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Note 19 - Subsequent Events
6 Months Ended
Jun. 30, 2020
Notes to Financial Statements  
Subsequent Events [Text Block]
19. Subsequent Events:
 

On August 1, 2020, the Company entered into an Asset Purchase Agreement (the “Purchase Agreement”), by and between the Company and DISH Wireless L.L.C.(“DISH”). Under the Purchase Agreement and in accordance with the terms and conditions set forth therein, the Company sold to DISH its mobile customer accounts that are marketed and sold under the Ting brand (other than certain customer accounts associated with one network operator) (“Transferred Assets”). Tucows will retain minimum revenue commitments totaling $51.5 million on the Mobile Network Operator (“MNO”) contract associated with the customers excluded from the definition of Transferred Assets. The Company will be able to continue adding customers under the excluded MNO contract working with DISH in order to meet the agreement. 

 

The Purchase Agreement also sets forth certain rights and obligations with respect to intellectual property matters, including the right to use and purchase the name "Ting" and its associated domain name.  

 

Approximately 60 days following the execution of the Purchase Agreement, DISH and the Company will settle the working capital associated with the Transferred Assets and, upon such settlement, DISH will pay to the Company an amount in cash that is generally equal to (i) the accounts receivable related to the Transferred Assets plus (ii) the value of the transferred inventory minus (iii) the accounts payable and accrued liabilities received related to the Transferred Assets.  In addition, for a period of 10 years following the execution of the Purchase Agreement, DISH will pay a monthly fee to the Company generally equal to an amount of net revenue received by DISH in connection with the transferred customer accounts minus certain fees and expenses, as further set forth in the Purchase Agreement. The aggregate purchase price for the Transferred Assets is the working capital payment, the 10-year payment stream and DISH’s assumption of certain liabilities related to the Transferred Assets.

 

Contemporaneously with the execution of the Purchase Agreement on August 1, 2020, the Company, through its wholly owned subsidiary Ting, Inc. entered a services agreement under which Ting will act as a mobile service enabler (“MSE Agreement”) with DISH in support of the DISH’s mobile network operations.  The term of the agreement is four years with an automatic one-year extension upon achievement of certain milestones.  Under the terms of the MSE Agreement, the Company and its affiliates are permitted to sell mobile service enabler services to other third parties.

 

The Company also entered into the Transitional Services Agreement (“TSA”) on August 1, 2020 with DISH, under which the Company will provide certain other services such as customer service, marketing and fulfillment services. DISH has option to terminate services provided under the TSA throughout the term of the agreement, which is for five years effective August 1, 2020.