Unrestricted Subsidiaries

As of June 30, 2014, the Company's Board of Directors had designated the following entities as “Unrestricted Subsidiaries” under the indenture governing j2 Cloud Services' Senior Notes:

Ziff Davis, LLC and subsidiaries

Advanced Messaging Technologies, Inc. and subsidiaries

The financial position and results of operations of these Unrestricted Subsidiaries are included in the Company's condensed consolidated financial statements.

As required by the indenture governing j2 Cloud Services' Senior Notes, information sufficient to ascertain the financial condition and results of operations excluding the Unrestricted Subsidiaries must be presented. Accordingly, the Company is presenting the following tables.

The financial position of the Unrestricted Subsidiaries as of June 30, 2014 is as follows (in thousands):



	June 30, 2014
ASSETS
Cash and cash equivalents	$	19,902
Accounts receivable	47,528
Prepaid expenses and other current assets	2,723
Deferred income taxes	4,187
Total current assets	74,340
Property and equipment, net	13,070
Trade names, net	49,128
Patent and patent licenses, net	19,295
Customer relationships, net	52,705
Goodwill	148,301
Other purchased intangibles, net	3,244
Deferred income taxes	196
Other assets	1,741
Total assets	$	362,020
LIABILITIES AND STOCKHOLDERS’ EQUITY
Accounts payable and accrued expenses	$	14,391
Income taxes payable	7,731
Deferred revenue, current	4,527
Deferred income taxes	—
Total current liabilities	26,649
Deferred income taxes	23,799
Other long-term liabilities	1,409
Total liabilities	51,857
Additional paid-in capital	316,300
Accumulated deficit	(6,086		)
Accumulated other comprehensive income (loss)	(51		)
Total stockholders’ equity	310,163
Total liabilities and stockholders’ equity	$	362,020

The results of operations of the Unrestricted Subsidiaries for the three and six months ended June 30, 2014 and 2013 is as follows (in thousands):



	Three Months Ended June 30,						Six Months Ended June 30,
	2014 ⁽¹⁾			2013			2014 ⁽¹⁾			2013
Revenues	$	38,907		$	32,778		$	72,275		$	55,685

Cost of revenues	4,445			4,692			8,297			8,284
Gross profit	34,462			28,086			63,978			47,401
Operating expenses:
Sales and marketing	16,431			18,176			31,389			30,964
Research, development and engineering	1,154			1,480			2,226			3,458
General and administrative	12,959			8,943			21,793			17,488
Total operating expenses	30,544			28,599			55,408			51,910
Income (loss) from operations	3,918			(513		)	8,570			(4,509		)
Interest expense (income), net	(3		)	2,367			(1		)	3,716
Other expense (income), net	(76		)	(261		)	(418		)	(192		)
Income (loss) before income taxes	3,997			(2,619		)	8,989			(8,033		)
Income tax expense (benefit)	2,209			(1,128		)	4,235			(3,460		)
Net income (loss)	$	1,788		$	(1,491	)	$	4,754		$	(4,573	)

⁽¹⁾ Effective in the second quarter of 2014, Advanced Messaging Technologies, Inc. and subsidiaries were classified as Unrestricted Subsidiaries. As a result, the prior period may not be comparable to the current period presentation.