UNITED STATES SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

☒

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

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

For the quarterly period ended September 30, ~~2017~~2019

☐

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

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

For the transition period from to

Commission file number: 001-35155

BOINGO WIRELESS, INC.

(Exact name of registrant as specified in its charter)

Delaware		95-4856877
(State or other jurisdiction of		(I.R.S. Employer
incorporation or organization)		Identification No.)

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

~~(310)~~ (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	WIFI	The NASDAQ Stock Market LLC
(Title of each class)	(Trading symbol)	(Name of each exchange on which registered)

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 x⌧ 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 x⌧ No o☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of ~~��large~~“large accelerated filer,” “accelerated filer”, “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act. ~~(Check one):~~


Large accelerated filer o☒		Accelerated filer x☐

Non-accelerated filer o☐		Smaller Reporting Company o☐
~~(Do not check if a smaller reporting company)~~
		Emerging Growth Company o☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. 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 x⌧

As of October ~~27, 2017,~~25, 2019, there were ~~40,795,209~~44,160,591 shares of the registrant’s common stock outstanding.

Table of Contents

TABLE OF CONTENTS


				Page
PART I — FINANCIAL INFORMATION

Item 1.		Financial Statements (unaudited)	3

		Condensed Consolidated Balance Sheets	3

		Condensed Consolidated Statements of Operations	4

		Condensed Consolidated Statements of Comprehensive Income (Loss)	5

		Condensed Consolidated Statement of Stockholders’ Equity	6

		Condensed Consolidated Statements of Cash Flows	7

		Notes to the Condensed Consolidated Financial Statements	8

Item 2.		Management’s Discussion and Analysis of Financial Condition and Results of Operations	1730

Item 3.		Quantitative and Qualitative Disclosure about Market Risk	2844

Item 4.		Controls and Procedures	2845

PART II — OTHER INFORMATION

Item 1.	Legal Proceedings	~~Legal Proceedings~~	2945

Item 1A.	Risk Factors	~~Risk Factors~~	2945

Item 6.2.	Unregistered Sales of Equity Securities and Use of Proceeds	~~Exhibits~~	2946

~~SIGNATURES~~Item 6.	31Exhibits	47

SIGNATURES		48

Table of Contents

PART I — FINANCIAL INFORMATION

Item 1. Financial Statements

Boingo Wireless, Inc.

Condensed Consolidated Balance Sheets

~~(Unaudited)~~

(Unaudited)

(In thousands, except per share amounts)

September 30,
2017

December 31,
2016

Assets

Current assets:

Cash and cash equivalents

$
21,634

$
19,485

Accounts receivable, net

39,102

42,978

Prepaid expenses and other current assets

6,722

5,344

Total current assets

67,458

67,807

Property and equipment, net

261,010

250,765

Goodwill

42,403

42,403

Intangible assets, net

11,094

13,783

Other assets

6,580

6,223

Total assets

$
388,545

$
380,981

Liabilities and stockholders’ equity

Current liabilities:

Accounts payable

$
14,614

$
15,516

Accrued expenses and other liabilities

35,660

27,723

Deferred revenue

78,575

50,869

Current portion of long-term debt

875

1,094

Current portion of capital leases and notes payable

4,349

3,993

Total current liabilities

134,073

99,195

Deferred revenue, net of current portion

138,910

152,719

Long-term debt

5,219

15,875

Long-term portion of capital leases and notes payable

3,560

4,612

Deferred tax liabilities

3,513

3,208

Other liabilities

6,500

6,826

Total liabilities

291,775

282,435

Commitments and contingencies (Note 8)

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; 40,788 and 38,562 shares issued and outstanding at September 30, 2017 and December 31, 2016, respectively

4

4

Additional paid-in capital

227,454

211,275

Accumulated deficit

(130,948
)
(112,601
)
Accumulated other comprehensive loss

(812
)
(870
)
Total common stockholders’ equity

95,698

97,808

Non-controlling interests

1,072

738

Total stockholders’ equity

96,770

98,546

Total liabilities and stockholders’ equity

$
388,545

$
380,981


	September 30,		December 31,
	2019		2018
Assets
Current assets:
Cash and cash equivalents	$	50,182	$	149,412
Marketable securities		36,594		—
Accounts receivable, net		49,446		42,766
Prepaid expenses and other current assets		8,965		7,815
Total current assets		145,187		199,993
Property and equipment, net		361,876		314,179
Operating lease right-of-use assets, net		15,647		—
Goodwill		58,579		59,640
Intangible assets, net		15,739		19,152
Other assets		9,406		9,936
Total assets	$	606,434	$	602,900

Liabilities and stockholders’ equity
Current liabilities:
Accounts payable	$	28,497	$	21,543
Accrued expenses and other liabilities		55,707		62,653
Deferred revenue		63,510		80,383
Current portion of operating leases		2,911		—
Current portion of long-term debt		778		—
Current portion of finance leases		3,057		4,201
Current portion of notes payable		1,937		2,411
Total current liabilities		156,397		171,191
Deferred revenue, net of current portion		172,601		137,205
Long-term portion of operating leases		17,879		—
Long-term debt		160,568		151,670
Long-term portion of finance leases		1,149		3,293
Long-term portion of notes payable		218		1,618
Deferred tax liabilities		1,129		1,073
Other liabilities		307		6,728
Total liabilities		510,248		472,778

Commitments and contingencies (Note 14)

Stockholders’ equity:
Preferred stock, $0.0001 par value; 5,000 shares authorized; 0 shares issued and outstanding		—		—
Common stock, $0.0001 par value; 100,000 shares authorized; 44,121 and 42,669 shares issued and outstanding at September 30, 2019 and December 31, 2018, respectively		4		4
Additional paid-in capital		232,286		259,132
Accumulated deficit		(135,801)		(129,930)
Accumulated other comprehensive loss		(1,543)		(1,295)
Total common stockholders’ equity		94,946		127,911
Non-controlling interests		1,240		2,211
Total stockholders’ equity		96,186		130,122
Total liabilities and stockholders’ equity	$	606,434	$	602,900

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

Table of Contents

Boingo Wireless, Inc.

Condensed Consolidated Statements of Operations

~~(Unaudited)~~

(Unaudited)

(In thousands, except per share amounts)

Three Months Ended
September 30,

Nine Months Ended
September 30,

2017

2016

2017

2016

Revenue

$
53,655

$
40,796

$
147,021

$
114,370

Costs and operating expenses:

Network access

24,143

17,982

64,655

49,575

Network operations

11,625

10,698

34,556

31,566

Development and technology

6,817

5,394

19,814

16,014

Selling and marketing

5,201

4,553

15,188

14,103

General and administrative

8,006

6,701

27,372

22,553

Amortization of intangible assets

852

855

2,673

2,582

Total costs and operating expenses

56,644

46,183

164,258

136,393

Loss from operations

(2,989
)
(5,387
)
(17,237
)
(22,023
)
Interest and other expense, net

(84
)
(117
)
(126
)
(299
)
Loss before income taxes

(3,073
)
(5,504
)
(17,363
)
(22,322
)
Income tax expense

167

95

507

457

Net loss

(3,240
)
(5,599
)
(17,870
)
(22,779
)
Net income attributable to non-controlling interests

210

110

477

180

Net loss attributable to common stockholders

$
(3,450
)
$
(5,709
)
$
(18,347
)
$
(22,959
)

Net loss per share attributable to common stockholders:

Basic

$
(0.09
)
$
(0.15
)
$
(0.46
)
$
(0.61
)
Diluted

$
(0.09
)
$
(0.15
)
$
(0.46
)
$
(0.61
)

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

Basic

40,336

38,189

39,468

37,897

Diluted

40,336

38,189

39,468

37,897



	Three Months Ended				Nine Months Ended
	September 30,				September 30,
	2019		2018		2019		2018

Revenue	$	64,707	$	65,253	$	199,734	$	183,013
Costs and operating expenses:
Network access		29,155		29,273		90,368		79,926
Network operations		13,682		13,260		42,073		38,829
Development and technology		8,182		7,995		25,534		22,883
Selling and marketing		5,721		5,674		17,782		16,490
General and administrative		5,021		7,789		20,330		22,218
Amortization of intangible assets		1,103		1,112		3,365		2,507
Total costs and operating expenses		62,864		65,103		199,452		182,853
Income from operations		1,843		150		282		160
Interest expense and amortization of debt discount		(2,191)		(8)		(6,741)		(58)
Interest income and other expense, net		388		(14)		1,600		(93)
Income (loss) before income taxes		40		128		(4,859)		9
Income tax expense		(143)		(54)		(254)		(198)
Net (loss) income		(103)		74		(5,113)		(189)
Net income attributable to non-controlling interests		84		596		11		1,447
Net loss attributable to common stockholders	$	(187)	$	(522)	$	(5,124)	$	(1,636)

Net loss per share attributable to common stockholders:
Basic	$	0.00	$	(0.01)	$	(0.12)	$	(0.04)
Diluted	$	0.00	$	(0.01)	$	(0.12)	$	(0.04)

Weighted average shares used in computing net loss per share attributable to common stockholders:
Basic		44,136		42,377		43,904		41,890
Diluted		44,136		42,377		43,904		41,890

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

Table of Contents

Boingo Wireless, Inc.

Condensed Consolidated Statements of Comprehensive Income (Loss)

~~(Unaudited)~~

(Unaudited)

(In thousands)

Three Months Ended
September 30,

Nine Months Ended
September 30,

2017

2016

2017

2016

Net loss

$
(3,240
)
$
(5,599
)
$
(17,870
)
$
(22,779
)
Other comprehensive income (loss), net of tax

Foreign currency translation adjustments

64

(11
)
40

213

Comprehensive loss

(3,176
)
(5,610
)
(17,830
)
(22,566
)
Comprehensive income attributable to non-controlling interest

185

113

459

101

Comprehensive loss attributable to common stockholders

$
(3,361
)
$
(5,723
)
$
(18,289
)
$
(22,667
)


	Three Months Ended				Nine Months Ended
	September 30,				September 30,
	2019		2018		2019		2018

Net (loss) income	$	(103)	$	74	$	(5,113)	$	(189)
Other comprehensive loss, net of tax
Foreign currency translation adjustments		(304)		(219)		(268)		(490)
Unrealized (loss) gain on marketable securities		(4)		—		41		—
Comprehensive loss		(411)		(145)		(5,340)		(679)
Comprehensive income attributable to non-controlling interest		107		609		32		1,514
Comprehensive loss attributable to common stockholders	$	(518)	$	(754)	$	(5,372)	$	(2,193)

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

Table of Contents

Boingo Wireless, Inc.

Condensed Consolidated Statement of Stockholders’ Equity

~~(Unaudited)~~

(Unaudited)

(In thousands)

Accumulated

Common

Common

Additional

Other

Non-

Total

Stock

Stock

Paid-in

Accumulated

Comprehensive

controlling

Stockholders’

Shares

Amount

Capital

Deficit

Loss

Interests

Equity

Balance at December 31, 2016

38,562

$
4

$
211,275

$
(112,601
)
$
(870
)
$
738

$
98,546

Issuance of common stock under stock incentive plans

2,226

—

7,993

—

—

—

7,993

Shares withheld for taxes

—

—

(3,480
)
—

—

—

(3,480
)
Stock-based compensation expense

—

—

11,666

—

—

—

11,666

Non-controlling interest distributions

—

—

—

—

—

(125
)
(125
)
Net loss

—

—

—

(18,347
)
—

477

(17,870
)
Other comprehensive income (loss)

—

—

—

—

58

(18
)
40

Balance at September 30, 2017

40,788

$
4

$
227,454

$
(130,948
)
$
(812
)
$
1,072

$
96,770


								Accumulated
	Common	Common		Additional				Other		Non-		Total
	Stock	Stock		Paid-in		Accumulated		Comprehensive		controlling		Stockholders’
	Shares	Amount		Capital		Deficit		Loss		Interests		Equity

Balance at December 31, 2018	42,669	$	4	$	259,132	$	(129,930)	$	(1,295)	$	2,211	$	130,122
Issuance of common stock under stock incentive plans	1,310		—		6		—		—		—		6
Shares withheld for taxes	—		—		(32,907)		—		—		—		(32,907)
Stock-based compensation expense	—		—		2,574		—		—		—		2,574
Net loss	—		—		—		(5,153)		—		(86)		(5,239)
Other comprehensive (loss) income	—		—		—		—		(22)		4		(18)
Balance at March 31, 2019	43,979		4		228,805		(135,083)		(1,317)		2,129		94,538
Issuance of common stock under stock incentive plans	128		—		74		—		—		—		74
Shares withheld for taxes	—		—		(759)		—		��		—		(759)
Stock-based compensation expense	—		—		2,271		—		—		—		2,271
Non-controlling interest distributions	—		—		—		—		—		(1,003)		(1,003)
Net income	—		—		—		216		—		13		229
Other comprehensive income (loss)	—		—		—		—		105		(6)		99
Balance at June 30, 2019	44,107		4		230,391		(134,867)		(1,212)		1,133		95,449
Issuance of common stock under stock incentive plans	70		—		74		—		—		—		74
Repurchases of common stock	(56)		—		—		(747)		—		—		(747)
Shares withheld for taxes	—		—		(457)		—		—		—		(457)
Stock-based compensation expense	—		—		2,278		—		—		—		2,278
Net (loss) income	—		—		—		(187)		—		84		(103)
Other comprehensive (loss) income	—		—		—		—		(331)		23		(308)
Balance at September 30, 2019	44,121	$	4	$	232,286	$	(135,801)	$	(1,543)	$	1,240	$	96,186

Balance at December 31, 2017	40,995	$	4	$	230,679	$	(131,967)	$	(898)	$	1,212	$	99,030
Issuance of common stock under stock incentive plans	758		—		4,228		—		—		—		4,228
Shares withheld for taxes	—		—		(6,340)		—		—		—		(6,340)
Stock-based compensation expense	—		—		3,312		—		—		—		3,312
Cumulative effect of a change in accounting principle	—		—		—		3,257		—		69		3,326
Net (loss) income	—		—		—		(3,229)		—		456		(2,773)
Other comprehensive loss	—		—		—		—		(1)		(3)		(4)
Balance at March 31,2018	41,753		4		231,879		(131,939)		(899)		1,734		100,779
Issuance of common stock under stock incentive plans	500		—		4,227		—		—		—		4,227
Shares withheld for taxes	—		—		(1,246)		—		—		—		(1,246)
Stock-based compensation expense	—		—		3,152		—		—		—		3,152
Non-controlling interest distributions	—		—		—		—		—		(614)		(614)
Net income	—		—		—		2,115		—		395		2,510
Other comprehensive (loss) income	—		—		—		—		(324)		57		(267)
Balance at June 30, 2018	42,253		4		238,012		(129,824)		(1,223)		1,572		108,541
Issuance of common stock under stock incentive plans	225		—		1,309		—		—		—		1,309
Shares withheld for taxes	—		—		(1,315)		—		—		—		(1,315)
Stock-based compensation expense	—		—		3,363		—		—		—		3,363
Net (loss) income	—		—		—		(522)		—		596		74
Other comprehensive (loss) income	—		—		—		—		(232)		13		(219)
Balance at September 30,2018	42,478	$	4	$	241,369	$	(130,346)	$	(1,455)	$	2,181	$	111,753

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

Table of Contents

Boingo Wireless, Inc.

Condensed Consolidated Statements of Cash Flows

~~(Unaudited)~~

(Unaudited)

(In thousands)

Nine Months Ended
September 30,

2017

2016

Cash flows from operating activities

Net loss

$
(17,870
)
$
(22,779
)
Adjustments to reconcile net loss including non-controlling interests to net cash provided by operating activities:

Depreciation and amortization of property and equipment

49,244

34,801

Amortization of intangible assets

2,673

2,582

Bad debt expense (recovery)

88

(47
)
Other

51

—

Impairment loss and loss on disposal of fixed assets, net

442

49

Stock-based compensation

11,016

9,690

Change in deferred income taxes

305

324

Changes in operating assets and liabilities:

Accounts receivable

3,804

(462
)
Prepaid expenses and other assets

(1,816
)
(2,182
)
Accounts payable

(1,330
)
3,464

Accrued expenses and other liabilities

6,920

4,018

Deferred revenue

13,897

64,140

Net cash provided by operating activities

67,424

93,598

Cash flows from investing activities

Purchases of property and equipment

(54,691
)
(92,045
)
Payments for asset acquisition

(1,150
)
—

Net cash used in investing activities

(55,841
)
(92,045
)
Cash flows from financing activities

Proceeds from credit facility

—

5,000

Principal payments on credit facility

(10,875
)
(5,656
)
Proceeds from exercise of stock options

7,993

1,981

Debt issuance costs

—

(124
)
Payments of capital leases and notes payable

(2,952
)
(1,889
)
Payments of withholding tax on net issuance of restricted stock units

(3,480
)
(2,112
)
Payments to non-controlling interests

(125
)
(286
)
Net cash used in financing activities

(9,439
)
(3,086
)
Effect of exchange rates on cash

5

15

Net increase (decrease) in cash and cash equivalents

2,149

(1,518
)
Cash and cash equivalents at beginning of period

19,485

14,718

Cash and cash equivalents at end of period

$
21,634

$
13,200

Supplemental disclosure of non-cash investing and financing activities

Property and equipment costs in accounts payable, accrued expenses and other liabilities

$
19,438

$
19,367

Purchase of equipment and prepaid maintenance services under capital financing arrangements

$
2,141

$
4,560


	Nine Months Ended
	September 30,
	2019		2018
Cash flows from operating activities
Net loss	$	(5,113)	$	(189)
Adjustments to reconcile net loss including non-controlling interests to net cash provided by operating activities:
Depreciation and amortization of property and equipment		52,750		56,769
Amortization of intangible assets		3,365		2,507
Impairment loss and loss on disposal of fixed assets and intangible assets held for sale, net		277		198
Stock-based compensation		6,434		9,227
Amortization of deferred financing costs and debt discount, net of amounts capitalized		6,554		0
Non-cash operating lease cost		1,675		0
Gains and amortization of premiums/discounts for marketable securities		(522)		0
Change in fair value of contingent consideration		(961)		0
Bad debt expense		187		301
Changes in operating assets and liabilities:
Accounts receivable		(6,974)		(1,596)
Prepaid expenses and other assets		946		(209)
Accounts payable		532		2,041
Accrued expenses and other liabilities		5,394		3,557
Deferred revenue		18,523		(1,772)
Operating lease liabilities		(1,996)		0
Net cash provided by operating activities		81,071		70,834
Cash flows from investing activities
Purchases of marketable securities		(73,323)		0
Proceeds from maturities of marketable securities		37,293		0
Purchases of property and equipment		(101,455)		(72,531)
Payments for asset acquisitions		0		(22,052)
Net cash used in investing activities		(137,485)		(94,583)
Cash flows from financing activities
Debt issuance costs		(1,815)		0
Proceeds from credit facility		3,500		15,000
Principal payments on credit facility		(584)		(656)
Payments of acquisition related consideration		(3,027)		0
Proceeds from exercise of stock options		154		9,764
Repurchase of common stock for retirement		(747)		0
Payments of finance leases and notes payable		(5,162)		(4,362)
Payments of withholding tax on net issuance of restricted stock units		(34,123)		(8,901)
Payments to non-controlling interests		(1,003)		(614)
Net cash (used in) provided by financing activities		(42,807)		10,231
Effect of exchange rates on cash		(9)		9
Net decrease in cash, cash equivalents, and restricted cash		(99,230)		(13,509)
Cash and cash equivalents at beginning of period		149,412		26,685
Cash, cash equivalents, and restricted cash at end of period	$	50,182	$	13,176
Supplemental disclosure of non-cash investing and financing activities
Property and equipment costs in accounts payable, accrued expenses and other liabilities	$	35,515	$	35,458
Purchase of equipment and prepaid maintenance services under capital financing arrangements	$	0	$	5,068
Capitalized stock-based compensation included in property and equipment costs	$	689	$	600
Financed sale of intangible assets held for sale	$	300	$	0

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

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Boingo Wireless, Inc.

Notes to the Condensed Consolidated Financial Statements

~~(Unaudited)~~

(Unaudited)

(In thousands, except shares and per share amounts)

1. The business

Boingo Wireless, Inc. and its subsidiaries (collectively “we, “us”, “our” or “the Company”) is a leading global provider of wireless connectivity solutions for smartphones, tablets, laptops, wearables and other wireless-enabled consumer devices. Boingo Wireless, Inc. was incorporated on April 16, 2001 in the State of Delaware. We have a diverse monetization model that enables us to generate revenues from wholesale partnerships, retail sales, and advertising across these wireless networks. Wholesale offerings include distributed antenna systems (“DAS”) ~~and~~or small cells, which are cellular extension networks, multifamily, carrier offload, Wi-Fi roaming, value-added services, private label Wi-Fi, and ~~location based~~location-based services. Retail products include Wi-Fi ~~and TV~~ services for military ~~servicemen and women~~personnel living in the barracks of U.S. Army, Air Force and Marine bases around the world, and Wi-Fi subscriptions and day passes that provide access to ~~approximately 1.5~~over 1.3 million commercial hotspots worldwide. Advertising revenue is driven by Wi-Fi sponsorships at airports, hotels, cafes and restaurants, and public spaces. Our customers include some of the world’s largest carriers, telecommunications service providers, ~~and~~ global consumer brands, and property owners, as well as troops stationed at military bases and Internet savvy consumers on the go.

2. Summary of significant accounting policies

Basis of presentation

The accompanying interim ~~unaudited~~ condensed consolidated financial statements and related notes for the three and nine months ended September 30, ~~2017~~2019 and ~~2016~~2018 are unaudited. The unaudited interim condensed consolidated financial information has been prepared in accordance with the rules and regulations of the SEC for interim financial information. Accordingly, they do not include all ~~of the~~ information and footnotes required by generally accepted accounting principles (“GAAP”) in the United States of America (“U.S.”) for complete financial statements. These financial statements should be read in conjunction with the audited consolidated financial statements and the accompanying notes for the year ended December 31, ~~2016~~2018 contained in our annual report on Form 10-K filed with the SEC on March ~~13, 2017.~~1, 2019. The unaudited interim condensed consolidated financial statements have been prepared on the same basis as the annual consolidated financial statements and in the opinion of management, reflect all adjustments, consisting of normal recurring adjustments, necessary for a fair statement of our results of operations for the three and nine months ended September 30, ~~2017~~2019 and ~~2016,~~2018, our cash flows for the nine months ended September 30, ~~2017,~~2019 and 2018, and our financial position as of September 30, ~~2017.~~2019. The year-end balance sheet data was derived from audited consolidated financial statements but does not include all disclosures required by GAAP. Interim results are not necessarily indicative of the results to be expected for an entire year or any other future year or interim period.

In ~~January 2017,~~June 2018, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) ~~2017-04,~~2018-07, ~~Intangibles-Goodwill~~Improvements to Nonemployee Share-Based Payment Accounting, which eliminates the separate accounting model for nonemployee share-based payment awards and ~~Other (Topic 350),~~generally requires companies to account for share-based payment transactions with nonemployees in the same way as share-based payment transactions with employees. The accounting remains different for attribution, which ~~simplifies~~represents how ~~an entity~~the equity-based payment cost is ~~required to test goodwill~~recognized over the vesting period, and a contractual term election for impairment. An entity will no longer perform a hypothetical purchase price allocation to measure goodwill impairment. Instead, impairment will be measured using the difference between the carrying amount and the fair value of the reporting unit.valuing nonemployee equity share options. The standard is effective for interim and annual periods beginning after December 15, ~~2019 with early adoption permitted for goodwill impairment tests with measurement dates after~~2018. We adopted ASU 2018-07 on January 1, ~~2017. We elected to early adopt ASU 2017-04 as of January 1, 2017~~2019 and the adoption of this standard did not have a material impact on our condensed consolidated financial statements.

In ~~August~~February 2016, the FASB issued ~~ASU 2016-15,~~a new standard related to leases, which was codified into Accounting Standards Codification (“ASC”) 842, ~~Statement~~Leases. ASC 842 requires lessees to recognize assets and liabilities for all leases with lease terms of ~~Cash Flows (Topic 230), which adds~~more than 12 months on the balance sheet. Under ASC 842, the recognition, measurement, and presentation of expenses and cash flows arising from a lease by a lessee will depend on its classification as a finance or ~~clarifies~~operating lease. On January 1, 2019, we adopted ASC 842 using the modified retrospective transition approach. ASC 842 permits two methods of adoption and we elected to apply the guidance to reduce diversity in how certain transactions are classified in the statement of cash flows. The standard is effective for interim and annual periods beginning after December 15, 2017 with early adoption permitted. The standard requires application using a retrospective transition method. We elected to early adopt ASU 2016-15each lease that had commenced as of January 1, ~~2017~~2019 with a cumulative-effect adjustment to the opening balance of retained earnings as of that date. ASC 842 permits various optional transition practical expedients. The discount rate used to calculate the present value of the future payments was determined as of January 1, 2019 for existing lease contracts and was generally based on our incremental borrowing rate as of January 1, 2019 commensurate with the ~~adoption~~remaining lease term. We also elected the package of ~~this~~

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practical expedients which included the following: (i) an entity need not reassess whether any expired or existing contracts are or contain leases; (ii) an entity need not reassess the lease classification for any expired or existing leases; and (iii) an entity need not reassess initial direct costs for any existing leases. The standard ~~did not have~~had a material impact on our condensed consolidated ~~financial statements.~~balance sheet but did not have an impact on our condensed consolidated statement of operations and our condensed consolidated statement of cash flows. The most significant impact was the recognition of right-of-use (“ROU”) assets and liabilities related to our operating leases, while our accounting for finance leases remained substantially unchanged. Adoption of the new standard resulted in the recording of $16,916 of operating lease ROU assets and $22,338 of operating lease ROU liabilities as of January 1, 2019.

Principles of consolidation

The unaudited condensed consolidated financial statements include our accounts and the accounts of our majority owned subsidiaries. We consolidate our 70% ownership of Chicago Concourse Development Group, LLC and our 75% ownership of Boingo Holding Participacoes Ltda. in accordance with ~~FASB Accounting Standards Codification (“ASC”)~~ASC 810, Consolidation. Other parties’ interests in consolidated entities are reported as non-controlling interests. All intercompany balances and transactions have been eliminated in consolidation.

Marketable securities

Our marketable securities consist of available-for-sale securities with original maturities exceeding three months. According to ASC 320, Investments—Debt and Equity Securities, we have classified securities, which have readily determinable fair values and are highly liquid, as short-term because such securities are expected to be realized within a one-year period. At September 30, 2019, we had $36,594 in marketable securities. We had 0 marketable securities at December 31, 2018.

Marketable securities are reported at fair value with the related unrealized gains and losses reported as other comprehensive income (loss) until realized or until a determination is made that an other-than-temporary decline in market value has occurred. No significant unrealized gains and losses have been reported during the periods presented. Factors considered by us in assessing whether an other-than-temporary impairment has occurred include the nature of the investment, whether the decline in fair value is attributable to specific adverse conditions affecting the investment, the financial condition of the investee, the severity and the duration of the impairment and whether we have the ability to hold the investment to maturity. When it is determined that an other-than-temporary impairment has occurred, the investment is written down to its market value at the end of the period in which it is determined that an other-than-temporary decline has occurred. The cost of marketable securities sold is based upon the specific identification method. Any realized gains or losses on the sale of investments are reflected as a component of interest income and other expense, net.

For the three and nine months ended September 30, 2019, we had no significant realized or unrealized gains or losses from investments in marketable securities classified as available-for-sale. As of September 30, 2019, we had $41 of cumulative unrealized gains, net of tax, which was $0 as of September 30, 2019 due to the full valuation allowance established against our deferred tax assets, in accumulated other comprehensive loss.

Segment and ~~geographical~~geographic information

We operate as ~~one~~1 reportable segment; a service provider of wireless connectivity solutions across our managed and operated network and aggregated network for mobile devices such as laptops, smartphones, tablets and other wireless-enabled consumer devices. This single segment is consistent with the internal organization structure and the manner in which operations are reviewed and managed by our Chief Executive Officer, the chief operating decision maker.

All significant long-lived tangible assets are held in the United States of America. We do not disclose sales by geographic area because to do so would be impracticable.

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The following is a summary of our revenue disaggregated by ~~primary revenue source:~~product offerings:

	Three Months Ended September 30,				Nine Months Ended September 30,
	2017		2016		2017		2016

									Three Months Ended				Nine Months Ended
									September 30,				September 30,
									2019		2018		2019		2018
Revenue:
DAS	$	21,755	$	15,959	$	56,563	$	40,957	$	23,714	$	24,410	$	75,431	$	69,940
Military	13,946		10,137		40,029		28,969
Military/multifamily										23,641		21,745		73,934		54,334
Wholesale—Wi-Fi	8,307		5,888		22,438		16,031			11,200		11,749		32,938		36,428
Retail	6,234		6,619		19,007		20,100			3,646		4,088		11,419		13,964
Advertising and other	3,413		2,193		8,984		8,313			2,506		3,261		6,012		8,347
Total revenue	$	53,655	$	40,796	$	147,021	$	114,370	$	64,707	$	65,253	$	199,734	$	183,013

Revenue recognition

We generate revenue from several sources including: (i) DAS customers that are telecom operators under long-term contracts for access to our DAS at our managed and operated locations, (ii) military and retail customers under subscription plans for month-to-month network access that automatically renew, and military and retail single-use access from sales of hourly, daily or other single-use access plans, (iii) arrangements with property owners for multifamily properties that provide for network installation and monthly Wi-Fi services and support for residents and employees, (iv) arrangements with wholesale Wi-Fi customers that provide software licensing, network access, and/or professional services fees, and ~~(iv)~~(v) display advertisements and sponsorships on our walled garden sign-in pages. Software licensed by our wholesale 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.

Revenues are recognized when a contract with a customer exists and control of the promised goods or services is transferred to our customers, in an amount that reflects the consideration we expect to be entitled to in exchange for those goods or services and the identified performance obligation has been satisfied. Contracts entered into at or near the same time with the same customer are combined and accounted for as a single contract if the contracts have a single commercial objective, the amount of consideration is dependent on the price or performance of the other contract, or the services promised in the contracts are a single performance obligation. Contract amendments are routine in the performance of our DAS, wholesale Wi-Fi, and advertising contracts. Contracts are often amended to account for changes in contract specifications or requirements or expand network access services. In most instances, our DAS and wholesale Wi-Fi contract amendments are for additional goods or services that are distinct, and the contract price increases by an amount that reflects the standalone selling price of the additional goods or services; therefore, such contract amendments are accounted for as separate contracts. Contract amendments for our advertising contracts are also generally for additional goods or services that are distinct; however, the contract price does not increase by an amount that reflects the standalone selling price of the additional goods or services. Advertising contract amendments are therefore generally accounted for as contract modifications under the prospective method. Contract amendments to transaction prices with no change in remaining services are accounted for as contract modifications under the cumulative catch-up method.

A performance obligation is a promise in a contract to transfer a distinct good or service to the customer and is the unit of account in ASC 606, Revenue from Contracts with Customers. A contract’s transaction price is allocated to each distinct performance obligation and is recognized as revenue when, or as, the performance obligation is satisfied, which typically occurs when the services are rendered. Determining whether products and services are considered distinct performance obligations that should be accounted for separately versus together may require significant judgment. Our contracts with customers may include multiple performance obligations. For such arrangements, we allocate revenue to each performance obligation based on its relative standalone selling price. We generally determine standalone selling prices based on the prices charged to customers. Judgment may be used to determine the standalone selling prices for items that are not sold separately, including services provided at no additional charge. Most of our performance obligations are satisfied over time as services are provided. We generally recognize revenue ~~when an arrangement exists,~~on a gross basis as we are primarily responsible for fulfilling the promises to provide the specified goods or services, ~~have been rendered, fees~~we are ~~fixed or determinable, no significant obligations remain~~responsible for paying all costs related to the ~~earned fees~~goods or services before they have been transferred to the customer, and ~~collection of~~we have discretion in establishing prices for the ~~related receivable is reasonably assured.~~specified goods or services. Revenue is presented net of any sales and value added taxes.

~~Revenue generated~~Payment terms vary on a contract-by-contract basis, although terms generally require payment within 30 to 60 days for non-recurring payments, the first day of the monthly or quarterly billing cycle for recurring payments for DAS and wholesale Wi-Fi contracts, and the first day of the month prior to the month that services are provided for multifamily contracts. We apply a practical expedient for purposes of determining whether a significant financing component may exist for our contracts if, at contract inception,

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we expect that the period between when we transfer the promised good or service to the customer and when the customer pays for that good or service will be one year or less. In instances where the customer pays for a good or service one year or more in advance of the period when we transfer the promised good or service to the customer, we have determined our contracts generally do not include a significant financing component. The primary purpose of our invoicing terms is not to receive financing from our customers or to provide customers with financing but rather to maximize our profitability on the customer contract. Specifically, inclusion of non-refundable upfront fees in our long-term customer contracts increases the likelihood that the customer will be committed through the end of the contractual term and ensures recoverability of the capital outlay that we incur in expectation of the customer fulfilling its contractual obligations. We may also provide service credits to our customers if we fail to meet contractual monthly system uptime requirements and we account for the variable consideration related to these service credits using the most likely amount method.

For contracts that include variable consideration, we estimate the amount of consideration at contract inception under the expected value method or the most likely amount method and include the amount of variable consideration that is not considered to be constrained. Significant judgment is used in constraining estimates of variable consideration. We update our estimates at the end of each reporting period as additional information becomes available.

Timing of revenue recognition may differ from the timing of invoicing to customers. We record unbilled receivables (contract assets) when revenue is recognized prior to invoicing, deferred revenue (contract liabilities) when revenue is recognized after invoicing, and receivables when we have an unconditional right to consideration to invoice and receive payment in the future. We present our DAS, multifamily, and wholesale Wi-Fi contracts in our condensed consolidated balance sheet as either a contract asset or a contract liability with any unconditional rights to consideration presented separately as a receivable. Our other customer contracts generally do not have any significant contract asset or contract liability balances. Generally, a significant portion of the billing for our DAS contracts occurs prior to revenue recognition, resulting in our DAS contracts being presented as contract liabilities. In contrast, our wholesale Wi-Fi contracts that contain recurring fees with annual escalations are generally presented as contract assets as revenue is recognized prior to invoicing. Our multifamily contracts can be presented as either contract liabilities or contract assets primarily as a result of timing of invoicing for the network installations.

We recognize an asset for the incremental costs of obtaining a contract with a customer if we expect the benefit of those costs to be longer than one year. We have determined that certain sales incentive programs meet the requirements to be capitalized. Total capitalized costs to obtain a contract were immaterial during the three and nine months ended September 30, 2019 and are included in prepaid expenses and other current assets and non-current other assets on our condensed consolidated balance sheets. We apply a practical expedient to expense costs as incurred for costs to obtain a contract with a customer when the amortization period would have been one year or less, the most significant of which relates to sales commissions related to obtaining our advertising customer contracts. Contract costs are evaluated for impairment in accordance with ASC 310, Receivables.

DAS

We enter into long-term contracts with telecom operators at our managed and operated locations. The initial term of our contracts with telecom operators generally range from five to twenty years and the agreements generally contain renewal options. Some of our contracts provide termination for convenience clauses that may or may not include substantive termination penalties. We apply judgment in determining the contract term, the period during which we have present and enforceable rights and obligations. Our DAS customer contracts generally contain a single performance obligation—provide non-exclusive access to our DAS or small cell networks ~~consists of build-out fees~~to provide telecom operators’ customers with access to the licensed wireless spectrum, together with providing telecom operators with construction, installation, optimization/engineering, maintenance services and ~~recurring access fees under certain long-term contracts with~~agreed-upon storage space for the telecom operators’ transmission equipment, each related to providing such licensed wireless spectrum to the telecom operators. ~~Build-out fees paid upfront are generally deferred~~The performance obligation is considered a series of distinct services as the performance obligation is satisfied over time and ~~recognized ratably over~~ the ~~term~~same time-based input method would be used to measure our progress toward complete satisfaction of the ~~estimated~~performance obligation to transfer each distinct service in the series to the customer. Our contract fee structure generally includes a non-refundable upfront fee and we evaluated whether customer ~~relationship~~options to renew services give rise to a material right that should be accounted for as a separate performance obligation because of those non-refundable upfront fees. We believe that a material right generally does not exist for our DAS customer contracts that contain renewal options because the telecom operators’ decision to renew is highly dependent upon our ability to maintain our exclusivity as the DAS service provider at the venue location and our limited operating history with venue and customer renewals. The telecom operators will make the decision to incur the capital improvement costs at the venue location irrespective of our remaining exclusivity period ~~once~~with the ~~build-out~~venue as the telecom operators expect that the assets will continue to be serviced regardless of whether we will remain such exclusive DAS service provider. Our contracts also provide our DAS customers with the option to purchase additional future services such as upgrades or enhancements. This option is ~~complete.~~not considered to provide the

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customer with a material right that should be accounted for as a separate performance obligation since the cost of the additional future services depends entirely on the market rate of such services at the time such services are requested and we are not automatically obligated to stand ready to deliver these additional goods or services as the customer may reject our proposal. 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~~

Our contract fee structure may include varying components of an upfront build-out fee and recurring access, ~~fees~~maintenance, and other fees. The upfront build-out fee is generally structured as a firm-fixed price or cost-plus arrangement and becomes payable as certain contract and/or construction milestones are achieved. Our DAS and small cell networks are neutral-host networks that can accommodate multiple telecom operators. Some of our DAS customer contracts provide for ~~usage~~credits that may be issued to existing telecom operators for additional telecom operators subsequently joining the DAS network. The credits are generally based upon a fixed dollar amount per additional telecom operator, a fixed percentage amount of the original build-out fee paid by the telecom operator per additional telecom operator, or a proportionate share based upon the split among the relevant number of telecom operators for the actual costs incurred by all telecom operators to construct the DAS ~~networks are non-cancellable~~network. In most cases, there is significant uncertainty on whether additional telecom operator contracts will be executed at inception of the contract with the existing telecom operator. We believe that the upfront build-out fee is fixed consideration once the build-out is complete and any subsequent credits that may be issued would be accounted for in a manner similar to a contract modification under the prospective method because (i) the execution of customer contracts with additional telecom carriers is at our sole election and (ii) we would not execute agreements with additional telecom carriers if it would not increase our revenues and gross profits at the venue level. Further, the credits issued to the existing telecom operator changes the transaction price on a go-forward basis, which corresponds with the decline in service levels for the existing telecom operator once the neutral-host DAS network can be accessed by the additional telecom operator. The recurring access, maintenance, and other fees generally escalate on an annual basis. ~~These minimum monthly access~~The recurring fees are ~~recognized ratably~~variable consideration until the contract term and annual escalation dates are fixed. We estimate the variable consideration for our recurring fees using the most likely amount method based on the expected commencement date for the services. We evaluate our estimates of variable consideration each period and record a cumulative catch-up adjustment in the period in which changes occur for the amount allocated to satisfied performance obligations.

We generally recognize revenue related to our single performance obligation for our DAS customer contract monthly over the contract term once the customer may access the DAS network and we commence maintenance on the DAS network.

Military and retail

Military and retail customers must review and agree to abide by our standard “Customer Agreement (With Acceptable Use Policy) and End User License Agreement” before they are able to sign up for our subscription or single-use Wi-Fi network access services. Our military and retail customer contracts generally contain a single performance obligation—provide non-exclusive access to Wi-Fi services, together with performance of standard maintenance, customer support, and the Wi-Finder app to facilitate seamless connection to the Company’s Wi-Fi network. The performance obligation is considered a series of distinct services as the performance obligation is satisfied over time and the same time-based input method would be used to measure our progress toward complete satisfaction of the ~~telecom operator agreement. The initial~~performance obligation to transfer each distinct service in the series to the customer. Our contracts also provide our military and retail subscription customers with the option to renew the agreement when the subscription term ~~of our contracts~~is over. We do not consider this option to provide the customer with ~~telecom operators generally range from five~~a material right that should be accounted for as a separate performance obligation because the customer would not receive a discount if it decided to ~~twenty years~~renew and the ~~agreements generally contain renewal clauses.~~ ~~Revenue from DAS network access fees in excess~~option to renew is cancellable with 5 days’ notice prior to the end of the ~~monthly minimums~~then current term by either party.

The contract transaction price is ~~recognized when earned.~~

determined based on the subscription or single-use plan selected by the customer. Our military and retail service plans are for fixed price services as described on our website. From time to time, we offer promotional discounts that result in an immediate reduction in the price paid by the customer. Subscription fees from military and retail 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 military and retail services on a case-by-case basis. ~~These~~Refunds and credit card chargeback amounts are not significant and are recorded as contra-revenue in the period the refunds are ~~made.~~ made, or chargebacks are received.

Subscription fee revenue is recognized ratably over the subscription period. Revenue generated from military and retail single-use access is recognized when access is ~~provided.~~provided, and the performance obligation is satisfied.

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Multifamily

~~Services provided~~

We enter into long-term contracts with property owners. The initial term of our contracts with property owners generally range from three to ~~wholesale Wi-Fi partners~~five years and the contracts may contain renewal options. Some of our contracts provide termination for convenience clauses that may or may not include substantive termination penalties. We apply judgment in determining the contract term, which is the period during which we have present and enforceable rights and obligations. Our customer contracts generally contain ~~several elements including:~~2 performance obligations: (i) install the network required to provide Wi-Fi services; and (ii) provide Wi-Fi services and technical support to the residents and employees. Our contracts may also provide our property owners with the option to renew the agreement. We do not consider this option to provide the property owner with a ~~term license~~material right that should be accounted for as a separate performance obligation because the property owner would not receive a discount if it decided to ~~use~~renew and the option to renew is generally cancellable by either party subject to the notice of non-renewal requirements specified in the contract. Our contracts may also provide our ~~software~~customers with the option to ~~access our Wi-Fi network, (ii) access fees~~purchase additional future services. We do not consider this option to provide the customer with a material right that should be accounted for ~~Wi-Fi network usage, and/or (iii) professional services for software integration and customization and to maintain~~as a separate performance obligation since the ~~Wi-Fi service. The term license, monthly minimum network access fees and professional~~cost of the additional future services are ~~billed~~generally at market rates for such services and we are not automatically obligated to stand ready to deliver these additional goods or services because the customer may reject our proposal.

Our contract fee structure includes a network installation fee and recurring Wi-Fi service and support fees. The network installation fee is generally structured as a firm-fixed price arrangement and becomes payable as certain contract and/or installation milestones are achieved. We generally estimate variable consideration for unpriced change orders using the most likely amount method based on the expected price for those services. If network installations are not completed by specified dates, we may be subject to network installation penalties. We estimate the variable consideration for our network installation fees using the most likely amount method based on the amount of network installation penalties we expect to incur. Title to the network generally transfers to the property owner once installation is completed and the network has been accepted. We generally recognize revenue related to our network installation performance obligation using a cost-to-cost method over the network installation period. We may provide latent defect warranties for materials and installation labor services related to our network installation services. Our warranty obligations are generally not accounted for as separate performance obligations as warranties cannot be separately purchased and warranties do not provide a service in addition to the assurance that the network will function as expected.

The recurring fees commence once the network is launched with recurring fees generally based upon a fixed or variable occupancy rate. The recurring Wi-Fi service fees may be adjusted prospectively for changes in circuit and/or video content costs, and Wi-Fi support fees may escalate on an annual basis. We estimate the variable consideration for our recurring fees using the expected value method with the exception of the variable consideration related to actual occupancy rates, which we record when we have the contractual right to bill. We evaluate our estimates of variable consideration each period and record a cumulative catch-up adjustment in the period in which changes occur for the amount allocated to satisfied performance obligations. We recognize revenue related to the recurring fees 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~~contract term ofas the Wi-Fi services and support is rendered, and the performance obligation is satisfied.

Wholesale Wi-Fi

We enter into long-term contracts with enterprise customers such as telecom operators, cable companies, technology companies, and enterprise software/services companies, that pay us usage-based Wi-Fi network access and software licensing fees to allow their customers' access to our footprint worldwide. We also enter into long-term contracts with financial institutions and other enterprise customers who provide access to our Wi-Fi footprint as a value-added service ~~arrangement.~~for their customers. The initial term of ~~the license agreements is~~our contracts with wholesale Wi-Fi customers generally ~~between~~range from one to ~~five~~three years and the agreements generally contain renewal ~~clauses. Revenue~~options. Some of our contracts provide termination for convenience clauses that may or may not include substantive termination penalties. We apply judgment in determining the contract term, the period during which we have present and enforceable rights and obligations. Our wholesale Wi-Fi customer contracts generally contain a single performance obligation-provide non-exclusive rights to access our Wi-Fi networks to provide wholesale Wi-Fi customers' end customers with access to the high-speed broadband network ~~access fees in excess~~that may be bundled together with integration services, support services, and/or performance of standard maintenance. The performance obligation is considered a series of distinct services as the performance obligation is satisfied over time and the same time-based input method or usage-based output method would be used to measure our progress toward complete satisfaction of the ~~monthly minimum amounts~~performance obligation to transfer each distinct service in the series to the customer. Our contracts may also provide our enterprise customers with the option to renew the agreement. This option is ~~recognized when earned. All elements within~~not considered to provide the customer with a material right that should be accounted for as a separate performance obligation because the customer would not receive a discount if it decided to renew and the option to renew is generally cancellable by either party subject to the notice of non-renewal requirements specified in the

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~~existing service arrangements~~contract. Our contracts may also provide our wholesale Wi-Fi customers with the option to purchase additional future services. We do not consider this option to provide the customer with a material right that should be accounted for as a separate performance obligation since the cost of the additional future services are generally ~~delivered~~at market rates for such services and ~~earned concurrently throughout~~we are not automatically obligated to stand ready to deliver these additional goods or services because the ~~term of the respective service arrangement.~~

~~In instances~~customer may reject our proposal. Periodically, we install and sell Wi-Fi networks to customers 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.

~~We adopted the provisions of ASU 2009-13,~~ ~~Revenue Recognition (Topic 605)—Multiple-Deliverable Revenue Arrangements~~~~, on a prospective basis on January 1, 2011. For multiple-deliverable arrangements entered into prior to January 1, 2011 that are accounted for under 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 term of the estimated customer relationship period for DAS arrangements and the wholesale service period for Wi-Fi platform service arrangements, as we do not have ~~evidence~~service contracts or remaining obligations beyond the installation of ~~fair value~~those networks and we recognize build-out fees for such projects as revenue when the ~~undelivered elements in~~installation work is completed, and the ~~arrangement. For multiple-deliverable arrangements entered into or materially modified after January 1, 2011 that are accounted for under ASC 605-25,~~network has been accepted by the customer.

Our contract fee structure may include varying components of a minimum fee and usage-based fees. Minimum fees represent fixed price consideration while usage-based fees represent variable consideration. With respect to variable consideration, our commitment to our wholesale Wi-Fi customers consists of providing continuous access to the network. It is therefore a single performance obligation to stand ready to perform and we ~~evaluate whether or not separate units of accounting exist and then~~ allocate the ~~arrangement consideration~~variable fees charged for usage when we have the contractual right to ~~all units~~bill. The variable component of ~~accounting~~revenue is recognized based on the ~~relative~~actual usage during the period.

Wholesale Wi-Fi revenue is recognized as it is earned over the relevant contract term with variable consideration recognized when we have the contractual right to bill.

Advertising

We generally enter into short-term cancellable insertion orders with our advertising customers for advertising campaigns that are served at our managed and operated locations and other locations where we solely provide authorized access to a partner’s Wi-Fi network through sponsored and promotional programs. Our sponsorship advertising arrangements are generally priced under a cost per engagement structure, which is a set price per click or engagement, or a cost per install structure for third party application downloads. Our display advertising arrangements are priced based on cost per thousand impressions. Insertion orders may also include bonus items. Our advertising customer contracts may contain multiple performance obligations with each distinct service. These distinct services may include an advertisement video or banner impressions in the contract bundled with the requirement to provide network, space on the website, and integration of customer advertisement onto the website, and each is generally considered to be its own performance obligation. The performance obligations are considered a series of distinct services as the performance obligations are satisfied over time and the same action-based output method would be used to measure our progress toward complete satisfaction of the performance obligation to transfer each distinct service in the series to the customer.

The contract transaction price is comprised of variable consideration based on the stated rates applied against the number of units delivered inclusive of the bonus units subject to the maximums provided for in the insertion order. It is customary for us to provide additional units over and above the amounts contractually required; however, there are a number of factors that can also negatively impact our ability to deliver the units required by the customer such as service outages at the venue resulting from power or circuit failures and customer cancellation of the remaining undelivered units under the insertion order due to campaign performance or budgetary constraints. Typically, the advertising campaign periods are short in duration. We therefore use the contractual rates per the insertion orders and actual units delivered to determine the transaction price each period end. The transaction price is allocated to each performance obligation based on the standalone 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 term of the estimated customer relationship period for DAS arrangements and the wholesale service period for Wi-Fi platform service arrangements.each performance obligation.

Advertising revenue is ~~generated from advertisements~~recognized ratably over the service period based on ~~our managed and operated or partner networks. In determining whether~~actual units delivered subject to the maximums provided for in the insertion order.

Leases

We determine if an arrangement ~~exists, we ensure that~~is a ~~binding arrangement is~~lease at inception. Operating leases are included 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~~operating lease right-of-use assets, current portion of ~~units or the satisfaction~~operating and finance leases, and long-term portion of ~~certain performance criteria. Advertising~~operating and ~~other revenue is recognized when the services are performed.~~

~~Foreign currency translation~~

Our Brazilian subsidiary uses the Brazilian Real as its functional currency. Assets and liabilities of our Brazilian subsidiary are translated to U.S. dollars at period-end rates of exchange, and revenues and expenses are translated at average exchange rates prevailing for each month. The resulting translation adjustments are made directly to a separate component of other comprehensive loss, which is reflected in stockholders’ equityfinance leases in our condensed consolidated balance sheets. ~~As of September 30, 2017 and December 31, 2016, the Company had $~~(812) and $(870), respectively, of cumulative foreign currency translation adjustments, net of tax, which was $0 as of September 30, 2017 and December 31, 2016 due to the full valuation allowance established against our deferred tax assets, in accumulated other comprehensive loss.

~~Some of our subsidiaries also enter into transactions and have monetary assets and liabilities that are denominated in a currency other than the entities’ respective functional currencies.~~ ~~Gains and losses from the revaluation of foreign currency transactions and monetary assets and liabilities~~Finance leases are included in ~~the~~property and equipment, net, current portion of operating and finance leases, and long-term portion of operating and finance leases in our condensed consolidated ~~statements of operations.~~balance sheets.

~~Fair value of financial instruments~~

Fair value is defined as the price that would be received from selling an asset, or paid to transfer a liability, in an orderly transaction between market participants at the measurement date. When determining the fair value measurements forOperating and finance lease ROU assets and ROU liabilities required or permitted to be recorded at fair value, we consider the principal or most advantageous market in which it would transact, and we consider assumptions that market participants would use when pricing the asset or liability.

The accounting guidance for fair value measurement also requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. The standard establishes a fair value hierarchyare recognized based on the level of independent, objective evidence surrounding the inputs used to measure fair value. A financial instrument’s categorization within the fair value hierarchy is based upon the lowest level of input that is significant to the fair value measurement. The fair value hierarchy is as follows:

· ~~Level 1—Unadjusted quoted prices in active markets that are accessible at the measurement date for identical, unrestricted assets or liabilities.~~

· Level 2—Quoted prices for identical assets and liabilities in markets that are not active, quoted prices for similar assets and liabilities in active markets or financial instruments for which significant inputs are observable, either directly or indirectly.

· ~~Level 3—Unobservable inputs that are supported by little or no market activity and that are significant to the fair~~present value of the ~~assets~~future minimum lease payments over the lease term at the commencement date. As most of our leases do not provide an implicit rate, we use our incremental borrowing rate based on the information available at the commencement date in determining the present value of future payments. The ROU asset also includes any lease payments made and excludes lease incentives and initial direct costs incurred. Our lease terms may include options to extend or ~~liabilities.~~

~~The carrying amount reflected in~~terminate the ~~accompanying~~lease when it is reasonably certain that we will exercise that option. Lease

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expense for minimum lease payments is recognized on a straight-line basis over the lease term. We have lease agreements with lease and non-lease components, which are accounted for separately for the asset classes maintained. We exclude short-term leases with a lease term of 12 months or less at the commencement date from our condensed consolidated balance sheets for cash and cash equivalents, accounts receivable, prepaid expenses and other current assets, other assets, accounts payable, accrued expenses and other liabilities, and deferred revenue approximates fair value due to the short-term nature of these financial instruments. As of September 30, 2017 and December 31, 2016, the carrying amount reflected in the accompanying condensed consolidated balance sheets for current and long-term portions of capital leases and notes payable approximate fair value (Level 2) based on the lack of significant change in our credit risk.sheets.

~~Recent accounting pronouncements~~Income taxes

~~In May 2017, the FASB issued ASU 2017-09,~~ ~~Compensation-Stock Compensation (Topic 718): Scope of Modification Accounting~~, which provides guidance on the types of changes to the terms or conditions of share-based payment awards to which an entity applies modification accounting under ASC 718. According to the new standard, an entity would not apply modification accounting if the fair value, vesting conditions and classification of the modified award is the same as the original award immediately before the original award is modified. The standard is effective for interim and annual periods beginning after December 15, 2017. Early adoption is permitted for all entities. The standard will be applied prospectively to modifications that occur on or after the adoption date. We currently do not expect that this standard will have a material impact on our consolidated financial statements.

~~In February 2016, the FASB issued ASU 2016-02,~~ ~~Leases (Topic 842)~~, which requires lessees to recognize assets and liabilities for all leases with lease terms of more than 12 months on the balance sheet. Under the new guidance, the recognition, measurement, and presentation of expenses and cash flows arising from a lease by a lessee will depend on its classification as a finance or operating lease. The standard is effective for interim and annual periods beginning after December 15, 2018. Early adoption is permitted for all entities on a modified retrospective basis, with elective reliefs. We are currently evaluating the expected impact of this new standard.

~~In May 2014, the FASB issued ASU 2014-09,~~ ~~Revenue From Contracts with Customers~~, which is intended to improve and converge the financial reporting requirements for revenue from contracts with customers between U.S. GAAP and International Accounting Standards. In accordance with this new standard, an entity would recognize revenue to depict the transfer of promised goods or services. The standard establishes a five-step model and related application guidance, which will replace most existing revenue recognition guidance in U.S. GAAP. The FASB has subsequently issued several updates and proposals to clarify guidance to be applied. In August 2015, the FASB issued ASU 2015-14, ~~Revenue From Contracts with Customers (Topic (606): Deferral of the Effective Date~~~~, to defer the effective date of the new revenue standard by one year. In March 2016, the FASB issued ASU 2016-08,~~ ~~Revenue from Contracts with Customers (Topic 606): Principal versus Agent Considerations (Reporting Revenue Gross versus Net),~~ which amends the principal versus agent guidance in the new revenue standard. ASU 2016-08 clarifies that the analysis must focus on whether the entity has control of the goods or services before they are transferred to the customer. In April 2016, the FASB issued ASU 2016-10, ~~Revenue from Contracts with Customers (Topic 606): Identifying Performance Obligations and Licensing~~~~, which amends the revenue guidance on identifying performance obligations and accounting for licenses of intellectual property. In May 2016, the FASB issued ASU 2016-12,~~ ~~Revenue from Contracts with Customers (Topic 606): Narrow-Scope Improvements and Practical Expedients~~~~, which amends certain aspects of Topic 606. In December 2016, the FASB issued ASU 2016-20,~~ ~~Technical Corrections and Improvements to Topic 606, Revenue from Contracts with Customers~~, which provides disclosure relief and clarifies the scope and application of the new revenue standard and related cost guidance. The standard, as amended, will be effective for annual and interim periods in fiscal years beginning after December 15, 2017. The FASB also agreed to allow entities to choose to adopt the new standard as of the original effective date. An entity may choose to adopt the new standard either retrospectively or through a cumulative effect adjustment as of the start of the first period for which it applies the new standard. We have selected January 1, 2018 as our effective date but we have not yet selected a transition method. We are currently evaluating the adoption approach. Our final determination will depend on a number of factors, such as the significance of the impact of the new standard on our financial results, our ability to accumulate and analyze the information necessary to assess the impact on prior period financial statements and our ability to maintain two sets of financials under current and new standards if we were to adopt the full retrospective approach. We are completing the assessment stage of our evaluation of the impact of the new standard on our accounting policies, processes, and system requirements and are in the implementation stage. We have assigned internal resources in addition to the engagement of third party service providers to assist in the evaluation and implementation. While we continue to assess all potential impacts under the new standard, there is the potential for change to the timing of recognition of revenue for DAS and wholesale Wi-Fi. We are also in the evaluation stage for advertising and other revenue. Revenue for military and retail will remain substantially unchanged.

~~3. Cash and cash equivalents~~

~~Cash and cash equivalents consisted of the following:~~

September 30,
2017

December 31,
2016

Cash and cash equivalents:

Cash

$
19,384

$
17,246

Money market accounts

2,250

2,239

Total cash and cash equivalents

$
21,634

$
19,485

~~Our money market account assets~~ ~~are measured at fair value on a recurring basis utilizing Level 1 inputs.~~

~~4. Property and equipment~~

~~The following is a summary of property and equipment, at cost less accumulated depreciation and amortization:~~

September 30,
2017

December 31,
2016

Leasehold improvements

$
405,712

$
358,477

Software

39,481

33,349

Construction in progress

22,249

18,859

Computer equipment

12,437

10,878

Furniture, fixtures and office equipment

1,792

1,760

Total property and equipment

481,671

423,323

Less: accumulated depreciation and amortization

(220,661
)
(172,558
)
Total property and equipment, net

$
261,010

$
250,765

Depreciation and amortization expense, which includes depreciation and amortization for property and equipment under capital leases, is allocated as follows in the accompanying condensed consolidated statements of operations:

Three Months Ended
September 30,

Nine Months Ended
September 30,

2017

2016

2017

2016

Network access

$
11,625

$
7,227

$
29,354

$
18,689

Network operations

3,987

3,733

12,273

10,183

Development and technology

2,375

1,881

6,840

5,172

General and administrative

258

252

777

757

Total depreciation and amortization of property and equipment

$
18,245

$
13,093

$
49,244

$
34,801

During the nine months ended September 30, 2017, we recognized $166 of impairment losses primarily related to construction in progress projects that were abandoned. During the nine months ended September 30, 2017, we also recognized $276 of losses on disposals of property and equipment.

~~5. Accrued expenses and other liabilities~~

~~Accrued expenses and other liabilities consisted of the following:~~

September 30,
2017

December 31,
2016

Accrued construction in progress

$
8,744

$
6,753

Accrued customer liabilities

5,904

4,651

Revenue share

4,857

5,611

Salaries and wages

4,581

3,001

Accrued partner network

1,846

1,022

Accrued taxes

1,800

1,761

Accrued professional fees

1,725

1,183

Other

6,203

3,741

Total accrued expenses and other liabilities

$
35,660

$
27,723

~~6. Income taxes~~

We calculate our interim income tax provision in accordance with ASC 270,Interim Reporting, and ASC 740, Accounting for Income Taxes. At the end of each interim period, we estimate the annual effective tax rate and apply that rate to our ordinary quarterly earnings. The tax expense or benefit related to significant, unusual, or extraordinary items is recognized in the interim period in which those items occur. In addition, the effect of changes in enacted tax laws, rates, or tax status is recognized in the interim period in which the change occurs. Excess windfall tax benefits and tax deficiencies related to our stock option exercises and restricted stock unit (“RSU”) ~~vestings~~vesting are recognized as an income tax benefit or expense in our condensed consolidated statements of operations in the period they are deducted on the income tax return. Excess windfall tax benefits and tax deficiencies are therefore not anticipated when determining the annual effective tax rate and are instead recognized in the interim period in which those items occur.

The computation of the annual estimated effective tax rate at each interim period requires certain estimates and significant judgment, including the expected operating income (loss) for the year, projections of the proportion of income (loss) earned and taxed in various states, permanent and temporary differences as a result of differences between amounts measured and recognized in accordance with tax laws and financial accounting standards, and the likelihood of recovering deferred tax assets generated in the current year. The accounting estimates used to compute the provision for income taxes may change as new events occur, additional information is obtained, or as the tax environment changes.

~~Income~~As of September 30, 2019, we had an immaterial amount of unremitted earnings in our subsidiaries located outside of the U.S. for which state taxes have not been paid. Our intention is to indefinitely reinvest these earnings outside the U.S. If we were to remit our foreign earnings, we would be subject to state income taxes or withholding taxes imposed on actual distributions, or currency transaction gains (losses) that would result in taxation upon remittance. However, the amounts of any such tax ~~expense~~liabilities resulting from the repatriation of $~~167~~foreign earnings are not material.

Foreign currency translation

Our Brazilian subsidiary uses the Brazilian Real as its functional currency. Assets and ~~$95 reflects~~liabilities of our Brazilian subsidiary are translated to U.S. dollars at period-end rates of exchange, and revenues and expenses are translated at average exchange rates prevailing for each month. The resulting translation adjustments are made directly to a separate component of other comprehensive loss, which is reflected in stockholders’ equity in our condensed consolidated balance sheets. As of September 30, 2019 and December 31, 2018, the Company had $(1,584) and $(1,295), respectively, of cumulative foreign currency translation adjustments, net of tax, which was $0 as of September 30, 2019 and December 31, 2018 due to the full valuation allowance established against our deferred tax assets, in accumulated other comprehensive loss.

The functional currency for our other foreign subsidiaries is the U.S. dollar. Gains and losses from the revaluation of foreign currency transactions and monetary assets and liabilities are included in the condensed consolidated statements of operations.

Use of estimates

The preparation of accompanying condensed consolidated financial statements in conformity with GAAP requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the dates of the accompanying condensed consolidated financial statements, and the reported amounts of revenue and expenses during the reporting period. Actual results could differ from those estimates. Assets and liabilities which are subject to significant judgment and the use of estimates include the allowance for doubtful accounts, recoverability of goodwill and long-lived assets, valuation allowances with respect to deferred tax assets, useful lives associated with property and equipment, valuation of ROU assets and ROU liabilities, valuation and useful lives of intangible assets, valuation of contingent consideration, contract assets and contract liabilities including estimates of variable consideration, and the valuation and assumptions underlying stock-based compensation and other equity instruments. On an ongoing basis, we evaluate our estimates compared to historical experience and trends, which form the basis for making judgments about the carrying value of assets and liabilities.

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Fair value of financial instruments

Fair value is defined as the price that would be received from selling an asset, or paid to transfer a liability, in an orderly transaction between market participants at the measurement date. When determining the fair value measurements for assets and liabilities required or permitted to be recorded at fair value, we consider the principal or most advantageous market in which it would transact, and we consider assumptions that market participants would use when pricing the asset or liability.

The accounting guidance for fair value measurement also requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. The standard establishes a fair value hierarchy based on the level of independent, objective evidence surrounding the inputs used to measure fair value. A financial instrument’s categorization within the fair value hierarchy is based upon the lowest level of input that is significant to the fair value measurement. The fair value hierarchy is as follows:

●

Level 1—Unadjusted quoted prices in active markets that are accessible at the measurement date for identical, unrestricted assets or liabilities.

●

Level 2—Quoted prices for identical assets and liabilities in markets that are not active, quoted prices for similar assets and liabilities in active markets or financial instruments for which significant inputs are observable, either directly or indirectly.

●

Level 3—Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities.

The carrying amount reflected in the accompanying condensed consolidated balance sheets for cash and cash equivalents, accounts receivable, prepaid expenses and other current assets, other assets, accounts payable, accrued expenses and other liabilities, and deferred revenue approximates fair value due to the short duration and nature of these financial instruments.

Recent accounting pronouncements

In August 2018, the FASB issued ASU 2018-15, Intangibles—Goodwill and Other—Internal-Use Software (Subtopic 350-40): Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That Is a Service Contract, which requires customers to apply the same criteria for capitalizing implementation costs incurred in a cloud computing arrangement that is hosted by the vendor as they would for an arrangement that has a software license. The standard is effective ~~tax rate~~for interim and annual periods beginning after December 15, 2019 and early adoption is permitted. The standard can be adopted prospectively or retrospectively. We are completing the assessment stage of ~~5.4%~~our evaluation of the impact of the new standard on our accounting policies, processes, and ~~1.8%~~system requirements. We have assigned internal resources to assist in the evaluation and implementation. We are currently evaluating the expected impact of this new standard on our consolidated financial statements.

In June 2016, the FASB issued ASU 2016-13, Financial Instruments—Credit Losses (Topic 326), which replaces the incurred loss methodology with an expected loss methodology that is referred to as the current expected credit loss (“CECL”) methodology. The measurement of expected credit losses under the CECL methodology is applicable to financial assets measured at amortized cost, including loan receivables and held-to-maturity debt securities. It also applies to off-balance sheet credit exposures not accounted for as insurance (loan commitments, standby letters of credit, financial guarantees, and other similar investments) and net investments in leases recognized by the lessor in accordance with ASC 842 on leases. In addition, the standard made changes to the accounting for available-for-sale debt securities. One such change is to require credit losses to be presented as an allowance rather than as a write-down on available-for-sale debt securities. Available-for-sale accounting recognizes that value may be realized either through collection of contractual cash flows or through sale of the security. Therefore, the amendments limit the amount of the allowance for credit losses to the amount by which fair value is below amortized cost because the classification as available-for-sale is premised on an investment strategy that recognizes that the investment could be sold at fair value, if cash collection would result in the realization of an amount less than fair value. The standard is effective for interim and annual periods beginning after December 15, 2019 and early adoption is permitted. The standard will be adopted under the modified-retrospective approach with the prospective transition approach required for debt securities for which an other-than-temporary impairment had been recognized before the effective date. We are currently evaluating the expected impact of this new standard on our consolidated financial statements.

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3. Acquisitions

Elauwit Networks, LLC

On August 1, 2018, we acquired the assets of Elauwit Networks, LLC (“Elauwit”) for $28,000 plus other contingent consideration. Elauwit provides data and video services to multi-unit dwelling properties including student housing, condominiums, apartments, senior living, and hospitality industries throughout the U.S. In addition, Elauwit builds and maintains the network that supports these services for property owners and managers and provides support for residents and employees.

The acquisition has been accounted for under the acquisition method of accounting in accordance with ASC 805, Business Combinations. As such, the assets acquired and liabilities assumed are recorded at their acquisition-date fair values. The total purchase price was $28,612, which includes contingent consideration fair valued at $961. At the closing date, we paid cash of $15,576. $13,000 of the purchase price was held back for the following: (i) $11,000 held back for third-party consents not obtained at closing for certain customer agreements, which are released as Elauwit delivers third-party consents with respect to such customer agreements; and (ii) a $2,000 indemnification holdback that is being retained for a period of 12 months following the closing of the acquisition. In 2018, we paid $9,048 of the amounts held back for third-party consents. We paid the remaining $1,952 for amounts held back for third-party consents in January 2019. During the nine months ended September 30, 2019, we paid $1,075 of the indemnification holdback consideration with the remaining $925 retained by the Company for settlement of working capital deficit and other indemnification matters discussed further below. Of the $925 retained by the Company, $566 related to undisclosed liabilities associated with acquired contracts that were initially recorded as network costs in the condensed consolidated statement of operations in the period in which the costs were incurred instead of recognizing a reduction in the indemnification liability and establishing an unfavorable contract liability. Accordingly, during the three months ended September 30, ~~2017~~2019 an out-of-period adjustment was recognized that reduced cost of sales by $566 to correct for costs associated with these unfavorable contracts that were recorded in the prior periods.

The contingent consideration could require payments in the aggregate amount of up to $15,000 that would be due and ~~2016, respectively. Income tax expense~~payable subject to certain conditions and the successful achievement of ~~$507~~annual revenue targets for the acquired business during the 2019 and ~~$457 reflects~~2020 fiscal years. Refer to Note 12 for further discussion. The contingent consideration is subject to acceleration under certain corporate events. The fair value of the contingent consideration is based on Level 3 inputs. Further changes in the fair value of the contingent consideration will be recorded through operating income (loss). The contingent consideration was valued at the date of acquisition using the Monte Carlo method reflecting the average expected monthly revenue, an ~~effective tax~~annual risk-free rate of ~~2.9%~~2.78%, and ~~2.1%~~an annual revenue volatility rate of 40%.

The identifiable intangible assets were primarily valued using the excess earnings, relief from royalty, and loss-of-revenue methods using discount rates ranging from 8.0% to 21.0% and a 1.0% royalty rate, where applicable, except for certain backlog intangible assets held for sale that were valued at fair value less costs to sell using a discount rate of 8%. The amortizable intangible assets held for use are being amortized on a straight-line basis over their estimated useful lives. Intangible assets held for sale are not amortized. We allocated the excess of the purchase price over the fair value of assets acquired and liabilities assumed to goodwill, which is deductible for tax purposes. The goodwill arising from the Elauwit acquisition is attributable primarily to expected synergies and other benefits, including the acquired workforce, from combining Elauwit with us.

ASC 805 provides for a measurement period not to exceed one year from the acquisition date to adjust the provisional amounts recognized at the acquisition date to reflect new information obtained about facts and circumstances that existed as of the acquisition date that, if known, would have affected the measurement of the amounts recognized as of that date. During the nine months ended September 30, ~~2017~~2019, we recorded measurement period adjustments to: (i) increase the value of backlog intangible assets held for sale by $750 as a result of the identification of additional assets that were acquired; (ii) decrease the value of backlog intangible assets by $48 as a result of an adjustment made to the fair value of an acquired customer contract; and ~~2016, respectively. Our effective tax rate differs from~~(iii) increase the ~~statutory rate primarily due~~value of accrued expenses and other liabilities and reduce the indemnification liability by $566 as a result of the identification of previously undisclosed liabilities of the sellers. The measurement period adjustments resulted in a net decrease to ~~our valuation allowance~~goodwill of $1,061. Intangible assets held for sale are included within prepaid expenses and other current assets on the condensed consolidated balance sheets. The following summarizes the final purchase price allocation:

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			Weighted Average
			Estimated Useful
	Fair Value		Life (years)
Consideration:
Cash paid	$	15,576
Holdback consideration		12,075
Contingent consideration		961
Total consideration	$	28,612
Recognized amounts of identifiable assets acquired and liabilities assumed:
Accounts receivable	$	4,494
Prepaid expenses and other current assets		1,687
Property and equipment		195
Other non-current assets		177
Accounts payable		(2,049)
Accrued expenses and other liabilities		(1,249)
Deferred revenue		(3,854)
Other non-current liabilities		(307)
Net tangible liabilities acquired		(906)
Backlog		6,982	5.0
Backlog-held for sale		750	—
Customer relationships		2,490	10.0
Partner relationships		1,200	10.0
Transition services agreement		540	2.0
Non-compete agreement		1,380	3.0
Goodwill		16,176
Total purchase price	$	28,612

The following table presents the results of Elauwit included in the Company’s revenue and net loss:


	Three Months Ended				Nine Months Ended
	September 30,				September 30,
	2019		2018		2019		2018
	(Unaudited)
Revenue	$	5,745	$	5,082	$	19,049	$	5,082
Net loss		(1,658)		(571)		(5,674)		(571)

Pro forma results (Unaudited)

The following table presents the unaudited pro forma results of the Company for the three and nine months ended September 30, 2018 as if the acquisition of Elauwit had occurred on January 1, 2017 and ~~2016. As~~therefore includes Elauwit’s revenue and net income (loss), as adjusted, for such period. These results are not intended to reflect the actual operations of the Company had the acquisition occurred on January 1, 2017. Income taxes were calculated based on the projected annual effective tax rate excluding discrete items as of September 30, ~~2017~~2018. Acquisition transaction costs have been excluded from the pro forma net income (loss).


	Three Months Ended		Nine Months Ended
	September 30, 2018		September 30, 2018
Revenue	$	67,917	$	200,885
Net income (loss)		104		(1,221)
Net loss attributable to common stockholders		(492)		(2,668)
Net loss per share attributable to common stockholders
Basic	$	(0.01)	$	(0.06)
Diluted	$	(0.01)	$	(0.06)

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4. Cash and ~~December 31, 2016, we had $389~~cash equivalents and ~~$380~~marketable securities

Cash and cash equivalents and marketable securities consisted of ~~uncertain tax positions, respectively, $84~~the following:


	September 30,		December 31,
	2019		2018
Cash and cash equivalents:
Cash	$	4,391	$	11,689
Money market accounts		45,791		137,723
Total cash and cash equivalents	$	50,182	$	149,412
Short-term marketable securities-available-for-sale:
Marketable securities	$	36,594	$	—
Total short-term marketable securities	$	36,594	$	—

All contractual maturities of marketable securities were less than one year at September 30, 2019. Marketable securities consist primarily of debt securities which include commercial paper and debt instruments including notes issued by foreign or domestic industrial and financial corporations and governments which pay in U.S. dollars and carry a rating of A or better. For the three and nine months ended September 30, 2019, interest income was $431 and $1,685, respectively. For the three and nine months ended September 30, 2018, interest income was $12 and $31, respectively. Interest income is ~~a reduction to deferred tax assets, which is presented~~included in interest income and other expense, net ~~of uncertain tax positions,~~ in the accompanying condensed consolidated statements of operations.

5. Contract assets and contract liabilities

The opening and closing balances of our contract asset, net and contract liability, net balances from contracts with customers for the nine months ended September 30, 2019 were as follows:


	Contract		Contract
	Assets, Net		Liabilities, Net
Balance at December 31, 2018	$	468	$	217,733
Balance at September 30, 2019		784		236,111
Change	$	316	$	18,378

The current and non-current portions of our contract assets, net are included within prepaid expenses and other current assets and other assets, respectively, and current and non-current portions of our contract liabilities, net are included within deferred revenue and deferred revenue, net of current portion, respectively, in our condensed consolidated balance sheets. ~~We accrue interest~~Contract assets, net is generated from our multifamily and ~~penalties~~wholesale Wi-Fi contracts and the change in the contract assets, net balance includes activity related to ~~unrecognized tax benefits as a component~~amounts invoiced offset by revenue recognized from performance obligations satisfied in the current reporting period.

Contract liabilities are recorded when fees are collected, or we have an unconditional right to consideration (a receivable) in advance of ~~income taxes.~~ delivery of goods or services. The change in contract liabilities, net balance is related to customer activity associated with each of our product offerings including the receipt of cash payments and the satisfaction of our performance obligations. Revenues for the three and nine months ended September 30, 2019 include the following:


	Three Months Ended		Nine Months Ended
	September 30, 2019		September 30, 2019
Amounts included in the beginning of period contract liability balance	$	21,801	$	73,301
Amounts associated with performance obligations satisfied in previous periods		40		341

As of September 30, ~~2017~~2019, the aggregate amount of the transaction price allocated to remaining service performance obligations for our DAS contracts was $219,218. We expect to recognize this revenue as service is provided over the remaining contract term. As of September 30, 2019, our DAS contracts have a remaining duration of less than one year to approximately fifteen years.

Certain of our wholesale Wi-Fi contracts include variable consideration based on usage. This variable consideration has been excluded from the disclosure of remaining performance obligations. As of September 30, 2019, the aggregate amount of the transaction price allocated to remaining service performance obligations for certain of our wholesale Wi-Fi contracts with guaranteed

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minimum consideration was $11,379. We expect to recognize this revenue as service is provided over the remaining contract term. As of September 30, 2019, our wholesale Wi-Fi contracts have a remaining duration of less than one year to approximately fifteen years.

Information about remaining performance obligations that are part of a contract that has an original expected duration of one year or less have been excluded from the above, which primarily consists of network installations for our multifamily customers and ~~December 31, 2016, we~~monthly service contracts.

6. Property and equipment

The following is a summary of property and equipment, at cost less accumulated depreciation and amortization:


	September 30,		December 31,
	2019		2018
Leasehold improvements	$	534,794	$	474,808
Construction in progress		72,552		40,369
Software		57,912		51,534
Computer equipment		15,986		14,215
Furniture, fixtures and office equipment		2,142		2,141
Total property and equipment		683,386		583,067
Less: accumulated depreciation and amortization		(321,510)		(268,888)
Total property and equipment, net	$	361,876	$	314,179

Depreciation and amortization expense, which includes depreciation and amortization for property and equipment under finance leases, is allocated as follows in the accompanying condensed consolidated statements of operations:


	Three Months Ended				Nine Months Ended
	September 30,				September 30,
	2019		2018		2019		2018
Network access	$	9,463	$	11,531	$	30,527	$	35,252
Network operations		4,361		4,447		13,069		13,017
Development and technology		2,782		2,664		8,369		7,740
General and administrative		261		259		785		760
Total depreciation and amortization of property and equipment	$	16,867	$	18,901	$	52,750	$	56,769

7. Accrued expenses and other liabilities

Accrued expenses and other liabilities consisted of the following:


	September 30,		December 31,
	2019		2018
Accrued customer liabilities	$	18,135	$	15,219
Accrued construction in progress		12,246		20,930
Revenue share		8,972		5,514
Salaries and wages		3,504		4,425
Accrued taxes		3,421		2,745
Accrued professional fees		1,420		1,434
Accrued partner network		1,043		1,228
Holdback consideration		—		2,000
Acquisition purchase consideration		—		1,952
Other		6,966		7,206
Total accrued expenses and other liabilities	$	55,707	$	62,653

8. Convertible Notes

In October 2018, the Company sold, through the initial purchasers, convertible senior notes (“Convertible Notes”) to qualified institutional buyers pursuant to Rule 144A of the Securities Act of 1933, as amended, for gross proceeds of $201,250. The

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Convertible Notes are senior, unsecured obligations with interest payable semi-annually in cash at a rate of 1.00% per annum on April 1^st and October 1^st of each year, beginning on April 1, 2019. The Convertible Notes will mature on October 1, 2023 unless they are redeemed, repurchased or converted prior to such date. Prior to April 1, 2023, the Convertible Notes are convertible at the option of holders only during certain periods and upon satisfaction of certain conditions. Thereafter, the Convertible Notes will be convertible at any time until the close of business on the second scheduled trading day immediately preceding the maturity date. Upon conversion, the Convertible Notes may be settled in shares of the Company’s common stock, cash or a combination of cash and shares of the Company’s common stock, at the Company’s election.

The Convertible Notes have an initial conversion rate of 23.6323 shares of common stock per $1,000 principal amount of the Convertible Notes, which will be subject to customary anti-dilution adjustments in certain circumstances. This represents an initial effective conversion price of approximately $42.31 per share, which represents a premium of approximately 30% to the $32.55 per share closing price of the Company’s common stock on October 2, 2018, the date the Company priced the offering.

The Company may redeem all or any portion of the Convertible Notes, at its option, on or after October 5, 2021, at a redemption price equal to 100% of the principal amount of the Convertible Notes to be redeemed, plus accrued ~~$76~~ and ~~$67~~unpaid interest to, but excluding, the redemption date, if the last reported sale price of the Company’s stock has been at least 130% of the conversion price then in effect for ~~related~~at least 20 trading days (whether or not consecutive) during any 30 consecutive trading day period (including the last trading day of such period) ending on, and including, the trading day immediately preceding the date on which the Company provides written notice of redemption.

Holders of Convertible Notes may require the Company to repurchase their Convertible Notes upon the occurrence of certain events that constitute a fundamental change under the indenture governing the Convertible Notes at a fundamental change repurchase price equal to 100% of the principal amount thereof, plus accrued and unpaid interest to, but excluding, the date of repurchase. In connection with certain corporate events or if the Company issues a notice of redemption prior to the maturity date, it will, under certain circumstances, increase the conversion rate for holders who elect to convert their Convertible Notes in connection with such corporate event or notice of redemption.

In connection with the pricing of the Convertible Notes, the Company entered into privately negotiated capped call transactions with a financial institution. The capped call transactions initially cover, subject to customary anti-dilution adjustments, the number of shares of the Company’s common stock that initially underlie the Convertible Notes. The cap price of the capped call transactions is initially $65.10 per share of the Company’s common stock, representing a premium of 100% above the closing price of $32.55 per share of the Company’s common stock on October 2, 2018, and is subject to certain adjustments under the terms of the capped call transactions. The capped call transactions are expected generally to reduce potential dilution to the Company’s common stock upon conversion of the Convertible Notes and/or offset the potential cash payments that the Company could be required to make in excess of the principal amount of any converted Convertible Notes upon conversion thereof, with such reduction and/or offset subject to a cap based on the cap price.

The following table summarizes the Convertible Notes as of September 30, 2019:


	September 30,
	2019
Par value of the Convertible Notes	$	201,250
Unamortized debt discounts		(38,930)
Unamortized debt issuance costs		(3,890)
Net carrying value of Convertible Notes	$	158,430

The fair value of our Convertible Notes was $167,541 as of September 30, 2019. The estimated fair value of Convertible Notes is based on market rates and the closing trading price of the Convertible Notes as of September 27, 2019 and is classified as Level 2 in the fair value hierarchy. As of September 30, 2019, the if-converted value of the Convertible Notes did not exceed the principal amount.

Debt issuance costs are amortized on an effective interest basis over the term of the Convertible Notes. Debt issuance cost amortization expense, net of ~~federal income tax benefits,~~amounts capitalized, is included in interest expense and ~~penalties recorded~~amortization of debt discount in ~~income tax expense on our~~the

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accompanying condensed consolidated statements of operations ~~respectively. The amount of unrecognized tax benefits that, if recognized, would affect~~for the ~~effective tax rate at~~three and nine months ended September 30, ~~2017 was $229.~~2019. The following table sets forth interest expense related to the Convertible Notes for the three and nine months ended September 30, 2019:

~~We operate within federal, state~~


	Three Months			Nine Months
	Ended			Ended
	September 30, 2019			September 30, 2019
Contractual interest expense	$	503		$	1,509
Amortization of debt issuance costs		213			632
Amortization of debt discount		2,079			6,127
Total	$	2,795		$	8,268
Effective interest rate of the liability component		7.1	%		7.1	%

During the three and ~~international taxing jurisdictions~~nine months ended September 30, 2019, we capitalized $740 and $1,948, respectively, of amortization and interest expense related to the Convertible Notes.

Amortization expense for our debt discount and debt issuance costs through 2023 are subject to audit in these jurisdictions. These audits can involve complex issues which may require an extended period of time to resolve. We are subject to taxation in the United States and in various states. Our tax years 2014 and forward are subject to examination by the IRS and our tax years 2012 and forward are subject to examination by material state jurisdictions. However, due to prior year loss carryovers, the IRS and state tax authorities may examine any tax years for which the carryovers are used to offset future taxable income.as follows:


	Debt		Debt Issuance
	Discounts		Costs
October 1, 2019―December 31, 2019	$	2,117	$	217
January 1, 2020―December 31, 2020		8,864		901
January 1, 2021―December 31, 2021		9,528		955
January 1, 2022―December 31, 2022		10,241		1,015
January 1, 2023―December 31, 2023		8,180		802
	$	38,930	$	3,890

7.9. Credit Facility

~~We have~~In February 2019, we entered into a Credit Agreement (the “Credit Agreement”) and related agreements ~~as amended,~~ with Bank of America, N.A. acting as agent for lenders named therein, including Bank of America, N.A., Silicon Valley Bank, Bank of the West, Zions Bancorporation, N.A. dba California Bank & Trust, and ~~Citizens~~Barclays Bank ~~N.A.~~PLC (the “Lenders”), for a secured credit facility in the form of a revolving line of credit of up to ~~$69,750 with an option to increase the available amount to $86,500 upon the satisfaction of certain conditions~~$150,000 (the “Revolving Line of Credit”) and a term loan of $3,500 (the “Term Loan” and together with the Revolving Line of Credit, the “Credit Facility”). We may use borrowings under the Credit Facility for general working capital and corporate purposes. In general, amounts borrowed under the Credit Facility are secured by a lien against all ~~of our~~ assets, with certain exclusions.

As of September 30, ~~2017 and December 31, 2016, $5,000 and $15,000, respectively, was outstanding under the Revolving Line of Credit. Amounts~~2019, we had 0 amounts outstanding under the Revolving Line of Credit ~~are classified within long-term debt in our condensed consolidated balance sheet as of September 30, 2017 as we do not expect to repay~~and $2,916 outstanding under the outstanding debt in the next twelve-month period. The Revolving Line of Credit requires quarterly payments of interest and matures on November 21, 2018, but may be prepaid in whole or part at any time.Term Loan. Amounts borrowed under the Revolving Line of Credit and Term Loan will bear ~~at our election, a~~ variable interest at the greater of LIBOR plus ~~2.5%~~1.75% - ~~3.5%~~2.75% or Lender’s Prime Rate plus ~~1.5%~~0.75% - ~~2.5%~~1.75% per year and we will pay a fee of ~~0.375%~~0.25% - 0.5% per year on any unused portion of the Revolving Line of Credit. ~~As of September 30, 2017 and December 31, 2016, $1,094 and $1,969, respectively, was outstanding under the Term Loan.~~ The Term Loan requires quarterly payments of interest and principal ~~amortizing fully over the four-year-term such that~~until it is repaid in full on the maturity date ~~of November 21, 2018,~~ but may be prepaid in whole or part at any time. Our Credit Facility will mature on April 3, 2023. Repayment of amounts borrowed under the Credit Facility may be accelerated in the event that we are in violation of the representations, warranties and covenants made in the Credit Agreement, including certain financial covenants set forth therein, and under other specified default events including, but not limited to, non-payment or inability to pay debt, breach of cross default provisions, insolvency provisions, and change of control.

~~Principal payments due under our Term Loan through 2018 are as follows:~~

Period

Principal
Payments

October 1, 2017 — December 31, 2017

$
219

January 1, 2018 — December 31, 2018

875

$
1,094

~~We are~~The Company is subject to customary financial and non-financial covenants under the Credit Facility, including a minimum quarterly consolidated senior secured leverage ratio, a minimum quarterly consolidated total leverage ratio, a maximum quarterly consolidated fixed charge coverage ratio, and ~~monthly liquidity~~cash on hand minimums. ~~We were in compliance with all financial covenants~~

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Principal payments due under our Term Loan through 2023 are as ~~of September 30, 2017.~~follows:


	Principal Payments
October 1, 2019―December 31, 2019	$	194
January 1, 2020―December 31, 2020		778
January 1, 2021―December 31, 2021		778
January 1, 2022―December 31, 2022		778
January 1, 2023―December 31, 2023		388
	$	2,916

Debt issuance costs are amortized on a straight-line basis over the term of the Credit Facility. Amortization expense related to debt issuance costs, net of amounts capitalized, are included in interest expense and ~~other expense, net~~amortization of debt discount in the accompanying condensed consolidated statements of operations for the three and nine months ended September 30, ~~2017 and 2016.~~2019. Amortization and interest expense capitalized during the three and nine months ended September 30, ~~2017~~2019 amounted to ~~$159~~$33 and ~~$585,~~$69, respectively. ~~Amortization and interest expense capitalized during the three and nine months ended September 30, 2016 amounted to $227 and $710, respectively~~ Amortization and interest expense expensed during the three and nine months ended September 30, ~~2017~~2019 amounted to ~~$36~~$114 and ~~$144,~~$284, respectively. The interest rate for the Credit Facility for the nine months ended September 30, 2019 ranged from 4.1% to 4.4%.

Amortization expense for our debt issuance costs through 2023 are as follows:


	Amortization Expense
October 1, 2019―December 31, 2019	$	115
January 1, 2020―December 31, 2020		457
January 1, 2021―December 31, 2021		457
January 1, 2022―December 31, 2022		457
January 1, 2023―December 31, 2023		120
	$	1,606

10. Leases

We have operating and ~~interest~~finance leases for corporate offices, datacenters, data communication equipment and database software. Our operating leases have remaining lease terms of less than one year to nine years and our finance leases have remaining lease terms of one month to two years. Some of our operating leases may include 1 or more options to renew and can extend the lease term from one year to ten years. The exercise of operating lease renewal options is at our sole discretion. Certain leases also include options to purchase the leased property. The depreciable life of assets and leasehold improvements are limited by the expected lease term, unless there is a transfer of title or purchase option reasonably certain of exercise. Some of our operating lease agreements include options to terminate the leases upon written notice and may include early termination penalties. Our lease agreements do not contain any material residual value guarantees or material restrictive covenants. As of September 30, 2019, assets recorded under finance leases were $12,280 and accumulated depreciation and amortization associated with finance leases was $4,840.

The components of lease expense ~~expensed~~were as follows:


	Three Months		Nine Months
	Ended		Ended
	September 30, 2019		September 30, 2019
Operating lease expense	$	907	$	2,683
Finance lease expense:
Depreciation and amortization of assets included in property and equipment, net	$	514	$	1,555
Interest on lease liabilities		—		56
Total finance lease expense	$	514	$	1,611

Interest on lease liabilities capitalized during the three and nine months ended September 30, ~~2016~~2019 amounted to ~~$86~~$38 and ~~$182,~~$85, respectively.

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Supplemental cash flow information related to leases was as follows:


	Nine Months
	Ended September 30,
	2019
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases	$	(2,723)
Operating cash flows from finance leases		(142)
Financing cash flows from finance leases		(3,288)
Right-of-use assets obtained in exchange for lease obligations:
Operating leases		17,321

Operating lease ROU assets obtained in exchange for lease obligations include the effects of the adoption of ASC 842 effective January 1, 2019.

Other information related to leases was as follows:


	September 30, 2019
Weighted average remaining lease term:
Operating leases	6.4	years
Financing leases	1.4	years
Weighted average discount rate:
Operating leases	5.3	%
Finance leases	3.2	%

Future minimum lease payments under non-cancellable leases as of September 30, 2019 as presented in accordance with ASC 842 were as follows:


	Operating		Finance
	Leases		Leases
October 1, 2019 – December 31, 2019	$	1,033	$	943
January 1, 2020―December 31, 2020		3,821		2,784
January 1, 2021―December 31, 2021		3,640		574
January 1, 2022―December 31, 2022		3,597		—
January 1, 2023―December 31, 2023		3,626		—
January 1, 2024―December 31, 2024		3,639		—
Thereafter		5,235		—
Total future minimum lease payments		24,591		4,301
Less: Imputed interest		(3,801)		(95)
Total		20,790		4,206
Current portion of operating and finance leases		2,911		3,057
Long-term portion of operating and finance leases	$	17,879	$	1,149

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Future minimum lease payments under non-cancellable leases as of December 31, 2018 as presented in accordance with ASC 840, Leases, were as follows:


	Operating		Capital
	Leases		Leases
January 1, 2019 – December 31, 2019	$	3,573	$	4,373
January 1, 2020―December 31, 2020		3,456		2,783
January 1, 2021―December 31, 2021		3,385		574
January 1, 2022―December 31, 2022		3,414		—
January 1, 2023―December 31, 2023		3,495		—
Thereafter		8,835		—
Minimum lease payments	$	26,158		7,730
Less: Amounts representing interest ranging from 1.3% to 7.7%				(236)
Minimum lease payments				7,494
Current portion of capital leases				4,201
Long-term portion of capital leases			$	3,293

11. Notes payable

We enter into financed maintenance arrangements for some of our leased data communication equipment. Future minimum lease payments under notes payable as of September 30, 2019 were as follows:


	Notes Payable
October 1, 2019 – December 31, 2019	$	547
January 1, 2020―December 31, 2020		1,541
January 1, 2021―December 31, 2021		95
Total future minimum payments		2,183
Less: Imputed interest		(28)
Total		2,155
Current portion of note payable		1,937
Long-term portion of notes payable	$	218

12. Fair value measurement

The ~~interest rate~~following table sets forth our financial assets and liabilities that are measured at fair value on a recurring basis:


At September 30, 2019	Level 1		Level 2		Level 3		Total
Assets:
Money market accounts	$	45,791	$	—	$	—	$	45,791
Marketable securities		4,250		32,344		—		36,594
Total assets	$	50,041	$	32,344	$	—	$	82,385


At December 31, 2018	Level 1		Level 2		Level 3		Total
Assets:
Money market accounts	$	137,723	$	—	$	—	$	137,723
Total assets	$	137,723	$	—	$	—	$	137,723
Liabilities:
Contingent consideration	$	—	$	—	$	961	$	961
Total liabilities	$	—	$	—	$	961	$	961

Our marketable securities utilize Level 1 and Level 2 inputs and consist primarily of corporate debt securities, which primarily include commercial paper and debt instruments including notes issued by foreign or domestic industrial and financial corporations and governments which pay in U.S. dollars and carry a rating of A or better. We have evaluated the various types of securities in our investment portfolio to determine an appropriate fair value hierarchy level based upon trading activity and the

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observability of market inputs. Due to variations in trading volumes and the lack of quoted market prices in active markets, our fixed maturity securities are classified as Level 2 securities. Our marketable securities are valued at amortized cost, which approximates fair value. The fair value of our fixed maturity marketable securities is derived through the use of a third-party pricing source using recent reported trades for ~~our Credit Facility~~identical or similar securities, making adjustments through the reporting date based upon available market observable data.

The Company’s contingent consideration obligation was initially recorded at fair value using probability-weighted discounted cash flow approaches that are based on significant unobservable inputs related to achievement of estimated annual sales and are reviewed quarterly. Significant changes to estimated annual sales and discount rates would result in corresponding changes in the fair value of this obligation. The following table presents a reconciliation of the beginning and ending amounts related to the fair value of contingent consideration categorized as Level 3:


Balance , December 31, 2018	$	961
Payment of contingent consideration		—
Change in fair value		—
Balance, June 30, 2019		961
Payment of contingent consideration		—
Change in fair value		(961)
Balance , September 30, 2019	$	—

We do not expect to make any payments for the contingent consideration related to the Elauwit acquisition. The change in fair value of contingent consideration was recorded in general and administrative expenses in the condensed consolidated statements of operations.

13. Income taxes

Income tax expense of $143 and $54 reflect effective tax rates of 357.5% and 42.2% for the three months ended September 30, 2019 and 2018, respectively. Income tax expense of $254 and $198 reflect effective tax rates of 5.2% and 2,200.0% for the nine months ended September 30, ~~2017 ranged~~2019 and 2018, respectively. Our effective tax rate differs from ~~3.5%~~the statutory rate primarily due to ~~3.8%.~~

~~Amortization~~our valuation allowance and minimum state taxes for the three and nine months ended September 30, 2019 and 2018 as well as foreign tax expense for ~~our debt issuance costs through 2018 is as follows:~~

Period

Amortization
Expense

October 1, 2017 — December 31, 2017

$
61

January 1, 2018 — December 31, 2018

217

$
278

~~As of~~the three and nine months ended September 30, ~~2017~~2018.

We operate within federal, state and ~~December 31, 2016, the carrying amount reflected~~international taxing jurisdictions and are subject to audit in these jurisdictions. These audits can involve complex issues which may require an extended period to resolve. We are subject to taxation in the ~~accompanying condensed consolidated balance sheets~~United States and in various states. Our tax years 2016 and forward are subject to examination by the IRS and our tax years 2014 and forward are subject to examination by material state jurisdictions. However, due to prior year loss carryovers, the IRS and state tax authorities may examine any tax years for which the ~~current portion of long-term debt and long-term debt approximates fair value (Level 2) based on the variable nature of the interest rates and lack of significant change~~carryovers are used to ~~our credit risk.~~offset future taxable income.

8.14. Commitments and contingencies

Letters of credit

We have entered into Letter of Credit Authorization agreements (collectively, “Letters of Credit”), which are issued under our Credit Agreement. The Letters of Credit are irrevocable and serve as performance guarantees that will allow our customers to draw upon the available funds if we are in default. As of September 30, ~~2017,~~2019, we have Letters of Credit totaling ~~$6,275~~$12,976 that are scheduled to expire or renew ~~within~~over the next ~~one-year period.~~fourteen months. There have been no0 drafts drawn under these Letters of Credit as of September 30, ~~2017.~~2019.

Legal proceedings

From time to time, we may be 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. Legal costs are expensed as incurred.

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Other matters

We have received a claim from one of our venue partners with respect to contractual terms on our revenue share payments. The claim asserts that we have underpaid revenue share payments and related interest by approximately $4,600. We are currently in ~~final~~ settlement discussions with our venue partner. As of September 30, ~~2017,~~2019, we have accrued for the probable and estimable losses that have been incurred, which have been recorded as general and administrative expenses in the condensed consolidated statements of operations. We are not currently a party to any other claims that we believe could have a material adverse effect on our business, financial position, results of operations or cash flows.

15. Stock repurchases

On April 1, 2013, the Company approved a stock repurchase program to repurchase up to $10,000 of the Company’s common stock in the open market, exclusive of any commissions, markups or expenses. In July 2019, the stock repurchase plan was terminated and was replaced with a new stock repurchase program to repurchase up to $20,000 of the Company’s common stock in the open market. The stock repurchased will be retired and will resume the status of authorized but unissued shares of common stock. During the three months ended September 30, 2019, we repurchased approximately 56,000 shares under the new stock repurchase program for $745, excluding commissions paid, at a weighted average price per share of $13.24, which was not in excess of current market values at the time of repurchase. As of September 30, 2019, the remaining approved amount for repurchase was approximately $19,255.

9.16. Stock incentive plans

In March 2011, our board of directors approved the 2011 Equity Incentive Plan (“2011 Plan”). The 2011 Plan provides for the grant of incentive and non-statutory stock options, stock appreciation rights, restricted shares of our common stock, stock units, and performance cash awards. As of January 1st of each year, the number of shares of common stock reserved for issuance under the 2011 Plan shall automatically be increased by a number equal to the lesser of (a) 4.5% of the total number of shares of common stock then outstanding, (b) 3,000,000 shares of common stock or (c) as determined by our board of directors. The automatic “evergreen” share reserve increase feature will be terminated after January 2018, so that no additional automatic annual share increases will occur thereafter. As of September 30, ~~2017,~~2019, options to purchase ~~1,234,593~~approximately 269,000 shares of common stock and RSUs covering ~~3,469,449~~approximately 800,000 shares of common stock were outstanding under the 2011 ~~Plan~~.Plan.

No further awards will be made under our Amended and Restated 2001 Stock Incentive Plan (“2001 Plan”), and it will be terminated. Options outstanding under the 2001 Plan will continue to be governed by their existing terms.

Stock-based compensation expense is allocated as follows on the accompanying condensed consolidated statements of operations:

	Three Months Ended September 30,				Nine Months Ended September 30,
	2017		2016		2017		2016


									Three Months Ended				Nine Months Ended
									September 30,				September 30,
									2019		2018		2019		2018
Network operations	$	552	$	483	$	1,660	$	1,660	$	387	$	549	$	1,241	$	1,602
Development and technology	275		267		825		830			325		323		962		915
Selling and marketing	524		424		1,589		1,431			578		511		1,655		1,377
General and administrative	2,333		1,832		6,942		5,769			764		1,772		2,576		5,333
Total stock-based compensation	$	3,684	$	3,006	$	11,016	$	9,690	$	2,054	$	3,155	$	6,434	$	9,227

During the three and nine months ended September 30, ~~2017,~~2019, we capitalized ~~$163~~$224 and ~~$530,~~$689, respectively, of stock-based compensation expense. During the three and nine months ended September 30, ~~2016,~~2018, we capitalized $~~182~~$208 and ~~$553,~~$600, respectively, of stock-based compensation expense.

Stock option awards

We grant stock option awards to both employees and non-employee directors. The grant date for these awards is the same as the measurement date. The stock option awards generally vest over a four-year service period with 25% vesting when the individual completes 12 months of continuous service and the remaining 75% vesting monthly thereafter. These awards are valued as of the measurement date and the stock-based compensation expense, net of forfeitures, is recognized on a straight-line basis over the requisite service period.

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A summary of the stock option activity is as follows:

Number of
Options
(000’s)

Weighted
Average
Exercise
Price

Weighted-
Average
Remaining
Contract
Life
(years)

Aggregate
Intrinsic
Value

Outstanding at December 31, 2016

3,084

$
7.04

3.8

$
17,145

Exercised

(1,665
)
$
4.80

Canceled/forfeited

(20
)
$
6.69

Outstanding at September 30, 2017

1,399

$
9.70

4.0

$
16,318

Exercisable at September 30, 2017

1,385

$
9.74

4.0

$
16,105


				Weighted-
				Average
		Weighted		Remaining
	Number of	Average		Contract	Aggregate
	Options	Exercise		Life	Intrinsic
	(000’s)	Price		(years)	Value
Outstanding at December 31, 2018	304	$	7.49	3.8	$	3,970
Exercised	(27)	$	5.72
Canceled/forfeited	—	$	—
Outstanding and exercisable at September 30, 2019	277	$	7.66	3.1	$	1,044

Restricted stock unit awards

We grant ~~time-based~~service-based RSUs to executive and non-executive personnel and non-employee directors. The ~~time-based~~service-based RSUs granted to executive and non-executive personnel generally vest over a three-year period subject to continuous service on each vesting date. The ~~time-based~~service-based RSUs for our non-employee directors generally vest over a one-year period for existing members and ~~25%~~33.3% per year over a ~~four-year~~three-year period for new members subject to continuous service on each vesting date.

We grant performance-based RSUs to executive personnel. These awards vest subject to certain performance objectives based on the Company’s revenue growth, ~~and/or~~ Adjusted EBITDA growth, and/or relative total stockholder return achieved during the specified performance period and certain long-term service conditions. The maximum number of RSUs that may vest is determined based on actual Company achievement and performance-based RSUs generally vest over a three-year period subject to continuous service on each vesting ~~date.~~date and achievement of the performance conditions. We recognize stock-based compensation expense for performance-based RSUs when we believe that it is probable that the performance objectives will be met.

A summary of the RSU activity is as follows:

Number of Shares
(000’s)

Weighted Average
Grant-Date Fair
Value

Non-vested at December 31, 2016

3,825

$
6.55

Granted

598

$
12.69

Vested

(815
)
$
7.36

Canceled/forfeited

(139
)
$
8.85

Non-vested at September 30, 2017

3,469

$
7.33


		Weighted Average
	Number of Shares	Grant-Date Fair
	(000’s)	Value
Non-vested at December 31, 2018	3,119	$	8.60
Granted(1)	637	$	22.15
Vested	(2,896)	$	7.56
Canceled/forfeited	(60)	$	23.71
Non-vested at September 30, 2019	800	$	21.97

(1)

The RSUs granted to all of our named executive officers in 2017 were subject to satisfaction of specified service-based and performance-based conditions. The performance objectives were subject to under- or over- achievement on a sliding scale, with a threshold of 50% of the target number of RSUs and a maximum of 150% of the target RSUs. In February 2019, our Compensation Committee determined actual achievement of the 2017 performance-based RSUs resulting in additional RSUs granted of approximately 29,000 at a grant-date fair value of $11.94 per share during the nine months ended September 30, 2019.

During the nine months ended September 30, ~~2017,~~ ~~814,583~~2019, approximately 2,896,000 shares of RSUs vested. The Company issued ~~560,661~~approximately 1,481,000 shares and the remaining shares were withheld to pay minimum statutory federal, state, and local employment payroll taxes on those vested awards.

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~~10.~~17. Net loss per share attributable to common stockholders

The following table sets forth the computation of basic and diluted net loss per share attributable to common stockholders:

Three Months Ended
September 30,

Nine Months Ended
September 30,

2017

2016

2017

2016

(in thousands)

Numerator:

Net loss attributable to common stockholders, basic and diluted

$
(3,450
)
$
(5,709
)
$
(18,347
)
$
(22,959
)
Denominator:

Weighted average common stock, basic and diluted

40,336

38,189

39,468

37,897

Net loss per share attributable to common stockholders:

Basic and diluted

$
(0.09
)
$
(0.15
)
$
(0.46
)
$
(0.61
)


	Three Months Ended				Nine Months Ended
	September 30,				September 30,
	2019		2018		2019		2018
	(in thousands)
Numerator:
Net loss attributable to common stockholders, basic and diluted	$	(187)	$	(522)	$	(5,124)	$	(1,636)
Denominator:
Weighted average common stock, basic and diluted		44,136		42,377		43,904		41,890
Net loss per share attributable to common stockholders:
Basic	$	0.00	$	(0.01)	$	(0.12)	$	(0.04)
Diluted	$	0.00	$	(0.01)	$	(0.12)	$	(0.04)

For the three and nine months ended September 30, ~~2017~~2019 and ~~2016,~~September 30, 2018, we excluded all assumed exercises of stock options and the assumed issuance of common stock under RSUs from the computation of diluted net loss per share as the effect would be anti-dilutive due to the net loss for the period.

On April 1, 2013, the Company approved a stock repurchase program to repurchase up to $10,000 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 For the three and nine months ended September 30, ~~2017. As~~2019, we also excluded the shares that would be issuable assuming conversion of ~~September 30, 2017,~~ the ~~remaining approved amount~~Convertible Notes and the shares for ~~repurchases was approximately $5,180.~~the capped call as their effect would be anti-dilutive. Diluted EPS for our Convertible Notes is calculated under the treasury method in accordance with ASC 260, Earnings Per Share.

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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

The following discussion and analysis of our financial condition and results of operations should be read in conjunction with our unaudited condensed consolidated financial statements and notes thereto included in “Item 1. Financial Statements” of this Quarterly Report on Form 10-Q and the audited consolidated financial statements and notes thereto and the section titled “Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations” in our Annual Report on Form 10-K for the year ended December 31, ~~2016,~~2018, filed with the Securities Exchange Commission on March ~~13, 2017.~~1, 2019.

Forward-Looking Statements

This Quarterly Report on Form 10-Q and the documents incorporated herein by reference contain forward-looking statements within the meaning of the “safe harbor” provisions of the Private Securities Litigation Reform Act of 1995, as amended, based on our current expectations, estimates and projections about our operations, industry, financial condition, performance, results of operations, and liquidity. Statements containing words such as “may,” “believe,” “anticipate,” “expect,” “intend,” “plan,” “project,” “projections,” “business outlook,” “estimate,” or similar expressions constitute forward-looking statements. These forward-looking statements include, but are not limited to, statements about future financial performance; revenues; metrics; operating expenses; market trends, including those in the markets in which we compete; operating and marketing efficiencies; liquidity; cash flows and uses of cash; dividends; capital expenditures; depreciation and amortization; tax payments; foreign currency exchange rates; hedging arrangements; our ability to repay indebtedness, pay dividends and invest in initiatives; our products and services; pricing; competition; strategies; and new business initiatives, products, services, and features. Potential factors that could affect the matters about which the forward-looking statements are made include, among others, the factors disclosed in the section entitled “Risk Factors” in this Quarterly Report on Form 10-Q and additional factors that accompany the related forward-looking statements in this Quarterly Report on Form 10-Q and our other filings with the Securities and Exchange Commission, including our Annual Report on Form 10-K for the year ended December 31, ~~2016.~~2018. Readers are cautioned not to place undue reliance on these forward-looking statements, which reflect management’s analysis only as the date hereof. Any such forward-looking statements are not guarantees of future performance or results and involve risks and uncertainties that may cause actual performance and results to differ materially from those predicted. Reported results should not be considered an indication of future performance. Except as required by law, we undertake no obligation to publicly release the results of any revision to these forward-looking statements that may be made to reflect events or circumstances after the date hereof or to reflect the occurrence of unanticipated events.

Overview

Boingo helps the world stay connected to the people and things they love.

We acquire long-term wireless rights at large venues like airports, transportation hubs, ~~stadiums,~~ stadiums/arenas, military bases, multifamily properties, universities, convention centers, and office campuses; we build high-quality wireless networks such as distributed antenna systems (“DAS”), Wi-Fi, and small cells at those venues; and we monetize the wireless networks through a number of products and services.

Over the past 1517 years, we’ve built a global ~~network~~footprint of wireless networks that we estimate reaches more than a billion consumers annually. We operate 71 DAS networks containing approximately ~~22,200~~37,200 DAS ~~nodes. We~~nodes, and believe we are the largest operator of indoor DAS ~~provider~~networks in the world. Our Wi-Fi network, which includes locations we manage and operate ourselves (our “managed and operated locations”) as well as networks managed and operated by third-parties with whom we contract for access (our “roaming” networks), includes ~~approximately 1.5~~over 1.3 million commercial Wi-Fi hotspots in more than 100 countries around the world. ~~We also operate Wi-Fi and internet protocol television (“IPTV”) networks at 60 U.S. Army, Air Force, and Marine bases around the world.~~

We generate revenue from our wireless networks in a number of ways, including our DAS, small cells, multifamily and wholesale Wi-Fi offerings, which are targeted towards businesses, and our military, retail, and advertising offerings, which are targeted towards consumers.

We generate wholesale ~~Wi-Fi~~ revenue from telecom operators that pay us build-out fees and recurring access fees so that their cellular customers may use our DAS or small cell networks at locations where we manage and operate the wireless network. For the three months ended September 30, ~~2017,~~2019, DAS revenue accounted for approximately ~~41%~~37% of our revenue.

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Military revenue, which is driven by military personnel who purchase ~~broadband and IPTV~~Wi-Fi services on military bases, and multifamily revenue, which is driven by property owners who purchase network installation services and recurring monthly Wi-Fi services and support, accounted for approximately ~~26%~~37% of our total revenue for the three months ended September 30, ~~2017.~~2019. As of September 30, ~~2017, we have grown~~2019, our military subscriber base towas approximately ~~133,000 from approximately 86,000 in~~137,000, a 3.5% decrease over the prior year comparative period. Retail revenue, which is driven by consumers who purchase a recurring monthly subscription plan or one-time Wi-Fi access, accounted for approximately ~~12%~~6% of our total revenue for the three months ended September 30, ~~2017.~~2019. As of September 30, ~~2017,~~2019, our retail subscriber base was approximately ~~194,000, an increase of approximately 4.9%~~85,000, a 39.7% decrease over the prior year comparative period.

Our ~~enterprise~~wholesale customers such as telecom operators, cable companies, technology companies, and enterprise software/services companies, 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 and other enterprise customers who provide Boingo as a value-added service for their customers. For the three months ended September 30, ~~2017,~~2019, wholesale Wi-Fi revenue accounted for approximately ~~15%~~17% of our revenue.

We also generate revenue from advertisers that seek to reach consumers via sponsored Wi-Fi access. For the three months ended September 30, ~~2017,~~2019, advertising and other revenue accounted for approximately 6%3% of our revenue.

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. Our advertising business is similarly weighted to the fourth quarter, with the highest percentage of sales occurring in the fourth quarter and the lowest percentage of sales occurring in the first quarter. We expect these trends to continue. Our other products have not experienced any significant seasonal impact.

In support of our overall business strategy, we are focused on the following objectives:

●expand our footprint of managed and operated and aggregated networks;

●leverage our neutral-host business model to grow DAS, small cell, and wholesale roaming partnerships;

●expand our carrier offload relationships; and

· ~~maximize our military business through recurring subscriber fees and shorter-term transaction plans, as well as strategic build-outs; and~~

●increase our brand awareness.

Key Business Metrics

In addition to monitoring traditional financial measures, we also monitor our operating performance using key performance indicators. ~~There are four~~Our key ~~metrics that we use to monitor results and activity in the business as follows:~~performance indicators follow:

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.

Subscribers—military and Subscribers—retail. These metrics represent 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 wholesale and retail 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~~24-hour period. This measure is an indicator of paid activity throughout our network.

Revenue

Our revenue consists of DAS revenue, ~~military~~military/multifamily revenue and retail revenue, wholesale Wi-Fi revenue, and advertising and other revenue.

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 and small cell networks.

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~~Military~~Military/multifamily and retail. We generate revenue from sales to military and retail individuals of month-to-month network access subscriptions that automatically renew and hourly, daily or other single-use access, primarily through charge card transactions. We ~~also~~ generate multifamily revenue from ~~sales~~property owners who pay us a recurring monthly fee for Wi-Fi services including building and maintaining the network that supports these services and providing support for residents and employees of ~~hourly, daily or other single-use access to military and retail individuals primarily through charge card transactions.~~the properties.

Wholesale—Wi-Fi~~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.

Results of Operations

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

	Three Months Ended September 30,						Nine Months Ended September 30,
	2017			2016			2017			2016
	(unaudited)
	(in thousands)
Consolidated Statement of Operations Data:

													Three Months Ended				Nine Months Ended
													September 30,				September 30,
													2019		2018		2019		2018
													(unaudited)
													(in thousands)
Consolidated Statements of Operations Data:
Revenue	$	53,655		$	40,796		$	147,021		$	114,370		$	64,707	$	65,253	$	199,734	$	183,013
Costs and operating expenses:
Network access	24,143			17,982			64,655			49,575				29,155		29,273		90,368		79,926
Network operations	11,625			10,698			34,556			31,566				13,682		13,260		42,073		38,829
Development and technology	6,817			5,394			19,814			16,014				8,182		7,995		25,534		22,883
Selling and marketing	5,201			4,553			15,188			14,103				5,721		5,674		17,782		16,490
General and administrative	8,006			6,701			27,372			22,553				5,021		7,789		20,330		22,218
Amortization of intangible assets	852			855			2,673			2,582				1,103		1,112		3,365		2,507
Total costs and operating expenses	56,644			46,183			164,258			136,393				62,864		65,103		199,452		182,853
Loss from operations	(2,989		)	(5,387		)	(17,237		)	(22,023		)
Interest and other expense, net	(84		)	(117		)	(126		)	(299		)
Loss before income taxes	(3,073		)	(5,504		)	(17,393		)	(22,322		)
Income from operations														1,843		150		282		160
Interest expense and amortization of debt discount														(2,191)		(8)		(6,741)		(58)
Interest income and other expense, net														388		(14)		1,600		(93)
Income (loss) before income taxes														40		128		(4,859)		9
Income tax expense	167			95			507			457				(143)		(54)		(254)		(198)
Net loss	(3,240		)	(5,599		)	(17,870		)	(22,779		)
Net (loss) income														(103)		74		(5,113)		(189)
Net income attributable to non-controlling interests	210			110			477			180				84		596		11		1,447
Net loss attributable to common stockholders	$	(3,450	)	$	(5,709	)	$	(18,347	)	$	(22,959	)	$	(187)	$	(522)	$	(5,124)	$	(1,636)

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Depreciation and amortization expense included in costs and operating expenses:

	Three Months Ended September 30,				Nine Months Ended September 30,
	2017		2016		2017		2016
	(unaudited)
	(in thousands)

									Three Months Ended				Nine Months Ended
									September 30,				September 30,
									2019		2018		2019		2018
									(unaudited)
									(in thousands)
Network access	$	11,625	$	7,227	$	29,354	$	18,689	$	9,463	$	11,531	$	30,527	$	35,252
Network operations	3,987		3,733		12,273		10,183			4,361		4,447		13,069		13,017
Development and technology	2,375		1,881		6,840		5,172			2,782		2,664		8,369		7,740
General and administrative	258		252		777		757			261		259		785		760
Total(1)	$	18,245	$	13,093	$	49,244	$	34,801	$	16,867	$	18,901	$	52,750	$	56,769

(1)

The $2.0 million and $4.0 million decrease in depreciation and amortization of property and equipment for the three and nine months ended September 30, 2019, as compared to the three and nine months ended September 30, 2018, respectively, is primarily due to a decrease in depreciation expense related to certain DAS build-out projects that were depreciated over a longer estimated useful life resulting from the successful extension of certain venue agreements, which was partially offset by depreciation expense for new DAS build-out projects that were completed and launched in 2018 and 2019.

~~(1)~~ The $5.2 million and $14.4 million increase in depreciation and amortization of property and equipment for the three and nine months ended September 30, 2017, respectively, as compared to the three and nine months ended September 30, 2016, is primarily a result of our increased fixed assets from our DAS build-out projects, Wi-Fi networks, and software development in 2016 and 2017.

Stock-based compensation expense included in costs and operating expenses:


	Three Months Ended				Nine Months Ended
	September 30,				September 30,
	2019		2018		2019		2018
	(unaudited)
	(in thousands)
Network operations	$	387	$	549	$	1,241	$	1,602
Development and technology		325		323		962		915
Selling and marketing		578		511		1,655		1,377
General and administrative		764		1,772		2,576		5,333
Total(2)	$	2,054	$	3,155	$	6,434	$	9,227

(2)

Stock-based compensation expense decreased by $1.1 million and $2.8 million for the three and nine months ended September 30, 2019, as compared to the three and nine months ended September 30, 2018, respectively. The decreases are primarily due to the decrease in stock-based compensation expense related to the multi-year 2016 RSUs granted to our previous Chief Executive Officer and our Chief Financial Officer, which became fully vested in February 2019. No similar multi-year RSUs have been granted to any of our executives after 2016. We capitalized $0.2 million and $0.7 million of stock-based compensation expense for each of the three and nine months ended September 30, 2019, respectively. We capitalized $0.2 million and $0.6 million of stock-based compensation expense for each of the three and nine months ended September 30, 2018, respectively.

Three Months Ended
September 30,

Nine Months Ended
September 30,

2017

2016

2017

2016

(unaudited)

(in thousands)

Network operations

$
552

$
483

$
1,660

$
1,660

Development and technology

275

267

825

830

Selling and marketing

524

424

1,589

1,431

General and administrative

2,333

1,832

6,942

5,769

Total(2)

$
3,684

$
3,006

$
11,016

$
9,690

~~(2)~~ The $0.7 million and $1.3 million increase in stock-based compensation expense for the three and nine months ended September 30, 2017, as compared to the three and nine months ended September 30, 2016, is due primarily to stock-based compensation expense related to our performance-based restricted stock units (“RSU”). We recognize stock-based compensation expense for performance-based RSUs when we believe that it is probable that the performance objectives will be met and based upon the expected achievement levels. We capitalized $0.2 million and $0.5 millionTable of stock-based compensation expense the three and nine months ended September 30, 2017. We capitalized $0.2 million and $0.6 million of stock-based compensation expense the three and nine months ended September 30, 2016.Contents

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

	Three Months Ended September 30,				Nine Months Ended September 30,
	2017		2016		2017		2016
	(unaudited)
	(as a percentage of revenue)
Consolidated Statement of Operations Data:

									Three Months Ended				Nine Months Ended
									September 30,				September 30,
									2019		2018		2019		2018
									(unaudited)
									(as a percentage of revenue)
Consolidated Statements of Operations Data:
Revenue	100.0	%	100.0	%	100.0	%	100.0	%	100.0	%	100.0	%	100.0	%	100.0	%
Costs and operating expenses:
Network access	45.0		44.1		44.0		43.3		45.1		44.9		45.2		43.7
Network operations	21.7		26.2		23.5		27.6		21.1		20.3		21.1		21.2
Development and technology	12.7		13.2		13.5		14.0		12.6		12.3		12.8		12.5
Selling and marketing	9.7		11.2		10.3		12.3		8.8		8.7		8.9		9.0
General and administrative	14.9		16.4		18.6		19.7		7.8		11.9		10.2		12.1
Amortization of intangible assets	1.6		2.1		1.8		2.3		1.7		1.7		1.7		1.4
Total costs and operating expenses	105.6		113.2		111.7		119.3		97.2		99.8		99.9		99.9
Loss from operations	(5.6	)	(13.2	)	(11.7	)	(19.3	)
Interest and other expense, net	(0.2	)	(0.3	)	(0.1	)	(0.3	)
Loss before income taxes	(5.7	)	(13.5	)	(11.8	)	(19.5	)
Income from operations									2.8		0.2		0.1		0.1
Interest expense and amortization of debt discount									(3.4)		0.0		(3.4)		0.0
Interest income and other expense, net									0.6		0.0		0.8		(0.1)
Income (loss) before income taxes									0.1		0.2		(2.4)		0.0
Income tax expense	0.3		0.2		0.3		0.4		(0.2)		(0.1)		(0.1)		(0.1)
Net loss	(6.0	)	(13.7	)	(12.2	)	(19.9	)
Net (loss) income									(0.2)		0.1		(2.6)		(0.1)
Net income attributable to non-controlling interests	0.4		0.3		0.3		0.2		0.1		0.9		0.0		0.8
Net loss attributable to common stockholders	(6.4	)%	(14.0	)%	(12.5	)%	(20.1	)%	(0.3)	%	(0.8)	%	(2.6)	%	(0.9)	%

Three Months ended September 30, ~~2017~~2019 and ~~2016~~2018

Revenue

Three Months Ended September 30,

2017

2016

Change

% Change

(unaudited)

(in thousands, except percentages)

Revenue:

DAS

$
21,755

$
15,959

$
5,796

36.3

Military

13,946

10,137

3,809

37.6

Wholesale—Wi-Fi

8,307

5,888

2,419

41.1

Retail

6,234

6,619

(385
)
(5.8
)
Advertising and other

3,413

2,193

1,220

55.6

Total revenue

$
53,655

$
40,796

$
12,859

31.5

Key business metrics:

DAS nodes

22.2

17.7

4.5

25.4

Subscribers—military

133

86

47

54.7

Subscribers—retail

194

185

9

4.9

Connects

64,875

40,263

24,612

61.1


	Three Months Ended September 30,
	2019		2018		Change		% Change
	(unaudited)
	(in thousands, except percentages)
Revenue:
DAS	$	23,714	$	24,410	$	(696)	(2.9)
Military/multifamily		23,641		21,745		1,896	8.7
Wholesale—Wi-Fi		11,200		11,749		(549)	(4.7)
Retail		3,646		4,088		(442)	(10.8)
Advertising and other		2,506		3,261		(755)	(23.2)
Total revenue	$	64,707	$	65,253	$	(546)	(0.8)

Key business metrics:
DAS nodes		37.2		27.4		9.8	35.8
Subscribers—military		137		142		(5)	(3.5)
Subscribers—retail		85		141		(56)	(39.7)
Connects		89,291		75,424		13,867	18.4

DAS. DAS revenue ~~increased $5.8~~decreased $0.7 million, or ~~36.3%~~2.9%, for the three months ended September 30, ~~2017,~~2019, as compared to the three months ended September 30, ~~2016,~~2018, due to a ~~$5.3~~$4.9 million ~~increase~~decrease from ~~new~~ build-out projects in our managed and operated locations, ~~and a $0.5~~which was partially offset by $4.2 million increase in access fees from our telecom operators. DAS access fees for the three months ended September 30, 2019 include $1.8 million of one-time access fees.

~~Military.~~Military/multifamily. ~~Military~~ Military/multifamily revenue increased ~~$3.8~~$1.9 million, or ~~37.6%~~8.7%, for the three months ended September 30, ~~2017,~~2019, as compared to the three months ended September 30, ~~2016,~~2018, primarily due to a ~~$5.0~~$1.3 million increase in military subscriber

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revenue, which was driven primarily by ~~the increase in military subscribers and a 3.0%~~an 10.9% increase in the average monthly revenue per military subscriber in ~~2017~~2019 compared to ~~2016. The~~2018, and a $0.7 million increase ~~was partially offset by a $1.2 million decrease~~ in ~~military single-use revenue.~~multifamily revenues resulting from our Elauwit Networks, LLC acquisition in August 2018.

Wholesale—Wi-Fi. Wholesale Wi-Fi revenue ~~increased $2.4~~decreased $0.5 million, or ~~41.1%,~~4.7% for the three months ended September 30, ~~2017,~~2019, as compared to the three months ended September 30, ~~2016, primarily~~2018, due to a $1.6 million ~~increase~~decrease in partner usage based fees, ~~and~~which was partially offset by a ~~$0.8~~$1.1 million increase in fees primarily earned from our venue partners who pay us to provide a Wi-Fi infrastructure that we install, manage and operate at their venues.

Retail. Retail revenue decreased $0.4 million, or ~~5.8%~~10.8%, for the three months ended September 30, ~~2017,~~2019, as compared to the three months ended September 30, ~~2016,~~2018, primarily due to a $0.5 million decrease in retail ~~single-use revenue.~~subscriber revenue, which was driven primarily by the decrease in retail subscribers.

Advertising and other. Advertising and other revenue ~~increased $1.2~~decreased $0.8 million, or ~~55.6%,~~23.2% for the three months ended September 30, ~~2017,~~2019, as compared to the three months ended September 30, ~~2016,~~2018, primarily due to a ~~$1.1 million increase~~decrease in advertising sales at our managed and operated ~~locations.~~locations resulting from a decline in the number of premium ad units sold.

Costs and Operating Expenses

	Three Months Ended September 30,
	2017		2016		Change			% Change
	(unaudited)
	(in thousands, except percentages)

										Three Months Ended September 30,
										2019		2018		Change		% Change
										(unaudited)
										(in thousands, except percentages)
Costs and operating expenses:
Network access	$	24,143	$	17,982	$	6,161		34.3		$	29,155	$	29,273	$	(118)	(0.4)
Network operations	11,625		10,698		927			8.7			13,682		13,260		422	3.2
Development and technology	6,817		5,394		1,423			26.4			8,182		7,995		187	2.3
Selling and marketing	5,201		4,553		648			14.2			5,721		5,674		47	0.8
General and administrative	8,006		6,701		1,305			19.5			5,021		7,789		(2,768)	(35.5)
Amortization of intangible assets	852		855		(3		)	(0.4	)		1,103		1,112		(9)	(0.8)
Total costs and operating expenses	$	56,644	$	46,183	$	10,461		22.7		$	62,864	$	65,103	$	(2,239)	(3.4)

Network access. Network access costs ~~increased $6.2 million, or 34.3%,~~remained relatively consistent for the three months ended September 30, ~~2017,~~2019, as compared to the three months ended September 30, ~~2016. The increase is primarily due to~~2018. We experienced a ~~$4.4~~$2.1 million ~~increase~~decrease in depreciation expense, ~~related to our increased fixed assets from our DAS build-out projects and~~ a ~~$1.5~~$1.4 million increase in revenue share paid to venues in our managed and operated ~~locations.~~locations, a $0.4 million increase in direct cost of sales, and a $0.3 million increase in expenses related to our multifamily operations, which we acquired in August 2018 in the Elauwit acquisition.

Network operations.Network operations expenses increased ~~$0.9~~$0.4 million, or ~~8.7%~~3.2%, for the three months ended September 30, ~~2017,~~2019, as compared to the three months ended September 30, ~~2016,~~2018, due to a ~~$0.6~~$0.2 million increase in personnel related expenses and a ~~$0.3~~$0.2 million increase in ~~depreciation expense~~other expenses. Network operations expenses related to our multifamily operations, which we acquired in August 2018, increased ~~fixed assets.~~

by $0.5 million.

Development and technology.Development and technology expenses increased ~~$1.4~~$0.2 million, or ~~26.4%~~2.3%, for the three months ended September 30, ~~2017,~~2019, as compared to the three months ended September 30, ~~2016,~~2018, primarily due to a ~~$0.8~~$0.3 million increase in ~~personnel related~~hardware and software maintenance expenses, ~~a $0.5 million increase in depreciation expense related to our increased fixed assets and~~which was partially offset by a $0.2 million ~~increase~~decrease in ~~cloud computing~~consulting expenses.

Selling and marketing.Selling and marketing expenses ~~increased $0.6 million, or 14.2%,~~remained relatively consistent for the three months ended September 30, ~~2017,~~2019, as compared to the three months ended September 30, ~~2016, primarily due~~2018. Selling and marketing expenses related to ~~a $0.6 million increase~~our multifamily operations, which we acquired in ~~personnel related expenses.~~August 2018, increased by $0.3 million.

General and administrative. General and administrative expenses ~~increased $1.3~~decreased $2.8 million, or ~~19.5%~~35.5%, for the three months ended September 30, ~~2017,~~2019, as compared to the three months ended September 30, ~~2016,~~2018, primarily due to a ~~$1.1~~$1.0 million ~~increase~~decrease in the fair value of contingent consideration, a $1.0 million decrease in personnel related expenses, ~~which was inclusive of a $0.5 million increase in stock-based compensation, and~~ a $0.3 million ~~increase~~decrease in professional ~~services fees.~~fees, and a $0.2 million decrease in bad debt expenses. General and administrative expenses related to our multifamily operations, which we acquired in August 2018, increased by $0.4 million.

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Amortization of intangible assets.Amortization of intangible assets expense remained relatively consistent for the three months ended September 30, ~~2017,~~2019, as compared to the three months ended September 30, ~~2016.~~2018.

Interest Expense and Amortization of Debt Discount

Interest expense and ~~Other Expense, Net~~

~~There were no significant changes in interest and other expense, net~~amortization of debt discount increased $2.2 million for the three months ended September 30, ~~2017,~~2019, as compared to the three months ended September 30, ~~2016. We~~2018, primarily due to interest expense incurred in connection with the Convertible Notes we issued in October 2018. During the three months ended September 30, 2019 and 2018, we capitalized ~~$0.2~~$0.8 million and $0.3 million, respectively, of interest expense.

Interest Income and Other Expense, Net

Interest income and other expense, net increased $0.4 million for the three months ended September 30, ~~2017 and 2016, respectively.~~

~~Income Tax Expense~~

~~Income tax expense and our effective tax rate remained relatively consistent for the three months ended September 30, 2017 and 2016.~~

~~Non-controlling Interests~~

~~There were no significant changes in non-controlling interests~~ ~~for the three months ended September 30, 2017,~~2019, as compared to the three months ended September 30, ~~2016.~~2018, primarily due to increased interest income related to our cash equivalents and marketable securities balances in 2019.

Income Tax Expense

~~Net Loss Attributable to Common Stockholders~~

~~Our net loss~~There were no significant changes in income tax expense for the three months ended September 30, ~~2017 decreased~~2019, as compared to the three months ended September 30, ~~2016,~~2018. Our effective tax rate was 357.5% and 42.2% for the three months ended September 30, 2019 and 2018, respectively. Our effective tax rate differs from the statutory rate primarily due to our valuation allowance and minimum state taxes for the three months ended September 30, 2019 and 2018 as well as foreign tax expense for the three months ended September 30, 2018.

Non-controlling Interests

Non-controlling interests decreased $0.5 million, or 85.9% for the three months ended September 30, 2019, as compared to the three months ended September 30, 2018 resulting from decreased net income for a ~~result of~~subsidiary from DAS build-out projects that were completed in 2018.

Net Loss Attributable to Common Stockholders

Our net loss attributable to common stockholders for the ~~$12.9~~three months ended September 30, 2019 decreased $0.3 million as compared to the three months ended September 30, 2018 primarily due to the $2.2 million decrease in costs and operating expenses, the $0.5 million decrease in non-controlling interests, and the $0.4 million increase in ~~revenues,~~interest income and other expense, net, which ~~was~~were partially offset by the ~~$10.5~~$2.2 million increase in ~~costs~~interest expense and ~~operating expenses.~~amortization of debt discount, and the $0.5 million decrease in revenues. Our diluted net loss per share ~~decreased primarily as a result~~remained consistent.

Table of ~~the decrease in our net loss.~~Contents

Nine Months ended September 30, ~~2017~~2019 and ~~2016~~2018

Revenue

	Nine Months Ended September 30,
	2017		2016		Change			% Change
	(unaudited)
	(in thousands, except percentages)

										Nine Months Ended September 30,
										2019		2018		Change		% Change
										(unaudited)
										(in thousands, except percentages)
Revenue:
DAS	$	56,563	$	40,957	$	15,606		38.1		$	75,431	$	69,940	$	5,491	7.9
Military	40,029		28,969		11,060			38.2
Military/multifamily											73,934		54,334		19,600	36.1
Wholesale—Wi-Fi	22,438		16,031		6,407			40.0			32,938		36,428		(3,490)	(9.6)
Retail	19,007		20,100		(1,093		)	(5.4	)		11,419		13,964		(2,545)	(18.2)
Advertising and other	8,984		8,313		671			8.1			6,012		8,347		(2,335)	(28.0)
Total revenue	$	147,021	$	114,370	$	32,651		28.5		$	199,734	$	183,013	$	16,721	9.1


Key business metrics:
DAS nodes	22.2		17.7		4.5			25.4			37.2		27.4		9.8	35.8
Subscribers—military	133		86		47			54.7			137		142		(5)	(3.5)
Subscribers—retail	194		185		9			4.9			85		141		(56)	(39.7)
Connects	160,082		102,515		57,567			56.2			253,757		210,626		43,131	20.5

DAS.DAS revenue increased ~~$15.6~~$5.5 million, or ~~38.1%~~7.9%, for the nine months ended September 30, ~~2017,~~2019, as compared to the nine months ended September 30, ~~2016,~~2018, due to a ~~$13.6 million increase from new build-out projects in our managed and operated locations and a $2.0~~$10.3 million increase in access fees from our telecom ~~operators.~~operators, which was partially offset by a $4.8 million decrease from build-out projects in our managed and operated locations. DAS access fees for the nine months ended September 30, 2019 include $4.8 million of one-time access fees.

~~Military.~~Military/multifamily. ~~Military~~Military/multifamily revenue increased ~~$11.1~~$19.6 million, or ~~38.2%~~36.1%, for the nine months ended September 30, ~~2017,~~2019, as compared to the nine months ended September 30, ~~2016,~~2018, primarily due to a ~~$14.5~~$14.0 million increase in multifamily revenues resulting from our multifamily operations, which we acquired in August 2018, and a $5.8 million increase in military subscriber revenue, which was driven primarily

by ~~the~~an 11.5% increase ~~in military subscribers partially offset by a 2.2% decrease~~ in the average monthly revenue per military subscriber in ~~2017~~2019 compared to ~~2016. The increase was partially offset by a $3.4 million decrease in military single-use revenue.~~2018.

Wholesale—Wi-Fi. Wholesale Wi-Fi revenue ~~increased $6.4~~decreased $3.5 million, or ~~40.0%,~~9.6% for the nine months ended September 30, ~~2017,~~2019, as compared to the nine months ended September 30, ~~2016, primarily~~2018, due to a ~~$5.1~~$5.7 million ~~increase~~decrease in partner usage based fees, ~~and~~which was partially offset by a ~~$1.3~~$2.2 million increase in fees primarily earned from our venue partners who pay us to provide a Wi-Fi infrastructure that we install, manage and operate at their venues.

Retail.Retail revenue decreased ~~$1.1~~$2.5 million, or ~~5.4%~~18.2%, for the nine months ended September 30, ~~2017,~~2019, as compared to the nine months ended September 30, ~~2016, primarily~~2018, due to a ~~$1.2~~$2.2 million decrease in retail subscriber revenue, which was driven primarily by the decrease in retail subscribers, and a $0.3 million decrease in retail single-use revenue.

Advertising and other.Advertising and other revenue ~~increased $0.7~~decreased $2.3 million, or ~~8.1%,~~28.0% for the nine months ended September 30, ~~2017,~~2019, as compared to the nine months ended September 30, ~~2016,~~2018, primarily due to a ~~$0.5~~$2.6 million ~~increase~~decrease in ~~revenues~~advertising sales at our managed and operated locations resulting from ~~other service agreements.~~a decline in the number of premium ad units sold.

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Costs and Operating Expenses

	Nine Months Ended September 30,
	2017		2016		Change		% Change
	(unaudited)
	(in thousands, except percentages)

								Nine Months Ended September 30,
								2019		2018		Change		% Change
								(unaudited)
								(in thousands, except percentages)
Costs and operating expenses:
Network access	$	64,655	$	49,575	$	15,080	30.4	$	90,368	$	79,926	$	10,442	13.1
Network operations	34,556		31,566		2,990		9.5		42,073		38,829		3,244	8.4
Development and technology	19,814		16,014		3,800		23.7		25,534		22,883		2,651	11.6
Selling and marketing	15,188		14,103		1,085		7.7		17,782		16,490		1,292	7.8
General and administrative	27,372		22,553		4,819		21.4		20,330		22,218		(1,888)	(8.5)
Amortization of intangible assets	2,673		2,582		91		3.5		3,365		2,507		858	34.2
Total costs and operating expenses	$	164,258	$	136,393	$	27,865	20.4	$	199,452	$	182,853	$	16,599	9.1

Network access. Network access costs increased ~~$15.1~~$10.4 million, or ~~30.4%~~13.1%, for the nine months ended September 30, ~~2017,~~2019, as compared to the nine months ended September 30, ~~2016.~~2018. The increase is primarily due to ~~a $10.7~~an $11.0 million increase in ~~depreciation expense~~expenses related to our ~~increased fixed assets from our DAS build-out projects and~~multifamily operations, which we acquired in August 2018, a ~~$4.4~~$3.3 million increase in revenue share paid to venues in our managed and operated ~~locations.~~locations, and a $1.0 million increase in direct cost of sales, and a $0.7 million increase in other cost of revenue, which were partially offset by $4.7 million decrease in depreciation expense related to our decreased fixed assets from our DAS build-out projects and a $0.9 million decrease from customer usage at partner venues.

Network operations.Network operations expenses increased ~~$3.0~~$3.2 million, or ~~9.5%~~8.4%, for the nine months ended September 30, ~~2017,~~2019, as compared to the nine months ended September 30, ~~2016,~~2018, primarily due to a ~~$2.1~~$1.9 million increase in personnel related expenses, a $0.5 million increase in network maintenance expenses, a $0.5 million increase in other expenses, and a $0.3 million increase in travel and entertainment expenses. Network operations expenses related to our multifamily operations, which we acquired in August 2018, increased by $2.6 million.

Development and technology. Development and technology expenses increased $2.7 million, or 11.6%, for the nine months ended September 30, 2019, as compared to the nine months ended September 30, 2018, primarily due to a $0.8 million increase in hardware and software maintenance expenses, a $0.7 million increase in personnel related expenses, a $0.6 million increase in depreciation expense related to our increased ~~fixed~~software assets, and a ~~$0.6~~$0.2 million increase in ~~personnel related expenses, and a $0.6 million increase in other~~cloud computing expenses. ~~The increases were partially offset by a $0.3 million decrease in network connectivity expenses.~~

~~Development and technology.~~ Development and technology expenses related to our multifamily operations, which we acquired in August 2018, increased ~~$3.8~~by $0.4 million.

Selling and marketing. Selling and marketing expenses increased $1.3 million, or ~~23.7%~~7.8%, for the nine months ended September 30, ~~2017,~~2019, as compared to the nine months ended September 30, ~~2016,~~2018, primarily due to a ~~$1.7 million increase in depreciation expense related to our increased fixed assets, a $1.4~~$1.0 million increase in personnel related expenses and a ~~$0.6~~$0.2 million increase in ~~cloud computing~~travel and entertainment expenses.

~~Selling and marketing.~~ Selling and marketing expenses related to our multifamily operations, which we acquired in August 2018, increased ~~$1.1~~by $1.6 million.

General and administrative. General and administrative expenses decreased $1.9 million, or ~~7.7%~~8.5%, for the nine months ended September 30, ~~2017,~~2019, as compared to the nine months ended September 30, ~~2016,~~2018, primarily due to a $1.2 million ~~increase~~decrease in personnel related ~~expenses.~~

~~General~~expenses and ~~administrative.~~a $1.0 million decrease in the fair value of contingent consideration, which were partially offset by a $0.3 million increase in licenses and taxes. General and administrative expenses related to our multifamily operations, which we acquired in August 2018, increased ~~$4.8~~by $1.9 million.

Amortization of intangible assets. Amortization of intangible assets expense increased $0.9 million, or ~~21.4%,~~34.2% for the nine months ended September 30, ~~2017,~~2019, as compared to the nine months ended September 30, ~~2016,~~2018, primarily due to ~~a $2.8 million settlement expense accrual related to a claim from one of our venue partners recorded during~~ the ~~nine months ended September 30, 2017, a $2.0~~$1.5 million increase resulting from our Elauwit acquisition in personnel related expenses, which was inclusive of a $1.2 million increase in stock-based compensation, a $0.8 million increase in professional service fees expenses, a $0.5 million increase in outside service fees,August 2018.

Interest Expense and a $0.4 million increase in consulting expenses. The increases were partially offset by $1.4 million of costs we incurred during the nine months ended September 30, 2016 on our contested proxy election for the 2016 annual meeting of of stockholders.

Amortization of ~~intangible assets.~~ ~~Amortization~~Debt Discount

Interest expense and amortization of ~~intangible assets expense remained relatively consistent~~debt discount increased $6.7 million for the nine months ended September 30, ~~2017,~~2019, as compared to the nine months ended September 30, ~~2016.~~2018, primarily due to interest expense incurred in connection with the Convertible Notes we issued in October 2018. During the nine months ended September 30, 2019 and 2018, we capitalized $2.1 million and $0.6 million, respectively, of interest expense.

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Interest Income and Other Expense, Net

~~There were no significant changes in interest~~Interest income and other expense, net increased $1.7 million for the nine months ended September 30, ~~2017,~~2019, as compared to the nine months ended September 30, ~~2016. During the nine months ended September 30, 2017~~2018, primarily due to increased interest income related to our cash equivalents and ~~2016, we capitalized $0.6 million and $0.7 million, respectively, of interest expense.~~marketable securities balances in 2019.

Income Tax Expense

~~Income~~There were no significant changes in income tax expense ~~and our effective tax rate remained relatively consistent~~ for the nine months ended September 30, ~~2017 and 2016.~~

~~Non-controlling Interests~~

~~Non-controlling interests increased $0.3 million or 165.0%,~~ ~~for the nine months ended September 30, 2017,~~2019, as compared to the nine months ended September 30, ~~2016,~~2018. Our effective tax rate decreased from 2,200.0% for the nine months ended September 30, 2018 to 5.2% for the nine months ended September 30, 2019. Or effective tax rate differs from the statutory rate primarily due to our valuation allowance and minimum state taxes for the nine months ended September 30, 2019 and 2018 as well as foreign tax expense for the nine months ended September 30, 2018.

Non-controlling Interests

Non-controlling interests decreased $1.4 million, or 99.2% for the nine months ended September 30, 2019, as compared to the nine months ended September 30, 2018 resulting from ~~increased~~decreased net income for a subsidiary from DAS build-out projects that were completed in ~~2017.~~2018.

Net Loss Attributable to Common Stockholders

Our net loss attributable to common stockholders for the nine months ended September 30, ~~2017 decreased~~2019 increased $3.5 million as compared to the nine months ended September 30, ~~2016,~~2018, primarily due to the $6.7 million increase in interest expense and amortization of debt discount, which was partially offset by the $1.7 million increase in interest income and other expense, net, and the $1.4 million decrease in non-controlling interests. Our diluted net loss per share increased primarily as a result of the ~~$32.7 million~~ increase ~~in revenues, which was partially offset by the $27.9 million increase in costs and operating expenses. Our diluted net loss per share decreased primarily as a result of the decrease~~ in our net loss.

Reconciliation of Non-GAAP Financial Measures

We define Adjusted EBITDA as net loss attributable to common stockholders plus depreciation and amortization of property and equipment, stock-based compensation expense, amortization of intangible assets, income tax expense, interest expense and amortization of debt discount, interest income and other expense, net, non-controlling interests, and excludes charges or gains that are non-recurring, infrequent, or unusual.

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 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.

· 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 (i) non-cash charges, such as 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 and (ii) settlement expense related to our claim from one of our venue partners and charges related to our contested proxy election for the 2016 annual meeting of stockholders because they represent non-recurring charges and are not indicative of the underlying performance of our business operations.

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.

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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 attributable to common stockholders.

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

	Three Months Ended September 30,						Nine Months Ended September 30,
	2017			2016			2017			2016
	(unaudited)
	(in thousands)

													Three Months Ended				Nine Months Ended
													September 30,				September 30,
													2019		2018		2019		2018
													(unaudited)
													(in thousands)
Net loss attributable to common stockholders	$	(3,450	)	$	(5,709	)	$	(18,347	)	$	(22,959	)	$	(187)	$	(522)	$	(5,124)	$	(1,636)
Depreciation and amortization of property and equipment	18,245			13,093			49,244			34,801				16,867		18,901		52,750		56,769
Stock-based compensation expense	3,684			3,006			11,016			9,690				2,054		3,155		6,434		9,227
Amortization of intangible assets	852			855			2,673			2,582				1,103		1,112		3,365		2,507
Income tax expense	167			95			507			457				143		54		254		198
Interest and other expense, net	84			117			126			299
Interest expense and amortization of debt discount														2,191		8		6,741		58
Interest income and other expense, net														(388)		14		(1,600)		93
Non-controlling interests	210			110			477			180				84		596		11		1,447
Contested proxy election expense	—			—			—			1,440
Settlement expense	—			—			2,807			—
Adjusted EBITDA	$	19,792		$	11,567		$	48,503		$	26,490		$	21,867	$	23,318	$	62,831	$	68,663

Adjusted EBITDA was ~~$19.8~~$21.9 million for the three months ended September 30, ~~2017, an increase~~2019, a decrease of ~~71.1%~~ 6.2% from ~~$11.6~~$23.3 million recorded in the three months ended September 30, ~~2016.~~2018. As a percent of revenue, Adjusted EBITDA was ~~36.9%~~33.8% for the three months ended September 30, ~~2017, up~~2019, down from ~~28.4%~~35.7% of revenue for the three months ended September 30, ~~2016.~~2018. The Adjusted EBITDA ~~increase~~decrease was primarily due ~~primarily~~ to the ~~$5.1~~$2.0 million ~~increase~~decrease in depreciation and amortization expense, the ~~$2.3~~$1.1 million decrease in ~~our net loss attributable to common stockholders,~~stock-based compensation expense, the $0.5 million decrease in non-controlling interests, and the ~~$0.7~~$0.4 million increase in ~~stock-based compensation expenses~~interest income and other expense, net, for the three months ended September 30, ~~2017~~2019 compared to the three months ended September 30, ~~2016.~~2018. The changes were partially offset by $2.2 million increase in interest expense and amortization of debt discount and the $0.3 million decrease in net loss attributable to common stockholders, for the three months ended September 30, 2019 compared to three nine months ended September 30, 2018.

Adjusted EBITDA was ~~$48.5~~$62.8 million for the nine months ended September 30, ~~2017, an increase~~2019, a decrease of ~~83.1%~~ 8.5% from ~~$26.5~~$68.7 million recorded in the nine months ended September 30, ~~2016.~~2018. As a percent of revenue, Adjusted EBITDA was ~~33.0%~~31.5% for the nine months ended September 30, ~~2017, up~~2019, down from ~~23.2%~~37.5% of revenue for the nine months ended September 30, ~~2016.~~2018. The Adjusted EBITDA ~~increase~~decrease was due primarily to the ~~$14.5~~$3.5 million increase ~~in depreciation and amortization expense, the $4.6 million decrease~~ in our net loss attributable to common stockholders, the ~~$1.3~~$3.2 million decrease in depreciation and amortization expense, the $2.8 million decrease in stock based compensation expense, the $1.7 million increase in ~~stock-based compensation expenses,~~interest income and other expense, net, and the ~~$0.3~~$1.4 million decrease in non-controlling interests, which were partially offset by the $6.7 million increase in ~~non-controlling interests~~interest expense and amortization of debt discount, for the nine months ended September 30, ~~2017~~2019 compared to the nine months ended September 30, 2016. Adjusted EBITDA for the nine months ended September 30, 2017 excludes $2.8 million of settlement expense accrual related to a claim from one of our venue partners. Adjusted EBITDA for the nine months ended September 30, 2016 excludes $1.4 million of expenses that we incurred on our contested proxy election for the 2016 annual meeting of stockholders.

2018.

Liquidity and Capital Resources

We have financed our operations primarily through cash provided by operating activities and borrowings under our Convertible Notes (defined below) and credit ~~facility.~~facilities. Our primary sources of liquidity as of September 30, ~~2017~~2019 consisted of $~~21.6~~$50.2 million of cash and cash equivalents, ~~and $64.8~~$36.6 million of marketable securities, $150.0 million available for borrowing under our ~~credit facility, $6.3~~Credit Facility, $13.0 million of which is reserved for our outstanding Letter of Credit Authorization agreements. As of September 30, 2019, we had $2.9 million outstanding under the Term Loan, and we had no amounts outstanding under the Revolving Line of Credit.

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 liquidity over the near term. Our capital expenditures in

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the nine months ended September 30, ~~2017~~2019 were ~~$54.7~~$101.5 million, of which ~~$33.6~~$79.9 million ~~was~~will be reimbursed through revenue for DAS build-out projects from our telecom operators.

~~We have~~In February 2019, we entered into a Credit Agreement (the “Credit Agreement”) and related agreements ~~as amended~~ with Bank of America, N.A. acting as agent for lenders named therein, including Bank of America, N.A., Silicon Valley Bank, Bank of the West, Zions Bancorporation, N.A. dba California Bank & Trust, and ~~Citizens~~Barclays Bank ~~N.A.~~PLC (the “Lenders”), for a secured credit facility in the form of a revolving line of credit up to ~~$69.8~~$150.0 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~~Our Credit Facility will mature on ~~November 21, 2018.~~April 3, 2023. Amounts borrowed under the Revolving Line of Credit and Term Loan will bear ~~at our election, a~~ variable interest at the greater of LIBOR plus ~~2.5%~~1.75% - ~~3.5%~~2.75% or Lender’s Prime Rate plus ~~1.5%~~0.75% - ~~2.5%~~1.75% per year and we will pay

a fee of ~~0.375%~~0.25% - 0.5% per year on any unused portion of the Revolving Line of Credit. As of September 30, 2017, $1.1 million was outstanding under the Term Loan and $5.0 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. The interest rate for our Credit Facility for the nine months ended September 30, 2017 ranged from 3.5% to 3.8%.

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 senior secured leverage ratio, a minimum quarterly consolidated total leverage ratio, a maximum quarterly consolidated fixed charge coverage ratio, and ~~monthly liquidity~~cash on hand minimums.We were in compliance with all such financial covenants as of September 30, 2017 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 September 30, 2017 and through the date of this report. The Credit Facility provides us with significant additional flexibility and liquidity ~~for~~to pursue our strategic objectives ~~involving~~for capital expenditures and acquisitions that we may pursue from time to time.

In October 2018, we sold, through the initial purchasers, convertible senior notes (“Convertible Notes”) to qualified institutional buyers pursuant to Rule 144A of the Securities Act of 1933, as amended, for gross proceeds of $201.25 million. The Convertible Notes are senior, unsecured obligations with interest payable semi-annually in cash at a rate of 1.00% per annum on April 1st and October 1st of each year, beginning on April 1, 2019. The Convertible Notes will mature on October 1, 2023 unless they are redeemed, repurchased or converted prior to such date. Prior to April 1, 2023, the Convertible Notes are convertible at the option of holders only during certain periods and upon satisfaction of certain conditions. Thereafter, the Convertible Notes will be convertible at any time until the close of business on the second scheduled trading day immediately preceding the maturity date. Upon conversion, the Convertible Notes may be settled in shares of our common stock, cash or a combination of cash and shares of our common stock, at our election.

The Convertible Notes have an initial conversion rate of 23.6323 shares of common stock per $1,000 principal amount of the Convertible Notes, which will be subject to customary anti-dilution adjustments in certain circumstances. This represents an initial effective conversion price of approximately $42.31 per share, which represents a premium of approximately 30% to the $32.55 per share closing price of our common stock on October 2, 2018, the day we priced the offering.

We may redeem all or any portion of the Convertible Notes, at our option, on or after October 5, 2021, at a redemption price equal to 100% of the principal amount of the Convertible Notes to be redeemed, plus accrued and unpaid interest to, but excluding, the redemption date, if the last reported sale price of our stock has been at least 130% of the conversion price then in effect for at least 20 trading days (whether or not consecutive) during any 30 consecutive trading day period (including the last trading day of such period) ending on, and including, the trading day immediately preceding the date on which we provide written notice of redemption.

Holders of Convertible Notes may require us to repurchase their Convertible Notes upon the occurrence of certain events that constitute a fundamental change under the indenture governing the Convertible Notes at a fundamental change repurchase price equal to 100% of the principal amount thereof, plus accrued and unpaid interest to, but excluding, the date of repurchase. In connection with certain corporate events or if we issue a notice of redemption prior to the maturity date, it will, under certain circumstances, increase the conversion rate for holders who elect to convert their Convertible Notes in connection with such corporate event or notice of redemption.

In connection with the pricing of the Convertible Notes, we entered into privately negotiated capped call transactions with a financial institution. The capped call transactions initially cover, subject to customary anti-dilution adjustments, the number of shares of our common stock that initially underlie the Convertible Notes. The cap price of the capped call transactions is initially $65.10 per share of our common stock, representing a premium of 100% above the closing price of $32.55 per share of our common stock on October 2, 2018, and is subject to certain adjustments under the terms of the capped call transactions. The capped call transactions are expected generally to reduce potential dilution to our common stock upon conversion of the Convertible Notes and/or offset the

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potential cash payments that we could be required to make in excess of the principal amount of any converted Convertible Notes upon conversion thereof, with such reduction and/or offset subject to a cap based on the cap price.

We believe that our existing cash and cash equivalents, marketable securities, 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 from the date of issuance of our financial statements. 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 and corresponding timing of cash collections, 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 for ~~the remainder of 2017~~2019 will range from ~~$4.0~~$120.0 million to ~~$9.0~~$135.0 million, ~~excluding~~including $95.0 million to $105.0 million of capital expenditures for DAS build-out projects, which are reimbursed through revenue from our telecom operator customers. We anticipate the majority of our ~~remaining 2017~~2019 capital expenditures will be used to build out and upgrade Wi-Fi and DAS networks at our managed and operated ~~venues and to build out residential broadband and IPTV networks for troops stationed on military bases pursuant to our~~venues.

We have 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.~~ 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 other 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.

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 September 30, 2019 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 September 30, 2019 and through the date of this report. The Credit Facility provides us with significant additional flexibility and liquidity for our strategic objectives involving capital expenditures and acquisitions that we may pursue from time to time.

The following table sets forth cash flow data for the nine months ended September 30:

	2017			2016
	(unaudited)
	(in thousands)

							2019		2018
							(unaudited)
							(in thousands)

Net cash provided by operating activities	$	67,424		$	93,598		$	81,071	$	70,834
Net cash used in investing activities	(55,841		)	(92,045		)		(137,485)		(94,583)
Net cash used in financing activities	(9,439		)	(3,086		)

Net cash (used in) provided by financing activities								(42,807)		10,231

Net Cash Provided by Operating Activities

For the nine months ended September 30, ~~2017,~~2019, we generated ~~$67.4~~$81.1 million of net cash from operating activities, ~~a decrease~~an increase of ~~$26.2~~$10.2 million from ~~the prior year comparative period.~~2018. The ~~decrease~~increase is primarily due to a ~~$47.5~~$14.4 million ~~non-cash~~ change in our operating assets and ~~liabilities.~~liabilities, which is primarily driven by a higher rate of invoicing for our DAS build-out projects, a $6.6 million increase in the addback for amortization of deferred financing costs and debt discounts, and a $1.7 million increase in the addback for the non-cash operating lease costs. The ~~change was~~changes were partially offset by a ~~$14.4~~$4.9 million increase in our net loss, a $3.2 million decrease in depreciation and amortization expenses, ~~related to our recent increased fixed assets from our DAS build-out projects, Wi-Fi networks, and software development,~~ a ~~$4.9~~$2.8 million decrease ~~in our net loss, a $1.3 million increase~~ in stock-based compensation expenses, a $1.0 million change in fair value of contingent consideration, and a ~~$0.4~~$0.5 million increase in ~~impairment losses~~gains and ~~losses~~amortization of premiums/discounts on ~~disposal of fixed assets, net.~~marketable securities in 2019.

Net Cash Used in Investing Activities

For the nine months ended September 30, ~~2017,~~2019, we used ~~$55.8~~$137.5 million in investing activities, ~~a decrease~~an increase of ~~$36.2~~$42.9 million from ~~the prior year comparative period.~~2018. The ~~decrease~~increase is due to a ~~$37.4~~$36.0 million ~~decrease~~increase in net purchases of marketable securities resulting from our investment of some of the cash proceeds received from our issuance of the Convertible Notes, and a $28.9 million increase in purchases of property and equipment ~~which was~~resulting from our continued build out and upgrade of Wi-Fi and DAS networks at our managed and operated venues. The increases were partially offset by ~~$1.2~~a $22.1 million ofdecrease in cash paid for ~~a caching technology intangible~~ asset ~~which we acquired in November 2016.~~acquisitions.

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Net Cash ~~Used in~~(Used in) Provided by Financing Activities

For the nine months ended September 30, ~~2017,~~2019, we used ~~$9.4~~$42.8 million of cash in financing activities ~~an increase~~compared to $10.2 million of ~~$6.4 million from the prior year comparative period.~~cash provided by financing activities in 2018. This change is primarily due to a ~~$5.2~~$25.2 million increase in payments ~~on our Credit Facility, a $5.0 million decrease in proceeds from our Credit Facility, a $1.4 million increase in cash used to pay~~for federal, state, and local employment payroll taxes related to our RSUs that vested during the period, ~~and~~an $11.5 million decrease in proceeds from our Credit Facility, a ~~$1.1~~$9.6 million decrease in proceeds from exercise of stock options, a $3.0 million increase in cash paid for business acquisitions, a $1.8 million increase in cash paid for debt issuance costs, a $0.8 million increase in principal payments for our ~~capital~~finance leases and notes ~~payable. The changes were partially offset by~~payable, a ~~$6.0~~$0.7 million increase in ~~proceeds from exercise of~~cash paid for stock ~~options.~~repurchases, and a $0.4 million increase in cash paid to non-controlling interests.

Contractual Obligations and Commitments

The following table sets forth our contractual obligations and commitments as of September 30, ~~2017:~~2019:

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

											Payments Due by Period
													Less than						More than
											Total		1 Year		2 - 3 Years		4 - 5 Years		5 Years
											(in thousands)
Venue revenue share minimums(1)	$	36,677	$	8,349	$	10,738	$	9,774	$	7,816	$	41,857	$	9,484	$	14,840	$	11,300	$	6,233
Operating leases for office space and other(2)	29,983		3,809		6,520		6,603		13,051
Operating and finance leases(2)												24,996		5,968		6,847		6,296		5,885
Open purchase commitments(3)	25,859		22,759		3,100		—		—			18,036		17,651		385		—		—
Credit Facility(4)	6,094		875		5,219		—		—
Capital leases for equipment and software(5)	5,745		3,118		2,627		—		—
Unrecognized tax benefits(6)	229		229		—		—		—
Convertible Notes(4)												201,250		—		—		201,250		—
Credit Facility(5)												2,916		778		1,556		582		—
Notes payable~~(7)~~(6)	2,164		1,231		933		—		—			2,155		1,937		218		—		—
Total	$	106,751	$	40,370	$	29,137	$	16,377	$	20,867	$	291,210	$	35,818	$	23,846	$	219,428	$	12,118

(1)	Payments under exclusive long-term, non-cancellable contracts to provide wireless communications network access to venues such as airports.

(2)	Non-cancellable operating leases for office and other spaces and finance leases for equipment, primarily for data communication equipment and database software.

~~(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.

(3)	Open purchase commitments for the purchase of property and equipment, supplies and services. They are not recorded as liabilities on our condensed consolidated balance sheet as of September 30, 2019 as we have not received the related goods or services.

(4)	Long-term debt associated with our Convertible Notes are based on contractual terms and intended timing of repayments of long-term debt.

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

(5)	Debt associated with our Credit Agreement with Bank of America N.A. Payments are based on contractual terms and intended timing of repayments.

(6)	Payments under notes payable related to purchases of prepaid maintenance service.

~~(3)~~ Open purchase commitments are for the purchase of property and equipment, supplies and services. They are not recorded as liabilities on our condensed consolidated balance sheet as of September 30, 2017 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 6 to the accompanying condensed consolidated financial statements included in Part I, Item 1, of this Quarterly Report on Form 10-Q).

~~(7)~~ ~~Notes payable assumed in our acquisition of Endeka Group, Inc. in 2013 and loans payable related to financed equipment and prepaid maintenance service purchases.~~

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.

Critical Accounting Policies and Estimates

Leases

We determine if an arrangement is a lease at inception. Operating leases are included in operating lease right-of-use assets, current portion of operating and finance leases, and long-term portion of operating and finance leases in our condensed consolidated

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balance sheets. Finance leases are included in property and equipment, net, current portion of operating and finance leases, and long-term portion of operating and finance leases in our condensed consolidated balance sheets.

Operating and finance lease ROU assets and ROU liabilities are recognized based on the present value of the future minimum lease payments over the lease term at commencement date. As most of our leases do not provide an implicit rate, we use our incremental borrowing rate based on the information available at the commencement date in determining the present value of future payments. The ROU asset also includes any lease payments made and excludes lease incentives and initial direct costs incurred. Our lease terms may include options to extend or terminate the lease when it is reasonably certain that we will exercise that option. Lease expense for minimum lease payments is recognized on a straight-line basis over the lease term. We have lease agreements with lease and non-lease components, which are generally accounted for separately. We exclude short-term leases with a lease term of 12 months or less at commencement date from our condensed consolidated balance sheets.

There have been no other material changes to our critical accounting policies and estimates from the information provided for the year ended December 31, ~~2016~~2018 in “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” included in our annual report on Form 10-K filed by us with the SEC on March ~~13, 2017.~~1, 2019.

Recently Issued Accounting Standards

Information regarding recent accounting pronouncements is contained in Note 2 “Summary of Significant Accounting Policies” to the accompanying condensed consolidated financial statements included in Part I, Item 1, of this Quarterly Report on Form 10-Q and under “Critical Accounting Policies and Estimates” in Part I, Item II, of this Quarterly Report on Form 10-Q, the information of which is incorporated herein by this reference.

Item 3. Quantitative and Qualitative Disclosure about Market Risk

~~We are exposed to various market risks including: (i) interest rate~~Market risk ~~and (ii) foreign currency exchange rate risk.~~represents the potential loss arising from adverse changes in the value of financial instruments. The risk of loss is assessed based on the likelihood of adverse changes in fair values, cash flows or future earnings. We are exposed to various market risks including: (i) investment portfolio risk, (ii) interest rate risk, and (iii) foreign currency exchange rate risk.

Investment portfolio risk. We have established guidelines relative to the diversification and maturities of investments to maintain safety and liquidity. These guidelines are reviewed periodically and may be modified depending on market conditions. Although investments may be subject to credit risk, our investment policy specifies credit quality standards for our investments and limits the amount of credit exposure from any single issue, issuer, or type of investment. At September 30, 2019, our market risk sensitive instruments consisted of marketable securities available-for-sale, which are comprised of highly rated short-term commercial paper, corporate debt instruments and US treasury and agencies obligations.

Our marketable available-for-sale securities are carried at fair value and are intended for use in meeting our ongoing liquidity needs. Unrealized gains and losses on available-for-sale securities, which are deemed temporary, are reported as a separate component of stockholders’ equity, net of tax. The cost of debt securities is adjusted for amortization of premiums and accretion of discounts to maturity. The amortization, along with realized gains and losses, would be included in interest income and other expense, net.

Interest rate risk. Our ~~Revolving Line~~Convertible Notes bear a coupon rate of 1.00% per annum. We do not have economic interest rate exposure on our Convertible Notes due to the fixed rate nature. However, the values of the Convertible Notes are exposed to interest rate risk. Generally, the fair value of our fixed interest rate Convertible Notes will increase as interest rates fall and decrease as interest rates rise. In addition, the fair values of the Convertible Notes are affected by our stock price. The fair value of the Convertible Notes will generally increase as our common stock price increases and will generally decrease as our common stock price declines in value. Additionally, we carry the Convertible Notes at face value less unamortized discount and issuance costs on our consolidated balance sheet, and we present the fair value for required disclosure purposes only.

Our Credit ~~and Term Loan~~Facility bears ~~at our election,~~ interest at a variable ~~interest~~ rate equal to the greater of LIBOR plus ~~2.5%~~1.75% - ~~3.5%~~2.75% or the Lender’s Prime Rate plus ~~1.5%~~0.75% - ~~2.5%~~1.75% 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~~100-basis point increase in the LIBOR or Lender’s Prime Rate as of September 30, ~~2017~~2019 would not have a material impact on net ~~loss~~income (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 nine months ended September 30, ~~2017~~2019 was

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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 4. Controls and Procedures

Disclosure Controls and Procedures. We carried out an evaluation, under the supervision and with the participation of our management, including our Chief Executive Officer and Chief Financial Officer, of the effectiveness, as of September 30, ~~2017,~~2019, of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934). Based upon that evaluation, ~~the~~our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures are effective.

Changes in Internal Control over Financial Reporting. During the three months ended September 30, ~~2017,~~2019, there were no changes in our internal control over financial reporting that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

Because of the inherent limitations of internal control over financial reporting, including the possibility of collusion or improper management override of controls, material misstatements due to error or fraud may not be prevented or detected on a timely basis. Also, projections of any evaluation of the effectiveness of the internal control over financial reporting to future periods are subject to the risk that the controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

PART II. OTHER INFORMATION

Item 1. Legal Proceedings

The information set forth in Note 814 “Commitments and Contingencies,” to the unaudited condensed consolidated financial statements included in Part I, Item 1, of this Quarterly Report on Form 10-Q, is incorporated herein by this reference.

Item 1A. Risk Factors

Certain Factors Affecting Boingo Wireless, Inc.

In addition to the other information set forth in this report, you should carefully consider the factors discussed in Part I, “Item 1A. Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, ~~2016~~2018 filed with the SEC on March ~~13, 2017,~~1, 2019, which we incorporate by reference into this Quarterly Report on Form 10-Q, which could materially affect our business, results of operations, cash flows, or financial condition. The risks described in our Annual Report on Form 10-K are not the only risks facing our ~~company.~~Company. Additional risks and uncertainties not currently known to us or that we currently deem to be immaterial also may materially adversely affect our business, financial condition, or future results. There have been no material changes in the risk factors contained in our Annual Report on Form 10-K.

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Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

Information Regarding Stock Repurchases

On April 1, 2013, our Board of Directors approved a stock repurchase program to repurchase up to $10.0 million of the Company’s common stock in the open market, exclusive of any commissions, markups or expenses. On July 30, 2019, our Board of Directors authorized a new stock repurchase program under which we may repurchase up to $20.0 million of our outstanding shares of common stock through July 31, 2020. The program replaced and superseded our existing stock repurchase program. Under the program, we may repurchase shares in accordance with all applicable securities laws and regulations, including Rule 10b-18 of the Securities Exchange Act of 1934. The extent to which we may repurchase our shares, and the timing of such repurchases, will depend upon a variety of factors, including market conditions, regulatory requirements and other corporate considerations, as determined by our management. The repurchase program may be extended, suspended or discontinued at any time.

During the nine months ended September 30, 2019, we repurchased and retired approximately 56,000 shares under this program for approximately $745,000, excluding commissions paid, at a weighted average price per share of $13.24. As of September 30, 2019, the remaining approved amount for repurchases was approximately $19,255,000. Activity under the program for the nine months ended September 30, 2019 was as follows:


				Approximate Dollar
				Value of Shares that
				May Yet Be
	Total Number of	Weighted		Purchased Under
	Shares Purchased (1)	Average Price Paid		the Plans or
	(000’s)	Per Share		Programs (000’s)

As of December 31, 2018	—	$	—	—
September 1 – September 30	56	$	13.24	19,255
Total	56

(1)	All shares purchased were purchased as part of a publicly announced program discussed above, in open-market transactions.

Items 2, 3, 4 and 45 are not applicable and have been omitted.

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Item 6. Exhibits

The following exhibits are filed as part of, or incorporated by reference into, this Quarterly Report on Form 10-Q:

Exhibit		Incorporated by Reference			Filed		Incorporated by Reference			Filed
No.	Description	Form	Date	Number	Herewith	Description	Form	Date	Number	Herewith
3.1	Amended and Restated Certificate of Incorporation.	S-1	03/21/2011	3.2		Amended and Restated Certificate of Incorporation.	S-1	03/21/2011	3.2


3.2	Certificate of Amendment to the Certificate of Incorporation.	8-K	06/09/2017	3.1		Certificate of Amendment to the Certificate of Incorporation.	8-K	06/09/2017	3.1


3.3	Amended and Restated Bylaws.	8-K	06/09/2017	3.2		Amended and Restated Bylaws.	8-K	06/09/2017	3.2


31.1	Certification of David Hagan, Chief Executive Officer, pursuant to Rule 13a-14(a) and 15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.				X	Certification of Michael Finley, Chief Executive Officer, pursuant to Rule 13a-14(a) and 15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.				X


31.2	Certification of Peter Hovenier, Chief Financial Officer, pursuant to Rule 13a-14(a) and 15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.				X	Certification of Peter Hovenier, Chief Financial Officer, pursuant to Rule 13a-14(a) and 15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.				X


32.1	Certifications of David Hagan, Chief Executive Officer, and Peter Hovenier, Chief Financial Officer, pursuant to 18 U.S.C. Section 1350, as adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.				X	Certifications of Michael Finley, Chief Executive Officer, and Peter Hovenier, Chief Financial Officer, pursuant to 18 U.S.C. Section 1350, as adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.				X

101						The following financial information from the Quarterly Report on Form 10-Q of Boingo Wireless, Inc. for the quarter ended September 30, 2019, formatted in iXBRL (Inline eXtensible Business Reporting Language): (i) Condensed Consolidated Balance Sheets at September 30, 2019 and December 31, 2018 for Boingo Wireless, Inc.; (ii) Condensed Consolidated Statements of Operations for the three and nine months ended September 30, 2019 and 2018 for Boingo Wireless, Inc.; (iii) Condensed Consolidated Statements of Comprehensive Income (Loss) for the three and nine months ended September 30, 2019 and 2018 for Boingo Wireless, Inc.; (iv) Condensed Consolidated Statements of Cash Flows for the nine months ended September 30, 2019 and 2018 for Boingo Wireless, Inc.; (v) Condensed Consolidated Statement of Stockholders’ Equity for Boingo Wireless, Inc.; and (vi) the Notes to Condensed Consolidated Financial Statements, tagged as blocks of text.

~~Exhibit~~		~~Incorporated by Reference~~			~~Filed~~
~~No.~~	~~Description~~	~~Form~~	~~Date~~	~~Number~~	~~Herewith~~
~~101~~	The following financial information from the Quarterly Report on Form 10-Q of Boingo Wireless, Inc. for the quarter ended September 30, 2017, formatted in XBRL (eXtensible Business Reporting Language): (i) Condensed Consolidated Balance Sheets at September 30, 2017 and December 31, 2016 for Boingo Wireless, Inc.; (ii) Condensed Consolidated Statements of Operations for the three and nine months ended September 30, 2017 and 2016 for Boingo Wireless, Inc.; (iii) Condensed Consolidated Statements of Comprehensive Income (Loss) for the three and nine months ended September 30, 2017 and 2016 for Boingo Wireless, Inc.; (iv) Condensed Consolidated Statements of Cash Flows for the nine months ended September 30, 2017 and 2016 for Boingo Wireless, Inc.; (v) Condensed Consolidated Statement of Stockholders’ Equity for Boingo Wireless, Inc.; and (vi) the Notes to Condensed Consolidated Financial Statements, tagged as blocks of text.				X

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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 thereunto duly authorized.

	BOINGO WIRELESS, INC.

Date: November 8, ~~2017~~2019	By:	/s/ ~~DAVID HAGAN~~MICHAEL FINLEY
		~~David Hagan~~Michael Finley
		~~Chairman~~Chief Executive Officer and Member of the Board ~~and Chief Executive Officer~~
		(Principal Executive Officer)

	BOINGO WIRELESS, INC.

Date: November 8, ~~2017~~2019	By:	/s/ PETER HOVENIER
		Peter Hovenier
		Chief Financial Officer
		(Principal Financial and Accounting Officer)

	September 30, 2017			December 31, 2016
Assets
Current assets:
Cash and cash equivalents	$	21,634		$	19,485
Accounts receivable, net	39,102			42,978
Prepaid expenses and other current assets	6,722			5,344
Total current assets	67,458			67,807
Property and equipment, net	261,010			250,765
Goodwill	42,403			42,403
Intangible assets, net	11,094			13,783
Other assets	6,580			6,223
Total assets	$	388,545		$	380,981

Liabilities and stockholders’ equity
Current liabilities:
Accounts payable	$	14,614		$	15,516
Accrued expenses and other liabilities	35,660			27,723
Deferred revenue	78,575			50,869
Current portion of long-term debt	875			1,094
Current portion of capital leases and notes payable	4,349			3,993
Total current liabilities	134,073			99,195
Deferred revenue, net of current portion	138,910			152,719
Long-term debt	5,219			15,875
Long-term portion of capital leases and notes payable	3,560			4,612
Deferred tax liabilities	3,513			3,208
Other liabilities	6,500			6,826
Total liabilities	291,775			282,435

Commitments and contingencies (Note 8)

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; 40,788 and 38,562 shares issued and outstanding at September 30, 2017 and December 31, 2016, respectively	4			4
Additional paid-in capital	227,454			211,275
Accumulated deficit	(130,948		)	(112,601		)
Accumulated other comprehensive loss	(812		)	(870		)
Total common stockholders’ equity	95,698			97,808
Non-controlling interests	1,072			738
Total stockholders’ equity	96,770			98,546
Total liabilities and stockholders’ equity	$	388,545		$	380,981

Period	Principal Payments
October 1, 2017 — December 31, 2017	$	219
January 1, 2018 — December 31, 2018	875
	$	1,094

Period	Amortization Expense
October 1, 2017 — December 31, 2017	$	61
January 1, 2018 — December 31, 2018	217
	$	278

	Number of Options (000’s)		Weighted Average Exercise Price		Weighted- Average Remaining Contract Life (years)	Aggregate Intrinsic Value
Outstanding at December 31, 2016	3,084		$	7.04	3.8	$	17,145
Exercised	(1,665	)	$	4.80
Canceled/forfeited	(20	)	$	6.69
Outstanding at September 30, 2017	1,399		$	9.70	4.0	$	16,318
Exercisable at September 30, 2017	1,385		$	9.74	4.0	$	16,105

	Number of Shares (000’s)		Weighted Average Grant-Date Fair Value
Non-vested at December 31, 2016	3,825		$	6.55
Granted	598		$	12.69
Vested	(815	)	$	7.36
Canceled/forfeited	(139	)	$	8.85
Non-vested at September 30, 2017	3,469		$	7.33