10-Q

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 September 30, 2018 

OR

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

Commission file number: 000-50580

(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 November 2, 2018 there were 28,535,502 shares of common stock, $0.01 par value, issued and 24,428,246 shares outstanding, with 4,107,256 shares of treasury stock.

Form 10-Q

September 30, 2018

Table of Contents

		Page
	PART I. FINANCIAL INFORMATION
Item 1.	Financial Statements (Unaudited)	2
	Condensed Consolidated Statements of Operations for the Three and Nine Months Ended September 30, 2018 and 2017	2
	Condensed Consolidated Balance Sheets as of September 30, 2018 and December 31, 2017	3
	Condensed Consolidated Statements of Cash Flows for the Nine Months Ended September 30, 2018 and 2017	4
	Notes to Condensed Consolidated Financial Statements	6
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	34
Item 4.	Controls and Procedures	54
	PART II. OTHER INFORMATION
Item 1.	Legal Proceedings	55
Item 1A.	Risk Factors	55
Item 6.	Exhibits	56

1

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 September 30,				Nine Months Ended September 30,
	2018		2017		2018		2017
REVENUE:	$	37,485	$	39,248	$	115,182	$	119,631
OPERATING EXPENSES:
Marketing	631		2,682		2,455		9,294
Commission	8,743		9,462		26,949		28,966
Cost of revenue	12,481		13,126		37,284		39,694
General and administrative	14,038		14,827		41,675		49,169
Loss on dispositions of Captira and Habits at Work	—		—		—		106
Depreciation	1,587		1,378		4,604		3,966
Amortization	20		29		118		123
Total operating expenses	37,500		41,504		113,085		131,318
(LOSS) INCOME FROM OPERATIONS	(15)		(2,256)		2,097		(11,687)
Interest expense, net	(930)		(701)		(2,284)		(1,895)
Loss on extinguishment of debt	—		—		—		(1,525)
Other income (expense), net	56		(3)		(29)		133
LOSS FROM CONTINUING OPERATIONS BEFORE INCOME TAXES	(889)		(2,960)		(216)		(14,974)
Income tax (expense) benefit	(220)		(6)		303		23
(LOSS) INCOME FROM CONTINUING OPERATIONS	(1,109)		(2,966)		87		(14,951)
Loss from discontinued operations, net of tax	—		(1,030)		—		(2,449)
NET (LOSS) INCOME	$	(1,109)	$	(3,996)	$	87	$	(17,400)
Basic (loss) earnings per common share:
From continuing operations	$	(0.05)	$	(0.12)	$	—	$	(0.63)
From discontinued operations	—		(0.05)		—		(0.10)
Basic net (loss) income per common share	$	(0.05)	$	(0.17)	$	—	$	(0.73)
Diluted (loss) earnings per common share:
From continuing operations	$	(0.05)	$	(0.12)	$	—	$	(0.63)
From discontinued operations	—		(0.05)		—		(0.10)
Diluted net (loss) income per common share:	$	(0.05)	$	(0.17)	$	—	$	(0.73)
Weighted average common shares outstanding—basic	24,395		23,953		24,306		23,818
Weighted average common shares outstanding—diluted	24,395		23,953		24,687		23,818

See Notes to Condensed Consolidated Financial Statements

2

INTERSECTIONS INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(in thousands, except par value)

(unaudited)

	September 30, 2018		December 31, 2017
ASSETS
CURRENT ASSETS:
Cash and cash equivalents	$	5,789	$	8,502
Accounts receivable, net of allowance for doubtful accounts of $67 (2018) and $34 (2017)	6,147		8,225
Contract assets	638		—
Prepaid expenses and other current assets	3,783		3,232
Income tax receivable	1,301		2,545
Deferred subscription solicitation and commission costs	—		1,655
Total current assets	17,658		24,159
PROPERTY AND EQUIPMENT, net	8,509		11,040
GOODWILL	9,763		9,763
INTANGIBLE ASSETS, net	180		58
CONTRACT COSTS	380		—
OTHER ASSETS	1,246		1,459
TOTAL ASSETS	$	37,736	$	46,479
LIABILITIES AND STOCKHOLDERS’ EQUITY
CURRENT LIABILITIES:
Accounts payable	$	2,746	$	3,498
Accrued expenses and other current liabilities	8,538		8,533
Accrued payroll and employee benefits	552		1,501
Commissions payable	356		141
Capital leases, current portion	328		423
Contract liabilities, current	4,075		7,759
Total current liabilities	16,595		21,855
LONG-TERM DEBT, net	18,235		20,736
OBLIGATIONS UNDER CAPITAL LEASES, non-current	121		392
OTHER LONG-TERM LIABILITIES	1,711		2,895
DEFERRED TAX LIABILITY, net	219		7
TOTAL LIABILITIES	36,881		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 28,504 (2018) and 28,194 (2017); shares outstanding 24,397 (2018) and 24,102 (2017)	285		282
Additional paid-in capital	152,063		150,305
Warrants	2,840		2,840
Treasury stock, shares at cost; 4,107 (2018) and 4,092 (2017)	(35,781)		(35,745)
Accumulated deficit	(118,552)		(117,088)
TOTAL STOCKHOLDERS’ EQUITY	855		594
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY	$	37,736	$	46,479

See Notes to Condensed Consolidated Financial Statements

3

INTERSECTIONS INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(in thousands; unaudited)

	Nine Months Ended September 30,
	2018		2017
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss)	$	87	$	(17,400)
Less: loss from discontinued operations, net of tax	—		(2,449)
Income (loss) from continuing operations	87		(14,951)
Adjustments to reconcile net income (loss) to cash flows from operating activities:
Depreciation and amortization	4,722		4,089
Deferred income tax, net	213		—
Amortization of debt issuance costs	159		184
Accretion of debt discount	364		66
Provision for doubtful accounts	34		(15)
Share based compensation	1,979		6,582
Amortization of deferred subscription solicitation costs	—		8,482
Amortization of contract costs	646		—
Loss on dispositions of Captira Analytical and Habits at Work	—		106
Loss on extinguishment of debt	—		1,525
Changes in assets and liabilities:
Accounts receivable	1,583		1,483
Contract assets	(1,537)		—
Prepaid expenses, other current assets and other assets	(139)		(412)
Income tax receivable, net	1,243		766
Deferred subscription solicitation and commission costs	—		(6,336)
Contract costs	(704)		—
Accounts payable and accrued liabilities	(1,620)		(677)
Commissions payable	(3)		29
Contract liabilities, current	(2,323)		(2,411)
Other long-term liabilities	(1,184)		(329)
Cash flows provided by (used in) continuing operations	3,520		(1,819)
Cash flows used in discontinued operations	—		(2,313)
Net cash provided by (used in) operating activities	3,520		(4,132)
CASH FLOWS FROM INVESTING ACTIVITIES:
Net cash paid for the disposition of Captira Analytical	—		(315)
Decrease in restricted cash	—		115
Cash paid for withholding tax on vesting of RSUs in exchange for promissory note	—		(130)
Acquisition of property and equipment	(2,265)		(3,964)
Cash flows used in continuing operations	(2,265)		(4,294)
Cash flows provided by discontinued operations	—		4
Net cash used in investing activities	(2,265)		(4,290)
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from issuance of debt	4,000		20,000
Repayments of debt (including fees of $90 thousand in 2018)	(7,135)		(13,920)
Repurchase of common stock	—		(1,510)
Proceeds from issuance of warrants	—		1,500
Cash paid for debt and equity issuance costs	(212)		(323)
Capital lease payments	(366)		(411)
Withholding tax payment on vesting of restricted stock units	(255)		(1,122)
Cash flows (used in) provided by financing activities	(3,968)		4,214
DECREASE IN CASH AND CASH EQUIVALENTS	(2,713)		(4,208)
CASH AND CASH EQUIVALENTS — Beginning of period	8,502		10,857
Cash reclassified to assets held for sale at beginning of period	—		321
CASH AND CASH EQUIVALENTS — end of period	$	5,789	$	6,970

4

SUPPLEMENTAL DISCLOSURE OF NON-CASH FINANCING AND INVESTING ACTIVITIES:
Equipment obtained under capital lease, including acquisition costs	$	—	$	40
Equipment additions accrued but not paid	$	128	$	209
Intangible asset placed in service but paid in prior year	$	240	$	—
Shares withheld in lieu of withholding taxes on vesting of restricted stock awards	$	—	$	117
Debt issuance costs accrued but not paid	$	45	$	—
Right of use asset obtained under financing arrangement	$	249	$	—

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, Significant Accounting Policies and Liquidity

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 nine months ended September 30, 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.

6

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 and accompanying notes for the year ended December 31, 2017, as filed in our Annual Report on Form 10-K.

Liquidity

On June 8, 2018, we entered into Amendment No. 4 to the Credit Agreement (as defined in Note 16), which set forth required monthly principal payments beginning June 30, 2018, and shortened the maturity date of the secured indebtedness evidenced by the Credit Agreement to December 31, 2018. In June and September 2018, we entered into the Bridge Notes (as defined in Note 16) in the aggregate amount of $4.0 million ($3.0 million on June 27, 2018 and $1.0 million on September 24, 2018), which were convertible into a qualified future financing and had a maturity date of June 30, 2019. As of September 30, 2018, the outstanding balance of the Credit Agreement was $14.5 million, the outstanding balances of the Bridge Notes totaled $4.0 million, and our cash on hand was approximately $5.8 million.

On October 31, 2018, we entered into a note purchase and exchange agreement (the “Note Purchase Agreement”), pursuant to which we sold to WC SACD One Parent, Inc. (“Parent”) Senior Secured Convertible Notes (the “Notes”) in the aggregate principal amount of $30.0 million for a purchase price in cash of $30.0 million, and issued to Loeb Holding Corporation and David A. McGough (together with Parent, the “Purchasers” and each a “Purchaser”) additional Notes in the aggregate principal amount of $4.0 million in exchange for the Bridge Notes previously issued by us to such Purchasers (who received payment in cash of the accrued and unpaid interest on the Bridge Notes). We used approximately $14.6 million of the net proceeds from the sale of the Notes to repay in full the principal outstanding under the Credit Agreement and to pay related interest thereon. We intend to use the balance of the net proceeds for general corporate purposes. The Notes mature on October 31, 2021 and are convertible in whole or in part, together with accrued and unpaid interest with respect to the principal amount converted, into shares of the Company’s common stock and preferred stock. For additional information on the Note Purchase Agreement as well as the Agreement and Plan of Merger, which we also entered into on October 31, 2018, please see Note 21.

We evaluated these conditions and determined it is probable that we will be able to meet all our obligations over the next twelve months. In accordance with U.S. GAAP, we reclassified the indebtedness in the Credit Agreement and Bridge Notes from short-term to long-term in our condensed consolidated balance sheets as of September 30, 2018.

Revision to Previously Issued Financial Statements

The results of operations for the three and nine months ended September 30, 2017 have been updated to reflect an adjustment to our share based compensation expense, which is recorded in general and administrative expenses in our condensed consolidated statements of operations. The change in share based compensation from the amount as reported to the amount as revised was a $404 thousand decrease and a $2.0 million increase for the three and nine months ended September 30, 2017, respectively. These changes are reflected in the loss from operations, loss from continuing operations before income taxes, net loss and basic and diluted net loss per common share figures in these condensed consolidated financial statements. For additional information, please see Note 21 to the consolidated financial statements contained in our most recent 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.

7

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 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

8

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 September 30, 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. The fair value of each option granted has been estimated as of the date of grant with the following weighted-average assumptions for the nine months ended September 30, 2018 and 2017:

Expected Dividend Yield. Under the Credit Agreement, we are currently prohibited from declaring and paying dividends and therefore, the expected 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 52% and 49% for 2018 and 2017, respectively.

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% and 1.8% for 2018 and 2017, respectively.

Expected Term. The expected term of options granted was determined by considering employees’ historical exercise patterns or homogeneous management pools, which we determined is approximately 5.0 years for both 2018 and 2017. We will continue to review our estimate in the future and adjust it, if necessary, due to changes in our historical exercises.

9

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. We record depreciation for internally developed capitalized software in depreciation expense in our condensed consolidated statements of operations. 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

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liability for the majority of our subscribers. This presentation effectively reduced our total accounts receivable as of September 30, 2018 from December 31, 2017 and was offset by a comparable decrease in contract liabilities. In addition, we separately state unbilled contract assets in our condensed consolidated balance sheet as of September 30, 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, 2018	Modified retrospective 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, 2019	Modified retrospective with the cumulative effect of initially applying these updates recognized at the date of initial application.	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, 2018	Retrospective	We adopted this update as of January 1, 2018, and there was no material impact to our condensed consolidated financial statements.
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, 2018	Prospective	Upon adoption, there was no material impact to our condensed consolidated financial statements.
ASU 2018-15, Intangibles (Topic 350)	The amendments in this update align the requirements for capitalizing implementation costs incurred in a hosting arrangement that is a service contract with those incurred to develop or obtain internal-use software. The update requires the entity to determine which implementation costs to capitalize and expense over the term of the hosting arrangement.	January 1, 2020	Prospective or Retrospective	We are currently in the planning stage and have not yet begun implementation of the new standard. We have not yet determined the potential 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

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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 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 September 30, 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 reduce 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):

Statements of Operations

(select lines)	As Reported		Adjustments		Balances without Adoption of 606
Three Months Ended September 30, 2018
Revenue	$	37,485	$	—	$	37,485
Marketing expenses	631		72		703
Commission expenses	8,743		5		8,748
Loss from operations	(15)		(77)		(92)
Net loss	(1,109)		(77)		(1,186)
Nine Months Ended September 30, 2018
Revenue	$	115,182	$	—	$	115,182
Marketing expenses	2,455		613		3,068
Commission expenses	26,949		(3)		26,946
Income from operations	2,097		(610)		1,487
Net income (loss)	87		(610)		(523)

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Balance Sheet

	As of September 30, 2018
(select lines)	As Reported		Adjustments		Balances without Adoption of 606
ASSETS:
Accounts receivable	$	6,147	$	1,850	$	7,997
Contract assets	638		(638)		—
Prepaid expenses and other current assets	3,783		26		3,809
Deferred subscription solicitation and commission costs	—		1,027		1,027
Contact costs	380		(380)		—
Total assets	37,736		1,885		39,621
LIABILITIES AND STOCKHOLDERS' EQUITY
Commissions payable	$	356	$	(267)	$	89
Contract liabilities, current	4,075		1,212		5,287
Other long-term liabilities	1,711		—		1,711
Accumulated deficit	(118,552)		940		(117,612)
Total liabilities and stockholders' equity	37,736		1,885		39,621

Statement of Cash Flows

	Nine Months Ended September 30, 2018
(select lines)	As Reported		Adjustments		Balances without Adoption of 606
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss)	$	87	$	(610)	$	(523)
Adjustments to reconcile net income to cash flows from operating activities:
Amortization of deferred subscription solicitation costs	—		2,432		2,432
Amortization of contract costs	646		(646)		—
Changes in assets and liabilities:
Accounts receivable	1,583		(1,387)		196
Contract assets	(1,537)		1,537		—
Prepaid expenses, other current assets and other assets	(139)		(26)		(165)
Deferred subscription solicitation and commission costs	—		(1,804)		(1,804)
Contract costs	(704)		704		—
Commissions payable	(3)		(49)		(52)
Contract liabilities, current	(2,323)		(151)		(2,474)
Net cash provided by operating activities	3,520		—		3,520

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 includes controls for performing a completeness assessment over the lease population, reviewing and measuring all forms of leases and analyzing the practical expedients. In accordance with ASU 2018-11 "Targeted Improvements," issued in July 2018, we expect to apply the new lease requirements as of January 1, 2019 under the modified retrospective approach and recognize a cumulative-effect adjustment, if any, at the date of initial application, rather than restate comparative periods.

We did not identify any embedded leases in our existing contracts that require bifurcation under Topic 842. However, we expect the adoption of Topic 842 will have a material impact to our condensed consolidated balance sheets due to the recognition of right-of-use assets and lease liabilities principally for certain leases currently accounted for as operating leases. As of September 30, 2018, we had an estimated $4.2 million in undiscounted future minimum lease commitments,

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as reported in Note 14, of which $1.6 million has a commencement date of January 1, 2019 and will not be included in the adoption impact but will be evaluated under Topic 842 in the year ended December 31, 2019.

In addition, we evaluated our deferred rent amount in our condensed consolidated balance sheets, which is exclusively for our operating leases, and concluded that the balance of the historical lease incentives would appropriately reduce the right of use asset at adoption. As of September 30, 2018, our deferred rent balance was $657 thousand, as reported in Note 15.

We are continuing to finalize the impact of adoption to our condensed consolidated financial statements, including disclosures, accounting policies, business processes and internal controls, as well as income tax impacts, which we anticipate will not have a financial statement impact due to the valuation allowance.

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 whether our refund history would be 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

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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.

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. 

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Disaggregation of Revenue

The following table disaggregates our revenue by major source for the three and nine months ended September 30, 2018 (in thousands):

	Personal Information Services		Insurance and Other Consumer Services		Total
Three months ended September 30, 2018
Primary geographical markets:
United States	$	32,723	$	1,501	$	34,224
Canada	3,261		—		3,261
Total revenue	$	35,984	$	1,501	$	37,485
Major service lines:
Identity Guard® and Identity Guard® with Watson™	$	13,270	$	—	$	13,270
Canadian business	3,261		—		3,261
U.S. financial institutions	18,527		—		18,527
Breach services & other	926		1,501		2,427
Total revenue	$	35,984	$	1,501	$	37,485
Timing of revenue recognition:
Products and services transferred over time	$	35,984	$	1,501	$	37,485
Products transferred at a point in time	—		—		—
Total revenue	$	35,984	$	1,501	$	37,485
Nine months ended September 30, 2018
Primary geographical markets:
United States	$	100,993	$	4,531	$	105,524
Canada	9,658		—		9,658
Total revenue	$	110,651	$	4,531	$	115,182
Major service lines:
Identity Guard® and Identity Guard® with Watson™	$	40,178	$	—	$	40,178
Canadian business	9,658		—		9,658
U.S. financial institutions	56,941		—		56,941
Breach services & other	3,874		4,531		8,405
Total revenue	$	110,651	$	4,531	$	115,182
Timing of revenue recognition:
Products and services transferred over time	$	110,258	$	4,531	$	114,789
Products transferred at a point in time	393		—		393
Total revenue	$	110,651	$	4,531	$	115,182

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, Current		Contract Liabilities, Non-Current
Balance as of December 31, 2017	$	8,225	$	—	$	7,759	$	—
Increase (decrease), net	(2,078)		638		(3,684)		30
Balance as of September 30, 2018	$	6,147	$	638	$	4,075	$	30

We recognized $906 thousand and $7.4 million of revenue in the three and nine months ended September 30, 2018, respectively, that was included in the contract liability balance as of December 31, 2017. The decreasing trend of this revenue recognized in the three months ended September 30, 2018 as compared to the three months ended March 31,

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2018 is consistent with the pro-rata recognition of revenue earned from our monthly subscriptions. Our longer-term breach contracts have performance obligations that will continue to be satisfied in future periods and reduce the December 31, 2017 contract liability balance.

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.

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 and nine months ended September 30, 2018 and 2017 and our financial position as of September 30, 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 and nine months ended September 30, 2017; for additional information, please see "—Variable Interest Entities" in Note 2.

In the three and nine months ended September 30, 2017, we recorded a loss on sale of $528 thousand (including $516 thousand of transaction costs), which is included in loss from discontinued operations, net of tax in our condensed consolidated statements of operations. 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 September 30, 2017		Nine Months Ended September 30, 2017
Major classes of line items constituting loss from discontinued operations:
Marketing expenses	$	(1)	$	(18)
Cost of revenue	—		(4)
General and administrative expenses	(500)		(1,718)
Impairment	—		(180)
Depreciation and amortization	(1)		(1)
Loss from discontinued operations before income taxes	(502)		(1,921)
Loss on disposal of discontinued operations	(528)		(528)
Total loss from discontinued operations, net of tax	$	(1,030)	$	(2,449)

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 in the nine months ended September 30, 2017 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. Habits at Work met all the criteria under U.S. GAAP to classify its assets

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and liabilities as held for sale in our consolidated balance sheets as of March 31, 2017. Effective June 1, 2017, we completed the sale of Habits at Work for a nominal amount, which resulted in a gain on sale of $24 thousand in the three and nine months ended September 30, 2017. 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.

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 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 September 30, 2018, options to purchase common stock, unvested restricted stock units and outstanding warrants totaling approximately 6.1 million shares were excluded from the computation of diluted loss per common share, as their effect would be anti-dilutive. For the nine months ended September 30, 2018, options to purchase common stock, unvested restricted stock units and outstanding warrants totaling approximately 5.7 million shares were excluded from the computation of diluted income per common share, as their effect would be anti-dilutive. For the three and nine months ended September 30, 2017, options to purchase common stock, unvested restricted stock units and outstanding warrants totaling approximately 6.9 million shares 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 September 30,				Nine Months Ended September 30,
	2018		2017		2018		2017
Net (loss) income—basic and diluted:
(Loss) income from continuing operations	$	(1,109)	$	(2,966)	$	87	$	(14,951)
Loss from discontinued operations	—		(1,030)		—		(2,449)
Net (loss) income—basic and diluted	$	(1,109)	$	(3,996)	$	87	$	(17,400)
Weighted average common shares outstanding:
Weighted average common shares outstanding—basic	24,395		23,953		24,306		23,818
Dilutive effect of common stock equivalents	—		—		381		—
Weighted average common shares outstanding—diluted	24,395		23,953		24,687		23,818
Basic (loss) earnings per common share:
(Loss) income from continuing operations	$	(0.05)	$	(0.12)	$	—	$	(0.63)
Loss from discontinued operations	—		(0.05)		—		(0.10)
Basic net (loss) income per common share	$	(0.05)	$	(0.17)	$	—	$	(0.73)
Diluted (loss) earnings per common share:
(Loss) income from continuing operations	$	(0.05)	$	(0.12)	$	—	$	(0.63)
Loss from discontinued operations	—		(0.05)		—		(0.10)
Diluted net (loss) income per common share	$	(0.05)	$	(0.17)	$	—	$	(0.73)

7. Fair Value Measurement

Our cash, cash equivalents 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

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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 September 30, 2018, the carrying value of our 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 nine months ended September 30, 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 September 30, 2018 or December 31, 2017.

The fair value of our instruments measured on a non-recurring basis as of September 30, 2018 and December 31, 2017 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):

	September 30, 2018		Valuation Technique	Unobservable Inputs	Quantitative Inputs Used for Original Warrant		Quantitative Inputs Used for Replacement Warrant (1)
Warrant	$	2,840	Monte Carlo	Volatility of underlying	50.0	%	55.0	%
				Risk-free rate	1.78	%	2.02	%
				Dividend yield	—	%	—	%
				Probability of Designated Event (2)	0% - 50%		0% - 50%
				Timing of Designated Event (2)	3-5 years from issuance		3-5 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 the year ended December 31, 2017. 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):

	September 30, 2018		December 31, 2017
Prepaid services	$	294	$	533
Other prepaid contracts	2,891		2,132
Restricted cash	240		240
Other	358		327
Total	$	3,783	$	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 September 30, 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 September 30, 2018 (in thousands):

	September 30, 2018
Costs to obtain (commissions)	$	354
Costs to fulfill	26
Total contract costs	$	380

In the three and nine months ended September 30, 2018, we amortized $196 thousand and $587 thousand, respectively, related to costs to obtain, and there were no adverse changes which would cause the need for an impairment analysis.

In the three and nine months ended September 30, 2018, we amortized $26 thousand and $59 thousand, respectively, 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. In the three and nine months ended September 30, 2018, we recorded a non-cash impairment of $64 thousand, included in general and administrative expenses in our condensed consolidated statements of operations, of software development-in-progress that will not be placed in service. We had no impairments of internally developed capitalized software in the nine months ended September 30, 2017. Activity in our internally developed capitalized software during the nine months ended September 30, 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
Additions	2,625		—		2,625
Depreciation expense	—		(3,343)		(3,343)
Balance at September 30, 2018	$	21,228	$	(15,172)	$	6,056
Balance at December 31, 2016	$	15,015	$	(7,931)	$	7,084
Additions	2,703		—		2,703
Depreciation expense	—		(2,864)		(2,864)
Balance at September 30, 2017	$	17,718	$	(10,795)	$	6,923

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 three months ending December 31, 2018	$	1,007
For the years ending December 31:
2019	3,452
2020	1,419
2021	178
Total	$	6,056

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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 September 30, 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 nine months ended September 30, 2018, we did not identify any triggering events related to our goodwill and therefore were not required to test our goodwill for impairment. 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 September 30, 2018:
Customer related	$	38,831	$	(38,831)	$	—	$	—
Marketing related	2,727		(2,727)		—		—
Technology related	1,979		(1,799)		—		180
Total amortizable intangible assets at September 30, 2018	$	43,537	$	(43,357)	$	—	$	180
As of December 31, 2017:
Customer related	$	38,831	$	(38,831)	$	—	$	—
Marketing related	2,727		(2,709)		—		18
Technology related	1,739		(1,699)		—		40
Total amortizable intangible assets at December 31, 2017	$	43,297	$	(43,239)	$	—	$	58

During the nine months ended September 30, 2018, there were no adverse changes in our long-lived assets, which would cause a need for an impairment analysis.

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Intangible assets are amortized over a period of two to ten years. For the three months ended September 30, 2018 and 2017, we had an aggregate amortization expense of $20 thousand and $29 thousand, respectively, which was included in amortization expense in our condensed consolidated statements of operations. For the nine months ended September 30, 2018 and 2017, we had an aggregate amortization expense of $118 thousand and $123 thousand, respectively. We estimate that we will have the following amortization expense for the future periods indicated below (in thousands):

For the remaining three months ending December 31, 2018	$	20
For the years ending December 31:
2019	80
2020	80
Total	$	180

12. Accrued Expenses and Other Current Liabilities

The components of our accrued expenses and other current liabilities are as follows (in thousands):

	September 30, 2018		December 31, 2017
Accrued marketing	$	129	$	155
Accrued cost of sales, including credit bureau costs	5,146		5,044
Accrued general and administrative expense and professional fees	1,241		570
Insurance premiums	338		340
Estimated liability for non-income business taxes	892		783
Other	792		1,641
Total	$	8,538	$	8,533

As of September 30, 2018, "Other" includes a short-term commitment for software licenses of $208 thousand. Under this agreement, we will make monthly installment payments of $23 thousand, including interest, through July 2019.

13. Accrued Payroll and Employee Benefits

The components of our accrued payroll and employee benefits are as follows (in thousands): 

	September 30, 2018		December 31, 2017
Accrued payroll	$	193	$	808
Accrued benefits	244		408
Accrued severance	115		285
Total accrued payroll and employee benefits	$	552	$	1,501

The following table summarizes our accrued severance activity (in thousands):

	Three Months Ended September 30,				Nine Months Ended September 30,
	2018		2017		2018		2017
Balance, beginning of period	$	38	$	1,297	$	285	$	1,440
Adjustments to expense	77		6		248		1,500
Payments	—		(841)		(418)		(2,478)
Balance, end of period	$	115	$	462	$	115	$	462

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14. Commitments and Contingencies

Leases

We have entered into long-term operating lease agreements for office space and capital leases for fixed assets. The minimum fixed commitments related to all non-cancellable leases are as follows (in thousands):

	Operating Leases		Capital Leases
For the remaining three months ending December 31, 2018	$	574	$	67
For the years ending December 31:
2019	1,977		400
2020	608		20
2021	403		7
2022	314		—
2023	317		—
Total minimum lease payments	$	4,193	494
Less: amount representing interest			(45)
Present value of minimum lease payments			449
Less: current obligation			(328)
Long-term obligations under capital lease			$	121

We did not enter into any new capital lease arrangements during the three or nine months ended September 30, 2018 or 2017. Rental expenses included in general and administrative expenses for the three months ended September 30, 2018 and 2017 were $642 thousand and $1.0 million, respectively. Rental expenses for the nine months ended September 30, 2018 and 2017 were $2.0 million and $2.5 million, respectively.

Legal Proceedings

In the normal course of business, we may become involved in various legal proceedings. Except as stated below, we know of no pending or threatened legal proceedings to which we are or will be a party that, if successful, would result in a material adverse change in our business or financial condition.

In January 2013, the Office of the West Virginia Attorney General ("WVAG") served Intersections Insurance Services Inc. ("IISI") with a complaint filed in the Circuit Court of Mason County, West Virginia on October 2, 2012. The complaint alleges violations of West Virginia consumer protection laws based on the marketing of unspecified products. On April 21, 2017, the Court granted a motion of the WVAG to add Intersections Inc. as a defendant. The parties are currently engaged in discovery. No trial has been scheduled. We continue to believe that the claims in the complaint are without merit and intend to continue to vigorously defend this matter.

On March 22, 2018, Johan Roets, the Company’s former Chief Executive Officer, filed a civil Complaint against the Company in the Circuit Court of Fairfax County Virginia. The Complaint alleges that the Company’s termination of Mr. Roets’ employment on February 22, 2018 violated his Employment Agreement and seeks monetary damages. The Company believes that the Complaint is without merit and plans to vigorously defend this litigation.

For information regarding our policy for analyzing legal proceedings, please see "—Contingent Liabilities" in Note 2. As of September 30, 2018, we do not have any significant liabilities accrued for any of the legal proceedings mentioned above. We believe based on information currently available that the amount, if any, accrued for the above contingencies is adequate. However, legal proceedings are inherently unpredictable and, although we believe our accruals are adequate and we intend to vigorously defend ourselves against such matters, unfavorable resolutions could occur, which could have a material adverse effect on our condensed consolidated financial statements, taken as a whole.

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Other

Our products and services are subject to indirect tax obligations, including sales and use taxes, in certain states with which we are currently compliant, and taxability is generally determined by statutory state laws and regulations as well as an assessment of nexus, if applicable. Whether sales of our services are subject to additional states’ indirect taxes is uncertain, due in part to the unique nature of our services and the relationships through which our services are offered, as well as changing state laws and interpretations of those laws. Therefore, we periodically analyze our facts and circumstances related to potential indirect tax obligations in state and other jurisdictions. The following table summarizes our non-income business tax liability activity (in thousands):

	Nine Months Ended September 30,
	2018		2017
Balance at beginning of period	$	783	$	94
Adjustments to existing liabilities	109		1,461
Payments	—		(94)
Balance at end of period	$	892	$	1,461

We have been audited in the past and continue to analyze what obligations we have, if any, to state taxing authorities. We analyzed all the information available to us in order to estimate a liability for potential obligations in other jurisdictions including, but not limited to: the delivery nature of our services; the relationship through which our services are offered; the probability of obtaining resale or exemption certificates; limited, if any, nexus-creating activity; and our historical success in settling or abating liabilities under audit. We continue to correspond with the applicable authorities in an effort toward resolution of our potential liabilities using a variety of settlement options including, but not limited to, voluntary disclosures, negotiation and standard appeals process, and we may adjust the liability as a result of such correspondence. Proceedings with jurisdictions are inherently unpredictable, but we believe it is reasonably possible that other states may approach us or that the scope of the taxable base in any state may also increase. For additional information, please see Note 16 to the consolidated financial statements contained in our most recent Annual Report on Form 10-K. 

In June 2018, the Supreme Court heard the appeal from the South Dakota Supreme Court on the matter of South Dakota v. Wayfair, Inc. and ruled in favor of the state, perhaps giving states more authority to require online retailers and remote sellers to collect sales tax. We have the appropriate internal processes and capabilities and are compliant in the collection of sales and use tax across a broad tax footprint throughout the U.S. We place a significant amount of emphasis on the taxability of our products and services, rather than on nexus or physical presence. Therefore, we do not believe there is a material impact to our business. We will continue to monitor for further regulatory actions by states, and perhaps the federal government. Further actions, including any retrospective state requirements or actions impacting state income tax obligations, would likely increase our cost of doing business and could reduce demand for our services and create additional administrative and compliance burdens, all of which could adversely affect our results of operations.

We have entered into various software licenses and operational non-refundable commitments totaling approximately $57.2 million as of September 30, 2018, payable in monthly and yearly installments through December 31, 2021. These amounts will be expensed on a pro-rata basis and recorded in cost of revenue and general and administrative expenses in our condensed consolidated statements of operations.

15. Other Long-Term Liabilities

The components of our other long-term liabilities are as follows (in thousands):

	September 30, 2018		December 31, 2017
Deferred rent	$	657	$	1,223
Uncertain tax positions, interest and penalties not recognized	1,022		1,669
Contract liabilities, non-current	30		—
Accrued general and administrative expenses	2		3
Total other long-term liabilities	$	1,711	$	2,895

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For additional information regarding the change in uncertain tax positions, see Note 17.

16. Debt and Other Financing

Debt

In March 2016, we and our subsidiaries entered into a credit agreement with Crystal Financial SPV LLC ("Prior Credit Agreement"). The Prior Credit Agreement provided for a $20.0 million senior secured term loan, which was fully funded at closing, with a maturity date of March 21, 2019 and interest at the greater of LIBOR plus 10% per annum or 10.5% per annum.

In April 2017, we refinanced our indebtedness under the Prior Credit Agreement with a new term loan facility with PEAK6 Investments, L.P. ("PEAK6 Investments"). We also executed amendments to the new term loan facility in July 2017, November 2017, April 2018, and June 2018 (together with the amendments, the "Credit Agreement"), which had a principal outstanding amount of $14.5 million as of September 30, 2018 and an interest rate of 10.91% per annum. The maturity date of the Credit Agreement is December 31, 2018 with monthly principal payments until the remaining $14.5 million is repaid. The Credit Agreement is secured by substantially all our assets and a pledge by us of stock and membership interests we hold in any domestic and first-tier foreign subsidiaries.

We used approximately $13.9 million of the net proceeds from the Credit Agreement to repay in full the aggregate principal amount outstanding under the Prior Credit Agreement and to pay interest, prepayment penalties, transaction fees and expenses as a result of the termination. We used the remainder of the proceeds from the Credit Agreement for general corporate purposes, including to increase subscriber acquisitions and continue our innovative product development. As a result of the refinancing, we recorded a loss on extinguishment of debt of $1.5 million in the year ended December 31, 2017, including interest, prepayment penalties, transaction fees and expenses totaling approximately $487 thousand as a result of the termination of the Prior Credit Agreement.

Certain events defined in the Credit Agreement require prepayment of the aggregate principal amount of the term loan, including all or a portion of proceeds received from asset dispositions, casualty events, extraordinary receipts, and certain equity issuances. Once amounts borrowed have been paid or prepaid, they may not be reborrowed.

On April 3, 2018, we entered into Amendment No. 3 with PEAK6 Investments (“Amendment No. 3”), amending the Credit Agreement. Amendment No. 3 provided for a voluntary, partial prepayment of the outstanding principal balance of the term loans in the amount of $1.0 million, which we paid in April 2018, and amended one of the financial covenants in the Credit Agreement. The amended covenant reduced our requirement to maintain at all times a minimum amount of cash on hand, as defined in the Credit Agreement, to (i) the lesser of 20% of the total amount outstanding under the term loans and $2.5 million for the period commencing on the Third Amendment Date through and including May 31, 2018, and (ii) the lesser of 20% of the total amount outstanding under the term loans and $3.0 million for the fiscal quarter ending June 1, 2018 and each fiscal quarter thereafter.

On June 8, 2018, we entered into Amendment No. 4 with PEAK6 Investments (“Amendment No. 4”), amending the Credit Agreement. Amendment No. 4 (i) requires that $1.5 million principal prepayments be made on the last day of June through November, each of which is to be accompanied by a 1.5% prepayment fee; (ii) shortens the maturity date to December 31, 2018; (iii) relieves the obligation to pay a 3% prepayment fee upon full prepayment of the term loan and on required partial prepayments resulting from equity or subordinate debt proceeds; (iv) increases the allowable principal amount of subordinate debt from $2 million to $15 million; and (v) confirms that debt and equity issued to affiliates is permitted if the proceeds are used to pay the term loan. The relief with respect to the 3% prepayment fee applies only if no event of default exists. Amendment No. 4 also confirms that no default currently exists with respect to the Credit Agreement.

On June 27, 2018, we entered into two promissory notes to borrow a total of $3.0 million from Loeb Holding Corporation ($2.0 million) and David A. McGough ($1.0 million) (for related party information, please see Note 19). On September 24, 2018, we entered into a promissory note under substantially identical terms to borrow an additional $1.0 million from Loeb Holding Corporation (together, the “Bridge Notes”). As of September 30, 2018, $4.0 million was outstanding under the Bridge Notes, as well as $84 thousand of accrued interest, payable upon maturity, which is included in accrued expenses and other current liabilities in our condensed consolidated balance sheets.

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The Bridge Notes provide (a) for a maturity date of June 30, 2019, (b) for an interest rate equivalent to the interest rate pursuant to the Credit Agreement, and (c) that the Company or the holder may convert or exchange the principal and accrued interest of such Bridge Note into securities to be sold by the Company in a “qualified financing” (an offering of debt and/or equity securities with net proceeds of at least $10 million (inclusive of the Bridge Notes) to the Company). All our obligations under the Bridge Notes are subordinated to the extent provided for in the subordination agreements dated as of June 27, 2018 (the “Subordination Agreements”) among the Borrower, the Lender and Peak6 Strategic Capital LLC. We used the net proceeds of the Bridge Notes to make required prepayments under the Credit Agreement. On August 1, 2018, we entered into an amendment to provide that the Bridge Notes shall not be convertible or exchangeable into any securities of the Company, with certain exceptions, if the issuance of such securities would require stockholder approval under the applicable NASDAQ Listing Rules.

Under the Credit Agreement and Bridge Notes, minimum required maturities were as follows (in thousands):

For the remaining three months ending December 31, 2018	$	14,500
For the year ending December 31, 2019	4,000
Total outstanding as of September 30, 2018	$	18,500

As of September 30, 2018, $18.5 million was outstanding under both agreements, which is presented net of unamortized debt issuance costs and debt discount totaling $265 thousand in our condensed consolidated balance sheets in accordance with U.S. GAAP. As of December 31, 2017, $21.5 million was outstanding under the Credit Agreement, which is presented net of unamortized debt issuance costs and debt discount totaling $764 thousand in our condensed consolidated balance sheets.

On October 31, 2018, we entered into the Note Purchase Agreement, pursuant to which we sold the Notes to Parent in the aggregate principal amount of $30.0 million for a purchase price in cash of $30.0 million, and issued to Loeb Holding Corporation and David A. McGough additional Notes in the aggregate principal amount of $4.0 million in exchange for the Bridge Notes previously issued by us to such Purchasers (who received payment in cash of the accrued and unpaid interest on the Bridge Notes). We used approximately $14.6 million of the net proceeds from the sale of the Notes to repay in full the principal outstanding under the Credit Agreement and to pay related interest thereon. We intend to use the balance of the net proceeds for general corporate purposes. The Notes mature on October 31, 2021 and are convertible in whole or in part, together with accrued and unpaid interest with respect to the principal amount converted, into shares of the Company’s common stock and preferred stock. For additional information on the Note Purchase Agreement as well as the Agreement and Plan of Merger, which we also entered into on October 31, 2018, please see Note 21.

The Credit Agreement, which was paid in full on October 31, 2018, contained certain customary covenants, including a requirement to maintain at all times a minimum cash on hand amount of the lesser of 20% or certain stated amounts of the total amount outstanding under the term loan, as set forth in the Credit Agreement, and minimum EBITDA requirements. The Credit Agreement also contained customary events of default, including among other things non-payment defaults, covenant defaults, inaccuracy of representations and warranties, bankruptcy and insolvency defaults, material judgment defaults, ERISA defaults, cross-defaults to other indebtedness, invalidity of loan documents defaults, change in control defaults, conduct of business defaults, and criminal and regulatory action defaults.

Warrant

In connection with the Credit Agreement, PEAK6 Investments purchased, for an aggregate purchase price of $1.5 million in cash, a warrant to purchase an aggregate of 1.5 million shares of our common stock at an exercise price of $5.00 per share ("Original Warrant”). In connection with a later amendment to the Credit Agreement, we issued a warrant to PEAK6 Investments for an additional purchase price of $700 thousand in cash ("Replacement Warrant"), and PEAK6 Investments surrendered the Original Warrant previously issued by us on April 20, 2017. The Replacement Warrant provides PEAK6 with the right to purchase an aggregate of 1.5 million shares of our common stock at an exercise price of $2.50 per share. The Replacement Warrant is immediately exercisable, has a five-year term and shall be exercised solely by a “net share settlement” feature that requires the holder to exercise the Replacement Warrant without a cash payment upon the terms set forth therein. Warrants are included in stockholders' equity in our condensed consolidated balance sheets and were valued at $2.8 million as of September 30, 2018 and December 31, 2017. For additional information related to the fair value of the warrants, please see Note 7.

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Stock Redemption

In connection with the Credit Agreement, we used the proceeds from the sale of the Warrant to repurchase approximately 419 thousand shares of our common stock, pursuant to a redemption agreement from PEAK6 Capital Management LLC at a price of $3.60 per share, for an aggregate repurchase price of approximately $1.5 million. PEAK6 Capital Management LLC is an affiliate of PEAK6 Investments.

The repurchase was made pursuant to our previously announced share repurchase program. Following the repurchase, we have approximately $15.3 million remaining under our repurchase program. The repurchases may be made on the open market, in block trades, through privately negotiated transactions or otherwise, and the program may be suspended or discontinued at any time. However, we are currently prohibited from repurchasing any shares of common stock under the Credit Agreement.

17. Income Taxes

We continued to evaluate all significant available positive and negative evidence including, but not limited to, our three-year cumulative loss, as adjusted for permanent items; insufficient sources of taxable income in prior carryback periods in order to utilize all of the existing definite-lived net deferred tax assets; unavailability of prudent and feasible tax-planning strategies; negative adjustments to our projected taxable income; and scheduling of the future reversals of existing temporary differences. As a result, we were not able to recognize a net tax benefit associated with our pre-tax loss in the nine months ended September 30, 2018, as there has been no change to the conclusion from the year ended December 31, 2017 that it was more likely than not that we would not generate sufficient taxable income in the foreseeable future to realize our net deferred tax assets.

Our consolidated effective tax rate from continuing operations for the three months ended September 30, 2018 and 2017 was (24.7)% and (0.2)%, respectively. Our consolidated effective tax rate from continuing operations for the nine months ended September 30, 2018 and 2017 was 140.3% and 0.2%, respectively. The increase in the rate for the nine months ended September 30, 2018 is primarily due to the discrete resolution of uncertain tax positions related to claimed general business credits under audit that were deemed effectively settled in the period, partially offset by an adjustment to the valuation allowance, which is further described below.

The amount of deferred tax assets considered realizable as of September 30, 2018 could be adjusted if facts and circumstances in future reporting periods change, including, but not limited to, generating sufficient future taxable income in the carryforward periods. If certain substantial changes in the entity’s ownership were to occur, there would be an annual limitation on the amount of the carryforwards that can be utilized in the future. 

We continued to evaluate the effects of the Tax Cuts and Jobs Act of 2017 (“Tax Act”) and are applying the guidance in Staff Accounting Bulletin No. 118. As of December 31, 2017, we made a reasonable estimate of the effects on our existing deferred tax balances, including the impact of our valuation allowance due to the indefinite life of certain deferred tax assets and the state adoption of the federal tax law changes. In the three months ended September 30, 2018, we made an adjustment to our initial assumptions based on new interpretations, which are consistent with the filing of our federal income tax return, by recording additional income tax expense in the amount of $212 thousand. We continue to review our facts and circumstances, including resolution, if any, of uncertainty surrounding conformity of the Tax Act from certain state tax jurisdictions, in the measurement period. We plan to complete our analysis no later than December 31, 2018. It is possible that future adjustments may have a material adverse effect on our cash tax liabilities, results of operations, or financial condition. 

During the nine months ended September 30, 2018, we decreased our gross unrecognized tax benefits primarily related to a portion of tax credits that were settled in conjunction with the federal examination for tax years 2010 and 2011. There were no material changes to our uncertain tax positions during the nine months ended September 30, 2017.  

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18. Stockholders’ Equity

As of September 30, 2018, we have 4.0 million shares of common stock available for future grants of awards under the Plan, and awards for approximately 4.6 million shares are outstanding under all of our active and inactive plans.

Stock Options

Total share based compensation expense recognized for stock options, which is included in general and administrative expenses in our condensed consolidated statements of operations, for the three months ended September 30, 2018 and 2017 was $25 thousand and $170 thousand, respectively. Total share based compensation (benefit) expense recognized for stock options for the nine months ended September 30, 2018 and 2017 was $(183) thousand and $2.7 million, respectively. The decrease is primarily due to options granted in June 2017 that were fully expensed on each grant date due to a retirement-age specific provision in our Executive Chairman and President's employment and award agreements.

The following table summarizes our stock option activity during the nine months ended September 30, 2018:

	Number of Shares	Weighted-Average Exercise Price		Aggregate Intrinsic Value		Weighted-Average Remaining Contractual Term
				(In thousands)		(In years)
Outstanding at December 31, 2017	2,933,232	$	3.82
Granted	539,000	$	2.04
Canceled	(714,345)	$	3.63
Outstanding at September 30, 2018	2,757,887	$	3.52	$	5	7.22
Exercisable at September 30, 2018	416,792	$	4.66	$	—	1.40

The weighted average grant date fair value of options granted, based on the Black Scholes method, during the three months ended September 30, 2018 was $0.84. There were no options granted in the three months ended September 30, 2017. The weighted average grant date fair value of options granted during the nine months ended September 30, 2018 and 2017 was $0.96 and $1.94, respectively.

There were no options exercised during the three or nine months ended September 30, 2018 or 2017.

As of September 30, 2018, there was $390 thousand of total unrecognized compensation cost related to unvested stock option arrangements granted under the Plan. That cost is expected to be recognized over a weighted-average period of 1.0 years.

Restricted Stock Units and Restricted Stock Awards

Total share based compensation expense recognized for restricted stock units and restricted stock awards (together, "RSUs"), which is included in general and administrative expense in our condensed consolidated statements of operations, for the three months ended September 30, 2018 and 2017 was $935 thousand and $1.6 million, respectively. Total share based compensation expense recognized for RSUs for the nine months ended September 30, 2018 and 2017 was $2.2 million and $4.0 million, respectively. The decrease in the year-to-date period is due to reversing the cumulative expense on 535 thousand unvested RSUs granted to a former employee that were forfeited in the nine months ended September 30, 2018.

The following table summarizes the activity of our RSUs during the nine months ended September 30, 2018:

	Number of RSUs	Weighted-Average Grant Date Fair Value
Outstanding at December 31, 2017	2,737,353	$	3.83
Granted	120,000	$	2.32
Canceled (1)	(719,775)	$	3.72
Vested	(293,492)	$	3.94
Outstanding at September 30, 2018	1,844,086	$	3.75

____________________

1. Includes shares net-settled to cover statutory employee taxes related to the vesting of restricted stock awards, which increased treasury shares by 15 thousand and 68 thousand in the nine months ended September 30, 2018 and 2017, respectively.

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As of September 30, 2018, there was $2.9 million of total unrecognized compensation cost related to unvested RSUs granted under the plans. That cost is expected to be recognized over a weighted-average period of 1.02 years.

Other

As of September 30, 2018, we have an outstanding Warrant held by our lender, PEAK6 Investments, to purchase an aggregate of 1.5 million shares of our common stock at an exercise price of $2.50 per share. For additional information, please see Note 16.

As a result of shares withheld for tax purposes on the vesting of a restricted stock award, we increased our treasury shares by 15 thousand and 68 thousand in the nine months ended September 30, 2018 and 2017, respectively. There are no remaining unvested restricted stock awards outstanding. Under the Credit Agreement, we are currently prohibited from declaring and paying ordinary cash or stock dividends or repurchasing any shares of common stock.

19. Related Party Transactions

Digital Matrix Systems, Inc. – The Chief Executive Officer and President of Digital Matrix Systems, Inc. ("DMS"), David A. McGough, serves as one of our board members. We have service agreements with DMS for monitoring updates on a daily and quarterly basis, along with occasional contracts for certain credit analysis and application development services. In connection with these agreements, we paid monthly installments totaling $541 thousand and $491 thousand in the three months ended September 30, 2018 and 2017, respectively. In the nine months ended September 30, 2018 and 2017, we paid $1.8 million and $1.9 million, respectively. These amounts are included within cost of revenue and general and administrative expenses in our condensed consolidated statements of operations. As of September 30, 2018 and December 31, 2017, we owed $108 thousand and $178 thousand, respectively, to DMS under these agreements.

On June 27, 2018, we entered into the Bridge Notes (which were amended and restated in August 2018) to borrow a total of $3.0 million, of which $1.0 million was funded by Mr. McGough. The Bridge Notes have a maturity date of June 30, 2019. As of September 30, 2018, we owed $1.0 million under this agreement.

PEAK6 Investments, L.P. – During 2017, we refinanced our existing senior secured indebtedness under the Prior Credit Agreement with the Credit Agreement with PEAK6 Investments. In connection with the Credit Agreement, we paid PEAK6 Investments $1.5 million for the repurchase of common stock, and we received a total of $2.2 million for the issuance of the Warrant. In the three months ended September 30, 2018 and 2017, we paid interest of $527 thousand and $485 thousand, respectively. In the nine months ended September 30, 2018 and 2017, we paid interest and other fees of $1.7 million and $864 thousand, respectively. As of September 30, 2018 and December 31, 2017, our outstanding principal balance was $14.5 million and $21.5 million, respectively. PEAK6 Investments owned approximately 419 thousand shares of our common stock immediately prior to the closing of the Credit Agreement. For additional information, please see Note 16.

Loeb Holding Corporation – On June 27, 2018, we entered into the Bridge Notes (which were amended and restated in August 2018) to borrow a total of $3.0 million, of which $2.0 million was funded by Loeb Holding Corporation ("Loeb"). On September 24, 2018 we entered into a promissory note to borrow an additional $1.0 million from Loeb Holding Corporation. The terms of the new promissory note are substantially identical to the prior Bridge Notes. Loeb beneficially owns approximately 40% of our outstanding shares of common stock and is our largest stockholder. Thomas L. Kempner, our Board member until October 2018, was the Chairman and Chief Executive Officer and the beneficial owner of a majority of the voting stock of Loeb. Bruce L. Lev, one of our Board members, is a Managing Director of Loeb. The Bridge Notes have a maturity date of June 30, 2019. As of September 30, 2018, we owed $3.1 million under this agreement, which includes accrued interest.

One Health Group, LLC – On July 31, 2017, we entered into and consummated the divestiture of Voyce to One Health Group, LLC (the "Purchaser"), pursuant to the terms and conditions of a membership interest purchase agreement (the "Purchase Agreement") between our wholly owned subsidiary and the Purchaser. The purchase price for the Interests (the "Purchase Price") is equal to (i) the sum of one hundred dollars ($100), paid in cash at closing, plus (ii) a revenue participation of up to $20.0 million (the "Maximum Amount"), payable pursuant to the terms and conditions of the Purchase Agreement.

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The Purchaser is a newly-formed entity of which Michael R. Stanfield, our Executive Chairman and President, is a significant minority investor, and certain former members of the Voyce management team are the managing member and investors.

Monde of Events – The Chief Executive Officer of Monde of Events is the spouse of our Chief Operating Officer. We have retained Monde of Events to provide event planning services for our corporate events. In the three months ended September 30, 2018 and 2017, we paid Monde of Events $3 thousand and $13 thousand, respectively, for these services. In the nine months ended September 30, 2018 and 2017, we paid Monde of Events $13 thousand and $63 thousand, respectively, for these services. As of September 30, 2018, there were no amounts due to Monde of Events.

20. Segment and Geographic Information

We have ongoing operations in two segments: 1) Personal Information Services and 2) Insurance and Other Consumer Services. In January 2017 we sold the business comprising our Bail Bonds Industry Solutions segment, and in July 2017 we sold the business comprising our Pet Health Monitoring segment. For additional information, please see Note 5. 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.

Our Personal Information Services segment offers identity theft and privacy protection as well as credit monitoring services for consumers to understand, monitor, manage and protect their personal information and privacy. Our Insurance and Other Consumer Services segment includes our insurance and other membership services.

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The following table sets forth segment information for the three and nine months ended September 30, 2018 and 2017 (in thousands):

	Personal Information Services		Insurance and Other Consumer Services		Bail Bonds Industry Solutions		Corporate		Consolidated
Three months ended September 30, 2018
Revenue	$	35,984	$	1,501	$	—	$	—	$	37,485
Depreciation	1,584		3		—		—		1,587
Amortization	20		—		—		—		20
Income (loss) from operations	246		574		—		(835)		(15)
(Loss) income from continuing operations before income taxes	(628)		574		—		(835)		(889)
Three months ended September 30, 2017
Revenue	$	37,845	$	1,403	$	—	$	—	$	39,248
Depreciation	1,355		23		—		—		1,378
Amortization	29		—		—		—		29
(Loss) income from operations	(1,155)		386		—		(1,487)		(2,256)
(Loss) income from continuing operations before income taxes	(1,859)		386		—		(1,487)		(2,960)
Nine months ended September 30, 2018
Revenue	$	110,651	$	4,531	$	—	$	—	$	115,182
Depreciation	4,587		17		—		—		4,604
Amortization	118		—		—		—		118
Income (loss) from operations	2,841		1,671		—		(2,415)		2,097
Income (loss) from continuing operations before income taxes	528		1,671		—		(2,415)		(216)
Nine months ended September 30, 2017
Revenue	$	114,832	$	4,617	$	182	$	—	$	119,631
Depreciation	3,880		86		—		—		3,966
Amortization	123		—		—		—		123
(Loss) income from operations	(6,514)		1,226		(46)		(6,353)		(11,687)
(Loss) income from continuing operations before income taxes	(9,800)		1,225		(46)		(6,353)		(14,974)

The following table sets forth segment information as of September 30, 2018 and December 31, 2017 (in thousands):

	September 30, 2018				December 31, 2017
	Property and Equipment, net		Total Assets		Property and Equipment, net		Total Assets
Segment:
Personal Information Services	$	8,503	$	27,436	$	11,017	$	35,517
Insurance and Other Consumer Services	6		9,796		23		10,159
Corporate	—		504		—		803
Consolidated	$	8,509	$	37,736	$	11,040	$	46,479

For revenue by geographic area, please see "—Disaggregation of Revenue" in Note 4.

21. Subsequent Events

On October 31, 2018, we entered into an Agreement and Plan of Merger (the “Merger Agreement”) with Parent and WC SACD One Merger Sub, Inc. (“Merger Sub”), a wholly-owned subsidiary of Parent, pursuant to which, among other things, subject to the terms and conditions of the Merger Agreement, Merger Sub has agreed to make a cash tender offer (the “Offer”) to purchase all of the outstanding shares of our common stock (the “Shares”), at a purchase price of $3.68

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per Share in cash (the “Offer Price”). Parent and Merger Sub are affiliates of WC SACD One, Inc., (“WC SACD”), a joint venture formed by iSubscribed, WndrCo Holdings, LLC and certain General Catalyst funds (collectively, the “Investors”).

The transaction has been unanimously approved by a Special Committee of the Board of Directors of the Company comprised of independent and disinterested directors. Certain affiliates of Intersections have agreed, subject to customary conditions, not to tender a majority of their shares into the tender offer, but to roll over such shares in the transaction into WC SACD. Such affiliates have also entered into tender and support agreements with Parent pursuant to which they have, among other things, agreed to tender to Parent in the offer the shares of common stock that they are not rolling over in the transaction. The transaction is subject to customary closing conditions, including the expiration of the applicable period under the Hart-Scott-Rodino Act and a minimum tender condition that requires the tender of both more than 50% of the our outstanding shares and more than 50% of our outstanding shares held by stockholders other than directors, executive officers, and rollover participants. The transaction is not subject to any financing contingency. The transaction is expected to close during the first quarter of 2019.

If the Merger is consummated, our shares of Common Stock will be delisted from the NASDAQ Stock Market and deregistered under the Securities Exchange Act of 1934, as amended (the “Exchange Act”).

On October 31, 2018, in connection with the Merger Agreement, we also entered into the Note Purchase Agreement, pursuant to which we sold the Notes to Parent in the aggregate principal amount of $30.0 million for a purchase price in cash of $30.0 million, and issued to Loeb Holding Corporation and David A. McGough additional Notes in the aggregate principal amount of $4.0 million in exchange for the Bridge Notes previously issued by us to such Purchasers (who received payment from the Company in cash of approximately $87 thousand for the accrued and unpaid interest on the Bridge Notes). We used approximately $14.6 million of the net proceeds from the sale of the Notes to repay in full the principal outstanding under the Credit Agreement and to pay related interest thereon. We intend to use the balance of the net proceeds for general corporate purposes.

The Notes mature on October 31, 2021, subject to potential acceleration in the event of certain specified events of default, and bear interest, payable quarterly in cash, at the rate of 6% per annum through October 31, 2019, and at the rate of 8% per annum thereafter, in each case subject to an increase of 2% per annum if any event of default has occurred and is continuing. The Notes are guaranteed by our subsidiaries and are secured by a first-priority security interest in substantially all the assets of the Company and such subsidiaries. The Notes are convertible in whole or in part, together with accrued and unpaid interest with respect to the principal amount converted, into shares of our common stock at a conversion price of $2.27 per share, subject to adjustment. To the extent the Company remains listed on NASDAQ and conversion occurs prior to the date on which approval of the Company’s stockholders to permit conversion of all the Notes into shares of common stock under the rules of NASDAQ becomes effective, we shall not be required to issue more shares of common stock than the converting Note holder’s pro rata share of 19.9% of the shares of common stock outstanding following conversion, and the remainder of the Notes to be converted shall be convertible into shares of non-voting convertible preferred stock of the Company (the “Preferred Stock”). Prior to the date on which such approval of the Company’s stockholders becomes effective, the issuance of common stock upon conversion of the Notes to officers or directors of the Company or their affiliates may be further limited to the extent they are subject to applicable NASDAQ rules. The Notes will automatically convert into common stock and (if applicable) Preferred Stock immediately prior to either the completion of the Merger or the consummation of a “Superior Transaction” (as defined in the Notes). Each Note may also be converted, at the option of the Purchaser, upon (i) the consummation of certain “Alternative Transactions” (as defined in the Notes), (ii) a determination by the Company’s Board of Directors that the Company is no longer pursuing a process to sell the Company, or (iii) on or after April 30, 2019.

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

The following discussion and analysis of our financial condition and results of operations should be read in conjunction with our audited consolidated financial statements for the years ended December 31, 2017 and 2016, and as of December 31, 2017 and 2016, included in our Annual Report on Form 10-K for the year ended December 31, 2017 (the "Form 10-K"), and with the unaudited condensed consolidated financial statements and related notes thereto presented in this Form 10-Q.

Forward-Looking Statements

Statements in this discussion and analysis relating to future plans, results, performance, expectations, achievements and the like are considered "forward-looking statements" under the Private Securities Litigation Reform Act of 1995. You can identify forward-looking statements by the fact that they do not relate strictly to historical or current facts. These statements may include words such as "anticipate," "estimate," "expect," "project,'' "plan," "intend," "believe," "may," "should," "can have," "likely" and other words and terms of similar meaning in connection with any discussion of the timing or nature of future operating or financial performance or other events or expectations concerning the acquisition (including the anticipated timing of consummation of the acquisition). Those forward-looking statements involve known and unknown risks and uncertainties and are subject to change based on various factors and uncertainties that may cause actual results to differ materially from those expressed or implied by those statements, including uncertainties as to the timing of the Offer and the subsequent merger; the risk that the Offer or the subsequent merger may not be completed in a timely manner or at all; (uncertainties as to the percentage of the Company stockholders tendering their shares in the Offer; the possibility that competing offers or acquisition proposals for the Company will be made; the possibility that any or all of the various conditions to the consummation of the Offer or the subsequent merger may not be satisfied or waived, including the failure to receive a tender of majority of the shares held by unaffiliated stockholders of the Company; the occurrence of any event, change or other circumstance that could give rise to the termination of the Merger Agreement, including in circumstances which would require the Company to pay a termination fee or other expenses; the effect of the announcement or pendency of the transactions contemplated by the Merger Agreement on the Company’s ability to retain and hire key personnel, its ability to maintain relationships with its customers, suppliers and others with whom it does business, or its operating results and business generally; risks related to diverting management’s attention from the Company’s ongoing business operations; the risk that stockholder litigation in connection with the transactions contemplated by the Merger Agreement may result in significant costs of defense, indemnification and liability; our ability to generate revenue from our partner sales strategy and business development pipeline with our distribution partners; the timing and success of new product launches and other growth initiatives, including our Identity Guard® with Watson™ service; the continuing impact of the regulatory environment on our business; the continued dependence on a small number of financial institutions for a majority of our revenue and to service our U.S. financial institution customer base; our incurring additional restructuring charges; our incurring additional charges for non-income business taxes or otherwise, or impairment costs or charges on goodwill and/or other assets; our ability to control costs; and our failure to protect private data due to a security breach or other unauthorized access. Factors and uncertainties that may cause actual results to differ include but are not limited to the risks disclosed under "Forward-Looking Statements," "Item 1. Business—Government Regulation" and "Item 1A. Risk Factors" in the Company’s most recent Annual Report on Form 10-K and herein and in its recent other filings with the U.S. Securities and Exchange Commission. The Company undertakes no obligation to revise or update any forward-looking statements unless required by applicable law.

Overview

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

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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.

On October 31, 2018, we entered into an Agreement and Plan of Merger as well as a Note Purchase and Exchange Agreement. For additional information, please see Note 21 to our condensed consolidated financial statements.

Personal Information Services

Our Personal Information Services segment includes privacy, personal information security and identity theft monitoring and remediation services to help consumers understand, monitor, manage and protect against the risks associated with the inappropriate and sometimes criminal exposure of their personal information. Our current services include: providing credit reports, performing credit monitoring and providing educational credit scores and credit education; reports, monitoring and education about other personal information and risks, such as public records, identity validation, new account opening, social media footprint and Internet data risks; identity theft recovery services; identity theft cost reimbursement insurance of up to $1.0 million underwritten by a prominent insurance company; and software and other technology tools and services. Our resolution team applies its expertise to assist consumers with the remediation of confirmed identity theft events by providing pertinent documentation, communicating directly with creditors and placing fraud alerts on their behalf. We also offer breach response services to large and small organizations responding to compromises of sensitive personal information and other customer and employee data, mitigating potential damage to the customers and the corporate brand. We help these organizations notify the affected individuals and we provide the affected individuals with identity theft recovery and credit monitoring services. In February 2018, we also launched Data Breach Readiness, a comprehensive data breach preparedness solution for small and medium sized businesses. We continue to develop innovative new services and tools to add to our Identity Guard^® portfolio and address the increasing awareness by consumers of the risks associated with their personal information.

We believe the threat to consumers’ personal information goes beyond traditional credit monitoring. The proliferation of data breaches, the pervasive use of social media and the increased sophistication of cyber criminals requires a solution for consumers’ needs in the identity protection space. To effectively identify, manage and remediate these new threats to consumers, we expanded Identity Guard^® with Watson^™. Identity Guard^® with Watson^™ is an identity theft monitoring and privacy advisory solution that can be personalized to each individual’s specific needs and is designed to protect the entire family. Identity Guard^® with Watson^™ maximizes the power of IBM Watson^™ cognitive computing to offer consumers the traditional credit monitoring services as well as non-credit related preventative alert services, using previously unmonitored unstructured data sources and processes and safe web browsing tools. Identity Guard^® with Watson^™ also equips users to reduce their risk of identity theft by educating individuals on existing risks to their personal information and recommending personalized remediation actions. Identity Guard^® with Watson^™ also offers social insights that help consumers and their families understand and responsibly manage their social media presence, including assistance to strengthen a consumer’s online privacy settings and remediation of potentially damaging posts. We believe it is the first service of its kind in our industry that uses natural language processing and machine learning to reveal insights from large amounts of unstructured data, delivered through the IBM Watson^™ technology platform. This platform is more scalable and adaptable than our legacy platform, which we believe will enable us to develop innovative new products and features for consumers and organizations more readily than in the past. As we focus on making Identity Guard^® with Watson^™ our leading offering to consumers and their families, we significantly invested in our product and business development group in 2017 and continued this investment in 2018, as the pipeline of engagement leads grows and we continue to seek to convert the market opportunities into sustainable revenue.

We continue to expand our business relationships with new partners including retail, communication and other industrial partners, as well as partnering with employers to offer Identity Guard^® with Watson^™ as an employee benefit option. After increasing our internal business development capability in various channels more than 100% in 2017, we are appropriately positioned to continue to pursue and contract with partners to bring our suite of differentiated and comprehensive services to their customers. We also continued to make significant investments in our internal systems, member platforms and IT security compliance in order to build, enhance and prioritize security in our partner distribution channels and generate subscriber growth. We continue to develop, improve and expand upon all of these important initiatives.

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We derive the majority of our revenue from historical agreements with U.S. financial institutions, which constituted approximately 51% and 56% of our Personal Information Services segment revenue in the nine months ended September 30, 2018 and 2017, respectively. Revenue from our largest client, Bank of America, constituted approximately 42% and 45% of our Personal Information Services segment revenue in the nine months ended September 30, 2018 and 2017, respectively. Bank of America ceased marketing of our services to new customers in 2011. Under our agreements with Bank of America, we continue to provide our services to the subscribers we acquired through Bank of America before December 31, 2011, subject to normal attrition and other ongoing adjustments by us or Bank of America, which may result in cancellation of certain subscribers or groups of subscribers.

Recently, there has been an increase in the number of major consumer data breaches, including a breach of one of the largest consumer reporting agencies. We continue to review those incidents for insights into how we can reduce our risk of a breach and incorporate those observations into our continuous monitoring of our cybersecurity controls, which we believe meet or exceed industry best practices. In addition, we believe the recent breaches have not had an adverse effect on our business, subscriber base, or vendor relationships; however, there can be no assurances that they will not have an adverse effect in the future. We will continue to evaluate our business and the financial or other impact, if any, of the consumer reporting agency breach and the response of that organization.

Other

 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.

Critical Accounting Policies

Management Estimates

In preparing our condensed consolidated financial statements, we make estimates and assumptions that can have a significant impact to our condensed consolidated financial position and results of operations. The application of our critical accounting policies requires an evaluation of a number of complex criteria and significant accounting judgments by us. In applying those policies, our management uses its judgment to determine the appropriate assumptions to be used in the determination of certain estimates. Actual results may differ significantly from these estimates under different assumptions, judgments or conditions. We have identified the following policies as critical to our business operations and the understanding of our condensed consolidated results of operations. For further information on our critical and other accounting policies, please see Note 2 to our condensed consolidated financial statements.

Revision to Previously Issued Financial Statements

The results of operations for the three and nine months ended September 30, 2017 have been updated to reflect an adjustment to our share based compensation expense, which is recorded in general and administrative expenses in our condensed consolidated statements of operations. The change in share based compensation from the amount as reported to the amount as revised was a $2.4 million increase for the three and nine months ended September 30, 2017. These changes are reflected in the loss from operations, loss from continuing operations before income taxes, net loss and basic and diluted net loss per common share figures in these condensed consolidated financial statements. For additional information, please see Note 21 to the consolidated financial statements contained in our most recent Annual Report on Form 10-K.

Revenue Recognition

For a full description of our revenue recognition policy, please see Note 4 to our condensed consolidated financial statements.

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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 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

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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 September 30, 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. For additional information, please see Note 11 to our condensed consolidated financial statements.

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. The fair value of each option granted has been estimated as of the date of grant with the following weighted-average assumptions for the nine months ended September 30, 2018 and 2017: 

Expected Dividend Yield. Under the Credit Agreement, we are currently prohibited from declaring and paying dividends and therefore, the expected 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 52% and 49% for 2018 and 2017, respectively. 

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% and 1.8% for 2018 and 2017, respectively. 

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Expected Term. The expected term of options granted was determined by considering employees’ historical exercise patterns or homogeneous management pools, which we determined is approximately 5.0 years for both 2018 and 2017. 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.  

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

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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. We record depreciation for internally developed capitalized software in depreciation expense in our condensed consolidated statements of operations. 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 separately state unbilled contract assets in our condensed consolidated balance sheet as of September 30, 2018, which we previously included in accounts receivable. For additional information, please see Notes 3 and 4 to our condensed consolidated financial statements.

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)

40

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.

Accounting Standards Updates Recently Adopted and Accounting Standards Updates Not Yet Effective

For information about accounting standards updates recently adopted and accounting standards updates not yet effective, please see Note 3 to our condensed consolidated financial statements.

Results of Operations

Three Months Ended September 30, 2018 and 2017 (all tables are in thousands, except percentages):

The condensed consolidated results of operations are as follows:

	Three Months Ended September 30,								Change
	2018		Percent of Revenue		2017		Percent of Revenue		Dollars		Percent
Revenue	$	37,485	100.0	%	$	39,248	100.0	%	$	(1,763)	(4.5)	%
Operating expenses:
Marketing	631		1.7	%	2,682		6.8	%	(2,051)		(76.5)	%
Commission	8,743		23.3	%	9,462		24.1	%	(719)		(7.6)	%
Cost of revenue	12,481		33.3	%	13,126		33.4	%	(645)		(4.9)	%
General and administrative	14,038		37.4	%	14,827		37.8	%	(789)		(5.3)	%
Depreciation	1,587		4.2	%	1,378		3.5	%	209		15.2	%
Amortization	20		0.1	%	29		0.1	%	(9)		(31.0)	%
Total operating expenses	37,500		100.0	%	41,504		105.7	%	(4,004)		(9.6)	%
Loss from operations	(15)		—	%	(2,256)		(5.7)	%	2,241		(99.3)	%
Interest expense, net	(930)		(2.5)	%	(701)		(1.8)	%	(229)		32.7	%
Loss on extinguishment of debt	—		—	%	—		—	%	—		N/M
Other income (expense), net	56		0.1	%	(3)		—	%	59		(1,966.7)	%
Loss from continuing operations before income taxes	(889)		(2.4)	%	(2,960)		(7.5)	%	2,071		(70.0)	%
Income tax expense	(220)		(0.6)	%	(6)		—	%	(214)		3,566.7	%
Loss from continuing operations	(1,109)		(3.0)	%	(2,966)		(7.6)	%	1,857		(62.6)	%
Loss from discontinued operations, net of tax	—		—	%	(1,030)		(2.6)	%	1,030		(100.0)	%
Net loss	$	(1,109)	(3.0)	%	$	(3,996)	(10.2)	%	$	2,887	(72.2)	%

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Revenue and Subscribers

The following tables provide details of our revenue and subscriber information for the three months ended September 30, 2018 and 2017:

	Three Months Ended September 30,
	2018		2017		2018		2017
	(In thousands)				(Percent of total)
Bank of America	$	15,021	$	16,828	40.0	%	42.9	%
All other financial institution clients	3,506		3,946		9.4	%	10.1	%
Subtotal: financial institutions	18,527		20,774		49.4	%	53.0	%
Identity Guard® and Identity Guard® with Watson™ (1)	13,270		12,396		35.4	%	31.5	%
Canadian business lines	3,261		3,405		8.7	%	8.7	%
Breach services & other (1)	926		1,270		2.5	%	3.2	%
Subtotal: ongoing business lines	17,457		17,071		46.6	%	43.4	%
Total Personal Information Services revenue	35,984		37,845		96.0	%	96.4	%
Revenue from other segments	1,501		1,403		4.0	%	3.6	%
Consolidated revenue	$	37,485	$	39,248	100.0	%	100.0	%

Personal Information Services Segment Subscribers

	Financial Institution	Identity Guard® Services (1)	Canadian Business Lines (2)	Total
Balance at June 30, 2018	580	357	159	1,096
Additions	—	14	37	51
Cancellations	(15)	(19)	(23)	(57)
Balance at September 30, 2018	565	352	173	1,090
Balance at June 30, 2017	663	329	161	1,153
Additions	—	38	23	61
Cancellations	(23)	(29)	(25)	(77)
Balance at September 30, 2017	640	338	159	1,137

____________________

1. We periodically refine the criteria used to calculate and report our subscriber data. In 2017, we determined that certain subscribers who receive our breach response services should no longer be included in the presentation of Identity Guard^® Services subscribers or revenue due to the nonrecurring nature of our breach response services. For comparability, all periods presented have been recast to reflect this change in subscribers and revenue.

2. Under our collaborative marketing arrangement, we recognize half of all the revenue earned from the Canadian Business subscribers reported above.

Personal Information Services Revenue

Revenue from our actively marketed, ongoing business lines, Identity Guard^®, Canada, and Breach services and other, increased $386 thousand, or 2.3%, for the three months ended September 30, 2018 compared to the three months ended September 30, 2017. The Identity Guard^® Services revenue increased 7.1% for the three months ended September 30, 2018 compared to the three months ended September 30, 2017, as revenue gains from subscriber increases in several of our Identity Guard^® channels were partially offset by decreases in revenue from subscribers acquired through one of our partners, Costco, that is no longer marketing our services. The Identity Guard^® Services subscriber base increased 4.1% from September 30, 2017 as a result of new subscribers acquired in the later part of 2017 primarily through one of our employee benefit partners. In mid-2017, we reduced marketing spending in certain direct-to-consumer channels and expect to continue a reduced level of spending through the remainder of 2018, which may result in reduced subscriber additions in those channels. We continue to focus on improving and expanding our affiliate marketing channels for direct-to-consumer subscriber acquisitions, partner relationships, and business relationships with employers to offer Identity Guard^® Services as an employee benefit option, which, if successful, could increase our revenue and subscriber counts over the next twelve months.

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The revenue increase in the ongoing business lines was more than offset by a $2.2 million decline in revenue from our Bank of America and other financial institution clients, which is primarily the result of normal subscriber attrition within the portfolios we continue to service. Due to our ceased marketing and retention efforts, we expect revenue and related earnings from our financial institution client base to continue to decrease.

Revenue from Other Segments

The decrease in revenue continues to be due to subscriber attrition and portfolio cancellations in our Insurance and Other Consumer Services segment, which consists of purchasers of both insurance and membership services that have recurring subscription benefits, and minimal new subscription sales due to substantially ceased marketing efforts by most of our clients for these services. We had approximately 32 thousand subscribers in our Insurance and Other Consumer Services segment as of September 30, 2018, which is a 24% decrease from our subscriber base of 42 thousand subscribers as of September 30, 2017.

Marketing Expenses

Marketing expenses consist of subscriber acquisition costs, including affiliate marketing payments, search engine marketing, web-based marketing and direct mail expenses such as printing and postage. In connection with the adoption of Topic 606, as of January 1, 2018, we no longer defer and amortize direct-response advertising costs, and all marketing costs are now expensed as incurred. Additionally, we recorded a cumulative adjustment to the opening balance of retained earnings, which consisted of $1.3 million of previously capitalized direct-response advertising costs. As such, we expect our marketing expenses in 2018 to be lower than in prior years. For additional information, please see Notes 3 and 4 to our condensed consolidated financial statements.

In the three months ended September 30, 2018 and 2017, our marketing expenses resulted primarily from marketing activity for direct-to-consumer and Canadian subscriber acquisitions, which decreased in the three months ended September 30, 2018 compared to the three months ended September 30, 2017. We did not amortize deferred subscription solicitation costs related to marketing for the three months ended September 30, 2018 due to the adoption of Topic 606, as described above. Amortization of deferred subscription solicitation costs for the three months ended September 30, 2017 was $2.2 million.

Marketing costs of $631 thousand were expensed as incurred for the three months ended September 30, 2018. Marketing costs that did not meet the criteria for capitalization and were expensed as incurred for the three months ended September 30, 2017 were $441 thousand. We continue to expect our limited direct-to-consumer marketing spend to focus on our historically most productive channels or programs, which may result in less marketing costs, reduced subscriber acquisitions and revenue.

Commission Expenses

Commission expenses consist of commissions paid to our clients and other partners, as well as amortization of incremental contract costs due to the adoption of Topic 606. The decrease is related to a decrease in subscribers largely from our financial institution subscriber base for which commissions based on a percentage of revenue are paid. We expect commission expenses related to our financial institution subscriber base to continue to decline due to normal attrition of subscribers in client portfolios with no new marketing activity. However, the decline may be partially or completely offset by increased commission expenses paid to affiliates, partners and internal incentive plans related to increased sales of our new service offerings. We expect commission expenses as a percentage of revenue to remain relatively flat for the remainder of 2018.

Cost of Revenue

Cost of revenue consists of the costs of operating our customer service and information processing centers, data costs, and billing costs for subscribers and one-time transactional sales. The decrease is primarily due to lower volumes of data fulfillment and service costs for subscribers, partially offset by an increase in the effective rates for data. We incur fixed fee long term pricing for a significant portion of the supply of credit bureau data and certain alternative data sources for our services. To the extent our volume increases, we expect our effective rates (that is, the variable rate of tiered and fixed subscriber fulfillment costs) to decrease. For additional information, please see "Liquidity and Capital Resources — Other" below.

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General and Administrative Expenses

General and administrative expenses consist of personnel and facilities expenses associated with our executive, sales, marketing, information technology, legal, human resources and finance functions, as well as internal audit, payroll, share based compensation and other corporate overhead costs. The decrease in general and administrative expenses is primarily due to lower payroll-related costs, including $849 thousand lower share based compensation expense.

In connection with our continuing efforts to refinance our debt that was outstanding as of September 30, 2018, we incurred significant transaction costs, of which $334 thousand was included in general and administrative expenses in the three months ended September 30, 2018. We expect to pay significant additional transaction costs over the next twelve months but cannot yet estimate what portion will be included in general and administrative expenses.

Depreciation

Depreciation consists primarily of depreciation of our fixed assets and capitalized software. The increase in depreciation is primarily due to increases in internally developed capitalized software placed in service related to the continuous innovative development of Identity Guard^® with Watson^™. Our capitalized software is generally depreciated over a period of three years.

Goodwill

During the three months ended September 30, 2018, we did not identify any triggering events related to our goodwill and therefore were not required to test our goodwill for impairment. 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 the reporting units decrease, we may incur additional impairment charges in the future.

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Results of Operations

Nine Months Ended September 30, 2018 and 2017 (all tables are in thousands, except percentages):

The condensed consolidated results of operations are as follows:

	Nine Months Ended September 30,								Change
	2018		Percent of Revenue		2017		Percent of Revenue		Dollars		Percent
Revenue	$	115,182	100.0	%	$	119,631	100.0	%	$	(4,449)	(3.7)	%
Operating expenses:
Marketing	2,455		2.1	%	9,294		7.8	%	(6,839)		(73.6)	%
Commission	26,949		23.4	%	28,966		24.2	%	(2,017)		(7.0)	%
Cost of revenue	37,284		32.4	%	39,694		33.2	%	(2,410)		(6.1)	%
General and administrative	41,675		36.2	%	49,169		41.1	%	(7,494)		(15.2)	%
Loss on disposition of Captira Analytical	—		—	%	106		0.1	%	(106)		(100.0)	%
Depreciation	4,604		4.0	%	3,966		3.3	%	638		16.1	%
Amortization	118		0.1	%	123		0.1	%	(5)		(4.1)	%
Total operating expenses	113,085		98.2	%	131,318		109.8	%	(18,233)		(13.9)	%
Income (loss) from operations	2,097		1.8	%	(11,687)		(9.8)	%	13,784		(117.9)	%
Interest expense, net	(2,284)		(2.0)	%	(1,895)		(1.6)	%	(389)		20.5	%
Loss on extinguishment of debt	—		—	%	(1,525)		(1.3)	%	1,525		(100.0)	%
Other (expense) income, net	(29)		—	%	133		0.1	%	(162)		(121.8)	%
Loss from continuing operations before income taxes	(216)		(0.2)	%	(14,974)		(12.5)	%	14,758		(98.6)	%
Income tax benefit	303		0.3	%	23		—	%	280		1,217.4	%
Income (loss) from continuing operations	87		0.1	%	(14,951)		(12.5)	%	15,038		(100.6)	%
Loss from discontinued operations, net of tax	—		—	%	(2,449)		(2.0)	%	2,449		(100.0)	%
Net income (loss)	$	87	0.1	%	$	(17,400)	(14.5)	%	$	17,487	(100.5)	%

Revenue

The following tables provide details of our revenue and subscriber information for the nine months ended September 30, 2018 and 2017:

	Nine Months Ended September 30,
	2018		2017		2018		2017
	(In thousands)				(Percent of total)
Bank of America	$	46,099	$	51,815	40.0	%	43.3	%
All other financial institution clients	10,842		12,227		9.4	%	10.2	%
Subtotal: financial institutions	56,941		64,042		49.4	%	53.5	%
Identity Guard® and Identity Guard® with Watson™ (1)	40,178		36,889		34.9	%	30.8	%
Canadian business lines	9,658		9,684		8.4	%	8.2	%
Breach services & other (1)	3,874		4,217		3.4	%	3.5	%
Subtotal: ongoing business lines	53,710		50,790		46.7	%	42.5	%
Total Personal Information Services revenue	110,651		114,832		96.1	%	96.0	%
Revenue from other segments	4,531		4,799		3.9	%	4.0	%
Consolidated revenue	$	115,182	$	119,631	100.0	%	100.0	%

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Personal Information Services Segment Subscribers

	Financial Institution	Identity Guard® Services (1)	Canadian Business Lines (2)	Total
Balance at December 31, 2017	620	359	161	1,140
Additions	—	51	87	138
Cancellations	(55)	(58)	(75)	(188)
Balance at September 30, 2018	565	352	173	1,090
Balance at December 31, 2016	705	317	162	1,184
Additions	2	116	81	199
Cancellations	(67)	(95)	(84)	(246)
Balance at September 30, 2017	640	338	159	1,137

____________________

1. We periodically refine the criteria used to calculate and report our subscriber data. In 2017, we determined that certain subscribers who receive our breach response services should no longer be included in the presentation of Identity Guard^® Services subscribers or revenue due to the nonrecurring nature of our breach response services. For comparability, all periods presented have been recast to reflect this change in subscribers and revenue.

2. Under our collaborative marketing arrangement, we recognize half of all the revenue earned from the Canadian Business subscribers reported above.

Personal Information Services Revenue

Revenue from our actively marketed, ongoing business lines, Identity Guard^®, Canada, and Breach services and other, increased $2.9 million, or 5.7%, for the nine months ended September 30, 2018 compared to the nine months ended September 30, 2017. The Identity Guard^® Services revenue increased 8.9% for the nine months ended September 30, 2018 compared to the nine months ended September 30, 2017, as revenue gains from subscriber increases in several of our Identity Guard^® channels were partially offset by decreases in revenue from subscribers acquired through one of our partners, Costco, that is no longer marketing our services. The Identity Guard^® Services subscriber base increased 4.1% from September 30, 2017 as a result of new subscribers acquired in the later part of 2017 primarily through one of our employee benefit partners. In mid-2017, we reduced marketing spending in certain direct-to-consumer channels and expect to continue a reduced level of spending through the remainder of 2018, which may result in reduced subscriber additions in those channels. We continue to focus on improving and expanding our affiliate marketing channels for direct-to-consumer subscriber acquisitions, partner relationships, and business relationships with employers to offer Identity Guard^® Services as an employee benefit option, which, if successful, could increase our revenue and subscriber counts over the next twelve months.

The revenue increase in the ongoing business lines was more than offset by a $7.1 million decline in revenue from our Bank of America and other financial institution clients, which is primarily the result of normal subscriber attrition within the portfolios we continue to service. Due to our ceased marketing and retention efforts, we expect revenue and related earnings from our financial institution client base to continue to decrease.

Revenue from Other Segments

The decrease in revenue continues to be due to subscriber attrition and portfolio cancellations in our Insurance and Other Consumer Services segment, which consists of purchasers of both insurance and membership services that have recurring subscription benefits, and minimal new subscription sales due to substantially ceased marketing efforts by most of our clients for these services. We had approximately 32 thousand subscribers in our Insurance and Other Consumer Services segment as of September 30, 2018, which is a 24% decrease from our subscriber base of 42 thousand subscribers as of September 30, 2017.

Marketing Expenses

In the nine months ended September 30, 2018 and 2017, our marketing expenses resulted primarily from marketing activity for direct-to-consumer and Canadian subscriber acquisitions, which decreased in the nine months ended September 30, 2018 compared to the nine months ended September 30, 2017. We did not amortize deferred subscription solicitation costs related to marketing for the nine months ended September 30, 2018 due to the adoption of Topic 606, as

46

described in Notes 3 and 4 to our condensed consolidated financial statements. Amortization of deferred subscription solicitation costs for the nine months ended September 30, 2017 was $7.9 million.

Marketing costs of $2.5 million were expensed as incurred for the nine months ended September 30, 2018. Marketing costs that did not meet the criteria for capitalization and were expensed as incurred for the nine months ended September 30, 2017 were $1.4 million. We continue to expect our limited direct-to-consumer marketing spend to focus on our historically most productive channels or programs, which may result in less marketing costs, reduced subscriber acquisitions and revenue.

Commission Expenses

The decrease is related to a decrease in subscribers largely from our financial institution subscriber base for which commissions based on a percentage of revenue are paid. We expect commission expenses related to our financial institution subscriber base to continue to decline due to normal attrition of subscribers in client portfolios with no new marketing activity. However, the decline may be partially or completely offset by increased commission expenses paid to affiliates, partners and internal incentive plans related to increased sales of our new service offerings. We expect commission expenses as a percentage of revenue to remain relatively flat for the remainder of 2018.

Cost of Revenue

The decrease is primarily due to lower volumes of data fulfillment and service costs for subscribers, partially offset by an increase in the effective rates for data. We incur fixed fee long term pricing for a significant portion of the supply of credit bureau data and certain alternative data sources for our services. To the extent our volume increases, we expect our effective rates (that is, the variable rate of tiered and fixed subscriber fulfillment costs) to decrease. For additional information, please see "Liquidity and Capital Resources — Other" below.

General and Administrative Expenses

The decrease in general and administrative expenses is primarily due to lower payroll-related costs, including $4.6 million lower share based compensation expense, lower severance expense of $1.2 million and executive management bonuses of $1.0 million in 2017 that did not reoccur in 2018. The decrease in share based compensation expense is primarily due to options granted in June 2017 that were fully expensed on each grant date due to a retirement-age specific provision in our Executive Chairman and President's employment and award agreements, as well as a reversal of the cumulative expense on unvested options and RSUs granted to a former employee that were forfeited in the first quarter of 2018.

In connection with our continuing efforts to refinance our debt that was outstanding as of September 30, 2018, we incurred significant transaction costs, of which $467 thousand was included in general and administrative expenses in the nine months ended September 30, 2018. We expect to pay significant additional transaction costs over the next twelve months but cannot yet estimate what portion will be included in general and administrative expenses.

Depreciation

The increase is primarily due increases in internally developed capitalized software placed in service related to the continuous innovative development of Identity Guard^® with Watson^™.

Goodwill

During the nine months ended September 30, 2018, we did not identify any triggering events related to our goodwill and therefore were not required to test our goodwill for impairment. 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 the reporting units decrease, we may incur additional impairment charges in the future.

Interest Expense

Interest expense increased to $930 thousand for the three months ended September 30, 2018 from $701 thousand for the three months ended September 30, 2017. Interest expense increased to $2.3 million for the nine months ended September 30, 2018 from $1.9 million for the nine months ended September 30, 2017. As a result of the outstanding debt

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under the Credit Agreement and Bridge Notes, we expect to continue to incur significant interest expense until maturity. For additional information, please see Note 16 to our condensed consolidated financial statements.

Other Income (Expense), net

Other income was $56 thousand for the three months ended September 30, 2018 compared to other (expense) of $(3) thousand for the three months ended September 30, 2017. Other (expense) was $(29) thousand for the nine months ended September 30, 2018 compared to other income of $133 thousand for the nine months ended September 30, 2017. The fluctuations in the quarter-to-date and year-to-date periods are primarily due to changes in the Canadian foreign exchange rate, as well as the timing of related cash payments, which caused unrealized foreign exchange gains or losses during various periods.

Income Taxes

We continued to evaluate all significant available positive and negative evidence including, but not limited to, our three-year cumulative loss, as adjusted for permanent items; insufficient sources of taxable income in prior carryback periods in order to utilize all of the existing definite-lived net deferred tax assets; unavailability of prudent and feasible tax-planning strategies; negative adjustments to our projected taxable income; and scheduling of the future reversals of existing temporary differences. As a result, we were not able to recognize a net tax benefit associated with our pre-tax loss in the nine months ended September 30, 2018, as there has been no change to the conclusion from the year ended December 31, 2017 that it was more likely than not that we would not generate sufficient taxable income in the foreseeable future to realize our net deferred tax assets.

Our consolidated effective tax rate from continuing operations for the three months ended September 30, 2018 and 2017 was (24.7)% and (0.2)%, respectively. Our consolidated effective tax rate from continuing operations for the nine months ended September 30, 2018 and 2017 was 140.3% and 0.2%, respectively. The increase in the rate for the nine months ended September 30, 2018 is primarily due to the discrete resolution of uncertain tax positions related to claimed general business credits under audit that were deemed effectively settled in the period, partially offset by an adjustment to the valuation allowance, which is further described below.

The amount of deferred tax assets considered realizable as of September 30, 2018 could be adjusted if facts and circumstances in future reporting periods change, including, but not limited to, generating sufficient future taxable income in the carryforward periods. If certain substantial changes in the entity’s ownership were to occur, there would be an annual limitation on the amount of the carryforwards that can be utilized in the future.

We continued to evaluate the effects of the Tax Cuts and Jobs Act of 2017 (“Tax Act”) and are applying the guidance in Staff Accounting Bulletin No. 118. As of December 31, 2017, we made a reasonable estimate of the effects on our existing deferred tax balances, including the impact of our valuation allowance due to the indefinite life of certain deferred tax assets and the state adoption of the federal tax law changes. In the three months ended September 30, 2018, we made an adjustment to our initial assumptions based on new interpretations, which are consistent with the filing of our federal income tax return, by recording additional income tax expense in the amount of $212 thousand. We continue to review our facts and circumstances, including resolution, if any, of uncertainty surrounding conformity of the Tax Act from certain state tax jurisdictions, in the measurement period. We plan to complete our analysis no later than December 31, 2018. It is possible that future adjustments may have a material adverse effect on our cash tax liabilities, results of operations, or financial condition.

During the nine months ended September 30, 2018, we decreased our gross unrecognized tax benefits primarily related to a portion of tax credits that were settled in conjunction with the federal examination for tax years 2010 and 2011. There were no material changes to our uncertain tax positions during the nine months ended September 30, 2017.

Discontinued Operations

Prior to July 31, 2017, our Pet Health Monitoring segment included the health and wellness monitoring products and services for veterinarians and pet owners through our former subsidiary, i4c. Effective July 31, 2017, we divested our ownership in i4c. This segment is classified as a discontinued operation in the three and nine months ended September 30, 2017. For additional information, please see Note 5 to our condensed consolidated financial statements.

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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 in Note 5, 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 to our condensed consolidated financial statements.

Liquidity and Capital Resources

Cash Flow

Cash and cash equivalents as of September 30, 2018 were $5.8 million compared to $8.5 million as of December 31, 2017. Our cash and cash equivalents are highly liquid investments and may include short-term U.S. Treasury securities with original maturity dates of less than or equal to 90 days.

Our accounts receivable balance as of September 30, 2018 was $6.1 million compared to $8.2 million as of December 31, 2017. The decrease is primarily due to the adoption of Topic 606 and was offset by a comparable decrease to contract liabilities. For additional information, please see Notes 3 and 4 to our condensed consolidated financial statements. The likelihood of non-payment of billings has historically been remote with respect to our Identity Guard^® Services, financial institution and insurance services clients, however, we do provide for an allowance for doubtful accounts with respect to breach response services.

Our short-term and long-term liquidity depends primarily upon our level of income from operations, cash balances and working capital management. Pursuant to the Credit Agreement (as described below), we are required to maintain at all times minimum cash on hand amount of the lesser of 20% or certain stated amounts of the total amount outstanding under the term loan, as set forth in the Credit Agreement.

On June 8, 2018, we entered into Amendment No. 4 to the Credit Agreement (as defined in Note 16 to the condensed consolidated financial statements), which set forth required monthly principal payments beginning June 30, 2018, and shortened the maturity date of the secured indebtedness evidenced by the Credit Agreement to December 31, 2018. In June and September 2018, we entered into the Bridge Notes (as defined in Note 16 to the condensed consolidated financial statements) in the aggregate amount of $4.0 million ($3.0 million on June 27, 2018 and $1.0 million on September 24, 2018), which were convertible into a qualified future financing and had a maturity date of June 30, 2019. As of September 30, 2018, the outstanding balance of the Credit Agreement was $14.5 million, the outstanding balances of the Bridge Notes totaled $4.0 million, and our cash on hand was approximately $5.8 million.

On October 31, 2018, we entered into a note purchase and exchange agreement (the “Note Purchase Agreement”), pursuant to which we sold to WC SACD One Parent, Inc. (“Parent”) Senior Secured Convertible Notes (the “Notes”) in the aggregate principal amount of $30.0 million for a purchase price in cash of $30.0 million, and issued to Loeb Holding Corporation and David A. McGough (together with Parent, the “Purchasers” and each a “Purchaser”) additional Notes in the aggregate principal amount of $4.0 million in exchange for the Bridge Notes previously issued by us to such Purchasers (who received payment in cash of the accrued and unpaid interest on the Bridge Notes). We used approximately $14.6 million of the net proceeds from the sale of the Notes to repay in full the principal outstanding under the Credit Agreement and to pay related interest thereon. We intend to use the balance of the net proceeds for general corporate purposes. The Notes mature on October 31, 2021 and are convertible in whole or in part, together with accrued and unpaid interest with respect to the principal amount converted, into shares of the Company’s common stock and preferred stock. For additional information on the Note Purchase Agreement as well as the Agreement and Plan of Merger, which we also entered into on October 31, 2018, please see Note 21 to the condensed consolidated financial statements.

We evaluated these conditions and determined it is probable that we will be able to meet all our obligations over the next twelve months.

We expect to continue to fund sales, marketing, business development, and product development activities from cash on hand and anticipated cash provided by operations. The initiative to limit cash spend for certain historically productive direct-to-consumer marketing that began in the second quarter of 2017 is expected to continue and have a positive impact on our cash flows provided by operations. We also expect our Identity Guard® Services subscriber base and related revenue to continue to increase as a result of new client relationships as well as the expansion of existing client relationships. If there is a material change in our anticipated cash provided by operations or working capital needs, as a

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result of not achieving these revenue objectives, not maintaining or reducing our costs, or for other reasons, at a time when the Notes remain outstanding and/or we are not in compliance with all of the covenants in the Notes or related Note Purchase Agreement or otherwise do not have access to other sources of capital, our liquidity could be negatively affected.

The new sources of financing described above and additional or replacement financing sources we may explore, including to fund expansion, to respond to competitive pressures, to invest in or acquire complementary products, businesses or technologies, or to lower our cost of capital, could include equity and debt financings. There can be no guarantee that any additional or replacement financing will be available on acceptable terms, if at all. If additional or replacement capital is raised through the issuance of equity or equity-like securities, existing stockholders could suffer significant dilution, and if we raise additional or replacement capital through the issuance of debt securities or other borrowings, these securities or borrowings could have rights senior to our common stock, could result in increased interest expense and other costs, and could contain additional covenants that could restrict operations and other activities.

	Nine Months Ended September 30,
	2018		2017		Difference
	(In thousands)
CASH FLOWS FROM OPERATING ACTIVITIES:
Cash flows provided by (used in) continuing operations	$	3,520	$	(1,819)	$	5,339
Cash flows used in discontinued operations	—		(2,313)		2,313
Net cash provided by (used in) operating activities	3,520		(4,132)		7,652
CASH FLOWS FROM INVESTING ACTIVITIES:
Cash flows used in continuing operations	(2,265)		(4,294)		2,029
Cash flows provided by discontinued operations	—		4		(4)
Net cash used in investing activities	(2,265)		(4,290)		2,025
Cash flows (used in) provided by financing activities	(3,968)		4,214		(8,182)
DECREASE IN CASH AND CASH EQUIVALENTS	(2,713)		(4,208)		1,495
CASH AND CASH EQUIVALENTS- beginning of period	8,502		10,857		(2,355)
Cash reclassified to assets held for sale at beginning of period	—		321		(321)
CASH AND CASH EQUIVALENTS - end of period	$	5,789	$	6,970	$	(1,181)

The increase in operating cash flows from continuing operations is primarily due to decreased marketing spend in the nine months ended September 30, 2018 compared to the prior year period. We continue to expect our limited direct-to-consumer marketing spend to focus on our historically most productive channels or programs. However, we incurred incremental internal payroll costs to grow our business development and sales departments in 2017, and continue to incur similar costs in 2018 as we continue our efforts to support our growth initiatives in various marketing channels. These incremental costs have been offset by normal reductions in headcount in other departments, which were not replaced.

We continue to correspond with the applicable authorities in an effort toward resolution of our potential remaining indirect tax obligations in the remainder of 2018. For additional information, please see "—Other" below. Payment of these liabilities have and may continue to decrease our cash from operations for the next twelve months. In October 2018, as the result of an expected audit assessment, we paid a portion, which was approximately $205 thousand, of the non-income business tax liability. In addition, in the nine months ended September 30, 2018, we effectively settled a portion of our income tax refund claims, which were under federal income tax audit, and we received approximately $1.3 million. We do not expect to receive the remaining income tax refund receivable of approximately $1.0 million in 2018. We continue our efforts to advance the remaining income tax audit to closure within the next twelve months. Subsequent to September 30, 2018, we received a $1.2 million payment from our collaborative marketing arrangement in Canada. The cash represents our share of revenue from a significant breach response service, which is billed in advance of fulfillment, and we expect this contract liability to be amortized ratably over the various breach service periods.

In connection with our continuing efforts to refinance our debt that was outstanding as of September 30, 2018, we incurred significant transaction costs that were either included in general and administrative expenses in our condensed consolidated statements of operations or capitalized in our condensed consolidated balance sheets. In the nine months ended September 30, 2018, we paid approximately $679 thousand of such costs, and we expect to pay significant additional transaction costs over the next twelve months.

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The increase in investing cash flows from continuing operations is primarily due to a decrease in acquisition costs for property and equipment. We continue to fund the acquisition of property and equipment, which includes the internally developed capitalized software, as we add innovative new services and tools to our Identity Guard^® portfolio.

The decrease in cash flows from financing activities is primarily due to principal repayments on the term loan, partially offset by the closing of the Bridge Notes. For additional information, please see "—Debt" below.

Credit Facility and Borrowing Capacity

Debt

In April 2017, we refinanced our indebtedness under the Prior Credit Agreement with a new term loan facility with PEAK6 Investments, L.P. ("PEAK6 Investments"). We also executed amendments to the new term loan facility in July 2017, November 2017, April 2018, and June 2018 (together with the amendments, the "Credit Agreement" and described in further detail below), which had a principal outstanding amount of $21.5 million as of September 30, 2018 and an initial interest rate of 9.99% per annum, to be adjusted annually on March 31 to 8.25% plus 1 year LIBOR. The maturity date of the Credit Agreement is April 20, 2021 with quarterly principal payments of $1.3 million commencing on September 30, 2019. The Credit Agreement is secured by substantially all our assets and a pledge by us of stock and membership interests we hold in any domestic and first-tier foreign subsidiaries.

Certain events defined in the Credit Agreement require prepayment of the aggregate principal amount of the term loan, including all or a portion of proceeds received from asset dispositions, casualty events, extraordinary receipts, and certain equity issuances. Once amounts borrowed have been paid or prepaid, they may not be reborrowed.

On April 3, 2018, we entered into Amendment No. 3, amending the Credit Agreement. Amendment No. 3 provided for a voluntary, partial prepayment of the outstanding principal balance of the term loans in the amount of $1.0 million, which we paid in April 2018, and amended one of the financial covenants in the Credit Agreement. The amended covenant reduced our requirement to maintain at all times a minimum amount of cash on hand, as defined in the Credit Agreement, to (i) the lesser of 20% of the total amount outstanding under the term loans and $2.5 million for the period commencing on the Third Amendment Date through and including May 31, 2018, and (ii) the lesser of 20% of the total amount outstanding under the term loans and $3.0 million for the fiscal quarter ending June 1, 2018 and each fiscal quarter thereafter.

On June 8, 2018, we entered into Amendment No. 4 with PEAK6 Investments (“Amendment No. 4”), amending the Credit Agreement. Amendment No. 4 (i) requires that $1.5 million principal prepayments be made on the last day of June through November, each of which is to be accompanied by a 1.5% prepayment fee; (ii) shortens the maturity date to December 31, 2018; (iii) relieves the obligation to pay a 3% prepayment fee upon full prepayment of the term loan and on required partial prepayments resulting from equity or subordinate debt proceeds; (iv) increases the allowable principal amount of subordinate debt from $2 million to $15 million; and (v) confirms that debt and equity issued to affiliates is permitted if the proceeds are used to pay the term loan. The relief with respect to the 3% prepayment fee applies only if no event of default exists. Amendment No. 4 also confirms that no default currently exists with respect to the Credit Agreement.

On June 27, 2018, we entered into two promissory notes to borrow a total of $3.0 million from Loeb Holding Corporation ($2.0 million) and David A. McGough ($1.0 million) (for related party information, please see Note 19). On September 24, 2018, we entered into a promissory note under substantially identical terms to borrow an additional $1.0 million from Loeb Holding Corporation (together, the “Bridge Notes”). As of September 30, 2018, $4.0 million was outstanding under the Bridge Notes, as well as $84 thousand of accrued interest, payable upon maturity, which is included in accrued expenses and other current liabilities in our condensed consolidated balance sheets.

As of September 30, 2018, $18.5 million was outstanding under the Credit Agreement and Bridge Notes, which is presented net of unamortized debt issuance costs and debt discount totaling $265 thousand in our consolidated balance sheets in accordance with U.S. GAAP. As of December 31, 2017, $21.5 million was outstanding under the Credit Agreement, which is presented net of unamortized debt issuance costs and debt discount totaling $764 thousand in our consolidated balance sheets. The amendment executed on April 3, 2018 included provision for a voluntary, partial prepayment of the outstanding principal balance of the term loan in the amount of $1.0 million, which was paid on the same date.

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As described above, we used a portion of the net proceeds from the sale of the Notes to repay in full the principal outstanding under the Credit Agreement. The Notes, as described above, mature on October 31, 2021, subject to potential acceleration in the event of certain specified events of default, and bear interest, payable quarterly in cash, at the rate of 6% per annum through October 31, 2019, and at the rate of 8% per annum thereafter, in each case subject to an increase of 2% per annum if any event of default has occurred and is continuing. The Notes are guaranteed by our subsidiaries and are secured by a first-priority security interest in substantially all the assets of the Company and such subsidiaries. The Notes are convertible in whole or in part, together with accrued and unpaid interest with respect to the principal amount converted, into shares of our common stock at a conversion price of $2.27 per share, subject to adjustment. To the extent the Company remains listed on NASDAQ and conversion occurs prior to the date on which approval of the Company’s stockholders to permit conversion of all the Notes into shares of common stock under the rules of NASDAQ becomes effective, we shall not be required to issue more shares of common stock than the converting Note holder’s pro rata share of 19.9% of the shares of common stock outstanding following conversion, and the remainder of the Notes to be converted shall be convertible into shares of non-voting convertible preferred stock of the Company (the “Preferred Stock”). Prior to the date on which such approval of the Company’s stockholders becomes effective, the issuance of common stock upon conversion of the Notes to officers or directors of the Company or their affiliates may be further limited to the extent they are subject to applicable NASDAQ rules. The Notes will automatically convert into common stock and (if applicable) Preferred Stock immediately prior to either the completion of the Merger or the consummation of a “Superior Transaction” (as defined in the Notes). Each Note may also be converted, at the option of the Purchaser, upon (i) the consummation of certain “Alternative Transactions” (as defined in the Notes), (ii) a determination by the Company’s Board of Directors that the Company is no longer pursuing a process to sell the Company, or (iii) on or after April 30, 2019.

Warrant

In connection with the Credit Agreement, as amended, PEAK6 Investments purchased, for an aggregate purchase price of $2.2 million in cash, a warrant to purchase an aggregate of 1.5 million shares of our common stock at an exercise price of $2.50 per share ("Warrant”). The Warrant is immediately exercisable, has a five-year term and shall be exercised solely by a “net share settlement” feature that requires the holder to exercise the Warrant without a cash payment upon the terms set forth therein. The Warrant includes a feature to provide for increases in the number of shares issuable upon exercise in the event of a future change of control transaction (as defined therein), with the number of increased shares based upon the time elapsed from issuance of the Warrant and the difference between the exercise price of the Warrant and the transaction price in the change of control, all as more fully set forth in the Warrant. The Warrant also provides for adjustments in the underlying number of shares and exercise price in the event of recapitalizations, stock splits or dividends and other corporate events. The Warrant is included in stockholders' equity in our condensed consolidated balance sheets and was valued at $2.8 million as of September 30, 2018 and December 31, 2017. For additional information related to the fair value of the Warrant, please see Note 7 to our condensed consolidated financial statements.

Stock Redemption

In connection with the Credit Agreement, we used the proceeds from the sale of the Original Warrant to repurchase approximately 419 thousand shares of our common stock, pursuant to a redemption agreement from PEAK6 Capital Management LLC at a price of $3.60 per share, for an aggregate repurchase price of approximately $1.5 million. PEAK6 Capital Management LLC is an affiliate of PEAK6 Investments.

The repurchase was made pursuant to our previously announced share repurchase program. The repurchases may be made on the open market, in block trades, through privately negotiated transactions or otherwise, and the program may be suspended or discontinued at any time. However, we are currently prohibited from repurchasing any shares of common stock under the Credit Agreement.

Share Repurchase

As of September 30, 2018, we had approximately $15.3 million remaining under our share repurchase program. During the nine months ended September 30, 2018, we did not directly repurchase any shares of common stock for cash. During the nine months ended September 30, 2017, we repurchased 419 thousand shares of our common stock as described above. As a result of shares withheld for tax purposes on the vesting of a restricted stock award, we increased our treasury shares by 15 thousand and 68 thousand in the nine months ended September 30, 2018 and 2017, respectively.

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Other

Our products and services are subject to indirect tax obligations, including sales and use taxes, in certain states with which we are currently compliant, and taxability is generally determined by statutory state laws and regulations as well as an assessment of nexus. Whether sales of our services are subject to additional states’ indirect taxes is uncertain, due in part to the unique nature of our services and the relationships through which our services are offered, as well as changing state laws and interpretations of those laws. Therefore, we periodically analyze our facts and circumstances related to potential indirect tax obligations in state and other jurisdictions. The following table summarizes our non-income business tax liability activity (in thousands):

	Nine Months Ended September 30,
	2018		2017
Balance at beginning of period	$	783	$	94
Adjustments to existing liabilities	109		1,461
Payments	—		(94)
Balance at end of period	$	892	$	1,461

We have been audited in the past and continue to analyze what obligations we have, if any, to state taxing authorities. In October 2018, as the result of an expected audit assessment, we paid a portion, which was approximately $205 thousand, of the non-income business tax liability. We analyzed all the information available to us in order to estimate a liability for potential obligations in other jurisdictions including, but not limited to: the delivery nature of our services; the relationship through which our services are offered; the probability of obtaining resale or exemption certificates; limited, if any, nexus-creating activity; and our historical success in settling or abating liabilities under audit. We continue to correspond with the applicable authorities in an effort toward resolution of our potential liabilities using a variety of settlement options including, but not limited to, voluntary disclosures, negotiation and standard appeals process, and we may adjust the liability as a result of such correspondence. Proceedings with jurisdictions are inherently unpredictable, but we believe it is reasonably possible that other states may approach us or that the scope of the taxable base in any state may also increase. For additional information, please see Note 16 to the consolidated financial statements contained in our most recent Annual Report on Form 10-K. 

In June 2018, the Supreme Court ruled on the appeal from the South Dakota Supreme Court in the matter of South Dakota v. Wayfair, Inc. The court held in favor of the state, which could give states more authority to require online retailers and remote sellers to collect sales tax. We have the appropriate internal processes and capabilities and are compliant in the collection of sales and use tax across a broad tax footprint throughout the U.S. We place a significant amount of emphasis on the taxability of our products and services, rather than on nexus or physical presence. Therefore, we do not believe that the court’s ruling will have an immediate material impact to our business. We will continue to monitor for further regulatory actions by states, and perhaps the federal government. Further actions, including any retrospective state requirements or actions impacting state income tax obligations, would likely increase our cost of doing business and could reduce demand for our services and create additional administrative and compliance burdens, all of which could adversely affect our results of operations.

We have entered into various software licenses and operational non-refundable commitments totaling approximately $57.2 million as of September 30, 2018, payable in monthly and yearly installments through December 31, 2021. These amounts will be expensed on a pro-rata basis and recorded in cost of revenue and general and administrative expenses in our condensed consolidated statements of operations. 

Off-Balance Sheet Arrangements

As of September 30, 2018, we did not have any off-balance sheet arrangements other than the revenue participation rights as discussed in Note 5 to our condensed consolidated financial statements.

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Item 4.  Controls and Procedures

Evaluation of Disclosure Controls and Procedures

The Company, under the supervision and with the participation of its management, including the principal executive officer and Chief Financial Officer, evaluated the effectiveness of the design and operation of its "disclosure controls and procedures" (as such term is defined in Rule 13a-15(e) under the Securities Exchange Act of 1934, as amended (the “34 Act”)) as of the end of the period covered by this report to ensure that information required to be disclosed in reports that we file under the 34 Act is accumulated and communicated to our management, including our principal executive officer and Chief Financial Officer, to allow timely decisions regarding required disclosure. Our disclosure controls and procedures are designed to give reasonable assurance that information required to be disclosed by us in reports that we file under the 34 Act is recorded, processed, summarized and reported within the time periods specified in the rules and forms of the United States Securities and Exchange Commission. As a result of the material weaknesses in our internal control over financial reporting identified and described in Item 9A of our Annual Report on Form 10-K for the year ended December 31, 2017, our officers have concluded that our disclosure controls and procedures were not effective. Notwithstanding the identified material weaknesses, the Company has concluded that the consolidated financial statements included in this Form 10-Q present fairly, in all material respects, our financial condition, results of operations and cash flows at and for the periods presented in accordance with U.S. GAAP.

Remediation Plan for Material Weaknesses in Internal Control over Financial Reporting

The Company has improved its policies and procedures relating to the recognition and measurement of share based compensation by enhancing the design of existing controls to ensure proper review of new share based grants and the application of relevant accounting standards. During the third quarter of fiscal 2018, we have successfully completed the testing necessary to conclude that the material weakness has been remediated.

We continued remediation efforts for the material weakness of revenue recognition by implementing: a) added controls and procedures for revenue recognition and contract costs to properly apply the provisions of ASU 2014-09, "Revenue from Contracts with Customers" ("Topic 606"), which we adopted as of January 1, 2018, including training for the Company’s personnel and modifying the existing information technology systems to provide efficiencies and reduce potential risks of manual calculation errors; and b) strengthening the review and approval of the existing and new controls over revenue recognition.

The material weakness of revenue recognition will not be considered remediated until the applicable remedial controls operate for a sufficient period of time and management has concluded, through testing, that these controls are operating effectively. We believe the remediation will be completed prior to the end of 2018.

Changes in Internal Control over Financial Reporting

Except for the actions taken under “Remediation Plan for Material Weaknesses in Internal Control over Financial Reporting” discussed above, and the implementation of certain internal controls related to the adoption of Topic 606 and Topic 842, there were no changes in our internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) during the nine months ended September 30, 2018, that materially affected, or are reasonably likely to materially affect, our internal control over financial reporting. The Company implemented new controls as part of its effort to adopt Topic 606 and Topic 842. The adoption of Topic 606 required the implementation of new accounting processes, which changed the Company's internal controls over revenue recognition and financial reporting. We implemented these internal controls to ensure we adequately evaluated our contracts and properly assessed the impact of Topic 606 on our financial statements to facilitate its adoption in 2018.

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PART II. OTHER INFORMATION

Item 1.  Legal Proceedings

In the normal course of business, we may become involved in various legal proceedings. Based upon our experience, we do not believe that these proceedings and claims will result in a material adverse change in our business or financial condition, and as of September 30, 2018, we do not have any significant liabilities accrued. Please refer to "—Legal Proceedings" in Note 14 to our condensed consolidated financial statements for information regarding certain judicial, regulatory and legal proceedings.

Item 1A. Risk Factors

The following risk factors supplement and/or update the risk factors previously disclosed in our Annual Report on Form 10-K for the year ended December 31, 2017:

The Merger may not be consummated on the terms or on the timeframe described, or at all.

As previously reported, on October 31, 2018, the Company entered into an Agreement and Plan of Merger (the “Merger Agreement”) with Parent and WC SACD One Merger Sub, Inc. (“Merger Sub”), a wholly-owned subsidiary of Parent, pursuant to which, among other things, subject to the terms and conditions of the Merger Agreement, Merger Sub has agreed to make a cash tender offer (the “Offer”) to purchase all of the outstanding shares of our common stock (the “Shares”), at a purchase price of $3.68 per Share in cash (the “Offer Price”). The transaction is subject to customary closing conditions, including the expiration of the applicable period under the Hart-Scott-Rodino Act and a minimum tender condition that requires the tender of both more than 50% of the our outstanding shares and more than 50% of our outstanding shares held by stockholders other than directors, executive officers, and rollover participants. There can be no assurances that these conditions will be satisfied, or that other conditions will not be imposed by the parties or by any governmental entities, or that changes will not be made to the terms of the Offer and Merger, and such conditions or changes could have the effect of jeopardizing or delaying completion of the Offer and Merger.

Failure to complete the Offer and Merger could negatively impact our stock price and our future business and financial results.

If the Offer and Merger are not completed, our ongoing business may be adversely affected, and we will be subject to a number of risks, including the following:

• we may be required to pay Parent a reverse termination fee of approximately $3.6 million if the Merger Agreement is terminated under certain specified circumstances and;

• matters relating to the merger (including integration planning) may require substantial commitments of time and resources by our management, which could otherwise have been devoted to other opportunities that may have been beneficial to us.

In each case, without realizing any of the benefits of having completed the Offer and Merger, these risks may materialize and may adversely affect our business, financial results and stock price.

We are subject to business uncertainties and contractual restrictions while the Offer and Merger are pending.

Uncertainty about the effect of the Offer and Merger on employees, customers, suppliers and others having a business relationship with us may have an adverse effect on us. These uncertainties may impair our ability to attract, retain and motivate key personnel until the Merger is completed, and could cause customers and others that deal with us to seek to change existing business relationships. Retention of certain employees by us may be challenging while the Merger is pending, as certain employees may experience uncertainty about their future roles with the company. If key employees depart because of issues relating to the uncertainty and difficulty of integration or a desire not to remain with us, our business could be harmed. In addition, subject to certain contractual restrictions as to which we require the approval of Parent, we have agreed to operate our business in the ordinary course while the Merger is pending.

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If the Offer and Merger are not completed, we will have incurred substantial expenses without realizing the expected benefits of the Offer and Merger.

We have incurred and will incur substantial expenses in connection with the negotiation and completion of the transactions contemplated by the merger agreement. If the Offer and Merger are not completed, these expenses will be recognized without realizing the expected benefits.

Item 6.  Exhibits

10.1*	Promissory Note dated September 24, 2018 issued to Loeb Holding Corporation in the principal amount of $1,000,000.
31.1*	Certification of Michael R. Stanfield, Executive Chairman and President (principal executive officer), pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.2*	Certification of Ronald L. Barden, Chief Financial Officer, pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32.1*	Certification of Michael R. Stanfield, Executive Chairman and President (principal executive officer), pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
32.2*	Certification of Ronald L. Barden, Chief Financial Officer, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
101.INS	XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document.
101.SCH	XBRL Taxonomy Extension Schema Document.
101.CAL	XBRL Taxonomy Extension Calculation Linkbase Document.
101.LAB	XBRL Taxonomy Extension Labels Linkbase Document.
101.PRE	XBRL Taxonomy Extension Presentation Linkbase Document.
101.DEF	XBRL Taxonomy Extension Definition Linkbase Document.

____________________________

* Filed herewith.

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SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

		INTERSECTIONS INC.
Date:	November 9, 2018	By:	/s/ Ronald L. Barden
			Ronald L. Barden
			Chief Financial Officer

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EX-10.1

Exhibit 10.1

THIS NOTE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AND HAS BEEN ACQUIRED FOR INVESTMENT AND NOT WITH A VIEW TO, OR IN CONNECTION WITH, THE SALE OR DISTRIBUTION THEREOF. NO SUCH TRANSFER MAY BE EFFECTED WITHOUT AN EFFECTIVE REGISTRATION STATEMENT RELATED THERETO OR AN OPINION OF COUNSEL IN A FORM SATISFACTORY TO THE COMPANY THAT SUCH REGISTRATION IS NOT REQUIRED UNDER THE SECURITIES ACT OF 1933.

PROMISSORY NOTE

$1,000,000.00  Date: As of September 24, 2018 New York, New York

FOR VALUE RECEIVED, the undersigned, INTERSECTIONS INC., a Delaware corporation (“Borrower”), with offices at 3901 Stonecroft Boulevard, Chantilly, Virginia 20151, hereby promises to pay to the order of LOEB HOLDING CORPORATION, 100 Wall Street - 19th floor, New York, NY 10005, Attention; Bruce L. Lev, Esq. (“Lender”), the principal amount set forth above plus interest thereon from the date hereof, in U.S. Dollars, in immediately available funds.

1. Interest. The per annum rate of interest to be charged on the outstanding principal amount is at the Interest Rate (as herein defined). “Interest Rate” means the highest interest rate from time to time in effect under the Credit Agreement dated as of April 20, 2017 (as amended from time to time, the “Credit Agreement”) among the Borrower, certain other parties thereto and Peak6 Investments, L.P. Interest shall be calculated by the Lender from time to time.

2.Payments. Interest on the outstanding principal amount evidenced by this Note is payable on such date as any principal is payable hereunder. If any amount becomes due and payable hereunder on a Saturday, Sunday or public or other banking holiday under the law of the State of New York, with respect to such amount the payment date shall be extended to the next succeeding business day, and interest shall be payable thereon at the rate herein specified during such extension.

3.Prepayments. (a) The Borrower may prepay this Note in full or in part at any time, provided, that any prepayment made in cash prior to maturity hereof in the following paragraph shall be accompanied by an additional breakage cost of 10% of the amount of the principal so prepaid. (b) The Borrower shall make prepayments on this Note and the Amended and Restated Promissory Notes, dated as of June 27, 2018, payable to you and to David A. McGough in the original principal amounts of $2,000,000 and $1,000,000.00, respectively (the “Other Notes”), in the same proportion as the outstanding amounts bear to each other. (c) All payments shall be applied by the Lender as follows: first, to the payment of all accrued but unpaid fees, costs, or expenses under this Note; second, to the payment of interest on the amount of principal being repaid; third, to the repayment of principal under this Note; and fourth, the balance, if any, to the Borrower.

Exhibit 10.1

4.Maturity Date. All outstanding principal shall become due and payable on the earliest of the following dates: (a) June 30, 2019 and (b) upon the acceleration of the maturity of the amounts due hereunder upon an Event of Default (as herein defined) in accordance with the provisions of this Note.

5.Events of Default; Remedies. The occurrence of any one or more of the following events shall constitute an “Event of Default” under this Note:

(a)Payment Default.  The Borrower shall fail to pay the outstanding principal or accrued interest amount due under this Note, or any portion thereof when due, whether on the stated maturity date, or on such earlier date as is required by this Section 5, or otherwise;

(b)Other Default.  The Borrower shall materially breach any representation, warranty, covenant, agreement or obligation of the Borrower under this Note, and shall fail to cure such breach within ten (10) days after written notice thereof to the Borrower; 

(c)Other Indebtedness.  The Borrower shall default under the Other Notes or any other material indebtedness of the Borrower, and shall fail to cure such default within ten (10) days after written notice thereof to the Borrower;

(d)Bankruptcy, Etc.  (i) The Borrower, pursuant to or within the meaning of Title 11, United States Code or any similar Federal or state law for the relief of debtors (“Bankruptcy Law”) (A) admits in writing its inability to pay its debts generally as they become due, (B) commences a voluntary case or proceeding under any Bankruptcy Law with respect to itself, (C) consents to the entry of a judgment, decree or order for relief against it in an involuntary case or proceeding under any Bankruptcy Law, (D) consents to the appointment of a custodian of it or for any part of its assets, (E) consents to or acquiesces in the institution of bankruptcy or insolvency proceedings against it, (F) applies for, consents to or acquiesces in the appointment of or taking possession by a custodian of the Borrower or for any part of its assets, (G) makes a general assignment for the benefit of its creditors, or (H) takes any corporate act to authorize any of the foregoing; or (ii) an involuntary petition is filed against the Borrower (unless such petition is dismissed or discharged within sixty (60) days) under any Bankruptcy Law now or hereafter in effect, or a custodian, receiver, trustee or assignee for the benefit of creditors (or other similar official) is appointed to take possession, custody or control of any property of the Borrower.

Upon or at any time after the occurrence of an Event of Default, at the option of the Lender, in the Lender’ sole discretion, all principal, interest and other charges payable hereunder shall be immediately due and payable; provided that, in addition, upon the occurrence of the Event of Default in clause (d) above with respect to the Borrower, all principal, interest and other charges payable hereunder shall be automatically and immediately due and payable. The rights and remedies provided herein shall be cumulative and not exclusive of any rights or remedies provided by applicable law or otherwise.

6.Interest Upon Default. The Borrower agrees that if any amounts due hereunder are not paid when due, whether on an interest payment date, at maturity or accelerated

Exhibit 10.1

maturity as provided herein (in addition to any other interest, fees, or expenses which may accrue as a result of such Event of Default), such unpaid amounts will bear interest at 2% per annum in excess of the Interest Rate. In no event shall the amount of interest paid or agreed to be paid to the Holder hereunder exceed the highest lawful rate permissible under any law which a court of competent jurisdiction may deem applicable hereto. In such event, the Interest Rate shall automatically be reduced to the maximum rate permitted by such law.

7.Waivers. The Borrower waives demand and presentment for payment, notice of non-payment or dishonor, notice of protest and protest of this Note and any other notice required to be given by applicable law and agrees that its liability hereunder shall not be affected by any renewals, amendments or modifications of this Note, or extensions of the time of payment of all or any part of the amount owing hereunder at any time or times.

8.Taxes; Expenses; Attorneys’ Fees. The Borrower agrees to pay and indemnify the Lender for any documentary taxes arising from the execution of this Note. The Borrower agrees to pay any and all court costs incurred by the Lender in a legal action based on an Event of Default. The Borrower agrees to pay, to the extent allowed by law, reasonable attorneys’ fees, costs and expenses paid or incurred by the Lender in connection with the collection or enforcement of this Note, including but not limited to reasonable attorneys’ fees, court costs, and costs incurred in connection with any bankruptcy proceedings, whether or not suit is filed. The Borrower agrees to pay in full all amounts due under this Note without setoff, counterclaim, or any deduction whatsoever.

9.Miscellaneous. No provision of this Note shall be waived, modified or limited except by a written agreement signed by the Lender and the Borrower. The unenforceability of any provision of this Note shall not affect the enforceability or validity of any other provision hereof. No delay or omission on the part of the Lender in exercising any rights hereunder shall operate as a waiver of such right or of any other right under this Note. This Note shall be binding upon the Borrower and its successors and permitted assigns and shall inure to the benefit of the Lender and its successors and assigns. The Lender is hereby authorized at any time and from time to time, to the fullest extent permitted by law, to set off and apply any and all indebtedness at any time owing by the Lender to or for the credit or the account of the Borrower against any of and all the obligations of the Borrower now or hereafter existing under this Note held by the Lender, irrespective of whether the Lender shall have made any demand under this Agreement and although such obligations may be unmatured. The rights of the Lender under the preceding sentence are in addition to other rights and remedies (including other rights of setoff) which the Lender may have. Facsimile and pdf signatures are of the same force and effect as originals. Upon receipt by the Borrower of evidence satisfactory to it of the loss, theft, destruction or mutilation of this Note or any Note exchanged for it, and indemnity satisfactory to the Borrower (in case of loss, theft or destruction) or surrender and cancellation of such Note (in the case of mutilation), the Borrower will make and deliver in lieu of such Note a new Note of like tenor.

10.Transfer. This Note may be transferred or assigned by the Lender at any time and in any manner without the prior written consent of the Borrower, subject only to applicable securities laws. The Borrower may not transfer or assign this Note or any of its rights

Exhibit 10.1

hereunder without the prior written consent of the Lender.  The Lender shall promptly notify the Borrower of any transfer or assignment of this Note.

11.Governing Law; Venue; Trial By Jury. This Note and any claim, controversy or dispute related to or in connection with this Note or any of the transactions contemplated hereby or thereby, the relationship of the parties hereto and the interpretation and enforcement of the rights and duties of the parties hereto shall be governed by and construed in accordance with the laws of the State of New York without giving effect to principles of conflicts of law. The Borrower consents to the nonexclusive jurisdiction and venue of the state or federal courts located in the City of New York. The Borrower hereby waives any right to a trial by jury in any action or proceeding arising out of or in connection with this Note, or any other claim or dispute between the Borrower and the Lender.

12.Ranking; Subordination. All obligations under this Note will be subordinated to the extent provided for in the Subordination Agreement dated as of the date hereof among the Borrower, the Lender and Peak6 Strategic Capital LLC.

13.Conversion or Exchange. If a Qualified Financing is consummated, then within five business days of the Qualified Financing closing, the Lender or the Borrower will have the option to convert or exchange all principal and accrued interest to the date of conversion, in whole or in part, into securities issued in the Qualified Financing at the offering price. If the Borrower opts to convert this Note or the Other Notes, the Borrower shall convert the Other Notes and this Note. The Borrower shall provide the Lender with advance written notice of any Qualified Financing, as well as copies of all underlying documents with a reasonable opportunity for the Lender to provide comment on such documents. “Qualified Financing” means an offering of equity or equity derivative securities, including units consisting of stock, convertible notes and/or warrants, of the Borrower, in a single or series of related closings, with net proceeds to the Borrower of at least $10,000,000 (inclusive of principal amount of this Note converted or exchanged) after the date hereof and prior to the maturity date of this Note. Notwithstanding anything to the contrary contained in this Note, the Borrower and the Lender agree that the Borrower shall not issue any securities (including shares of Common Stock) upon conversion or exchange of this Note or otherwise pursuant to the terms of this Note if the issuance of such securities by the Borrower would result in the Borrower being in violation of its obligations, if any, under the rules or regulations of The NASDAQ Capital Market (or such other securities exchange on which the Company is listed), including, without limitation, NASDAQ Listing Rules 5635(c) or 5635(d), except that the foregoing restriction will not apply following Approval (as defined below) or if Borrower obtains from its counsel (or if Lender obtains from its counsel) a written opinion that the Approval is not required. If Approval is required, the Borrower will use its best efforts to obtain stockholder approval of the Note and the issuance of the securities upon such conversion or exchange, if necessary, in accordance with the requirements of NASDAQ Listing Rules, including Rules 5635(c) and/or 5635(d) (the “Approval”). If the Borrower is unable to obtain such Approval, all principal, interest and other charges payable hereunder must be repaid in cash when due and payable.

14.Representations and Warranties. The Borrower hereby represents and warrants to, and agrees with, the Lender as set forth on Exhibit A attached hereto. The Lender

Exhibit 10.1

hereby represents and warrants to, and agrees with, the Borrower as set forth on Exhibit B attached hereto. The representations, warranties, covenants and agreements contained in this Note shall survive the execution and delivery hereof.

[Remainder of Page Intentionally Left Blank]

IN WITNESS WHEREOF, the Borrower has executed and delivered this Note as of the day and year first above written.

	BORROWER:
	INTERSECTIONS INC.
	By: /s/ Michael R. Stanfield
	Name: Michael Stanfield
	Title: Chairman of the Board
AGREED:
LENDER:
LOEB HOLDING CORPORATION
By: /s/ Bruce L. Lev
Name: Bruce L. Lev
Title: Managing Director

EXHIBIT A

Representations and Warranties of the Borrower

The Borrower hereby represents and warrants to, and agrees with, the Lender that:

Organization, Good Standing and Qualification. The Borrower is a corporation validly existing and in good standing under the laws of the jurisdiction of its incorporation and has all requisite corporate power and authority to carry on its business as now conducted and to own or lease its properties. The Borrower is duly qualified to do business as a foreign corporation and is in good standing in each jurisdiction in which the conduct of its business or its ownership or leasing of property makes such qualification or leasing necessary unless the failure to so qualify has not had and would not reasonably be expected to have a material adverse effect on (i) the assets, liabilities, results of operations, financial condition or business of the Borrower and its Subsidiaries (as defined herein) taken as a whole, or (ii) the ability of the Borrower to perform its obligations hereunder (a “Material Adverse Effect”). As used herein, (i) “Subsidiary” of any Person means another Person, an amount of the voting securities, other voting ownership or voting partnership interests of which is sufficient to elect at least a majority of its Board of Directors or other governing body (or, if there are no such voting interests, 50% or more of the equity interests of which) is owned directly or indirectly by such first Person; and (ii) “Person” means an individual, corporation, partnership, limited liability company, trust, business trust, association, joint stock company, joint venture, sole proprietorship, unincorporated organization, governmental authority or any other form of entity not specifically listed herein.

Authorization. The Borrower has full corporate power and authority and has taken all requisite action on the part of the Borrower, its officers, directors and stockholders necessary for (a) the authorization, execution and delivery of the Note, and (b) the authorization of the performance of all obligations of the Borrower hereunder. The Note constitutes the legal, valid and binding obligation of the Borrower, enforceable against the Borrower in accordance with its terms, subject to bankruptcy, insolvency, fraudulent transfer, reorganization, moratorium and similar laws of general applicability, relating to or affecting creditors’ rights generally and to general equitable principles and except as rights to indemnity and contribution may be limited by state or federal securities laws or public policy.

Consents. The execution, delivery and performance by the Borrower of the Note requires no consent of, action by or in respect of, or filing with, any Person, governmental body, agency, or official other than filings that have been made pursuant to applicable state securities laws and post-sale filings pursuant to applicable state and federal securities laws which the Borrower undertakes to file within the applicable time periods. Subject to the accuracy of the representations and warranties of the Lender (and other lenders under similar promissory notes) set forth on Exhibit B hereof (and thereof), the Borrower has taken all action necessary to exempt from the registration requirements of the Securities Act of 1933, as amended (the “Securities Act”) the transactions contemplated hereby.

SEC Documents; Financial Statements. Since January 1, 2017, the Borrower has timely filed all reports, schedules, forms, statements and other documents required to be filed by it with the Commission pursuant to the reporting requirements of the Securities Exchange Act of

1934, as amended (the “Exchange Act”) (all of the foregoing and all exhibits included therein and financial statements, notes and schedules thereto and documents incorporated by reference therein being hereinafter referred to as the “SEC Documents”). The Borrower has made available to the Lender or its representatives true, correct and complete copies of any SEC Documents not available on the SEC’s Electronic Data Gathering Analysis (“EDGAR”) system. As of their respective filing dates, the SEC Documents complied in all material respects with the applicable requirements of the Exchange Act and the rules and regulations of the Commission promulgated thereunder applicable to the SEC Documents, and none of the SEC Documents, at the time they were filed with the Commission, contained any untrue statement of a material fact or omitted to state a material fact required to be stated therein or necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading. As of their respective filing dates, the financial statements of the Borrower included in the SEC Documents complied as to form in all material respects with applicable accounting requirements and the published rules and regulations of the Commission with respect thereto. Such financial statements have been prepared in accordance with generally accepted accounting principles, consistently applied, during the periods involved (except (i) as may be otherwise indicated in such financial statements or the notes thereto, or (ii) in the case of unaudited interim statements, to the extent they may exclude footnotes or may be condensed or summary statements) and fairly present in all material respects on a consolidated basis the financial position of the Borrower as of the dates thereof and the results of its operations and cash flows for the periods then ended (subject, in the case of unaudited statements, to normal year-end audit adjustments).

Absence of Certain Changes. Except as disclosed in the SEC Documents, since March 31, 2018: (a) there has occurred no event that would, to the Borrower’s knowledge, reasonably be expected to result in a Material Adverse Effect; (b) the Borrower and its Subsidiaries, taken as a whole, have not incurred any liabilities, contingent or otherwise, other than (i) those incurred in the ordinary course of business, consistent with past practices since the date of such financial statements, and (ii) liabilities not required to be reflected in the Borrower’s financial statements pursuant to generally accepted accounting principles, consistently applied, or disclosed in filings made with the Commission; (c) there has not been any material change in the capital stock or any material increase in any short-term or long-term indebtedness of the Borrower or any of its Subsidiaries; and (d) there has been no dividend or distribution of any kind declared, paid or made by the Borrower or, except for dividends paid to the Borrower, by the Borrower’s Subsidiaries on any class of capital stock, or any repurchase or redemption by the Borrower or any of its Subsidiaries of any class of capital stock.

Use of Proceeds. The net proceeds of the Note shall be used by the Borrower to make prepayments under the Credit Agreement and for working capital and general corporate purposes.

Brokers. There is no broker, investment banker, financial advisor, finder or other Person which has been retained by or is authorized to act on behalf of Borrower who might be entitled to any fee or commission for which the Borrower will be liable in connection with the execution of this Agreement and the consummation of the transactions contemplated hereby.

EXHIBIT B

Representations and Warranties of the Lender

The Lender hereby represents and warrants to, and agrees with, the Borrower that:

1.Authorization. The Lender has full power and authority necessary for (a) the authorization, execution and delivery of the Note, and (b) the authorization of the performance of all obligations of the Lender hereunder. The Note constitutes the legal, valid and binding obligation of the Lender, enforceable against the Lender in accordance with its terms, subject to bankruptcy, insolvency, fraudulent transfer, reorganization, moratorium and similar laws of general applicability, relating to or affecting creditors’ rights generally and to general equitable principles and except as rights to indemnity and contribution may be limited by state or federal securities laws or public policy.

2.Purchase Entirely for Own Account. This Note is made with the Lender in reliance upon the Lender’s representation to the Borrower that the Note to be acquired by the Lender will be acquired for investment for the Lender’s own account, not as a nominee or agent, and not with a view to the resale or distribution of any part thereof, and that the Lender has no present intention of selling, granting any participation in, or otherwise distributing the same. By executing this Note, the Lender further represents that the Lender does not presently have any contract, undertaking, agreement or arrangement with any Person to sell, transfer or grant participations to such Person or to any third Person, with respect to the Note. The Lender has not been formed for the specific purpose of acquiring the Note.

3.Disclosure of Information. The Lender is an affiliate of the Borrower, and has had a full opportunity to discuss the Borrower’s business, management, financial affairs and the terms and conditions of the offering of the Note with the Borrower's management and Board of Directors. The foregoing, however, does not limit or modify the representations and warranties of the Borrower in Exhibit A to this Note or the right of the Lender to rely thereon.

4.Restricted Securities. The Lender understands that the Note has not been, and will not be, registered under the Securities Act, by reason of a specific exemption from the registration provisions of the Securities Act which depends upon, among other things, the bona fide nature of the investment intent and the accuracy of the Lender’s representations as expressed herein. The Lender understands that the Note is a “restricted security” under applicable U.S. federal and state securities laws and that, pursuant to these laws, the Lender must hold the Note indefinitely unless it is registered with the SEC and qualified by state authorities, or an exemption from such registration and qualification requirements is available. The Lender acknowledges that the Borrower has no obligation to register or qualify the Note for resale. The Lender further acknowledges that if an exemption from registration or qualification is available, it may be conditioned on various requirements including, but not limited to, the time and manner of sale, and on requirements relating to the Borrower which are outside of the Lender’s control, and which the Borrower is under no obligation and may not be able to satisfy.

5.Legends. The Lender understands that the Note, including any securities issued in respect of or exchange for the Note, may bear one or all of the following legends:

(a)“THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AND HAVE BEEN ACQUIRED FOR INVESTMENT AND NOT WITH A VIEW TO, OR IN CONNECTION WITH, THE SALE OR DISTRIBUTION THEREOF. NO SUCH TRANSFER MAY BE EFFECTED WITHOUT AN EFFECTIVE REGISTRATION STATEMENT RELATED THERETO OR AN OPINION OF COUNSEL IN A FORM SATISFACTORY TO THE COMPANY THAT SUCH REGISTRATION IS NOT REQUIRED UNDER THE SECURITIES ACT OF 1933.”

(b)Any legend required by the federal securities laws or the securities laws of any state to the extent such laws are applicable to the Note represented by the certificate so legended.

Accredited Lender. The Lender is an accredited investor as defined in Rule 501(a) of Regulation D promulgated under the Securities Act.

No Disqualification Event. With respect to the Note, neither the Lender nor any of its directors, executive officers, other officers is subject to any of the “Bad Actor” disqualifications described in Rule 506(d)(1)(i) to (viii) promulgated under the Securities Act.

No General Solicitation. Neither the Lender, nor any of the Lender’s officers, directors, employees, agents, stockholders or partners has either directly or indirectly, including through a broker or finder (a) engaged in any general solicitation, or (b) published any advertisement in connection with the offer and sale of the Notes.

Short Sales. Between the time Lender learned about the offering contemplated by the Note and the public announcement of the offering, Lender has not engaged in any short sales or similar transactions with respect to the capital stock of Borrower, nor has Lender, directly or indirectly, caused any Person to engage in any short sales or similar transactions with respect to the capital stock of Borrower. Lender shall not engage in any short sales involving the capital stock of Borrower in violation of the Securities Act. Notwithstanding the foregoing, in the case of a Lender that is a multi-managed investment vehicle whereby separate portfolio managers manage separate portions of Lender’s assets and the portfolio managers have no direct knowledge of the investment decisions made by the portfolio managers managing other portions of Lender’s assets, the representation set forth above shall apply only with respect to the portion of assets managed by the portfolio managers that have knowledge about the financing transaction contemplated by the Note.

Residency.  Lender is a resident of that jurisdiction specified in the Note and is not acquiring the Shares as a nominee or agent or otherwise for any other person.

Brokers.  There is no broker, investment banker, financial advisor, finder or other Person which has been retained by or is authorized to act on behalf of Lender who might be entitled to any fee or commission for which the Borrower will be liable in connection with the execution of this Agreement and the consummation of the transactions contemplated hereby.

EX-31.1

Exhibit 31.1

CERTIFICATION

I, Michael R. Stanfield, certify that:

1. I have reviewed this quarterly report on Form 10-Q of Intersections Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a. Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b. Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c. Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d. Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a. All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b. Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

		/s/ Michael R. Stanfield
		Michael R. Stanfield
		Executive Chairman and President
Date:	November 9, 2018

EX-31.2

Exhibit 31.2

CERTIFICATION

I, Ronald L. Barden, certify that:

1. I have reviewed this quarterly report on Form 10-Q of Intersections Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a. Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b. Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c. Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d. Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a. All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b. Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

		/s/ Ronald L. Barden
		Ronald L. Barden
		Chief Financial Officer
Date:	November 9, 2018

EX-32.1

Exhibit 32.1

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

I, Michael R. Stanfield, Executive Chairman and President (principal executive officer) of Intersections Inc. (the “Company”), pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, do hereby certify as follows:

1. The quarterly report on Form 10-Q of the Company for the quarter ended September 30, 2018 fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

2. The information contained in such Form 10-Q fairly presents, in all material respects, the financial condition and results of operations of the Company.

IN WITNESS WHEREOF, I have executed this Certification this 9th day of November2018.

/s/ Michael R. Stanfield 

Michael R. Stanfield 

Executive Chairman and President 

A signed original of this written statement required by Section 906 has been provided to Intersections Inc. and will be retained by Intersections Inc. and furnished to the Securities and Exchange Commission or its staff upon request.

EX-32.2

Exhibit 32.2

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

I, Ronald L. Barden, Chief Financial Officer of Intersections Inc. (the “Company”), pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, do hereby certify as follows:

1. The quarterly report on Form 10-Q of the Company for the quarter ended September 30, 2018 fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

2. The information contained in such Form 10-Q fairly presents, in all material respects, the financial condition and results of operations of the Company.

IN WITNESS WHEREOF, I have executed this Certification this 9th day of November2018.

/s/ Ronald L. Barden 

Ronald L. Barden 

Chief Financial Officer 

A signed original of this written statement required by Section 906 has been provided to Intersections Inc. and will be retained by Intersections Inc. and furnished to the Securities and Exchange Commission or its staff upon request.

XML

Document and Entity Information - shares	9 Months Ended
	Sep. 30, 2018	Nov. 02, 2018
Document And Entity Information [Abstract]
Document Type	10-Q
Amendment Flag	false
Document Period End Date	Sep. 30, 2018
Document Fiscal Year Focus	2018
Document Fiscal Period Focus	Q3
Trading Symbol	INTX
Entity Registrant Name	INTERSECTIONS INC
Entity Central Index Key	0001095277
Current Fiscal Year End Date	--12-31
Entity Filer Category	Non-accelerated Filer
Entity Small Business	true
Entity Emerging Growth Company	false
Entity Common Stock, Shares Outstanding		24,428,246

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CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS - USD ($) shares in Thousands, $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2018	Sep. 30, 2017	Sep. 30, 2018	Sep. 30, 2017
Income Statement [Abstract]
Revenue	$ 37,485	$ 39,248	$ 115,182	$ 119,631
OPERATING EXPENSES:
Marketing	631	2,682	2,455	9,294
Commission	8,743	9,462	26,949	28,966
Cost of revenue	12,481	13,126	37,284	39,694
General and administrative	14,038	14,827	41,675	49,169
Loss on dispositions of Captira and Habits at Work	0	0	0	106
Depreciation	1,587	1,378	4,604	3,966
Amortization	20	29	118	123
Total operating expenses	37,500	41,504	113,085	131,318
(LOSS) INCOME FROM OPERATIONS	(15)	(2,256)	2,097	(11,687)
Interest expense, net	(930)	(701)	(2,284)	(1,895)
Loss on extinguishment of debt	0	0	0	(1,525)
Other income (expense), net	56	(3)	(29)	133
LOSS FROM CONTINUING OPERATIONS BEFORE INCOME TAXES	(889)	(2,960)	(216)	(14,974)
Income tax (expense) benefit	(220)	(6)	303	23
(LOSS) INCOME FROM CONTINUING OPERATIONS	(1,109)	(2,966)	87	(14,951)
Loss from discontinued operations, net of tax	0	(1,030)	0	(2,449)
NET (LOSS) INCOME	$ (1,109)	$ (3,996)	$ 87	$ (17,400)
Basic (loss) earnings per common share:
From continuing operations (in dollars per share)	$ (0.05)	$ (0.12)	$ 0	$ (0.63)
From discontinued operations (in dollars per share)	0	(0.05)	0	(0.10)
Basic net income (loss) per common share (in dollars per share)	(0.05)	(0.17)	0	(0.73)
Diluted (loss) earnings per common share:
Income (loss) from continuing operations (in dollars per share)	(0.05)	(0.12)	0	(0.63)
Loss from discontinued operations (in dollars per share)	0	(0.05)	0	(0.10)
Diluted net income (loss) per common share (in dollars per share)	$ (0.05)	$ (0.17)	$ 0	$ (0.73)
Weighted average common shares outstanding—basic (in shares)	24,395	23,953	24,306	23,818
Weighted average common shares outstanding—diluted (in shares)	24,395	23,953	24,687	23,818

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CONDENSED CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands	Sep. 30, 2018	Dec. 31, 2017
CURRENT ASSETS:
Cash and cash equivalents	$ 5,789	$ 8,502
Accounts receivable, net of allowance for doubtful accounts of $67 (2018) and $34 (2017)	6,147	8,225
Contract assets	638	0
Prepaid expenses and other current assets	3,783	3,232
Income tax receivable	1,301	2,545
Deferred subscription solicitation and commission costs	0	1,655
Total current assets	17,658	24,159
PROPERTY AND EQUIPMENT, net	8,509	11,040
GOODWILL	9,763	9,763
INTANGIBLE ASSETS, net	180	58
CONTRACT COSTS	380	0
OTHER ASSETS	1,246	1,459
TOTAL ASSETS	37,736	46,479
CURRENT LIABILITIES:
Accounts payable	2,746	3,498
Accrued expenses and other current liabilities	8,538	8,533
Accrued payroll and employee benefits	552	1,501
Commissions payable	356	141
Capital leases, current portion	328	423
Contract liabilities, current	4,075	7,759
Total current liabilities	16,595	21,855
LONG-TERM DEBT, net	18,235	20,736
OBLIGATIONS UNDER CAPITAL LEASES, non-current	121	392
OTHER LONG-TERM LIABILITIES	1,711	2,895
DEFERRED TAX LIABILITY, net	219	7
TOTAL LIABILITIES	36,881	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 28,504 (2018) and 28,194 (2017); shares outstanding 24,397 (2018) and 24,102 (2017)	285	282
Additional paid-in capital	152,063	150,305
Warrants	2,840	2,840
Treasury stock, shares at cost; 4,107 (2018) and 4,092 (2017)	(35,781)	(35,745)
Accumulated deficit	(118,552)	(117,088)
TOTAL STOCKHOLDERS’ EQUITY	855	594
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY	$ 37,736	$ 46,479

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CONDENSED CONSOLIDATED BALANCE SHEETS (Parenthetical) - USD ($) $ in Thousands	Sep. 30, 2018	Dec. 31, 2017
Statement of Financial Position [Abstract]
Accounts receivable, allowance for doubtful accounts	$ 67	$ 34
Common stock, par value (in dollars per share)	$ 0.01	$ 0.01
Common stock, shares authorized (in shares)	50,000,000	50,000,000
Common stock, shares issued (in shares)	28,504,000	28,194,000
Common stock, shares outstanding (in shares)	24,397,000	24,102,000
Treasury stock, shares (in shares)	4,170,000	4,092,000

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CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Thousands	9 Months Ended		12 Months Ended
	Sep. 30, 2018	Sep. 30, 2017	Dec. 31, 2017
CASH FLOWS FROM OPERATING ACTIVITIES:
NET (LOSS) INCOME	$ 87	$ (17,400)
Loss from discontinued operations, net of tax	0	(2,449)
(Loss) income from continuing operations	87	(14,951)
Adjustments to reconcile net income (loss) to cash flows from operating activities:
Depreciation and amortization	4,722	4,089
Deferred income tax, net	213	0
Amortization of debt issuance costs	159	184
Accretion of debt discount	364	66
Provision for doubtful accounts	34	(15)
Share based compensation	1,979	6,582
Amortization of deferred subscription solicitation costs	0	8,482
Amortization of contract costs	646	0
Loss on dispositions of Captira and Habits at Work	0	106
Loss on extinguishment of debt	0	1,525
Changes in assets and liabilities:
Accounts receivable	1,583	1,483
Contract assets	(1,537)	0
Prepaid expenses, other current assets and other assets	(139)	(412)
Income tax receivable, net	1,243	766
Deferred subscription solicitation and commission costs	0	(6,336)
Increase Decrease in Contract Costs	(704)	0
Accounts payable and accrued liabilities	(1,620)	(677)
Commissions payable	(3)	29
Contract liabilities, current	(2,323)	(2,411)
Other long-term liabilities	(1,184)	(329)
Cash flows provided by (used in) continuing operations	3,520	(1,819)
Cash flows used in discontinued operations	0	(2,313)
Net cash provided by (used in) operating activities	3,520	(4,132)
CASH FLOWS FROM INVESTING ACTIVITIES:
Net cash paid for the disposition of Captira Analytical	0	(315)
Decrease (increase) in restricted cash	0	115
Cash paid for withholding tax on vesting of RSUs in exchange for promissory note	0	(130)
Acquisition of property and equipment	(2,265)	(3,964)
Cash flows used in continuing operations	(2,265)	(4,294)
Cash flows provided by discontinued operations	0	4
Net cash used in investing activities	(2,265)	(4,290)
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from issuance of debt	4,000	20,000
Repayments of debt (including fees of $90 thousand)	(7,135)	(13,920)
Repurchase of common stock	0	(1,510)
Proceeds from issuance of warrants	0	1,500
Cash paid for debt and equity issuance costs	(212)	(323)
Capital lease payments	(366)	(411)
Withholding tax payment on vesting of restricted stock units	(255)	(1,122)
Cash flows (used in) provided by financing activities	(3,968)	4,214
DECREASE IN CASH AND CASH EQUIVALENTS	(2,713)	(4,208)
CASH AND CASH EQUIVALENTS — beginning of period	8,502	10,857	$ 10,857
Cash reclassified to assets held for sale at beginning of period	0	321	321
CASH AND CASH EQUIVALENTS — end of period	5,789	6,970	$ 8,502
SUPPLEMENTAL DISCLOSURE OF NON-CASH FINANCING AND INVESTING ACTIVITIES:
Equipment obtained under capital lease, including acquisition costs	0	40
Equipment additions accrued but not paid	128	209
Intangible asset placed in service but paid in prior year	240	0
Shares withheld in lieu of withholding taxes on vesting of restricted stock awards	0	117
Debt issuance costs accrued but not paid	45	0
Right of use asset obtained under financing arrangement	$ 249	$ 0

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CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (parenthetical) - USD ($) $ in Thousands	9 Months Ended
	Sep. 30, 2018	Sep. 30, 2017
Statement of Cash Flows [Abstract]
Payment for debt extinguishment or debt prepayment cost	$ 45	$ 45

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Organization and Business

9 Months Ended

Sep. 30, 2018

Organization, Consolidation and Presentation of Financial Statements [Abstract]

Organization and Business

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.

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Basis of Presentation, Significant Accounting Policies and Liquidity

9 Months Ended

Sep. 30, 2018

Accounting Policies [Abstract]

Basis of Presentation, Significant Accounting Policies and Liquidity

Basis of Presentation, Significant Accounting Policies and Liquidity

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 nine months ended September 30, 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 and accompanying notes for the year ended December 31, 2017, as filed in our Annual Report on Form 10-K.

Liquidity

On June 8, 2018, we entered into Amendment No. 4 to the Credit Agreement (as defined in Note 16), which set forth required monthly principal payments beginning June 30, 2018, and shortened the maturity date of the secured indebtedness evidenced by the Credit Agreement to December 31, 2018. In June and September 2018, we entered into the Bridge Notes (as defined in Note 16) in the aggregate amount of $4.0 million ($3.0 million on June 27, 2018 and $1.0 million on September 24, 2018), which were convertible into a qualified future financing and had a maturity date of June 30, 2019. As of September 30, 2018, the outstanding balance of the Credit Agreement was $14.5 million, the outstanding balances of the Bridge Notes totaled $4.0 million, and our cash on hand was approximately $5.8 million.

On October 31, 2018, we entered into a note purchase and exchange agreement (the “Note Purchase Agreement”), pursuant to which we sold to WC SACD One Parent, Inc. (“Parent”) Senior Secured Convertible Notes (the “Notes”) in the aggregate principal amount of $30.0 million for a purchase price in cash of $30.0 million, and issued to Loeb Holding Corporation and David A. McGough (together with Parent, the “Purchasers” and each a “Purchaser”) additional Notes in the aggregate principal amount of $4.0 million in exchange for the Bridge Notes previously issued by us to such Purchasers (who received payment in cash of the accrued and unpaid interest on the Bridge Notes). We used approximately $14.6 million of the net proceeds from the sale of the Notes to repay in full the principal outstanding under the Credit Agreement and to pay related interest thereon. We intend to use the balance of the net proceeds for general corporate purposes. The Notes mature on October 31, 2021 and are convertible in whole or in part, together with accrued and unpaid interest with respect to the principal amount converted, into shares of the Company’s common stock and preferred stock. For additional information on the Note Purchase Agreement as well as the Agreement and Plan of Merger, which we also entered into on October 31, 2018, please see Note 21.

We evaluated these conditions and determined it is probable that we will be able to meet all our obligations over the next twelve months. In accordance with U.S. GAAP, we reclassified the indebtedness in the Credit Agreement and Bridge Notes from short-term to long-term in our condensed consolidated balance sheets as of September 30, 2018.

Revision to Previously Issued Financial Statements

The results of operations for the three and nine months ended September 30, 2017 have been updated to reflect an adjustment to our share based compensation expense, which is recorded in general and administrative expenses in our condensed consolidated statements of operations. The change in share based compensation from the amount as reported to the amount as revised was a $404 thousand decrease and a $2.0 million increase for the three and nine months ended September 30, 2017, respectively. These changes are reflected in the loss from operations, loss from continuing operations before income taxes, net loss and basic and diluted net loss per common share figures in these condensed consolidated financial statements. For additional information, please see Note 21 to the consolidated financial statements contained in our most recent 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 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 September 30, 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. The fair value of each option granted has been estimated as of the date of grant with the following weighted-average assumptions for the nine months ended September 30, 2018 and 2017:

Expected Dividend Yield. Under the Credit Agreement, we are currently prohibited from declaring and paying dividends and therefore, the expected 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 52% and 49% for 2018 and 2017, respectively.

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% and 1.8% for 2018 and 2017, respectively.

Expected Term. The expected term of options granted was determined by considering employees’ historical exercise patterns or homogeneous management pools, which we determined is approximately 5.0 years for both 2018 and 2017. 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.

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. We record depreciation for internally developed capitalized software in depreciation expense in our condensed consolidated statements of operations. 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 September 30, 2018 from December 31, 2017 and was offset by a comparable decrease in contract liabilities. In addition, we separately state unbilled contract assets in our condensed consolidated balance sheet as of September 30, 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.

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Accounting Standards Updates

9 Months Ended

Sep. 30, 2018

Accounting Changes and Error Corrections [Abstract]

Accounting Standards Updates

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, 2018	Modified retrospective 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, 2019	Modified retrospective with the cumulative effect of initially applying these updates recognized at the date of initial application.	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, 2018	Retrospective	We adopted this update as of January 1, 2018, and there was no material impact to our condensed consolidated financial statements.
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, 2018	Prospective	Upon adoption, there was no material impact to our condensed consolidated financial statements.
ASU 2018-15, Intangibles (Topic 350)	The amendments in this update align the requirements for capitalizing implementation costs incurred in a hosting arrangement that is a service contract with those incurred to develop or obtain internal-use software. The update requires the entity to determine which implementation costs to capitalize and expense over the term of the hosting arrangement.	January 1, 2020	Prospective or Retrospective	We are currently in the planning stage and have not yet begun implementation of the new standard. We have not yet determined the potential 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 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 September 30, 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 reduce 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):

Statements of Operations

(select lines)	As Reported		Adjustments		Balances without Adoption of 606
Three Months Ended September 30, 2018
Revenue	$	37,485	$	—	$	37,485
Marketing expenses	631		72		703
Commission expenses	8,743		5		8,748
Loss from operations	(15)		(77)		(92)
Net loss	(1,109)		(77)		(1,186)
Nine Months Ended September 30, 2018
Revenue	$	115,182	$	—	$	115,182
Marketing expenses	2,455		613		3,068
Commission expenses	26,949		(3)		26,946
Income from operations	2,097		(610)		1,487
Net income (loss)	87		(610)		(523)

Balance Sheet

	As of September 30, 2018
(select lines)	As Reported		Adjustments		Balances without Adoption of 606
ASSETS:
Accounts receivable	$	6,147	$	1,850	$	7,997
Contract assets	638		(638)		—
Prepaid expenses and other current assets	3,783		26		3,809
Deferred subscription solicitation and commission costs	—		1,027		1,027
Contact costs	380		(380)		—
Total assets	37,736		1,885		39,621
LIABILITIES AND STOCKHOLDERS' EQUITY
Commissions payable	$	356	$	(267)	$	89
Contract liabilities, current	4,075		1,212		5,287
Other long-term liabilities	1,711		—		1,711
Accumulated deficit	(118,552)		940		(117,612)
Total liabilities and stockholders' equity	37,736		1,885		39,621

Statement of Cash Flows

	Nine Months Ended September 30, 2018
(select lines)	As Reported		Adjustments		Balances without Adoption of 606
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss)	$	87	$	(610)	$	(523)
Adjustments to reconcile net income to cash flows from operating activities:
Amortization of deferred subscription solicitation costs	—		2,432		2,432
Amortization of contract costs	646		(646)		—
Changes in assets and liabilities:
Accounts receivable	1,583		(1,387)		196
Contract assets	(1,537)		1,537		—
Prepaid expenses, other current assets and other assets	(139)		(26)		(165)
Deferred subscription solicitation and commission costs	—		(1,804)		(1,804)
Contract costs	(704)		704		—
Commissions payable	(3)		(49)		(52)
Contract liabilities, current	(2,323)		(151)		(2,474)
Net cash provided by operating activities	3,520		—		3,520

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 includes controls for performing a completeness assessment over the lease population, reviewing and measuring all forms of leases and analyzing the practical expedients. In accordance with ASU 2018-11 "Targeted Improvements," issued in July 2018, we expect to apply the new lease requirements as of January 1, 2019 under the modified retrospective approach and recognize a cumulative-effect adjustment, if any, at the date of initial application, rather than restate comparative periods.

We did not identify any embedded leases in our existing contracts that require bifurcation under Topic 842. However, we expect the adoption of Topic 842 will have a material impact to our condensed consolidated balance sheets due to the recognition of right-of-use assets and lease liabilities principally for certain leases currently accounted for as operating leases. As of September 30, 2018, we had an estimated $4.2 million in undiscounted future minimum lease commitments,

as reported in Note 14, of which $1.6 million has a commencement date of January 1, 2019 and will not be included in the adoption impact but will be evaluated under Topic 842 in the year ended December 31, 2019.

In addition, we evaluated our deferred rent amount in our condensed consolidated balance sheets, which is exclusively for our operating leases, and concluded that the balance of the historical lease incentives would appropriately reduce the right of use asset at adoption. As of September 30, 2018, our deferred rent balance was $657 thousand, as reported in Note 15.

We are continuing to finalize the impact of adoption to our condensed consolidated financial statements, including disclosures, accounting policies, business processes and internal controls, as well as income tax impacts, which we anticipate will not have a financial statement impact due to the valuation allowance.

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Revenue Recognition

9 Months Ended

Sep. 30, 2018

Revenue from Contract with Customer [Abstract]

Revenue Recognition

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 whether our refund history would be 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.

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 and nine months ended September 30, 2018 (in thousands):

	Personal Information Services		Insurance and Other Consumer Services		Total
Three months ended September 30, 2018
Primary geographical markets:
United States	$	32,723	$	1,501	$	34,224
Canada	3,261		—		3,261
Total revenue	$	35,984	$	1,501	$	37,485
Major service lines:
Identity Guard® and Identity Guard® with Watson™	$	13,270	$	—	$	13,270
Canadian business	3,261		—		3,261
U.S. financial institutions	18,527		—		18,527
Breach services & other	926		1,501		2,427
Total revenue	$	35,984	$	1,501	$	37,485
Timing of revenue recognition:
Products and services transferred over time	$	35,984	$	1,501	$	37,485
Products transferred at a point in time	—		—		—
Total revenue	$	35,984	$	1,501	$	37,485
Nine months ended September 30, 2018
Primary geographical markets:
United States	$	100,993	$	4,531	$	105,524
Canada	9,658		—		9,658
Total revenue	$	110,651	$	4,531	$	115,182
Major service lines:
Identity Guard® and Identity Guard® with Watson™	$	40,178	$	—	$	40,178
Canadian business	9,658		—		9,658
U.S. financial institutions	56,941		—		56,941
Breach services & other	3,874		4,531		8,405
Total revenue	$	110,651	$	4,531	$	115,182
Timing of revenue recognition:
Products and services transferred over time	$	110,258	$	4,531	$	114,789
Products transferred at a point in time	393		—		393
Total revenue	$	110,651	$	4,531	$	115,182

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, Current		Contract Liabilities, Non-Current
Balance as of December 31, 2017	$	8,225	$	—	$	7,759	$	—
Increase (decrease), net	(2,078)		638		(3,684)		30
Balance as of September 30, 2018	$	6,147	$	638	$	4,075	$	30

We recognized $906 thousand and $7.4 million of revenue in the three and nine months ended September 30, 2018, respectively, that was included in the contract liability balance as of December 31, 2017. The decreasing trend of this revenue recognized in the three months ended September 30, 2018 as compared to the three months ended March 31,

2018 is consistent with the pro-rata recognition of revenue earned from our monthly subscriptions. Our longer-term breach contracts have performance obligations that will continue to be satisfied in future periods and reduce the December 31, 2017 contract liability balance.

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Discontinued Operations and Assets and Liabilities Held for Sale

9 Months Ended

Sep. 30, 2018

Discontinued Operations and Disposal Groups [Abstract]

Discontinued Operations and Assets and Liabilities Held for Sale

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.

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 and nine months ended September 30, 2018 and 2017 and our financial position as of September 30, 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 and nine months ended September 30, 2017; for additional information, please see "—Variable Interest Entities" in Note 2.

In the three and nine months ended September 30, 2017, we recorded a loss on sale of $528 thousand (including $516 thousand of transaction costs), which is included in loss from discontinued operations, net of tax in our condensed consolidated statements of operations. 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 September 30, 2017		Nine Months Ended September 30, 2017
Major classes of line items constituting loss from discontinued operations:
Marketing expenses	$	(1)	$	(18)
Cost of revenue	—		(4)
General and administrative expenses	(500)		(1,718)
Impairment	—		(180)
Depreciation and amortization	(1)		(1)
Loss from discontinued operations before income taxes	(502)		(1,921)
Loss on disposal of discontinued operations	(528)		(528)
Total loss from discontinued operations, net of tax	$	(1,030)	$	(2,449)

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 in the nine months ended September 30, 2017 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. Habits at Work met all the criteria under U.S. GAAP to classify its assets

and liabilities as held for sale in our consolidated balance sheets as of March 31, 2017. Effective June 1, 2017, we completed the sale of Habits at Work for a nominal amount, which resulted in a gain on sale of $24 thousand in the three and nine months ended September 30, 2017. 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.

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Earnings (Loss) Per Common Share

9 Months Ended

Sep. 30, 2018

Earnings Per Share [Abstract]

Earnings (Loss) Per Common Share

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 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 September 30, 2018, options to purchase common stock, unvested restricted stock units and outstanding warrants totaling approximately 6.1 million shares were excluded from the computation of diluted loss per common share, as their effect would be anti-dilutive. For the nine months ended September 30, 2018, options to purchase common stock, unvested restricted stock units and outstanding warrants totaling approximately 5.7 million shares were excluded from the computation of diluted income per common share, as their effect would be anti-dilutive. For the three and nine months ended September 30, 2017, options to purchase common stock, unvested restricted stock units and outstanding warrants totaling approximately 6.9 million shares 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 September 30,				Nine Months Ended September 30,
	2018		2017		2018		2017
Net (loss) income—basic and diluted:
(Loss) income from continuing operations	$	(1,109)	$	(2,966)	$	87	$	(14,951)
Loss from discontinued operations	—		(1,030)		—		(2,449)
Net (loss) income—basic and diluted	$	(1,109)	$	(3,996)	$	87	$	(17,400)
Weighted average common shares outstanding:
Weighted average common shares outstanding—basic	24,395		23,953		24,306		23,818
Dilutive effect of common stock equivalents	—		—		381		—
Weighted average common shares outstanding—diluted	24,395		23,953		24,687		23,818
Basic (loss) earnings per common share:
(Loss) income from continuing operations	$	(0.05)	$	(0.12)	$	—	$	(0.63)
Loss from discontinued operations	—		(0.05)		—		(0.10)
Basic net (loss) income per common share	$	(0.05)	$	(0.17)	$	—	$	(0.73)
Diluted (loss) earnings per common share:
(Loss) income from continuing operations	$	(0.05)	$	(0.12)	$	—	$	(0.63)
Loss from discontinued operations	—		(0.05)		—		(0.10)
Diluted net (loss) income per common share	$	(0.05)	$	(0.17)	$	—	$	(0.73)

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Fair Value Measurement

9 Months Ended

Sep. 30, 2018

Fair Value Disclosures [Abstract]

Fair Value Measurement

Fair Value MeasurementOur cash, cash equivalents 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 September 30, 2018, the carrying value of our 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 nine months ended September 30, 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 September 30, 2018 or December 31, 2017.

The fair value of our instruments measured on a non-recurring basis as of September 30, 2018 and December 31, 2017 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):

	September 30, 2018		Valuation Technique	Unobservable Inputs	Quantitative Inputs Used for Original Warrant		Quantitative Inputs Used for Replacement Warrant (1)
Warrant	$	2,840	Monte Carlo	Volatility of underlying	50.0	%	55.0	%
				Risk-free rate	1.78	%	2.02	%
				Dividend yield	—	%	—	%
				Probability of Designated Event (2)	0% - 50%		0% - 50%
				Timing of Designated Event (2)	3-5 years from issuance		3-5 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 the year ended December 31, 2017. 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.

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Prepaid Expenses and Other Current Assets

9 Months Ended

Sep. 30, 2018

Deferred Costs, Capitalized, Prepaid, and Other Assets Disclosure [Abstract]

Prepaid Expenses and Other Current Assets

Prepaid Expenses and Other Current Assets

The components of our prepaid expenses and other current assets are as follows (in thousands):

	September 30, 2018		December 31, 2017
Prepaid services	$	294	$	533
Other prepaid contracts	2,891		2,132
Restricted cash	240		240
Other	358		327
Total	$	3,783	$	3,232

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Contract Costs

9 Months Ended

Sep. 30, 2018

Revenue from Contract with Customer [Abstract]

Contract Costs

Contract CostsIn 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 September 30, 2018. For additional information, please see Note 3.

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 September 30, 2018 (in thousands):

	September 30, 2018
Costs to obtain (commissions)	$	354
Costs to fulfill	26
Total contract costs	$	380

In the three and nine months ended September 30, 2018, we amortized $196 thousand and $587 thousand, respectively, related to costs to obtain, and there were no adverse changes which would cause the need for an impairment analysis.

In the three and nine months ended September 30, 2018, we amortized $26 thousand and $59 thousand, respectively, related to costs to fulfill, and there were no adverse changes which would cause the need for an impairment analysis.

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Internally Developed Capitalized Software

9 Months Ended

Sep. 30, 2018

Property, Plant and Equipment [Abstract]

Internally Developed Capitalized Software

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. In the three and nine months ended September 30, 2018, we recorded a non-cash impairment of $64 thousand, included in general and administrative expenses in our condensed consolidated statements of operations, of software development-in-progress that will not be placed in service. We had no impairments of internally developed capitalized software in the nine months ended September 30, 2017. Activity in our internally developed capitalized software during the nine months ended September 30, 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
Additions	2,625		—		2,625
Depreciation expense	—		(3,343)		(3,343)
Balance at September 30, 2018	$	21,228	$	(15,172)	$	6,056
Balance at December 31, 2016	$	15,015	$	(7,931)	$	7,084
Additions	2,703		—		2,703
Depreciation expense	—		(2,864)		(2,864)
Balance at September 30, 2017	$	17,718	$	(10,795)	$	6,923

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 three months ending December 31, 2018	$	1,007
For the years ending December 31:
2019	3,452
2020	1,419
2021	178
Total	$	6,056

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Goodwill and Intangibles

9 Months Ended

Sep. 30, 2018

Goodwill and Intangible Assets Disclosure [Abstract]

Goodwill and Intangibles

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 September 30, 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 nine months ended September 30, 2018, we did not identify any triggering events related to our goodwill and therefore were not required to test our goodwill for impairment. 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 September 30, 2018:
Customer related	$	38,831	$	(38,831)	$	—	$	—
Marketing related	2,727		(2,727)		—		—
Technology related	1,979		(1,799)		—		180
Total amortizable intangible assets at September 30, 2018	$	43,537	$	(43,357)	$	—	$	180
As of December 31, 2017:
Customer related	$	38,831	$	(38,831)	$	—	$	—
Marketing related	2,727		(2,709)		—		18
Technology related	1,739		(1,699)		—		40
Total amortizable intangible assets at December 31, 2017	$	43,297	$	(43,239)	$	—	$	58

During the nine months ended September 30, 2018, there were no adverse changes in our long-lived assets, which would cause a need for an impairment analysis.

Intangible assets are amortized over a period of two to ten years. For the three months ended September 30, 2018 and 2017, we had an aggregate amortization expense of $20 thousand and $29 thousand, respectively, which was included in amortization expense in our condensed consolidated statements of operations. For the nine months ended September 30, 2018 and 2017, we had an aggregate amortization expense of $118 thousand and $123 thousand, respectively. We estimate that we will have the following amortization expense for the future periods indicated below (in thousands):

For the remaining three months ending December 31, 2018	$	20
For the years ending December 31:
2019	80
2020	80
Total	$	180

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Accrued Expenses and Other Current Liabilities

9 Months Ended

Sep. 30, 2018

Accrued Liabilities and Other Liabilities [Abstract]

Accrued Expenses and Other Current Liabilities

Accrued Expenses and Other Current Liabilities

The components of our accrued expenses and other current liabilities are as follows (in thousands):

	September 30, 2018		December 31, 2017
Accrued marketing	$	129	$	155
Accrued cost of sales, including credit bureau costs	5,146		5,044
Accrued general and administrative expense and professional fees	1,241		570
Insurance premiums	338		340
Estimated liability for non-income business taxes	892		783
Other	792		1,641
Total	$	8,538	$	8,533

As of September 30, 2018, "Other" includes a short-term commitment for software licenses of $208 thousand. Under this agreement, we will make monthly installment payments of $23 thousand, including interest, through July 2019.

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Accrued Payroll and Employee Benefits

9 Months Ended

Sep. 30, 2018

Payables and Accruals [Abstract]

Accrued Payroll and Employee Benefits

Accrued Payroll and Employee Benefits

The components of our accrued payroll and employee benefits are as follows (in thousands): 

	September 30, 2018		December 31, 2017
Accrued payroll	$	193	$	808
Accrued benefits	244		408
Accrued severance	115		285
Total accrued payroll and employee benefits	$	552	$	1,501

The following table summarizes our accrued severance activity (in thousands):

	Three Months Ended September 30,				Nine Months Ended September 30,
	2018		2017		2018		2017
Balance, beginning of period	$	38	$	1,297	$	285	$	1,440
Adjustments to expense	77		6		248		1,500
Payments	—		(841)		(418)		(2,478)
Balance, end of period	$	115	$	462	$	115	$	462

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Commitments and Contingencies

9 Months Ended

Sep. 30, 2018

Commitments and Contingencies Disclosure [Abstract]

Commitments and Contingencies

Commitments and Contingencies

Leases

We have entered into long-term operating lease agreements for office space and capital leases for fixed assets. The minimum fixed commitments related to all non-cancellable leases are as follows (in thousands):

	Operating Leases		Capital Leases
For the remaining three months ending December 31, 2018	$	574	$	67
For the years ending December 31:
2019	1,977		400
2020	608		20
2021	403		7
2022	314		—
2023	317		—
Total minimum lease payments	$	4,193	494
Less: amount representing interest			(45)
Present value of minimum lease payments			449
Less: current obligation			(328)
Long-term obligations under capital lease			$	121

We did not enter into any new capital lease arrangements during the three or nine months ended September 30, 2018 or 2017. Rental expenses included in general and administrative expenses for the three months ended September 30, 2018 and 2017 were $642 thousand and $1.0 million, respectively. Rental expenses for the nine months ended September 30, 2018 and 2017 were $2.0 million and $2.5 million, respectively.

Legal Proceedings

In the normal course of business, we may become involved in various legal proceedings. Except as stated below, we know of no pending or threatened legal proceedings to which we are or will be a party that, if successful, would result in a material adverse change in our business or financial condition.

In January 2013, the Office of the West Virginia Attorney General ("WVAG") served Intersections Insurance Services Inc. ("IISI") with a complaint filed in the Circuit Court of Mason County, West Virginia on October 2, 2012. The complaint alleges violations of West Virginia consumer protection laws based on the marketing of unspecified products. On April 21, 2017, the Court granted a motion of the WVAG to add Intersections Inc. as a defendant. The parties are currently engaged in discovery. No trial has been scheduled. We continue to believe that the claims in the complaint are without merit and intend to continue to vigorously defend this matter.

On March 22, 2018, Johan Roets, the Company’s former Chief Executive Officer, filed a civil Complaint against the Company in the Circuit Court of Fairfax County Virginia. The Complaint alleges that the Company’s termination of Mr. Roets’ employment on February 22, 2018 violated his Employment Agreement and seeks monetary damages. The Company believes that the Complaint is without merit and plans to vigorously defend this litigation.

For information regarding our policy for analyzing legal proceedings, please see "—Contingent Liabilities" in Note 2. As of September 30, 2018, we do not have any significant liabilities accrued for any of the legal proceedings mentioned above. We believe based on information currently available that the amount, if any, accrued for the above contingencies is adequate. However, legal proceedings are inherently unpredictable and, although we believe our accruals are adequate and we intend to vigorously defend ourselves against such matters, unfavorable resolutions could occur, which could have a material adverse effect on our condensed consolidated financial statements, taken as a whole.

Other

Our products and services are subject to indirect tax obligations, including sales and use taxes, in certain states with which we are currently compliant, and taxability is generally determined by statutory state laws and regulations as well as an assessment of nexus, if applicable. Whether sales of our services are subject to additional states’ indirect taxes is uncertain, due in part to the unique nature of our services and the relationships through which our services are offered, as well as changing state laws and interpretations of those laws. Therefore, we periodically analyze our facts and circumstances related to potential indirect tax obligations in state and other jurisdictions. The following table summarizes our non-income business tax liability activity (in thousands):

	Nine Months Ended September 30,
	2018		2017
Balance at beginning of period	$	783	$	94
Adjustments to existing liabilities	109		1,461
Payments	—		(94)
Balance at end of period	$	892	$	1,461

We have been audited in the past and continue to analyze what obligations we have, if any, to state taxing authorities. We analyzed all the information available to us in order to estimate a liability for potential obligations in other jurisdictions including, but not limited to: the delivery nature of our services; the relationship through which our services are offered; the probability of obtaining resale or exemption certificates; limited, if any, nexus-creating activity; and our historical success in settling or abating liabilities under audit. We continue to correspond with the applicable authorities in an effort toward resolution of our potential liabilities using a variety of settlement options including, but not limited to, voluntary disclosures, negotiation and standard appeals process, and we may adjust the liability as a result of such correspondence. Proceedings with jurisdictions are inherently unpredictable, but we believe it is reasonably possible that other states may approach us or that the scope of the taxable base in any state may also increase. For additional information, please see Note 16 to the consolidated financial statements contained in our most recent Annual Report on Form 10-K. 

In June 2018, the Supreme Court heard the appeal from the South Dakota Supreme Court on the matter of South Dakota v. Wayfair, Inc. and ruled in favor of the state, perhaps giving states more authority to require online retailers and remote sellers to collect sales tax. We have the appropriate internal processes and capabilities and are compliant in the collection of sales and use tax across a broad tax footprint throughout the U.S. We place a significant amount of emphasis on the taxability of our products and services, rather than on nexus or physical presence. Therefore, we do not believe there is a material impact to our business. We will continue to monitor for further regulatory actions by states, and perhaps the federal government. Further actions, including any retrospective state requirements or actions impacting state income tax obligations, would likely increase our cost of doing business and could reduce demand for our services and create additional administrative and compliance burdens, all of which could adversely affect our results of operations.

We have entered into various software licenses and operational non-refundable commitments totaling approximately $57.2 million as of September 30, 2018, payable in monthly and yearly installments through December 31, 2021. These amounts will be expensed on a pro-rata basis and recorded in cost of revenue and general and administrative expenses in our condensed consolidated statements of operations.

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Other Long-Term Liabilities

9 Months Ended

Sep. 30, 2018

Other Liabilities Disclosure [Abstract]

Other Long-Term Liabilities

Other Long-Term Liabilities

The components of our other long-term liabilities are as follows (in thousands):

	September 30, 2018		December 31, 2017
Deferred rent	$	657	$	1,223
Uncertain tax positions, interest and penalties not recognized	1,022		1,669
Contract liabilities, non-current	30		—
Accrued general and administrative expenses	2		3
Total other long-term liabilities	$	1,711	$	2,895

For additional information regarding the change in uncertain tax positions, see Note 17.

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Debt and Other Financing

9 Months Ended

Sep. 30, 2018

Debt Disclosure [Abstract]

Debt and Other Financing

Debt and Other Financing

Debt

In March 2016, we and our subsidiaries entered into a credit agreement with Crystal Financial SPV LLC ("Prior Credit Agreement"). The Prior Credit Agreement provided for a $20.0 million senior secured term loan, which was fully funded at closing, with a maturity date of March 21, 2019 and interest at the greater of LIBOR plus 10% per annum or 10.5% per annum.

In April 2017, we refinanced our indebtedness under the Prior Credit Agreement with a new term loan facility with PEAK6 Investments, L.P. ("PEAK6 Investments"). We also executed amendments to the new term loan facility in July 2017, November 2017, April 2018, and June 2018 (together with the amendments, the "Credit Agreement"), which had a principal outstanding amount of $14.5 million as of September 30, 2018 and an interest rate of 10.91% per annum. The maturity date of the Credit Agreement is December 31, 2018 with monthly principal payments until the remaining $14.5 million is repaid. The Credit Agreement is secured by substantially all our assets and a pledge by us of stock and membership interests we hold in any domestic and first-tier foreign subsidiaries.

We used approximately $13.9 million of the net proceeds from the Credit Agreement to repay in full the aggregate principal amount outstanding under the Prior Credit Agreement and to pay interest, prepayment penalties, transaction fees and expenses as a result of the termination. We used the remainder of the proceeds from the Credit Agreement for general corporate purposes, including to increase subscriber acquisitions and continue our innovative product development. As a result of the refinancing, we recorded a loss on extinguishment of debt of $1.5 million in the year ended December 31, 2017, including interest, prepayment penalties, transaction fees and expenses totaling approximately $487 thousand as a result of the termination of the Prior Credit Agreement.

Certain events defined in the Credit Agreement require prepayment of the aggregate principal amount of the term loan, including all or a portion of proceeds received from asset dispositions, casualty events, extraordinary receipts, and certain equity issuances. Once amounts borrowed have been paid or prepaid, they may not be reborrowed.

On April 3, 2018, we entered into Amendment No. 3 with PEAK6 Investments (“Amendment No. 3”), amending the Credit Agreement. Amendment No. 3 provided for a voluntary, partial prepayment of the outstanding principal balance of the term loans in the amount of $1.0 million, which we paid in April 2018, and amended one of the financial covenants in the Credit Agreement. The amended covenant reduced our requirement to maintain at all times a minimum amount of cash on hand, as defined in the Credit Agreement, to (i) the lesser of 20% of the total amount outstanding under the term loans and $2.5 million for the period commencing on the Third Amendment Date through and including May 31, 2018, and (ii) the lesser of 20% of the total amount outstanding under the term loans and $3.0 million for the fiscal quarter ending June 1, 2018 and each fiscal quarter thereafter.

On June 8, 2018, we entered into Amendment No. 4 with PEAK6 Investments (“Amendment No. 4”), amending the Credit Agreement. Amendment No. 4 (i) requires that $1.5 million principal prepayments be made on the last day of June through November, each of which is to be accompanied by a 1.5% prepayment fee; (ii) shortens the maturity date to December 31, 2018; (iii) relieves the obligation to pay a 3% prepayment fee upon full prepayment of the term loan and on required partial prepayments resulting from equity or subordinate debt proceeds; (iv) increases the allowable principal amount of subordinate debt from $2 million to $15 million; and (v) confirms that debt and equity issued to affiliates is permitted if the proceeds are used to pay the term loan. The relief with respect to the 3% prepayment fee applies only if no event of default exists. Amendment No. 4 also confirms that no default currently exists with respect to the Credit Agreement.

On June 27, 2018, we entered into two promissory notes to borrow a total of $3.0 million from Loeb Holding Corporation ($2.0 million) and David A. McGough ($1.0 million) (for related party information, please see Note 19). On September 24, 2018, we entered into a promissory note under substantially identical terms to borrow an additional $1.0 million from Loeb Holding Corporation (together, the “Bridge Notes”). As of September 30, 2018, $4.0 million was outstanding under the Bridge Notes, as well as $84 thousand of accrued interest, payable upon maturity, which is included in accrued expenses and other current liabilities in our condensed consolidated balance sheets.

The Bridge Notes provide (a) for a maturity date of June 30, 2019, (b) for an interest rate equivalent to the interest rate pursuant to the Credit Agreement, and (c) that the Company or the holder may convert or exchange the principal and accrued interest of such Bridge Note into securities to be sold by the Company in a “qualified financing” (an offering of debt and/or equity securities with net proceeds of at least $10 million (inclusive of the Bridge Notes) to the Company). All our obligations under the Bridge Notes are subordinated to the extent provided for in the subordination agreements dated as of June 27, 2018 (the “Subordination Agreements”) among the Borrower, the Lender and Peak6 Strategic Capital LLC. We used the net proceeds of the Bridge Notes to make required prepayments under the Credit Agreement. On August 1, 2018, we entered into an amendment to provide that the Bridge Notes shall not be convertible or exchangeable into any securities of the Company, with certain exceptions, if the issuance of such securities would require stockholder approval under the applicable NASDAQ Listing Rules.

Under the Credit Agreement and Bridge Notes, minimum required maturities were as follows (in thousands):

For the remaining three months ending December 31, 2018	$	14,500
For the year ending December 31, 2019	4,000
Total outstanding as of September 30, 2018	$	18,500

As of September 30, 2018, $18.5 million was outstanding under both agreements, which is presented net of unamortized debt issuance costs and debt discount totaling $265 thousand in our condensed consolidated balance sheets in accordance with U.S. GAAP. As of December 31, 2017, $21.5 million was outstanding under the Credit Agreement, which is presented net of unamortized debt issuance costs and debt discount totaling $764 thousand in our condensed consolidated balance sheets.

On October 31, 2018, we entered into the Note Purchase Agreement, pursuant to which we sold the Notes to Parent in the aggregate principal amount of $30.0 million for a purchase price in cash of $30.0 million, and issued to Loeb Holding Corporation and David A. McGough additional Notes in the aggregate principal amount of $4.0 million in exchange for the Bridge Notes previously issued by us to such Purchasers (who received payment in cash of the accrued and unpaid interest on the Bridge Notes). We used approximately $14.6 million of the net proceeds from the sale of the Notes to repay in full the principal outstanding under the Credit Agreement and to pay related interest thereon. We intend to use the balance of the net proceeds for general corporate purposes. The Notes mature on October 31, 2021 and are convertible in whole or in part, together with accrued and unpaid interest with respect to the principal amount converted, into shares of the Company’s common stock and preferred stock. For additional information on the Note Purchase Agreement as well as the Agreement and Plan of Merger, which we also entered into on October 31, 2018, please see Note 21.

The Credit Agreement, which was paid in full on October 31, 2018, contained certain customary covenants, including a requirement to maintain at all times a minimum cash on hand amount of the lesser of 20% or certain stated amounts of the total amount outstanding under the term loan, as set forth in the Credit Agreement, and minimum EBITDA requirements. The Credit Agreement also contained customary events of default, including among other things non-payment defaults, covenant defaults, inaccuracy of representations and warranties, bankruptcy and insolvency defaults, material judgment defaults, ERISA defaults, cross-defaults to other indebtedness, invalidity of loan documents defaults, change in control defaults, conduct of business defaults, and criminal and regulatory action defaults.

Warrant

In connection with the Credit Agreement, PEAK6 Investments purchased, for an aggregate purchase price of $1.5 million in cash, a warrant to purchase an aggregate of 1.5 million shares of our common stock at an exercise price of $5.00 per share ("Original Warrant”). In connection with a later amendment to the Credit Agreement, we issued a warrant to PEAK6 Investments for an additional purchase price of $700 thousand in cash ("Replacement Warrant"), and PEAK6 Investments surrendered the Original Warrant previously issued by us on April 20, 2017. The Replacement Warrant provides PEAK6 with the right to purchase an aggregate of 1.5 million shares of our common stock at an exercise price of $2.50 per share. The Replacement Warrant is immediately exercisable, has a five-year term and shall be exercised solely by a “net share settlement” feature that requires the holder to exercise the Replacement Warrant without a cash payment upon the terms set forth therein. Warrants are included in stockholders' equity in our condensed consolidated balance sheets and were valued at $2.8 million as of September 30, 2018 and December 31, 2017. For additional information related to the fair value of the warrants, please see Note 7.

Stock Redemption

In connection with the Credit Agreement, we used the proceeds from the sale of the Warrant to repurchase approximately 419 thousand shares of our common stock, pursuant to a redemption agreement from PEAK6 Capital Management LLC at a price of $3.60 per share, for an aggregate repurchase price of approximately $1.5 million. PEAK6 Capital Management LLC is an affiliate of PEAK6 Investments.

The repurchase was made pursuant to our previously announced share repurchase program. Following the repurchase, we have approximately $15.3 million remaining under our repurchase program. The repurchases may be made on the open market, in block trades, through privately negotiated transactions or otherwise, and the program may be suspended or discontinued at any time. However, we are currently prohibited from repurchasing any shares of common stock under the Credit Agreement.

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Income Taxes

9 Months Ended

Sep. 30, 2018

Income Tax Disclosure [Abstract]

Income Taxes

Income Taxes

We continued to evaluate all significant available positive and negative evidence including, but not limited to, our three-year cumulative loss, as adjusted for permanent items; insufficient sources of taxable income in prior carryback periods in order to utilize all of the existing definite-lived net deferred tax assets; unavailability of prudent and feasible tax-planning strategies; negative adjustments to our projected taxable income; and scheduling of the future reversals of existing temporary differences. As a result, we were not able to recognize a net tax benefit associated with our pre-tax loss in the nine months ended September 30, 2018, as there has been no change to the conclusion from the year ended December 31, 2017 that it was more likely than not that we would not generate sufficient taxable income in the foreseeable future to realize our net deferred tax assets.

Our consolidated effective tax rate from continuing operations for the three months ended September 30, 2018 and 2017 was (24.7)% and (0.2)%, respectively. Our consolidated effective tax rate from continuing operations for the nine months ended September 30, 2018 and 2017 was 140.3% and 0.2%, respectively. The increase in the rate for the nine months ended September 30, 2018 is primarily due to the discrete resolution of uncertain tax positions related to claimed general business credits under audit that were deemed effectively settled in the period, partially offset by an adjustment to the valuation allowance, which is further described below.

The amount of deferred tax assets considered realizable as of September 30, 2018 could be adjusted if facts and circumstances in future reporting periods change, including, but not limited to, generating sufficient future taxable income in the carryforward periods. If certain substantial changes in the entity’s ownership were to occur, there would be an annual limitation on the amount of the carryforwards that can be utilized in the future. 

We continued to evaluate the effects of the Tax Cuts and Jobs Act of 2017 (“Tax Act”) and are applying the guidance in Staff Accounting Bulletin No. 118. As of December 31, 2017, we made a reasonable estimate of the effects on our existing deferred tax balances, including the impact of our valuation allowance due to the indefinite life of certain deferred tax assets and the state adoption of the federal tax law changes. In the three months ended September 30, 2018, we made an adjustment to our initial assumptions based on new interpretations, which are consistent with the filing of our federal income tax return, by recording additional income tax expense in the amount of $212 thousand. We continue to review our facts and circumstances, including resolution, if any, of uncertainty surrounding conformity of the Tax Act from certain state tax jurisdictions, in the measurement period. We plan to complete our analysis no later than December 31, 2018. It is possible that future adjustments may have a material adverse effect on our cash tax liabilities, results of operations, or financial condition. 

During the nine months ended September 30, 2018, we decreased our gross unrecognized tax benefits primarily related to a portion of tax credits that were settled in conjunction with the federal examination for tax years 2010 and 2011. There were no material changes to our uncertain tax positions during the nine months ended September 30, 2017.

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Stockholders' Equity

9 Months Ended

Sep. 30, 2018

Disclosure of Compensation Related Costs, Share-based Payments [Abstract]

Stockholders' Equity

Stockholders’ Equity

As of September 30, 2018, we have 4.0 million shares of common stock available for future grants of awards under the Plan, and awards for approximately 4.6 million shares are outstanding under all of our active and inactive plans.

Stock Options

Total share based compensation expense recognized for stock options, which is included in general and administrative expenses in our condensed consolidated statements of operations, for the three months ended September 30, 2018 and 2017 was $25 thousand and $170 thousand, respectively. Total share based compensation (benefit) expense recognized for stock options for the nine months ended September 30, 2018 and 2017 was $(183) thousand and $2.7 million, respectively. The decrease is primarily due to options granted in June 2017 that were fully expensed on each grant date due to a retirement-age specific provision in our Executive Chairman and President's employment and award agreements.

The following table summarizes our stock option activity during the nine months ended September 30, 2018:

	Number of Shares	Weighted-Average Exercise Price		Aggregate Intrinsic Value		Weighted-Average Remaining Contractual Term
				(In thousands)		(In years)
Outstanding at December 31, 2017	2,933,232	$	3.82
Granted	539,000	$	2.04
Canceled	(714,345)	$	3.63
Outstanding at September 30, 2018	2,757,887	$	3.52	$	5	7.22
Exercisable at September 30, 2018	416,792	$	4.66	$	—	1.40

The weighted average grant date fair value of options granted, based on the Black Scholes method, during the three months ended September 30, 2018 was $0.84. There were no options granted in the three months ended September 30, 2017. The weighted average grant date fair value of options granted during the nine months ended September 30, 2018 and 2017 was $0.96 and $1.94, respectively.

There were no options exercised during the three or nine months ended September 30, 2018 or 2017.

As of September 30, 2018, there was $390 thousand of total unrecognized compensation cost related to unvested stock option arrangements granted under the Plan. That cost is expected to be recognized over a weighted-average period of 1.0 years.

Restricted Stock Units and Restricted Stock Awards

Total share based compensation expense recognized for restricted stock units and restricted stock awards (together, "RSUs"), which is included in general and administrative expense in our condensed consolidated statements of operations, for the three months ended September 30, 2018 and 2017 was $935 thousand and $1.6 million, respectively. Total share based compensation expense recognized for RSUs for the nine months ended September 30, 2018 and 2017 was $2.2 million and $4.0 million, respectively. The decrease in the year-to-date period is due to reversing the cumulative expense on 535 thousand unvested RSUs granted to a former employee that were forfeited in the nine months ended September 30, 2018.

The following table summarizes the activity of our RSUs during the nine months ended September 30, 2018:

	Number of RSUs	Weighted-Average Grant Date Fair Value
Outstanding at December 31, 2017	2,737,353	$	3.83
Granted	120,000	$	2.32
Canceled (1)	(719,775)	$	3.72
Vested	(293,492)	$	3.94
Outstanding at September 30, 2018	1,844,086	$	3.75

____________________

1. Includes shares net-settled to cover statutory employee taxes related to the vesting of restricted stock awards, which increased treasury shares by 15 thousand and 68 thousand in the nine months ended September 30, 2018 and 2017, respectively.

As of September 30, 2018, there was $2.9 million of total unrecognized compensation cost related to unvested RSUs granted under the plans. That cost is expected to be recognized over a weighted-average period of 1.02 years.

Other

As of September 30, 2018, we have an outstanding Warrant held by our lender, PEAK6 Investments, to purchase an aggregate of 1.5 million shares of our common stock at an exercise price of $2.50 per share. For additional information, please see Note 16.

As a result of shares withheld for tax purposes on the vesting of a restricted stock award, we increased our treasury shares by 15 thousand and 68 thousand in the nine months ended September 30, 2018 and 2017, respectively. There are no remaining unvested restricted stock awards outstanding. Under the Credit Agreement, we are currently prohibited from declaring and paying ordinary cash or stock dividends or repurchasing any shares of common stock.

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Related Party Transactions

9 Months Ended

Sep. 30, 2018

Related Party Transactions [Abstract]

Related Party Transactions

Related Party Transactions

Digital Matrix Systems, Inc. – The Chief Executive Officer and President of Digital Matrix Systems, Inc. ("DMS"), David A. McGough, serves as one of our board members. We have service agreements with DMS for monitoring updates on a daily and quarterly basis, along with occasional contracts for certain credit analysis and application development services. In connection with these agreements, we paid monthly installments totaling $541 thousand and $491 thousand in the three months ended September 30, 2018 and 2017, respectively. In the nine months ended September 30, 2018 and 2017, we paid $1.8 million and $1.9 million, respectively. These amounts are included within cost of revenue and general and administrative expenses in our condensed consolidated statements of operations. As of September 30, 2018 and December 31, 2017, we owed $108 thousand and $178 thousand, respectively, to DMS under these agreements.

On June 27, 2018, we entered into the Bridge Notes (which were amended and restated in August 2018) to borrow a total of $3.0 million, of which $1.0 million was funded by Mr. McGough. The Bridge Notes have a maturity date of June 30, 2019. As of September 30, 2018, we owed $1.0 million under this agreement.

PEAK6 Investments, L.P. – During 2017, we refinanced our existing senior secured indebtedness under the Prior Credit Agreement with the Credit Agreement with PEAK6 Investments. In connection with the Credit Agreement, we paid PEAK6 Investments $1.5 million for the repurchase of common stock, and we received a total of $2.2 million for the issuance of the Warrant. In the three months ended September 30, 2018 and 2017, we paid interest of $527 thousand and $485 thousand, respectively. In the nine months ended September 30, 2018 and 2017, we paid interest and other fees of $1.7 million and $864 thousand, respectively. As of September 30, 2018 and December 31, 2017, our outstanding principal balance was $14.5 million and $21.5 million, respectively. PEAK6 Investments owned approximately 419 thousand shares of our common stock immediately prior to the closing of the Credit Agreement. For additional information, please see Note 16.

Loeb Holding Corporation – On June 27, 2018, we entered into the Bridge Notes (which were amended and restated in August 2018) to borrow a total of $3.0 million, of which $2.0 million was funded by Loeb Holding Corporation ("Loeb"). On September 24, 2018 we entered into a promissory note to borrow an additional $1.0 million from Loeb Holding Corporation. The terms of the new promissory note are substantially identical to the prior Bridge Notes. Loeb beneficially owns approximately 40% of our outstanding shares of common stock and is our largest stockholder. Thomas L. Kempner, our Board member until October 2018, was the Chairman and Chief Executive Officer and the beneficial owner of a majority of the voting stock of Loeb. Bruce L. Lev, one of our Board members, is a Managing Director of Loeb. The Bridge Notes have a maturity date of June 30, 2019. As of September 30, 2018, we owed $3.1 million under this agreement, which includes accrued interest.

One Health Group, LLC – On July 31, 2017, we entered into and consummated the divestiture of Voyce to One Health Group, LLC (the "Purchaser"), pursuant to the terms and conditions of a membership interest purchase agreement (the "Purchase Agreement") between our wholly owned subsidiary and the Purchaser. The purchase price for the Interests (the "Purchase Price") is equal to (i) the sum of one hundred dollars ($100), paid in cash at closing, plus (ii) a revenue participation of up to $20.0 million (the "Maximum Amount"), payable pursuant to the terms and conditions of the Purchase Agreement.

The Purchaser is a newly-formed entity of which Michael R. Stanfield, our Executive Chairman and President, is a significant minority investor, and certain former members of the Voyce management team are the managing member and investors.

Monde of Events – The Chief Executive Officer of Monde of Events is the spouse of our Chief Operating Officer. We have retained Monde of Events to provide event planning services for our corporate events. In the three months ended September 30, 2018 and 2017, we paid Monde of Events $3 thousand and $13 thousand, respectively, for these services. In the nine months ended September 30, 2018 and 2017, we paid Monde of Events $13 thousand and $63 thousand, respectively, for these services. As of September 30, 2018, there were no amounts due to Monde of Events.

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Segment and Geographic Information

9 Months Ended

Sep. 30, 2018

Segment Reporting [Abstract]

Segment and Geographic Information

Segment and Geographic Information

We have ongoing operations in two segments: 1) Personal Information Services and 2) Insurance and Other Consumer Services. In January 2017 we sold the business comprising our Bail Bonds Industry Solutions segment, and in July 2017 we sold the business comprising our Pet Health Monitoring segment. For additional information, please see Note 5. 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.

Our Personal Information Services segment offers identity theft and privacy protection as well as credit monitoring services for consumers to understand, monitor, manage and protect their personal information and privacy. Our Insurance and Other Consumer Services segment includes our insurance and other membership services.

The following table sets forth segment information for the three and nine months ended September 30, 2018 and 2017 (in thousands):

	Personal Information Services		Insurance and Other Consumer Services		Bail Bonds Industry Solutions		Corporate		Consolidated
Three months ended September 30, 2018
Revenue	$	35,984	$	1,501	$	—	$	—	$	37,485
Depreciation	1,584		3		—		—		1,587
Amortization	20		—		—		—		20
Income (loss) from operations	246		574		—		(835)		(15)
(Loss) income from continuing operations before income taxes	(628)		574		—		(835)		(889)
Three months ended September 30, 2017
Revenue	$	37,845	$	1,403	$	—	$	—	$	39,248
Depreciation	1,355		23		—		—		1,378
Amortization	29		—		—		—		29
(Loss) income from operations	(1,155)		386		—		(1,487)		(2,256)
(Loss) income from continuing operations before income taxes	(1,859)		386		—		(1,487)		(2,960)
Nine months ended September 30, 2018
Revenue	$	110,651	$	4,531	$	—	$	—	$	115,182
Depreciation	4,587		17		—		—		4,604
Amortization	118		—		—		—		118
Income (loss) from operations	2,841		1,671		—		(2,415)		2,097
Income (loss) from continuing operations before income taxes	528		1,671		—		(2,415)		(216)
Nine months ended September 30, 2017
Revenue	$	114,832	$	4,617	$	182	$	—	$	119,631
Depreciation	3,880		86		—		—		3,966
Amortization	123		—		—		—		123
(Loss) income from operations	(6,514)		1,226		(46)		(6,353)		(11,687)
(Loss) income from continuing operations before income taxes	(9,800)		1,225		(46)		(6,353)		(14,974)

The following table sets forth segment information as of September 30, 2018 and December 31, 2017 (in thousands):

	September 30, 2018				December 31, 2017
	Property and Equipment, net		Total Assets		Property and Equipment, net		Total Assets
Segment:
Personal Information Services	$	8,503	$	27,436	$	11,017	$	35,517
Insurance and Other Consumer Services	6		9,796		23		10,159
Corporate	—		504		—		803
Consolidated	$	8,509	$	37,736	$	11,040	$	46,479

For revenue by geographic area, please see "—Disaggregation of Revenue" in Note 4.

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Subsequent Events

9 Months Ended

Sep. 30, 2018

Subsequent Events [Abstract]

Subsequent Events

Subsequent EventsOn October 31, 2018, we entered into an Agreement and Plan of Merger (the “Merger Agreement”) with Parent and WC SACD One Merger Sub, Inc. (“Merger Sub”), a wholly-owned subsidiary of Parent, pursuant to which, among other things, subject to the terms and conditions of the Merger Agreement, Merger Sub has agreed to make a cash tender offer (the “Offer”) to purchase all of the outstanding shares of our common stock (the “Shares”), at a purchase price of $3.68

per Share in cash (the “Offer Price”). Parent and Merger Sub are affiliates of WC SACD One, Inc., (“WC SACD”), a joint venture formed by iSubscribed, WndrCo Holdings, LLC and certain General Catalyst funds (collectively, the “Investors”).

The transaction has been unanimously approved by a Special Committee of the Board of Directors of the Company comprised of independent and disinterested directors. Certain affiliates of Intersections have agreed, subject to customary conditions, not to tender a majority of their shares into the tender offer, but to roll over such shares in the transaction into WC SACD. Such affiliates have also entered into tender and support agreements with Parent pursuant to which they have, among other things, agreed to tender to Parent in the offer the shares of common stock that they are not rolling over in the transaction. The transaction is subject to customary closing conditions, including the expiration of the applicable period under the Hart-Scott-Rodino Act and a minimum tender condition that requires the tender of both more than 50% of the our outstanding shares and more than 50% of our outstanding shares held by stockholders other than directors, executive officers, and rollover participants. The transaction is not subject to any financing contingency. The transaction is expected to close during the first quarter of 2019.

If the Merger is consummated, our shares of Common Stock will be delisted from the NASDAQ Stock Market and deregistered under the Securities Exchange Act of 1934, as amended (the “Exchange Act”).

On October 31, 2018, in connection with the Merger Agreement, we also entered into the Note Purchase Agreement, pursuant to which we sold the Notes to Parent in the aggregate principal amount of $30.0 million for a purchase price in cash of $30.0 million, and issued to Loeb Holding Corporation and David A. McGough additional Notes in the aggregate principal amount of $4.0 million in exchange for the Bridge Notes previously issued by us to such Purchasers (who received payment from the Company in cash of approximately $87 thousand for the accrued and unpaid interest on the Bridge Notes). We used approximately $14.6 million of the net proceeds from the sale of the Notes to repay in full the principal outstanding under the Credit Agreement and to pay related interest thereon. We intend to use the balance of the net proceeds for general corporate purposes.

The Notes mature on October 31, 2021, subject to potential acceleration in the event of certain specified events of default, and bear interest, payable quarterly in cash, at the rate of 6% per annum through October 31, 2019, and at the rate of 8% per annum thereafter, in each case subject to an increase of 2% per annum if any event of default has occurred and is continuing. The Notes are guaranteed by our subsidiaries and are secured by a first-priority security interest in substantially all the assets of the Company and such subsidiaries. The Notes are convertible in whole or in part, together with accrued and unpaid interest with respect to the principal amount converted, into shares of our common stock at a conversion price of $2.27 per share, subject to adjustment. To the extent the Company remains listed on NASDAQ and conversion occurs prior to the date on which approval of the Company’s stockholders to permit conversion of all the Notes into shares of common stock under the rules of NASDAQ becomes effective, we shall not be required to issue more shares of common stock than the converting Note holder’s pro rata share of 19.9% of the shares of common stock outstanding following conversion, and the remainder of the Notes to be converted shall be convertible into shares of non-voting convertible preferred stock of the Company (the “Preferred Stock”). Prior to the date on which such approval of the Company’s stockholders becomes effective, the issuance of common stock upon conversion of the Notes to officers or directors of the Company or their affiliates may be further limited to the extent they are subject to applicable NASDAQ rules. The Notes will automatically convert into common stock and (if applicable) Preferred Stock immediately prior to either the completion of the Merger or the consummation of a “Superior Transaction” (as defined in the Notes). Each Note may also be converted, at the option of the Purchaser, upon (i) the consummation of certain “Alternative Transactions” (as defined in the Notes), (ii) a determination by the Company’s Board of Directors that the Company is no longer pursuing a process to sell the Company, or (iii) on or after April 30, 2019.

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Basis of Presentation, Significant Accounting Policies and Liquidity (Policies)

9 Months Ended

Sep. 30, 2018

Accounting Policies [Abstract]

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 nine months ended September 30, 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 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.

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 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 September 30, 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. The fair value of each option granted has been estimated as of the date of grant with the following weighted-average assumptions for the nine months ended September 30, 2018 and 2017:

Expected Dividend Yield. Under the Credit Agreement, we are currently prohibited from declaring and paying dividends and therefore, the expected 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 52% and 49% for 2018 and 2017, respectively.

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% and 1.8% for 2018 and 2017, respectively.

Expected Term. The expected term of options granted was determined by considering employees’ historical exercise patterns or homogeneous management pools, which we determined is approximately 5.0 years for both 2018 and 2017. 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.

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. We record depreciation for internally developed capitalized software in depreciation expense in our condensed consolidated statements of operations. 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 with Customer, Asset and Liability

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 September 30, 2018 from December 31, 2017 and was offset by a comparable decrease in contract liabilities. In addition, we separately state unbilled contract assets in our condensed consolidated balance sheet as of September 30, 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.

Accounting Standards Updates

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, 2018	Modified retrospective 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, 2019	Modified retrospective with the cumulative effect of initially applying these updates recognized at the date of initial application.	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, 2018	Retrospective	We adopted this update as of January 1, 2018, and there was no material impact to our condensed consolidated financial statements.
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, 2018	Prospective	Upon adoption, there was no material impact to our condensed consolidated financial statements.
ASU 2018-15, Intangibles (Topic 350)	The amendments in this update align the requirements for capitalizing implementation costs incurred in a hosting arrangement that is a service contract with those incurred to develop or obtain internal-use software. The update requires the entity to determine which implementation costs to capitalize and expense over the term of the hosting arrangement.	January 1, 2020	Prospective or Retrospective	We are currently in the planning stage and have not yet begun implementation of the new standard. We have not yet determined the potential 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 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 September 30, 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 reduce 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):

Statements of Operations

(select lines)	As Reported		Adjustments		Balances without Adoption of 606
Three Months Ended September 30, 2018
Revenue	$	37,485	$	—	$	37,485
Marketing expenses	631		72		703
Commission expenses	8,743		5		8,748
Loss from operations	(15)		(77)		(92)
Net loss	(1,109)		(77)		(1,186)
Nine Months Ended September 30, 2018
Revenue	$	115,182	$	—	$	115,182
Marketing expenses	2,455		613		3,068
Commission expenses	26,949		(3)		26,946
Income from operations	2,097		(610)		1,487
Net income (loss)	87		(610)		(523)

Balance Sheet

	As of September 30, 2018
(select lines)	As Reported		Adjustments		Balances without Adoption of 606
ASSETS:
Accounts receivable	$	6,147	$	1,850	$	7,997
Contract assets	638		(638)		—
Prepaid expenses and other current assets	3,783		26		3,809
Deferred subscription solicitation and commission costs	—		1,027		1,027
Contact costs	380		(380)		—
Total assets	37,736		1,885		39,621
LIABILITIES AND STOCKHOLDERS' EQUITY
Commissions payable	$	356	$	(267)	$	89
Contract liabilities, current	4,075		1,212		5,287
Other long-term liabilities	1,711		—		1,711
Accumulated deficit	(118,552)		940		(117,612)
Total liabilities and stockholders' equity	37,736		1,885		39,621

Statement of Cash Flows

	Nine Months Ended September 30, 2018
(select lines)	As Reported		Adjustments		Balances without Adoption of 606
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss)	$	87	$	(610)	$	(523)
Adjustments to reconcile net income to cash flows from operating activities:
Amortization of deferred subscription solicitation costs	—		2,432		2,432
Amortization of contract costs	646		(646)		—
Changes in assets and liabilities:
Accounts receivable	1,583		(1,387)		196
Contract assets	(1,537)		1,537		—
Prepaid expenses, other current assets and other assets	(139)		(26)		(165)
Deferred subscription solicitation and commission costs	—		(1,804)		(1,804)
Contract costs	(704)		704		—
Commissions payable	(3)		(49)		(52)
Contract liabilities, current	(2,323)		(151)		(2,474)
Net cash provided by operating activities	3,520		—		3,520

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 includes controls for performing a completeness assessment over the lease population, reviewing and measuring all forms of leases and analyzing the practical expedients. In accordance with ASU 2018-11 "Targeted Improvements," issued in July 2018, we expect to apply the new lease requirements as of January 1, 2019 under the modified retrospective approach and recognize a cumulative-effect adjustment, if any, at the date of initial application, rather than restate comparative periods.

We did not identify any embedded leases in our existing contracts that require bifurcation under Topic 842. However, we expect the adoption of Topic 842 will have a material impact to our condensed consolidated balance sheets due to the recognition of right-of-use assets and lease liabilities principally for certain leases currently accounted for as operating leases. As of September 30, 2018, we had an estimated $4.2 million in undiscounted future minimum lease commitments,

as reported in Note 14, of which $1.6 million has a commencement date of January 1, 2019 and will not be included in the adoption impact but will be evaluated under Topic 842 in the year ended December 31, 2019.

In addition, we evaluated our deferred rent amount in our condensed consolidated balance sheets, which is exclusively for our operating leases, and concluded that the balance of the historical lease incentives would appropriately reduce the right of use asset at adoption. As of September 30, 2018, our deferred rent balance was $657 thousand, as reported in Note 15.

We are continuing to finalize the impact of adoption to our condensed consolidated financial statements, including disclosures, accounting policies, business processes and internal controls, as well as income tax impacts, which we anticipate will not have a financial statement impact due to the valuation allowance.

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 whether our refund history would be 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.

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.

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Accounting Standards Updates (Tables)

9 Months Ended

Sep. 30, 2018

New Accounting Pronouncements or Change in Accounting Principle [Line Items]

Schedule of New Accounting Pronouncements and Changes in Accounting Principles

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, 2018	Modified retrospective 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, 2019	Modified retrospective with the cumulative effect of initially applying these updates recognized at the date of initial application.	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, 2018	Retrospective	We adopted this update as of January 1, 2018, and there was no material impact to our condensed consolidated financial statements.
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, 2018	Prospective	Upon adoption, there was no material impact to our condensed consolidated financial statements.
ASU 2018-15, Intangibles (Topic 350)	The amendments in this update align the requirements for capitalizing implementation costs incurred in a hosting arrangement that is a service contract with those incurred to develop or obtain internal-use software. The update requires the entity to determine which implementation costs to capitalize and expense over the term of the hosting arrangement.	January 1, 2020	Prospective or Retrospective	We are currently in the planning stage and have not yet begun implementation of the new standard. We have not yet determined the potential impact to our condensed consolidated financial statements.

Adjustments for New Accounting Pronouncement

New Accounting Pronouncements or Change in Accounting Principle [Line Items]

Schedule of New Accounting Pronouncements and Changes in Accounting Principles

The following tables summarize the impacts of adopting Topic 606 on select lines of our unaudited condensed consolidated financial statements (all tables in thousands):

Statements of Operations

(select lines)	As Reported		Adjustments		Balances without Adoption of 606
Three Months Ended September 30, 2018
Revenue	$	37,485	$	—	$	37,485
Marketing expenses	631		72		703
Commission expenses	8,743		5		8,748
Loss from operations	(15)		(77)		(92)
Net loss	(1,109)		(77)		(1,186)
Nine Months Ended September 30, 2018
Revenue	$	115,182	$	—	$	115,182
Marketing expenses	2,455		613		3,068
Commission expenses	26,949		(3)		26,946
Income from operations	2,097		(610)		1,487
Net income (loss)	87		(610)		(523)

Balance Sheet

	As of September 30, 2018
(select lines)	As Reported		Adjustments		Balances without Adoption of 606
ASSETS:
Accounts receivable	$	6,147	$	1,850	$	7,997
Contract assets	638		(638)		—
Prepaid expenses and other current assets	3,783		26		3,809
Deferred subscription solicitation and commission costs	—		1,027		1,027
Contact costs	380		(380)		—
Total assets	37,736		1,885		39,621
LIABILITIES AND STOCKHOLDERS' EQUITY
Commissions payable	$	356	$	(267)	$	89
Contract liabilities, current	4,075		1,212		5,287
Other long-term liabilities	1,711		—		1,711
Accumulated deficit	(118,552)		940		(117,612)
Total liabilities and stockholders' equity	37,736		1,885		39,621

Statement of Cash Flows

	Nine Months Ended September 30, 2018
(select lines)	As Reported		Adjustments		Balances without Adoption of 606
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss)	$	87	$	(610)	$	(523)
Adjustments to reconcile net income to cash flows from operating activities:
Amortization of deferred subscription solicitation costs	—		2,432		2,432
Amortization of contract costs	646		(646)		—
Changes in assets and liabilities:
Accounts receivable	1,583		(1,387)		196
Contract assets	(1,537)		1,537		—
Prepaid expenses, other current assets and other assets	(139)		(26)		(165)
Deferred subscription solicitation and commission costs	—		(1,804)		(1,804)
Contract costs	(704)		704		—
Commissions payable	(3)		(49)		(52)
Contract liabilities, current	(2,323)		(151)		(2,474)
Net cash provided by operating activities	3,520		—		3,520

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Revenue Recognition (Tables)

9 Months Ended

Sep. 30, 2018

Revenue from Contract with Customer [Abstract]

Disaggregation of Revenue

The following table disaggregates our revenue by major source for the three and nine months ended September 30, 2018 (in thousands):

	Personal Information Services		Insurance and Other Consumer Services		Total
Three months ended September 30, 2018
Primary geographical markets:
United States	$	32,723	$	1,501	$	34,224
Canada	3,261		—		3,261
Total revenue	$	35,984	$	1,501	$	37,485
Major service lines:
Identity Guard® and Identity Guard® with Watson™	$	13,270	$	—	$	13,270
Canadian business	3,261		—		3,261
U.S. financial institutions	18,527		—		18,527
Breach services & other	926		1,501		2,427
Total revenue	$	35,984	$	1,501	$	37,485
Timing of revenue recognition:
Products and services transferred over time	$	35,984	$	1,501	$	37,485
Products transferred at a point in time	—		—		—
Total revenue	$	35,984	$	1,501	$	37,485
Nine months ended September 30, 2018
Primary geographical markets:
United States	$	100,993	$	4,531	$	105,524
Canada	9,658		—		9,658
Total revenue	$	110,651	$	4,531	$	115,182
Major service lines:
Identity Guard® and Identity Guard® with Watson™	$	40,178	$	—	$	40,178
Canadian business	9,658		—		9,658
U.S. financial institutions	56,941		—		56,941
Breach services & other	3,874		4,531		8,405
Total revenue	$	110,651	$	4,531	$	115,182
Timing of revenue recognition:
Products and services transferred over time	$	110,258	$	4,531	$	114,789
Products transferred at a point in time	393		—		393
Total revenue	$	110,651	$	4,531	$	115,182

Contract with Customer, Asset and Liability

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, Current		Contract Liabilities, Non-Current
Balance as of December 31, 2017	$	8,225	$	—	$	7,759	$	—
Increase (decrease), net	(2,078)		638		(3,684)		30
Balance as of September 30, 2018	$	6,147	$	638	$	4,075	$	30

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Discontinued Operations and Assets and Liabilities Held for Sale (Tables)

9 Months Ended

Sep. 30, 2018

Discontinued Operations and Disposal Groups [Abstract]

Summary of components of loss from discontinued operations

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 September 30, 2017		Nine Months Ended September 30, 2017
Major classes of line items constituting loss from discontinued operations:
Marketing expenses	$	(1)	$	(18)
Cost of revenue	—		(4)
General and administrative expenses	(500)		(1,718)
Impairment	—		(180)
Depreciation and amortization	(1)		(1)
Loss from discontinued operations before income taxes	(502)		(1,921)
Loss on disposal of discontinued operations	(528)		(528)
Total loss from discontinued operations, net of tax	$	(1,030)	$	(2,449)

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Earnings (Loss) Per Common Share (Tables)

9 Months Ended

Sep. 30, 2018

Earnings Per Share [Abstract]

Reconciliation of Basic Loss Per Common Share to Diluted Loss Per Common Share

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 September 30,				Nine Months Ended September 30,
	2018		2017		2018		2017
Net (loss) income—basic and diluted:
(Loss) income from continuing operations	$	(1,109)	$	(2,966)	$	87	$	(14,951)
Loss from discontinued operations	—		(1,030)		—		(2,449)
Net (loss) income—basic and diluted	$	(1,109)	$	(3,996)	$	87	$	(17,400)
Weighted average common shares outstanding:
Weighted average common shares outstanding—basic	24,395		23,953		24,306		23,818
Dilutive effect of common stock equivalents	—		—		381		—
Weighted average common shares outstanding—diluted	24,395		23,953		24,687		23,818
Basic (loss) earnings per common share:
(Loss) income from continuing operations	$	(0.05)	$	(0.12)	$	—	$	(0.63)
Loss from discontinued operations	—		(0.05)		—		(0.10)
Basic net (loss) income per common share	$	(0.05)	$	(0.17)	$	—	$	(0.73)
Diluted (loss) earnings per common share:
(Loss) income from continuing operations	$	(0.05)	$	(0.12)	$	—	$	(0.63)
Loss from discontinued operations	—		(0.05)		—		(0.10)
Diluted net (loss) income per common share	$	(0.05)	$	(0.17)	$	—	$	(0.73)

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Fair Value Measurement (Tables)

9 Months Ended

Sep. 30, 2018

Fair Value Disclosures [Abstract]

Fair Value Measurements, Nonrecurring

The fair value of our instruments measured on a non-recurring basis as of September 30, 2018 and December 31, 2017 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	$	—

Fair Value Inputs, Assets, Quantitative Information

The following is quantitative information about our significant unobservable inputs used in our Level 3 fair value measurements (dollars in thousands):

	September 30, 2018		Valuation Technique	Unobservable Inputs	Quantitative Inputs Used for Original Warrant		Quantitative Inputs Used for Replacement Warrant (1)
Warrant	$	2,840	Monte Carlo	Volatility of underlying	50.0	%	55.0	%
				Risk-free rate	1.78	%	2.02	%
				Dividend yield	—	%	—	%
				Probability of Designated Event (2)	0% - 50%		0% - 50%
				Timing of Designated Event (2)	3-5 years from issuance		3-5 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 the year ended December 31, 2017. 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.

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Prepaid Expenses and Other Current Assets (Tables)

9 Months Ended

Sep. 30, 2018

Deferred Costs, Capitalized, Prepaid, and Other Assets Disclosure [Abstract]

Components of Prepaid Expenses and Other Current Assets

The components of our prepaid expenses and other current assets are as follows (in thousands):

	September 30, 2018		December 31, 2017
Prepaid services	$	294	$	533
Other prepaid contracts	2,891		2,132
Restricted cash	240		240
Other	358		327
Total	$	3,783	$	3,232

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Contract Costs (Tables)

9 Months Ended

Sep. 30, 2018

Revenue from Contract with Customer [Abstract]

Contract Costs

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 September 30, 2018 (in thousands):

	September 30, 2018
Costs to obtain (commissions)	$	354
Costs to fulfill	26
Total contract costs	$	380

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Internally Developed Capitalized Software (Tables)

9 Months Ended

Sep. 30, 2018

Property, Plant and Equipment [Line Items]

Summary of Internally Developed Capitalized Software

Activity in our internally developed capitalized software during the nine months ended September 30, 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
Additions	2,625		—		2,625
Depreciation expense	—		(3,343)		(3,343)
Balance at September 30, 2018	$	21,228	$	(15,172)	$	6,056
Balance at December 31, 2016	$	15,015	$	(7,931)	$	7,084
Additions	2,703		—		2,703
Depreciation expense	—		(2,864)		(2,864)
Balance at September 30, 2017	$	17,718	$	(10,795)	$	6,923

Amortization Expense for Future Periods

We estimate that we will have the following amortization expense for the future periods indicated below (in thousands):

For the remaining three months ending December 31, 2018	$	20
For the years ending December 31:
2019	80
2020	80
Total	$	180

Depreciation Expense Related to Capitalized Software

Property, Plant and Equipment [Line Items]

Amortization Expense for Future Periods

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 three months ending December 31, 2018	$	1,007
For the years ending December 31:
2019	3,452
2020	1,419
2021	178
Total	$	6,056

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Goodwill and Intangibles (Tables)

9 Months Ended

Sep. 30, 2018

Goodwill and Intangible Assets Disclosure [Abstract]

Changes in Carrying Amount of Goodwill

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 September 30, 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

Amortizable Intangible Assets

Our intangible assets consisted of the following (in thousands):

	Gross Carrying Amount		Accumulated Amortization		Impairment		Net Carrying Amount
As of September 30, 2018:
Customer related	$	38,831	$	(38,831)	$	—	$	—
Marketing related	2,727		(2,727)		—		—
Technology related	1,979		(1,799)		—		180
Total amortizable intangible assets at September 30, 2018	$	43,537	$	(43,357)	$	—	$	180
As of December 31, 2017:
Customer related	$	38,831	$	(38,831)	$	—	$	—
Marketing related	2,727		(2,709)		—		18
Technology related	1,739		(1,699)		—		40
Total amortizable intangible assets at December 31, 2017	$	43,297	$	(43,239)	$	—	$	58

Amortization Expense for Future Periods

We estimate that we will have the following amortization expense for the future periods indicated below (in thousands):

For the remaining three months ending December 31, 2018	$	20
For the years ending December 31:
2019	80
2020	80
Total	$	180

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Accrued Expenses and Other Current Liabilities (Tables)

9 Months Ended

Sep. 30, 2018

Accrued Liabilities and Other Liabilities [Abstract]

Accrued Expenses and Other Current Liabilities

The components of our accrued expenses and other current liabilities are as follows (in thousands):

	September 30, 2018		December 31, 2017
Accrued marketing	$	129	$	155
Accrued cost of sales, including credit bureau costs	5,146		5,044
Accrued general and administrative expense and professional fees	1,241		570
Insurance premiums	338		340
Estimated liability for non-income business taxes	892		783
Other	792		1,641
Total	$	8,538	$	8,533

As of September 30, 2018, "Other" includes a short-term commitment for software licenses of $208 thousand. Under this agreement, we will make monthly installment payments of $23 thousand, including interest, through July 2019.

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Accrued Payroll and Employee Benefits (Tables)

9 Months Ended

Sep. 30, 2018

Payables and Accruals [Abstract]

Components of Accrued Payroll and Employee Benefits

The components of our accrued payroll and employee benefits are as follows (in thousands): 

	September 30, 2018		December 31, 2017
Accrued payroll	$	193	$	808
Accrued benefits	244		408
Accrued severance	115		285
Total accrued payroll and employee benefits	$	552	$	1,501

Schedule of Restructuring Reserve by Type of Cost

The following table summarizes our accrued severance activity (in thousands):

	Three Months Ended September 30,				Nine Months Ended September 30,
	2018		2017		2018		2017
Balance, beginning of period	$	38	$	1,297	$	285	$	1,440
Adjustments to expense	77		6		248		1,500
Payments	—		(841)		(418)		(2,478)
Balance, end of period	$	115	$	462	$	115	$	462

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Commitments and Contingencies (Tables)

9 Months Ended

Sep. 30, 2018

Commitments and Contingencies Disclosure [Abstract]

Minimum Fixed Commitments Related to All Non-Cancellable Leases

We have entered into long-term operating lease agreements for office space and capital leases for fixed assets. The minimum fixed commitments related to all non-cancellable leases are as follows (in thousands):

	Operating Leases		Capital Leases
For the remaining three months ending December 31, 2018	$	574	$	67
For the years ending December 31:
2019	1,977		400
2020	608		20
2021	403		7
2022	314		—
2023	317		—
Total minimum lease payments	$	4,193	494
Less: amount representing interest			(45)
Present value of minimum lease payments			449
Less: current obligation			(328)
Long-term obligations under capital lease			$	121

Non Income Business Tax Liability Activity

Our products and services are subject to indirect tax obligations, including sales and use taxes, in certain states with which we are currently compliant, and taxability is generally determined by statutory state laws and regulations as well as an assessment of nexus, if applicable. Whether sales of our services are subject to additional states’ indirect taxes is uncertain, due in part to the unique nature of our services and the relationships through which our services are offered, as well as changing state laws and interpretations of those laws. Therefore, we periodically analyze our facts and circumstances related to potential indirect tax obligations in state and other jurisdictions. The following table summarizes our non-income business tax liability activity (in thousands):

	Nine Months Ended September 30,
	2018		2017
Balance at beginning of period	$	783	$	94
Adjustments to existing liabilities	109		1,461
Payments	—		(94)
Balance at end of period	$	892	$	1,461

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Other Long-Term Liabilities (Tables)

9 Months Ended

Sep. 30, 2018

Other Liabilities Disclosure [Abstract]

Other Long-Term Liabilities

The components of our other long-term liabilities are as follows (in thousands):

	September 30, 2018		December 31, 2017
Deferred rent	$	657	$	1,223
Uncertain tax positions, interest and penalties not recognized	1,022		1,669
Contract liabilities, non-current	30		—
Accrued general and administrative expenses	2		3
Total other long-term liabilities	$	1,711	$	2,895

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Debt and Other Financing (Table)

9 Months Ended

Sep. 30, 2018

Debt Disclosure [Abstract]

Summary of Minimum Required Maturities

Under the Credit Agreement and Bridge Notes, minimum required maturities were as follows (in thousands):

For the remaining three months ending December 31, 2018	$	14,500
For the year ending December 31, 2019	4,000
Total outstanding as of September 30, 2018	$	18,500

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Stockholders' Equity (Tables)

9 Months Ended

Sep. 30, 2018

Disclosure of Compensation Related Costs, Share-based Payments [Abstract]

Summary of Stock Option Activity

The following table summarizes our stock option activity during the nine months ended September 30, 2018:

	Number of Shares	Weighted-Average Exercise Price		Aggregate Intrinsic Value		Weighted-Average Remaining Contractual Term
				(In thousands)		(In years)
Outstanding at December 31, 2017	2,933,232	$	3.82
Granted	539,000	$	2.04
Canceled	(714,345)	$	3.63
Outstanding at September 30, 2018	2,757,887	$	3.52	$	5	7.22
Exercisable at September 30, 2018	416,792	$	4.66	$	—	1.40

Summary of RSUs Activity

The following table summarizes the activity of our RSUs during the nine months ended September 30, 2018:

	Number of RSUs	Weighted-Average Grant Date Fair Value
Outstanding at December 31, 2017	2,737,353	$	3.83
Granted	120,000	$	2.32
Canceled (1)	(719,775)	$	3.72
Vested	(293,492)	$	3.94
Outstanding at September 30, 2018	1,844,086	$	3.75

____________________

1. Includes shares net-settled to cover statutory employee taxes related to the vesting of restricted stock awards, which increased treasury shares by 15 thousand and 68 thousand in the nine months ended September 30, 2018 and 2017, respectively.

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Segment and Geographic Information (Tables)

9 Months Ended

Sep. 30, 2018

Segment Reporting [Abstract]

Schedule of Segment Information

The following table sets forth segment information for the three and nine months ended September 30, 2018 and 2017 (in thousands):

	Personal Information Services		Insurance and Other Consumer Services		Bail Bonds Industry Solutions		Corporate		Consolidated
Three months ended September 30, 2018
Revenue	$	35,984	$	1,501	$	—	$	—	$	37,485
Depreciation	1,584		3		—		—		1,587
Amortization	20		—		—		—		20
Income (loss) from operations	246		574		—		(835)		(15)
(Loss) income from continuing operations before income taxes	(628)		574		—		(835)		(889)
Three months ended September 30, 2017
Revenue	$	37,845	$	1,403	$	—	$	—	$	39,248
Depreciation	1,355		23		—		—		1,378
Amortization	29		—		—		—		29
(Loss) income from operations	(1,155)		386		—		(1,487)		(2,256)
(Loss) income from continuing operations before income taxes	(1,859)		386		—		(1,487)		(2,960)
Nine months ended September 30, 2018
Revenue	$	110,651	$	4,531	$	—	$	—	$	115,182
Depreciation	4,587		17		—		—		4,604
Amortization	118		—		—		—		118
Income (loss) from operations	2,841		1,671		—		(2,415)		2,097
Income (loss) from continuing operations before income taxes	528		1,671		—		(2,415)		(216)
Nine months ended September 30, 2017
Revenue	$	114,832	$	4,617	$	182	$	—	$	119,631
Depreciation	3,880		86		—		—		3,966
Amortization	123		—		—		—		123
(Loss) income from operations	(6,514)		1,226		(46)		(6,353)		(11,687)
(Loss) income from continuing operations before income taxes	(9,800)		1,225		(46)		(6,353)		(14,974)

The following table sets forth segment information as of September 30, 2018 and December 31, 2017 (in thousands):

	September 30, 2018				December 31, 2017
	Property and Equipment, net		Total Assets		Property and Equipment, net		Total Assets
Segment:
Personal Information Services	$	8,503	$	27,436	$	11,017	$	35,517
Insurance and Other Consumer Services	6		9,796		23		10,159
Corporate	—		504		—		803
Consolidated	$	8,509	$	37,736	$	11,040	$	46,479

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Basis of Presentation, Significant Accounting Policies and Liquidity - Additional Information (Detail)		1 Months Ended	3 Months Ended	9 Months Ended
	Oct. 31, 2018 USD ($)	Apr. 30, 2017 USD ($)	Sep. 30, 2017 USD ($)	Sep. 30, 2018 USD ($) bank	Sep. 30, 2017 USD ($)	Sep. 24, 2018 USD ($)	Jun. 27, 2018 USD ($)	Dec. 31, 2017 USD ($)	Dec. 31, 2016 USD ($)
Finite-Lived Intangible Assets [Line Items]
Long-term line of credit				$ 18,500,000
Cash and cash equivalents			$ 6,970,000	5,789,000	$ 6,970,000			$ 8,502,000	$ 10,857,000
Repayments of debt				7,135,000	13,920,000
Share based compensation				$ 1,979,000	$ 6,582,000
Number of commercial banks requiring cash collateral (in banks) | bank				1
Goodwill				$ 9,763,000				9,763,000
Expected dividend yield of options granted (as a percent)				0.00%
Expected volatility of options granted (as a percent)				52.00%	49.00%
Risk-free interest rate of options granted (as a percent)				2.70%	1.80%
Expected term of options granted				5 years	5 years
Measurement period for historical data				3 years
Commissions, useful life				1 year
Depreciation Expense Related to Capitalized Software
Finite-Lived Intangible Assets [Line Items]
Intangible assets, estimated useful lives				3 years
Minimum
Finite-Lived Intangible Assets [Line Items]
Intangible assets, estimated useful lives				2 years
Commissions, useful life				1 year
Maximum
Finite-Lived Intangible Assets [Line Items]
Intangible assets, estimated useful lives				10 years
Commissions, useful life				2 years
Insurance And Other Consumer Services
Finite-Lived Intangible Assets [Line Items]
Goodwill				$ 347,000				347,000
Personal Information Services
Finite-Lived Intangible Assets [Line Items]
Goodwill				9,416,000				9,416,000
Adjustment to Share-based Compensation Expense
Finite-Lived Intangible Assets [Line Items]
Share based compensation			$ (404,000)		$ 2,000,000.0
Loeb Holding Corporation and David A. McGough Notes | Subsequent Event
Finite-Lived Intangible Assets [Line Items]
Face amount	$ 4,000,000.0
Credit Agreement
Finite-Lived Intangible Assets [Line Items]
Repayments of debt		$ 13,900,000
Credit Agreement | Subsequent Event
Finite-Lived Intangible Assets [Line Items]
Repayments of debt	14,600,000
Crystal Financial S P V L L C | New Credit Agreement
Finite-Lived Intangible Assets [Line Items]
Long-term line of credit				14,500,000				21,500,000
Long-term debt								$ 21,500,000
Bridge Loan
Finite-Lived Intangible Assets [Line Items]
Face amount				4,000,000.0		$ 1,000,000.0	$ 3,000,000.0
Long-term debt				$ 4,000,000.0
Bridge Loan | Loeb Holding Corporation and David A. McGough Notes | Subsequent Event
Finite-Lived Intangible Assets [Line Items]
Face amount	4,000,000.0
Convertible Debt | Senior Secured Convertible Notes | Subsequent Event
Finite-Lived Intangible Assets [Line Items]
Face amount	30,000,000.0
Proceeds from convertible debt	$ 30,000,000.0

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Accounting Standards Updates - Additional Information (Details) - USD ($) $ in Thousands	Sep. 30, 2018	Dec. 31, 2017
New Accounting Pronouncements or Change in Accounting Principle [Line Items]
Future minimum payments due	$ 4,193
Amount excluded from adoption impact	1,600
Deferred rent	$ 657	$ 1,223
Retained Earnings | Accounting Standards Update 2014-09 | Difference between Revenue Guidance in Effect before and after Topic 606
New Accounting Pronouncements or Change in Accounting Principle [Line Items]
Cumulative effect of new accounting principle in period of adoption		$ 1,600

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Accounting Standards Updates - Effect on Statement of Operations (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2018	Sep. 30, 2017	Sep. 30, 2018	Sep. 30, 2017
New Accounting Pronouncements or Change in Accounting Principle [Line Items]
Revenue	$ 37,485	$ 39,248	$ 115,182	$ 119,631
Marketing expenses	631	2,682	2,455	9,294
Commission expenses	8,743	9,462	26,949	28,966
Income (loss) from operations	(15)	(2,256)	2,097	(11,687)
Net income (loss)	(1,109)	$ (3,996)	87	$ (17,400)
Difference between Revenue Guidance in Effect before and after Topic 606
New Accounting Pronouncements or Change in Accounting Principle [Line Items]
Net income (loss)			(610)
Difference between Revenue Guidance in Effect before and after Topic 606 | Accounting Standards Update 2014-09
New Accounting Pronouncements or Change in Accounting Principle [Line Items]
Revenue	0		0
Marketing expenses	72		613
Commission expenses	5		(3)
Income (loss) from operations	(77)		(610)
Net income (loss)	(77)		(610)
Calculated under Revenue Guidance in Effect before Topic 606
New Accounting Pronouncements or Change in Accounting Principle [Line Items]
Revenue	37,485		115,182
Marketing expenses	703		3,068
Commission expenses	8,748		26,946
Income (loss) from operations	(92)		1,487
Net income (loss)	$ (1,186)		$ (523)

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Accounting Standards Updates - Effect on Balance Sheet (Details) - USD ($) $ in Thousands	Sep. 30, 2018	Dec. 31, 2017
ASSETS
Accounts receivable	$ 6,147	$ 8,225
Contract assets	638	0
Prepaid expenses and other current assets	3,783	3,232
Deferred subscription solicitation and commission costs	0	1,655
Contract costs	380	0
Total Assets	37,736	46,479
LIABILITIES AND STOCKHOLDERS’ EQUITY
Commissions payable	356	141
Contract liabilities, current	4,075	7,759
Other long-term liabilities	1,711	2,895
Accumulated deficit	(118,552)	(117,088)
Total liabilities and stockholders' equity	37,736	$ 46,479
Difference between Revenue Guidance in Effect before and after Topic 606 | Accounting Standards Update 2014-09
ASSETS
Accounts receivable	1,850
Contract assets	(638)
Prepaid expenses and other current assets	26
Deferred subscription solicitation and commission costs	1,027
Contract costs	(380)
Total Assets	1,885
LIABILITIES AND STOCKHOLDERS’ EQUITY
Commissions payable	(267)
Contract liabilities, current	1,212
Other long-term liabilities	0
Accumulated deficit	940
Total liabilities and stockholders' equity	1,885
Calculated under Revenue Guidance in Effect before Topic 606
ASSETS
Accounts receivable	7,997
Contract assets	0
Prepaid expenses and other current assets	3,809
Deferred subscription solicitation and commission costs	1,027
Contract costs	0
Total Assets	39,621
LIABILITIES AND STOCKHOLDERS’ EQUITY
Commissions payable	89
Contract liabilities, current	5,287
Other long-term liabilities	1,711
Accumulated deficit	(117,612)
Total liabilities and stockholders' equity	$ 39,621

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Accounting Standards Updates - Effect on Cash Flows (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2018	Sep. 30, 2017	Sep. 30, 2018	Sep. 30, 2017
New Accounting Pronouncements or Change in Accounting Principle [Line Items]
Net income (loss)	$ (1,109)	$ (3,996)	$ 87	$ (17,400)
Adjustments to reconcile net income (loss) to cash flows from operating activities:
Amortization of deferred subscription solicitation costs			0	8,482
Amortization of contract costs			646	0
Changes in assets and liabilities:
Accounts receivable			1,583	1,483
Contract assets			(1,537)
Prepaid expenses, other current assets and other assets			(139)	(412)
Deferred subscription solicitation and commission costs			0	(6,336)
Increase (Decrease) in Contract Costs			(704)	0
Commissions payable			(3)	29
Contract liabilities, current			(2,323)
Net cash provided by operating activities			3,520	$ (4,132)
Difference between Revenue Guidance in Effect before and after Topic 606
New Accounting Pronouncements or Change in Accounting Principle [Line Items]
Net income (loss)			(610)
Adjustments to reconcile net income (loss) to cash flows from operating activities:
Amortization of deferred subscription solicitation costs			2,432
Amortization of contract costs			(646)
Changes in assets and liabilities:
Accounts receivable			(1,387)
Contract assets			1,537
Prepaid expenses, other current assets and other assets			(26)
Deferred subscription solicitation and commission costs			(1,804)
Increase (Decrease) in Contract Costs			704
Commissions payable			(49)
Contract liabilities, current			(151)
Net cash provided by operating activities			0
Difference between Revenue Guidance in Effect before and after Topic 606 | Accounting Standards Update 2014-09
New Accounting Pronouncements or Change in Accounting Principle [Line Items]
Net income (loss)	(77)		(610)
Calculated under Revenue Guidance in Effect before Topic 606
New Accounting Pronouncements or Change in Accounting Principle [Line Items]
Net income (loss)	$ (1,186)		(523)
Adjustments to reconcile net income (loss) to cash flows from operating activities:
Amortization of deferred subscription solicitation costs			2,432
Amortization of contract costs			0
Changes in assets and liabilities:
Accounts receivable			196
Contract assets			0
Prepaid expenses, other current assets and other assets			(165)
Deferred subscription solicitation and commission costs			(1,804)
Increase (Decrease) in Contract Costs			0
Commissions payable			(52)
Contract liabilities, current			(2,474)
Net cash provided by operating activities			$ 3,520

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Revenue Recognition - Additional Information (Details) - USD ($)	3 Months Ended	9 Months Ended
	Sep. 30, 2018	Sep. 30, 2018
Revenue, Initial Application Period Cumulative Effect Transition [Line Items]
Subscription period		1 year
Deferred revenue, revenue recognized	$ 906,000	$ 7,400,000
Minimum
Revenue, Initial Application Period Cumulative Effect Transition [Line Items]
Subscription price per month		$ 4.99
Period of revenue recognition		1 month
Maximum
Revenue, Initial Application Period Cumulative Effect Transition [Line Items]
Subscription price per month		$ 25.00
Period of revenue recognition		1 year

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Revenue Recognition - Disaggregation of Revenue (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2018	Sep. 30, 2017	Sep. 30, 2018	Sep. 30, 2017
Disaggregation of Revenue [Line Items]
Revenue	$ 37,485	$ 39,248	$ 115,182	$ 119,631
Transferred over Time
Disaggregation of Revenue [Line Items]
Revenue	37,485		114,789
Transferred at Point in Time
Disaggregation of Revenue [Line Items]
Revenue	0		393
Identity Guard
Disaggregation of Revenue [Line Items]
Revenue	13,270		40,178
Canadian Business
Disaggregation of Revenue [Line Items]
Revenue	3,261		9,658
U.S. Financial Institutions
Disaggregation of Revenue [Line Items]
Revenue	18,527		56,941
Breach Services and Other
Disaggregation of Revenue [Line Items]
Revenue	2,427		8,405
United States
Disaggregation of Revenue [Line Items]
Revenue	34,224		105,524
Canada
Disaggregation of Revenue [Line Items]
Revenue	3,261		9,658
Personal Information Services
Disaggregation of Revenue [Line Items]
Revenue	35,984		110,651
Personal Information Services | Transferred over Time
Disaggregation of Revenue [Line Items]
Revenue	35,984		110,258
Personal Information Services | Transferred at Point in Time
Disaggregation of Revenue [Line Items]
Revenue	0		393
Personal Information Services | Identity Guard
Disaggregation of Revenue [Line Items]
Revenue	13,270		40,178
Personal Information Services | Canadian Business
Disaggregation of Revenue [Line Items]
Revenue	3,261		9,658
Personal Information Services | U.S. Financial Institutions
Disaggregation of Revenue [Line Items]
Revenue	18,527		56,941
Personal Information Services | Breach Services and Other
Disaggregation of Revenue [Line Items]
Revenue	926		3,874
Personal Information Services | United States
Disaggregation of Revenue [Line Items]
Revenue	32,723		100,993
Personal Information Services | Canada
Disaggregation of Revenue [Line Items]
Revenue	3,261		9,658
Insurance And Other Consumer Services
Disaggregation of Revenue [Line Items]
Revenue	1,501		4,531
Insurance And Other Consumer Services | Transferred over Time
Disaggregation of Revenue [Line Items]
Revenue	1,501		4,531
Insurance And Other Consumer Services | Transferred at Point in Time
Disaggregation of Revenue [Line Items]
Revenue	0		0
Insurance And Other Consumer Services | Identity Guard
Disaggregation of Revenue [Line Items]
Revenue	0		0
Insurance And Other Consumer Services | Canadian Business
Disaggregation of Revenue [Line Items]
Revenue	0		0
Insurance And Other Consumer Services | U.S. Financial Institutions
Disaggregation of Revenue [Line Items]
Revenue	0		0
Insurance And Other Consumer Services | Breach Services and Other
Disaggregation of Revenue [Line Items]
Revenue	1,501		4,531
Insurance And Other Consumer Services | United States
Disaggregation of Revenue [Line Items]
Revenue	1,501		4,531
Insurance And Other Consumer Services | Canada
Disaggregation of Revenue [Line Items]
Revenue	$ 0		$ 0

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Revenue Recognition - Contract Balances (Details) $ in Thousands	9 Months Ended
	Sep. 30, 2018 USD ($)
Change in Contract with Customer, Asset and Liability [Roll Forward]
Accounts Receivable, Opening Balance as of December 31, 2017	$ 8,225
Accounts Receivable, Increase (decrease), net	(2,078)
Accounts Receivable, Ending Balance as of September 30, 2018	6,147
Contract Assets, Opening Balance as of December 31, 2017	0
Contract Assets, Increase (decrease), net	638
Contract Assets, Ending Balance as of September 30, 2018	638
Contract Liabilities, Current, Opening Balance as of December 31, 2017	7,759
Contract Liabilities, Current, Increase (decrease), net	(3,684)
Contract Liabilities, Current, Ending Balance as of September 30, 2018	4,075
Contract Liabilities, Noncurrent, Opening Balance as of December 31, 2017	0
Contract Liabilities, Noncurrent, Increase (decrease), net	30
Contract Liabilities, Noncurrent, Ending Balance as of September 30, 2018	$ 30

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Discontinued Operations and Assets and Liabilities Held for Sale - Additional Information (Details) - USD ($)		3 Months Ended		9 Months Ended
	Jul. 31, 2017	Sep. 30, 2018	Sep. 30, 2017	Sep. 30, 2018	Sep. 30, 2017
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items]
Loss on dispositions of Captira Analytical and Habits at Work		$ 0	$ 0	$ 0	$ (106,000)
Discontinued Operations
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items]
Gain (loss) on disposal of discontinued operations			(528,000)		(528,000)
Discontinued Operations | i4c Innovations
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items]
Gain (loss) on disposal of discontinued operations			(528,000)		(528,000)
Transaction costs of sale of discontinued operation			516,000		516,000
Discontinued Operations | One Health Group, LLC | i4c Innovations
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items]
Proceeds from divestiture of businesses	$ 100
Revenue participation limit	$ 20,000,000.0
Held for sale | Captira
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items]
Gain (loss) on disposal of discontinued operations					(130,000)
Held for sale | Habits at Work
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items]
Loss on dispositions of Captira Analytical and Habits at Work			$ 24,000		$ 24,000

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Discontinued Operations and Assets and Liabilities Held for Sale - Items Included in Statement of Operations (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2018	Sep. 30, 2017	Sep. 30, 2018	Sep. 30, 2017
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items]
Total loss from discontinued operations, net of tax	$ 0	$ (1,030)	$ 0	$ (2,449)
Discontinued Operations
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items]
Marketing expenses		(1)		(18)
Cost of revenue		0		(4)
General and administrative expenses		(500)		(1,718)
Impairment		0		(180)
Depreciation and amortization		(1)		(1)
Loss from discontinued operations before income taxes		(502)		(1,921)
Loss on disposal of discontinued operations		(528)		(528)
Total loss from discontinued operations, net of tax		$ (1,030)		$ (2,449)

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Earnings (Loss) Per Common Share - Additional Information (Detail) - shares shares in Millions	3 Months Ended		9 Months Ended
	Sep. 30, 2018	Sep. 30, 2017	Sep. 30, 2018	Sep. 30, 2017
Earnings Per Share [Abstract]
Common stock and unvested restricted stock units excluded from the computation of diluted loss per common share (in shares)	6.1	6.9	5.7	6.9

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Earnings (Loss) Per Common Share - Reconciliation of Basic Loss Per Common Share to Diluted Loss Per Common Share (Detail) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2018	Sep. 30, 2017	Sep. 30, 2018	Sep. 30, 2017
Net (loss) income—basic and diluted:
(Loss) income from continuing operations	$ (1,109)	$ (2,966)	$ 87	$ (14,951)
Loss from discontinued operations, net of tax	0	(1,030)	0	(2,449)
NET (LOSS) INCOME	$ (1,109)	$ (3,996)	$ 87	$ (17,400)
Weighted average common shares outstanding:
Weighted average common shares outstanding—basic (in shares)	24,395	23,953	24,306	23,818
Dilutive effect of common stock equivalents (in shares)	0	0	381	0
Weighted average common shares outstanding—diluted (in shares)	24,395	23,953	24,687	23,818
Basic (loss) earnings per common share:
From continuing operations (in dollars per share)	$ (0.05)	$ (0.12)	$ 0	$ (0.63)
From discontinued operations (in dollars per share)	0	(0.05)	0	(0.10)
Basic net income (loss) per common share (in dollars per share)	(0.05)	(0.17)	0	(0.73)
Diluted (loss) earnings per common share:
Income (loss) from continuing operations (in dollars per share)	(0.05)	(0.12)	0	(0.63)
Loss from discontinued operations (in dollars per share)	0	(0.05)	0	(0.10)
Diluted net income (loss) per common share (in dollars per share)	$ (0.05)	$ (0.17)	$ 0	$ (0.73)

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Fair Value Measurement - Instruments Measured on a Non-recurring Basis (Details) - Fair Value, Measurements, Nonrecurring - USD ($) $ in Thousands	9 Months Ended	12 Months Ended
	Sep. 30, 2018	Dec. 31, 2017
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Warrant, fair value disclosure	$ 2,840	$ 2,840
Total Gains (Losses)	0	0
Fair Value, Inputs, Level 1
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Warrant, fair value disclosure	0	0
Fair Value, Inputs, Level 2
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Warrant, fair value disclosure	0	0
Fair Value, Inputs, Level 3
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Warrant, fair value disclosure	$ 2,840	$ 2,840

XML

Fair Value Measurement - Assumptions (Details) $ in Thousands		9 Months Ended
	Apr. 20, 2017 USD ($)	Sep. 30, 2018 USD ($)	Sep. 30, 2017 USD ($)	Dec. 31, 2017 USD ($)
Fair Value Measurement Inputs and Valuation Techniques [Line Items]
Proceeds from issuance of warrants	$ 2,200	$ 0	$ 1,500
PEAK6
Fair Value Measurement Inputs and Valuation Techniques [Line Items]
Proceeds from issuance of warrants		700
Fair Value, Measurements, Nonrecurring
Fair Value Measurement Inputs and Valuation Techniques [Line Items]
Warrant, fair value disclosure		2,840		$ 2,840
Fair Value, Inputs, Level 3 | Fair Value, Measurements, Nonrecurring
Fair Value Measurement Inputs and Valuation Techniques [Line Items]
Warrant, fair value disclosure		$ 2,840		$ 2,840
Warrant | Monte Carlo | Fair Value, Inputs, Level 3 | Minimum | Fair Value, Measurements, Nonrecurring
Fair Value Measurement Inputs and Valuation Techniques [Line Items]
Timing of Designated Event		3 years
Warrant | Monte Carlo | Fair Value, Inputs, Level 3 | Maximum | Fair Value, Measurements, Nonrecurring
Fair Value Measurement Inputs and Valuation Techniques [Line Items]
Timing of Designated Event		5 years
Replacement Warrant | Monte Carlo | Fair Value, Inputs, Level 3 | Minimum | Fair Value, Measurements, Nonrecurring
Fair Value Measurement Inputs and Valuation Techniques [Line Items]
Timing of Designated Event		3 years
Replacement Warrant | Monte Carlo | Fair Value, Inputs, Level 3 | Maximum | Fair Value, Measurements, Nonrecurring
Fair Value Measurement Inputs and Valuation Techniques [Line Items]
Timing of Designated Event		5 years
Volatility of underlying | Warrant | Monte Carlo | Fair Value, Inputs, Level 3 | Fair Value, Measurements, Nonrecurring
Fair Value Measurement Inputs and Valuation Techniques [Line Items]
Measurement input		0.500
Volatility of underlying | Replacement Warrant | Monte Carlo | Fair Value, Inputs, Level 3 | Fair Value, Measurements, Nonrecurring
Fair Value Measurement Inputs and Valuation Techniques [Line Items]
Measurement input		0.550
Risk-free rate | Warrant | Monte Carlo | Fair Value, Inputs, Level 3 | Fair Value, Measurements, Nonrecurring
Fair Value Measurement Inputs and Valuation Techniques [Line Items]
Measurement input		0.0178
Risk-free rate | Replacement Warrant | Monte Carlo | Fair Value, Inputs, Level 3 | Fair Value, Measurements, Nonrecurring
Fair Value Measurement Inputs and Valuation Techniques [Line Items]
Measurement input		0.0202
Dividend yield | Warrant | Monte Carlo | Fair Value, Inputs, Level 3 | Fair Value, Measurements, Nonrecurring
Fair Value Measurement Inputs and Valuation Techniques [Line Items]
Measurement input		0
Dividend yield | Replacement Warrant | Monte Carlo | Fair Value, Inputs, Level 3 | Fair Value, Measurements, Nonrecurring
Fair Value Measurement Inputs and Valuation Techniques [Line Items]
Measurement input		0
Probability of designated event | Warrant | Monte Carlo | Fair Value, Inputs, Level 3 | Minimum | Fair Value, Measurements, Nonrecurring
Fair Value Measurement Inputs and Valuation Techniques [Line Items]
Measurement input		0
Probability of designated event | Warrant | Monte Carlo | Fair Value, Inputs, Level 3 | Maximum | Fair Value, Measurements, Nonrecurring
Fair Value Measurement Inputs and Valuation Techniques [Line Items]
Measurement input		0.50
Probability of designated event | Replacement Warrant | Monte Carlo | Fair Value, Inputs, Level 3 | Minimum | Fair Value, Measurements, Nonrecurring
Fair Value Measurement Inputs and Valuation Techniques [Line Items]
Measurement input		0
Probability of designated event | Replacement Warrant | Monte Carlo | Fair Value, Inputs, Level 3 | Maximum | Fair Value, Measurements, Nonrecurring
Fair Value Measurement Inputs and Valuation Techniques [Line Items]
Measurement input		0.50

XML

Prepaid Expenses and Other Current Assets - Components of Prepaid Expenses and Other Current Assets (Detail) - USD ($) $ in Thousands	Sep. 30, 2018	Dec. 31, 2017
Deferred Costs, Capitalized, Prepaid, and Other Assets Disclosure [Abstract]
Prepaid services	$ 294	$ 533
Other prepaid contracts	2,891	2,132
Restricted cash	240	240
Other	358	327
Total	$ 3,783	$ 3,232

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Contract Costs (Details) - USD ($) $ in Thousands	3 Months Ended	9 Months Ended
	Sep. 30, 2018	Sep. 30, 2018	Sep. 30, 2017
Capitalized Contract Cost [Line Items]
Contract costs	$ 380	$ 380
Amortized contract costs		646	$ 0
Costs to Obtain
Capitalized Contract Cost [Line Items]
Contract costs	354	354
Amortized contract costs	196	587
Costs to Fulfill
Capitalized Contract Cost [Line Items]
Contract costs	26	26
Amortized contract costs	$ 26	$ 59

XML

Internally Developed Capitalized Software - Additional Information (Detail) - USD ($) $ in Thousands	3 Months Ended	9 Months Ended
	Sep. 30, 2018	Sep. 30, 2018
Software Development-in-Progress
Property, Plant and Equipment [Line Items]
Fixed asset impairment charge	$ 64	$ 64

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Internally Developed Capitalized Software - Summary of Internally Developed Capitalized Software (Detail) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2018	Sep. 30, 2017	Sep. 30, 2018	Sep. 30, 2017
Movement in Property, Plant and Equipment [Roll Forward]
Net Carrying Amount, Beginning Balance			$ 11,040
Depreciation expense	$ (1,587)	$ (1,378)	(4,604)	$ (3,966)
Net Carrying Amount, Ending Balance	8,509		8,509
Depreciation Expense Related to Capitalized Software
Movement in Property, Plant and Equipment [Roll Forward]
Gross Carrying Amount, Beginning Balance			18,603	15,015
Accumulated Depreciation, Beginning Balance			(11,829)	(7,931)
Net Carrying Amount, Beginning Balance			6,774	7,084
Additions			2,625	2,703
Depreciation expense			(3,343)	(2,864)
Gross Carrying Amount, Ending Balance	21,228	17,718	21,228	17,718
Accumulated Depreciation, Ending Balance	(15,172)	(10,795)	(15,172)	(10,795)
Net Carrying Amount, Ending Balance	$ 6,056	$ 6,923	$ 6,056	$ 6,923

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Internally Developed Capitalized Software - Amortization Expense for Future Periods (Detail) - USD ($) $ in Thousands	Sep. 30, 2018	Dec. 31, 2017
Future Depreciation Expense
For the remaining three months ending December 31, 2018	$ 20
2019	80
2020	80
Net Carrying Amount	180	$ 58
Depreciation Expense Related to Capitalized Software
Future Depreciation Expense
For the remaining three months ending December 31, 2018	1,007
2019	3,452
2020	1,419
2021	178
Net Carrying Amount	$ 6,056

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Goodwill and Intangibles - Changes in Carrying Amount of Goodwill (Detail) - USD ($) $ in Thousands	Sep. 30, 2018	Dec. 31, 2017
Goodwill [Line Items]
Gross carrying amount	$ 45,918	$ 45,918
Accumulated impairment losses	(36,155)	(36,155)
Net carrying value of goodwill	9,763	9,763
Personal Information Services
Goodwill [Line Items]
Gross carrying amount	35,253	35,253
Accumulated impairment losses	(25,837)	(25,837)
Net carrying value of goodwill	9,416	9,416
Insurance And Other Consumer Services
Goodwill [Line Items]
Gross carrying amount	10,665	10,665
Accumulated impairment losses	(10,318)	(10,318)
Net carrying value of goodwill	$ 347	$ 347

XML

Goodwill and Intangibles - Amortizable Intangible Assets (Detail) - USD ($) $ in Thousands	Sep. 30, 2018	Dec. 31, 2017
Finite-Lived Intangible Assets [Line Items]
Gross Carrying Amount	$ 43,537	$ 43,297
Accumulated Amortization	(43,357)	(43,239)
Impairment	0	0
Net Carrying Amount	180	58
Customer Related
Finite-Lived Intangible Assets [Line Items]
Gross Carrying Amount	38,831	38,831
Accumulated Amortization	(38,831)	(38,831)
Impairment	0	0
Net Carrying Amount	0	0
Marketing Related
Finite-Lived Intangible Assets [Line Items]
Gross Carrying Amount	2,727	2,727
Accumulated Amortization	(2,727)	(2,709)
Impairment	0	0
Net Carrying Amount	0	18
Technology Related
Finite-Lived Intangible Assets [Line Items]
Gross Carrying Amount	1,979	1,739
Accumulated Amortization	(1,799)	(1,699)
Impairment	0	0
Net Carrying Amount	$ 180	$ 40

XML

Goodwill and Intangibles - Additional Information (Detail) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2018	Sep. 30, 2017	Sep. 30, 2018	Sep. 30, 2017
Finite-Lived Intangible Assets [Line Items]
Aggregate amortization expense	$ 20	$ 29	$ 118	$ 123
Minimum
Finite-Lived Intangible Assets [Line Items]
Intangible assets, estimated useful lives			2 years
Maximum
Finite-Lived Intangible Assets [Line Items]
Intangible assets, estimated useful lives			10 years

XML

Goodwill and Intangibles - Amortization Expense for Future Periods (Detail) - USD ($) $ in Thousands	Sep. 30, 2018	Dec. 31, 2017
Estimated Amortization in Future Periods
For the remaining three months ending December 31, 2018	$ 20
2019	80
2020	80
Net Carrying Amount	$ 180	$ 58

XML

Accrued Expenses and Other Current Liabilities - Accrued Expenses and Other Current Liabilities (Detail) - USD ($)	Sep. 30, 2018	Dec. 31, 2017	Sep. 30, 2017	Dec. 31, 2016
Accrued Liabilities and Other Liabilities [Abstract]
Accrued marketing	$ 129,000	$ 155,000
Accrued cost of sales, including credit bureau costs	5,146,000	5,044,000
Accrued general and administrative expense and professional fees	1,241,000	570,000
Insurance premiums	338,000	340,000
Estimated liability for non-income business taxes	892,000	783,000	$ 1,461,000	$ 94,000
Other	792,000	1,641,000
Total	8,538,000	$ 8,533,000
Software commitments	208,000
Monthly installment payment	$ 23,000

XML

Accrued Payroll and Employee Benefits - Components of Accrued Payroll and Employee Benefits (Detail) - USD ($) $ in Thousands	Sep. 30, 2018	Jun. 30, 2018	Dec. 31, 2017	Sep. 30, 2017	Jun. 30, 2017	Dec. 31, 2016
Payables and Accruals [Abstract]
Accrued payroll	$ 193		$ 808
Accrued benefits	244		408
Accrued severance	115	$ 38	285	$ 462	$ 1,297	$ 1,440
Total accrued payroll and employee benefits	$ 552		$ 1,501

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Accrued Payroll and Employee Benefits - Severance Cost Schedule (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2018	Sep. 30, 2017	Sep. 30, 2018	Sep. 30, 2017
Restructuring Reserve [Roll Forward]
Balance, beginning of period	$ 38	$ 1,297	$ 285	$ 1,440
Adjustments to expense	77	6	248	1,500
Payments	0	(841)	(418)	(2,478)
Balance, end of period	$ 115	$ 462	$ 115	$ 462

XML

Commitments and Contingencies - Minimum Fixed Commitments Related to All Non-Cancellable Leases (Detail) - USD ($) $ in Thousands	Sep. 30, 2018	Dec. 31, 2017
Operating Leases
For the remaining three months ending December 31, 2018	$ 574
2019	1,977
2020	608
2021	403
2022	314
Thereafter	317
Total minimum lease payments	4,193
Capital Leases
For the remaining three months ending December 31, 2018	67
2019	400
2020	20
2021	7
2022	0
Thereafter	0
Total minimum lease payments	494
Less: amount representing interest	(45)
Present value of minimum lease payments	449
Less: current obligation	(328)	$ (423)
Long-term obligations under capital lease	$ 121	$ 392

XML

Commitments and Contingencies - Additional Information (Detail) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2018	Sep. 30, 2017	Sep. 30, 2018	Sep. 30, 2017
Commitments and Contingencies Disclosure [Abstract]
Rental expenses included in general and administrative expenses	$ 642	$ 1,000	$ 2,000	$ 2,500
Contract obligation future minimum non-refundable total payment	$ 57,200		$ 57,200

XML

Commitments and Contingencies - Non Income Business Tax Liability Activity (Detail) - USD ($) $ in Thousands	9 Months Ended
	Sep. 30, 2018	Sep. 30, 2017
Indirect Tax Obligations
Beginning balance	$ 783	$ 94
Adjustments to existing liabilities	109	1,461
Payments	0	(94)
Ending balance	$ 892	$ 1,461

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Other Long-Term Liabilities (Detail) - USD ($) $ in Thousands	Sep. 30, 2018	Dec. 31, 2017
Other Liabilities Disclosure [Abstract]
Deferred rent	$ 657	$ 1,223
Uncertain tax positions, interest and penalties not recognized	1,022	1,669
Contract liabilities, non-current	30	0
Accrued general and administrative expenses	2	3
Total other long-term liabilities	$ 1,711	$ 2,895

XML

Debt and Other Financing - Additional Information (Detail) - USD ($) $ / shares in Units, shares in Thousands					1 Months Ended		3 Months Ended		9 Months Ended		12 Months Ended
	Oct. 31, 2018	Jun. 08, 2018	Apr. 03, 2018	Apr. 20, 2017	Apr. 30, 2017	Mar. 31, 2016	Sep. 30, 2018	Sep. 30, 2017	Sep. 30, 2018	Sep. 30, 2017	Dec. 31, 2017	Sep. 24, 2018	Jun. 27, 2018	Jun. 07, 2018
Line Of Credit Facility [Line Items]
Long-term line of credit							$ 18,500,000		$ 18,500,000
Repayments of debt									7,135,000	$ 13,920,000
Loss on extinguishment of debt							0	$ 0	0	1,525,000
Payment for debt extinguishment or debt prepayment cost									45,000	45,000
Unamortized debt issuance costs							265,000		265,000
Proceeds from issuance of warrants				$ 2,200,000					0	$ 1,500,000
Warrants							2,840,000		2,840,000		$ 2,840,000
Treasury stock acquired (in shares)					419
Treasury stock acquired, average cost (in dollars per share)					$ 3.60
Treasury Stock, value acquired					$ 1,500,000
Remaining authorized repurchase amount							$ 15,300,000		$ 15,300,000
Original Warrant
Line Of Credit Facility [Line Items]
Proceeds from issuance of warrants					$ 1,500,000
Number of securities called by warrants (in shares)					1,500
Exercise price of warrants (in dollars per share)					$ 5.00
Replacement Warrant
Line Of Credit Facility [Line Items]
Proceeds from issuance of warrants					$ 700,000
Number of securities called by warrants (in shares)							1,500		1,500
Exercise price of warrants (in dollars per share)					$ 2.50		$ 2.50		$ 2.50
Term of warrant					5 years
Bridge Loan
Line Of Credit Facility [Line Items]
Face amount							$ 4,000,000.0		$ 4,000,000.0			$ 1,000,000.0	$ 3,000,000.0
Long-term debt							4,000,000.0		4,000,000.0
Interest payable							84,000		84,000
Minimum proceeds from sale of converted securities													10,000,000
Credit Agreement
Line Of Credit Facility [Line Items]
Repayments of debt					$ 13,900,000
Loss on extinguishment of debt											1,500,000
Payment for debt extinguishment or debt prepayment cost											487,000
Credit Agreement | Subsequent Event
Line Of Credit Facility [Line Items]
Repayments of debt	$ 14,600,000
Credit Agreement | Crystal Financial S P V L L C
Line Of Credit Facility [Line Items]
Maximum borrowing capacity						$ 20,000,000.0
Credit Agreement | Crystal Financial S P V L L C | Minimum
Line Of Credit Facility [Line Items]
Credit agreement, minimum borrowed interest rate						10.50%
Credit Agreement | Crystal Financial S P V L L C | LIBOR
Line Of Credit Facility [Line Items]
Credit agreement, basis spread on variable interest rate						10.00%
New Credit Agreement
Line Of Credit Facility [Line Items]
Credit agreement, minimum borrowed interest rate					10.91%
Percentage of minimum cash required on total outstanding amount					20.00%
New Credit Agreement | Crystal Financial S P V L L C
Line Of Credit Facility [Line Items]
Long-term line of credit							14,500,000		14,500,000		21,500,000
Long-term debt											21,500,000
Valuation allowances and reserves, balance											$ 764,000
Bridge Loan, Loeb Holding | Bridge Loan
Line Of Credit Facility [Line Items]
Face amount												$ 1,000,000.0	2,000,000.0
Long-term debt							3,100,000		3,100,000
Bridge Loan, David A. McGough | Bridge Loan
Line Of Credit Facility [Line Items]
Face amount													$ 1,000,000.0
Long-term debt							$ 1,000,000.0		$ 1,000,000.0
Credit Agreement, Amendment Three
Line Of Credit Facility [Line Items]
Partial prepayment amount allowed			$ 1,000,000.0
Credit Agreement, Amendment Three | Debt Covenant, Term One
Line Of Credit Facility [Line Items]
Percentage of minimum cash required on total outstanding amount			20.00%
Minimum cash to be maintained			$ 2,500,000
Credit Agreement, Amendment Three | Debt Covenant, Term Two
Line Of Credit Facility [Line Items]
Percentage of minimum cash required on total outstanding amount			20.00%
Minimum cash to be maintained			$ 3,000,000.0
Credit Agreement, Amendment Four
Line Of Credit Facility [Line Items]
Debt Instrument, periodic payment, principal		$ 1,500,000
Prepayment fee percent		1.50%												3.00%
Subordinate debt amount		$ 15,000,000												$ 2,000,000
Senior Secured Convertible Notes | Convertible Debt | Subsequent Event
Line Of Credit Facility [Line Items]
Face amount	30,000,000.0
Proceeds from convertible debt	30,000,000.0
Loeb Holding Corporation and David A. McGough Notes | Subsequent Event
Line Of Credit Facility [Line Items]
Face amount	$ 4,000,000.0
Loeb Holding Corporation and David A. McGough Notes | Bridge Loan | Subsequent Event
Line Of Credit Facility [Line Items]
Credit agreement, minimum borrowed interest rate	6.00%
Face amount	$ 4,000,000.0

XML

Debt and Other Financing - Summary of Minimum Required Maturities (Detail) - New Credit Agreement and Bridge Notes $ in Thousands	Sep. 30, 2018 USD ($)
Debt Instrument, Redemption [Line Items]
For the remaining three months ending December 31, 2018	$ 14,500
For the year ending December 31, 2019	4,000
Total outstanding as of September 30, 2018	$ 18,500

XML

Income Taxes (Detail) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2018	Sep. 30, 2017	Sep. 30, 2018	Sep. 30, 2017
Income Tax Disclosure [Abstract]
Effective tax rate	(24.70%)	(0.20%)	140.30%	0.20%
Provisional income tax expense from change in enacted rate	$ 212

XML

Stockholders' Equity - Additional Information (Detail) - USD ($) $ / shares in Units, $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2018	Sep. 30, 2017	Sep. 30, 2018	Sep. 30, 2017	Dec. 31, 2017	Apr. 30, 2017
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Weighted average grant date fair value (in dollars per share)	$ 0.84
Options exercised in period (in shares)				0
Increase in treasury shares (in shares)			15,000	68,000
Replacement Warrant
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Number of securities called by warrants (in shares)	1,500,000		1,500,000
Exercise price of warrants (in dollars per share)	$ 2.50		$ 2.50			$ 2.50
Stock Option
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Options to purchase shares outstanding under share based compensation (in shares)	2,757,887		2,757,887		2,933,232
Weighted average grant date fair value (in dollars per share)			$ 0.96	$ 1.94
Granted, Number of Shares (in shares)		0	539,000
Options exercised in period (in shares)			0
Unrecognized compensation cost	$ 390		$ 390
Expected weighted-average period for recognized compensation cost			1 year
Stock Option | General and Administrative Expenses
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Share-based compensation expense	25	$ 170	$ (183)	$ 2,700
RSUs
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Unrecognized compensation cost	$ 2,900		$ 2,900
Expected weighted-average period for recognized compensation cost			1 year 7 days
RSUs granted in period (in shares)	535,000
RSUs | General and Administrative Expenses
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Share-based compensation expense	$ 935	$ 1,600	$ 2,200	$ 4,000
2014 Stock Incentive Plan
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Shares remaining to be granted under stock option plan (in shares)	4,000,000.0		4,000,000.0
Options to purchase shares outstanding under share based compensation (in shares)	4,600,000		4,600,000

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Stockholders' Equity - Summary of Stock Option Activity (Detail) - Stock Option - USD ($) $ / shares in Units, $ in Thousands	3 Months Ended	9 Months Ended
	Sep. 30, 2017	Sep. 30, 2018
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding [Roll Forward]
Outstanding, Number of Shares, Beginning balance (in shares)		2,933,232
Granted, Number of Shares (in shares)	0	539,000
Canceled, Number of Shares (in shares)		(714,345)
Outstanding, Number of Shares, Ending balance (in shares)		2,757,887
Exercisable, Number of Shares (in shares)		416,792
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding, Weighted Average Exercise Price [Abstract]
Outstanding, Weighted-Average Exercise Price, Beginning balance (in dollars per share)		$ 3.82
Granted, Weighted-Average Exercise Price (in dollars per share)		2.04
Canceled, Weighted-Average Exercise Price (in dollars per share)		3.63
Outstanding, Weighted-Average Exercise Price, Ending balance (in dollars per share)		3.52
Exercisable, Weighted-Average Exercise Price (in dollars per share)		$ 4.66
Share-based Compensation Arrangement by Share-based Payment Award, Options, Additional Disclosures
Outstanding, Aggregate Intrinsic Value		$ 5
Exercisable, Aggregate Intrinsic Value		$ 0
Outstanding, Weighted-Average Remaining Contractual Term		7 years 2 months 19 days
Exercisable, Weighted-Average Remaining Contractual Life		1 year 4 months 24 days

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Stockholders' Equity - Summary of RSUs Activity (Detail) - $ / shares	9 Months Ended
	Sep. 30, 2018	Sep. 30, 2017
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Nonvested, Weighted Average Grant Date Fair Value
Increase in treasury shares (in shares)	15,000	68,000
RSUs
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Nonvested, Number of Shares [Roll Forward]
Outstanding, Number of RSUs, Beginning balance (in shares)	2,737,353
Granted, Number of RSUs (in shares)	120,000
Canceled, Number of RSUs (in shares)	(719,775)
Vested, Number of RSUs (in shares)	(293,492)
Outstanding, Number of RSUs, Ending balance (in shares)	1,844,086
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Nonvested, Weighted Average Grant Date Fair Value
Outstanding, Weighted-Average Grant Date Fair Value, Beginning balance (in dollars per share)	$ 3.83
Granted, Weighted-Average Grant Date Fair Value (in dollars per share)	2.32
Canceled, Weighted-Average Grant Date Fair Value (in dollars per share)	3.72
Vested, Weighted-Average Grant Date Fair Value (in dollars per share)	3.94
Outstanding, Weighted-Average Grant Date Fair Value, Ending balance (in dollars per share)	$ 3.75

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Related Party Transactions - Additional Information (Detail) - USD ($) shares in Thousands			3 Months Ended		9 Months Ended
	Jul. 31, 2017	Apr. 20, 2017	Sep. 30, 2018	Sep. 30, 2017	Sep. 30, 2018	Sep. 30, 2017	Sep. 24, 2018	Jun. 27, 2018	Dec. 31, 2017
Related Party Transaction [Line Items]
Payments for repurchase of common stock		$ 1,500,000			$ 0	$ 1,510,000
Proceeds from issuance of warrants		$ 2,200,000			0	1,500,000
Interest expense, related party			$ 527,000	$ 485,000	1,700,000	864,000
Long-term line of credit			$ 18,500,000		$ 18,500,000
Number of company shares owned by related party (in shares)			419		419
Intersections Inc. | Loeb Holding Corporation
Related Party Transaction [Line Items]
Ownership percentage by noncontrolling owners			40.00%		40.00%
New Credit Agreement | Crystal Financial S P V L L C
Related Party Transaction [Line Items]
Long-term debt									$ 21,500,000
Long-term line of credit			$ 14,500,000		$ 14,500,000				21,500,000
Bridge Loan
Related Party Transaction [Line Items]
Face amount			4,000,000.0		4,000,000.0		$ 1,000,000.0	$ 3,000,000.0
Long-term debt			4,000,000.0		4,000,000.0
Bridge Loan | Bridge Loan, David A. McGough
Related Party Transaction [Line Items]
Face amount								1,000,000.0
Long-term debt			1,000,000.0		1,000,000.0
Bridge Loan | Bridge Loan, Loeb Holding
Related Party Transaction [Line Items]
Face amount							$ 1,000,000.0	$ 2,000,000.0
Long-term debt			3,100,000		3,100,000
Digital Matrix Systems
Related Party Transaction [Line Items]
Payment of monthly installments for monitoring credit and on-line credit analysis services			541,000	491,000	1,800,000	1,900,000
Amount owed to related parties			108,000		108,000				$ 178,000
One Health Group, LLC | Voyce
Related Party Transaction [Line Items]
Proceeds from divestiture of businesses	$ 100
Revenue participation limit	$ 20,000,000.0
Monde of Events
Related Party Transaction [Line Items]
Amounts of related party transaction			3,000	$ 13,000	13,000	$ 63,000
Due to related parties			$ 0		$ 0

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Segment and Geographic Information - Additional Information (Detail)	9 Months Ended
	Sep. 30, 2018 segment
Segment Reporting [Abstract]
Number of reportable segments	2

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Segment and Geographic Information - Schedule of Segment Information (Detail) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2018	Sep. 30, 2017	Sep. 30, 2018	Sep. 30, 2017
Segment Reporting Information [Line Items]
Revenue	$ 37,485	$ 39,248	$ 115,182	$ 119,631
Depreciation	1,587	1,378	4,604	3,966
Amortization	20	29	118	123
Income (loss) from operations	(15)	(2,256)	2,097	(11,687)
(Loss) income from continuing operations before income taxes	(889)	(2,960)	(216)	(14,974)
Personal Information Services
Segment Reporting Information [Line Items]
Revenue	35,984		110,651
Insurance And Other Consumer Services
Segment Reporting Information [Line Items]
Revenue	1,501		4,531
Operating Segments | Personal Information Services
Segment Reporting Information [Line Items]
Revenue	35,984	37,845	110,651	114,832
Depreciation	1,584	1,355	4,587	3,880
Amortization	20	29	118	123
Income (loss) from operations	246	(1,155)	2,841	(6,514)
(Loss) income from continuing operations before income taxes	(628)	(1,859)	528	(9,800)
Operating Segments | Insurance And Other Consumer Services
Segment Reporting Information [Line Items]
Revenue	1,501	1,403	4,531	4,617
Depreciation	3	23	17	86
Amortization	0	0	0	0
Income (loss) from operations	574	386	1,671	1,226
(Loss) income from continuing operations before income taxes	574	386	1,671	1,225
Operating Segments | Bail Bonds Industry Solutions
Segment Reporting Information [Line Items]
Revenue	0	0	0	182
Depreciation	0	0	0	0
Amortization	0	0	0	0
Income (loss) from operations	0	0	0	(46)
(Loss) income from continuing operations before income taxes	0	0	0	(46)
Corporate, Non-Segment
Segment Reporting Information [Line Items]
Revenue	0	0	0	0
Depreciation	0	0	0	0
Amortization	0	0	0	0
Income (loss) from operations	(835)	(1,487)	(2,415)	(6,353)
(Loss) income from continuing operations before income taxes	$ (835)	$ (1,487)	$ (2,415)	$ (6,353)

XML

Segment and Geographic Information - Schedule of Assets by Segment (Details) - USD ($) $ in Thousands	Sep. 30, 2018	Dec. 31, 2017
Segment Reporting Information [Line Items]
Property and Equipment, net	$ 8,509	$ 11,040
Total Assets	37,736	46,479
Operating Segments | Personal Information Services
Segment Reporting Information [Line Items]
Property and Equipment, net	8,503	11,017
Total Assets	27,436	35,517
Operating Segments | Insurance And Other Consumer Services
Segment Reporting Information [Line Items]
Property and Equipment, net	6	23
Total Assets	9,796	10,159
Corporate, Non-Segment
Segment Reporting Information [Line Items]
Property and Equipment, net	0	0
Total Assets	$ 504	$ 803

XML

Subsequent Events (Detail) - USD ($)		1 Months Ended	9 Months Ended
	Oct. 31, 2018	Apr. 30, 2017	Sep. 30, 2018	Sep. 30, 2017	Nov. 01, 2019	Sep. 24, 2018	Jun. 27, 2018
Subsequent Event [Line Items]
Repayments of debt			$ 7,135,000	$ 13,920,000
Intersections Inc. | WC SACD One Merger Sub, Inc. | Subsequent Event
Subsequent Event [Line Items]
Consideration transferred per share (in usd per share)	$ 3.68
Minimum required percentage of total outstanding shares tendered	50.00%
Minimum required percentage of total shares tendered by stockholders other than directors, executive officers and rollover participants	50.00%
Bridge Loan
Subsequent Event [Line Items]
Face amount			$ 4,000,000.0			$ 1,000,000.0	$ 3,000,000.0
Bridge Loan | Subsequent Event
Subsequent Event [Line Items]
Interest expense on debt	$ 87,000
Credit Agreement
Subsequent Event [Line Items]
Repayments of debt		$ 13,900,000
Credit Agreement | Subsequent Event
Subsequent Event [Line Items]
Repayments of debt	14,600,000
Loeb Holding Corporation and David A. McGough Notes | Subsequent Event
Subsequent Event [Line Items]
Face amount	4,000,000.0
Loeb Holding Corporation and David A. McGough Notes | Bridge Loan | Subsequent Event
Subsequent Event [Line Items]
Face amount	$ 4,000,000.0
Debt instrument stated interest rate	6.00%
Increase in stated interest rate in event of default	2.00%
Conversion price of convertible debt (in usd per share)	$ 2.27
Debt covenant, maximum percentage of outstanding shares to be issued	19.90%
Senior Secured Convertible Notes | Convertible Debt | Subsequent Event
Subsequent Event [Line Items]
Face amount	$ 30,000,000.0
Proceeds from convertible debt	$ 30,000,000.0
Forecast | Loeb Holding Corporation and David A. McGough Notes | Bridge Loan | Subsequent Event
Subsequent Event [Line Items]
Debt instrument stated interest rate					8.00%