Document and Entity Information
Document and Entity Information - shares | 3 Months Ended | |
Mar. 31, 2018 | Apr. 30, 2018 | |
Document and Entity Information [Abstract] | ||
Document Type | 10-Q | |
Amendment Flag | false | |
Document Period End Date | Mar. 31, 2018 | |
Document Fiscal Year Focus | 2,018 | |
Document Fiscal Period Focus | Q1 | |
Entity Registrant Name | IPASS INC | |
Entity Central Index Key | 1,053,374 | |
Current Fiscal Year End Date | --12-31 | |
Entity Filer Category | Accelerated Filer | |
Entity Common Stock, Shares Outstanding | 72,745,276 |
Condensed Consolidated Balance
Condensed Consolidated Balance Sheets - USD ($) $ in Thousands | Mar. 31, 2018 | Dec. 31, 2017 |
Current assets: | ||
Cash and cash equivalents | $ 2,766 | $ 5,159 |
Accounts receivable, net of allowance for doubtful accounts of $79 and $151, respectively | 6,910 | 8,717 |
Prepaid expenses | 2,110 | 1,641 |
Other current assets | 587 | 712 |
Total current assets | 12,373 | 16,229 |
Property and equipment, net | 1,128 | 1,334 |
Other assets | 1,295 | 840 |
Total assets | 14,796 | 18,403 |
Current liabilities: | ||
Accounts payable | 9,734 | 9,044 |
Accrued liabilities | 3,841 | 3,734 |
Deferred revenue, short-term | 3,022 | 3,723 |
Total current liabilities | 16,597 | 16,501 |
Deferred revenue, long-term | 40 | 102 |
Other long-term liabilities | 362 | 1,009 |
Total liabilities | 16,999 | 17,612 |
Stockholders’ equity (deficit): | ||
Common stock | 73 | 71 |
Additional paid-in capital | 227,333 | 226,490 |
Accumulated deficit | (229,609) | (225,770) |
Total stockholders’ equity (deficit) | (2,203) | 791 |
Total liabilities and stockholders’ equity (deficit) | $ 14,796 | $ 18,403 |
Condensed Consolidated Balance3
Condensed Consolidated Balance Sheets (Parenthetical) - USD ($) $ in Thousands | Mar. 31, 2018 | Dec. 31, 2017 |
Statement of Financial Position [Abstract] | ||
Accounts receivable, allowance for doubtful accounts | $ 113 | $ 142 |
Condensed Consolidated Statemen
Condensed Consolidated Statements of Operations and Comprehensive Income (Loss) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2018 | Mar. 31, 2017 | |
Statement of Comprehensive Income [Abstract] | ||
Revenue | $ 11,427 | $ 14,286 |
Cost of revenue and operating expenses: | ||
Network access costs | 6,844 | 9,559 |
Network operations | 1,384 | 1,692 |
Research and development | 1,953 | 1,974 |
Sales and marketing | 2,469 | 2,454 |
General and administrative | 2,589 | 2,772 |
Total cost of revenue and operating expenses | 15,239 | 18,451 |
Operating loss | (3,812) | (4,165) |
Interest income, net | 7 | 14 |
Foreign exchange loss, net | (143) | (49) |
Loss before provision for income taxes | (3,948) | (4,200) |
Provision for income taxes | 65 | 115 |
Net loss | (4,013) | (4,315) |
Comprehensive loss | $ (4,013) | $ (4,315) |
Net loss per share - basic and diluted | ||
Total net income (loss) per share (USD per share) | $ (0.06) | $ (0.07) |
Weighted average shares outstanding - basic and diluted | 69,853,058 | 65,567,707 |
Condensed Consolidated Stateme5
Condensed Consolidated Statements of Cash Flows - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2018 | Mar. 31, 2017 | |
Cash flows from operating activities: | ||
Net loss | $ (4,013) | $ (4,315) |
Adjustments to reconcile net loss to net cash used in operating activities: | ||
Stock-based compensation expense | 344 | 350 |
Depreciation and amortization | 198 | 454 |
Provision for (recovery of) doubtful accounts | (67) | 39 |
Changes in operating assets and liabilities: | ||
Accounts receivable | 1,874 | 1,388 |
Prepaid expenses and other current assets | (189) | (232) |
Other assets | (344) | (21) |
Accounts payable | 690 | (435) |
Accrued liabilities | 69 | (265) |
Deferred revenue | (842) | 738 |
Other liabilities | (647) | (89) |
Net cash used in operating activities | (2,927) | (2,388) |
Cash flows from investing activities: | ||
Purchases of property and equipment | (5) | (222) |
Net cash used in investing activities | (5) | (222) |
Cash flows from financing activities: | ||
Net proceeds from issuance of common stock | 0 | 10 |
Proceeds from common stock purchase agreement | 539 | 0 |
Net cash provided by financing activities | 539 | 10 |
Net decrease in cash and cash equivalents | (2,393) | (2,600) |
Cash and cash equivalents at beginning of period | 5,159 | 16,072 |
Cash and cash equivalents at end of period | 2,766 | 13,472 |
Supplemental disclosures of cash flow information: | ||
Net cash paid for taxes | 47 | 46 |
Accrued amounts for acquisition of property and equipment | 0 | 73 |
Accrued issuance cost of common stock purchase agreement | $ 38 | $ 0 |
Basis of Presentation and Summa
Basis of Presentation and Summary of Significant Accounting Policies | 3 Months Ended |
Mar. 31, 2018 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Basis of Presentation and Summary of Significant Accounting Policies | Basis of Presentation The condensed consolidated financial statements include the accounts of iPass Inc. and its wholly owned subsidiaries ("iPass" and the “Company”). The condensed consolidated financial statements have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission. Certain information and note disclosures normally included in annual financial statements prepared in accordance with U.S. generally accepted accounting principles ("GAAP") have been condensed or omitted pursuant to those rules and regulations, although the Company believes that the disclosures made are adequate to make the information not misleading. The interim financial information is unaudited but reflects all normal adjustments that are, in the opinion of management, necessary to provide a fair presentation for the interim periods presented. The condensed consolidated financial statements as of and for the year ended December 31, 2017, were derived from audited financial statements. This interim financial information should be read in conjunction with the consolidated financial statements and the notes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2017. The results of operations for the three months ended March 31, 2018 , are not necessarily indicative of the operating results for the full fiscal year or any future periods. The preparation of the condensed consolidated financial statements in conformity with GAAP requires management to make estimates and judgments that affect the amounts reported in the condensed consolidated financial statements and accompanying notes. Actual results that the Company experiences may differ materially from those estimates. Estimates are used for, but not limited to, the valuation of accounts receivables, other long-lived assets, deferred commissions, recognition of revenue and deferred revenue, network access costs, stock-based compensation, legal contingencies, and income taxes. The Company reports total comprehensive net loss in a single continuous financial statement within its condensed consolidated statements of operations and comprehensive loss. The Company’s comprehensive net loss is equivalent to its total net loss because the Company does not have any transactions that are recorded through other comprehensive loss. Going Concern The Company has historically relied on existing cash and cash equivalents and sales of equity financing for its liquidity needs. As of March 31, 2018, the Company had $2.8 million in cash and cash equivalents. In November 2017, the Company entered into a Common Stock Purchase Agreement ("CSPA") with Aspire Capital Fund, LLC, ("Aspire Capital"). The agreement allows the Company to sell up to $10.0 million worth of common stock to Aspire Capital over a 24 month period. Upon execution of the agreement on November 16, 2017, Aspire Capital purchased from the Company 1,867,692 shares of common stock for a total purchase price of $1.0 million . In addition, the Company issued 840,461 commitment shares to Aspire Capital. Beyond the initial purchase, the Company, at its discretion, has the right to direct Aspire Capital to purchase additional shares up to a daily maximum of 200,000 shares. The Company and Aspire Capital may mutually agree to increase this by an additional 2,000,000 shares in a given business day. However, the total number of shares issued to Aspire Capital cannot exceed 13,341,750 , which represents 19.99% of the Company's total outstanding shares of common stock at the signing of the CSPA. As of March 31, 2018, the Company has issued a total of 4,308,153 shares to Aspire Capital for a gross amount of $1.7 million . The Company cannot sell its common stock under this agreement if the closing price is $0.25 per share or lower. The accompanying condensed consolidated financial statements were prepared on a going concern basis in accordance with GAAP. The going concern basis assumes that the Company will continue operations for the next twelve months from the date the condensed consolidated financial statements are issued and will be able to realize its assets and discharge its liabilities and commitments in the normal course of business. The condensed consolidated financial statements do not include any adjustments to reflect the possible future effects that may result from the Company's inability to continue as a going concern. The Company's history of losses, limited liquidity, and other factors raise substantial doubt about the Company's ability to continue as a going concern. The Company may require additional financing, through either debt or equity arrangements. Equity and debt financing, however, might not be available when needed or, if available, might not be available on terms satisfactory to the Company. If the Company raises additional funds through equity financing, stockholders will experience dilution. Debt financing, if available, may involve covenants restricting operations or the Company's ability to incur additional debt. If the Company is unable to execute its business plan or obtain adequate financing and satisfactory financing terms, its ability to continue to support business growth and to respond to business challenges would be significantly limited as the Company may have to delay, reduce the scope of or eliminate some or all of its initiatives, or reduce expenses which would harm operating results. Recent Accounting Pronouncements In December 2017, the SEC issued Staff Accounting Bulletin (“SAB”) 118 to address the application of GAAP in situations in which a registrant does not have the necessary information available, prepared, or analyzed (including computations) in reasonable detail to complete the accounting for certain income tax effects of the Tax Cuts and Jobs Act (the “Act”) which was signed into law on December 22, 2017. In March 2018, the Financial Accounting Standards Board ("FASB") issued Accounting Standard Update ("ASU") 2018-05, which amended Accounting Standards Codification ("ASC") 740 to incorporate the requirements of SAB 118. The Company recognized the provisional tax impacts of the Act in the fourth quarter of 2017. During first quarter of 2018, the Company did not receive any additional information regarding these provisional calculations. As a result, the Company continues to anticipate finalizing its analysis in connection with the completion of the Company's tax return for 2017 to be filed in 2018. In February 2016, the FASB issued ASU 2016-02, Leases (Topic 842) . ASU 2016-02 impacts any entity that enters a lease with some specified scope exceptions. The guidance updates and supersedes Topic 840, Leases. For public entities, ASU 2016-02 is effective for fiscal years, and interim periods with those years, beginning after December 15, 2018,and early adoption is permitted. The Company is evaluating the effect that ASU 2014-09 will have on the Company's consolidated financial statements and related disclosures. Recently Adopted Accounting Pronouncements In May 2014, the FASB issued ASU 2014-09, Revenue from Contracts with Customers ("Topic 606"). Topic 606 supersedes the revenue recognition requirements in ASC Topic 605, Revenue Recognition , and requires entities to recognize revenue through the application of a five-step model, which includes identification of the contract, identification of the performance obligations, determination of the transaction price, allocation of the transaction price to the performance obligations and recognition of revenue as the entity satisfies the performance obligations. On January 1, 2018, the Company adopted Topic 606 using the modified retrospective method applied to those contracts which were not completed as of January 1, 2018. Results for reporting periods beginning after January 1, 2018, are presented under Topic 606, while prior period amounts are not adjusted and continue to be reported in accordance with our historic accounting under ASC Topic 605. The Company recorded a net decrease to opening accumulated deficit of $0.2 million as of January 1, 2018, due to the cumulative impact of adopting Topic 606. The impact primarily related to the capitalization of costs to obtain customer contracts of $0.3 million, specifically commissions, offset by $0.1 million from the deferral of revenue from certain arrangements. There was no impact to other items on the condensed consolidated balance sheets. The adoption of Topic 606 had a less than $0.1 million impact on the Company’s condensed consolidated statements of operations and comprehensive loss and to each of the line items therein. The costs associated with obtaining a customer contract were previously expensed in the period they were incurred. Under Topic 606, these payments have been deferred on our condensed consolidated balance sheets as other current assets and other assets and amortized over the expected life of the customer contract. Previously, the revenue from certain arrangements was recognized on a straight-line basis on an estimated period of time it was expected end users would activate the service to begin their twelve month trial period. Under Topic 606, the Company will recognize revenue in proportion to end user activation of the twelve month trial period based on expected or historical experience. Revenue Recognition Revenue is recognized when control of the promised goods or services is transferred to the Company's customers in an amount that reflects the consideration the Company expects to be entitled to in exchange for those goods or services. The majority of the Company's revenue is derived from monthly recurring arrangements that provide the Company's customers access to the Company's WiFi network footprint. Other sources of revenue include professional services and Veri-Fi TM big data analytics. The Company applies the following five steps to recognize revenue: 1. Identify the contract with a customer: The terms and conditions of the Company's contracts are considered to identify contracts under Topic 606. The Company identifies a contract with a customer once the contract is approved, details each party's rights regarding the services to be transferred, specifies the payment terms for the services, the Company has determined the customer has the ability and intent to pay, and the contract has commercial substance. Typically, the terms of contracts with customers is twelve months. Payment terms less than 90 days are not considered a significant financing component. 2. Identify the performance obligations in the contract: Performance obligations in contracts are identified based on the services that will be transferred to the customer that are both capable of being distinct, whereby the customer can benefit from the service either on its own or together with other resources that are readily available from third parties or from the Company, and are distinct in the context of the contract, whereby the transfer of the services is separately identifiable from other promises in the contract. The most significant performance obligations identified by the Company consist of 1) access to the Company's Wi-Fi network footprint via the iPass SmartConnect TM application (which forms a monthly series of performance obligations together with technical support and unspecified upgrades), 2) professional services and 3) Veri-Fi big data analytics. As the Company's product offerings continue to evolve, the Company could identify further performance obligations based on the terms of the contract. 3. Determine the transaction price: The transaction price is based on the consideration to which the Company expects to be entitled in exchange for transferring services to the customer. The Company concludes that because fees are consistently priced throughout the contract on a monthly basis, there is no need to allocate potential variable consideration. None of the Company's contracts contain a significant financing component. 4. Allocate the transaction price to performance obligations in the contract: If the contract contains a single performance obligation, the entire transaction price is allocated to that performance obligation. Contracts that contain multiple performance obligations require an allocation of the transaction price to each performance obligation based on a relative standalone selling price ("SSP"). 5. Recognize revenue when the performance obligation is satisfied: Revenue is recognized at the time the related performance obligation is satisfied by transferring the promised services to a customer. The Company recognizes revenue when the Company transfers control of the services to the customers for an amount that reflects the consideration that the Company expects to receive in exchange for those services. Typically, access to the Company's Wi-Fi network footprint is recognized over time, such as over a month or quarter, and at a point in time for when professional services or Veri-Fi big data analytics obligations are satisfied. Costs to Obtain a Customer Contract The Company capitalizes sales commissions that are incremental to the acquisition of contracts with customers. These costs are recorded as other current assets and other assets on our condensed consolidated balance sheets. The Company determines whether costs should be deferred based on sales compensation plans and agreements when the costs are in fact incremental and would not have occurred absent the customer contract. The deferred commission amounts are deemed recoverable through future revenue streams and positive margins. Deferred commissions are amortized on a straight-line basis over the expected customer contract life and included in sales and marketing expense in the condensed consolidated statements of operations and comprehensive loss. As of March 31, 2018, the estimated customer contract life is deemed to approximate three years. The Company periodically reviews these deferred costs to determine whether events or changes in circumstances have occurred that could impact the period of benefit of these deferred sales commissions. There were no material impairment losses for deferred sales commissions through March 31, 2018. |
Financial Instruments and Fair
Financial Instruments and Fair Value | 3 Months Ended |
Mar. 31, 2018 | |
Fair Value Disclosures [Abstract] | |
Financial Instruments and Fair Value | Financial Instruments and Fair Value Fair value is the price that would be received from selling an asset or paid to transfer a liability in an orderly transaction in the principal or most advantageous market 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, the Company considers assumptions that market participants would use when pricing the asset or liability. Fair Value Hierarchy The three levels of inputs that may be used to measure fair value are as follows: • Level 1—Quoted prices in active markets for identical assets or liabilities; • Level 2—Inputs other than Level 1 that are observable, either directly or indirectly, such as quoted prices for similar assets or liabilities, quoted prices in markets that are not active, or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities; and • 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 recurring fair value measurements of these financial assets (excluding cash) were determined using the following inputs at March 31, 2018 , and December 31, 2017 , respectively: As of March 31, 2018 As of December 31, 2017 Fair Value Measured Using Total Balance Fair Value Measured Using Total Balance Level 1 Level 2 Level 3 Level 1 Level 2 Level 3 (In thousands) Financial assets Money market funds (1) $ 2,035 $ — $ — $ 2,035 $ 4,175 $ — $ — $ 4,175 Total financial assets $ 2,035 $ — $ — $ 2,035 $ 4,175 $ — $ — $ 4,175 (1) Held in cash and cash equivalents on the Company’s condensed consolidated balance sheets. There were no transfers between Levels 1, 2, and 3 from December 31, 2017 through March 31, 2018 . As of March 31, 2018 and December 31, 2017 , the carrying amounts of accounts receivable, accounts payable, and accrued liabilities approximated fair value due to their short maturities. |
Property and Equipment, Net
Property and Equipment, Net | 3 Months Ended |
Mar. 31, 2018 | |
Property, Plant and Equipment [Abstract] | |
Property and Equipment, Net | Property and Equipment, net Property and equipment, net, consisted of the following: March 31, December 31, 2017 (In thousands) Equipment $ 10,701 $ 10,698 Furniture and fixtures 246 246 Computer software 10,724 10,723 Construction in progress — 36 Leasehold improvements 483 483 22,154 22,186 Less: Accumulated depreciation and amortization (21,026 ) (20,852 ) Property and equipment, net $ 1,128 $ 1,334 Depreciation expense was approximately $0.2 million and $0.5 million for the three months ended March 31, 2018 and 2017, respectively. During each of the three months ended March 31, 2018 and 2017, the Company retired less than $0.1 million in gross property and equipment. |
Other Assets Other Assets (Note
Other Assets Other Assets (Notes) | 3 Months Ended |
Mar. 31, 2018 | |
Other Assets [Abstract] | |
Other Assets | Note 4. Other Assets Other assets (non-current) consisted of the following: March 31, December 31, 2017 (In thousands) Deposits $ 501 $ 503 Deferred financing 370 — Long-term deferred tax asset, net 209 209 Long-term tax receivable 128 128 Deferred commissions, long-term 87 — $ 1,295 $ 840 |
Accrued Liabilities
Accrued Liabilities | 3 Months Ended |
Mar. 31, 2018 | |
Payables and Accruals [Abstract] | |
Accrued Liabilities | Accrued Liabilities Accrued liabilities consisted of the following: March 31, December 31, 2017 (In thousands) Accrued tax liabilities $ 876 $ 886 Accrued bonus, commissions and other employee benefits 575 522 Amounts due to customers 788 962 Legal fee accruals 281 492 Sales tax liability 289 — Other accrued liabilities 1,032 872 $ 3,841 $ 3,734 |
Commitments and Contingencies
Commitments and Contingencies | 3 Months Ended |
Mar. 31, 2018 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | Commitments and Contingencies Lease and Purchase Commitments The Company leases facilities under operating leases that expire at various dates through October 2020. Future minimum lease payments under these operating leases as of March 31, 2018, are as follows: Year Operating Leases (In thousands) Remainder of 2018 $ 1,280 2019 1,248 2020 926 $ 3,454 The Company has contracts with certain network service and other infrastructure providers which have minimum purchase commitments that expire on various dates through December 2019 . Future minimum purchase commitments under these agreements as of March 31, 2018, are as follows: Year Minimum Purchase Commitments (In thousands) Remainder of 2018 $ 9,142 2019 1,225 $ 10,367 Unclaimed Property Compliance The Company has received notices from several states stating that they have appointed an agent to conduct an examination of the books and records of the Company to determine whether it has complied with state unclaimed property laws. In addition to seeking the turnover of unclaimed property subject to escheat laws, the states may seek interest, penalties, costs of examinations, and other relief. If the potential loss from any payment claim is considered probable and the amount or the range of the loss can be estimated, the Company accrues a liability for the estimated loss. While the Company is not able to estimate the possible payment, if any, it continues to work through this matter with the states and their appointed agents. Legal Proceedings The Company is involved in legal proceedings and claims arising in the ordinary course of business. While there can be no assurances as to the ultimate outcome of any litigation involving the Company, management does not believe any such pending legal proceeding or claim will result in a judgment or settlement that would have a material adverse effect on the Company’s financial position, results of operations or cash flows. In the ordinary course of business, the Company may provide indemnifications of varying scope and terms to customers, business partners, and other parties with respect to certain matters, including, but not limited to, losses arising out of breach of such agreements, services to be provided by the Company, or from intellectual property infringement claims made by third-parties. Certain indemnification agreements may not be subject to maximum loss clauses. If the potential loss from any indemnification claim is considered probable and the amount or the range of the loss can be estimated, the Company accrues a liability for the estimated loss. To date, claims under such indemnification provisions have not been significant. |
Net Loss Per Share
Net Loss Per Share | 3 Months Ended |
Mar. 31, 2018 | |
Earnings Per Share [Abstract] | |
Net Loss Per Share | Net Loss Per Share Basic net loss per common share is computed by dividing net loss available to common shareholders by the weighted average number of common shares outstanding during the period. Diluted net loss per common share is computed by dividing net loss available to common shareholders by the weighted average number of common shares outstanding plus dilutive potential common shares as determined using the treasury stock method for outstanding stock options, restricted stock-based awards and shares issuable under the employee stock purchase plan, unless the result of adding such shares would be anti-dilutive. The following weighted average potential shares of common stock have been excluded from the computation of diluted net loss per share because the effect of including these shares would have been anti-dilutive: Three Months Ended 2018 2017 Options to purchase common stock 9,204,473 4,455,596 Restricted stock awards, including participating securities 199,165 215,831 Total 9,403,638 4,671,427 |
Segment and Geographical Inform
Segment and Geographical Information | 3 Months Ended |
Mar. 31, 2018 | |
Segment Reporting [Abstract] | |
Segment and Geographical Information | Segment and Geographical Information The Company has one reportable operating segment, Mobile Connectivity Services. The Company's Mobile Connectivity Services offer a standard cloud-based solution allowing the Company's customers and their users access to the Company's global Wi-Fi network. The following table presents total Company revenue by country or by geographical region: Three Months Ended March 31, 2018 2017 United States 48 % 43 % Europe, Middle East and Africa 45 % 47 % Asia Pacific 4 % 8 % Rest of the World 3 % 2 % No individual country, except for the United States and Germany accounted for 10% or more of total revenues for the three months ended March 31, 2018 and 2017. Revenues in Germany accounted for 15% of total revenue, for both 2018 and 2017. One customer, a channel reseller, represented 11% of total revenues for the three months ended March 31, 2018 and 2017. |
Subsequent Events
Subsequent Events | 3 Months Ended |
Mar. 31, 2018 | |
Subsequent Events [Abstract] | |
Subsequent Events | Subsequent Events From March 31, 2018, to the date of the filing of this Form 10-Q, the Company sold to Aspire Capital a total of 2,400,000 shares of common stock for a total of $0.8 million for an average per share purchase price of $0.33 . Management has evaluated events subsequent to March 31, 2018, through the date the filing of this Form 10-Q for other transactions and events that may require adjustment of and/or disclosure in such financial statements and noted no additional significant subsequent events that require disclosure. |
Basis of Presentation and Sum15
Basis of Presentation and Summary of Significant Accounting Policies (Policies) | 3 Months Ended |
Mar. 31, 2018 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Recent Accounting Pronouncements | Recently Adopted Accounting Pronouncements In May 2014, the FASB issued ASU 2014-09, Revenue from Contracts with Customers ("Topic 606"). Topic 606 supersedes the revenue recognition requirements in ASC Topic 605, Revenue Recognition , and requires entities to recognize revenue through the application of a five-step model, which includes identification of the contract, identification of the performance obligations, determination of the transaction price, allocation of the transaction price to the performance obligations and recognition of revenue as the entity satisfies the performance obligations. On January 1, 2018, the Company adopted Topic 606 using the modified retrospective method applied to those contracts which were not completed as of January 1, 2018. Results for reporting periods beginning after January 1, 2018, are presented under Topic 606, while prior period amounts are not adjusted and continue to be reported in accordance with our historic accounting under ASC Topic 605. The Company recorded a net decrease to opening accumulated deficit of $0.2 million as of January 1, 2018, due to the cumulative impact of adopting Topic 606. The impact primarily related to the capitalization of costs to obtain customer contracts of $0.3 million, specifically commissions, offset by $0.1 million from the deferral of revenue from certain arrangements. There was no impact to other items on the condensed consolidated balance sheets. The adoption of Topic 606 had a less than $0.1 million impact on the Company’s condensed consolidated statements of operations and comprehensive loss and to each of the line items therein. The costs associated with obtaining a customer contract were previously expensed in the period they were incurred. Under Topic 606, these payments have been deferred on our condensed consolidated balance sheets as other current assets and other assets and amortized over the expected life of the customer contract. Previously, the revenue from certain arrangements was recognized on a straight-line basis on an estimated period of time it was expected end users would activate the service to begin their twelve month trial period. Under Topic 606, the Company will recognize revenue in proportion to end user activation of the twelve month trial period based on expected or historical experience. Revenue Recognition Revenue is recognized when control of the promised goods or services is transferred to the Company's customers in an amount that reflects the consideration the Company expects to be entitled to in exchange for those goods or services. The majority of the Company's revenue is derived from monthly recurring arrangements that provide the Company's customers access to the Company's WiFi network footprint. Other sources of revenue include professional services and Veri-Fi TM big data analytics. The Company applies the following five steps to recognize revenue: 1. Identify the contract with a customer: The terms and conditions of the Company's contracts are considered to identify contracts under Topic 606. The Company identifies a contract with a customer once the contract is approved, details each party's rights regarding the services to be transferred, specifies the payment terms for the services, the Company has determined the customer has the ability and intent to pay, and the contract has commercial substance. Typically, the terms of contracts with customers is twelve months. Payment terms less than 90 days are not considered a significant financing component. 2. Identify the performance obligations in the contract: Performance obligations in contracts are identified based on the services that will be transferred to the customer that are both capable of being distinct, whereby the customer can benefit from the service either on its own or together with other resources that are readily available from third parties or from the Company, and are distinct in the context of the contract, whereby the transfer of the services is separately identifiable from other promises in the contract. The most significant performance obligations identified by the Company consist of 1) access to the Company's Wi-Fi network footprint via the iPass SmartConnect TM application (which forms a monthly series of performance obligations together with technical support and unspecified upgrades), 2) professional services and 3) Veri-Fi big data analytics. As the Company's product offerings continue to evolve, the Company could identify further performance obligations based on the terms of the contract. 3. Determine the transaction price: The transaction price is based on the consideration to which the Company expects to be entitled in exchange for transferring services to the customer. The Company concludes that because fees are consistently priced throughout the contract on a monthly basis, there is no need to allocate potential variable consideration. None of the Company's contracts contain a significant financing component. 4. Allocate the transaction price to performance obligations in the contract: If the contract contains a single performance obligation, the entire transaction price is allocated to that performance obligation. Contracts that contain multiple performance obligations require an allocation of the transaction price to each performance obligation based on a relative standalone selling price ("SSP"). 5. Recognize revenue when the performance obligation is satisfied: Revenue is recognized at the time the related performance obligation is satisfied by transferring the promised services to a customer. The Company recognizes revenue when the Company transfers control of the services to the customers for an amount that reflects the consideration that the Company expects to receive in exchange for those services. Typically, access to the Company's Wi-Fi network footprint is recognized over time, such as over a month or quarter, and at a point in time for when professional services or Veri-Fi big data analytics obligations are satisfied. Costs to Obtain a Customer Contract The Company capitalizes sales commissions that are incremental to the acquisition of contracts with customers. These costs are recorded as other current assets and other assets on our condensed consolidated balance sheets. The Company determines whether costs should be deferred based on sales compensation plans and agreements when the costs are in fact incremental and would not have occurred absent the customer contract. The deferred commission amounts are deemed recoverable through future revenue streams and positive margins. Deferred commissions are amortized on a straight-line basis over the expected customer contract life and included in sales and marketing expense in the condensed consolidated statements of operations and comprehensive loss. As of March 31, 2018, the estimated customer contract life is deemed to approximate three years. The Company periodically reviews these deferred costs to determine whether events or changes in circumstances have occurred that could impact the period of benefit of these deferred sales commissions. There were no material impairment losses for deferred sales commissions through March 31, 2018. |
Financial Instruments and Fai16
Financial Instruments and Fair Value (Tables) | 3 Months Ended |
Mar. 31, 2018 | |
Fair Value Disclosures [Abstract] | |
Fair Value of Financial Assets (Excluding Cash) and Financial Liabilities | The recurring fair value measurements of these financial assets (excluding cash) were determined using the following inputs at March 31, 2018 , and December 31, 2017 , respectively: As of March 31, 2018 As of December 31, 2017 Fair Value Measured Using Total Balance Fair Value Measured Using Total Balance Level 1 Level 2 Level 3 Level 1 Level 2 Level 3 (In thousands) Financial assets Money market funds (1) $ 2,035 $ — $ — $ 2,035 $ 4,175 $ — $ — $ 4,175 Total financial assets $ 2,035 $ — $ — $ 2,035 $ 4,175 $ — $ — $ 4,175 (1) Held in cash and cash equivalents on the Company’s condensed consolidated balance sheets. |
Property and Equipment, Net (Ta
Property and Equipment, Net (Tables) | 3 Months Ended |
Mar. 31, 2018 | |
Property, Plant and Equipment [Abstract] | |
Components of Property and Equipment, Net | Property and equipment, net, consisted of the following: March 31, December 31, 2017 (In thousands) Equipment $ 10,701 $ 10,698 Furniture and fixtures 246 246 Computer software 10,724 10,723 Construction in progress — 36 Leasehold improvements 483 483 22,154 22,186 Less: Accumulated depreciation and amortization (21,026 ) (20,852 ) Property and equipment, net $ 1,128 $ 1,334 |
Other Assets (Tables)
Other Assets (Tables) | 3 Months Ended |
Mar. 31, 2018 | |
Other Assets [Abstract] | |
Components of other assets | Note 4. Other Assets Other assets (non-current) consisted of the following: March 31, December 31, 2017 (In thousands) Deposits $ 501 $ 503 Deferred financing 370 — Long-term deferred tax asset, net 209 209 Long-term tax receivable 128 128 Deferred commissions, long-term 87 — $ 1,295 $ 840 |
Accrued Liabilities (Tables)
Accrued Liabilities (Tables) | 3 Months Ended |
Mar. 31, 2018 | |
Payables and Accruals [Abstract] | |
Schedule of Accrued Liabilities | Accrued liabilities consisted of the following: March 31, December 31, 2017 (In thousands) Accrued tax liabilities $ 876 $ 886 Accrued bonus, commissions and other employee benefits 575 522 Amounts due to customers 788 962 Legal fee accruals 281 492 Sales tax liability 289 — Other accrued liabilities 1,032 872 $ 3,841 $ 3,734 |
Commitments and Contingencies (
Commitments and Contingencies (Tables) | 3 Months Ended |
Mar. 31, 2018 | |
Commitments and Contingencies Disclosure [Abstract] | |
Schedule of Future Minimum Lease Payments | The Company leases facilities under operating leases that expire at various dates through October 2020. Future minimum lease payments under these operating leases as of March 31, 2018, are as follows: Year Operating Leases (In thousands) Remainder of 2018 $ 1,280 2019 1,248 2020 926 $ 3,454 |
Schedule of Future Minimum Purchase Commitments | Future minimum purchase commitments under these agreements as of March 31, 2018, are as follows: Year Minimum Purchase Commitments (In thousands) Remainder of 2018 $ 9,142 2019 1,225 $ 10,367 |
Net Loss Per Share (Tables)
Net Loss Per Share (Tables) | 3 Months Ended |
Mar. 31, 2018 | |
Earnings Per Share [Abstract] | |
Schedule of Anti-dilutive Shares Excluded from Computation of Diluted Net Loss Per Share | The following weighted average potential shares of common stock have been excluded from the computation of diluted net loss per share because the effect of including these shares would have been anti-dilutive: Three Months Ended 2018 2017 Options to purchase common stock 9,204,473 4,455,596 Restricted stock awards, including participating securities 199,165 215,831 Total 9,403,638 4,671,427 |
Segment and Geographical Info22
Segment and Geographical Information (Tables) | 3 Months Ended |
Mar. 31, 2018 | |
Segment Reporting [Abstract] | |
Summary of Revenue by Geographical Region | Three Months Ended March 31, 2018 2017 United States 48 % 43 % Europe, Middle East and Africa 45 % 47 % Asia Pacific 4 % 8 % Rest of the World 3 % 2 % |
Basis of Presentation and Sum23
Basis of Presentation and Summary of Significant Accounting Policies (Details Textual) - USD ($) $ / shares in Units, $ in Thousands | Nov. 17, 2017 | Mar. 31, 2018 | Dec. 31, 2017 | Mar. 31, 2017 | Dec. 31, 2016 |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |||||
Cash and cash equivalents | $ 2,766 | $ 5,159 | $ 13,472 | $ 16,072 | |
Subsidiary, Sale of Stock [Line Items] | |||||
Minimum stock price for shares to be sold under agreement (in usd per share) | $ 0.25 | ||||
CSPA | |||||
Subsidiary, Sale of Stock [Line Items] | |||||
Authorized transaction amount | $ 10,000 | ||||
Transaction term | 24 months | ||||
Shares sold (in shares) | 1,867,692 | ||||
Proceeds from transaction | $ 1,000 | ||||
Commitments [Member] | |||||
Subsidiary, Sale of Stock [Line Items] | |||||
Shares sold (in shares) | 840,461 | ||||
Commitment Shares | |||||
Subsidiary, Sale of Stock [Line Items] | |||||
Sale of stock, maximum number of shares to be sold | 13,341,750 | ||||
Additional Shares | |||||
Subsidiary, Sale of Stock [Line Items] | |||||
Shares sold (in shares) | 4,308,153 | ||||
Proceeds from transaction | $ 1,700 | ||||
Shares authorized on daily basis (in shares) | 200,000 | ||||
Additional shares authorized on daily basis (in shares) | 2,000,000 | ||||
Percentage of total outstanding shares | 19.99% |
Financial Instruments and Fai24
Financial Instruments and Fair Value - Fair Value of Financial Assets (Excluding Cash) and Financial Liabilities (Detail) - USD ($) $ in Thousands | Mar. 31, 2018 | Dec. 31, 2017 | |
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||
Total financial assets | $ 2,035 | $ 4,175 | |
Money market funds | |||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||
Total financial assets | [1] | 2,035 | 4,175 |
Fair Value Measurements Recurring | Level 1 | |||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||
Total financial assets | 2,035 | 4,175 | |
Fair Value Measurements Recurring | Level 1 | Money market funds | |||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||
Total financial assets | [1] | 2,035 | 4,175 |
Fair Value Measurements Recurring | Level 2 | |||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||
Total financial assets | 0 | 0 | |
Fair Value Measurements Recurring | Level 2 | Money market funds | |||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||
Total financial assets | [1] | 0 | 0 |
Fair Value Measurements Recurring | Level 3 | |||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||
Total financial assets | 0 | 0 | |
Fair Value Measurements Recurring | Level 3 | Money market funds | |||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||
Total financial assets | [1] | $ 0 | $ 0 |
[1] | Held in cash and cash equivalents on the Company’s condensed consolidated balance sheets. |
Financial Instruments and Fai25
Financial Instruments and Fair Value - Narrative (Detail) | 3 Months Ended |
Mar. 31, 2018USD ($) | |
Fair Value Disclosures [Abstract] | |
Transfers between Levels 1, 2, and 3 | $ 0 |
Property and Equipment, Net - C
Property and Equipment, Net - Components of Property and Equipment, Net (Detail) - USD ($) $ in Thousands | Mar. 31, 2018 | Dec. 31, 2017 |
Property, Plant and Equipment [Abstract] | ||
Equipment | $ 10,701 | $ 10,698 |
Furniture and fixtures | 246 | 246 |
Computer software | 10,724 | 10,723 |
Construction in progress | 0 | 36 |
Leasehold improvements | 483 | 483 |
Property plant and equipment, gross | 22,154 | 22,186 |
Less: Accumulated depreciation and amortization | (21,026) | (20,852) |
Property and equipment, net | $ 1,128 | $ 1,334 |
Property and Equipment, Net - N
Property and Equipment, Net - Narrative (Detail) - USD ($) $ in Millions | 3 Months Ended | |
Mar. 31, 2018 | Mar. 31, 2017 | |
Property, Plant and Equipment [Line Items] | ||
Property and equipment, wrote-off (less than 0.1 million) | $ 0.1 | $ 0.1 |
Continuing Operations | ||
Property, Plant and Equipment [Line Items] | ||
Depreciation expense | $ 0.2 | $ 0.5 |
Other Assets (Details)
Other Assets (Details) - USD ($) $ in Thousands | Mar. 31, 2018 | Dec. 31, 2017 |
Components of other assets | ||
Deposits | $ 501 | $ 503 |
Other Deferred Costs, Net | 370 | |
Long-term deferred tax assets, net | 209 | 209 |
Long-term tax receivable | 128 | 128 |
Deferred Sales Commission | 87 | 0 |
Other Assets, Noncurrent | $ 1,295 | $ 840 |
Accrued Liabilities - Schedule
Accrued Liabilities - Schedule of Accrued Liabilities (Detail) - USD ($) $ in Thousands | Mar. 31, 2018 | Dec. 31, 2017 |
Payables and Accruals [Abstract] | ||
Accrued tax liabilities | $ 876 | $ 886 |
Accrued bonus, commissions and other employee benefits | 575 | 522 |
Amounts due to customers | 788 | 962 |
Legal fee accruals | 281 | 492 |
Sales tax liability | 289 | 0 |
Other accrued liabilities | 1,032 | 872 |
Accrued liabilities | $ 3,841 | $ 3,734 |
Commitments and Contingencies -
Commitments and Contingencies - Narrative (Detail) | 3 Months Ended |
Mar. 31, 2018 | |
Commitments and Contingencies Disclosure [Abstract] | |
Purchase commitments expiration period | expire on various dates through December 2019 |
Commitments and Contingencies31
Commitments and Contingencies - Schedule of Future Minimum Lease Payments (Detail) $ in Thousands | Mar. 31, 2018USD ($) |
Commitments and Contingencies Disclosure [Abstract] | |
Remainder of 2018 | $ 1,280 |
2,019 | 1,248 |
2,020 | 926 |
Operating leases, future minimum payments | $ 3,454 |
Commitments and Contingencies32
Commitments and Contingencies - Schedule of Future Minimum Purchase Commitments (Detail) $ in Thousands | Mar. 31, 2018USD ($) |
Commitments and Contingencies Disclosure [Abstract] | |
Remainder of 2018 | $ 9,142 |
2,019 | 1,225 |
Future minimum purchase commitments | $ 10,367 |
Net Loss Per Share - Schedule o
Net Loss Per Share - Schedule of Anti-Dilutive Shares Excluded from Computation of Diluted Net Loss Per Share (Detail) - shares | 3 Months Ended | |
Mar. 31, 2018 | Mar. 31, 2017 | |
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||
Total | 9,403,638 | 4,671,427 |
Options to Purchase Common Stock | ||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||
Total | 9,204,473 | 4,455,596 |
Restricted Stock Awards, Including Participating Securities | ||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||
Total | 199,165 | 215,831 |
Segment and Geographical Info34
Segment and Geographical Information - Narrative (Detail) | 3 Months Ended | |
Mar. 31, 2018Customer | Mar. 31, 2017Segment | |
Revenues from External Customers and Long-Lived Assets [Line Items] | ||
Number of reportable segments | Segment | 1 | |
United States | Revenue | Geographic Concentration Risk | ||
Revenues from External Customers and Long-Lived Assets [Line Items] | ||
Concentration risk, percentage | 48.00% | 43.00% |
Germany | Revenue | Geographic Concentration Risk | ||
Revenues from External Customers and Long-Lived Assets [Line Items] | ||
Concentration risk, percentage | 15.00% | 15.00% |
Germany | Revenue | Customer Concentration Risk | ||
Revenues from External Customers and Long-Lived Assets [Line Items] | ||
Concentration risk, percentage | 11.00% | 11.00% |
Customer A | Revenue | Customer Concentration Risk | ||
Revenues from External Customers and Long-Lived Assets [Line Items] | ||
Number of individual customer | Customer | 1 |
Segment and Geographical Info35
Segment and Geographical Information - Summary of Revenue by Geographical Region (Detail) - Revenue - Geographic Concentration Risk | 3 Months Ended | |
Mar. 31, 2018 | Mar. 31, 2017 | |
United States | ||
Revenues from External Customers and Long-Lived Assets [Line Items] | ||
Percentage of revenue by geographical region | 48.00% | 43.00% |
EMEA | ||
Revenues from External Customers and Long-Lived Assets [Line Items] | ||
Percentage of revenue by geographical region | 45.00% | 47.00% |
Asia Pacific | ||
Revenues from External Customers and Long-Lived Assets [Line Items] | ||
Percentage of revenue by geographical region | 4.00% | 8.00% |
Rest of the World | ||
Revenues from External Customers and Long-Lived Assets [Line Items] | ||
Percentage of revenue by geographical region | 3.00% | 2.00% |
Subsequent Events - Narrative (
Subsequent Events - Narrative (Details) - Subsequent Event $ / shares in Units, $ in Millions | 1 Months Ended |
May 08, 2018USD ($)$ / sharesshares | |
Subsequent Event [Line Items] | |
Shares sold (in shares) | shares | 2,400,000 |
Proceeds from transaction | $ | $ 0.8 |
Sale price of stock (in usd per share) | $ / shares | $ 0.33 |