Related Party Transactions

12 Months Ended

Dec. 31, 2016

Related Party Transactions [Abstract]

Related Party Transactions

Related Party Transactions

In September 2016, we entered into dealer and loan agreements with a new 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 loan has two advance periods which begin each year in October and end during the following January until August 31, 2019, the term date of the loan. Interest on the outstanding principal accrues at a rate per annum equal to the greater of 6.0% or the LIBOR rate plus 4.0%, as determined on the first date of each annual advance period. The borrower has the option to extend the term of the loan for 2 successive terms of one year each. During the fourth quarter of 2016, our distribution partner drew $3.0 million at a rate of 6.0% per annum. As of December 31, 2016, the $3.0 million loan receivable balance was included in other current assets. Subsequent to December 31, 2016 and prior to the filing of this Annual Report on Form 10-K, our distribution partner drew an additional $1.0 million at a rate of 6.0% per annum. For the year ended December 31, 2016, we recorded $28,500 of interest income related to this note receivable and we recognized less than $0.1 million of revenue. Our accounts receivable balance from this distribution partner was less than $0.1 million as of December 31, 2016.

Our installation partner in which we have a 48.2% ownership interest performs installation services for security dealers and also provides installation services for us and certain of our subsidiaries. On December 11, 2015, we purchased an additional 9,290 common units of the same company for $0.2 million, which did not change our proportional share of ownership interest. We account for this investment using the equity method (see Note 8). During the years ended December 31, 2016, 2015 and 2014, we recorded $1.3 million, $0.8 million and $0.3 million of cost of hardware and other revenue in connection with this installation partner. As of December 31, 2016 and December 31, 2015, our accounts payable balance to our installation partner was $0.1 million and $0.5 million. In September 2014, we loaned $0.3 million to our installation partner under a secured promissory note that accrues interest at 8.0%. Interest is payable monthly with the entire principal balance plus accrued but unpaid interest due at maturity in September 2016. For the years ended December 31, 2016, 2015 and 2014, we recorded $26,000, $26,000 and $7,000 of interest income related to this note receivable.

In June 2015, two of our significant stockholders, entities affiliated with Technology Crossover Ventures ("TCV"), and entities affiliated with ABS Capital Partners ("ABS"), entered into a Securities Purchase Agreement (the "Secondary Sale Agreement"). Pursuant to the terms of the Secondary Sale Agreement, ABS agreed to sell to TCV, and TCV agreed to buy from ABS, 888,988 shares of our common stock at a purchase price of $13.02 per share.