Document
10-QFALSEMarch 31, 20182018Q1INTXINTERSECTIONS INCSmaller Reporting 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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-Q
☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 
For the quarterly period ended March 31, 2018
OR
☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 
Commission file number: 000-50580
http://api.tenkwizard.com/cgi/image?quest=1&rid=23&ipage=12245996&doc=12
(Exact name of registrant as specified in the charter)
DELAWARE 54-1956515 
(State or other jurisdiction of
incorporation or organization)
(I.R.S. Employer
Identification Number)
3901 Stonecroft Boulevard,
Chantilly, Virginia
20151 
(Address of principal executive office) (Zip Code) 
(703) 488-6100
(Registrant’s telephone number including area code)
Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes      No  ☐
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).    Yes      No  ☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of "large accelerated filer," "accelerated filer," "smaller reporting company," and "emerging growth company" in Rule 12b-2 of the Exchange Act.
Large accelerated filer ☐  Accelerated filer 
Non accelerated filer ☐ (Do not check if a smaller reporting company) Smaller reporting company ☒ 
Emerging growth company 
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.    ☐
Indicate by check mark whether the registrant is a shell company (as defined in Exchange Act Rule 12b-2).    Yes  ☐    No  
Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the last practicable date:
As of May 4, 2018 there were 28,397,155 shares of common stock, $0.01 par value, issued and 24,289,899 shares outstanding, with 4,107,256 shares of treasury stock.



Form 10-Q
March 31, 2018
Table of Contents
Page 
PART I. FINANCIAL INFORMATION 
Item 1. 
Item 2. 
Item 4. 
PART II. OTHER INFORMATION 
Item 1. 
Item 2. 
Item 6. 

2


PART I. FINANCIAL INFORMATION
Item 1.  Financial Statements
INTERSECTIONS INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share data)
(unaudited)
Three Months Ended March 31, 
2018 2017 
REVENUE$39,078 $40,449 
OPERATING EXPENSES:
Marketing912 3,450 
Commission9,305 9,748 
Cost of revenue12,382 12,999 
General and administrative13,128 16,381 
Loss on disposition of Captira Analytical 130 
Impairment of intangibles and other assets 86 
Depreciation1,453 1,300 
Amortization49 47 
Total operating expenses37,229 44,141 
INCOME (LOSS) FROM OPERATIONS1,849 (3,692)
Interest expense, net(531)(592)
Other (expense) income, net(48)34 
INCOME (LOSS) FROM CONTINUING OPERATIONS BEFORE INCOME TAXES1,270 (4,250)
Income tax benefit523 10 
INCOME (LOSS) FROM CONTINUING OPERATIONS1,793 (4,240)
Loss from discontinued operations, net of tax (562)
NET INCOME (LOSS)$1,793 $(4,802)
Basic earnings (loss) per common share:
Income (loss) from continuing operations$0.07 $(0.18)
Loss from discontinued operations (0.02)
Basic net income (loss) per common share$0.07 $(0.20)
Diluted earnings (loss) per common share:
Income (loss) from continuing operations$0.07 $(0.18)
Loss from discontinued operations (0.02)
Diluted net income (loss) per common share$0.07 $(0.20)
Weighted average common shares outstanding—basic24,203 23,675 
Weighted average common shares outstanding—diluted24,529 23,675 
See Notes to Condensed Consolidated Financial Statements
3


INTERSECTIONS INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands, except par value)
(unaudited) 
March 31, 2018December 31, 2017
ASSETS
CURRENT ASSETS:
Cash and cash equivalents$8,437 $8,502 
Accounts receivable, net of allowance for doubtful accounts of $35 (2018) and $34 (2017)6,006 8,225 
Contract assets353  
Prepaid expenses and other current assets3,584 3,232 
Income tax receivable1,290 2,545 
Deferred subscription solicitation and commission costs 1,655 
Total current assets19,670 24,159 
PROPERTY AND EQUIPMENT, net10,591 11,040 
GOODWILL9,763 9,763 
INTANGIBLE ASSETS, net249 58 
CONTRACT COSTS419  
OTHER ASSETS1,378 1,459 
TOTAL ASSETS$42,070 $46,479 
LIABILITIES AND STOCKHOLDERS’ EQUITY
CURRENT LIABILITIES:
Accounts payable$2,417 $3,498 
Accrued expenses and other current liabilities9,223 8,533 
Accrued payroll and employee benefits487 1,501 
Commissions payable416 141 
Capital leases, current portion332 423 
Contract liabilities, current5,307 7,759 
Total current liabilities18,182 21,855 
LONG-TERM DEBT, net20,790 20,736 
OBLIGATIONS UNDER CAPITAL LEASES, non-current334 392 
OTHER LONG-TERM LIABILITIES2,076 2,895 
DEFERRED TAX LIABILITY, net7 7 
TOTAL LIABILITIES41,389 45,885 
COMMITMENTS AND CONTINGENCIES (see Notes 14 and 16)
STOCKHOLDERS’ EQUITY:
Common stock at $0.01 par value, shares authorized 50,000; shares issued 28,371 (2018) and 28,194 (2017); shares outstanding 24,264 (2018) and 24,102 (2017) 284 282 
Additional paid-in capital150,184 150,305 
Warrants2,840 2,840 
Treasury stock, shares at cost; 4,107 (2018) and 4,092 (2017)(35,781)(35,745)
Accumulated deficit(116,846)(117,088)
TOTAL STOCKHOLDERS’ EQUITY681 594 
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY$42,070 $46,479 
See Notes to Condensed Consolidated Financial Statements
4


INTERSECTIONS INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands; unaudited)
Three Months Ended March 31, 
20182017
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss)$1,793 $(4802)
Less: loss from discontinued operations, net of tax (562)
Income (loss) from continuing operations1,793 (4240)
Adjustments to reconcile net income (loss) to cash flows from operating activities:
Depreciation and amortization1,502 1347 
Amortization of debt issuance costs16 156 
Accretion of debt discount38  
Provision for doubtful accounts (9)
Share based compensation4 1,096 
Amortization of deferred subscription solicitation costs 3,087 
Amortization of deferred contract costs203  
Loss on disposition of Captira Analytical 130 
Impairment of intangibles and other long-lived assets 86 
Changes in assets and liabilities:
Accounts receivable1,757 12 
Contract assets(1,252) 
Prepaid expenses, other current assets and other assets(512)(264)
Income tax receivable, net1,255 649 
Deferred subscription solicitation and commission costs (4,011)
Contract costs(300) 
Accounts payable and accrued liabilities(1,272)301 
Commissions payable58 (16)
Contract liabilities, current(1,091)(945)
Other long-term liabilities(819)(83)
Cash flows provided by (used in) continuing operations1,380 (2,704)
Cash flows used in discontinued operations (1,069)
Net cash provided by (used in) operating activities1,380 (3,773)
CASH FLOWS FROM INVESTING ACTIVITIES:
Net cash paid for the disposition of Captira Analytical (315)
Decrease (increase) in restricted cash 25 
Acquisition of property and equipment(1,137)(1,432)
Cash flows used in continuing operations(1,137)(1,722)
Cash flows provided by discontinued operations 94 
Net cash used in investing activities(1,137)(1,628)
CASH FLOWS FROM FINANCING ACTIVITIES:
Capital lease payments(149)(166)
Withholding tax payment on vesting of restricted stock units(159)(381)
Cash flows used in financing activities(308)(547)
DECREASE IN CASH AND CASH EQUIVALENTS(65)(5,948)
CASH AND CASH EQUIVALENTS — beginning of period8,502 10,797 
Cash reclassified to assets held for sale at beginning of period 381 
Less: cash reclassified to assets held for sale at end of period (56)
CASH AND CASH EQUIVALENTS — end of period$8,437 $5,174 
SUPPLEMENTAL DISCLOSURE OF NON-CASH FINANCING AND INVESTING ACTIVITIES:
Equipment additions accrued but not paid$92 $164 
Withholding tax payments accrued on vesting of restricted stock units and stock option exercises$ $100 
Intangible asset placed in service but paid in prior year$240 $ 
See Notes to Condensed Consolidated Financial Statements
5


INTERSECTIONS INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)
1. Organization and Business
We provide innovative software and data monitoring and analytics solutions that help consumers manage financial and personal risks associated with the proliferation of their personal data in the virtual and financial world. Under our Identity Guard® brand and other brands that comprise our Personal Information Services segment, we have helped consumers monitor, manage and protect against the risks associated with their identities and personal information for more than twenty years. We offer identity theft and privacy protection as well as credit monitoring services for consumers to understand, monitor, manage and protect their personal information and privacy. Under our Identity Guard® and Identity Guard® with Watson™ suite of services (collectively, "Identity Guard® Services"), we help protect consumers against the risks associated with the inappropriate exposure of their personal information that can result in fraudulent use or reputation damage. Identity Guard® with Watson™ offers robust early detection of potential risks, stretching beyond credit-centric risks to include online privacy risks, and provides personalized threat alerts with actionable steps to help keep our customers’ information private from the earliest stage possible. Identity Guard® Services are offered through large and small organizations as an embedded service for either its employees or consumers, as well as directly to consumers through our direct marketing efforts. We believe that our suite of services offers consumers the most proactive and comprehensive identity theft monitoring and online privacy services available on the market today.  
 Our Insurance and Other Consumer Services segment includes insurance and membership services for consumers, delivered on a subscription basis. We are not planning to develop new business in this segment and are experiencing normal subscriber attrition due to ceased marketing and retention efforts. Some of our legacy subscriber portfolios have been cancelled, and our continued servicing of other subscribers may be cancelled as a result of actions taken by one or more financial institutions. Corporate headquarter office transactions including, but not limited to, payroll, share based compensation and other expenses related to our Chairman and non-employee Board of Directors are reported in our Corporate business unit.
2. Basis of Presentation and Summary of Significant Accounting Policies
Basis of Presentation and Consolidation
The accompanying unaudited condensed consolidated financial statements have been prepared by us in accordance with accounting principles generally accepted in the United States of America ("U.S. GAAP") and applicable rules and regulations of the Securities and Exchange Commission, and in management’s opinion reflect all normal and recurring adjustments necessary for a fair presentation of results of operations, financial position and cash flows for the periods presented. They include the accounts of the Company and our subsidiaries.
The information in our condensed consolidated financial statements is presented for the three months ended March 31, 2017 giving effect to the disposal of i4c Innovations LLC (“i4c” or “Voyce”), with the historical financial results of the Voyce business recast as discontinued operations. In accordance with U.S. GAAP, we did not allocate corporate overhead expenses to discontinued operations in the year ended December 31, 2017. Additionally, we considered, and made the necessary adjustments to the historical financial results for, the allocation of other costs to either discontinued or continuing operations, including, but not limited to, rent expense, severance expense and other wind-down costs. The result of these adjustments changed the historical operating results for certain segments as well as the presentation of the condensed consolidated financial statements to include discontinued operations for the year ended December 31, 2017. Unless otherwise indicated, the information in the notes to the condensed consolidated financial statements refer only to our continuing operations and do not include discussion of balances or activity of i4c. For additional information, please see Note 5.
All intercompany transactions have been eliminated from the condensed consolidated statements of operations. The condensed consolidated results of operations for the interim periods are not necessarily indicative of results for the full year.
These condensed consolidated financial statements do not include all the information or notes necessary for a complete presentation and, accordingly, should be read in conjunction with our audited consolidated financial statements
6


and accompanying notes for the year ended December 31, 2017, as filed in our Annual Report on Form 10-K.
Use of Estimates
The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.
Restricted Cash
We classify cash as restricted when the cash is unavailable for withdrawal or usage for general operations. Our restricted cash represents cash collateral to one commercial bank for corporate credit cards and electronic payments. Restricted cash is included in prepaid expenses and other current assets in our condensed consolidated balance sheets.
Revenue Recognition
For a full description of our revenue recognition policy, please see Note 4.
Goodwill, Identifiable Intangibles and Other Long-Lived Assets  
We record, as goodwill, the excess of the purchase price over the fair value of the identifiable net assets acquired in purchase transactions. We review our goodwill for impairment annually, as of October 31, or more frequently if indicators of impairment exist. Goodwill is reflected as an asset in our Personal Information Services and Insurance and Other Consumer Services segments’ balance sheets, resulting from our acquisitions of Health at Work Wellness Actuaries LLC ("Habits at Work") and White Sky, Inc. ("White Sky") in 2015 as well as our prior acquisition of IISI Insurance Services Inc. ("IISI"), formerly known as Intersections Insurance Services Inc., in 2006. 
We continuously evaluate whether indicators of impairment exist and perform an initial assessment of qualitative factors to determine whether it is necessary to perform the goodwill impairment test (commonly referred to as the step zero approach). For reporting units in which the qualitative assessment concludes it is more likely than not that the fair value is more than its carrying value, U.S. GAAP eliminates the requirement to perform further goodwill impairment testing. In addition, we are not required to perform a qualitative assessment for our reporting units with zero or negative carrying amounts. For those reporting units where a significant change or event occurs, and where potential impairment indicators exist, we perform the quantitative assessment to test goodwill for impairment. A significant amount of judgment is involved in determining if an indicator of impairment has occurred. Such indicators may include, among others (a) a significant decline in our expected future cash flows; (b) a sustained, significant decline in our stock price and market capitalization; (c) a significant adverse change in legal factors or in the business climate; (d) unanticipated competition; (e) the testing for recoverability of a significant asset group within a reporting unit; and (f) slower growth rates. Any adverse change in these factors could have a significant impact on the recoverability of these assets and could have a material impact in our condensed consolidated financial statements. 
The quantitative assessment is a comparison of each reporting unit’s fair value to its carrying value. We estimate fair value using the best information available, using a combined income approach (discounted cash flow) and market based approach. The income approach measures the value of the reporting units by the present values of its economic benefits. These benefits can include revenue and cost savings. The market based approach measures the value of an entity through an analysis of recent sales or offerings of comparable companies and using revenue and other multiples of comparable companies as a reasonable basis to estimate our implied multiples. Value indications are developed by discounting expected cash flows to their present value at a rate of return that incorporates the risk-free rate for use of funds, trends within the industry, and risks associated with particular investments of similar type and quality as of the valuation date. In addition, we consider the uncertainty of realizing the projected cash flows in the analysis. 
The estimated fair values of our reporting units are dependent on several significant assumptions, including our earnings projections, and cost of capital (discount rate). The projections use management’s best estimates of economic and market conditions over the projected period including business plans, growth rates in sales, costs, and estimates of future expected changes in operating margins and cash expenditures. Other significant estimates and assumptions include terminal value growth rates, estimates of future capital expenditures, changes in future working capital requirements and overhead cost allocation, based on each reporting unit’s relative benefit received from the functions that reside in our Corporate business unit. We perform a detailed analysis of our Corporate overhead costs for purposes of establishing the
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overhead allocation baseline for the projection period. Overhead allocation methods include, but are not limited to, the percentage of the payroll within each reporting unit, allocation of existing support function costs based on estimated usage by the reporting units, and vendor specific costs incurred by Corporate that can be reasonably attributed to a particular reporting unit. These allocations are adjusted over the projected period in our discounted cash flow analysis based on the forecasted changing relative needs of the reporting units. Throughout the forecast period, the majority of Corporate’s total overhead expenses are allocated to our Personal Information Services reporting unit. We believe this overhead allocation method fairly allocates costs to each reporting unit, and we will continue to review, and possibly refine, these allocation methods as our businesses grow and mature. There are inherent uncertainties related to these factors and management’s judgment in applying each to the analysis of the recoverability of goodwill. 
We estimate fair value giving consideration to both the income and market approaches. Consideration is given to the line of business and operating performance of the entities being valued relative to those of actual transactions, potentially subject to corresponding economic, environmental, and political factors considered to be reasonable investment alternatives. 
If the estimated fair value of a reporting unit exceeds its carrying value, goodwill of the reporting unit is not impaired. If the carrying value of a reporting unit exceeds its estimated fair value, then a goodwill impairment loss is recognized for the amount that the carrying value of the reporting unit (including goodwill) exceeds its fair value, limited to the total amount of goodwill allocated to that reporting unit. 
As of  March 31, 2018, goodwill of $347 thousand resided in our Insurance and Other Consumer Services reporting unit and goodwill of $9.4 million resided in our Personal Information Services reporting unit.
We review long-lived assets, including finite-lived intangible assets, property and equipment, non-current contract costs and other long-term assets, for impairment whenever events or changes in circumstances indicate that the carrying amounts of the assets may not be fully recoverable. Significant judgments in this area involve determining whether a triggering event has occurred and determining the future cash flows for assets involved. In conducting our analysis, we would compare the undiscounted cash flows expected to be generated from the long-lived assets to the related net book values. If the undiscounted cash flows exceed the net book value, the long-lived assets are considered not to be impaired. If the net book value exceeds the undiscounted cash flows, an impairment charge is measured and recognized. An impairment charge is measured as the difference between the net book value and the fair value of the long-lived assets. Fair value is estimated by discounting the future cash flows associated with these assets. 
Intangible assets subject to amortization may include customer, marketing and technology related intangibles, as well as trademarks. Such intangible assets, excluding customer related intangibles, are amortized on a straight-line basis over their estimated useful lives, which are generally two to ten years. Customer related intangible assets are amortized on either a straight-line or accelerated basis, depending upon the pattern in which the economic benefits of the intangible asset are consumed or otherwise used up. 
Debt Issuance Costs
Debt issuance costs are capitalized and amortized to interest expense using the effective interest method over the life of the related debt agreements. The effective interest rate applied to the amortization is reviewed periodically and may change if actual principal repayments of the term loan differ from estimates. In accordance with U.S. GAAP, short-term and long-term debt are presented net of the unamortized debt issuance costs in our condensed consolidated balance sheets. 
Share Based Compensation
We currently issue equity and equity-based awards under the 2014 Stock Incentive Plan (the "Plan"), and we have three inactive stock incentive plans: the 1999 Stock Option Plan, the 2004 Stock Option Plan and the 2006 Stock Incentive Plan. Individual awards under the 2014 Stock Incentive Plan may take the form of incentive stock options, nonqualified stock options, stock appreciation rights, restricted stock awards and/or restricted stock units. 
The Compensation Committee administers the Plan, and the grants are approved by either the Compensation Committee or by appropriate members of Management in accordance with authority delegated by the Compensation Committee. Restricted stock units in the Plan that have expired, terminated, or been canceled or forfeited are available for issuance or use in connection with future awards.
We use the Black-Scholes option-pricing model to value all options and the straight-line method to amortize this fair value as compensation cost over the requisite service period. We did not grant stock options during the three months
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ended March 31, 2017. The fair value of each option granted has been estimated as of the date of grant with the following weighted-average assumptions for the three months ended March 31, 2018: 
Expected Dividend Yield. Under the New Credit Agreement, we are currently prohibited from declaring and paying dividends and therefore, the dividend yield was zero.
Expected Volatility. The expected volatility of options granted was estimated based upon our historical share price volatility based on the expected term of the underlying grants, or approximately 51%. 
Risk-free Interest Rate. The yield on actively traded non-inflation indexed U.S. Treasury notes was used to extrapolate an average risk-free interest rate based on the expected term of the underlying grants, or approximately 2.7%. 
Expected Term. The expected term of options granted was determined by considering employees’ historical exercise patterns, or approximately 5.0 years. We will continue to review our estimate in the future and adjust it, if necessary, due to changes in our historical exercises. 
Income Taxes 
We account for income taxes under the applicable provisions of U.S. GAAP, which requires an asset and liability approach to financial accounting and reporting for income taxes. Deferred tax assets and liabilities are recognized for future tax consequences attributable to differences between the 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 in effect for the year in which those temporary differences are expected to be recovered or settled. In evaluating our ability to recover our deferred tax assets, we consider all available positive and negative evidence, including projected future taxable income and future reversal of existing deferred tax assets and liabilities, sufficient sources of taxable income in available carryback periods, tax-planning strategies, and historical results of recent operations. The assumptions about future taxable income require significant judgment and are consistent with the plans and estimates we are using to manage the underlying businesses. In evaluating the objective evidence that historical results provide, we consider three trailing years of cumulative operating income (loss). Valuation allowances are provided, if, based upon the weight of the available evidence, it is more likely than not that some or all of the deferred tax assets will not be realized. Changes in tax laws and rates may affect recorded deferred tax assets and liabilities and our effective tax rate in the future. 
Accounting for income taxes in interim periods provides that at the end of each interim period we are required to make our best estimate of the consolidated effective tax rate expected to be applicable for our full calendar year. The rate so determined shall be used in providing for income taxes on a consolidated current year-to-date basis. Further, the rate is reviewed, if necessary, as of the end of each successive interim period during the year to our best estimate of our annual effective tax rate. 
In addition to the amount of tax resulting from applying the estimated annual effective tax rate to income from operations before income taxes, we may include certain items treated as discrete events to arrive at an estimated overall tax amount. 
We believe that our tax positions comply with applicable tax law. As a matter of course, we may be audited by various taxing authorities and these audits may result in proposed assessments where the ultimate resolution may result in us owing additional taxes. U.S. GAAP addresses the determination of whether tax benefits claimed or expected to be claimed on a tax return should be recorded in the financial statements. We may recognize the tax benefit from an uncertain tax position only if it is more likely than not that the tax position will be sustained on examination by the taxing authorities, based on the technical merits of the position. The tax benefits recognized in the financial statements from such a position should be measured based on the largest benefit that has a greater than fifty percent likelihood of being realized upon ultimate settlement. We have elected to include principal and penalties expense related to uncertain tax positions as part of income tax expense and include interest expense related to uncertain tax positions as part of interest expense in our condensed consolidated financial statements. The accrued interest is included as a component of other long-term liabilities in our condensed consolidated balance sheets. U.S. GAAP provides guidance on how an enterprise should determine whether a tax position is effectively settled for the purpose of recognizing previously unrecognized tax benefits. 
Our income tax expense and liability and/or receivable, deferred tax assets and liabilities, and liabilities for uncertain tax benefits reflect management’s best assessment of estimated current and future taxes to be paid or received. Significant judgments and estimates are required in determining the consolidated income tax expense. 

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Contingent Liabilities
We may become involved in litigation or other financial claims as a result of our normal business operations. We periodically analyze currently available information and make a determination of the probability of loss and provide a range of possible loss when we believe that sufficient and appropriate information is available. We accrue a liability for those contingencies where the incurrence of a loss is probable and the amount can be reasonably estimated. If a loss is probable and a range of amounts can be reasonably estimated but no amount within the range is a better estimate than any other amount in the range, then the minimum of the range is accrued. We do not accrue a liability when the likelihood that the liability has been incurred is believed to be probable but the amount cannot be reasonably estimated or when the likelihood that a liability has been incurred is believed to be only reasonably possible or remote. For contingencies where an unfavorable outcome is reasonably possible and the impact could potentially be material, we disclose the nature of the contingency and, where feasible, an estimate of the possible loss or range of loss. 
Variable Interest Entities 
Our decision to consolidate an entity is based on our assessment that we have a controlling financial interest in such entity. We continuously evaluate our related party relationships and any ownership interests, including controlling or financial interests of our executive management team such as our Executive Chairman and President's non-controlling interest in One Health Group, LLC ("OHG"). In accordance with U.S. GAAP, since the total equity investment at risk is not sufficient for OHG to finance its activities without additional subordinated financial support, as well as economic interests of the holders of OHG that are disproportionate to their voting interests, we concluded OHG is a variable interest entity ("VIE"). We further analyzed which related party would be the primary beneficiary in a tiebreaker test. Given that neither we nor our de facto agent have the power to direct the activities of OHG that most significantly impact its economic performance, we determined that we are not the primary beneficiary of the VIE and therefore are not required to consolidate the results of OHG. We do not have any assets or liabilities in our condensed consolidated balance sheets that relate to our variable interest in OHG. Other than the potential participation in future revenue if and when earned, we have no material, continuing economic or other involvement in OHG, including no exposure to loss as a result of our involvement with OHG. Please see Note 5 for additional information related to the divestiture.
Internally Developed Capitalized Software
We develop software for our internal use and capitalize the estimated software development costs incurred during the application development stage in accordance with U.S. GAAP. Costs incurred prior to and after the application development stage are charged to expense. When the software is ready for its intended use, capitalization ceases and such costs are amortized on a straight-line basis over the estimated life, which is generally three years. Significant judgments and estimates are required in measuring capitalized software. We regularly review our capitalized software projects for impairment.
Contract Costs
In accordance with ASU 2014-09, "Revenue from Contracts with Customers" ("Topic 606"), which was adopted January 1, 2018, we recognize certain commission costs, which are included in commission expenses in our condensed consolidated statements of operations, and certain fulfillment costs, which are included in cost of revenue.
Our commissions are generally monthly commissions paid to partners, affiliates and our internal sales team, most of which have commensurate renewal terms or useful lives of one year or less. Therefore, we apply the practical expedient on a portfolio basis and recognize those incremental costs of obtaining contracts as an expense when incurred. We also have a minority population of commission fees that we believe meet the capitalization guidance in U.S. GAAP and are amortized based on the systematic transfer of the underlying contractual service terms, which includes our estimate of subscriber renewal behavior based on acquisition channel from historical data, if available, which is typically on a straight-line basis for one to two years. If we determine that our incremental costs to fulfill a contract are capitalizable under Topic 606, the costs are amortized based on the systematic transfer of the underlying contractual service terms.
Contract Assets and Contract Liabilities
In accordance with Topic 606 and the practical expedient to apply the guidance on a portfolio of contracts, which effectively treats contracts with similar characteristics as a single contract, we presented a net contract asset or contract liability for the majority of our subscribers. This presentation effectively reduced our total accounts receivable as of March 31, 2018 from December 31, 2017 and was offset by a comparable decrease in contract liabilities. In addition, we
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separately state unbilled contract assets in our condensed consolidated balance sheet as of March 31, 2018, which we previously included in accounts receivable. For additional information, please see Notes 3 and 4.
We receive payments from subscribers based on a billing schedule as established in the terms of our monthly and annual contract service agreements. Contract assets relate to our conditional right to consideration for our unbilled completed performance under the contract. Accounts receivable are recorded when the right to consideration for our completed performance is billed and is therefore, no longer unconditional. Contract liabilities (that is, deferred revenue) relate to payments received in advance of performance under the contract. Contract liabilities that are payable in greater than one year are included in other long-term liabilities in our condensed consolidated balance sheets.
3. Accounting Standards Updates
We consider the applicability and impact of all Accounting Standards Updates ("ASUs"). Recently issued ASUs not listed below were assessed and determined to be either not applicable or are expected to have minimal impact on our consolidated financial position or results of operations.
Standard Description Date of Adoption Application Effect on the Consolidated Financial Statements (or Other Significant Matters) 
ASU 2014-09, Revenue from Contracts with Customers (Topic 606) This update supersedes the revenue recognition requirements in Topic 605, Revenue Recognition, by creating a new Topic 606, Revenue from Contracts with Customers. The guidance in this update affects most entities that either enter into contracts with customers to transfer goods or services or enter into contracts for the trade of nonfinancial assets. The core principle of the guidance is that an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. Additionally, various updates have been issued during 2015 and 2016 to clarify the guidance in Topic 606.  January 1, 2018Retrospectively with the cumulative effect of initially applying these updates recognized at the date of initial application.  See "Topic 606" below.  
ASU 2016-02, Leases (Topic 842) The primary amendments in this update require the recognition of lease assets and lease liabilities on the balance sheet, as well as certain qualitative disclosures regarding leasing arrangements. January 1, 2019Modified retrospective See "Topic 842" below.  
ASU 2016-15, Statement of Cash Flows (Topic 230) This update clarifies the guidance regarding the classification of operating, investing, and financing activities for certain types of cash receipts and payments. January 1, 2018Retrospective We adopted this update as of January 1, 2018, and there was no material impact to our condensed consolidated financial statements. Although we previously anticipated a reclassification from operating to financing cash flows, after further consideration, no action was necessary.  
ASU 2017-09, Compensation—Stock Compensation (Topic 718) This update clarifies the guidance regarding changes in the terms or conditions of a share based payment award. Under the amendments of this update, an entity should account for the effects of a modification unless certain criteria remain the same immediately before and after the modification. January 1, 2018Prospective Upon adoption, there was no material impact to our condensed consolidated financial statements. 

Topic 606
We adopted the provisions of Topic 606 as of January 1, 2018 on a modified retrospective basis to open contracts at the date of adoption only. Our assessment of the impact included review of a significant majority of our revenue streams, contracts and contract costs incremental to obtaining the contract. We evaluated our service offerings and determined that the service offerings' obligations are not distinct within the context of the contracts and, as such, are considered to be a series of promised services treated as a single performance obligation. Therefore, we concluded the impact to the way we recognize revenue is immaterial because our revenue is primarily generated from monthly subscriptions of a single performance obligation and longer-term breach contracts, which will continue to be recognized ratably over the service
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delivery periods.
We also concluded that direct-response advertising costs previously included in deferred subscription solicitation and advertising costs must be expensed as incurred under the new standard. Since we previously deferred and amortized these costs over the period during which benefits were expected to be received not to exceed twelve months, we believe this is a significant change that impacts our results of operations in each reportable period after adoption. Any other costs previously included in deferred subscription solicitation and advertising costs, such as annual renewal commission costs, that could continue to be capitalized and amortized over the transfer of the underlying service period under Topic 606 were reclassified to contract costs in our condensed consolidated balance sheet as of March 31, 2018.
In addition, we elected a practical expedient to immediately expense the majority of our incremental one-time commission costs, which is not expected to have a material impact to our future results of operations.
As a result of our comprehensive assessment, we recorded a cumulative adjustment of approximately $1.6 million to the opening balance of retained earnings, which is primarily due to expensing direct-response advertising costs as well as immediately expensing certain incremental one-time commission costs. Given the continued valuation allowance on our net deferred taxes, the tax effect of these cumulative adjustments at adoption is also immaterial to the consolidated financial statements.
The comparative information has not been restated and continues to be reported under the accounting standards in effect for those periods. The following tables summarize the impacts of adopting Topic 606 on select lines of our unaudited condensed consolidated financial statements (all tables in thousands of dollars):
Statement of Operations
Three Months Ended March 31, 2018 
(select lines) As Reported Adjustments Balances without Adoption of 606 
Revenue 39,078  39,078 
Marketing expenses 912 420 1,332 
Commission expenses 9,305 28 9,333 
Income from operations 1,849 (448)1,401 
Net income 1,793 (448)1,345 

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Balance Sheet
As of March 31, 2018 
(select lines) As Reported Adjustments Balances without Adoption of 606 
ASSETS: 
Accounts receivable 6,006 1,715 7,721 
Contract assets 353 (353) 
Prepaid expenses and other current assets 3,584 72 3,656 
Deferred subscription solicitation and commission costs  1,232 1,232 
Contract costs 419 (419) 
Total assets 42,070 2,247 44,317 
LIABILITIES AND STOCKHOLDERS’ EQUITY: 
Commissions payable 416 (217)199 
Contract liabilities, current 5,307 1,312 6,619 
Other Long-Term Liabilites 2,076 50 2,126 
Accumulated deficit (116,846)1,102 (115,744)
Total liabilities and stockholders' equity 42,070 2,247 44,317 
Statement of Cash Flows
Three Months Ended March 31, 2018 
(select lines) As Reported Adjustments Balances without Adoption of 606 
CASH FLOWS FROM OPERATING ACTIVITIES: 
Net income 1,793 (448)1,345 
Adjustments to reconcile net income to cash flows from operating activities: 
Amortization of deferred subscription solicitation costs  1,048 1,048 
Amortization of deferred contract costs 203 (203) 
Changes in assets and liabilities: 
Accounts receivable 1,757 (1,252)505 
Contract assets (1,252)1,252  
Prepaid expenses, other current assets and other assets (512)(72)(584)
Deferred subscription solicitation and commission costs  (625)(625)
Contract costs (300)300  
Net cash provided by operating activities 1,380  1,380 
Topic 842
We plan to adopt the provisions of ASU 2016-02 ("Topic 842"), as amended, as of January 1, 2019. We are evaluating the standard in accordance with our adoption plan, which will include performing a completeness assessment over the lease population, reviewing all forms of leases and analyzing the practical expedients in order to determine the best implementation strategy. We will then determine the impact of adoption on our condensed consolidated financial statements, as well as disclosures, accounting policies, business processes and internal controls. While our evaluation is ongoing, we expect to adopt the standard on a modified retrospective basis and recognize additional lease liabilities and right of use assets.
The extent of the increase to assets and liabilities associated with these amounts remains to be determined, and we are currently unable to estimate if there will be a material impact to any of our consolidated financial statements. As of March 31, 2018, we had an estimated $5.9 million in undiscounted future minimum lease commitments, as reported in Note 14. We also continue to monitor changes to the standard and we will assess and revise our implementation process as guidance is updated.

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4.  Revenue Recognition
We account for revenue in accordance with Topic 606, which was adopted January 1, 2018. For additional information about the adoption impact, please see Note 3.
We recognize revenue on identity theft protection services, as well as insurance services and other monthly membership and transaction services. The following is a description of principal activities, separated by reportable segments, from which we generate revenues. For additional information about reportable segments, please see Note 20.
Accounting Policy, Nature of Services and Timing of Satisfaction of Performance Obligations
Personal Information Services segment
We offer identity theft and privacy protection services to subscribers through multiple marketing channels including, but not limited to, direct-to-consumer, affiliates and partners, and as an embedded service for either its employees or consumers. We also offer breach-response services to large and small organizations by providing affected individuals with identity theft recovery and credit monitoring services.
With the exception of breach-response services, revenue is measured based on the stated consideration specified in the monthly renewable individual subscription contract. Subscription fees billed by our clients are generally billed directly to the subscriber’s credit card, mortgage bill or demand deposit accounts. Subscription fees billed by us are generally billed directly to the subscriber’s credit card except for arrangements under which subscription fees are paid to us by our clients on behalf of the subscriber. These payment mechanisms significantly reduce the risk of uncertain cash flows and a significant portion of our subscribers are billed in advance of fulfillment, which also mitigates uncertainty of cash flows. The prices to subscribers of various configurations of our non-breach services range generally from $4.99 to $25.00 per month. As a means of allowing customers to become familiar with our services, our subscriptions periodically may be offered with trial, delayed billing or guaranteed refund periods. No revenues are recognized until applicable trial periods are completed. We are the principal in almost all of our transactions and therefore, revenue is recorded on a gross basis in the amount that we bill subscribers from the sale of subscriptions and is recognized ratably on a straight-line basis over the contractual term of the service agreement, ranging from one month to one year. In a minority of transactions, we also provide services to certain legacy partners in which we are the agent in the transactions and therefore, we record revenue on a net basis in the amount that we bill certain partners. Revenue from these arrangements is also recognized ratably on a straight-line basis over the contractual term of the service agreement. Based on the short-term nature of our monthly subscription services and the service terms, we do not have any unsatisfied, or partially unsatisfied, future performance obligations, in addition to the amounts included in contract liabilities. In addition, and for the same reasons noted above, we do not have any contracts that have a significant financing component. Revenues are presented net of the taxes that are collected from members and remitted to governmental authorities.
Revenue for annual subscription fees and breach-response services, which the contract term is one year or greater, are deferred and recognized ratably on a straight-line basis over the contractual term of the service agreement, which is as the services are systematically transferred to the subscriber.
Our monthly contractual subscription terms do not have stated refund provisions, however, we considered our refund history as variable consideration in determining the estimated transaction price. Discretionary refunds for our monthly subscriptions are generally consistent, processed within the service term and are appropriately reflected as reductions to revenue. Discretionary refunds in excess of one month of service are insignificant. Annual subscriptions include subscribers with pro-rata refund provisions. Revenue related to annual subscribers with pro-rata provisions is recognized based on a pro-rata share of revenue earned. An allowance for discretionary subscription refunds is established based on our historical experience. For subscriptions with refund provisions whereby only the prorated subscription fee is refunded upon cancellation by the subscriber, deferred subscription fees are recorded when billed and amortized as subscription fee revenue on a straight-line basis over the subscription period, generally one year.
We also generate revenue through a collaborative arrangement, which involves joint marketing and servicing activities. We recognize our share of revenues and expenses from this arrangement in our condensed consolidated financial statements and account for third-party revenue and contract costs in accordance with U.S. GAAP.

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Insurance and Other Consumer Services Segment
We offer insurance and other membership services to subscribers on a monthly basis. We are not planning to develop new business in this segment and are experiencing normal attrition due to ceased marketing and retention efforts. We provide these insurance services to certain legacy partners in which we are the agent in the transactions and therefore, we record revenue on a net basis in the amount that we bill certain partners. Revenue from these arrangements is also recognized ratably on a straight-line basis over the contractual term of the service agreements. Revenues are presented net of the taxes that are collected from members and remitted to governmental authorities.
Disaggregation of Revenue
The following table disaggregates our revenue by major source for the three months ended March 31, 2018 (in thousands):
Personal Information ServicesInsurance and Other Consumer ServicesTotal
Primary geographical markets: 
United States $34,342 $1,505 $35,847 
Canada 3,231  3,231 
Total revenue $37,573 $1,505 $39,078 
Major service lines: 
Identity Guard® Services $13,514 $ $13,514 
Canadian business 3,231  3,231 
U.S. financial institutions 19,559  19,559 
Breach services & other 1,269 1,505 2,774 
Total revenue $37,573 $1,505 $39,078 
Timing of revenue recognition: 
Products and services transferred over time $37,573 $1,505 $39,078 
Products transferred at a point in time    
Total revenue $37,573 $1,505 $39,078 
Contract Balances
The opening and closing balances of our accounts receivable, contract assets and contract liabilities are as follows (in thousands):
Accounts Receivable Contract Assets Contract Liabilities, CurrentContract Liabilities, Non-Current
Opening Balance as of December 31, 2017 $8,225 $ $7,759 $ 
Increase (decrease), net (2,219)353 (2,452)50 
Ending Balance as of March 31, 2018 $6,006 $353 $5,307 $50 
We had $5.0 million deferred revenue as of December 31, 2017 that was recognized in the three months ended March 31, 2018. 
5. Discontinued Operations and Assets and Liabilities Held for Sale
On July 31, 2017, we divested i4c to One Health Group, LLC (the "Purchaser"), pursuant to the terms and conditions of a membership interest purchase agreement (the "Purchase Agreement"). i4c conducted our Pet Health Monitoring business known as Voyce. The purchase price for the assets was equal to (i) the sum of $100, plus (ii) a revenue participation of up to $20.0 million, payable pursuant to the terms and conditions of the Purchase Agreement. We have determined that the revenue participation is a gain contingency and therefore will be recognized if and when it is earned.
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The total value of the consideration paid pursuant to the Purchase Agreement was determined through negotiations that took into account a number of factors of the Pet Health Monitoring business, including historical revenues, operating history, business contracts, obligations and commitments and other factors. The terms of the transaction were approved by our independent directors of the Board of Directors and required the consent of our lender.
The Purchaser is a newly-formed entity of which Michael R. Stanfield, our Executive Chairman and President, is a minority investor, and certain former members of the i4c management team are the managing member and investors. Except as described above, there are no material relationships between the Purchaser, on the one hand, and us or any of our affiliates, directors, officers, or any associate of such directors or officers, on the other hand. For our policy on identifying a controlling financial interest, please see "—Variable Interest Entities" in Note 2. 
These condensed consolidated financial statements present our results of operations for the three months ended March 31, 2018 and  2017 and our financial position as of March 31, 2018 and December 31, 2017 giving effect to the disposal of i4c, with the historical financial results of the Pet Health Monitoring segment reflected as discontinued operations, since the disposal constituted a strategic business shift. We made adjustments to our historical financial results for certain costs and overhead allocations to either discontinued or continuing operations for the three months ended March 31, 2017; for additional information, please see "—Variable Interest Entities" in Note 2.
The following table summarizes the components of loss from discontinued operations, net of income taxes included in the condensed consolidated statements of operations (in thousands):
Three Months Ended March 31, 2017 
Major classes of line items constituting loss from discontinued operations:
Marketing expenses$(15)
Cost of revenue(4)
General and administrative expenses(613)
Impairment70 
Loss from discontinued operations before income taxes(562)
Loss on disposal of discontinued operations 
Income tax benefit 
Total loss from discontinued operations, net of tax$(562)
In 2016, our Board of Directors approved a plan to sell Captira, which comprised our Bail Bonds Industry Solutions segment. Effective January 31, 2017, we completed the sale of Captira for a nominal amount, which resulted in a loss on sale of $130 thousand and marked the conclusion of our operations in the Bail Bonds Industry Solutions segment. The disposal did not represent a strategic shift that would have a major effect on operations and financial results, and therefore, it is not classified as discontinued operations. For information on the operating results of the Bail Bonds Industry Solutions segment, please see "Item 2. — Management’s Discussion and Analysis of Financial Condition and Results of Operations."
In March 2017, we executed an agreement to dispose of our Habits at Work business, the results of which are recorded in our Personal Information Services segment. Effective June 1, 2017, we completed the sale of Habits at Work for a nominal amount. The disposal did not represent a strategic shift that would have a major effect on operations and financial results, and therefore, it is not classified as discontinued operations. As part of the required evaluation under U.S. GAAP, we determined that the approximate fair value less costs to sell the businesses were significantly lower than the carrying value of the net assets. As a result, we recorded an impairment charge of $86 thousand related to Habits at Work for the three months ended March 31, 2017, which is included in impairment of intangibles and other assets in our condensed consolidated statements of operations.
6. Earnings (Loss) Per Common Share
Basic and diluted earnings (loss) per common share is determined in accordance with the applicable provisions of U.S. GAAP. Basic earnings (loss) per common share is computed using the weighted average number of shares of common stock outstanding for the period. Diluted earnings per common share is computed using the weighted average
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number of shares of common stock, adjusted for the dilutive effect of potential common stock. Potential common stock, computed using the treasury stock method, includes the potential exercise of outstanding stock options and warrants and vesting of restricted stock units. Diluted loss per common share is equivalent to basic loss per common share, as the effect of potential common stock would be anti-dilutive.
For the three months ended March 31, 2018 and 2017, options to purchase common stock, unvested restricted stock units and outstanding warrants totaling approximately 5.6 million shares and 3.4 million shares, respectively, were excluded from the computation of diluted loss per common share, as their effect would be anti-dilutive. These shares could dilute earnings per common share in the future.
A reconciliation of basic earnings (loss) per common share to diluted earnings (loss) per common share is as follows (in thousands, except per share data):
Three Months Ended March 31, 
20182017
Net income (loss)—basic and diluted:
Income (loss) from continuing operations$1,793 $(4,240)
Loss from discontinued operations (562)
Net income (loss)—basic and diluted$1,793 $(4,802)
Weighted average common shares outstanding:
Weighted average common shares outstanding—basic$24,203 $23,675 
Dilutive effect of common stock equivalents326  
Weighted average common shares outstanding—diluted$24,529 $23,675 
Basic earnings (loss) per common share:
Income (loss) from continuing operations$0.07 $(0.18)
Loss from discontinued operations (0.02)
Basic net income (loss) per common share$0.07 $(0.20)
Diluted earnings (loss) per common share:
Income (loss) from continuing operations$0.07 $(0.18)
Loss from discontinued operations (0.02)
Diluted net income (loss) per common share$0.07 $(0.20)
7. Fair Value Measurement
Our cash and any investment instruments are classified within Level 1 or Level 2 of the fair value hierarchy as they are valued using quoted market prices, broker or dealer quotations, or alternative pricing sources with reasonable levels of price transparency. The types of instruments valued are based on quoted market prices in active markets and are primarily U.S. government and agency securities and money market securities. Such instruments are generally classified within Level 1 of the fair value hierarchy.
As of March 31, 2018, the carrying value of our long-term debt approximated its fair value due to the variable interest rate. We did not have any transfers in or out of Level 1 and Level 2 in the three months ended March 31, 2018 or in the year ended December 31, 2017. We did not hold any significant instruments that are measured at fair value on a recurring basis as of March 31, 2018 or December 31, 2017.





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The fair value of our instruments measured on a non-recurring basis as of March 31, 2018 were as follows (in thousands):
Fair Value Measurements Using: 
Fair Value Quoted Prices in Active Markets for Identical Assets (Level 1) Significant Other Observable Inputs (Level 2) Significant Unobservable Inputs(Level 3) Total Gains (Losses) 
Warrant $2,840 $ $ $2,840 $ 
The following is quantitative information about our significant unobservable inputs used in our Level 3 fair value measurements (dollars in thousands): 
Fair Value at March 31, 2018Valuation TechniqueUnobservable InputsQuantitative Inputs Used for Original WarrantQuantitative Inputs Used for Replacement Warrant (1)
Warrant$2,840 Monte CarloVolatility of underlying50.0 %55.0 %
Risk-free rate1.78 %2.02 %
Dividend yield  % %
Probability of Designated Event (2) 0% - 50%0% - 50%
Timing of Designated Event (2) 3-5 years from issuance3-5 years from issuance
____________________
(1) In connection with the Replacement Warrant (as defined in Note 16), we received an additional payment of $700 thousand from PEAK6 Investments. In accordance with U.S. GAAP, we performed valuations immediately before and after the equity modification and concluded that the additional payment approximately represented the incremental fair value provided by the Replacement Warrant. For additional information, please see Note 16.
(2) Refers to certain change of control transactions, defined as a "Designated Event" as in the Warrant Agreement.
8. Prepaid Expenses and Other Current Assets
The components of our prepaid expenses and other current assets are as follows (in thousands):
March 31, 2018December 31, 2017
Prepaid services$618 $533 
Other prepaid contracts2,423 2,132 
Restricted cash240 240 
Other303 327 
Total$3,584 $3,232 
9. Contract Costs
In conjunction with the adoption of Topic 606, certain capitalized contract costs that were previously classified as deferred subscription solicitation and commission costs in our condensed consolidated balance sheets as of December 31, 2017 were reclassified to contract costs as of March 31, 2018. For additional information, please see Note 3.



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The following table is summary of our incremental contract cost balances, which are included in contract costs in our condensed consolidated balance sheets as of March 31, 2018 (in thousands):
March 31, 2018
Costs to obtain (commissions)$347 
Costs to fulfill72 
Total contract costs$419 
In the three months ended March 31, 2018, we amortized $195 thousand related to costs to obtain, and there were no adverse changes which would cause the need for an impairment analysis.  
In the three months ended March 31, 2018, we amortized $8 thousand related to costs to fulfill, and there were no adverse changes which would cause the need for an impairment analysis.
10. Internally Developed Capitalized Software
We record internally developed capitalized software as a component of software in property and equipment in our condensed consolidated balance sheets. We regularly review our capitalized software projects for impairment. We had no impairments of internally developed capitalized software in the three months ended March 31, 2018 or 2017. We record depreciation for internally developed capitalized software in depreciation expense in our condensed consolidated statements of operations. Activity in our internally developed capitalized software during the three months ended March 31, 2018 and 2017 was as follows (in thousands):
Gross Carrying Amount Accumulated Depreciation Net Carrying Amount 
Balance at December 31, 2017$18,603 $(11,829)$6,774 
Additions1,743 — 1,743 
Depreciation expense— (1,044)(1,044)
Balance at March 31, 2018$20,346 $(12,873)$7,473 
Balance at December 31, 2016$15,015 $(7,931)$7,084 
Additions729 — 729 
Depreciation expense— (932)(932)
Balance at March 31, 2017$15,744 $(8,863)$6,881 
Depreciation expense related to capitalized software no longer in the application development stage, for the future periods is indicated below (in thousands):
For the remaining nine months ending December 31, 2018$3,116 
For the years ending December 31:
2019 3,158 
2020 1,132 
2021 67 
Total$7,473 




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11. Goodwill and Intangibles
Changes in the carrying amount of goodwill are as follows (in thousands):
Personal Information Services Reporting Unit Insurance and Other Consumer Services Reporting Unit Totals 
Balance as of March 31, 2018
Gross carrying amount$35,253 $10,665 $45,918 
Accumulated impairment losses(25,837)(10,318)(36,155)
Net carrying value of goodwill$9,416 $347 $9,763 
Balance as of December 31, 2017
Gross carrying amount$35,253 $10,665 $45,918 
Accumulated impairment losses(25,837)(10,318)(36,155)
Net carrying value of goodwill$9,416 $347 $9,763 
During the three months ended March 31, 2018 we did not identify any triggering events related to our goodwill and therefore were not required to test our goodwill for impairment. As of March 31, 2018, both our Personal Information Services and Insurance and Other Consumer Services reporting units had negative carrying amounts of net assets. To the extent our Personal Information Services or Insurance and Other Consumer Services reporting units realize unfavorable actual results compared to forecasted results, or decrease forecasted results compared to previous forecasts, or in the event the estimated fair value of those reporting units decrease (as a result, among other things, of changes in market capitalization, including further declines in our stock price), we may incur additional goodwill impairment charges in the future. Future impairment charges on our Personal Information Services reporting unit will be recognized in the operating results of our Personal Information Services segment and our Insurance and Other Consumer Services segment, based on a pro-rata allocation of goodwill.
Our intangible assets consisted of the following (in thousands):
Gross Carrying Amount Accumulated Amortization Impairment Net Carrying Amount 
As of March 31, 2018: 
Customer related$38,831 $(38,831)$ $ 
Marketing related2,727 (2,718) 9 
Technology related1,979 (1,739) 240 
Total amortizable intangible assets at March 31, 2018$43,537 $(43,288)$ $249 
As of December 31, 2017:
Customer related$38,831 $(38,831)$ $ 
Marketing related2,727