| Summary of Significant Accounting Policies (Policies) | 7 Months Ended | 9 Months Ended |
| Aug. 03, 2022 | Oct. 31, 2023 |
| Accounting Policies [Line Items] | | |
| Basis of Presentation | | Basis of Presentation As a result of the Business Combination, the Company evaluated if L&F, ZeroFox, or IDX is the predecessor for accounting purposes. The Company considered the application of Rule 405 of Regulation C, the interpretative guidance of the staff of the United States Securities and Exchange Commission (SEC), including factors for the Registrant to consider in determining the predecessor, and analyzed the following: (1) the order in which the entities were acquired, (2) the size of the entities, (3) the fair value of the entities, (4) the historical and ongoing management structure, and (5) how management discusses the Company's business in the Company's Form 10-Q and Form 10-K filings. In considering the foregoing principles of predecessor determination in light of the Company's specific facts and circumstances, management determined that ZeroFox, Inc. is the predecessor for accounting purposes. The financial statement presentation includes the financial statements of ZeroFox, Inc. as “Predecessor” for the period prior to the Closing Date and the financial statements of the Company as “Successor” for the periods after the Closing Date, including the consolidation of ZeroFox, Inc., IDX, and LookingGlass. The accompanying condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (US GAAP) as set forth by the Financial Accounting Standards Board (FASB) and in accordance with the instructions to Form 10-Q and Article 8 of Regulation S-X of the SEC. References to US GAAP issued by the FASB in these notes to the condensed consolidated financial statements are to the FASB Accounting Standards Codifications (ASC). |
| Unaudited Interim Financial Information | | Unaudited Interim Financial Information The interim condensed consolidated financial statements have been prepared by the Company, pursuant to the rules and regulations of the SEC and are unaudited. Certain information and footnote disclosures normally included in financial statements prepared in accordance with US GAAP have been condensed or omitted pursuant to such rules and regulations. However, the Company believes that the disclosures contained herein comply with the requirements of Section 13(a) of the Securities Exchange Act of 1934, as amended (the Exchange Act) and are adequate to make the information presented not misleading. The interim condensed consolidated financial statements reflect all adjustments (consisting of normal recurring adjustments) which are, in the opinion of management, necessary for a fair presentation of the Condensed Consolidated Balance Sheets, Condensed Consolidated Statements of Comprehensive Loss, Condensed Consolidated Statements of Stockholders Equity, Condensed Consolidated Statement of Redeemable Convertible Preferred Stock and Stockholders' Deficit, and the Condensed Consolidated Statements of Cash Flows for the interim periods presented. These interim condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and related notes included in the Company's 2023 Annual Report on Form 10-K filed with the Securities Exchange Commission on March 30, 2023. The Condensed Consolidated Statements of Comprehensive Loss for the Successor's three and nine months ended October 31, 2023, are not necessarily indicative of the results to be anticipated for the entire year ending January 31, 2024, or thereafter. All financial information as of and for the Predecessor's Quarter and Year to Date, referenced in the notes to the condensed consolidated financial statements is unaudited . |
| Emerging Growth Company Status | | Emerging Growth Company Status The Company is an “emerging growth company” (EGC), as defined in the Jumpstart Our Business Startups Act (the JOBS Act), and may take advantage of certain exemptions from various reporting requirements that are applicable to other public companies that are not EGCs. The Company may take advantage of these exemptions until it is no longer an EGC under the JOBS Act and has elected to use the extended transition period for complying with new or revised accounting standards. As a result of this election, the Company’s financial statements may not be comparable to companies that comply with public company FASB standards’ effective dates. The JOBS Act exempts EGCs from being required to comply with new or revised financial accounting standards until private companies are required to comply with the new or revised financial accounting standards. The JOBS Act provides that a company can elect to opt out of the extended transition period and comply with the requirements that apply to non-emerging growth companies but any such election to opt out is irrevocable. The Company has elected not to opt out of such extended transition period, which means that when a standard is issued or revised and it has different application dates for public or private companies, the Company, as an EGC, can adopt the new or revised standard at the time private companies adopt the new or revised standard. This may make comparison of the Company's financial statements with certain other public companies difficult or impossible because of the potential differences in accounting standards used. |
| Principles of Consolidation | | Principles of Consolidation The accompanying condensed consolidated financial statements include all the accounts of the Company. All intercompany balances and transactions have been eliminated in consolidation. |
| Use of Estimates | | Use of Estimates The preparation of the accompanying condensed consolidated financial statements in conformity with US GAAP requires management to make certain estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities within these condensed consolidated financial statements. Significant estimates and judgments include but are not limited to: (1) revenue recognition, (2) capitalization of internally developed software costs, (3) fair value of stock-based compensation, (4) valuation of assets acquired and liabilities assumed in business combinations, (5) useful lives of contract acquisition costs and intangible assets, (6) evaluation of goodwill and long lived assets for impairment, (7) valuation of warrants and the Sponsor Earnout Shares (see Note 8), (8) fair value of the purchase consideration liability, and (9) valuation allowances associated with deferred tax assets. The Company bases its estimates and assumptions on historical experience, expectations, forecasts, and on various other factors that are believed to be reasonable under the circumstances. Due to the inherent uncertainty involved in making estimates, actual results reported in future periods may differ from results of prior periods. |
| Revenue Recognition | | Revenue Recognition The Company derives its revenue from providing its customers with subscription access to the Company’s External Cybersecurity Platform (subscription revenue) and services (services revenue). In accordance with ASC 606, Revenue from Contracts with Customers , revenue is recognized when a customer obtains control of promised services. The amount of revenue recognized reflects the consideration that the Company expects to be entitled to receive in exchange for those services. To achieve the core principle of this standard, the Company applies the following five steps: a) Identify Contracts with Customers. The Company considers the terms and conditions of contracts and its customary business practices in identifying contracts with customers in accordance with ASC 606. The Company determines it has a contract with a customer when the contract is approved, the Company can identify each party’s rights regarding the services to be transferred, the Company can identify the payment terms for the services, and the Company has determined that the customer has the ability and intent to pay and the contract has commercial substance. The Company applies judgment in determining the customer’s ability and intent to pay, which is based on a variety of factors, including the customer’s historical payment experience or, in the case of a new customer, credit and financial information pertaining to the customer. b) Identify the Performance Obligations in the Contract. Performance obligations promised in a contract 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 that are distinct in the context of the contract, whereby the transfer of the services is separately identifiable from other promises in the contract. c) Determine the Transaction Price. The transaction price is determined based on the consideration to which the Company expects to be entitled in exchange for transferring services to the customer. The Company’s typical pricing for its subscriptions and professional services does not result in contracts with significant variable consideration. The Company’s arrangements do not contain significant financing components. d) 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 the single performance obligation. Contracts that contain multiple performance obligations require an allocation of the transaction price to each performance obligation based on the stand-alone selling price (SSP) of each performance obligation, using the relative selling price method of allocation. e) Recognize Revenue When or As Performance Obligations are Satisfied. Revenue is recognized at the time the related performance obligation is satisfied by transferring the promised service to a customer. For the Company's performance obligations, the Company transfers control over time, as the customer simultaneously receives and consumes the benefits provided by the Company’s service. Subscription Revenue The Company generates subscription revenue from its External Cybersecurity Platform. Subscription revenue from the External Cybersecurity Platform includes the sale of subscriptions to access the platform and related support and intelligence services. Subscription revenue is driven by the number of assets protected and the desired level of service. These arrangements do not provide the customer with the right to take possession of the Company’s software operating on its cloud platform at any time. These arrangements represent a combined, stand-ready performance obligation to provide access to the software together with related support and intelligence services. Customers are granted continuous access to the External Cybersecurity Platform over the contractual period. Revenue is recognized on a ratable basis over the contract term beginning on the date that the Company’s service is made available to the customer. The Company’s subscription contracts generally have terms of one to three years , which are primarily billed in advance and are non-cancelable. Services Revenue The Company generates services revenue by executing engagements for data breach response and intelligence services. The Company generates breach response revenue primarily from various combinations of notification, project management, communication services, and ongoing identity protection services. Performance periods generally range from one to three years . The Company’s breach response contracts are structured as either fixed price or variable price. In fixed price contracts, the Company charges a fixed total price or fixed individual price for the total combination of services. For variable price breach services contracts, the Company charges the breach communications component, which includes notifications and call center, at a fixed total fee, and the Company charges the ongoing identity protection services as incurred using a fixed price per enrollment. The Company generally bills for fixed fees at the time the contract is executed. For larger contracts, the Company bills 50% at the time the contract is executed and the remaining 50% within 30 days of contract execution. For variable price breach contracts, the Company invoices for identity protection services on a monthly basis in arrears. The Company offers several types of cybersecurity services, including investigative, security advisory and training services. The Company often sells a suite of cybersecurity services along with subscriptions to its External Cybersecurity Platform. All of the Company’s advisory and training services are considered distinct performance obligations from the External Cybersecurity Platform subscriptions services within the context of the Company’s contracts. Revenue is recognized over time as the customers benefit from these services as they are performed or as control of the promised services is transferred to the customer. These contracts are most often fixed fee arrangements and less frequently arrangements that are billed at hourly rates. These contracts normally have terms of one year or less. Contracts with Multiple Performance Obligations The majority of the Company’s contracts with customers contain multiple performance obligations. For these contracts, the Company accounts for individual performance obligations separately . The transaction price is allocated to the separate performance obligations based on the SSP of each performance obligation using the relative selling price method of allocation. Revenue from Reseller Arrangements The Company enters into arrangements with third parties that allow those parties to resell the Company’s services to end users. The partners negotiate pricing with the end customer and the Company does not have visibility into the price paid by the end customer. For these arrangements, the Company recognizes revenue at the amount charged to the reseller and does not reflect any mark-up to the end user. Government Contracts The Company evaluates arrangements with governmental entities containing fiscal funding or termination for convenience provisions, when such provisions are required by law, to determine the probability of possible cancellation. The Company considers multiple factors, including the history with the customer in similar transactions and budgeting and approval processes undertaken by the governmental entity. If the Company determines upon execution of these arrangements that the likelihood of cancellation is remote, it then recognizes revenue for such arrangements once all relevant criteria have been met. If such a determination cannot be made, revenue is recognized upon the earlier of cash receipt or approval of the applicable funding provision by the governmental entity for such arrangements. Revenue from Non-Cancelable Contracts As of October 31, 2023, the Company had approximately $ 110.3 million of revenue that is expected to be recognized from remaining performance obligations that are unsatisfied (or partially unsatisfied) under non-cancelable contracts. Of this $ 110.3 million, the Company expects to recognize revenue of approximately $ 89.0 million in the twelve-month period November 2023 through October 2024 , approximately $ 16.9 million in the twelve-month period November 2024 through October 2025 , and approximately $ 4.4 million thereafter . Timing of Revenue Recognition The table below provides revenues earned by timing of revenue (in thousands).
Successor Predecessor
Revenue Recognition Timing Three months ended August 4, 2022 to October 31, 2022 August 1, 2022 to August 3, 2022
Over time $ 47,642 $ 38,531 $ 478
Point in time 17,381 4,458 16
Total $ 65,023 $ 42,989 $ 494
Successor Predecessor
Revenue Recognition Timing Nine months ended October 31, 2023 August 4, 2022 to October 31, 2022 February 1, 2022 to August 3, 2022
Over time $ 136,228 $ 38,531 $ 27,946
Point in time 36,564 4,458 1,291
Total $ 172,792 $ 42,989 $ 29,237 |
| Disaggregation of Revenue | | Disaggregation of Revenue The table below provides revenues earned by line of service (in thousands).
Successor Predecessor
Revenue Line Three months ended August 4, 2022 to October 31, 2022 August 1, 2022 to August 3, 2022
Subscription revenue $ 23,748 $ 15,174 $ 478
Services revenue
Breach 40,210 26,888 —
Other services 1,065 927 16
Total services revenue 41,275 27,815 16
Total $ 65,023 $ 42,989 $ 494
Successor Predecessor
Revenue Line Nine months ended October 31, 2023 August 4, 2022 to October 31, 2022 February 1, 2022 to August 3, 2022
Subscription revenue $ 65,191 $ 15,174 $ 27,946
Services revenue
Breach 104,347 26,888 —
Other services 3,254 927 1,291
Total services revenue 107,601 27,815 1,291
Total $ 172,792 $ 42,989 $ 29,237 The table below provides revenues earned based on geographic locations (in thousands).
Successor Predecessor
Country Three months ended August 4, 2022 to October 31, 2022 August 1, 2022 to August 3, 2022
United States $ 60,104 $ 39,335 $ 369
Other 4,919 3,654 125
Total $ 65,023 $ 42,989 $ 494
Successor Predecessor
Country Nine months ended October 31, 2023 August 4, 2022 to October 31, 2022 February 1, 2022 to August 3, 2022
United States $ 158,716 $ 39,335 $ 21,916
Other 14,076 3,654 7,321
Total $ 172,792 $ 42,989 $ 29,237 |
| Concentration of Credit Risk | | Concentration of Credit Risk The Company maintains cash balances in bank deposit accounts, which at times, may exceed federally insured limits. Deposits held in interest-bearing checking accounts are insured up to $250,000. Deposits held in insured cash sweep accounts are insured up to $150.0 million. The Company has not experienced any losses in such accounts, and believes it is not exposed to any significant credit risk from cash. The Company does not perform ongoing credit evaluations, generally does not require collateral, and establishes an allowance for doubtful accounts based upon factors surrounding the credit risk of customers, historical trends, and other information. |
| Concentration of Revenue and Accounts Receivable | | Concentration of Revenue and Accounts Receivable For the three months ended October 31, 2023, two customers accounted for 10 % or more of total consolidated revenue. The largest customer accounted fo r 32 % and the other accounted for 11 %. For the nine months ended October 31, 2023, one customer accounted for 36 % of total consolidated revenue. For the Quarter to Date Predecessor Period and the Year to Date Predecessor Period, there was no individual customer that accounted for 10 % or more of total consolidated revenue. As of October 31, 2023, one customer accounted for 18 % of total accounts receivable. As of January 31, 2023, one customer accounted for 23 % of total accounts receivable. |
| Income Taxes | | Income Taxes In accordance with ASC 740, Income Taxes, income taxes are accounted for under the asset and liability method. Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the consolidated financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those assets and liabilities are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in the results of operations in the period that includes the enactment date. The measurement of a deferred tax asset is reduced, if necessary, by a valuation allowance if it is more likely than not that some portion or all of the deferred tax asset will not be realized. ASC 740 prescribes a recognition threshold and a measurement attribute for the consolidated financial statement recognition and measurement of tax positions taken, or expected to be taken, in a tax return, as well as guidance on derecognition, classification, interest, penalties, and consolidated financial statement reporting disclosures. For those benefits to be recognized, a tax position must be more likely than not to be sustained upon examination by taxing authorities. The amount recognized is measured as the largest amount of benefit that is greater than 50 % likely of being realized upon ultimate settlement. The Company recognizes interest and penalties accrued on any unrecognized tax benefits as a component of income tax expense. The Company remains subject to examination by U.S. federal and various state tax authorities for the fiscal years 2020 through 2023. Under ASC 740, the Company determined that some of its income tax positions did not meet the more-likely-than-not recognition threshold and, therefore, recorded a reserve of $ 1.6 million as of October 31, 2023. |
| Business Combinations | | Business Combinations The Company accounted for the LookingGlass Business Combination (see Note 4) using the acquisition method pursuant to ASC 805, Business Combinations . The Company is the accounting acquirer of LookingGlass. The Company accounted for the assets acquired and liabilities assumed based on their estimated acquisition date fair values. The Company recognized the excess of consideration transferred over the fair values of assets acquired and liabilities assumed as goodwill. The Company expensed all transaction related costs of the LookingGlass Business Combination. All fees and expenses associated with business combinations were expensed as incurred. The Company recorded approximately $ 1.5 million of expense related to the LookingGlass Business Combination in general and administrative expenses in the Condensed Consolidated Statements of Comprehensive Loss for the nine months ended October 31, 2023. The Company did not incur business combination expenses during the three months ended October 31, 2023. T he Company recorded approximately $ 1.2 million of expenses related to the Business Combination in general and administrative expenses in the Condensed Consolidated Statement of Comprehensive Loss for the Successor Period. The Predecessor recorded $ 3.2 million of expenses related to the Business Combination in general and administrative expenses in the Condensed Consolidated Statements of Comprehensive Loss for the Year to Date Predecessor Period . |
| Goodwill and Intangible Assets | | Goodwill and Intangible Assets Goodwill represents the excess of the purchase price over the fair value of identifiable assets acquired and liabilities assumed when a business is acquired. The valuation of intangible assets and goodwill involves the use of the Company's estimates and assumptions and can have a significant impact on future operating results. The Company initially records its intangible assets at fair value. Intangible assets with finite lives are amortized over their estimated useful lives while goodwill is not amortized but is evaluated for impairment at least annually. Goodwill is evaluated for impairment beginning on November 1 of each year or when an assessment of qualitative factors indicates an impairment may have occurred. The quantitative assessment includes an analysis that compares the fair value of a reporting unit to its carrying value including goodwill recorded by the reporting unit. The Company has a single reporting unit. Accordingly, the impairment assessment for goodwill is performed at the enterprise level. Goodwill is reviewed for possible impairment between annual tests if an event occurs or circumstances change that would more likely than not reduce the fair value of the reporting unit below its carrying value. The Company initially assesses qualitative factors to determine if it is necessary to perform the goodwill impairment review. Goodwill is reviewed for impairment if, based on an assessment of the qualitative factors, it is determined that it is more likely than not that the fair value of the reporting unit is less than its carrying value, or the Company decides to bypass the qualitative assessment. The Company uses a combination of methods to estimate the fair value of its reporting unit including the discounted cash flow, guideline public company, and merger and acquisitions methods. These valuation approaches consider a number of factors that include, but are not limited to, prospective financial information, growth rates, terminal value, discount rates, and comparable multiples from publicly traded companies and merger transactions in the Company's industry. Use of these factors requires the Company to make certain assumptions and estimates regarding industry economic factors and future profitability of its business. Additionally, the Company considers income tax effects from any tax-deductible goodwill (if applicable) on the carrying amount of the reporting unit when measuring the goodwill impairment loss. It is possible that future changes in such circumstances, or in the variables associated with the judgments, assumptions, and estimates used in assessing the fair value of the reporting unit would require the Company to record a non-cash impairment charge. The Company performed its annual quantitative assessment of goodwill impairment as of October 31, 2023. The assessment determined that the fair value of the Company's single reporting unit had declined below its carrying value, as result of the decline in the price of the Company's Common Stock, market conditions, and macroeconomic factors. The fair value of the Company's single reporting unit was determined to be $ 572.7 million as of October 31, 2023. As the carrying value of the reporting unit was $ 644.8 million as of October 31, 2023, the Company recorded a goodwill impairment charge $ 72.1 million during the three months ended October 31, 2023. |
| Sponsor Earnout Shares | | Sponsor Earnout Shares The Company analyzed the terms of the Sponsor Earnout Shares (see Note 8) and determined they are within the scope of ASC 815. The Company determined that the Sponsor Earnout Shares do not meet the requirements to be recognized as an equity instrument as the Company could not conclude the Sponsor Earnout Shares are indexed to the Company's own equity. Therefore, the Company recognizes the Sponsor Earnout Shares as a liability recorded at fair value. The Sponsor Earnout Shares are not considered outstanding for accounting purposes since they are considered contingently issuable and are therefore, excluded from the calculation of basic loss per share. The Company analyzed the terms of the Sponsor Earnout Shares to determine if they meet the definition of "participating securities", which would require the two-class method of EPS. The holders of the Sponsor Earnout Shares are not entitled to nonforfeitable rights to dividends and as such, they do not meet the definition of "participating securities". |
| LGSC Earnout Shares | | LookingGlass Earnout Shares The Company analyzed the terms of the LookingGlass Earnout Shares and determined they are within the scope of ASC 480 and qualify for liability treatment as the shares to be issued vary based on if LookingGlass achieves certain contract thresholds within a specified period of time or if a certain contract is renewed with a specified contract value within a specified period of time (see "LookingGlass Earnout Shares" in Note 9). The Company analyzed the terms of the LookingGlass Earnout Shares to determine if they meet the definition of "participating securities", which would require the two-class method of EPS. The holders of the LookingGlass Earnout Shares are not entitled to nonforfeitable rights to dividends and as such, they do not meet the definition of "participating securities". |
| LGCS Non-Contingent Shares | | LookingGlass Deferred Shares The Company analyzed the terms of the LookingGlass Deferred Shares (see Note 9) and determined they are within the scope of ASC 480. The Company determined that the LookingGlass Deferred Shares do not meet the requirements to be recognized as an equity instrument based on the settlement provisions provided by the merger agreement. Therefore, the Company recognizes the LookingGlass Deferred Shares as a liability recorded at fair value. The Company analyzed the terms of the LookingGlass Deferred Shares to determine if they meet the definition of "participating securities", which would require the two-class method of EPS. The holders of the LookingGlass Deferred Shares are not entitled to nonforfeitable rights to dividends and as such, they do not meet the definition of "participating securities". |
| Warrant Liabilities | | Warrant Liabilities The Company evaluates all of its financial instruments, including issued stock purchase warrants, to determine if such instruments are derivatives or contain features that qualify as embedded derivatives, pursuant to ASC 480, Distinguishing Liabilities from Equity and FASB ASC 815, Derivatives and Hedging . The Company accounts for warrants as either equity-classified or liability-classified instruments based on an assessment of the warrant’s specific terms and applicable authoritative guidance in ASC 480 and ASC 815. The assessment considers whether the warrants are freestanding financial instruments pursuant to ASC 480, whether the warrants meet the definition of a liability pursuant to ASC 480, and whether the warrants meet all of the requirements for equity classification under ASC 815, including whether the warrants are indexed to the Company’s own Common Stock. This assessment, which requires the use of professional judgment, is conducted at the time of warrant issuance and as of each subsequent quarterly period end date while the warrants are outstanding. For issued or modified warrants that meet all of the criteria for equity classification, the warrants are required to be recorded as a component of additional paid-in capital at the time of issuance. For issued or modified warrants that do not meet all the criteria for equity classification, the warrants are required to be recorded at their initial fair value on the date of issuance and each balance sheet date thereafter. The Company recognizes changes in the estimated fair value of the warrants as a non-cash gain or loss on the Condensed Consolidated Statements of Comprehensive Loss. The Company assessed the Public and Private Warrants and the Stifel Warrant (see Note 7) and determined each met the criteria for liability treatment. |
| Fair Value of Financial Instruments | | Fair Value of Financial Instruments ASC 820-10, Fair Value Measurements and Disclosures: Overall , defines fair value, establishes a fair value hierarchy for assets and liabilities measured at fair value, and expands required disclosures about fair value measurements. The fair value of an asset and liability is defined as an exit price and represents the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants. The three-tier fair value hierarchy, which prioritizes the inputs used to measure fair value, is as follows: Level 1 —Inputs are quoted prices in active markets for identical assets or liabilities that the Company can access at the measurement date. Level 2 —Observable inputs other than Level 1 prices, such as quoted prices for similar assets or liabilities or 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. Level 3 —Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets and liabilities. Assets and liabilities are classified in their entirety based on the lowest level of input that is significant to the fair value measurements. The Company’s assessment of the significance of an input to the fair value measurement requires judgment and may affect the valuation of the asset or liability being measured and its placement within the fair value hierarchy. The Company effectuates transfers between levels of the fair value hierarchy, if any, as of the date of the actual circumstance that caused the transfer. Certain assets and liabilities, including goodwill and intangible assets, are subject to measurement at fair value on a non-recurring basis if there are indicators of impairment or if they are deemed to be impaired as a result of an impairment review. As of October 31, 2023, and January 31, 2023, the Company had outstanding Public and Private Warrants. The Company measured its Public Warrants based on a Level 1 input, the public price for the Company's warrants traded on Nasdaq (ticker ZFOXW). The Company measured its Private Warrants based on a Level 2 input, the same price for the Company's Public Warrants traded on Nasdaq. The Company analyzed the terms and features of the Private Warrants and determined that they were economically similar to the Public Warrants. As of October 31, 2023, the Company measured the Stifel Warrant based on Level 3 inputs. The assumptions used to value all warrants are described in Note 7. A summary of the changes in the fair value of warrants is as follows (in thousands):
Successor
Public Private
Warrant liabilities - January 31, 2023 $ 1,373 $ 1,208
Issuance of warrants — 126
Gain due to change in fair value of warrants ( 1,201 ) ( 1,123 )
Warrant liabilities - October 31, 2023 $ 172 $ 211
Public Private
Warrant liabilities - August 4, 2022 $ 4,226 $ 11,351
Exercise of warrants — ( 7,632 )
Gain due to change in fair value of warrants ( 3,105 ) ( 2,732 )
Warrant liabilities - October 31, 2022 $ 1,121 $ 987
Predecessor
Public Private
Warrant liability - January 31, 2022 $ — $ 10,709
Issuance of warrants — 519
Exercise of warrants — ( 5,900 )
Loss due to change in fair value of warrants — 2,059
Warrant liability - August 3, 2022 $ — $ 7,387 The Stifel Warrant is included in the Private Warrants column in the table above as of October 31, 2023. The Company measured the liability for Sponsor Earnout Shares using Level 3 inputs. The methodology and assumptions used to measure the Sponsor Earnout Shares are described in Note 8. A summary of the changes in the fair value of the Sponsor Earnout Shares is included below (in thousands). There is no balance for the Predecessor as of August 3, 2022, as the earnout period began on the Closing Date of the Business Combination, August 3, 2022.
Successor
Sponsor earnout shares - January 31, 2023 $ 2,445
Gain due to change in fair value of sponsor earnout shares ( 2,186 )
Sponsor earnout shares - October 31, 2023 $ 259 The Company measured the purchase consideration liability using Level 2 inputs. The methodology and assumptions used to measure the purchase consideration liability are described in Note 9. A summary of the changes in the fair value of the purchase consideration liability is included below (in thousands). There is no balance for the Predecessor as of August 3, 2022, as the LookingGlass Business Combination occurred on April 21, 2023.
Successor
Purchase consideration liability - January 31, 2023 $ —
Business acquisition 9,827
Adjustment related to business acquisition ( 364 )
Gain due to change in fair value of purchase consideration liability ( 3,645 )
Release of common stock to partially satisfy purchase consideration liability ( 2,647 )
Purchase consideration liability - October 31, 2023 $ 3,171 The carrying amounts of accounts receivable, accounts payable, and accrued expenses approximate fair value because of the short maturity terms of these instruments. The carrying amount of the Stifel Note (see Note 6) approximates fair value due to the short duration of time that has elapsed since the amendment to the loan and security agreement. The carrying amount of the Alsop Louie Convertible Note (see Note 6) approximates fair value due to the short duration of time that has elapsed since the note has been issued. |
| Net Loss Per Share Attributable to Common Stockholders | | Net Loss Per Share Attributable to Common Stockholders Basic net loss per share attributable to common stockholders is computed by dividing the net loss attributable to common stockholders by the weighted average number of common shares outstanding for the period, inclusive of the LookingGlass purchase consideration shares that will be issued based on the passage of time (see Note 9). Diluted net loss attributable to common stockholders is computed by adjusting net loss attributable to common stockholders to reallocate undistributed earnings based on the potential impact of dilutive securities. Diluted net loss per share attributable to common stockholders is computed by dividing the diluted net loss attributable to common stockholders by the weighted average number of common shares outstanding for the period, including potential dilutive common stock. For the purposes of this calculation, outstanding stock options, unvested restricted stock, stock warrants, Sponsor Earnout Shares, the variable portion of the LookingGlass Deferred Shares (see Note 9) that have not been distributed, and redeemable convertible preferred stock are considered potential dilutive common stock and are excluded from the computation of net loss per share as their effect is anti-dilutive. The following table sets forth computation of basic loss per share attributable to common stockholders (in thousands, except share and per share data):
Successor Predecessor
Three months ended August 4, 2022 to October 31, 2022 August 1, 2022 to August 3, 2022
Numerator:
Net loss $ ( 86,692 ) $ ( 704,158 ) $ 54
Net loss per share attributable to common $ ( 86,692 ) $ ( 704,158 ) $ 54
Denominator:
Weighted-average common stock outstanding 126,586,116 116,853,297 43,214,825
Net loss per share attributable to common stockholders $ ( 0.68 ) $ ( 6.03 ) $ -
Successor Predecessor
Nine months ended October 31, 2023 August 4, 2022 to October 31, 2022 February 1, 2022 to August 3, 2022
Numerator:
Net loss $ ( 121,507 ) $ ( 704,158 ) $ ( 21,405 )
Net loss per share attributable to common $ ( 121,507 ) $ ( 704,158 ) $ ( 21,405 )
Denominator:
Weighted-average common stock outstanding 122,662,666 116,853,297 43,041,209
Net loss per share attributable to common stockholders $ ( 0.99 ) $ ( 6.03 ) $ ( 0.50 ) The Predecessor's redeemable convertible preferred stock and restricted common stock contractually entitled the holders of such shares to participate in dividends but do not contractually require the holders of such shares to participate in losses of the Predecessor. Accordingly, in periods in which the Predecessor reported a net loss, such losses were not allocated to such participating securities. In periods in which the Predecessor reported a net loss attributable to common stockholders, diluted net loss per share attributable to common stockholders was the same as basic net loss per share attributable to common stockholders, since dilutive common shares are not assumed to be outstanding if their effect is anti-dilutive. The following is a summary of the weighted average common stock equivalents, for the securities outstanding during the respective periods, that have been excluded from the computation of diluted net loss per common share, as their effect would be anti-dilutive:
Successor Predecessor
Nine months ended October 31, 2023 August 4, 2022 to October 31, 2022 February 1, 2022 to August 3, 2022
Preferred stock (on an as-converted basis) — — 241,238,877
Common stock options outstanding 7,037,136 7,911,164 22,178,814
Warrants to purchase preferred stock, all series — — 5,794,517
Public and private warrants to purchase common stock 16,304,870 16,228,329 —
Sponsor earnout shares 1,293,750 1,293,750 —
Restricted stock units 7,044,540 — — The LookingGlass Earnout Shares and the variable portion of the LookingGlass Deferred Shares are not included in the table above as they were not outstanding during the respective periods. |
| Predecessor Redeemable Convertible Preferred Stock | | Predecessor Redeemable Convertible Preferred Stock The Series Preferred of the Predecessor was not mandatorily redeemable. The Series Preferred was contingently redeemable upon the occurrence of a deemed liquidation event and a majority vote of the holders of Series Preferred and Series Seed to redeem all outstanding shares of the Company’s redeemable convertible preferred stock. The contingent redemption upon the occurrence of a deemed liquidation was not within the Predecessor's control. Liquidation Rights —In the event of any liquidation or dissolution of the Predecessor (Liquidation Event), the holders of Predecessor Common Stock were entitled to the remaining assets of the Predecessor legally available for distribution after the payment of the full liquidation preference for all series of outstanding redeemable convertible preferred stock. The Predecessor’s redeemable convertible preferred stock consists of (in thousands except share data):
Successor Predecessor
October 31, 2023 October 31, 2022 August 3, 2022
Shares Issued and Amount Shares Issued and Amount Shares Issued and Amount
Convertible preferred stock—Series E, $ 0.00001 19,033,653 shares; 28,354,249 ) — $ — — $ — 15,767,013 $ 36,291
Convertible preferred stock—Series D, $ 0.00001 14,833,942 shares; 21,222,496 ) — — — — 13,871,547 21,067
Convertible preferred stock—Series D-2, $ 0.00001 993,868 shares 1,216,439 ) — — — — 993,868 1,451
Convertible preferred stock—Series D-1, $ 0.00001 5,878,303 8,094,053 ) — — — — 5,878,303 8,171
Convertible preferred stock—Series C-1, $ 0.00001 16,208,756 shares 14,037,000 ) — — — — 11,882,605 16,836
Convertible preferred stock—Series C, $ 0.00001 21,124,700 shares 19,999,999 ) — — — — 21,124,699 19,899
Convertible preferred stock—Series B, $ 0.00001 26,914,949 shares 22,124,088 ) — — — — 26,914,949 22,047
Convertible preferred stock—Series A, $ 0.00001 16,122,188 shares 10,246,261 ) — — — — 15,997,285 10,159
Convertible preferred stock—Series seed, $ 0.00001 9,198,372 shares 2,285,795 ) — — — — 9,198,372 2,208
— $ — — $ — 121,628,641 $ 138,129 |
| Standards Issued and Adopted | | Standards Issued and Adopted In June 2016, the FASB issued ASU 2016-13, Measurement of Credit Losses on Financial Instruments , which amends the accounting for credit losses for most financial assets and certain other instruments. The standard requires that entities holding financial assets that are not accounted for at fair value through net income be presented at the net amount expected to be collected. An allowance for credit losses will be a valuation account that will be deducted from the amortized cost basis of the financial asset to present the net carrying value at the amount expected to be collected on the financial asset. The Company adopted ASU 2016-13 on February 1, 2023, using the modified transition approach. The adoption of the standard did not have a material impact on the condensed consolidated financial statements. In June 2022, the FASB issued ASU 2022-03, Fair Value Measurement of Equity Securities Subject to Contractual Sale Restrictions , which clarifies the guidance in ASC 820 on the fair value measurement of an equity security that is subject to a contractual sale restriction. The standard clarifies that entities should not apply a discount related to a contractual sale restriction of an equity security when measuring the fair value of the equity security. The standard provides that entities should instead consider sale restrictions that are characteristics of the equity security. The standard is effective for public business entities' fiscal years beginning after December 15, 2023, and interim periods within those fiscal years, with early adoption permitted. The Company elected to early adopt ASU 2022-03 effective February 1, 2023. The adoption of the standard did not have a material impact on the condensed consolidated financial statements. |
| ID Experts Holdings, Inc. and Subsidiary [Member] | | |
| Accounting Policies [Line Items] | | |
| Basis of Presentation | Basis of Presentation The condensed consolidated financial statements have been prepared in conformity with generally accepted accounting principles in the United States of America (U.S. GAAP) set forth by the Financial Accounting Standards Board (FASB). References to U.S. GAAP issued by the FASB in these notes to the condensed consolidated financial statements are to the FASB Accounting Standards Codification (ASC). IDX presented financial statements from the beginning of the year to the acquisition date of August 3, 2022. | |
| Emerging Growth Company Status | Emerging Growth Company Status The Company is an “emerging growth company” (EGC), as defined in the Jumpstart Our Business Startups Act (the JOBS Act), and may take advantage of certain exemptions from various reporting requirements that are applicable to other public companies that are not EGCs. The Company may take advantage of these exemptions until it is no longer an EGC under Section 107 of the JOBS Act and has elected to use the extended transition period for complying with new or revised accounting standards. As a result of this election, the Company’s financial statements may not be comparable to companies that comply with public company FASB standards’ effective dates. IDX merged with L&F on August 3, 2022. Refer to Note 1 for more information regarding the Business Combination. The surviving company, ZeroFox Holdings, will remain an emerging growth company until the earliest of (i) the last day of the surviving company’s first fiscal year following the fifth anniversary of the completion of the L&F’s initial public offering, (ii) the last day of the fiscal year in which ZeroFox Holdings has total annual gross revenue of at least $ 1.235 billion, (iii) the last day of the fiscal year in which ZeroFox Holdings is deemed to be a large accelerated filer, which means the market value of ZeroFox Holding’s common stock that is held by non-affiliates exceeds $ 700.0 million as of the prior July 31 or (iv) the date on which ZeroFox Holdings has issued more than $ 1.0 billion in non-convertible debt securities during the prior three-year period. | |
| Principles of Consolidation | Principles of Consolidation The accompanying condensed consolidated financial statements include the accounts of the Company. All intercompany balances and transactions have been eliminated in consolidation. | |
| Use of Estimates | Use of Estimates The preparation of financial statements in conformity with U.S. GAAP requires that management make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the amounts of revenues and expenses reported during the period. Such estimates include assumptions used in the allocation of revenue, long-lived assets, liabilities, depreciable lives of assets, stock-based compensation, and deferred income taxes. Actual results could differ from those estimates, and such differences may be material to the condensed consolidated financial statements. | |
| Cash and Cash Equivalents | Cash and Cash Equivalents Cash and cash equivalents consist of business checking accounts. The Company considers all highly liquid investments with an original maturity of three months or less at the time of purchase to be cash equivalents. The Company generally places its cash and cash equivalents with major financial institutions deemed to be of high-credit-quality in order to limit its credit exposure. The Company maintains its cash accounts with financial institutions where, at times, deposits exceed federal insurance limits. Cash and cash equivalents are carried at cost, which due to their short-term nature, approximate fair value. | |
| Revenue Recognition | Revenue Recognition In accordance with ASC 606, revenue is recognized when a customer obtains control of promised products or services. The amount of revenue recognized reflects the consideration that the Company expects to be entitled to receive in exchange for those products or services. To achieve the core principle of this standard, the Company applies the following five steps: a) Identify Contracts with Customers, b) Identify the Performance Obligations in the Contract, c) Determine the Transaction Price, d) Allocate the Transaction Price to Performance Obligations in the Contract, and e) Recognize Revenue When or As Performance Obligations are Satisfied. For arrangements with multiple performance obligations, the Company allocates total consideration to each performance obligation on a relative fair value basis based on management’s estimate of stand-alone selling price (SSP). The following table illustrates the timing of the Company’s revenue recognition:
July 1, 2022, to January 1, 2022, to August 3, 2022
Breach - point in time 9.4 % 12.6 %
Breach - over time 86.3 % 83.4 %
Membership services - over time 4.3 % 4.0 % As discussed in Note 3, all revenue was recognized over time prior to the adoption of ASC 606. Breach Services The Company’s breach services revenue consists of contracts with various combinations of notification, project management, communication services, and ongoing identity protection services. Performance periods generally range from one to three years. Payment terms are generally between thirty and sixty days. Contracts generally do not contain significant financing components. The pricing for the Company’s breach services contracts is structured as either fixed price or variable price. In fixed price contracts, a fixed total price or fixed per-impacted-individual price is charged for the total combination of services. For variable price breach services contracts, the breach communications component, which includes notifications and call center, is charged at a fixed total fee and ongoing identity protection services are charged as incurred using a fixed price per enrollment. Fixed fees are generally billed at the time the statement of work is executed and are due upon receipt. Large, fixed-fee contracts are typically billed 50% upfront and due upon receipt with the remaining 50% invoiced 30 days later with net 30 terms. For variable price contracts the charges for identity protection services are billed monthly for the prior month and are due net 30. Membership Services The Company provides membership services through its employer groups and strategic partners as well as directly to end-users through its website. Membership services consist of multiple, bundled identity and privacy product offerings and provide members with ongoing identity protection services. For membership services, revenue is recognized ratably over the service period. Performance periods are generally one year . Payments from employer groups and strategic partners are generally collected monthly. Payments from end-users are collected up front. Provisions for estimated losses on uncompleted contracts are made in the period in which such losses are determined. No losses on uncompleted contracts were recognized for the period July 1, 2022, to August 3, 2022, and the period January 1, 2022, to August 3, 2022. Significant Judgments Significant judgments and estimates are required under ASC 606. Due to the complexity of certain contracts, the actual revenue recognition treatment required under ASC 606 for the Company’s arrangements may be dependent on contract-specific terms and may vary in some instances. The Company’s contracts with customers often include promises to transfer multiple services including project management services, notification services, call center services, and identity protection services. Determining whether services are distinct performance obligations that should be accounted for separately requires significant judgment. The Company is required to estimate the total consideration expected to be received from contracts with customers, including any variable consideration. Once the estimated transaction price is established, amounts are allocated to performance obligations on a relative SSP basis. The Company’s breach business derives revenue from two main performance obligations: (i) notification and (ii) combined call center and monitoring services, described further in Note 3. At contract inception, the Company assesses the products and services promised in the contract to identify each performance obligation and evaluates whether the performance obligations are capable of being distinct and are distinct within the context of the contract. Performance obligations that are not both capable of being distinct and distinct within the context of the contract are combined and treated as a single performance obligation in determining the allocation and recognition of revenue. Determining whether products and services are considered distinct performance obligations requires significant judgment. In determining whether products and services are considered distinct performance obligations, the Company assesses whether the customer can benefit from the products and services on their own or together with other readily available resources and whether our promise to transfer the product or service to the customer is separately identifiable from other promises in the contract. Judgment is required to determine the SSP for each distinct performance obligation. The Company rarely sells its individual breach services on a standalone basis and accordingly, the Company is required to estimate the range of SSPs for each performance obligation. In instances where the SSP is not directly observable because the Company does not sell the service separately, the Company reviews information that includes historical discounting practices, market conditions, cost-plus analyses, and other observable inputs to determine an appropriate SSP. The Company typically has more than one SSP for individual performance obligations due to the stratification of those items by classes of customers, size of breach, and other circumstances. In these instances, the Company may use other available information such as service inclusions or exclusions, customizations to notifications, or varying lengths of call center or identity protection services in determining the SSP. If a group of agreements are so closely related to each other that they are in effect part of a single arrangement, such agreements are deemed to be one arrangement for revenue recognition purposes. The Company exercises judgment to evaluate the relevant facts and circumstances in determining whether the separate agreements should be accounted for separately or as in substance, a single arrangement. The Company’s judgments about whether a group of contracts comprises a single arrangement can affect the allocation of consideration to the distinct performance obligations, which could have an effect on results of the Company’s operations. The Company has not experienced significant refunds to customers. The Company’s estimates related to revenue recognition may require significant judgment and the change in these estimates could have an effect on the Company’s results of operations during the periods involved. Contract Balances The timing of revenue recognition may differ from the timing of invoicing to customers and these timing differences result in receivables, contract assets, or contract liabilities (deferred revenue) on the Condensed Consolidated Balance Sheets. The Company records a contract asset when revenue is recognized prior to invoicing and records a deferred revenue liability when revenue is expected to be recognized after invoicing. For the Company’s breach services agreements, customers are typically invoiced at the beginning of the arrangement for the entire contract amount. When the breach agreement includes variable components related to as-incurred identity protection services, customers are invoiced monthly for the duration of the enrollment or call center period. Unbilled accounts receivable, which consists of services billed one month in arrears, was $ 7.8 million as of August 3, 2022. These unbilled amounts are included in accounts receivable as the Company has the unconditional right to receive this consideration. Contract assets are presented as other receivables within the Condensed Consolidated Balance Sheets and primarily relate to the Company’s rights to consideration for work completed but not billed on service contracts. Contract assets are transferred to receivables when the Company invoices the customer. Contract liabilities are presented as deferred revenue and relate to payments received for services that are yet to be recognized in revenue. During the period July 1, 2022, to August 3, 2022, and the period January 1, 2022, to August 3, 2022, the Company recognized $ 0.6 million and $ 5.1 million of revenue that was included in deferred revenue at the end of the preceding year, respectively. All other deferred revenue activity is due to the timing of invoices in relation to the timing of revenue, as described above. The Company expects to recognize as revenue approximately 56 % of its August 3, 2022, deferred revenue balance in the remainder of 2022 , 29 % in the January 1, 2023, to August 3, 2023 , and the remainder thereafter. In instances where the timing of revenue recognition differs from the timing of invoicing, the Company determined that its contracts do not include a significant financing component. The primary purpose of invoicing terms is to provide customers with simplified and predictable ways of purchasing the Company's services and not to facilitate financing arrangements. Government Contracts The Company evaluates arrangements with governmental entities containing fiscal funding or termination for convenience provisions, when such provisions are required by law, to determine the probability of possible cancellation. The Company considers multiple factors including the history with the customer in similar transactions and the budgeting and approval processes undertaken by the governmental entity. If the Company determines upon execution of these arrangements that the likelihood of cancellation is remote, it then recognizes revenue for such arrangements once all relevant criteria have been met. If such a determination cannot be made, revenue is recognized upon the earlier of cash receipt or approval of the applicable funding provision by the governmental entity for such arrangements. | |
| Contract Costs | Contract Costs The Company capitalizes costs to obtain a contract or fulfill a contract. These costs are recorded as deferred contract acquisitions costs on the Condensed Consolidated Balance Sheets. Costs to obtain a contract for a new customer are amortized on a straight-line basis over the estimated period of benefit. The Company determined the estimated period of benefit by taking into consideration the contractual term. The Company periodically reviews the carrying amount of the capitalized contract costs to determine whether events or changes in circumstances have occurred that could affect the period of benefit. Amortization expense associated with costs to fulfill a contract is recorded to cost of services on the Condensed Consolidated Statements of Income. Amortization expense associated with costs to obtain a contract (sales commissions) is recorded to sales and marketing expense on the Condensed Consolidated Statements of Income. | |
| Cost of Services | Cost of Services Cost of services consists of fees to outsourced service providers for credit monitoring, call center operation, notification mailing, insurance, and other miscellaneous services and internal labor costs. Costs incurred for breach service contracts represent fulfillment costs. These costs are deferred within capitalized contract costs and recognized in relation to revenue recorded over the combined service and membership terms. The remainder of cost of services are expensed as incurred. Relevant depreciation and amortization are included in cost of services on the Condensed Consolidated Statements of Income. | |
| Research and Development | Research and Development Research and development expenses primarily consist of personnel costs and contractor fees related to the bundling of other third-party software products that are offered as one combined package within the Company’s product offerings. Personnel costs include salaries, bonuses, stock-based compensation, employer-paid payroll taxes, and an allocation of our facilities, benefits, and internal IT costs. Research and development costs are expensed as incurred. | |
| Advertising | Advertising Advertising costs are expensed as incurred. Advertising costs amounted to $ 0.1 million and $ 0.8 million for the period July 1, 2022, August 3, 2022, and January1, 2022, to August 3, 2022, respectively. | |
| Stock-Based Compensation | Stock-Based Compensation The Company grants stock options to purchase common stock to employees with exercise prices equal to the fair market value of the underlying stock as determined by the Board of Directors and management. The Board of Directors, with the assistance of outside valuation experts, determines the fair value of the underlying stock by considering several factors including historical and projected financial results, the risks the Company faced on the grant date, the preferences of the Company’s debt holders and preferred stockholders, and the lack of liquidity of the Company’s common stock. The fair value of each stock option award is estimated using the Black-Scholes-Merton valuation model. Such value is recognized as expense over the requisite service period using the straight-line method, net of forfeitures as they occur. Excess tax benefits of awards that relate to stock option exercises are reflected as operating cash inflows. Stock-based compensation expense recognized in the Company’s Consolidated Statements of Income for options were negligible for all periods presented. | |
| Concentration of Credit Risk | Concentrations of Credit Risk Financial instruments that potentially subject the Company to concentrations of credit risk consist principally of cash balances and trade accounts receivable. The Company maintains cash balances at two financial institutions. The balances, at times, exceed federally insured limits. As of August 3, 2022, balances exceeded federally insured limits by $ 16.0 million. The Company has not experienced any losses in such accounts, and believes it is not exposed to any significant credit risk from cash. Concentrations of credit with respect to accounts receivables are generally limited due to the large number of customers, outside the U.S. Government, comprising the Company's customer base and their dispersion across different industries. The Company generated 73 % and 76 % of its revenue in for the periods July 1, 2022, to August 3, 2022, and January 1, 2022, to August 3, 2022, respectively, from the U.S. Government, who generally pays invoices in less than thirty days and is deemed to be a low credit risk. On August 3, 2022, accounts receivables from the U.S. Government made up 64 % of the Company’s outstanding accounts receivables. | |
| Income Taxes | Income Taxes The Company provides for income taxes using the asset and liability method. Deferred tax assets and liabilities are recognized for the future tax effect of differences between recorded assets and liabilities and their respective tax basis along with operating loss and tax credit carryforwards. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to reverse. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period the rate change becomes effective. The Company recognizes the effect of income tax positions only if those positions are more likely than not of being sustained in the event of a tax audit. Recognized income tax positions are measured at the largest amount that is greater than 50% likely of being realized. Changes in recognition or measurement are reflected in the period in which the change in judgment occurs. The Company records interest related unrecognized tax benefits in income tax expense. Deferred tax assets are reduced by a valuation allowance when in management’s opinion it is more likely than not that some portion or all the deferred tax assets will not be realized. The Company considers the future reversal of existing taxable temporary differences, taxable income in prior carryback years, projected future taxable income, and tax planning strategies in making this assessment. The Company’s valuation allowance is based on all available positive and negative evidence, including its recent financial operations, evaluation of positive and negative evidence with respect to certain specific deferred tax assets (including evaluating sources of future taxable income) to support the realization of the deferred tax assets. The Company's income tax returns are generally subject to examination by taxing authorities for a period of three years from the date they are filed. Tax authorities may have the ability to review and adjust net operating loss or tax credit carryforwards that were generated prior to these periods if utilized in an open tax year. As of August 3, 2022, the Company’s income tax returns for the years ended December 31, 2016 through 2021 are subject to examination by the Internal Revenue Service and applicable state and local taxing authorities. | |
| Sales and Use Taxes | Sales and Use Taxes The Company collects sales tax in various jurisdictions. Upon collection from customers, it records the amount as a payable to the related jurisdiction. On a periodic basis, it files a sales tax return with the jurisdictions and remits the amounts indicated on the return. | |
| Segment Reporting | Segment Reporting Operating segments are identified as components of an enterprise for which separate discrete financial information is available for evaluation by the chief operating decision maker, the chief executive officer, or decision-making group, in making decisions on how to allocate resources and assess performance. The Company views its operations and manages its business as one operating segment. All revenue has been generated and all assets are held in the United States. | |
| Deferred Rent and Lease Incentives | Deferred Rent and Lease Incentives Rent expense and lease incentives from the Company’s operating leases are recognized on a straight-line basis over the lease term. The Company’s operating lease includes rent escalation payment terms and a rent-free period. Deferred rent represents the difference between actual operating lease payments and straight-line rent expense over the term of the lease. | |
| Net Loss Per Share Attributable to Common Stockholders | Earnings (Loss) per Share Series A-1 and A-2 Preferred Stock are participating securities due to their rights to receive dividends. The Company calculates EPS under the two-class method. In the two-class method, all earnings (distributed and undistributed) are allocated to each class of common stock and participating securities. The allocation between common stock and participating securities is based upon the rights to dividends for the two types of securities. For periods of net income and when the effects are not anti-dilutive, the Company calculates diluted earnings per share by dividing net income available to common shareholders by the weighted average number of common shares plus the weighted average number of common shares assuming the conversion of the Company’s convertible notes, as well as the impact of all potentially dilutive common shares. Potentially dilutive common shares consist primarily of common stock options using the treasury stock method. For periods of net loss, shares used in the diluted earnings (loss) per share calculation equals the amount of shares in the basic EPS calculation as including potentially dilutive shares would be anti-dilutive. | |
| Standards Issued and Adopted | Standards Issued and Adopted In May 2021, the FASB issued ASU 2021-04, Earnings per Share (“Topic 260”), Debt – Modifications and Extinguishments (“Subtopic 470-50”), Compensation – Stock Compensation (“Topic 718”), and Derivatives and Hedging – Contracts in Entity’s Own Equity (“Subtopic 815-40”). ASU 2021-04 clarifies the accounting by issuers for modifications or exchanges of equity-classified warrants and is effective for fiscal years starting after December 15, 2021. IDX adopted ASU 2021-04 effective as of January 1, 2022. The adoption of ASU 2021-04 did not have an impact on the condensed consolidated financial statements. | |
| Standards Issued, but Not Yet Effective | Standards Issued but Not Yet Effective In February 2016, the FASB issued ASU No. 2016-02, Leases (Topic 842). This guidance is intended to improve financial reporting for leasing transactions. The standard is effective for the Company for annual reporting periods beginning after December 15, 2021, and early adoption is permitted. Upon adoption, the Company will be required to record right-of-use assets and lease liabilities on its Consolidated Balance Sheets for leases which were historically classified as operating leases. The Company expects the adoption to have a material increase on the assets and liabilities recorded on its Consolidated Balance Sheets. The Company does not expect a material impact to its Consolidated Statement of Comprehensive Loss or Consolidated Statement of Cash Flows following adoption. In June 2016, the FASB issued ASU 2016-13, Measurement of Credit Losses on Financial Instruments, which amends the accounting for credit losses for most financial assets and certain other instruments. The standard requires that entities holding financial assets that are not accounted for at fair value through net income be presented at the net amount expected to be collected. An allowance for credit losses will be a valuation account that will be deducted from the amortized cost basis of the financial asset to present the net carrying value at the amount expected to be collected on the financial asset. The standard is effective for the Company for annual reporting periods beginning in fiscal year 2023. The Company does not believe the adoption will have a material impact on its consolidated financial statements. In December 2019, the FASB issued ASU 2019-12, Simplifying the Accounting for Income Taxes (Topic 740). The amendments will remove certain exceptions for recognizing deferred taxes for investments, performing intra-period allocation and calculating income taxes in interim periods. The ASU also adds guidance to reduce complexity in certain areas, including recognizing deferred taxes for tax goodwill and allocating taxes to members of a consolidated group. The amendments are effective for annual periods beginning after December 15, 2021, and interim periods within annual periods beginning after December 15, 2022. IDX is currently evaluating the impact of ASU 2019-12 on its consolidated financial statements. In March 2020, the FASB issued ASU No. 2020-06, Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity (Topics: 470-20, 815-40). The standards reduce the number of accounting models for convertible instruments and allows more contracts to qualify for equity classification. The standard also amends diluted EPS calculations for convertible instruments and amends the requirements for a contract (or embedded derivative) that is potentially settled in an entity’s own shares to be classified in equity. The standard is effective for the Company for all interim and annual periods of our fiscal year ending December 31, 2024. Early adoption is permitted. IDX is currently evaluating the impact of ASU 2020-06 on its consolidated financial statements. In August 2020, the FASB issued ASU 2020-06, Debt – Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging – Contracts in Entity’s Own Equity (Subtopic 815-40). ASU 2020-06 simplifies the accounting for convertible instruments by eliminating large sections of the existing guidance in this area. It also eliminates several triggers for derivative accounting, including a requirement to settle certain contracts by delivering registered shares. The standard is effective for the Company for all interim and annual periods of our fiscal year ending December 31, 2024. Early adoption is permitted. IDX is currently evaluating the impact of ASU 2020-06 on its consolidated financial statements. | |
