Significant Accounting Policies (Policies)

12 Months Ended

Dec. 31, 2017

Use of Estimates, Policy [Policy Text Block]

Use of Estimates:

The preparation of the consolidated financial statements in conformity with U.S. generally accepted accounting principles requires management to make estimates, judgments and assumptions. The Company’s management believes that the estimates, judgments and assumptions used are reasonable based upon information available at the time they are made. These estimates, judgments and assumptions can affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the dates of the financial statements, and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. On an ongoing basis, the Company’s management evaluates estimates, including those related to accounts receivable and sales allowances, fair values of stock-based awards, deferred taxes and income tax uncertainties, and contingent liabilities. Such estimates are based on historical experience and on various other assumptions that are believed to be reasonable, the results of which form the basis for making judgments about the carrying values of assets and liabilities.

Foreign Currency Transactions and Translations Policy [Policy Text Block]

Financial Statements in U.S. Dollars:

Most of the revenues and costs of VSI are denominated in United States dollars (“dollars”). Some of the subsidiaries’ revenues and costs are primarily incurred in Euros, the Pound Sterling, Canadian dollars, Australian dollars and NIS; however, the Company’s management believes that the dollar is the primary currency of the economic environment in which VSI and each of its subsidiaries operate. Thus, the dollar is the Company’s functional and reporting currency.

Accordingly, transactions denominated in currencies other than the functional currency are re-measured to the functional currency in accordance with ASC

No.

830,

“Foreign Currency Matters” at the exchange rate at the date of the transaction or the average exchange rate in the quarter. At the end of each reporting period, financial assets and liabilities are re-measured to the functional currency using exchange rates in effect at the balance sheet date. Non-financial assets and liabilities are re-measured at historical exchange rates. Gains and losses related to re-measurement are recorded as financial income (expense) in the consolidated statements of operations as appropriate.

Consolidation, Policy [Policy Text Block]

c.	Principles of Consolidation:

The consolidated financial statements include the accounts of VSI and its wholly-owned subsidiaries, VSL, VSUK, VSG, VSF, VSC, VIRE and VAUS. All intercompany transactions and balances have been eliminated upon consolidation.

Cash and Cash Equivalents, Unrestricted Cash and Cash Equivalents, Policy [Policy Text Block]

Cash, Cash Equivalents and Short-Term Investments:

The Company accounts for investments in marketable securities in accordance with ASC

No.

320,

“Investments—Debt and Equity Securities”. The Company considers all highly liquid investments with a maturity of

three

months or less when purchased to be cash equivalents. Cash and cash equivalents consist of cash on hand, highly liquid investments in money market funds and various deposit accounts.

The Company considers all high quality investments purchased with original maturities at the date of purchase greater than

three

months to be short-term investments. Investments are available to be used for current operations and are, therefore, classified as current assets even though maturities

may

extend beyond

one

year. Cash equivalents and short-term investments are classified as available for sale and are, therefore, recorded at fair value on the consolidated balance sheet, with any unrealized gains and losses reported in accumulated other comprehensive income (loss), which is reflected as a separate component of stockholders’ equity in the Company’s consolidated balance sheets, until realized. The Company uses the specific identification method to compute gains and losses on the investments. The amortized cost of securities is adjusted for amortization of premiums and accretion of discounts to maturity. Such amortization and accretion is included as a component of financial income, net in the consolidated statement of operations. Cash, cash equivalents and short-term investments consist of the following (in thousands):

	As of December 31, 2017
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Loss			Fair Value

Cash and cash equivalents
Cash	$	49,819	$	-	$	-		$	49,819
Money market funds		6,870		-		-			6,870
Total	$	56,689	$	-	$	-		$	56,689

Short-term investments
US Treasury securities	$	39,758	$	*)	$	(27	)	$	39,731
Term bank deposits		40,137		-		-			40,137
Total	$	79,895	$	-	$	(27	)	$	79,868

*) Represents an amount lower than

$1.

All the US Treasury securities in short-term investments have a stated effective maturity of less than

months as of

December 31, 2017.

	As of December 31, 2016
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Loss		Fair Value

Cash and cash equivalents
Cash	$	42,175	$	-	$	-	$	42,175
Money market funds		6,140		-		-		6,140
Total	$	48,315	$	-	$	-	$	48,315

Short-term investments
Term bank deposits	$	65,493		-		-	$	65,493
Total	$	65,493	$	-	$	-	$	65,493

The gross unrealized loss related to these short-term investments was due primarily to changes in interest rates. The Company reviews its short-term investments on a regular basis to evaluate whether or

not

any security has experienced an other than temporary decline in fair value. The Company considers factors such as length of time and extent to which the market value has been less than the cost, the financial condition and near-term prospects of the issuer and its intent to sell, or whether it is more likely than

not

the Company will be required to sell the investment before recovery of the investment’s amortized cost basis. If the Company believes that an other than temporary decline exists in

one

of these securities, the Company writes down these investments to fair value. For debt securities, the portion of the write-down related to credit loss would be recorded to other income (expense), net in the Company’s consolidated statements of operations. Any portion

not

related to credit loss would be recorded to accumulated other comprehensive income (loss), which is reflected as a separate component of stockholders’ equity in the Company’s condensed consolidated balance sheets. During the year ended

December 31, 2017,

the Company did

not

consider any of its investments to be other-than-temporarily impaired.

A short-term bank deposit is a deposit with a maturity of more than

three

months but less than

one

year. Deposits in U.S. dollars bear interest at rates ranging from

0.60%

1.35%

and

0.55%

1.11%,

per annum, as of

December

31,

2017

and

2016,

respectively. Deposits in NIS bear interest at rates of

0.03%

and

0.15%

per annum as of

December

31,

2017

and

2016,

respectively. Short-term investments are presented at cost which approximates market value due to their short maturities.

Cash and Cash Equivalents, Restricted Cash and Cash Equivalents, Policy [Policy Text Block]

Restricted Cash:

Restricted cash is primarily invested in certificates of deposit and is used mostly as security for the Company’s lease commitments.

The Company had

short-term restricted cash as of

December

31,

2017

and

2016,

respectively. The Company had long-term restricted cash in the amount of

$547

and

$488

as of

December

31,

2017

and

2016,

respectively.

Property, Plant and Equipment, Policy [Policy Text Block]

Property and Equipment:

Property and equipment are stated at cost, net of accumulated depreciation. Depreciation is calculated using the straight-line method over the estimated useful lives of the assets at the following annual rates:

Impairment or Disposal of Long-Lived Assets, Policy [Policy Text Block]

Impairment of Long-Lived Assets:

The Company’s long-lived assets are reviewed for impairment in accordance with ASC

No.

360

“Property, Plant and Equipment” whenever events or changes in circumstances indicate that the carrying amount of an asset (or asset group)

may

not

be recoverable. Recoverability of assets (or asset group) to be held and used is measured by a comparison of the carrying amount of an asset to the future undiscounted cash flows expected to be generated by the assets. If such assets are considered to be impaired, the impairment to be recognized is measured by the amount by which the carrying amount of the assets exceeds the fair value of the assets. During the years ended

December

31,

2017,

2016

and

2015,

impairment losses have been recorded.

Lessee, Leases [Policy Text Block]

Long-Term Lease Deposits:

Long-term lease deposits include long-term deposits for offices.

Revenue Recognition, Policy [Policy Text Block]

Revenue Recognition:

The Company generates revenues in the form of software license fees and related maintenance and services fees. Maintenance and services primarily consist of fees for maintenance services (including support and unspecified upgrades and enhancements when and if they are available) and professional services (including training) that are

not

essential to functionality of the Company’s software. The Company sells its products worldwide directly to a network of distributors and VARs.

The Company accounts for the sale of perpetual software in accordance with ASC

No.

985

605,

“Software Revenue Recognition”. As required by ASC

985

605,

the Company determines the value of the software component of its multiple-element arrangements using the residual method when vendor specific objective evidence (VSOE) of fair value exists for the undelivered elements of maintenance, and professional services agreements. VSOE is based on the price charged when an element is sold separately or renewed. Under the residual method, the fair value of the undelivered elements is deferred, and the remaining portion of the arrangement fee is allocated to the delivered elements and is recognized as revenue, when all ASC

985

605

criteria for revenue recognition are met.

The Company determines the fair value based on the stand alone sales price charged for maintenance, and professional services. The Company has defined classes of transactions, based on the value of licensed software products purchased from the Company. The Company prices renewals for each class of transaction as a fixed percentage of the total gross value of licensed software products the customer purchased.

Software license revenues are recognized when persuasive evidence of an arrangement exists, the software license has been delivered, there are

uncertainties surrounding product acceptance, there are

significant future performance obligations, the license fees are fixed or determinable and collection of the license fee is considered probable. Fees for arrangements with payment terms extending beyond customary payment terms are considered

not

to be fixed or determinable, in which case revenue is deferred and recognized when payments become due from the customer provided that all other revenue recognition criteria have been met.

The Company recognizes revenues from the sale of term license arrangements, ratably, on a straight-line basis, over the term of the underlying contract, and is typically up to

one

year.

The Company recognizes revenues from maintenance ratably over the term of the underlying maintenance contract term. The term of the maintenance contract is usually

one

year.

Revenues from professional services consist mostly of time and material services and, accordingly, are generally recognized as the services are performed or when the service term has expired.

Professional services bundled with licensed software and other software related elements are

not

essential to the functionality of the other elements of the arrangement. Revenues allocable to the services are recognized as the services are performed or when the service term has expired, using VSOE for such services.

Deferred revenues represent mostly unrecognized fees billed or collected for maintenance and professional services.

The Company does

not

grant a right of return to its customers, except for

one

of its resellers. During the years ended

December

31,

2017,

2016

and

2015,

there were

returns from this reseller.

Cost of Sales, Policy [Policy Text Block]

Cost of Revenues:

Cost of revenues consists of the cost of maintenance and services, resulting from costs associated with support, and professional services.

k.	Accounting for Stock-Based Compensation:

The Company accounts for stock-based compensation in accordance with ASC

No.

718,

“Compensation-Stock Compensation”. ASC

No.

718

requires companies to estimate the fair value of equity-based payment awards on the date of grant using an Option-Pricing Model (“OPM”). The value of the portion of the award that is ultimately expected to vest is recognized as an expense over the requisite service periods in the Company’s consolidated statements of operations.

The Company recognizes compensation expenses for the value of its awards granted based on the straight-line method over the requisite service period of each of the awards.

The Company applies ASC

718

and ASC

505

50,

“Equity-Based Payments to Non-Employees” with respect to options issued to non-employee consultants. Accordingly, the Company uses option valuation models to measure the fair value of the options at the measurement date as defined in ASC

505

50.

The Company selected the Black-Scholes-Merton option pricing model as the most appropriate fair value method for its stock options awards, whereas the fair value of restricted stock units is based on the market value of the underlying shares at the date of grant.

The fair value of options granted to employees and non-employee directors is estimated at the date of grant using the following weighted average assumptions:

For the year ended

December 31, 2017,

there were

stock options granted. For the years ended

December 31, 2016

and

2015,

dividend yield was

0%,

expected volatility was

62.1%

and

65.0%,

respectively, risk-free interest was

1.42%

and

1.94%

2.00%,

respectively, and expected life was

6.25.

The Company used its historical volatility in accordance with ASC

718.

The computation of volatility uses historical volatility derived from the Company’s exchange traded shares. Expected term of options granted is calculated based on the simplified method, in accordance with SAB

110,

(i.e., as the average between the vesting period and the contractual term of the options). The risk free interest rate assumption is the implied yield currently available on United States treasury

zero

-coupon issues with a remaining term equal to the expected life of the Company’s options. The dividend yield assumption is based on the Company’s historical experience and expectation of

future dividend payouts and

may

be subject to substantial change in the future. The Company has historically

not

paid cash dividends and has

foreseeable plans to pay cash dividends in the future.

The non-cash compensation expenses related to employees and consultants for the years ended

December

31,

2017,

2016

and

2015

amounted to

$19,835,

$12,938

and

$7,794,

respectively.

Effective as of

January 1, 2017,

the Company adopted Accounting Standards Update

2016

09,

“Compensation—Stock Compensation (Topic

718

)” (“ASU

2016

09”

) on a modified, retrospective basis. ASU

2016

permits entities to make an accounting policy election related to how forfeitures will impact the recognition of compensation cost for stock-based compensation: to estimate the total number of awards for which the requisite service period will

not

be rendered or to account for forfeitures as they occur. Upon adoption of ASU

2016

09,

the Company elected to change its accounting policy to account for forfeitures as they occur. The change was applied on a modified, retrospective basis with a cumulative-effect adjustment to retained earnings of

$2,616

(which increased the accumulated deficit) as of

January 1, 2017.

ASU

2016

also eliminates the requirement that excess tax benefits be realized as a reduction in current taxes payable before the associated tax benefit can be recognized as an increase in paid in capital. Approximately

$7,131

of federal net operating losses and

$718

of state net operating losses, neither of which was included in the deferred tax assets recognized in the statement of financial position as of

December 31, 2016,

have been attributed to tax deduction for stock-based compensation in excess of the related book expense. Under ASU

2016

09,

these previously unrecognized deferred tax assets will be recognized on a modified, retrospective basis as of the start of the year in which the ASU

2016

is adopted; in this case as of

January 1, 2017.

The U.S. federal and state net operating losses and credits that were recognized as of

January 1, 2017

have been offset by a valuation allowance. As a result, there is

cumulative-effect adjustment to retained earnings as of

January 1, 2017.

Additionally, ASU

2016

addresses the presentation of excess tax benefits and employee taxes paid on the statement of cash flows. The Company is now required to present excess tax benefits as an operating activity on the statement of cash flows rather than as a financing activity. The Company adopted this change prospectively.

Research, Development, and Computer Software, Policy [Policy Text Block]

Research and Development Costs:

Research and development costs are charged to the statement of operations as incurred. ASC

No.

985

20,

“Software-Costs of Software to Be Sold, Leased, or Marketed,” requires capitalization of certain software development costs subsequent to the establishment of technological feasibility.

Based on the Company’s product development process, technological feasibility is established upon the completion of a working model. The Company does

not

incur material costs between the completion of the working model and the point at which the product is ready for general release. Therefore, research and development costs are charged to the statement of operations as incurred.

Income Tax, Policy [Policy Text Block]

Income Taxes:

The Company accounts for income taxes in accordance with ASC

No.

740,

using the liability method whereby deferred tax assets and liability account balances are determined based on the differences between financial reporting and the tax basis for assets and liabilities and are measured using the enacted tax rates and laws that will be in effect when the differences are expected to reverse. The Company provides a valuation allowance, if necessary, to reduce deferred tax assets to the amounts that are more likely-than-

not

to be realized.

ASC

740

contains a

two

-step approach to recognizing and measuring a liability for uncertain tax positions. The

first

step is to evaluate the tax position taken or expected to be taken in a tax return by determining if the weight of available evidence indicates that it is more likely than

not

that, on an evaluation of the technical merits, the tax position will be sustained on audit, including resolution of any related appeals or litigation processes. The

second

step is to measure the tax benefit as the largest amount that is more than

50%

likely to be realized upon ultimate settlement. The Company accrues interest and penalties related to unrecognized tax provisions in its taxes on income.

Derivatives, Policy [Policy Text Block]

n.	Derivative Instruments:

The Company’s primary objective for holding derivative instruments is to reduce its exposure to foreign currency rate changes. The Company reduces its exposure by entering into forward foreign exchange contracts with respect to operating expenses that are forecast to be incurred in currencies other than the U.S. dollar. A majority of the Company’s revenues and operating expenditures are transacted in U.S. dollars. However, certain operating expenditures are incurred in or exposed to other currencies, primarily the NIS.

The Company has established forecasted transaction currency risk management programs to protect against fluctuations in fair value and the volatility of future cash flows caused by changes in exchange rates. The Company’s currency risk management program includes forward foreign exchange contracts designated as cash flow hedges. These forward foreign exchange contracts generally mature within

months. The Company does

not

enter into derivative financial instruments for trading purposes.

Derivative instruments measured at fair value and their classification on the consolidated balance sheets are presented in the following table (in thousands):

	Assets as of December 31, 2017				Liabilities as of December 31, 2016
	Notional Amount		Fair Value		Notional Amount		Fair Value
Foreign Exchange Forward Contract Derivatives in cash flow hedging relationships—included in other current assets and accrued expenses and other short term liabilities	$	1,746	$	163	$	46,116	$	(479	)

For the years ended

December 31, 2017

and

2016,

the consolidated statements of operations reflect a gain of approximately

$2,649

and

$332,

respectively, related to the effective portion of foreign currency forward contracts. There was

ineffective portion for the years ended

December 31, 2017

and

2016.

Concentration Risk, Credit Risk, Policy [Policy Text Block]

Concentrations of Credit Risks:

Financial instruments that potentially subject the Company to concentrations of credit risk consist principally of cash, cash equivalents, short-term investments and trade receivables.

The Company’s cash, cash equivalents and short-term investments are invested in major banks mainly in the United States but also in the United Kingdom, France, Germany, Israel, Canada, Ireland and Australia. Such deposits in the United States

may

be in excess of insured limits and are

not

insured in other jurisdictions. The Company maintains cash and cash equivalents with diverse financial institutions and monitors the amount of credit exposure to each financial institution.

The Company’s trade receivables are geographically diversified and derived primarily from sales to a network of distributors and VARs mainly in the United States and Europe. Concentration of credit risk with respect to trade receivables is limited by credit limits, ongoing credit evaluation and account monitoring procedures. The Company performs ongoing credit evaluations of its channel partners and establishes an allowance for doubtful accounts based upon a specific review of all significant outstanding invoices. The Company writes off receivables when they are deemed uncollectible and having exhausted all collection efforts.

Retirement And Severance Pay, Policy [Policy Text Block]

p.	Retirement and Severance Pay:

VSI makes available to its employees a retirement plan (the “U.S. Plan”) that qualifies as a deferred salary arrangement under Section

401

(k) of the Internal Revenue Code of

1986,

as amended (“the Code”). Participants in the U.S. Plan

may

elect to defer a portion of their pre-tax earnings, up to the Internal Revenue Service annual contribution limit. VSI matches

100%

of each participant’s contributions up to a maximum of

of the participant’s total pay and

50%

of each participant’s contributions on contributions between

and

of the participant’s total pay. Each participant

may

contribute up to

80%

of total remuneration up to the Internal Revenue Service’s annual contribution limit. Contributions to the U.S. Plan are recorded during the year contributed as an expense in the consolidated statements of income.

Pursuant to Israel’s Severance Pay Law, Israeli employees are entitled to severance pay equal to

one

month’s salary for each year of employment, or a portion thereof. The employees of the Israeli subsidiary elected to be included under section

of the Severance Pay Law,

1963

(“section

14”

). According to this section, these employees are entitled only to monthly deposits, at a rate of

8.33%

of their monthly salary, made in their name with insurance companies. Payments in accordance with section

release the Company from any future severance payments (under the above Israeli Severance Pay Law) in respect of those employees; therefore, related assets and liabilities are

not

presented in the balance sheet.

The Company’s liability for severance pay for the employees of its French subsidiary is calculated pursuant to French law, according to which French employees are entitled to an indemnity (a statutory redundancy). The law provides for the payment of severance payment to any employee working for the French subsidiary for at least a year.

VSUK makes available to certain eligible employees a pension plan whereby participants in the plan

may

elect to defer a portion of their earnings. VSUK matches

100%

of each participant’s contributions up to a maximum of

of the participant’s net pay.

Total Company expenses related to retirement and severance pay amounted to

$4,801,

$3,775

and

$3,085

for the years ended

December

31,

2017,

2016

and

2015,

respectively. The amount of severance payable included in other liabilities as of

December 31, 2017

and

2016

$1,781

and

$1,664,

respectively.

Fair Value of Financial Instruments, Policy [Policy Text Block]

Fair Value of Financial Instruments:

Fair value is an exit price, representing the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants. As such, fair value is a market-based measurement that should be determined based on assumptions that market participants would use in pricing an asset or a liability.

three

tier fair value hierarchy is established as a basis for considering such assumptions and for inputs used in the valuation methodologies in measuring fair value:

•

Level

Observable inputs that reflect quoted prices (unadjusted) for identical assets or liabilities in active markets.

•

Level

Observable inputs that reflect quoted prices for identical assets or liabilities in markets that are

not

active; quoted prices for similar assets or liabilities in active markets; inputs other than quoted prices that are observable for the assets or liabilities; or inputs that are derived principally from or corroborated by observable market data by correlation or other means.

•

Level

Unobservable inputs reflecting our own assumptions incorporated in valuation techniques used to determine fair value. These assumptions are required to be consistent with market participant assumptions that are reasonably available.

The fair value hierarchy also requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value.

The carrying amounts of cash and cash equivalents, trade receivables, short-term investments and trade payables approximate their fair value due to the short-term maturity of such instruments.

Earnings Per Share, Policy [Policy Text Block]

Basic and Diluted Net Loss Per Share:

Basic net loss per share is computed by dividing the net loss by the weighted-average number of shares of common stock outstanding during the period.

Diluted net loss per share is computed by giving effect to all potential shares of common stock, including stock options, to the extent dilutive.

Basic and diluted net loss per share was the same for each period presented as the inclusion of all potential shares of common stock outstanding would have been anti-dilutive.

Commitments and Contingencies, Policy [Policy Text Block]

s.	Contingent Liabilities:

The Company accounts for its contingent liabilities in accordance with ASC

No.

450

“Contingencies”. A provision is recorded when it is both probable that a liability has been incurred and the amount of the loss can be reasonably estimated.

With respect to legal matters, provisions are reviewed and adjusted to reflect the impact of negotiations, estimated settlements, legal rulings, advice of legal counsel and other information and events pertaining to a particular matter. As of

December

31,

2017

and

2016,

the Company was

not

a party to any litigation that could have a material adverse effect on the Company’s business, financial position, results of operations or cash flows.

Reclassification, Policy [Policy Text Block]

Reclassification:

Certain amounts in prior years' financial statements have been reclassified to conform to the current year's presentation.

New Accounting Pronouncements, Policy [Policy Text Block]

Recently Issued Accounting Pronouncements:

May 2014,

the FASB issued ASU

No.

2014

09,

“Revenue from Contracts with Customers”, an updated standard on revenue recognition

and issued subsequent amendments to the initial guidance in

March 2016,

April 2016,

May 2016

and

December 2016

within ASU

2016

08,

2016

10,

2016

and

2016

20,

respectively

. The new standards provide enhancements to the quality and consistency of how revenue is reported while also improving comparability in the financial statements of companies reporting using IFRS and US GAAP. The core principle of the new standard is for companies to recognize revenue to depict the transfer of goods or services to customers in amounts that reflect the consideration (that is, payment) to which the company expects to be entitled in exchange for those goods or services. The new standard also will result in enhanced disclosures about revenue, provide guidance for transactions that were

not

previously addressed comprehensively (for example, service revenue and contract modifications) and improve guidance for multiple-element arrangements. ASU

2014

was initially scheduled to be effective for annual and interim reporting periods beginning after

December 15, 2016

and

may

be adopted either on a full retrospective or modified retrospective approach. However, on

July 9, 2015,

the FASB approved a

one

year deferral of the effective date of ASU

2014

09.

The revised effective date is for annual reporting periods beginning after

December 15, 2017

and interim periods thereafter, with an early adoption permitted as of the original effective date. The Company has decided to adopt this standard effective

January 1, 2018

using the full retrospective method which will require each prior reporting period presented to be recast in future issuances of the Company’s financial statements. In preparation for adoption of the standard, the Company has implemented internal controls and key system functionality to enable the preparation of financial information and have reached conclusions on key accounting assessments related to the standard, including the assessment of the impact.

The most significant impact of the new standard relates to the way the Company accounts for term agreements and commission expense. Specifically, under the current revenue standard, the Company recognizes both the term license and maintenance revenues ratably over the contract period whereas under the new revenue standard it would recognize term license revenues upfront and the associated maintenance revenues over the contract period. The Company has also considered the impact of the guidance in ASC

340

40,

“Other Assets and Deferred Costs” under the new standard. Under ASC

340

40,

may

be required to capitalize and amortize certain incremental costs of obtaining a contract such as the maintenance portion of sales commissions over the life of the license. Under the Company’s current accounting policy, it does

not

capitalize sales commission costs but rather recognizes these costs when the purchase order is received.

Adoption of the standard will result in a reduction of revenues of

$1,974

for the year ended

December 31, 2017

and recognition of additional revenues of

$1,407

for the year ended

December 31, 2016,

primarily due to the net change in term license revenue recognition. In addition, adoption of the standard will result in an increase in prepaid expenses and other current assets and a decrease in deferred revenues of

$9,865

and

$97,

respectively, as of

December 31, 2017,

driven by the capitalization of sales commission costs and the upfront recognition of license revenues from term licenses. The cumulative impact to the Company’s accumulated deficit as of

January 1, 2016

is a reduction of

$5,583.

Adoption of the standard related to revenue recognition had

impact to cash from or used in operating, financing or investing activities on the Company’s consolidated statements of cash flows.

Select recast financial statement information, which reflect the preliminary effect of the adoption of the ASU is below.

	Year ended December 31, 2017
	As Reported			Adjustments			Recast for Adoption of ASC 606
Total revenues	$	217,364		$	(1,974	)	$	215,390
Operating loss	$	(13,597	)	$	178		$	(13,419	)
Income taxes	$	(2,459	)	$	(328	)	$	(2,787	)
Net loss	$	(13,694	)	$	(151	)	$	(13,845	)

	Year ended December 31, 2016
	As Reported			Adjustments			Recast for Adoption of ASC 606
Total revenues	$	164,456		$	1,407		$	165,863
Operating loss	$	(15,694	)	$	3,699		$	(11,995	)
Income taxes	$	(1,131	)	$	(182	)	$	(1,313	)
Net loss	$	(17,710	)	$	3,517		$	(14,193	)

	December 31, 2017 Balance Sheet Data
	As Reported		Adjustments			Recast for Adoption of ASC 606
Assets
Current assets:
Prepaid expenses and other current assets	$	7,130	$	9,865		$	16,995

Liabilities and stockholders’ equity
Current liabilities:
Accrued expenses and other short term liabilities	$	42,453	$	1,014		$	43,006
Deferred revenues	$	73,891	$	(227	)	$	73,664

Long-term liabilities:
Deferred revenues	$	7,034	$	130		$	7,164

January 2016,

the FASB issued ASU

2016

13,

“Financial Instruments – Credit Losses on Financial Instruments”, which requires that expected credit losses relating to financial assets measured on an amortized cost basis and available for sale debt securities be recorded through an allowance for credit losses. ASU

2016

limits the amount of credit losses to be recognized for available for sale debt securities to the amount by which carrying value exceeds fair value and also requires the reversal of previously recognized credit losses if fair value increases. The new standard will be effective for interim and annual periods beginning after

January 1, 2020,

and early adoption is permitted. The Company is currently evaluating whether to early adopt this standard and the potential effect on its consolidated financial statement.

February 2016,

the FASB issued ASU

2016

02,

“Leases”, on the recognition, measurement, presentation and disclosure of leases for both parties to a contract (i.e., lessees and lessors). The new standard requires lessees to apply a dual approach, classifying leases as either finance or operating leases based on the principle of whether or

not

the lease is effectively a financed purchase by the lessee. This classification will determine whether lease expense is recognized based on an effective interest method or on a straight line basis over the term of the lease, respectively. A lessee is also required to record a right-of-use asset and a lease liability for all leases with a term of greater than

months regardless of their classification. Leases with a term of

months or less will be accounted for in a manner similar to the accounting under existing guidance for operating leases today. The new standard requires lessors to account for leases using an approach that is substantially equivalent to existing guidance for sales-type leases, direct financing leases and operating leases. ASC

842

supersedes the previous leases standard, ASC

840,

"Leases". The guidance is effective for the interim and annual periods beginning on or after

December

15,

2018,

and early adoption is permitted. The Company is currently evaluating whether to early adopt this standard and the potential effect of the guidance on its consolidated financial statements.

November 2016,

the FASB issued ASU

2016

18,

“Statement of Cash Flows (Topic

230

): Restricted Cash”, which requires companies to include amounts generally described as restricted cash and restricted cash equivalents in cash and cash equivalents when reconciling beginning-of-period and end-of-period total amounts shown on the statement of cash flows. This ASU is effective for annual and interim periods beginning after

December 15, 2017.

The Company has decided to adopt this standard effective

December 31, 2017

using the retrospective transition method, as required by the new standard.

The adoption of this ASU has an immaterial impact on the Company’s consolidated statements of cash flows.

The following table provides a reconciliation of cash and cash equivalents, and long term restricted cash reported within the consolidated balance sheets that sum to the total of such amounts in the consolidated statements of cash flows:

	December 31. 2017		December 31. 2016		December 31. 2015
Cash and cash equivalents	$	56,689	$	48,315	$	49,241
Long term restricted cash included in other assets		547		488		467
Cash, cash equivalents and long term restricted cash shown in the consolidated statement of cash flows	$	57,236	$	48,803	$	49,708

January 2018,

the FASB released guidance on the accounting for tax on the GILTI provisions of the TCJA. The GILTI provisions impose a tax on foreign income in excess of a deemed return on tangible assets of foreign corporations. The guidance indicates that either (i) accounting for deferred taxes related to GILTI inclusions, or (ii) to treat any taxes on GILTI inclusions as period cost, are both acceptable methods subject to an accounting policy election. In accordance with SEC Staff Accounting Bulletin

No.

118,

and as the Company is

not

yet able to reasonably estimate the effect of the GILTI tax, as described infra in the Tax Notes, the Company has

not

yet adopted an accounting policy with respect to the GILTI tax.

Computer equipment

Office furniture and equipment

Leasehold improvements

Over the shorter of the expected lease
term or estimated useful life