XML 25 R14.htm IDEA: XBRL DOCUMENT
v3.21.2

Other Assets | 6 Months Ended
--- | ---
Jun. 30, 2021
Deferred Costs, Capitalized, Prepaid, and Other Assets Disclosure [Abstract] |
Other Assets | Other Assets Purchases of Patents and Patent Licenses From time to time, we enter into agreements to purchase patents or patent licenses. The carrying value, net of amortization, of our purchased patents and patent licenses was $2.5 million and $2.9 million as of June 30, 2021 and December 31, 2020, respectively. As of June 30, 2021 and December 31, 2020, $0.7 million of patent costs were included in other current assets and $1.8 million and $2.2 million of patent costs were included in other assets, respectively. We have $7.0 million of historical cost in purchased patents and patent licenses as of June 30, 2021. We are amortizing the patent costs over the estimated useful lives of the patents, which range from three years to eighteen years. Patent cost amortization of $0.1 million and $0.2 million was included in cost of SaaS and license revenue in our condensed consolidated statements of operations for the three and six months ended June 30, 2021 and 2020, respectively. Patent cost amortization of $0.1 million was included in amortization and depreciation in our condensed consolidated statements of operations for each of the three and six months ended June 30, 2021 and 2020. Loan to a Distribution Partner In September 2016, we entered into dealer and loan agreements with a distribution partner. The dealer agreement enables the distribution partner to resell our SaaS services and hardware to their subscribers. Under the loan agreements, we agreed to loan the distribution partner up to $4.0 million, collateralized by all assets owned by the distribution partner. The advance period for the loan was amended in August 2017 to begin each year on September 1 and end each year on December 31. Interest on the outstanding principal accrued at a rate per annum equal to the greater of 6.0% or LIBOR, plus 4.0%, as determined on the first date of each annual advance period. The repayment of principal and accrued interest was due in three installments beginning in July and ending in August following the advance period. The maturity date of the loan was August 31, 2019; however, the borrower had the option to extend the term of the loan for two successive terms of one year each. In May 2018, the loan agreement with our distribution partner was amended to convert the entire $4.0 million note receivable outstanding into a $4.0 million term loan. The term loan had a maturity date of July 31, 2022 and required annual principal repayments of $1.0 million on July 31 of each year, commencing on July 31, 2019. The term loan also required monthly interest payments, with interest accruing on the outstanding principal balance at a rate per annum equal to 6.0% through June 30, 2018 and a rate per annum equal to the LIBOR rate on the first of any interest period plus 7.0% beginning on July 1, 2018. In April 2017, we entered into a subordinated credit agreement with an affiliated entity of the distribution partner and loaned the affiliated entity $3.0 million, with a maturity date of November 21, 2022. Interest on the outstanding principal balance accrued at a rate of 8.5% per annum and required monthly interest payments. In June 2020, we amended the term loan with our distribution partner and also amended the subordinated credit agreement with the affiliated entity of the distribution partner. At the time of the amended term loan and subordinated credit agreement in June 2020, the outstanding balance of the term loan was $3.0 million and the outstanding balance of the subordinated credit agreement was $3.0 million. Under the amended terms, the distribution partner paid us $2.0 million in principal for the term loan on June 9, 2020 and the remaining $1.0 million was transferred to the amended subordinated credit agreement with the affiliated entity of the distribution partner. The amended subordinated credit agreement with the affiliated entity of the distribution partner matures on September 9, 2025 and interest on the outstanding principal balance accrues at a rate of 9.0% per annum and is payable in kind. As of June 30, 2021 and December 31, 2020, $4.4 million and $4.2 million of the notes receivable balance related to the subordinated credit agreement was included in other assets in our condensed consolidated balance sheets, respectively. For the three and six months ended June 30, 2021, we recognized $0.9 million and $1.6 million of revenue from the distribution partners associated with these loans, respectively, as compared to $0.9 million and $1.3 million for the same periods in the prior year. Loans to Service Provider Partners In July 2020, we entered into a loan agreement with a service provider partner, under which we agreed to loan the service provider partner up to $2.5 million, collateralized by the assets of the service provider partner. Interest on the outstanding principal accrues at a rate per annum equal to 9.0% and monthly interest and principal payments began in April 2021. The maturity date of the loan is July 24, 2025. As of each of June 30, 2021 and December 31, 2020, $1.2 million of principal was outstanding from the service provider partner under the loan agreement. For the three and six months ended June 30, 2021 and 2020, we recognized less than $0.1 million and $0.1 million of revenue from the service provider partner associated with this loan, respectively. Investment in a Hardware Supplier In October 2018, we entered into a subordinate convertible promissory note with one of our hardware suppliers. In July 2019, we converted the outstanding notes receivable balance of $5.6 million into 9,520,832 shares of Series B preferred stock in the hardware supplier. We concluded that the $5.6 million equity investment, which is included in the Alarm.com segment, does not meet the criteria for consolidation and will be accounted for using the measurement alternative. Under the alternative, we measure investments without readily determinable fair values at cost, less impairment, adjusted for observable price changes from orderly transactions for identical or similar investments. As of June 30, 2021 and December 31, 2020, our investment in the hardware supplier was $5.6 million. Investment in a Technology Partner In December 2016, we paid $0.3 million for a convertible promissory note with a technology partner. In April 2018, the $0.3 million convertible promissory note converted into 135,135 shares of Series A-1 Preferred Stock. At the time of conversion, we determined there was no value related to the Series A-1 Preferred Stock. Based on observable price changes from orderly transactions for similar investments, we increased the amount of our investment by $0.7 million and recorded a gain within o ther income, net, in our consolidate d statements of operations during the year ended December 31, 2020. In February 2021, we paid $5.0 million in cash to purchase 1,000,000 shares of Series B-2 Preferred Stock from the same technology partner as part of a financing round that included other investors. The $5.0 million equity investment, which is included in the Alarm.com segment, does not meet the criteria for consolidation and is accounted for using the measurement alternative. Under the alternative, we measure investments without readily determinable fair values at cost, less impairment, adjusted for observable price changes from orderly transactions for identical or similar investments. As of June 30, 2021 and December 31, 2020, our investment in the technology partner was $5.7 million and $0.7 million, respectively. Allowance for Credit Losses - Notes Receivable We identified the following two portfolio segments for our notes receivable: (i) loan receivables and (ii) hardware financing receivables. There were no changes to our portfolio segments for our notes receivable during the three and six months ended June 30, 2021, and no changes to our policies or practices involving the issuance of notes receivable, customer acquisitions or any other factors that influenced our estimate of expected credit losses for notes receivable. We do not accrue interest on notes receivable that are considered impaired or are 90 days or greater past due based on their contractual payment terms. Notes receivable that are 90 days or greater past due are placed on nonaccrual status. Notes receivable may be placed on nonaccrual status earlier if, in management’s opinion, a timely collection of the full principal and interest becomes uncertain. After a note receivable has been placed on nonaccrual status, interest will be recognized when cash is received. A note receivable may be returned to accrual status after all of the customer’s delinquent balances of principal and interest have been settled, and collection of all remaining contractual amounts due is reasonably assured. We have elected not to measure an allowance for credit losses for accrued interest receivables. We write-off any accrued interest on notes receivable that are considered impaired or are 90 days or greater past due based on their contractual payment terms by reversing interest income. The accrued interest receivable as of each of June 30, 2021 and December 31, 2020 was less than $0.1 million, and is reflected in other current assets within our condensed consolidated balance sheets and excluded from the amortized cost basis of the notes receivable. We did not write-off any accrued interest receivable during the three and six months ended June 30, 2021 and 2020. There were no purchases or sales of financial assets during the three and six months ended June 30, 2021 and 2020. There were no significant changes in the amount of note receivable write-offs during the three and six months ended June 30, 2021, as compared to historical periods. The changes in our allowance for credit losses for notes receivable are as follows (in thousands):
| Three Months Ended June 30, 2021 |  | Three Months Ended June 30, 2020 |  | Six Months Ended June 30, 2021 |  | Six Months Ended June 30, 2020
| Loan Receivables |  | Hardware Financing Receivables |  | Loan Receivables |  | Hardware Financing Receivables |  | Loan Receivables |  | Hardware Financing Receivables |  | Loan Receivables |  | Hardware Financing Receivables
Beginning of period balance | $ | (73) |  |  | $ | (5) |  |  | $ | (87) |  |  | $ | (29) |  |  | $ | (73) |  |  | $ | (16) |  |  | $ | — |  |  | $ | (16) |
Impact of adopting Topic 326 | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | (434) |  |  | (15) |
(Provision for) / recovery of expected credit losses | (1) |  |  | 1 |  |  | 41 |  |  | (8) |  |  | (1) |  |  | 12 |  |  | 388 |  |  | (6) |
Write-offs | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |
End of period balance | $ | (74) |  |  | $ | (4) |  |  | $ | (46) |  |  | $ | (37) |  |  | $ | (74) |  |  | $ | (4) |  |  | $ | (46) |  |  | $ | (37) |
We manage our notes receivables using delinquency as a key credit quality indicator. The following tables reflect the current and delinquent notes receivable by class of financing receivables and by year of origination (in thousands):
| June 30, 2021
Loan Receivables: | 2021 |  | 2020 |  | 2019 |  | 2018 |  | 2017 |  | Prior |  | Total
Current | $ | — |  |  | $ | 1,180 |  |  | $ | 12 |  |  | $ | — |  |  | $ | 4,399 |  |  | $ | — |  |  | $ | 5,591 |
30-59 days past due | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |
60-89 days past due | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |
90-119 days past due | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |
120+ days past due | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |
Total | $ | — |  |  | $ | 1,180 |  |  | $ | 12 |  |  | $ | — |  |  | $ | 4,399 |  |  | $ | — |  |  | $ | 5,591 |
Hardware Financing Receivables: |  |  |  |  |  |  |  |  |  |  |  |  |
Current | $ | — |  |  | $ | — |  |  | $ | 38 |  |  | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | 38 |
30-59 days past due | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |
60-89 days past due | — |  |  | — |  |  | 35 |  |  | 33 |  |  | — |  |  | — |  |  | 68 |
90-119 days past due | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |
120+ days past due | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |
Total | $ | — |  |  | $ | — |  |  | $ | 73 |  |  | $ | 33 |  |  | $ | — |  |  | $ | — |  |  | $ | 106 |
| December 31, 2020
Loan Receivables: | 2020 |  | 2019 |  | 2018 |  | 2017 |  | 2016 |  | Prior |  | Total
Current | $ | 1,200 |  |  | $ | 17 |  |  | $ | — |  |  | $ | 4,207 |  |  | $ | — |  |  | $ | — |  |  | $ | 5,424 |
30-59 days past due | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |
60-89 days past due | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |
90-119 days past due | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |
120+ days past due | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |
Total | $ | 1,200 |  |  | $ | 17 |  |  | $ | — |  |  | $ | 4,207 |  |  | $ | — |  |  | $ | — |  |  | $ | 5,424 |
Hardware Financing Receivables: |  |  |  |  |  |  |  |  |  |  |  |  |
Current | $ | — |  |  | $ | 67 |  |  | $ | 49 |  |  | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | 116 |
30-59 days past due | — |  |  | — |  |  | — |  |  | 2 |  |  | — |  |  | — |  |  | 2 |
60-89 days past due | — |  |  | 57 |  |  | 27 |  |  | — |  |  | — |  |  | — |  |  | 84 |
90-119 days past due | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |
120+ days past due | — |  |  | — |  |  | — |  |  | 9 |  |  | — |  |  | — |  |  | 9 |
Total | $ | — |  |  | $ | 124 |  |  | $ | 76 |  |  | $ | 11 |  |  | $ | — |  |  | $ | — |  |  | $ | 211 |
The amortized cost of notes receivables placed on nonaccrual status is as follows (in thousands):
| June 30, 2021 |  | December 31, 2020
Loan receivables | $ | — |  |  | $ | — |
Hardware financing receivables | — |  |  | 9 |
Total | $ | — |  |  | $ | 9 |
During the three and six months ended June 30, 2021 and 2020, there was no interest income recognized related to notes receivables that were in nonaccrual status. As of June 30, 2021 and December 31, 2020, there were no notes receivables placed in nonaccrual status for which there was not a related allowance for credit losses. As of June 30, 2021 and December 31, 2020, there were no notes receivables that were 90 days or greater past due for which we continued to accrue interest income. Prepaid Expenses As of June 30, 2021 and December 31, 2020, $12.0 million and $8.4 million of prepaid expenses were included in other current assets, respectively, primarily related to software licenses and for long lead-time parts related to our inventory.

X
- References No definition available. + Details
Name: | us-gaap_DeferredCostsCapitalizedPrepaidAndOtherAssetsDisclosureAbstract
Namespace Prefix: | us-gaap_
Data Type: | xbrli:stringItemType
Balance Type: | na
Period Type: | duration

X
- Definition The entire disclosure for other assets. This disclosure includes other current assets and other noncurrent assets. + References No definition available. + Details
Name: | us-gaap_OtherAssetsDisclosureTextBlock
Namespace Prefix: | us-gaap_
Data Type: | dtr-types:textBlockItemType
Balance Type: | na
Period Type: | duration