XML 21 R10.htm IDEA: XBRL DOCUMENT
v3.7.0.1

Note 4 - Acquisitions | 6 Months Ended
--- | ---
Jun. 30, 2017
Notes to Financial Statements |
Business Combination Disclosure [Text Block] | 4 . Acquisitions:
| (a) | Blue Ridge Websoft
On February 27, 2015, Ting Fiber, Inc., one of the Company ’s 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. Ting Virginia, LLC was an independent Internet service provider in Charlottesville, Virginia, doing business primarily as Blue Ridge Internet Works. On February 1, 2017, under the terms of a call option in the agreement, Ting Fiber, Inc. acquired an additional 20% interest in Ting Virginia, LLC from the selling shareholders (the “Minority Shareholders”) for consideration of $2.0 million. The Company recorded the $2.0 million payment as a reduction in the carrying value of Redeemable non-controlling interest. Following the exercise of the call option, the Minority Shareholders chose not to exercise their right to put their remaining 10% interest in Ting Virginia, LLC to Ting Fiber, Inc. The Minority Shareholders still retain the right, on the fourth anniversary of the closing date ( February 27, 2019), to exercise their put option under which Ting Fiber, Inc. would be obligated to purchase their remaining interest for $120,000 per percentage point of the additional equity interest acquired. The Company has determined that the put option is 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”. As at June 30, 2017, the value of the Redeemable non-controlling interest is $1,111,138 and is being accreted to the redemption value of $1,200,000 through February 27, 2019.
| (b) | eN om, Incorporated
On January 20, 2017, the Company entered into a Stock Purchase Agreement (the “Purchase Agreement”) with its indirect wholly owned subsidiary, Tucows (Emerald), LLC, Rightside Group, Ltd., and Rightside Operating Co., pursuant to which Tucows (Emerald), LLC purchased from Rightside Operating Co. all of the issued and outstanding capital stock of eNom, Incorporated, a domain name registrar business. The acquisition provides Tucows additional scale and efficiency opportunities across its domain registrar operations. The purchase price was $77.8 million, which represented the agreed upon purchase of $83.5 million less an amount of $5.7 million related to the working capital deficiency assessment on acquisition. The purchase price and the majority of the related acquisition costs were financed through borrowings under Facility D of the 2017 Amended Credit Facility agreement (note 7 ). On June 13, 2017, the Company entered into a First Amendment to Stock Purchase Agreement (the “ Amendment”) by and among the Company, Tucows (Emerald), LLC, Rightside Group, Ltd. And Rightside Operating Co., to amend certain provisions in the Purchase Agreement. Pursuant to the Amendment, the definition of “Escrow Triggering Event” was revised to remove a change in control of the Company and the definition of “Minimum Cash Amount” was revised to mean $5.35 million from June 13, 2017 until the end of April 20, 2018, and zero thereafter. The Company has prepared a preliminary purchase price allocation of the assets acquired and the liabilities assumed of eNom based on management ’s best estimates of fair value. The final purchase price allocation may vary based on final appraisals, valuations and analyses of the fair value of the acquired assets and assumed liabilities. The preliminary purchase price allocation is pending the finalization of the fair value of taxation-related balances and for potential adjustments to assets and liabilities. We expect to finalize this determination on or before September 30, 2017. The following table shows the preliminary allocation of the purchase price for eNom to the acquired identifiable assets and liabilities assumed:
Goodwill |  | $ | 66,481,100 |
Cash |  |  | 1,594,217 |
Brand |  |  | 12,400,000 |
Developed technology |  |  | 3,900,000 |
Customer relationships |  |  | 28,000,000 |
Prepaid domain registry fees |  |  | 70,643,994 |
Other assets |  |  | 10,170,789 |
Total assets |  |  | 193,190,100 |
Deferred Revenue |  |  | (77,798,994 | )
Deferred Tax Liabilities |  |  | (21,893,346 | )
Other liabilities |  |  | (15,666,083 | )
Total liabilities |  |  | (115,358,423 | )
Preliminary consideration paid |  | $ | 77,831,677 |
As required by ASC 805, Business Combinations, the Company has recorded deferred revenue at fair value at the acquisition date, which was determined by estimating the costs associated with customer support services and prepaid domain name registration fees to fulfill the contractual obligations over the remaining life of the contract at the acquisition date plus a normal profit margin. The good will related to this acquisition is primarily attributable to synergies expected to arise from the acquisition and is not tax deductible for tax purposes. In connection with this acquisition, the Company incurred total acquisition related costs of $0.8 million of which $0.4 million is included in General & Administrative expenses in the Consolidated Statements of Operations for the six months ended June 30, 2017. The following table presents selected unaudited pro forma information for the Company assuming the acquisition of eNom had occurred as of January 1, 2016. This pro forma information does not purport to represent what the Company ’s actual results would have been if the acquisition had occurred as of the date indicated or what results would be for any future periods.
|  | Unaudited |  |  | Unaudited |
|  | Three months ended June 30, |  |  | Six months ended June 30, |
|  | 2016 |  |  | 2017 |  |  | 2016 |
Net revenues |  | $ | 84,243,541 |  |  | $ | 158,253,585 |  |  | $ | 166,228,230 |
Net income |  |  | 402,039 |  |  |  | 7,315,802 |  |  |  | 1,015,546 |
Basic earnings per common share |  |  | 0.04 |  |  |  | 0.70 |  |  |  | 0.10 |
Diluted earnings per common share |  | $ | 0.04 |  |  | $ | 0.68 |  |  | $ | 0.10 |

X
- Definition The entire disclosure for a business combination (or series of individually immaterial business combinations) completed during the period, including background, timing, and recognized assets and liabilities. The disclosure may include leverage buyout transactions (as applicable). + References Reference 1: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 805 -URI http://asc.fasb.org/topic&trid=2303972 + Details
Name: | us-gaap_BusinessCombinationDisclosureTextBlock
Namespace Prefix: | us-gaap_
Data Type: | nonnum:textBlockItemType
Balance Type: | na
Period Type: | duration

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