LETTER TO STOCKHOLDERS

Fellow STockholders:

I’m pleased to update you on the company’s progress during 2007. The past year marked the successful completion of our transition to a more diverse revenue model comprising broadband, software, service fees and a declining dependence on dial revenues.

Let me put this revenue shift into perspective. In the last quarter of 2005, dial revenues represented 78 percent of iPass’ total revenues, and broadband, software and service fee revenues represented only 22 percent. By the last quarter of 2006, we reached a 50/50 balance of dial versus broadband, software and service fees. In the last quarter of 2007, broadband, software and service fees had grown to 73 percent of iPass revenues, while dial revenues represented only 27 percent.

Solid Revenue Growth

Growing the business in the face of decreasing dial revenues required across-the-board increases in broadband, software and service fee revenues. And that’s what we accomplished.

During 2007:

• Total broadband revenues grew nearly 90% to $75 million
• Mobile broadband revenues increased 132% to $49 million
• Fixed broadband revenues grew 41% to exceed $26 million
• Software and service revenues increased 31% to $49 million

Combined broadband software and service fees grew 61 percent in 2007, contributing $124 million of the company’s $192 million in revenues. For the full year, total revenues grew 5 percent despite nearly $38 million less dial revenues! Our increased focus on the wireless and broadband services that now dominate our industry was fundamental to our corporate transformation. It also dovetails with our strategic intent of increasing customer value through software and services that unify enterprise mobility management.

Growing Our Customer Base

iPass continues to attract and retain many of the world’s leading businesses. During 2007, iPass added 40 new Forbes Global 2000 customers, raising our total to more than 400 of these coveted enterprise accounts. We unified mobility management for more than 3,500 enterprises, with virtually no customer churn.

Leading industry experts shared this affinity for iPass. During 2007, iPass was recognized as a Gartner Magic Quadrant leader in Mobility Services for the 6th consecutive year, and IDC named iPass a leader in Mobile Device Management.

Global Broadband Network— More Venues and More Countries

Providing convenient, secure access is essential to deliver the full value of our unified mobility services to customers. That’s why we continue to grow our global virtual network footprint. During 2007, we added key venues in North America, France, the UK and Belgium, finishing the year with more than 95,000 Wi-Fi and Ethernet venues at airports, hotels, cafes and other locations. No other service in the world offers this many commercial locations.

An increasing number of iPass customers also required on-demand access via 3G mobile data services. We now offer our customers access to two mobile data networks in the United States, in addition to mobile data coverage in China, Hong Kong, Japan, the Netherlands, Singapore and the UK.

Continued Focus on Increasing Shareholder Value

Corporate refinement continued in 2007 as we maintained our focus on delivering greater long-term shareholder value. Despite growing broadband, software and service fee revenues, we faced challenges as a result of the dramatic decline in dial revenues, which resulted in our posting a net loss in 2006, which increased in 2007. To address this, the iPass management team took a hard look at how to further contain costs and improve operating margins in an effort to return to profitability.

During the fourth quarter, we implemented the latest phase of our global restructuring plan, resulting in several organizational changes. While this restructuring required difficult decisions, such as a 12 percent staff reduction, it was the right thing to do for the business. It also involved the continued shift from a direct sales model to increasing our focus on selling through channel partnerships. The end result of this restructuring will reduce non-stock compensation R&D, network operations and SG&A operating expenses by up to $3 million per quarter.

Turning Strength into Momentum

I am optimistic that 2008 will be a successful year at iPass. We enter the year with a strong balance sheet that includes $75 million in cash and no debt. Our FlexConnect program includes strong channel partnerships with Orange Business Services, Telstra, Chunghwa and other global telecommunications leaders. I am also excited about future plans to develop bigger and better relationships with system integrators and value-added resellers.

The iPass Board of Directors recently authorized a $30 million stock repurchase funded primarily by cash flow from operations. This is reflective of our confidence in the business going forward.

iPass remains committed to continue broadband, software and service fee revenue growth, increase channel sales and a stable cost structure. We look forward to 2008 as we strive to make it a year of profitable revenue growth at iPass.

Kenneth D. Denman

Chairman, President and Chief Executive Officer