Filed Pursuant to Rule 424(b)(3)
File Number 333-192064

Prospectus Supplement No. 3
(To Prospectus dated May 22, 2014)

Hipcricket, Inc.
31,037,500 Shares of Common Stock
 
     This Prospectus Supplement No. 3 supplements the prospectus dated May 22, 2014 (as supplemented to date, the “Prospectus”), which forms a part of our Registration Statement on Form S-1 (Registration Statement No. 333-192064).  The Prospectus and this prospectus supplement relate to the disposition from time to time of up to 31,037,500 shares of our common stock, which are held or may be held by the selling stockholders named in the Prospectus.  We are not selling any common stock under this prospectus and will not receive any of the proceeds from the sale of shares by the selling stockholders.
 
     This prospectus supplement should be read in conjunction with the Prospectus, which is to be delivered with this prospectus supplement.  This prospectus supplement updates, amends and supplements the information included in the Prospectus.  If there is any inconsistency between the information in the Prospectus and this prospectus supplement, you should rely on the information in this prospectus supplement.
 
     This prospectus supplement is not complete without, and may not be delivered or utilized except in connection with, the Prospectus, including any amendments or supplements to it.
 
Current Report on Form 8-K
 
     On July 9, 2014, we filed a Current Report on Form 8-K with the Securities and Exchange Commission.  The text of such Form 8-K is attached hereto.
_______________
 
     Investing in our common stock involves a high degree of risk. In reviewing the Prospectus and this prospectus supplement, you should carefully consider the matters described under the heading “Risk Factors” beginning on page 3 of the Prospectus.
 
     Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of these securities, or determined if this prospectus is truthful or complete. Any representation to the contrary is a criminal offense.
 
_______________
 
The date of this prospectus supplement is July 9, 2014.

 
 

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

FORM 8-K

CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934

Date of report (Date of earliest event reported): July 2, 2014

Hipcricket, Inc.
(Exact name of registrant as specified in Charter)

Delaware
 
333-57818
 
20-0122076
(State or other jurisdiction
of incorporation)
 
(Commission File No.)
 
(IRS Employer
Identification No.)

110 110 th Avenue NE, Suite 410
Bellevue, WA  98004
(Address of Principal Executive Offices)

(855) 423-5433
(Registrant’s telephone number, including area code)

 
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):

[  ]
Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

[  ]
Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

[  ]
Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

[  ]
Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

 
 

 

Item 2.02   Results of Operations and Financial Condition
 
     On July 9, 2014, Hipcricket, Inc. 2015 (the “Company”) issued a press release announcing the results of its operations for the first quarter of fiscal 2015 ended May 31, 2014. The full text of the press release is attached as an exhibit to this report.
 
     The information in this Item 2.02 and attached as Exhibit 99.1 to this report shall not be treated as “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liabilities of that section.  This information will not be incorporated by reference into any filing under the Securities Act of 1933, as amended, or into another filing under the Exchange Act, unless that filing expressly incorporates this information by reference.

Item 5.02   Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers.
 
     On July 2, 2014, the Company and Thomas J. Virgin agreed that Mr. Virgin’s employment as the Company’s Chief Financial Officer would cease effective as of the close of business on July 3, 2014.  The Company had announced on June 5, 2014, that Mr. Virgin would be leaving the Company and was working to transition his responsibilities.
 
     On July 8, 2014, the Board of Directors appointed Todd E. Wilson, the Company’s Chairman and Interim Chief Executive Officer, to serve as the Company’s principal financial officer.
 
     Mr. Wilson has been a director since June 2010 and was appointed to the position of Chairman in March 2013.  He has served as Interim Chief Executive Officer of the Company since May 30, 2014. Mr. Wilson has more than 20 years of experience as an investor, board member and advisor to growing middle-market companies. He has served as a Partner at Crane Street Capital, a California-based investment firm, since September 2011.  From July 2010 to September 2011, Mr. Wilson held the position of Managing Director for the Office of Small Business Services for the City of Los Angeles.  From July 2002 to December 2009, he served as a Principal in the private equity group at American Capital, Ltd. He received an MBA from the Fuqua School of Business at Duke University and a Bachelor's degree in Finance from The Wharton School of Business.

Item 9.01   Financial Statements and Exhibits

(d)  Exhibits
 
No. Description
99.1 Press Release issued July 9, 2014
 
 
 

 
 
SIGNATURES
 
     Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this Report to be signed on its behalf by the undersigned hereunto duly authorized.

   
Hipcricket, Inc.
   
(Registrant)
     
Date: July 9, 2014
 
By:
/s/ Todd E. Wilson
     
Todd E. Wilson
     
Interim Chief Executive Officer
 
 
 

 
 
Exhibit 99.1
Hipcricket Reports Fiscal First Quarter 2015 Results

Bellevue, Wash. – July 9, 2014 – Hipcricket ® , Inc. (OTCBB: HIPP) (OTCQB: HIPP), a leader in mobile engagement and analytics, reported results for the first quarter ended May 31, 2014.

Fiscal Q1 2015 Highlights
 
·
Revenue up 25% to record $7.3 million
·
Gross profit increased 13% to $3.7 million
·
Bookings increased 38% year-over-year to $8.8 million
·
Backlog increased 7% to $20.4 million from the same year-ago period

Fiscal Q1 2015 Financial Results
Revenue for the first quarter of fiscal 2015 increased 25% to $7.3 million from $5.9 million in the same year-ago period. The increase was driven by new customers and the expansion of existing customer activity.

Revenue mix for the first quarter of fiscal 2015 was 42% from mobile marketing (derived from messaging, mobile web, and mobile applications) and 58% from mobile advertising (primarily derived from mobile brand advertising through agencies). This is compared to 64% from mobile marketing and 36% from mobile advertising in the same year-ago period.

In the first quarter of fiscal 2015, bookings (which the company defines as the dollar value of contracts signed, including new orders and renewals) were $8.8 million compared to $6.4 million in the same period of fiscal 2014. Approximately 73% of total bookings in fiscal Q1 2015 were new sales to existing and new customers, with the balance representing license renewals. The company’s bookings can fluctuate from quarter-to-quarter, and renewals will vary primarily due to the timing of contract renewal dates.

Gross profit for the first quarter of fiscal 2015 was $3.7 million or 50% of revenue, compared to $3.3 million or 56% of revenue in the same year-ago period. The increase in gross profit was primarily due to a larger percentage of sales from mobile advertising.

Operating expenses for the first quarter of fiscal 2015 decreased 2% to $9.1 million from $9.3 million in the same year-ago period.

To provide greater insight into its operating expenses, the company reports a non-GAAP operating expense metric, which it defines as total operating expenses less impairment of goodwill, impairment of intangible assets and investments, share-based compensation, severance and related costs, depreciation and amortization. On this basis, non-GAAP operating expenses in the first quarter of fiscal 2015 totaled $6.7 million compared to $6.3 million in the same year-ago period.

Net loss for the first quarter of fiscal 2015 improved to $5.4 million or $(0.04) per share from a net loss of $6.0 million or $(0.05) per share in the same period of fiscal 2014. In the first quarter of fiscal 2015, earnings before non-cash charges (a non-GAAP term the company defines below) totaled a loss of $3.5 million, an improvement from a loss of $3.6 million in the same period of 2014. See further discussion of the company’s use of non-GAAP terms and reconciliations to GAAP, below.

 
-1-

 
 
Management Commentary
“This quarter’s record revenue was driven by both new customers and the expansion of existing customer activity,” said Todd Wilson, Hipcricket's chairman and CEO. “The results also reflect the strategic decisions we made late last year to strengthen our sales team and further enhance our product offerings, like the new analytics features of our AD LIFE platform.

“My first initiative as CEO is to ensure we quickly get to EBITDA positive operations. In doing this, we are focusing our sales efforts on higher value customers, leveraging our technology staff to maintain and enhance our product offering, as well as consolidate certain non-core personnel positions.

“We are now aggressively implementing this plan, and expect to begin seeing the full effect on a quarterly basis in our fiscal third quarter. Given our outlook for a strong second half, we continue to believe that fiscal 2015 has the potential to be a year of double-digit revenue growth. We see this being driven by continued industry expansion, new customer acquisitions, and increased activity within our existing customer base of global companies and brands. Our operating plan calls for sustainable revenue growth beyond 2015, as we realize operational efficiencies and achieve positive operating EBITDA in the second half of the fiscal year.”

Conference Call
Hipcricket will hold a conference call later today (July 9, 2014) to discuss these financial results. The company's chairman and interim CEO, Todd Wilson, and president and COO, Doug Stovall, will host the call starting at 4:30 p.m. Eastern time. A question and answer session will follow management's presentation.
To participate, please dial the appropriate number at least 10 minutes prior to the start time and ask for the Hipcricket conference call.

U.S. dial-in: (888) 401-4669
International dial-in: (719) 457-1035
Conference ID: 2827380

The conference call will be broadcast simultaneously via a link available in the investors section of the company's website here . For the webcast, please access the link at least 15 minutes prior the call in order to register and install any necessary audio software. If you have any difficulty connecting with the conference call or webcast, please contact Liolios Group at (949) 574-3860.

A replay of the call will be available after 7:30 p.m. Eastern time through July 23, 2014 via the same website link as well as by phone:

U.S. replay dial-in: (877) 870-5176
International replay dial-in: (858) 384-5517
Replay ID: 2827380

About Hipcricket
Hipcricket, Inc. (OTCBB: HIPP) & (OTCQB: HIPP) provides a unified mobile engagement platform that drives awareness, sales and loyalty. Its AD LIFE® platform has been used by internationally recognized brands and agencies to power more than 400,000 campaigns across SMS, 2D/QR codes, mobile websites, advertising networks, social media and branded apps. For additional Hipcricket news and information, visit www.hipcricket.com or text "NEWS" to 24474.

Hipcricket®, AD LIFE® and the Hipcricket logo are trademarks of Hipcricket, Inc. All rights reserved. 2009-14.

 
-2-

 
 
Non-GAAP Financial Measures
This press release includes financial measures defined as non-GAAP financial measures by the SEC. The presentation of this financial information is not intended to be considered in isolation or as a substitute for the financial information prepared and presented in accordance with generally accepted accounting principles accepted in the United States of America ("GAAP"). Generally, a non-GAAP financial measure is a numerical measure that either excludes or includes amounts that are not normally excluded or included in the most directly comparable measure calculated and presented in accordance with GAAP. We supplement our GAAP disclosures with Non-GAAP Operating Expenses and Non-GAAP Earnings (Losses). These amounts exclude non-cash items, including share-based compensation expense, depreciation and amortization, acquisition related contingent consideration (including fair value adjustments and deferred income tax benefits), and impairment charges for goodwill and intangible assets and investments. Non-GAAP Operating Expenses also exclude severance and related costs. The following table reconciles Non-GAAP Operating Expenses and Non-GAAP Earnings (Losses) to the comparable GAAP measures (Unaudited):
 
Non-GAAP Information and Reconcilation to Comparable GAAP Financial Measures (Unaudited):
 
   
3 months ended
 
   
May 31,
 
Non-GAAP Operating Expenses (in millions)
 
2014
   
2013
 
Total Operating Expense
    9.1       9.3  
Severance expense
    (0.5 )     (0.6 )
Share-based payments
    (0.6 )     (1.1 )
Depreciation and amortization
    (1.3 )     (1.3 )
Total Non-GAAP Operating Expenses:
    6.7       6.3  
                 
   
3 months ended
 
   
May 31,
 
Earnings before non-cash charges (in millions)
    2014       2013  
Net loss as reported (GAAP)
    (5.4 )     (6.0 )
Share-based payments
    0.6       1.1  
Depreciation and amortization
    1.3       1.3  
Earnings before non-cash charges
    (3.5 )     (3.6 )

Important Cautions Regarding Forward-Looking Statements
This press release contains forward-looking statements regarding future events and our future financial performance. All statements other than present and historical facts contained in this release, including any statements regarding our plans for future operations, anticipated future financial position, anticipated results of operations, financing plans, business strategy, competitive position, opportunities for growth and industry trends, are forward-looking statements. All forward-looking statements involve risks, uncertainties and contingencies, many of which are beyond our control. The company’s actual results, performance, or achievements may differ materially from those projected or assumed in any of the forward-looking statements. Factors that could cause actual results to differ materially from the forward-looking statements include, among others: overall economic and business conditions; the demand for our products and services; competitive factors in our industry; the emergence of new technologies; our cash position; the availability of funding sources; the strength of our intellectual property portfolio; and changes in government regulations in our industry. A more detailed discussion of these factors is set forth in the company’s annual report on Form 10-K for the year ended February 28, 2014 and other reports filed with the U.S. Securities and Exchange Commission. The company does not intend, and undertakes no duty, to update any forward-looking statement to reflect future events or circumstances.

Investor Relations Contact
Matt Glover or Michael Koehler
Liolios Group, Inc.
(949) 574-3860
HIPP@liolios.com

Hipcricket Media Contact
Andrea Mocherman
(425) 452-1111
amocherman@hipcricket.com
 
-3-

 
 
Balance Sheets
(in thousands)
   
May 31, 2014
   
February 28, 2014
 
ASSETS
           
CURRENT ASSETS
           
Cash & cash equivalents
  $ 1,598     $ 3,002  
Restricted cash
    215       215  
Accounts receivable, net
    6,853       6,808  
Prepaid expenses and other current assets
    438       416  
Total current assets
    9,104       10,441  
                 
Property and equipment, net
    358       323  
Goodwill
    35,060       35,060  
Intangible assets, net
    19,954       21,203  
Deposits
    159       163  
TOTAL ASSETS
    64,635       67,190  
                 
LIABILITIES AND STOCKHOLDERS' EQUITY
               
CURRENT LIABILITIES
               
Accounts payable
    6,552       4,412  
Accrued liabilities
    3,166       2,629  
Deferred revenues
    642       808  
Line of credit
    1,845       2,210  
Total current liabilities
    12,205       10,059  
                 
LONG TERM LIABILITIES
               
Deferred income tax liability
    3,376       3,376  
Accrued liabilities
    148       55  
                 
TOTAL LIABILITIES
    15,729       13,490  
                 
Commitments and contingencies
               
                 
STOCKHOLDERS' EQUITY
               
Common stock
    15       15  
Additional paid in capital
    187,960       187,333  
Accumulated deficit
    (139,069 )     (133,648 )
Total stockholders' equity
    48,906       53,700  
                 
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY
  $ 64,635     $ 67,190  

 
-4-

 
 
Statements of Operations
(in thousands except Net Loss Per Share and Shares Outstanding)
   
3 months ended
 
   
May 31,
 
   
2014
   
2013
 
             
REVENUE
    7,331       5,866  
                 
COST OF REVENUES
    3,638       2,603  
                 
OPERATING EXPENSES
               
Sales and Marketing
    3,082       3,337  
Technology and Development
    1,769       1,988  
General and Administrative
    2,946       2,677  
Depreciation and Amortization
    1,288       1,275  
                 
Total operating expenses
    9,085       9,277  
                 
LOSS FROM OPERATIONS
    (5,392 )     (6,014 )
                 
OTHER INCOME (EXPENSE)
               
Interest income (expense), net
    (29 )     (1 )
                 
NET LOSS BEFORE INCOME TAXES
    (5,421 )     (6,015 )
                 
Income tax benefit (expense)
    -       -  
                 
NET LOSS
    (5,421 )     (6,015 )
                 
BASIC AND DILUTED NET LOSS PER SHARE
  $ (0.04 )   $ (0.05 )
                 
WEIGHTED AVERAGE SHARES OUTSTANDING
    154,751,590       129,595,547  

 
-5-

 

Statements of Cash Flows
(in thousands)
   
3 months ended
 
   
May 31,
 
   
2014
   
2013
 
CASH FLOWS FROM OPERATING ACTIVITIES
           
Net loss
  $ (5,421 )   $ (6,015 )
Adjustments to reconcile net loss to net cash used in operating activities:
         
Depreciation and amortization
    1,288       1,275  
Bad debt expense and other
    20       1  
Common stock issued for services
    -       46  
Common stock issued for settlement
    35       -  
Share-based payments
    592       1,052  
Changes in operating assets and liabilities:
               
Accounts receivable
    (64 )     546  
Prepaid expenses and other current assets
    (23 )     121  
Deposits
    3       (13 )
Accounts payable &accrued liabilities
    2,678       (979 )
Deferred revenue
    (166 )     260  
Long-term liabilites and other
    93       (17 )
CASH USED IN OPERATING ACTIVITIES
    (965 )     (3,723 )
                 
CASH FLOWS FROM INVESTING ACTIVITIES
               
Cash paid for purchase of patents
    -       (46 )
Cash paid for patent defense costs
    (3 )     (183 )
Additions to property and equipment
    (71 )     -  
CASH USED IN INVESTING ACTIVITIES
    (74 )     (229 )
                 
CASH FLOWS FROM FINANCING ACTIVITIES
               
Proceeds received from line of credit
    (365 )     1,000  
Proceeds received from exercise of options /warrants
    -       3  
CASH PROVIDED BY FINANCING ACTIVITIES
    (365 )     1,003  
                 
NET DECREASE IN CASH
    (1,404 )     (2,949 )
CASH AT BEGINNING OF PERIOD
    3,002       4,353  
                 
CASH AT END OF PERIOD
  $ 1,598     $ 1,404