XML 26 R15.htm IDEA: XBRL DOCUMENT v3.5.0.2
Note 8 - Acquisitions
 9 Months Ended
Sep. 30, 2016
Notes to Financial Statements  
Business Combination Disclosure [Text Block]
8. 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 subsidiaries, Blue Ridge Websoft, LLC (doing business as Blue Ridge Internet Works), Fiber Roads, LLC and Navigator Network Services, LLC (the “BRI Group”) for consideration of approximately $3.5 million. The Company advanced in escrow $3,125,000 during the year ended December 31, 2014, and paid the remaining purchase price of $357,493 during the year ended December 31, 2015. Ting Virginia, LLC was an independent Internet service provider in Charlottesville, Virginia, doing business primarily as Blue Ridge Internet Works. 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 additional equity interest acquired.
 
In addition, on the fourth anniversary of the closing date, the Minority Shareholders may exercise a put option under which Ting Fiber, Inc. shall be obligated to purchase the Minority Shareholders’ remaining interest for $120,000 per percentage point of the additional equity interest acquired.
 
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 was $3,000,000 and is being accreted to the estimated liability amount using a discount rate of 5% over a period of four years from the acquisition date. During the three and nine months ended September 30, 2016, this amount was increased by $12,398 and $37,044, respectively, ($12,199 and $24,349 for the three and nine months ended September 30, 2015, respectively) to $3,073,642, to reflect the present value of this Redeemable non-controlling interest as at September 30, 2016.
 
The purchase consideration is comprised as follows:
 
Cash
   $ 3,135,140  
Less refund from working capital adjustment
     (50,000
)
Repayment of debt
     418,775  
Redeemable non-controlling interest
     3,000,000  
    $ 6,503,915  
 
The following table represents the finalized purchase price allocation based on the 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
     2,132,016  
         
Net assets acquired
   $ 6,503,915