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Note 4 - Acquisitions and Divestitures
 3 Months Ended
Mar. 31, 2015
Business Combinations [Abstract]  
Business Combination Disclosure [Text Block]

4. Acquisitions and Divestitures:


Acquisitions


On February 27, 2015, Ting Fiber, Inc., one of our wholly owned subsidiaries, acquired a 70% ownership interest in the newly formed Ting Virginia, LLC and its acquired subsidiaries, Blue Ridge Websoft, LLC (doing business as Blue Ridge InternetWorks), Fiber Roads, LLC and Navigator Network Services, LLC (the “BRI Group”) for a consideration of approximately $3.6 million, subject to additional customary adjustments as anticipated in the purchase agreement, primarily related to estimated working capital levels at closing. The purchase price was satisfied through our releasing $3.1 million from the escrow accounts established during Fiscal 2014 and an additional payment of $0.4 million made at closing. Ting Virginia, LLC is an independent Internet service provider in Charlottesville, Virginia, doing business primarily as Blue Ridge InternetWorks. The BRI Group provides high speed internet access, Internet hosting and network consulting services to over 3,000 customers in central Virginia. The purchase price was primarily satisfied through an advance under our 2012 DLR Loan facility.


Ting Fiber Inc. and the selling shareholders (the “Minority Shareholders”) also agreed to certain put and call options with regard to the remaining 30% interest in Ting Virginia, LLC retained by the Minority Shareholders. On the second anniversary of the closing date, Ting Fiber, Inc. may exercise a call option to purchase an additional 20% ownership interest in Ting Virginia, LLC. Contingent upon the exercise of the call option by Ting Fiber, Inc. the Minority Shareholders may exercise a put option within 7 days following the exercise of the call option by Ting Fiber, Inc., to sell their remaining 10% ownership interest in Ting Virginia LLC. The consideration to be exchanged for the shares acquired or sold under the options shall be $100,000 per percentage point of the equity interest acquired.


In addition, on the fourth anniversary of the closing date, the Minority Shareholders may exercise a put option under which the Ting Fiber Inc. shall be irrevocably obligated to purchase the Minority Shareholders’ remaining interest for $120,000 per percentage point of the equity interest acquired for a total of $3,600,000.


The Company has determined that the put options described above are embedded within the non-controlling interest shares that are subject to the put options. The redemption feature requires classification of the Minority Shareholders’ Interest in the Consolidated Balance Sheets outside of equity under the caption “Redeemable non-controlling interest”. The present value of the liability at the acquisition date is $3,000,000.


The preliminary purchase consideration is comprised as follows:


Cash

  $ 3,135,140  

Assumption of debt

    418,775  

Redeemable non-controlling interest

    3,000,000  
    $ 6,553,915  

The following table represents the purchase price allocation based on the estimated fair values of the assets


Current assets (including cash of $21,423)

  $ 338,577  

Current liabilities

    (529,702 )
         

Property and equipment, including:

       

Fiber network

    3,456,024  

Computer equipment

    200,000  

Furniture and equipment

    5,000  

Vehicles

    92,000  

Leasehold improvements

    50,000  
         

Intangible assets, including:

       

Network rights

    692,000  

Customer relationships

    68,000  
         

Goodwill

    2,182,016  
         

Net assets acquired

  $ 6,553,915  

The goodwill recorded on the acquisition is expected to be deductible for tax purposes.


The fair value of current assets acquired includes accounts receivable with a fair value of $0.2 million. All accounts receivable acquired at acquisition are expected to be collectable.


The acquisition had no significant impact on revenues and net earnings for the three months ended March 31, 2015. There was also no significant impact on the Company’s revenues and net income on a pro forma basis for all periods presented.


The Company acquired new classes of assets in this acquisition, namely fiber network and vehicles. The Company has accordingly, in connection with its depreciation policies, added additional disclosure in note 2 (b) above.