each accounted for 14% of total revenue. The loss of these groups and the customers could have a material adverse impact on our consolidated statements of operations.

    Costs and Operating Expenses

        We classify our costs and operating expenses as network access, network operations, development and technology, selling and marketing, general and administrative, and amortization of intangible assets. Network access costs consist primarily of payments to venues and network partners in our network. Other costs and operating expenses primarily consist of personnel costs, costs for contracted labor and development, marketing, legal, accounting and consulting services, and other professional service fees. Personnel costs include salaries, bonuses, stock-based compensation and employee benefits. Facilities costs are generally allocated based on headcount. Depreciation and amortization expenses associated with specifically identifiable property and equipment are allocated to the appropriate expense categories.

        Network access.     Network access costs consist of revenue share payments to venue owners where our managed and operated hotspots are located, usage-based fees to our roaming network partners for access to their networks, depreciation of equipment related to network build-out projects in our managed and operated locations, sale of equipment, and bandwidth and other Internet connectivity expenses in our managed and operated locations.

        Network operations.     Network operations expenses consist of costs for our customer service department and for our operations staff that designs, builds, monitors and maintains the network. Also

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included are expenses for our customer service provider that handles customer care inquiries and expenses for network operations contractors, equipment depreciation and software and hardware maintenance fees.

        Development and technology.     Development and technology expenses consist of costs for our product development and engineering departments, developers and our information systems services staff, depreciation of our equipment and internal-use software, and software and hardware maintenance fees.

        Selling and marketing.     Selling and marketing expenses consist of costs for our business development and marketing employees and executives, travel and entertainment and marketing programs.

        General and administrative.     General and administrative expenses consist of costs for our executive, finance and accounting, legal and human resources personnel, as well as legal, accounting, tax and other professional service fees. Also included are other corporate expenses such as charge card processing fees and bad debt expense.

        Amortization of intangible assets.     Amortization of intangible assets consists primarily of acquired venue contracts, technology and non-compete agreements.

    Interest and Other (Expense) Income, Net

        Interest and other (expense) income, net, primarily consist of interest income and expense.

    Income Tax Expense

        In 2013, we established a full valuation allowance as a result of our assessment that it was more likely than not that certain federal and state deferred tax assets would not be realized and we have continued to maintain the full valuation allowance as of December 31, 2015 and 2014. In 2013, income tax expense included $2.4 million of tax expense related to increases in our valuation allowance. $1.9 million of the increase relates to additional valuation allowances that were established as a result of our assessment that it was more likely than not that certain federal and state deferred tax assets would not be realized.

    Non-controlling Interests

        Non-controlling interests are comprised of minority holdings by third parties in our subsidiaries Chicago Concourse Development Group, LLC ("CCDG") and Boingo Holding Participacoes Ltda. ("BHPL").

        We are generally required to pay a portion of allocated net profits less capital expenditures of the preceding year to the non-controlling interest holders of CCDG. The limited liability company agreement for CCDG does not have a term. CCDG can be dissolved upon the unanimous agreement of the members, upon the sale of CCDG, upon declaration of bankruptcy, or upon the termination of the license agreement between CCDG and the City of Chicago.

        We attributed profits and losses to the non-controlling interest in BHPL under the terms of the limited liability company agreement in proportion to their holdings. The limited liability company agreement with BHPL does not have a term. We, by resolution of the members, may distribute profits against retained earnings or profit reserves existing on the most recent annual balance sheet or may draw up financial statements and distribute profits in shorter periods. BHPL can be dissolved by resolution of the members and as otherwise provided for by law.

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        Prior to August 4, 2015, we also had a 70% ownership of Concourse Communications Detroit, LLC ("CCG Detroit"). On August 4, 2015, we purchased the remaining 30% ownership interest from the non-controlling interest owners for $1.2 million. We accounted for this transaction as an acquisition of the remaining interest of an entity that had already been majority-owned by the Company. The purchase resulted in a reduction to additional paid-in capital of $1.2 million representing excess purchase price over the carrying amount of the non-controlling interests. In prior years, we attributed profits and losses to the non-controlling interest in CCG Detroit under the terms of the limited liability company agreement. CCG Detroit had generated losses, which had reduced the non-controlling owners capital account to zero in 2009, resulting in an allocation to the controlling interest holder of all operating losses and deficits created by fixed distributions to the non-controlling interest holder. The fixed distributions were terminated during September 2013 concurrent with the termination of CCG Detroit's agreement with Detroit Metropolitan Wayne County Airport.

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    Results of Operations

        The following tables set forth our results of operations for the specified periods.

 
  Year Ended December 31,  
 
  2015   2014   2013  
 
  (in thousands)
 

Consolidated Statements of Operations Data:

                   

Revenue

  $ 139,626   $ 119,297   $ 106,746  

Costs and operating expenses:

                   

Network access

    62,988     59,411     47,245  

Network operations

    33,537     25,475     18,402  

Development and technology

    19,147     14,879     11,432  

Selling and marketing

    19,653     16,382     14,244  

General and administrative

    22,356     17,460     15,067  

Amortization of intangible assets

    3,576     3,716     2,250  

Total costs and operating expenses

    161,257     137,323     108,640  

Loss from operations

    (21,631 )   (18,026 )   (1,894 )

Interest and other (expense) income, net

    (66 )   (41 )   37  

Loss before income taxes

    (21,697 )   (18,067 )   (1,857 )

Income tax expense

    481     700     1,461  

Net loss

    (22,178 )   (18,767 )   (3,318 )

Net income attributable to non-controlling interests

    114     754     650  

Net loss attributable to common stockholders

  $ (22,292 ) $ (19,521 ) $ (3,968 )

Depreciation and amortization expense included in the above line items:

                   

Network access

  $ 22,666   $ 18,074   $ 12,651  

Network operations

    9,058     5,662     4,091  

Development and technology

    5,441     3,381     1,992  

General and administrative

    1,128     329     206  

Total

  $ 38,293   $ 27,446   $ 18,940  

Stock-based compensation expense included in the above line items:

                   

Network operations

  $ 1,504   $ 1,356   $ 888  

Development and technology

    731     600     380  

Selling and marketing

    3,411     2,017     1,045  

General and administrative

    3,752     3,191     2,193  

Total

  $ 9,398   $ 7,164   $ 4,506  

    Depreciation and amortization expense

        Depreciation expense increased $10.8 million, or 39.5%, in 2015, as compared to 2014, and depreciation expense increased $8.5 million, or 44.9%, in 2014, as compared to 2013, primarily due to increased depreciation and amortization expense from our increased fixed assets for our DAS build-out projects, Wi-Fi networks, and software development in those periods.

    Stock-based compensation expense

        Stock-based compensation expense increased $2.2 million, or 31.2%, in 2015, as compared to 2014, primarily due to additional stock-based compensation expenses for RSUs granted in those periods as

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well as $1.0 million of additional stock-based compensation expense recognized in 2015 resulting from a change in the expected service period for one of our executives, who was terminated. Under the terms of the executive's employment agreement, the executive received 12 months of accelerated vesting credit on unvested stock-based awards. Stock-based compensation expense increased $2.7 million, or 59.0%, in 2014, as compared to 2013, primarily due to additional stock-based compensation expenses for RSUs granted in those periods. We have shifted our stock-based compensation from stock options to RSUs, which generally vest over a specified service period. We also issue performance-based RSUs to executive personnel. We recognize stock-based compensation expense for performance-based RSUs when we believe that it is probable that the performance objectives will be met.

        The following table sets forth our results of operations for the specified periods as a percentage of our revenue for those periods.

 
  Year Ended December 31,  
 
  2015   2014   2013  
 
  (as a percentage of revenue)
 

Consolidated Statements of Operations Data:

                   

Revenue

    100.0 %   100.0 %   100.0 %

Costs and operating expenses:

                   

Network access

    45.1     49.8     44.3  

Network operations

    24.0     21.4     17.2  

Development and technology

    13.7     12.5     10.7  

Selling and marketing

    14.1     13.7     13.3  

General and administrative

    16.0     14.6     14.1  

Amortization of intangible assets

    2.6     3.1     2.1  

Total costs and operating expenses

    115.5     115.1     101.8  

Loss from operations

    (15.5 )   (15.1 )   (1.8 )

Interest and other (expense) income, net

    0.0     0.0     0.0  

Loss before income taxes

    (15.5 )   (15.1 )   (1.7 )

Income tax expense

    0.3     0.6     1.4  

Net loss

    (15.9 )   (15.7 )   (3.1 )

Net income attributable to non-controlling interests

    0.1     0.6     0.6  

Net loss attributable to common stockholders

    (16.0 )%   (16.4 )%   (3.7 )%

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Years ended December 31, 2015 and 2014

    Revenue

 
  Year Ended December 31,  
 
  2015   2014   Change   % Change  
 
  (in thousands, except percentages)
 

Revenue:

                         

DAS

  $ 46,455   $ 38,259   $ 8,196     21.4  

Retail

    31,763     40,336     (8,573 )   (21.3 )

Wholesale—Wi-Fi

    21,923     15,209     6,714     44.1  

Military

    19,898     4,486     15,412     343.6  

Advertising and other

    19,587     21,007     (1,420 )   (6.8 )

Total revenue

  $ 139,626   $ 119,297   $ 20,329     17.0  

Key business metrics:

                         

Subscribers—retail

    204     254     (50 )   (19.7 )

Subscribers—military

    57     20     37     185.0  

Connects

    105,335     81,413     23,922     29.4  

DAS nodes

    10.9     8.4     2.5     29.8  

        DAS.     DAS revenue increased $8.2 million, or 21.4%, in 2015, as compared to 2014, due to a $6.1 million increase from new build-out projects in our managed and operated locations, which includes a $1.0 million short-term build-out project that included the sale of equipment that was completed during 2015, and a $2.1 million increase in access fees from our telecom operators. The increase in access fees resulted primarily from the new build-out projects that were completed and $0.4 million of one-time fees that were paid for early termination rights.

        Retail.     Retail revenue decreased $8.6 million, or 21.3%, in 2015, as compared to 2014, primarily due to a $6.7 million decrease in retail subscriber revenue, which was driven primarily by the decrease in retail subscribers in 2015 compared to 2014. The remaining decrease was due to a $1.9 million decrease in retail single-use revenue.

        Wholesale Wi-Fi.     Wholesale Wi-Fi revenue increased $6.7 million, or 44.1%, in 2015, as compared to 2014, primarily due to a $7.4 million increase in partner usage based fees, which was partially offset by a $0.7 million decrease in Wi-Fi build-out revenues related to a project that was completed in 2014.

        Military.     Military revenue increased $15.4 million, or 343.6%, in 2015, as compared to 2014 primarily due to the increase in subscribers resulting from our build-out of Wi-Fi networks at military bases.

        Advertising and other.     Advertising and other revenue decreased $1.4 million, or 6.8%, in 2015, as compared to 2014, primarily due to a $1.9 million decrease in advertising sales at our managed and operated locations, which was partially offset by a $0.5 million increase in revenues from other service agreements.

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    Costs and Operating Expenses

 
  Year Ended December 31,  
 
  2015   2014   Change   % Change  
 
  (in thousands, except percentages)
 

Costs and operating expenses:

                         

Network access

  $ 62,988   $ 59,411   $ 3,577     6.0  

Network operations

    33,537     25,475     8,062     31.6  

Development and technology

    19,147     14,879     4,268     28.7  

Selling and marketing

    19,653     16,382     3,271     20.0  

General and administrative

    22,356     17,460     4,896     28.0  

Amortization of intangible assets

    3,576     3,716     (140 )   (3.8 )

Total costs and operating expenses

  $ 161,257   $ 137,323   $ 23,934     17.4  

        Network access.     Network access costs increased $3.6 million, or 6.0%, in 2015, as compared to 2014. The increase is primarily due to a $4.6 million increase in depreciation expense and a $3.6 million increase in bandwidth and other direct costs, which is inclusive of a $0.6 million increase in costs directly related to our short-term DAS and Wi-Fi build-out projects. The increases were partially offset by a $4.3 million decrease in revenue share paid to venues in our managed and operated locations, which included a one-time $1.9 million cost incurred in 2014 to terminate one of our venue contracts, and a $0.3 million decrease from customer usage at partner venues.

        Network operations.     Network operations expenses increased $8.1 million, or 31.6%, in 2015, as compared to 2014, due to a $3.4 million increase in depreciation expense, a $1.9 million increase in personnel related expenses primarily resulting from increased headcount, a $1.0 million increase in network maintenance and connectivity expenses, a $0.4 million increase in call center costs, a $0.3 million increase in hardware and software maintenance expenses, and a $1.1 million increase in other operating expenses.

        Development and technology.     Development and technology expenses increased $4.3 million, or 28.7%, in 2015, as compared to 2014, due primarily to a $2.1 million increase in depreciation expense, a $1.6 million increase in personnel related expenses primarily resulting from increased headcount, a $0.4 million increase in technology service expenses, and a $0.2 million increase in hardware and software maintenance and other operating expenses.

        Selling and marketing.     Selling and marketing expenses increased $3.3 million, or 20.0%, in 2015, as compared to 2014, due to a $1.2 million increase in personnel related expenses primarily resulting from increased headcount, $1.4 million one-time charge for salaries, benefits and stock-based compensation expense for one of our executives who was terminated, and a $0.7 million increase in other marketing related expenses.

        General and administrative.     General and administrative expenses increased $4.9 million, or 28.0%, in 2015, as compared to 2014, due to a $1.7 million increase in personnel related expenses resulting from increased headcount, a $0.8 million increase in depreciation expenses, a $0.5 million increase in business licenses, taxes, and insurance, a $0.5 million increase in consulting expenses, and a $1.4 million increase in rent and other general and administrative expenses.

        Amortization of intangible assets.     Amortization of intangible assets expense remained relatively consistent in 2015, as compared to 2014.

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    Interest and Other (Expense) Income, Net

        Interest and other (expense) income, net, remained relatively consistent in 2015, as compared to 2014. In 2015, we incurred and capitalized $0.6 million of interest expense related to our Credit Facility.

    Income Tax Expense

        We had income tax expense of $0.5 million in 2015, as compared to $0.7 million in 2014. Our effective tax rate decreased to 2.2% for 2015, as compared to 3.9% in 2014.

        Our future effective tax rate depends on various factors, such as our level of future taxable income, tax legislation and credits and the geographic compositions of our pre-tax income. We do not expect to incur any significant income taxes until such time that we reverse our valuation allowance against our federal and state deferred tax assets upon return to sustained profitability.

    Non-controlling Interests

        Non-controlling interests decreased $0.6 million in 2015, as compared to 2014 primarily as a result of decreased net income for a subsidiary resulting from the transition of the managed and operated venues of this subsidiary from an end-user paid to a tiered pricing model.

    Net Loss Attributable to Common Stockholders

        Our net loss for 2015 increased as compared to 2014 primarily as a result of the $23.9 million increase in costs and operating expenses, which was partially offset by the $20.3 million increase in revenues, the $0.6 million decrease in net income attributable to non-controlling interests, and the $0.2 million decrease in income tax expense. Our diluted net loss per share increased primarily as a result of the increase in our net loss.

    Adjusted EBITDA

        Adjusted EBITDA was $29.6 million in 2015, an increase of 46.0% from $20.3 million recorded in 2014. As a percentage of revenue, Adjusted EBITDA was 21.2% in 2015, up from 17.0% of revenue in 2014. The Adjusted EBITDA increase was due primarily to $10.7 million increase in depreciation and amortization expense and $2.2 million increase in stock-based compensation expense. The increases were partially offset by the $2.8 million increase in our net loss attributable to common stockholders, the $0.6 million decrease in non-controlling interests, and the $0.2 million decrease in income tax expense in 2015, as compared to 2014. We define Adjusted EBITDA as net (loss) income attributable to common stockholders plus depreciation and amortization of property and equipment, income tax expense, amortization of intangible assets, stock-based compensation expense, non-controlling interests and interest and other expense (income), net. For a discussion of Adjusted EBITDA and a reconciliation of net (loss) income attributable to common stockholders to Adjusted EBITDA, see footnote 1 to "Selected Financial Data" in Part II, Item 6.

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Years ended December 31, 2014 and 2013

    Revenue

 
  Year Ended December 31,  
 
  2014   2013   Change   % Change  
 
  (in thousands, except percentages)
 

Revenue:

                         

Retail

  $ 40,336   $ 43,194   $ (2,858 )   (6.6 )

DAS

    38,259     32,681     5,578     17.1  

Wholesale—Wi-Fi

    15,209     17,261     (2,052 )   (11.9 )

Military

    4,486     1,260     3,226     256.0  

Advertising and other

    21,007     12,350     8,657     70.1  

Total revenue

  $ 119,297   $ 106,746   $ 12,551     11.8  

Key business metrics:

                         

Subscribers—retail

    254     308     (54 )   (17.5 )

Subscribers—military

    20     2     18          *

Connects

    81,413     50,830     30,583     60.2  

DAS nodes

    8.4     6.3     2.1     33.3  

*
Calculation of percentage change is not meaningful.

        Retail.     Retail revenue decreased $2.9 million, or 6.6%, in 2014, as compared to 2013, primarily due to a $2.3 million decrease in retail subscriber revenue, which was driven primarily by the decrease in retail subscribers. Our average revenue per retail subscriber remained essentially the same in 2014 as compared to 2013. The remaining decrease was attributable to a $0.6 million decrease in retail single-use revenue resulting from the transition of certain paid managed and operated locations to a tiered or free pricing model. Retail revenue for 2014 and 2013 includes $2.3 million and $0.4 million, respectively, of retail single-use revenue related to venues acquired from AWG in October 2013.

        DAS.     DAS revenue increased $5.6 million, or 17.1%, in 2014, as compared to 2013, due to a $3.3 million increase from new build-out projects in our managed and operated locations and a $2.3 million increase in access fees from our telecom operators resulting primarily from the new build-out projects that were completed.

        Wholesale—Wi-Fi.     Wholesale Wi-Fi revenue decreased $2.1 million, or 11.9%, in 2014, as compared to 2013, due to a $3.5 million decrease in partner usage based fees, which was partially offset by a $0.6 million increase in wholesale service provider revenues resulting from increased deployments and $0.7 million in revenue from a Wi-Fi build-out project that was completed in 2014.

        Military.     Military revenue increased $3.2 million, or 256.0%, in 2014, as compared to 2013 due to deployments of our Wi-Fi and IPTV networks at military bases during 2014.

        Advertising and other.     Advertising and other revenue increased $8.7 million, or 70.1%, in 2014, as compared to 2013, primarily due to a $9.3 million increase in the volume of advertising sales at our managed and operated locations. The increase was partially offset by a $0.6 million decrease in other revenues. Advertising revenue for 2014 and 2013 includes $8.2 million and $1.1 million, respectively, of advertising sales at the venues acquired from AWG in October 2013.

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    Costs and Operating Expenses

 
  Year Ended December 31,  
 
  2014   2013   Change   % Change  
 
  (in thousands, except percentages)
 

Costs and operating expenses:

                         

Network access

  $ 59,411   $ 47,245   $ 12,166     25.8  

Network operations

    25,475     18,402     7,073     38.4  

Development and technology

    14,879     11,432     3,447     30.2  

Selling and marketing

    16,382     14,244     2,138     15.0  

General and administrative

    17,460     15,067     2,393     15.9  

Amortization of intangible assets

    3,716     2,250     1,466     65.2  

Total costs and operating expenses

  $ 137,323   $ 108,640   $ 28,683     26.4  

        Network access.     Network access costs increased $12.2 million, or 25.8%, in 2014, as compared to 2013. The increase is primarily attributed to a $9.2 million increase in revenue share paid to venues in our managed and operated locations, which includes a one-time $1.9 million cost to terminate one of our venue contracts, a $5.4 million increase in depreciation expense, and a $3.2 million increase in internet connectivity expenses. The increases were partially offset by a $3.1 million decrease from customer usage at partner venues and a $2.5 million decrease in other direct costs. Other direct costs for 2014 include $0.4 million of costs related to a Wi-Fi build out project.

        Network operations.     Network operations expenses increased $7.1 million, or 38.4%, in 2014, as compared to 2013, primarily due to a $3.9 million increase in personnel related expenses, inclusive of a $0.5 million increase in stock-based compensation expenses, primarily resulting from increased headcount, a $1.6 million increase in depreciation expense, a $0.6 million increase in network maintenance expenses, a $0.3 million increase in travel and entertainment expenses, a $0.3 million increase in hardware and software maintenance expenses, a $0.3 million increase in call center expenses, and a $0.1 million increase in rent and other expenses.

        Development and technology.     Development and technology expenses increased $3.4 million, or 30.2%, in 2014, as compared to 2013, primarily due to a $1.4 million increase in depreciation expense, a $0.7 million increase in hardware and software maintenance expenses, a $0.4 million impairment loss related to a change in the use of certain software developed for internal use, a $0.4 million increase in technology service expenses, and a $0.5 million increase in other operating expenses.

        Selling and marketing.     Selling and marketing expenses increased $2.1 million, or 15.0%, in 2014, as compared to 2013, primarily due to a $3.1 million increase in personnel related expenses, inclusive of a $1.0 million increase in stock-based compensation expenses, primarily resulting from increased headcount and higher sales commissions related to our increased advertising sales. The increase was partially offset by a $1.0 million decrease in marketing related expenses.

        General and administrative.     General and administrative expenses increased $2.4 million, or 15.9%, in 2014, as compared to 2013, due to a $1.8 million increase in personnel related expenses, inclusive of a $1.0 million increase in stock- based compensation expenses, a $0.3 million increase in consulting expenses, and a $0.3 million increase in rent and facilities expenses. General and administrative expenses includes a $0.5 million impairment loss related to a venue termination agreement that resulted in the abandonment of our Wi-Fi network assets and the release of the corresponding capital lease obligations associated with those assets. General and administrative expenses also includes a $0.8 million decrease in the fair value of our contingent consideration liabilities related to our acquisition of Endeka Group, Inc. ("Endeka") in February 2013.

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        Amortization of intangible assets.     Amortization of intangible assets expense increased $1.5 million, or 65.2%, in 2014, as compared to 2013, due primarily to our acquisitions of Endeka and AWG in February 2013 and October 2013, respectively. For future years, amortization expense is expected to be $3.5 million for 2015, $3.5 million for 2016, $3.2 million for 2017, $2.4 million for 2018, $1.6 million for 2019 and $5.5 million thereafter.

    Interest and Other (Expense) Income, Net

        Interest and other (expense) income, net, decreased $0.1 million in 2014, as compared to 2013, primarily due to our lower cash and cash equivalents and marketable securities balances during 2014 as compared to 2013 and interest expense related to our new Credit Agreement, which we entered into on November 21, 2014.

    Income Tax Expense

        Income tax expense decreased $0.8 million, or 52.1%, in 2014, as compared to 2013. Our effective tax rate decreased to 3.9% for 2014 compared to 78.7% for 2013 due primarily to the valuation allowance we established at year end in 2013.

    Non-controlling Interests

        Non-controlling interests remained essentially unchanged in 2014, as compared to 2013.

    Net Loss Attributable to Common Stockholders

        Our net loss for 2014 increased as compared to 2013 primarily as a result of the $28.7 million increase in costs and operating expenses, which was partially offset by the $12.6 million increase in revenues and the $0.8 million decrease in income tax expense. Our diluted net loss per share increased primarily as a result of the increase in our net loss.

    Adjusted EBITDA

        Adjusted EBITDA was $20.3 million in 2014, a decrease of 14.7% from $23.8 million recorded in 2013. As a percentage of revenue, Adjusted EBITDA was 17.0% in 2014, down from 22.3% of revenue in 2013. The Adjusted EBITDA decrease was due primarily to the $15.6 million increase in our net loss attributable to common stockholders and the $0.8 million decrease in income tax expenses. The changes were offset by a $10.0 million increase in depreciation and amortization expense and a $2.7 million increase in stock-based compensation expense. We define Adjusted EBITDA as net (loss) income attributable to common stockholders plus depreciation and amortization of property and equipment, income tax expense, amortization of intangible assets, stock-based compensation expense, non-controlling interests and interest and other expense (income), net. For a discussion of Adjusted EBITDA and a reconciliation of net (loss) income attributable to common stockholders to Adjusted EBITDA, see footnote 1 to "Selected Financial Data" in Part II, Item 6.

Liquidity and Capital Resources

        We have financed our operations primarily through cash provided by operating activities and borrowings under our credit facility. Our primary sources of liquidity as of December 31, 2015 consisted of $14.7 million of cash and cash equivalents and $31.5 million available for borrowing under our credit facility, $3.6 million of which is reserved for our outstanding Letter of Credit Authorization agreements.

        Our principal uses of liquidity have been to fund our operations, working capital requirements, capital expenditures and acquisitions. We expect that these requirements will be our principal needs for

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liquidity over the near term. Our capital expenditures in 2015 were $103.1 million, of which $57.8 million was reimbursed through revenue for DAS build-out projects from our telecom operators.

        On November 21, 2014, we entered into a Credit Agreement (the "Credit Agreement") and related agreements with Bank of America, N.A. acting as agent for lenders named therein, including Bank of America, N.A. and Silicon Valley Bank (the "Lenders"), for a secured credit facility in the form of a revolving line of credit in the initial amount of up to $46.5 million, with an option to increase the available amount to $86.5 million upon the satisfaction of certain conditions (the "Revolving Line of Credit") and a term loan of $3.5 million (the "Term Loan" and together with the Revolving Line of Credit, the "Credit Facility"). Both the Term Loan and Revolving Line of Credit mature on November 21, 2018. Amounts borrowed under the Revolving Line of Credit and Term Loan will bear, at our election, a variable interest at LIBOR plus 2.5% - 3.5% or Lender's Prime Rate plus 1.5% - 2.5% per year and we will pay a fee of 0.375% - 0.5% per year on any unused portion of the Revolving Line of Credit. As of December 31, 2015, $2.6 million was outstanding under the Term Loan at a rate of 3.3% and $15.0 million was outstanding under the Revolving Line of Credit. The Term Loan requires quarterly payments of interest and principal, amortizing fully over the four-year-term such that it is repaid in full on the maturity date of November 21, 2018. For the year ended December 31, 2015, interest rates for our Credit Facility ranged from 2.67% to 3.33%. Repayment of amounts borrowed under the Credit Facility may be accelerated in the event that we are in violation of the representation, warranties and covenants made in the Credit Agreement, including certain financial covenants set forth therein, and under other specific default events including, but not limited to, non-payment or inability to pay debt, breach of cross default provisions, insolvency provisions, and change in control.

        We are subject to customary covenants, including a minimum quarterly consolidated leverage ratio, a maximum quarterly consolidated fixed charge coverage ratio, and monthly liquidity minimums. We were in compliance with all such financial covenants as of December 31, 2015 and through the date of this report. We are subject to certain non-financial covenants, and we were also in compliance with all such non-financial covenants as of December 31, 2015 and through the date of this report. The Credit Facility provides us with significant additional flexibility and liquidity to pursue our strategic objectives for capital expenditures and acquisitions.

        On September 11, 2015, we filed a shelf registration statement (the "Shelf Registration") on Form S-3 with the SEC that was declared effective by the SEC on September 17, 2015, which permits us to offer up to $125.0 million of common stock, preferred stock, debt securities and warrants in one or more offerings and in any combination, including in units from time to time. In February 2016, we filed a post-effective amendment to terminate the Shelf Registration and remove from registration the securities registered pursuant to the Shelf Registration. The Company's Board of Directors determined that having the Shelf Registration on file was no longer necessary due to the Company increasing the Revolving Line of Credit (see Note 19 to the accompanying consolidated financial statements included in Part II, Item 8 hereto).

        We believe that our existing cash and cash equivalents, working capital, cash flow from operations and availability under the Credit Facility will be sufficient to fund our operations and planned capital expenditures for at least the next 12 months. There can be no assurance, however, that future industry-specific or other developments, general economic trends, or other matters will not adversely affect our operations or our ability to meet our future cash requirements. Our future capital requirements will depend on many factors including our rate of revenue growth, the timing and size of our managed and operated location expansion efforts, the timing and extent of spending to support product development efforts, the timing of introductions of new solutions and enhancements to existing solutions and the continuing market acceptance of our solutions. We expect our capital expenditures in 2016 will range from $35.0 million to $40.0 million, excluding capital expenditures for DAS build-out projects, which are reimbursed through revenue from our telecom operator customers. The majority of our 2016

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capital expenditures will be used to build out residential broadband and IPTV networks for troops stationed on military bases pursuant to our contracts with the U.S. government and upgrading our Wi-Fi networks at our managed and operated venues. The investment of these resources will occur in advance of experiencing any direct benefit from them including generation of revenues. The U.S. government may modify, curtail or terminate its contracts with us, either at its convenience or for default based on performance. Any such modification, curtailment, or termination of one or more of our government contracts could have a material adverse effect on our earnings, cash flow and/or financial position. We may also enter into acquisitions of complementary businesses, applications or technologies, which could require us to seek additional equity or debt financing. Additional funds may not be available on terms favorable to us, or at all.

        The following table sets forth cash flow data for the periods indicated therein:

 
  Year Ended December 31,  
 
  2015   2014   2013  
 
  (in thousands)
 

Net cash provided by operating activities

  $ 98,575   $ 21,207   $ 20,671  

Net cash used in investing activities

    (101,502 )   (39,199 )   (40,403 )

Net cash provided by (used in) financing activities

    8,843     (480 )   (11,068 )

    Net Cash Provided by Operating Activities

        In 2015, we generated $98.6 million of net cash from operating activities, an increase of $77.4 million from 2014. The increase is primarily due to a $68.1 million change in our operating assets and liabilities, a $10.7 million increase in depreciation and amortization expenses, a $2.2 million increase in stock-based compensation expenses, and a $0.7 million change in fair value of our contingent consideration liabilities. The increases were partially offset by the $3.4 million increase in our net loss and the $0.7 million decrease in impairment losses.

        In 2014, we generated $21.2 million of net cash from operating activities, an increase of $0.5 million from 2013. The increase was primarily due to a $16.6 million increase in accrued expenses and other liabilities and deferred revenue in 2014 compared to a $1.9 million decrease in 2013, a $10.0 million increase in depreciation and amortization expenses in 2014, a $2.7 million increase in stock-based compensation expenses in 2014, and a $1.0 million impairment loss in 2014. The increases were partially offset by a $15.4 million increase in our net loss including non-controlling interests from the prior year, a $9.0 million larger increase in accounts receivable in 2014 compared to 2013, a $1.9 million increase in prepaid expenses and other assets in 2014 compared to a $1.6 million decrease in 2013, a $2.0 million larger decrease in accounts payable in 2014 compared to 2013, a $1.1 million decrease in the change in deferred tax assets, and a $0.4 million increase in the change in fair value of contingent consideration.

        In 2013, we generated $20.7 million of net cash from operating activities, a decrease of $3.9 million from 2012. The decrease was primarily due to an $11.0 million decrease in our net income including non-controlling interests from the prior year and a $1.9 million decrease in excess windfall tax benefits from stock option exercises. The decreases were partially offset by a $4.1 million increase in depreciation and amortization expenses in 2013, a $1.6 million decrease in prepaids and other assets in 2013 compared to a $0.3 million increase in prepaids and other assets in 2012, a $1.8 million increase in stock-based compensation expenses in 2013, and a $1.2 million smaller decrease in accrued expenses and other liabilities in 2013 compared to 2012.

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    Net Cash Used in Investing Activities

        In 2015, we used $101.5 million in investing activities, an increase of $62.3 million from 2014. This increase is primarily due to a $32.2 million increase in purchases of property and equipment and a $29.7 million decrease in cash provided by net proceeds from sales of marketable securities.

        In 2014, we used $39.2 million in investing activities, a decrease of $1.2 million from 2013. The decrease was primarily due to a $22.8 million increase in cash received from net sales of marketable securities in 2014 compared to 2013, a $19.3 million decrease in cash used in acquisitions in 2014 compared to 2013, and a $0.5 million decrease in restricted cash. The decreases were partially offset by a $41.4 million increase in purchases of property and equipment in 2014 compared to 2013.

        In 2013, we used $40.4 million in investing activities, a decrease of $22.1 million from 2012. The decrease was primarily due to $8.6 million of cash received from net sales of marketable securities in 2013 compared to $41.6 million of cash used in net purchases of marketable securities in 2012. The decrease was offset by an $11.5 million increase in purchases of property and equipment in 2013 compared to 2012 and $19.5 million in net cash payments made for our acquisitions of Endeka and AWG in 2013 compared to the $3.2 million of cash payments made for our acquisition of Cloud 9 in 2012.

    Net Cash Provided by Financing Activities

        In 2015, we received $8.8 million of cash provided by financing activities compared to $0.5 million in cash used in financing activities in 2014. This change is primarily due to the $11.5 million increase in net proceeds from our Credit Facility, a $1.2 million decrease in acquisition related payments, a $0.6 million decrease in deferred financing costs, and a $0.2 million increase in proceeds from exercise of stock options. These changes were partially offset by $1.6 million of holdback consideration payments made to the previous AWG shareholders, $1.1 million in payments to acquire the remaining non-controlling interests in Concourse Communications Detroit, LLC from the non-controlling interest owners, a $0.6 million increase in cash used to pay federal, state, and local employment payroll taxes related to our RSUs that vested during the period, and $0.9 million in repayments made on our Term Loan during 2015.

        In 2014, we used $0.5 million in financing activities, a decrease of $10.6 million from 2013. The decrease was primarily due to $10.9 million of cash used to repay notes payable and other financed liabilities that were assumed in our acquisition of Endeka and cash used to repurchase shares of our common stock in the open market in 2013 that did not recur in 2014, $2.8 million of proceeds received from our Credit Facility, net of deferred financing costs that were paid, and a $0.5 million increase in proceeds from the exercise of stock options in 2014 compared to 2013. The decreases were partially offset by a $1.9 million increase in cash used to pay minimum statutory taxes related to our time-based RSUs that vested during 2014, $1.3 million of cash used to pay continent liabilities and other acquisition related consideration during 2014, and a $0.4 million increase in cash paid for capital leases and notes payable.

        In 2013, we used $11.1 million in financing activities compared to cash provided by financing activities of $2.1 million in 2012. The change was primarily due to $6.1 million of cash used to repay notes payable and other financed liabilities that were assumed in our acquisition of Endeka in 2013, the $4.8 million of cash used to repurchase and retire approximately 722,000 shares of our common stock in the open market under our stock repurchase program at an average price per share of $6.68 in 2013, and a $2.0 million decrease in proceeds from the exercise of stock options in 2013 compared to 2012.

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    Contractual Obligations and Commitments

        The following table sets forth our contractual obligations and commitments as of December 31, 2015:

 
  Payments Due By Period  
 
  Total   Less than
1 Year
  2 - 3 Years   4 - 5 Years   More than
5 Years
 
 
  (in thousands)
 

Venue revenue share minimums(1)

  $ 43,148   $ 9,297   $ 13,921   $ 8,108   $ 11,822  

Operating leases for office space(2)

    32,397     2,239     6,077     6,126     17,955  

Open purchase commitments(3)

    12,338     12,338              

Credit Facility(4)

    17,625     875     16,750          

Capital leases for equipment and software(5)

    3,850     1,610     2,240          

Unrecognized tax benefits(6)

    229     229              

Notes payable(7)

    150     96     54          

Total

  $ 109,737   $ 26,684   $ 39,042   $ 14,234   $ 29,777  

(1)
Payments under exclusive long-term, non-cancellable contracts to provide wireless communications network access to venues such as airports. Expense is recorded on a straight-line basis over the term of the lease.

(2)
Office space under non-cancellable operating leases.

(3)
Open purchase commitments are for the purchase of property and equipment, supplies and services. They are not recorded as liabilities on our consolidated balance sheet as of December 31, 2015 as we have not received the related goods or services.

(4)
Long-term debt associated with our Credit Agreement with Bank of America N.A. Payments are based on contractual terms and intended timing of repayments of long-term debt.

(5)
Leased equipment, primarily for data communication and database software, under non-cancellable capital leases.

(6)
The unrecognized tax benefits are related to uncertain tax positions taken in our income tax return that would impact the effective tax rate or additional paid-in capital, if recognized (refer to Note 12 to the accompanying consolidated financial statements included in Part II, Item 8).

(7)
Notes payable assumed in our acquisition of Endeka in 2013.

    Off-Balance Sheet Arrangements

        We do not have any off-balance sheet financing arrangements and we do not have any relationships with unconsolidated entities or financial partnerships, such as entities often referred to as structured finance or special purpose entities, which have been established for the purpose of facilitating off- balance sheet arrangements or other contractually narrow or limited purposes.

    Transactions with Related Parties

        Under our Audit Committee charter, our Audit Committee is responsible for reviewing and approving all related party transactions on a quarterly basis. In addition, our Board of Directors determines annually whether any related party relationships exist among the directors which would interfere with the judgment of individual directors in carrying out his responsibilities as director.

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    Inflation

        Inflationary factors have not had a significant effect on our performance over the past several years. A significant increase in inflation may affect our future performance since we may not be able to recover the increases in our costs with similar increases in our prices.

Item 7A.    Quantitative and Qualitative Disclosures About Market Risk

        We are exposed to various market risks including: (i) interest rate risk and (ii) currency exchange rate risk. The risk of loss is assessed based on the likelihood of adverse changes in fair values, cash flows or future earnings.

        Interest rate risk.     Our Revolving Line of Credit and Term Loan bears, at the Company's election, interest at a variable interest rate of LIBOR plus 2.5% - 3.5% or Lender's Prime Rate plus 1.5% - 2.5% per year. The interest rate on the Term Loan resets at the end of each three month period. Our use of variable rate debt exposes us to interest rate risk. A 100 basis point increase in the LIBOR or Lender's Prime Rate as of December 31, 2015 would not have a material impact on net loss and cash flow.

        Foreign currency exchange rate risk.     We are exposed to foreign currency exchange rate risk inherent in conducting business globally in numerous currencies, of which the most significant to our operations for the year ended December 31, 2015 was the Brazilian Real. We are primarily exposed to foreign currency fluctuations related to the operations of our subsidiary in Brazil whose financial statements are not denominated in the U.S. Dollar. Our foreign operations are not material to our operations as a whole. As such, we currently do not enter into currency forward exchange or option contracts to hedge foreign currency exposures.

Item 8.    Financial Statements and Supplementary Data

        The information required by this Item is included in Part IV, Items 15(a)(1) and (2) of this Annual Report on Form 10-K.

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

        None.

Item 9A.    Controls and Procedures

    Disclosure Controls and Procedures

        The Company maintains a system of disclosure controls and procedures that are designed to provide reasonable assurance that information required to be disclosed in the reports that the Company files or submits under the Securities Exchange Act of 1934, as amended, or the Exchange Act, is processed, recorded, summarized and reported within the time periods specified in the Securities and Exchange Commission's rules and forms. These disclosure controls and procedures include, among other processes, controls and procedures designed to ensure that information required to be disclosed in the reports that the Company files or submits under the Exchange Act is accumulated and communicated to management, including our Chief Executive Officer and Chief Financial Officer (our principal executive officer and principal financial officer, respectively), as appropriate, to allow for timely decisions regarding required disclosure.

        The Company carried out an evaluation, under the supervision and with the participation of management, including our Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of our disclosure controls and procedures as of December 31, 2015 pursuant to Exchange Act Rule 13a-15. Based upon that evaluation, the Company's Chief Executive Officer and

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Chief Financial Officer have concluded that the Company's disclosure controls and procedures, as defined in Exchange Act Rule 13a-15(e) and 15d-15(e), were effective as of the end of the period covered by this Annual Report.

    Management's Report on Internal Control over Financial Reporting

        Management is responsible for establishing and maintaining adequate internal control over financial reporting at the Company. Our internal control over financial reporting is a process designed under the supervision of our Chief Executive Officer and Chief Financial Officer to provide reasonable assurance regarding the reliability of financial reporting and the preparation of the Company's financial statements for external reporting purposes in accordance with GAAP. A company's internal control over financial reporting includes those policies and procedures that:

    pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the Company;

    provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with GAAP, and that receipts and expenditures of the Company are being made only in accordance with authorizations of management and the directors of the Company; and

    provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of the Company's assets that could have a material effect on the financial statements.

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

        Under the supervision and with the participation of management, including the certifying officers, the Company conducted an evaluation of the effectiveness of the Company's internal control over financial reporting as of December 31, 2015 based on the framework in Internal Control—Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Management's assessment included an evaluation of the design of the Company's internal control over financial reporting and testing of the operational effectiveness of its internal control over financial reporting.

        Based on this assessment, management determined that, as of December 31, 2015, the Company maintained effective internal control over financial reporting. The registered public accounting firm that audited the consolidated financial statements included in this Annual Report has also issued an audit report on the Company's internal control over financial reporting. The Report of Independent Registered Public Accounting Firm is filed with this Annual Report on Form 10-K in a separate section following Part IV, as shown on the index under Item 15 of this Annual Report.

    Changes in Internal Control over Financial Reporting

        There have been no changes in the Company's internal control over financial reporting (as defined by Exchange Act Rule 13a-15(f) and 15d-15(f)) that have materially affected, or are reasonably likely to materially affect, the Company's internal control over financial reporting during the quarter ended December 31, 2015.

Item 9B.    Other Information

        None.

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PART III

Item 10.    Directors, Executive Officers and Corporate Governance

        The information required by Item 10 will be included in the Company's definitive Proxy Statement under the caption "Directors, Executive Officers and Corporate Governance" and "Section 16(a) Beneficial Ownership Reporting Compliance," to be filed with the Commission within 120 days after the end of fiscal year 2015 pursuant to Regulation 14A, which information is incorporated herein by this reference.

Item 11.    Executive Compensation

        The Company maintains employee benefit plans and programs in which its executive officers are participants. Copies of certain of these plans and programs are set forth or incorporated by reference as Exhibits to this report. Information required by Item 11 will be included in the Company's definitive Proxy Statement under the captions "Director Compensation," "Executive Compensation," "Compensation Discussion and Analysis," and "Directors, Executive Officers and Corporate Governance," to be filed with the Commission within 120 days after the end of fiscal year 2015 pursuant to Regulation 14A, which information is incorporated herein by this reference.

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

        The information required by Item 12 will be included in the Company's definitive Proxy Statement under the caption "Security Ownership of Certain Beneficial Owners and Management," to be filed with the Commission within 120 days after the end of fiscal year 2015 pursuant to Regulation 14A, which information is incorporated herein by this reference. The information required to be disclosed by Item 201(d) of Regulation S-K regarding our equity securities authorized for issuance under our equity incentive plans is incorporated herein by reference to the section entitled "Securities Authorized for Issuance under Equity Compensation Plans" in our definitive Proxy Statement for our Annual Meeting of Stockholders to be filed with the Commission within 120 days after the end of fiscal year 2015 pursuant to Regulation 14A.

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

        The information required by Item 13 of Form 10-K regarding transactions with related persons, promoters and certain control persons, if any, will be included in the Company's definitive Proxy Statement under the caption "Certain Relationships and Related Party Transactions" to be filed with the Commission within 120 days after the end of fiscal year 2015 pursuant to Regulation 14A, which information is incorporated herein by this reference. The information required by Item 13 of Form 10-K regarding director independence will be included in the Company's definitive Proxy Statement under the caption "Directors, Executive Officers and Corporate Governance—Corporate Governance and Board Matters—Independence of the Board of Directors," to be filed with the Commission within 120 days after the end of fiscal year 2015 pursuant to Regulation 14A, which information is incorporated herein by this reference.

Item 14.    Principal Accounting Fees and Services

        The information required by Item 14 will be included in the Company's definitive Proxy Statement under the caption "Independent Registered Public Accounting Firm" to be filed with the Commission within 120 days after the end of fiscal year 2015 pursuant to Regulation 14A, which information is incorporated herein by this reference.

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PART IV

Item 15.    Exhibits

        (a)   The following documents are filed as part of, or incorporated by reference into, this Annual Report on Form 10-K:

            (1)(2)   Financial Statements.     The following consolidated financial statements of Boingo Wireless, Inc., and Report of Independent Registered Public Accounting Firm are included in a separate section of this Annual Report on Form 10-K beginning on page F-1. The Exhibits begin on page F-33.

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INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

 
  Page  

Report of Independent Registered Public Accounting Firm

    F-2  

Consolidated Balance Sheets

    F-3  

Consolidated Statements of Operations

    F-4  

Consolidated Statements of Comprehensive Income (Loss)

    F-5  

Consolidated Statements of Stockholders' Equity

    F-6  

Consolidated Statements of Cash Flows

    F-7  

Notes to the Consolidated Financial Statements

    F-8  

        All schedules are omitted because they are not applicable or the required information is shown in the Company's consolidated financial statements or the related notes thereto.

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REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors and Stockholders of Boingo Wireless, Inc.

        In our opinion, the accompanying consolidated balance sheets and the related consolidated statements of operations, comprehensive income (loss), stockholders' equity and cash flows present fairly, in all material respects, the financial position of Boingo Wireless, Inc. and its subsidiaries ("Company") at December 31, 2015 and 2014, and the results of their operations and their cash flows for each of the three years in the period ended December 31, 2015 in conformity with accounting principles generally accepted in the United States of America. Also in our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2015, based on criteria established in Internal Control—Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). The Company's management is responsible for these financial statements, for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting, included in Management's Report on Internal Control over Financial Reporting appearing under Item 9A. Our responsibility is to express opinions on these financial statements and on the Company's internal control over financial reporting based on our integrated audits. We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement and whether effective internal control over financial reporting was maintained in all material respects. Our audits of the financial statements included examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. Our audit of internal control over financial reporting included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our audits also included performing such other procedures as we considered necessary in the circumstances. We believe that our audits provide a reasonable basis for our opinions.

        A company's internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company's internal control over financial reporting includes those policies and procedures that (i) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company's assets that could have a material effect on the financial statements.

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

/s/ PricewaterhouseCoopers LLP
Los Angeles, California
March 11, 2016

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Boingo Wireless, Inc.

Consolidated Balance Sheets

(In thousands, except per share amounts)

 
  December 31,  
 
  2015   2014  

Assets

             

Current assets:

             

Cash and cash equivalents

  $ 14,718   $ 8,849  

Marketable securities

        1,614  

Accounts receivable, net

    43,552     27,917  

Prepaid expenses and other current assets

    3,876     3,916  

Total current assets

    62,146     42,296  

Property and equipment, net

    214,500     111,772  

Goodwill

    42,403     42,403  

Intangible assets, net

    16,055     19,676  

Other assets

    5,908     2,468  

Total assets

  $ 341,012   $ 218,615  

Liabilities and stockholders' equity

             

Current liabilities:

             

Accounts payable

  $ 29,376   $ 4,004  

Accrued expenses and other liabilities

    36,328     26,109  

Deferred revenue

    25,759     25,488  

Current portion of long-term debt

    875     875  

Current portion of capital leases

    1,610     309  

Total current liabilities

    93,948     56,785  

Deferred revenue, net of current portion

    106,825     27,267  

Long-term debt

    16,750     2,625  

Long-term portion of capital leases

    2,217     381  

Deferred tax liabilities

    2,965     2,645  

Other liabilities

    6,272     1,482  

Total liabilities

    228,977     91,185  

Commitments and contingencies (Note 13)

             

Stockholders' equity:

             

Preferred stock, $0.0001 par value; 5,000 shares authorized; no shares issued and outstanding

         

Common stock, $0.0001 par value; 100,000 shares authorized; 37,325 and 36,267 shares issued and outstanding for 2015 and 2014, respectively

    4     4  

Additional paid-in capital

    197,612     189,725  

Accumulated deficit

    (85,176 )   (62,884 )

Accumulated other comprehensive loss

    (1,160 )   (443 )

Total common stockholders' equity

    111,280     126,402  

Non-controlling interests

    755     1,028  

Total stockholders' equity

    112,035     127,430  

Total liabilities and stockholders' equity

  $ 341,012   $ 218,615  

   

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

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Boingo Wireless, Inc.

Consolidated Statements of Operations

(In thousands, except per share amounts)

 
  For the Years Ended December 31,  
 
  2015   2014   2013  

Revenue

  $ 139,626   $ 119,297   $ 106,746  

Costs and operating expenses:

                   

Network access

    62,988     59,411     47,245  

Network operations

    33,537     25,475     18,402  

Development and technology

    19,147     14,879     11,432  

Selling and marketing

    19,653     16,382     14,244  

General and administrative

    22,356     17,460     15,067  

Amortization of intangible assets

    3,576     3,716     2,250  

Total costs and operating expenses

    161,257     137,323     108,640  

Loss from operations

    (21,631 )   (18,026 )   (1,894 )

Interest and other (expense) income, net

    (66 )   (41 )   37  

Loss before income taxes

    (21,697 )   (18,067 )   (1,857 )

Income tax expense

    481     700     1,461  

Net loss

    (22,178 )   (18,767 )   (3,318 )

Net income attributable to non-controlling interests

    114     754     650  

Net loss attributable to common stockholders

  $ (22,292 ) $ (19,521 ) $ (3,968 )

Net loss per share attributable to common stockholders:

                   

Basic

  $ (0.60 ) $ (0.55 ) $ (0.11 )

Diluted

  $ (0.60 ) $ (0.55 ) $ (0.11 )

Weighted average shares used in computing net loss per share attributable to common stockholders:

                   

Basic

    36,849     35,753     35,578  

Diluted

    36,849     35,753     35,578  

   

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

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Boingo Wireless, Inc.

Consolidated Statements of Comprehensive Income (Loss)

(In thousands)

 
  For the Years Ended December 31,  
 
  2015   2014   2013  

Net loss

  $ (22,178 ) $ (18,767 ) $ (3,318 )

Other comprehensive loss, net of tax:

                   

Foreign currency translation adjustments

    (604 )   (411 )    

Comprehensive loss

    (22,782 )   (19,178 )   (3,318 )

Comprehensive income attributable to non-controlling interest

    227     786     650  

Comprehensive loss attributable to common stockholders

  $ (23,009 ) $ (19,964 ) $ (3,968 )

   

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

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Boingo Wireless, Inc.

Consolidated Statements of Stockholders' Equity

(In thousands)

 
  Common
Stock
Shares
  Common
Stock
Amount
  Additional
Paid-in
Capital
  Accumulated
Deficit
  Accumulated
Other
Comprehensive
Loss
  Non-
controlling
Interest
  Total
Stockholder's
Equity
 

Balance at December 31, 2012

    35,483   $ 4   $ 178,219   $ (34,547 ) $   $ 823   $ 144,499  

Issuance of common stock under stock incentive plans

    465         599                 599  

Repurchase and retirement of common stock

    (722 )           (4,848 )           (4,848 )

Stock-based compensation expense

            4,506                 4,506  

Deficient tax benefits from stock-based compensation

            (397 )               (397 )

Non-controlling interest distributions

                        (608 )   (608 )

Net loss

                (3,968 )       650     (3,318 )

Balance at December 31, 2013

    35,226     4     182,927     (43,363 )       865     140,433  

Issuance of common stock under stock incentive plans

    1,041         1,158                 1,158  

Shares withheld for taxes

            (1,922 )               (1,922 )

Stock-based compensation expense

            7,562                 7,562  

Non-controlling interest distributions

                        (623 )   (623 )

Net loss

                (19,521 )       754     (18,767 )

Other comprehensive loss

                    (443 )   32     (411 )

Balance at December 31, 2014

    36,267     4     189,725     (62,884 )   (443 )   1,028     127,430  

Issuance of common stock under stock incentive plans

    1,058         1,373                 1,373  

Shares withheld for taxes

            (2,512 )               (2,512 )

Stock-based compensation expense

            10,176                 10,176  

Purchase of non-controlling interest

            (1,150 )               (1,150 )

Non-controlling interest distributions

                        (500 )   (500 )

Net loss

                (22,292 )       114     (22,178 )

Other comprehensive loss

                    (717 )   113     (604 )

Balance at December 31, 2015

    37,325   $ 4   $ 197,612   $ (85,176 ) $ (1,160 ) $ 755   $ 112,035  

   

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

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Boingo Wireless, Inc.

Consolidated Statements of Cash Flows

(In thousands)

 
  For the Years Ended
December 31,
 
 
  2015   2014   2013  

Cash flows from operating activities

                   

Net loss

  $ (22,178 ) $ (18,767 ) $ (3,318 )

Adjustments to reconcile net loss including non-controlling interests to net cash provided by operating activities:

                   

Depreciation and amortization of property and equipment

    38,293     27,446     18,940  

Amortization of intangible assets

    3,576     3,716     2,250  

Impairment loss

    242     959      

Stock-based compensation

    9,398     7,164     4,506  

Excess tax benefits from stock-based compensation

            (55 )

Change in fair value of contingent consideration

    (114 )   (811 )   (367 )

Change in deferred income taxes

    320     468     1,615  

Changes in operating assets and liabilities, net of effect of acquisition:

                   

Accounts receivable

    (15,746 )   (11,392 )   (2,403 )

Prepaid expenses and other assets

    (3,459 )   (1,935 )   1,648  

Accounts payable

    3,845     (2,252 )   (242 )

Accrued expenses and other liabilities

    4,569     4,739     (1,307 )

Deferred revenue

    79,829     11,872     (596 )

Net cash provided by operating activities

    98,575     21,207     20,671  

Cash flows from investing activities

                   

Decrease in restricted cash

        545      

Purchases of marketable securities

        (27,163 )   (33,430 )

Proceeds from sales of marketable securities

    1,614     58,511     42,026  

Purchases of property and equipment

    (103,116 )   (70,945 )   (29,500 )

Payments for business acquisitions, net of cash acquired

        (147 )   (19,459 )

Other

            (40 )

Net cash used in investing activities

    (101,502 )   (39,199 )   (40,403 )

Cash flows from financing activities

                   

Proceeds from credit facility

    20,000     3,500      

Principal payments on debt

    (5,875 )        

Debt issuance costs

    (62 )   (711 )    

Proceeds from exercise of stock options

    1,373     1,158     614  

Repurchase and retirement of common stock

            (4,848 )

Excess tax benefits from stock-based compensation

            55  

Payments of capital leases and notes payable

    (814 )   (627 )   (187 )

Payments of acquired notes payable and financed liabilities

            (6,079 )

Payment of holdback consideration

    (1,600 )        

Payment of other acquisition related consideration

    (17 )   (1,255 )    

Payments of withholding tax on net issuance of restricted stock units

    (2,512 )   (1,922 )   (15 )

Payments to non-controlling interest

    (500 )   (623 )   (608 )

Purchase of non-controlling interests

    (1,150 )        

Net cash provided by (used in) financing activities

    8,843     (480 )   (11,068 )

Effect of exchange rates on cash. 

    (47 )   (17 )