Document_and_Entity_Informatio
Document and Entity Information | 9 Months Ended | |
Mar. 31, 2014 | 14-May-14 | |
Document and Entity Information [Abstract] | ' | ' |
Document Type | '10-Q | ' |
Amendment Flag | 'false | ' |
Document Period End Date | 31-Mar-14 | ' |
Entity Registrant Name | 'INTERNET AMERICA INC | ' |
Entity Central Index Key | '0001001279 | ' |
Current Fiscal Year End Date | '--06-30 | ' |
Document Fiscal Period Focus | 'Q3 | ' |
Document Fiscal Year Focus | '2014 | ' |
Entity Filer Category | 'Smaller Reporting Company | ' |
Entity Common Stock, Shares Outstanding | ' | 16,747,062 |
CONDENSED_CONSOLIDATED_BALANCE
CONDENSED CONSOLIDATED BALANCE SHEETS (USD $) | Mar. 31, 2014 | Jun. 30, 2013 |
CURRENT ASSETS: | ' | ' |
Cash and cash equivalents | $3,032,540 | $2,295,190 |
Accounts receivable, net of allowance for uncollectible accounts of $11,598 and $9,801 as of March 31, 2014 and June 30, 2013, respectively | 186,592 | 155,154 |
Inventory | 450,342 | 423,947 |
Prepaid expenses and other current assets | 66,415 | 71,311 |
Deferred tax asset | 260,000 | 260,000 |
Total current assets | 3,995,889 | 3,205,602 |
Property and equipment---net | 1,377,345 | 1,431,001 |
Goodwill | 1,968,127 | 1,968,127 |
Subscriber acquisition costs---net | 767,105 | 420,141 |
Deferred tax asset | 3,340,000 | 3,340,000 |
Other assets | 41,688 | 48,455 |
TOTAL ASSETS | 11,490,154 | 10,413,326 |
CURRENT LIABILITIES: | ' | ' |
Accounts payable | 163,438 | 159,791 |
Accrued liabilities | 671,357 | 429,275 |
Deferred revenue | 803,618 | 768,379 |
Current portion of long-term debt | 204,298 | 226,383 |
Total current liabilities | 1,842,711 | 1,583,828 |
LONG-TERM LIABILITIES: | ' | ' |
Other liability | 193,433 | ' |
Long-term debt, net of current portion | 4,093 | 152,677 |
Total liabilities | 2,040,237 | 1,736,505 |
COMMITMENTS AND CONTINGENCIES | ' | ' |
SHAREHOLDERS' EQUITY: | ' | ' |
Preferred stock $0.01 par value: 5,000,000 shares authorized, 2,718,428 issued and outstanding as of March 31, 2014 and June 30, 2013 | 27,185 | 27,185 |
Common stock, $0.01 par value: 40,000,000 shares authorized, 16,747,062 and 16,729,562 issued and outstanding as of March 31, 2014 and June 30, 2013, respectively | 167,471 | 167,296 |
Additional paid-in capital | 63,068,042 | 63,042,066 |
Accumulated deficit | -53,812,781 | -54,559,726 |
Total shareholders' equity | 9,449,917 | 8,676,821 |
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY | $11,490,154 | $10,413,326 |
CONDENSED_CONSOLIDATED_BALANCE1
CONDENSED CONSOLIDATED BALANCE SHEETS (Parenthetical) (USD $) | Mar. 31, 2014 | Jun. 30, 2013 |
CONDENSED CONSOLIDATED BALANCE SHEETS [Abstract] | ' | ' |
Allowance for uncollectible accounts | $11,598 | $9,801 |
Preferred stock, par value | $0.01 | $0.01 |
Preferred stock, shares authorized | 5,000,000 | 5,000,000 |
Preferred stock, issued | 2,718,428 | 2,718,428 |
Preferred stock, outstanding | 2,718,428 | 2,718,428 |
Common stock, par value | $0.01 | $0.01 |
Common stock, shares authorized | 40,000,000 | 40,000,000 |
Common stock, issued | 16,747,062 | 16,729,562 |
Common stock, outstanding | 16,747,062 | 16,729,562 |
CONDENSED_CONSOLIDATED_INCOME_
CONDENSED CONSOLIDATED INCOME STATEMENTS (USD $) | 3 Months Ended | 9 Months Ended | ||
Mar. 31, 2014 | Mar. 31, 2013 | Mar. 31, 2014 | Mar. 31, 2013 | |
REVENUES: | ' | ' | ' | ' |
Internet services | $2,059,221 | $1,968,396 | $6,053,741 | $5,832,951 |
TOTAL REVENUES | 2,059,221 | 1,968,396 | 6,053,741 | 5,832,951 |
OPERATING EXPENSES: | ' | ' | ' | ' |
Connectivity and operations | 1,075,131 | 1,009,335 | 3,059,764 | 2,931,234 |
Sales and marketing | 79,764 | 120,770 | 266,172 | 338,433 |
General and administrative | 499,592 | 403,129 | 1,361,738 | 1,178,829 |
Depreciation and amortization | 200,211 | 197,672 | 576,396 | 609,726 |
TOTAL OPERATING EXPENSES | 1,854,698 | 1,730,906 | 5,264,070 | 5,058,222 |
INCOME FROM OPERATIONS | 204,523 | 237,490 | 789,671 | 774,729 |
OTHER INCOME (EXPENSE) | ' | ' | ' | ' |
Interest income | 1,773 | 3,078 | 5,443 | 5,172 |
Interest expense | -2,600 | -4,246 | -9,769 | -14,937 |
OTHER EXPENSE, net | -827 | -1,168 | -4,326 | -9,765 |
INCOME BEFORE INCOME TAX EXPENSE | 203,696 | 236,322 | 785,345 | 764,964 |
Income tax expense | 13,200 | 12,000 | 38,400 | 36,000 |
NET INCOME | $190,496 | $224,322 | $746,945 | $728,964 |
NET INCOME PER COMMON SHARE: | ' | ' | ' | ' |
BASIC | $0.01 | $0.01 | $0.04 | $0.04 |
DILUTED | $0.01 | $0.01 | $0.04 | $0.04 |
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING: | ' | ' | ' | ' |
BASIC | 16,733,832 | 16,729,562 | 16,730,954 | 16,729,562 |
DILUTED | 19,849,915 | 19,474,299 | 19,805,672 | 19,449,575 |
CONDENSED_CONSOLIDATED_CASH_FL
CONDENSED CONSOLIDATED CASH FLOW STATEMENTS (USD $) | 9 Months Ended | |
Mar. 31, 2014 | Mar. 31, 2013 | |
OPERATING ACTIVITIES: | ' | ' |
Net income | $746,945 | $728,964 |
Adjustments to reconcile net income to net cash provided by operating activities: | ' | ' |
Depreciation and amortization | 576,396 | 609,726 |
Loss from sale or disposal of assets | 9,904 | 4,877 |
Provision for (recovery of) bad debt | 72 | -7,724 |
Stock based compensation | 20,026 | 10,000 |
Changes in operating assets and liabilities: | ' | ' |
Accounts receivable | -31,510 | -23,808 |
Inventory | -32,620 | -21,421 |
Prepaid expenses and other current assets | 4,896 | 24,125 |
Other assets | 14,448 | 20,706 |
Accounts payable and accrued liabilities | 52,294 | 16,287 |
Deferred revenue | -26,086 | -7,262 |
Net cash provided by operating activities | 1,334,765 | 1,354,470 |
INVESTING ACTIVITIES: | ' | ' |
Purchases of property and equipment | -300,763 | -450,718 |
Change in restricted cash | ' | 6,432 |
Proceeds from sale of assets | ' | 21,403 |
Cash and other consideration paid for acquisitions | -132,108 | -76,000 |
Net cash used in investing activities | -432,871 | -498,883 |
FINANCING ACTIVITIES: | ' | ' |
Proceeds from exercise of common stock options | 6,125 | ' |
Principal payments of long-term debt | -170,669 | -192,074 |
Net cash used in financing activities | -164,544 | -192,074 |
NET INCREASE IN CASH AND CASH EQUIVALENTS | 737,350 | 663,513 |
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD | 2,295,190 | 1,433,230 |
CASH AND CASH EQUIVALENTS, END OF PERIOD | 3,032,540 | 2,096,743 |
SUPPLEMENTAL INFORMATION: | ' | ' |
Cash paid for interest | 10,199 | 15,246 |
Cash paid for income taxes | 58,415 | 5,600 |
NON-CASH INVESTING AND FINANCING ACTIVITIES | ' | ' |
Accrued purchase consideration for acquisition of subscribers | 386,867 | 83,200 |
Note payable issued for acquisition of subscribers | ' | $37,006 |
Basis_of_Presentation
Basis of Presentation | 9 Months Ended | ||
Mar. 31, 2014 | |||
Basis of Presentation [Abstract] | ' | ||
Basis of Presentation | ' | ||
1 | Basis of Presentation | ||
Certain information and footnote disclosures normally included in consolidated financial statements prepared in accordance with U.S. generally accepted accounting principles have been condensed or omitted pursuant to Article 8 of Regulation S-X of the Securities and Exchange Commission. The accompanying unaudited condensed consolidated financial statements reflect, in the opinion of management, all adjustments necessary to achieve a fair presentation of the consolidated financial position and results of operations of Internet America, Inc. (the "Company" or "Internet America" or "we") for the interim periods presented. All such adjustments are of a normal and recurring nature. These condensed financial statements should be read in conjunction with the consolidated financial statements and the notes thereto included in the Company's Annual Report on Form 10-K for its fiscal year ended June 30, 2013. |
Principles_of_Consolidation
Principles of Consolidation | 9 Months Ended | ||
Mar. 31, 2014 | |||
Principles of Consolidation [Abstract] | ' | ||
Principles of Consolidation | ' | ||
2 | Principles of Consolidation | ||
The consolidated financial statements include the accounts of the Company and its subsidiary, TeleShare Communication Services, Inc. All material intercompany accounts and transactions have been eliminated. |
Basic_and_Diluted_Net_Income_P
Basic and Diluted Net Income Per Share | 9 Months Ended | ||
Mar. 31, 2014 | |||
Basic and Diluted Net Income Per Share [Abstract] | ' | ||
Basic and Diluted Net Income Per Share | ' | ||
3 | Basic and Diluted Net Income Per Share | ||
For the three and nine months ended March 31, 2014 and 2013, common stock equivalent shares totaling 2,718,428 have been added to the weighted average common shares outstanding, assuming the shares of preferred stock were converted into shares of common stock as of the first day of each respective period, for the purpose of computing diluted earnings per share ("EPS"). For the three and nine months ended March 31, 2014, additional common stock equivalent shares totaling 397,655 and 356,290, respectively, were included in the calculation of diluted EPS. For the three and nine months ended March 31, 2013, additional common stock equivalent shares totaling 26,309 and 1,585, respectively, were included in the calculation of diluted EPS. These additional shares are attributable to outstanding in-the-money stock options and warrants. For the three and nine months ended March 31, 2014, options to purchase zero and 471,526 shares, respectively, of the Company's common stock were excluded from the computation of diluted EPS. For the three and nine months ended March 31, 2013, warrants to acquire zero and 394,922 shares of common stock were excluded from the computation of diluted EPS. Additionally, for each of the three and nine months ended March 31, 2013, options to purchase 1,189,026 shares of common stock were excluded from the computation of diluted EPS. These aforementioned options and warrants were excluded as their effect was anti-dilutive. |
Use_of_Estimates
Use of Estimates | 9 Months Ended | ||
Mar. 31, 2014 | |||
Use of Estimates [Abstract] | ' | ||
Use of Estimates | ' | ||
4 | Use of Estimates | ||
The preparation of consolidated financial statements in conformity with U.S. generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ significantly from these estimates. |
Acquisition_of_Subscribers
Acquisition of Subscribers | 9 Months Ended | ||
Mar. 31, 2014 | |||
Acquisition of Subscribers [Abstract] | ' | ||
Acquisition of Subscribers | ' | ||
5 | Acquisition of Subscribers | ||
The Company completed two acquisitions during fiscal 2013 and one acquisition during fiscal 2014 of subscribers and tangible assets to grow the Company's subscriber base. These acquisitions were accounted for using the purchase method. The Company immediately began integrating the acquired assets of each acquisition into the Company's existing operations and continues to operate these assets within a single business segment.The amortization period of the intangible assets acquired in each acquisition is four years, which is management's best estimate of the average economic life of a subscriber based on historical experience. | |||
On August 1, 2012, the Company completed an acquisition of the subscribers associated with the wireless ISP operations of Pyro-tech Inc. conducted in and around Dallas/Fort Worth, Texas for a total purchase price consideration of $63,006, consisting of (i) $26,000 in cash payments made at closing and (ii) $37,006 in a note payable, net of a debt discount. | |||
On February 1, 2013, the Company completed an acquisition of the subscribers associated with the wireless ISP operations of PC Doctors d/b/a: Internet Doctors conducted in and around Dallas/Fort Worth, Texas for a total purchase price consideration of $95,695, consisting of (i) $50,000 in cash payments made at closing and (ii) $45,695 in a note payable, net of a debt discount. | |||
On November 1, 2013, the Company completed an acquisition of the subscribers associated with the wireless ISP operations of UpperSpace Corporation ("UpperSpace") conducted in and around northeast Oklahoma for an estimated total purchase consideration of $580,300, payable as follows: (i) a $193,433 cash payment, inclusive of $61,325 retained by the seller representing deferred revenues, made at closing, (ii) an estimated $193,434 cash payment to be made on the twelve month anniversary of the closing (which estimated payment is included in accrued liabilities) and (iii) an estimated $193,433 cash payment to be made on the thirty-six month anniversary of the closing (which payment is included in other long term liabilities). The total estimated purchase consideration of $580,300 is allocated as follows: $530,487 to subscriber acquisition costs, $42,132 to fixed assets and $7,681 to other intangible assets. The final purchase price will be determined twelve months from the closing date at which time a note payable will be issued for the remaining purchase price owed. |
Goodwill_and_Subscriber_Acquis
Goodwill and Subscriber Acquisition Costs | 9 Months Ended | ||
Mar. 31, 2014 | |||
Goodwill and Subscriber Acquisition Costs [Abstract] | ' | ||
Goodwill and Subscriber Acquisition Costs | ' | ||
6 | Goodwill and Subscriber Acquisition Costs | ||
Pursuant to Financial Accounting Standards Board ("FASB") guidance on goodwill and other intangibles, the Company performs a qualitative analysis of goodwill annually during the fourth quarter of its fiscal year or more frequently when events and circumstances indicate goodwill might be permanently impaired. If that evaluation indicates an impairment has occurred, the following two-step process is applied. First, the fair value of the reporting unit is compared to the carrying amount. If the carrying amount of the reporting unit exceeds its fair value, the implied value of the reporting unit's goodwill is compared with its carrying amount. An impairment loss is then recognized in an amount equal to the excess of the implied value over the carrying value, if any. The Company concluded that no impairment of goodwill is required at March 31, 2014. | |||
The Company amortizes customer acquisition costs over the estimated life of the acquired customers. The weighted average amortization period for subscriber acquisition costs was 48 months for both dial-up and wireless broadband Internet customers during the three and nine months ended March 31, 2014 and 2013. As of March 31, 2014, unrecognized amortization expense for the remainder of fiscal year ended June 30, 2014 is expected to be $76,000 and unrecognized amortization expense for fiscal years ended June 30, 2015, 2016, 2017 and 2018 is expected to be $283,000, $216,000, $148,000 and $44,000, respectively. |
Income_Taxes
Income Taxes | 9 Months Ended | ||||||||||||||||
Mar. 31, 2014 | |||||||||||||||||
Income Taxes [Abstract] | ' | ||||||||||||||||
Income Taxes | ' | ||||||||||||||||
7 | Income Taxes | ||||||||||||||||
During the three and nine months ended March 31, 2014, the Company generated income before income tax expense of $203,696 and $785,345, respectively, and recognized Texas franchise tax expense of $13,200 and $38,400, respectively. The effective tax rate for the three and nine months ended March 31, 2014 was 6.5% and 4.8%, respectively. During the three and nine months ended March 31, 2013, the Company generated income before income tax expense of $236,322 and $764,964, respectively, and recognized Texas franchise tax expense of $12,000 and $36,000, respectively. The effective tax rate for the three and nine months ended March 31, 2013 was 5.1% and 4.7%, respectively. No provision for federal income taxes was recorded for the three and nine months ended March 31, 2014 and 2013 due to the utilization of net operating loss carryforwards. | |||||||||||||||||
A reconciliation of the federal statutory income tax rate to the Company's effective tax rate, as reported, is as follows for the three and nine months ended March 31, 2014 and 2013. | |||||||||||||||||
Three Months Ended | Nine Months Ended | ||||||||||||||||
March 31, | March 31, | ||||||||||||||||
2014 | 2013 | 2014 | 2013 | ||||||||||||||
Income taxes at federal statutory rate | 34 | % | 34 | % | 34 | % | 34 | % | |||||||||
State income tax, net of federal benefit | 4.3 | % | 3.4 | % | 3.2 | % | 3.1 | % | |||||||||
Nondeductible expenses | (9.2 | )% | (9.4 | )% | (10.2 | )% | (10.2 | )% | |||||||||
Change in valuation allowance | (22.6 | )% | (22.9 | )% | (22.2 | )% | (22.2 | )% | |||||||||
Effective income tax rate | 6.5 | % | 5.1 | % | 4.8 | % | 4.7 | % | |||||||||
At June 30, 2013 and March 31, 2014, the Company reversed $3,600,000 and $174,000, respectively, of the valuation allowance for deferred tax assets in expectation of generating taxable income in the future. The Company has provided a valuation allowance for the remaining $10,715,000 of net deferred tax assets at March 31, 2014. In assessing the realizable value of deferred tax assets, management considers whether it is more likely than not that some portion or all of the deferred tax assets will not be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during the periods in which these temporary differences become deductible. Future adjustments to the valuation allowance associated with a change in management's determination of the Company's ability to realize these deferred tax assets will result in an adjustment to income tax expense (benefit) in future periods when those determinations are made. Management will continue to assess the realizability of the deferred tax assets at each interim and annual balance sheet date based on actual and forecasted operating results. | |||||||||||||||||
At March 31, 2014, the Company had net operating loss carry forwards of approximately $37 million for federal income tax purposes. These net operating loss carryforwards may be carried forward in varying amounts and expire beginning in fiscal year 2019 continuing through fiscal year 2034 and may be limited in their use due to significant changes in the Company's ownership. | |||||||||||||||||
The preparation of various tax returns requires the use of estimates for federal and state income tax purposes. Those estimates may be subject to review by respective taxing authorities. A revision, if any, to an estimate may result in assessment of additional taxes, penalties and interest. Tax years 2009 through 2012 remain subject to examination by various federal and state tax jurisdictions. The Company performed an assessment of its various income tax positions for all periods subject to examination and concluded that no accrual of uncertain tax positions was necessary as of March 31, 2014 and June 30, 2013. The Company will account for interest and penalties related to uncertain tax positions in the current period consolidated statement of operations, as necessary. |
Accrued_Liabilities
Accrued Liabilities | 9 Months Ended | ||||||||
Mar. 31, 2014 | |||||||||
Accrued Liabilities [Abstract] | ' | ||||||||
Accrued Liabilities | ' | ||||||||
8 | Accrued Liabilities | ||||||||
As of March 31, 2014 and June 30, 2013, accrued liabilities consisted of: | |||||||||
March 31, | June 30, | ||||||||
2014 | 2013 | ||||||||
Property, franchise and sales tax expense | $ | 211,733 | $ | 229,972 | |||||
Purchase consideration for acquisition of subscribers | 193,433 | - | |||||||
Employee wages and benefits | 167,807 | 114,794 | |||||||
Deferred rent expense | 51,801 | - | |||||||
Professional fees | 37,322 | 56,250 | |||||||
Other | 9,258 | 28,259 | |||||||
Total Accrued Liabilities | $ | 671,354 | $ | 429,275 |
Acquisition_Credit_Facility_an
Acquisition Credit Facility and Long-Term Debt | 9 Months Ended | ||||||||
Mar. 31, 2014 | |||||||||
Acquisition Credit Facility and Long-Term Debt [Abstract] | ' | ||||||||
Acquisition Credit Facility and Long-Term Debt | ' | ||||||||
9 | Acquisition Credit Facility and Long-Term Debt | ||||||||
On October 28, 2013, the Company entered into a loan agreement and other related agreements and documents with Frost Bank (the "Bank") creating a non-revolving acquisition credit facility (the "Acquisition Facility") designed to provide the Company with an additional source of funding for the potential acquisition of subscribers from internet companies (each, an "Acquisition"). | |||||||||
The amount that may be borrowed under the Acquisition Facility is $2,000,000 (the "Loan Cap"). For each specific Acquisition, the maximum amount that can be borrowed under the Acquisition Facility, subject to the Loan Cap, is (i) 55% of the cost of such Acquisition in the case of an Acquisition that is partially paid for using seller financing that has a maturity of less than three years and (ii) 65% of the cost of such Acquisition in the case of an Acquisition that is partially paid for using seller financing that has a maturity of three years or more. The Acquisition Facility is currently set to terminate on April 25, 2015. Through the date of this report, there has been no borrowing under the Acquisition Facility. | |||||||||
Each advance made by the Bank under the Acquisition Facility will be evidenced by the Company's execution and delivery to the Bank of a separate promissory note (an "Acquisition Note") that will provide for a maturity of not more than three years and equal monthly principal reduction payments, plus interest, to be made over the term of the Acquisition Note. Each Acquisition Note will bear interest at a fixed rate equal to the then current index rate for one and one-half (11/2) year to two (2) year loans established by the Federal Home Loan Bank of Dallas, plus 4%. | |||||||||
There are two financial covenants under the Acquisition Facility. The first covenant requires the Company to maintain an end of quarter debt (excluding subordinated debt) to tangible net worth ratio of less than or equal to 2.5 to 1.0. The second covenant requires the Company to maintain a cash flow to debt service ratio of greater than or equal to 2.0 to 1.0, to be calculated on a rolling four-quarter basis. Both covenants are to be tested as of the end of each fiscal quarter. | |||||||||
At March 31, 2014, the Company is in compliance with these covenants. | |||||||||
Indebtedness under the Acquisition Facility will be secured by a perfected, continuing security interest in favor of Frost Bank in all of the Company's assets. Advances will be conditioned on, among other things, all representations and warranties contained in the loan documents being true and correct as of the date of the advance request and there being no default under the Acquisition Facility at the time of, or as a result of, the advance request. With each advance, the Company will be charged a loan processing fee equal to the greater of $250 and one-tenth of one percent (0.10%) of the amount of the advance. | |||||||||
As of March 31, 2014 and June 30, 2013, long term debt consisted of: | |||||||||
March 31, | June 30, | ||||||||
2014 | 2013 | ||||||||
Note payable due February 15, 2015, payable in monthly payments of $4,346 with fixed interest at 4.5% | $ | 46,750 | $ | 83,594 | |||||
Note payable due February 15, 2015, payable in monthly payments of $11,189 with interest imputed at 3.25% (net of unamortized discount of $1,977 and $6,239, respectively) | 121,104 | 217,544 | |||||||
Note payable due February 10, 2014, payable in monthly installments of $417 with fixed interest at 8.5% | - | 2,985 | |||||||
Note payable due January 1, 2014, payable in monthly installments of $615 with interest imputed at 8.5% (net of unamortized discount of $0 and $119, respectively) | - | 4,182 | |||||||
Note payable due November 1, 2014, payable in monthly installments of $1,674 with interest imputed at 8% (net of unamortized discount of $393 and $1,638, respectively) | 13,000 | 26,822 | |||||||
Note payable due May 1, 2015, payable in monthly installments of $2,067 with interest imputed at 8% (net of unamortized discount of $1,397 and $3,600, respectively) | 27,537 | 43,933 | |||||||
208,391 | 379,060 | ||||||||
Less current portion | (204,298 | ) | (226,383 | ) | |||||
Total long-term debt, less current portion | $ | 4,093 | $ | 152,677 |
Stock_Options_and_Warrants
Stock Options and Warrants | 9 Months Ended | ||||||||
Mar. 31, 2014 | |||||||||
Stock Options and Warrants [Abstract] | ' | ||||||||
Stock Options and Warrants | ' | ||||||||
10 | Stock Options and Warrants | ||||||||
As of March 31, 2014, options consisted of: | |||||||||
Weighted Average | |||||||||
Options | Exercise Price | ||||||||
Outstanding at June 30, 2013 | 1,241,526 | $ | 0.39 | ||||||
Granted | 100,000 | $ | 0.45 | ||||||
Exercised | (17,500 | ) | $ | 0.35 | |||||
Forfeited | (97,500 | ) | $ | 0.32 | |||||
Outstanding at March 31, 2014 | 1,226,526 | $ | 0.4 | ||||||
Exercisable at March 31, 2014 | 536,526 | $ | 0.49 | ||||||
As of March 31, 2014, 1,226,526 stock options were outstanding and 755,974 stock options were available for future issuance under the Company's 2007 Stock Option Plan. During the three and nine months ended March 31, 2014, the Company granted zero and 100,000 stock options, respectively. The stock options granted during the nine months ended March 31, 2014 consisted of a single grant of an option to purchase 100,000 shares of the Company's common stock at an exercise price of $0.45 per share to the Company's Chief Financial Officer. The Company determined the total fair value of such option grant to be $15,747, or $0.16 per stock option. The option vests as follows: 25% vests on the grant date and the remaining 75% vests once the Company's stock price reaches $1.00 for 90 consecutive days. Stock based compensation expense of $1,352 and $20,026 was recognized during the three and nine months ended March 31, 2014, respectively, based on granted options. As of March 31, 2014, the total stock based compensation expense related to non-vested awards not yet recognized was $7,757. | |||||||||
As of March 31, 2014, the Company had a total of 394,922 warrants issued and outstanding, previously issued in equal amounts to Steven G. Mihaylo and Ambassador John N. Palmer, former directors of the Company. No warrants were granted during the three and nine months ended March 31, 2014. |
Related_Parties
Related Parties | 9 Months Ended | ||
Mar. 31, 2014 | |||
Related Parties [Abstract] | ' | ||
Related Parties | ' | ||
11 | Related Parties | ||
During the three and nine months ended March 31, 2014, a total of $11,625 and $33,328, respectively, was paid to non-employee directors for serving on the Company's board of directors. For the three and nine months ended March 31, 2013, a total of $13,191 and $27,754, respectively, was paid to non-employee directors for serving on the Company's board of directors. |
Recent_Accounting_Pronouncemen
Recent Accounting Pronouncements | 9 Months Ended | ||
Mar. 31, 2014 | |||
Recent Accounting Pronouncements [Abstract] | ' | ||
Recent Accounting Pronouncements | ' | ||
12 | Recent Accounting Pronouncements | ||
The Company has reviewed recently issued accounting standards, none of which are expected to have a material impact on the Company's financial positions or results of operations. |
Income_Taxes_Tables
Income Taxes (Tables) | 9 Months Ended | ||||||||||||||||
Mar. 31, 2014 | |||||||||||||||||
Income Taxes [Abstract] | ' | ||||||||||||||||
Reconciliation of Federal Statutory Income Tax Rate to the Effective Tax Rate | ' | ||||||||||||||||
A reconciliation of the federal statutory income tax rate to the Company's effective tax rate, as reported, is as follows for the three and nine months ended March 31, 2014 and 2013. | |||||||||||||||||
Three Months Ended | Nine Months Ended | ||||||||||||||||
March 31, | March 31, | ||||||||||||||||
2014 | 2013 | 2014 | 2013 | ||||||||||||||
Income taxes at federal statutory rate | 34 | % | 34 | % | 34 | % | 34 | % | |||||||||
State income tax, net of federal benefit | 4.3 | % | 3.4 | % | 3.2 | % | 3.1 | % | |||||||||
Nondeductible expenses | (9.2 | )% | (9.4 | )% | (10.2 | )% | (10.2 | )% | |||||||||
Change in valuation allowance | (22.6 | )% | (22.9 | )% | (22.2 | )% | (22.2 | )% | |||||||||
Effective income tax rate | 6.5 | % | 5.1 | % | 4.8 | % | 4.7 | % |
Accrued_Liabilities_Tables
Accrued Liabilities (Tables) | 9 Months Ended | ||||||||
Mar. 31, 2014 | |||||||||
Accrued Liabilities [Abstract] | ' | ||||||||
Schedule of accrued liabilities | ' | ||||||||
As of March 31, 2014 and June 30, 2013, accrued liabilities consisted of: | |||||||||
March 31, | June 30, | ||||||||
2014 | 2013 | ||||||||
Property, franchise and sales tax expense | $ | 211,733 | $ | 229,972 | |||||
Purchase consideration for acquisition of subscribers | 193,433 | - | |||||||
Employee wages and benefits | 167,807 | 114,794 | |||||||
Deferred rent expense | 51,801 | - | |||||||
Professional fees | 37,322 | 56,250 | |||||||
Other | 9,258 | 28,259 | |||||||
Total Accrued Liabilities | $ | 671,354 | $ | 429,275 |
Acquisition_Credit_Facility_an1
Acquisition Credit Facility and Long-Term Debt (Tables) | 9 Months Ended | ||||||||
Mar. 31, 2014 | |||||||||
Acquisition Credit Facility and Long-Term Debt [Abstract] | ' | ||||||||
Schedule of Long-Term Debt | ' | ||||||||
As of March 31, 2014 and June 30, 2013, long term debt consisted of: | |||||||||
March 31, | June 30, | ||||||||
2014 | 2013 | ||||||||
Note payable due February 15, 2015, payable in monthly payments of $4,346 with fixed interest at 4.5% | $ | 46,750 | $ | 83,594 | |||||
Note payable due February 15, 2015, payable in monthly payments of $11,189 with interest imputed at 3.25% (net of unamortized discount of $1,977 and $6,239, respectively) | 121,104 | 217,544 | |||||||
Note payable due February 10, 2014, payable in monthly installments of $417 with fixed interest at 8.5% | - | 2,985 | |||||||
Note payable due January 1, 2014, payable in monthly installments of $615 with interest imputed at 8.5% (net of unamortized discount of $0 and $119, respectively) | - | 4,182 | |||||||
Note payable due November 1, 2014, payable in monthly installments of $1,674 with interest imputed at 8% (net of unamortized discount of $393 and $1,638, respectively) | 13,000 | 26,822 | |||||||
Note payable due May 1, 2015, payable in monthly installments of $2,067 with interest imputed at 8% (net of unamortized discount of $1,397 and $3,600, respectively) | 27,537 | 43,933 | |||||||
208,391 | 379,060 | ||||||||
Less current portion | (204,298 | ) | (226,383 | ) | |||||
Total long-term debt, less current portion | $ | 4,093 | $ | 152,677 |
Stock_Options_and_Warrants_Tab
Stock Options and Warrants (Tables) | 9 Months Ended | ||||||||
Mar. 31, 2014 | |||||||||
Stock Options and Warrants [Abstract] | ' | ||||||||
Schedule of Stock Options | ' | ||||||||
As of March 31, 2014, options consisted of: | |||||||||
Weighted Average | |||||||||
Options | Exercise Price | ||||||||
Outstanding at June 30, 2013 | 1,241,526 | $ | 0.39 | ||||||
Granted | 100,000 | $ | 0.45 | ||||||
Exercised | (17,500 | ) | $ | 0.35 | |||||
Forfeited | (97,500 | ) | $ | 0.32 | |||||
Outstanding at March 31, 2014 | 1,226,526 | $ | 0.4 | ||||||
Exercisable at March 31, 2014 | 536,526 | $ | 0.49 |
Basic_and_Diluted_Net_Income_P1
Basic and Diluted Net Income Per Share (Details) | 3 Months Ended | 9 Months Ended | ||
Mar. 31, 2014 | Mar. 31, 2013 | Mar. 31, 2014 | Mar. 31, 2013 | |
Basic and Diluted Net Income Per Share [Abstract] | ' | ' | ' | ' |
Common stock equivalent shares assuming conversion of preferred stock | 2,718,428 | 2,718,428 | 2,718,428 | 2,718,428 |
Common stock equivalent shares attributable to outstanding in-the-money stock options and warrants | 397,655 | 26,309 | 356,290 | 1,585 |
Employee Stock Option [Member] | ' | ' | ' | ' |
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ' | ' | ' | ' |
Antidilutive shares excluded from the EPS calculation | 0 | 1,189,026 | 471,526 | 1,189,026 |
Warrants [Member] | ' | ' | ' | ' |
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ' | ' | ' | ' |
Antidilutive shares excluded from the EPS calculation | ' | 0 | ' | 394,922 |
Acquisition_of_Subscribers_Det
Acquisition of Subscribers (Details) (USD $) | 9 Months Ended | 12 Months Ended | 0 Months Ended | 0 Months Ended | |||||
Mar. 31, 2014 | Jun. 30, 2013 | Aug. 01, 2012 | Feb. 01, 2013 | Nov. 01, 2013 | Nov. 01, 2013 | Nov. 01, 2013 | Nov. 01, 2016 | Nov. 01, 2014 | |
acquisitions | acquisitions | AEI Acquisition [Member] | Internet Doctors Acquisition [Member] | Upperspace Corporation [Member] | Upperspace Corporation [Member] | Upperspace Corporation [Member] | Upperspace Corporation [Member] | Upperspace Corporation [Member] | |
Subscriber Acquisition Costs [Member] | Other Intangible Assets [Member] | Scenario, Forecast [Member] | Scenario, Forecast [Member] | ||||||
Business Acquisition [Line Items] | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Number of acquisitions | 1 | 2 | ' | ' | ' | ' | ' | ' | ' |
Total purchase consideration for acquisition of subscribers | ' | ' | $63,006 | $95,695 | $580,300 | ' | ' | ' | ' |
Subscriber acquisition, cash paid for consideration | ' | ' | 26,000 | 50,000 | 193,433 | ' | ' | 193,433 | 193,434 |
Cash retained by seller | ' | ' | ' | ' | 61,325 | ' | ' | ' | ' |
Notes payable issued for acquisition | ' | ' | 37,006 | 45,695 | ' | ' | ' | ' | ' |
Weighted average amortization period for subscriber acquisitions, months | '48 months | ' | ' | ' | ' | ' | ' | ' | ' |
Intangible assets acquired | ' | ' | ' | ' | ' | 530,487 | 7,681 | ' | ' |
Fixed assets acquired | ' | ' | ' | ' | $42,132 | ' | ' | ' | ' |
Goodwill_and_Subscriber_Acquis1
Goodwill and Subscriber Acquisition Costs (Details) (USD $) | 9 Months Ended |
Mar. 31, 2014 | |
Goodwill and Subscriber Acquisition Costs [Abstract] | ' |
Weighted average amortization period for subscriber acquisitions, months | '48 months |
Expected amortization expense, remainder of the fiscal year | $76,000 |
Expected future amortization expense, 2015 | 283,000 |
Expected future amortization expense, 2016 | 216,000 |
Expected future amortization expense, 2017 | 148,000 |
Expected future amortization expense, 2018 | $44,000 |
Income_Taxes_Details
Income Taxes (Details) (USD $) | 3 Months Ended | 9 Months Ended | 12 Months Ended | ||
Mar. 31, 2014 | Mar. 31, 2013 | Mar. 31, 2014 | Mar. 31, 2013 | Jun. 30, 2013 | |
Income Taxes [Abstract] | ' | ' | ' | ' | ' |
Income before income tax expense | $203,696 | $236,322 | $785,345 | $764,964 | ' |
Texas franchise tax expense | 13,200 | 12,000 | 38,400 | 36,000 | ' |
Reconciliation of the federal statutory income tax rate to the effective tax rate: | ' | ' | ' | ' | ' |
Income taxes at federal statutory rate | 34.00% | 34.00% | 34.00% | 34.00% | ' |
State income tax, net of federal benefit | 4.30% | 3.40% | 3.20% | 3.10% | ' |
Nondeductible expenses | -9.20% | -9.40% | -10.20% | -10.20% | ' |
Change in valuation allowance | -22.60% | -22.90% | -22.20% | -22.20% | ' |
Effective income tax rate | 6.50% | 5.10% | 4.80% | 4.70% | ' |
Increase (decrease) in valuation allowance on deferred tax assets | ' | ' | -174,000 | ' | -3,600,000 |
Valuation allowance of the deferred tax asset | 10,715,000 | ' | 10,715,000 | ' | ' |
Operating Loss Carryforwards [Line Items] | ' | ' | ' | ' | ' |
Net operating loss carryforwards | $37,000,000 | ' | $37,000,000 | ' | ' |
Minimum [Member] | ' | ' | ' | ' | ' |
Operating Loss Carryforwards [Line Items] | ' | ' | ' | ' | ' |
Net operating loss carryforwards expiration year | ' | ' | 1-Jul-19 | ' | ' |
Years open to examination | ' | ' | '2009 | ' | ' |
Maximum [Member] | ' | ' | ' | ' | ' |
Operating Loss Carryforwards [Line Items] | ' | ' | ' | ' | ' |
Net operating loss carryforwards expiration year | ' | ' | 30-Jun-34 | ' | ' |
Years open to examination | ' | ' | '2012 | ' | ' |
Accrued_Liabilities_Details
Accrued Liabilities (Details) (USD $) | Mar. 31, 2014 | Jun. 30, 2013 |
Accrued Liabilities [Abstract] | ' | ' |
Property, franchise and sales tax expense | $211,733 | $229,972 |
Purchase consideration for acquisition of subscribers | 193,433 | ' |
Employee wages and benefits | 167,807 | 114,794 |
Deferred rent expense | 51,801 | ' |
Professional fees | 37,322 | 56,250 |
Other | 9,258 | 28,259 |
Total Accrued Liabilities | $671,357 | $429,275 |
Acquisition_Credit_Facility_an2
Acquisition Credit Facility and Long-Term Debt (Narrative) (Details) (Line of Credit [Member], USD $) | 9 Months Ended |
Mar. 31, 2014 | |
Line of Credit [Member] | ' |
Line of Credit Facility [Line Items] | ' |
Amount that may be borrowed | $2,000,000 |
Percentage of cost of acquisition | 55.00% |
Percentage of acquisition with three year maturity | 65.00% |
Termination date of credit facility | 25-Apr-15 |
Basis spread over index rate | 4.00% |
Maximum debt to tangible net worth ratio | 2.5 |
Minimum cash flow to debt service ratio | 2 |
Debt instrument fee | $250 |
Debt instrument fee, percentage | 0.10% |
Acquisition_Credit_Facility_an3
Acquisition Credit Facility and Long-Term Debt (Schedule of Long Term Debt) (Details) (USD $) | 9 Months Ended | |
Mar. 31, 2014 | Jun. 30, 2013 | |
Long-Term Debt | ' | ' |
Total long-term debt | $208,391 | $379,060 |
Less current portion | -204,298 | -226,383 |
Total long-term debt, less current portion | 4,093 | 152,677 |
4.5 % Note Payable Due February 15, 2015 [Member] | ' | ' |
Long-Term Debt | ' | ' |
Notes payable | 46,750 | 83,594 |
Debt instrument, maturity date | 15-Feb-15 | ' |
Periodic payments, frequency | 'monthly | ' |
Debt instrument, periodic payment | 4,346 | ' |
Effective interest rate | 4.50% | ' |
Note Payable Due February 15, 2015 [Member] | ' | ' |
Long-Term Debt | ' | ' |
Notes payable | 121,104 | 217,544 |
Debt instrument, maturity date | 15-Feb-15 | ' |
Periodic payments, frequency | 'monthly | ' |
Debt instrument, periodic payment | 11,189 | ' |
Effective interest rate | 3.25% | ' |
Unamortized discount | 1,977 | 6,239 |
8.5% Note Payable Due February 10, 2014 [Member] | ' | ' |
Long-Term Debt | ' | ' |
Notes payable | ' | 2,985 |
Debt instrument, maturity date | 10-Feb-14 | ' |
Periodic payments, frequency | 'monthly | ' |
Debt instrument, periodic payment | 417 | ' |
Effective interest rate | 8.50% | ' |
Note Payable Due January 1, 2014 [Member] | ' | ' |
Long-Term Debt | ' | ' |
Notes payable | ' | 4,182 |
Debt instrument, maturity date | 1-Jan-14 | ' |
Periodic payments, frequency | 'monthly | ' |
Debt instrument, periodic payment | 615 | ' |
Effective interest rate | 8.50% | ' |
Unamortized discount | 0 | 119 |
Note Payable Due November 1, 2014 with no Interest [Member] | ' | ' |
Long-Term Debt | ' | ' |
Notes payable | 13,000 | 26,822 |
Debt instrument, maturity date | 1-Nov-14 | ' |
Periodic payments, frequency | 'monthly | ' |
Debt instrument, periodic payment | 1,674 | ' |
Effective interest rate | 8.00% | ' |
Unamortized discount | 393 | 1,638 |
Note Payable Due May 1, 2015 with no Interest [Member] | ' | ' |
Long-Term Debt | ' | ' |
Notes payable | 27,537 | 43,933 |
Debt instrument, maturity date | 1-May-15 | ' |
Periodic payments, frequency | 'monthly | ' |
Debt instrument, periodic payment | 2,067 | ' |
Effective interest rate | 8.00% | ' |
Unamortized discount | $1,397 | $3,600 |
Stock_Options_and_Warrants_Det
Stock Options and Warrants (Details) (USD $) | 3 Months Ended | 9 Months Ended |
Mar. 31, 2014 | Mar. 31, 2014 | |
Options | ' | ' |
Outstanding, beginning balance | ' | 1,241,526 |
Granted | ' | 100,000 |
Exercised | ' | -17,500 |
Forfeited | ' | -97,500 |
Outstanding, ending balance | 1,226,526 | 1,226,526 |
Exercisable, ending balance | 536,526 | 536,526 |
Weighted Average Exercise Price | ' | ' |
Outstanding, beginning balance | ' | $0.39 |
Granted | ' | $0.45 |
Exercised | ' | $0.35 |
Forfeited | ' | $0.32 |
Outstanding, ending balance | $0.40 | $0.40 |
Exercisable, ending balance | $0.49 | $0.49 |
Number of options available for future issuance | 755,974 | 755,974 |
Stock options granted | 0 | 100,000 |
Fair value of options granted in period | ' | $15,747 |
Fair value of options granted in period, per option | ' | $0.16 |
Option vesting terms | ' | '25% vests on the grant date and the remaining 75% vests once the Company's stock price reaches $1.00 for 90 consecutive days |
Stock compensation expense | 1,352 | 20,026 |
Unrecognized compensation cost related to non-vested stock options | $7,757 | $7,757 |
Warrants outstanding | 394,922 | 394,922 |
Vesting Immediately [Member] | ' | ' |
Weighted Average Exercise Price | ' | ' |
Vesting rate | ' | 25.00% |
Vesting upon Achievement of Performance Target [Member] | ' | ' |
Weighted Average Exercise Price | ' | ' |
Vesting rate | ' | 75.00% |
Related_Parties_Details
Related Parties (Details) (Non-Employee Directors [Member], USD $) | 3 Months Ended | 9 Months Ended | ||
Mar. 31, 2014 | Mar. 31, 2013 | Mar. 31, 2014 | Mar. 31, 2013 | |
Non-Employee Directors [Member] | ' | ' | ' | ' |
Related Party Transaction [Line Items] | ' | ' | ' | ' |
Fees paid to non-employee directors for serving on the Board of Directors | $11,625 | $13,191 | $33,328 | $27,754 |