Document_and_Entity_Informatio
Document and Entity Information (USD $) | 12 Months Ended | ||
Jun. 30, 2014 | Sep. 26, 2014 | Dec. 31, 2013 | |
Document and Entity Information [Abstract] | ' | ' | ' |
Entity Registrant Name | 'INTERNET AMERICA INC | ' | ' |
Entity Central Index Key | '0001001279 | ' | ' |
Document Type | '10-K | ' | ' |
Document Period End Date | 30-Jun-14 | ' | ' |
Amendment Flag | 'false | ' | ' |
Current Fiscal Year End Date | '--06-30 | ' | ' |
Entity Well-known Seasoned Issuer | 'No | ' | ' |
Entity Voluntary Filers | 'No | ' | ' |
Entity Current Reporting Status | 'Yes | ' | ' |
Entity Filer Category | 'Smaller Reporting Company | ' | ' |
Entity Public Float | ' | ' | $3,022,299 |
Entity Common Stock, Shares Outstanding | ' | 16,747,062 | ' |
Document Fiscal Year Focus | '2014 | ' | ' |
Document Fiscal Period Focus | 'FY | ' | ' |
CONSOLIDATED_BALANCE_SHEETS
CONSOLIDATED BALANCE SHEETS (USD $) | Jun. 30, 2014 | Jun. 30, 2013 |
CURRENT ASSETS: | ' | ' |
Cash and cash equivalents | $3,107,142 | $2,295,190 |
Accounts receivable, net of allowance for uncollectible accounts of $10,496 and $9,801 as of June 30, 2014 and 2013, respectively | 215,805 | 155,154 |
Inventory | 354,080 | 423,947 |
Prepaid expenses and other current assets | 94,001 | 71,311 |
Deferred tax asset | 422,000 | 260,000 |
Total current assets | 4,193,028 | 3,205,602 |
Property and equipment - net | 1,585,546 | 1,431,001 |
Goodwill | 1,968,127 | 1,968,127 |
Subscriber acquisition costs - net | 691,193 | 420,141 |
Deferred tax asset | 8,178,000 | 3,340,000 |
Other assets | 41,181 | 48,455 |
TOTAL ASSETS | 16,657,075 | 10,413,326 |
CURRENT LIABILITIES: | ' | ' |
Accounts payable | 158,059 | 159,791 |
Accrued liabilities | 597,529 | 429,275 |
Deferred revenue | 798,320 | 768,379 |
Current portion of long-term debt and capital lease | 187,029 | 226,383 |
Total current liabilities | 1,740,937 | 1,583,828 |
Other liability | 193,433 | ' |
Long-term debt and capital lease, net of current portion | 110,647 | 152,677 |
Total liabilities | 2,045,017 | 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 June 30, 2014 and 2013 | 27,185 | 27,185 |
Common stock, $0.01 par value: 40,000,000 shares authorized, 16,747,062 and 16,729,562 outstanding as of June 30, 2014 and June 30, 2013, respectively. | 167,471 | 167,296 |
Additional paid-in capital | 63,069,658 | 63,042,066 |
Accumulated deficit | -48,652,256 | -54,559,726 |
Total shareholders' equity | 14,612,058 | 8,676,821 |
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY | $16,657,075 | $10,413,326 |
CONSOLIDATED_BALANCE_SHEETS_Pa
CONSOLIDATED BALANCE SHEETS (Parenthetical) (USD $) | Jun. 30, 2014 | Jun. 30, 2013 |
CONSOLIDATED BALANCE SHEETS [Abstract] | ' | ' |
Allowance for uncollectible accounts | $10,496 | $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 |
CONSOLIDATED_STATEMENTS_OF_OPE
CONSOLIDATED STATEMENTS OF OPERATIONS (USD $) | 12 Months Ended | |
Jun. 30, 2014 | Jun. 30, 2013 | |
REVENUES: | ' | ' |
Internet services | $8,103,632 | $7,802,530 |
TOTAL REVENUES | 8,103,632 | 7,802,530 |
OPERATING EXPENSES: | ' | ' |
Connectivity and operations | 4,006,457 | 3,802,528 |
Sales and marketing | 332,873 | 439,830 |
General and administrative | 2,021,022 | 1,747,770 |
Depreciation and amortization | 776,794 | 796,228 |
Impairment loss | ' | 69,000 |
TOTAL OPERATING EXPENSES | 7,137,146 | 6,855,356 |
INCOME FROM OPERATIONS | 966,486 | 947,174 |
OTHER INCOME (EXPENSE) | ' | ' |
Interest income | 7,130 | 7,642 |
Interest expense | -12,357 | -19,238 |
OTHER EXPENSE, net | -5,227 | -11,596 |
INCOME BEFORE INCOME TAX EXPENSE (BENEFIT) | 961,259 | 935,578 |
Income tax benefit | -4,946,211 | -3,542,387 |
NET INCOME and TOTAL COMPREHENSIVE INCOME | $5,907,470 | $4,477,965 |
NET INCOME PER COMMON SHARE: | ' | ' |
BASIC | $0.35 | $0.27 |
DILUTED | $0.30 | $0.23 |
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING: | ' | ' |
BASIC | 16,734,981 | 16,729,562 |
DILUTED | 19,892,591 | 19,449,887 |
CONSOLIDATED_STATEMENTS_OF_CHA
CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY (USD $) | Total | Preferred Stock [Member] | Common Stock [Member] | Additional Paid-in Capital [Member] | Accumulated Deficit [Member] |
BALANCE at Jun. 30, 2012 | $4,187,655 | $27,185 | $167,296 | $63,030,865 | ($59,037,691) |
BALANCE, shares at Jun. 30, 2012 | ' | 2,718,428 | 16,729,562 | ' | ' |
Exercise of stock options, shares | ' | ' | ' | ' | ' |
Stock based compensation | 11,201 | ' | ' | 11,201 | ' |
Net income | 4,477,965 | ' | ' | ' | 4,477,965 |
BALANCE at Jun. 30, 2013 | 8,676,821 | 27,185 | 167,296 | 63,042,066 | -54,559,726 |
BALANCE, shares at Jun. 30, 2013 | ' | 2,718,428 | 16,729,562 | ' | ' |
Exercise of stock options | 6,125 | ' | 175 | 5,950 | ' |
Exercise of stock options, shares | 17,500 | ' | 17,500 | ' | ' |
Stock based compensation | 21,642 | ' | ' | 21,642 | ' |
Net income | 5,907,470 | ' | ' | ' | 5,907,470 |
BALANCE at Jun. 30, 2014 | $14,612,058 | $27,185 | $167,471 | $63,069,658 | ($48,652,256) |
BALANCE, shares at Jun. 30, 2014 | ' | 2,718,428 | 16,747,062 | ' | ' |
CONSOLIDATED_STATEMENTS_OF_CAS
CONSOLIDATED STATEMENTS OF CASH FLOWS (USD $) | 12 Months Ended | |
Jun. 30, 2014 | Jun. 30, 2013 | |
OPERATING ACTIVITIES: | ' | ' |
Net income | $5,907,470 | $4,477,965 |
Adjustments to reconcile net income to net cash provided by operating activities: | ' | ' |
Depreciation and amortization | 776,794 | 796,228 |
Impairment loss | ' | 69,000 |
Loss from sale or disposal of assets | 8,173 | 4,877 |
Provision for (recovery of) bad debt | 28 | -7,733 |
Stock based compensation | 21,642 | 11,201 |
Deferred income taxes | -5,000,000 | -3,600,000 |
Changes in operating assets and liabilities: | ' | ' |
Accounts receivable | -60,679 | -43,707 |
Inventory | 65,373 | 2,364 |
Prepaid expenses and other current assets | -24,610 | 78,961 |
Other assets | 14,955 | -20,957 |
Accounts payable and accrued liabilities | -26,912 | -1,103 |
Deferred revenue | -31,385 | -12,418 |
Net cash provided by operating activities | 1,650,849 | 1,754,678 |
INVESTING ACTIVITIES: | ' | ' |
Purchases of property and equipment | -483,753 | -584,131 |
Proceeds from release of 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 | -615,861 | -632,296 |
FINANCING ACTIVITIES: | ' | ' |
Proceeds from exercise of stock options | 6,125 | ' |
Principal payments of long-term debt | -226,383 | -260,422 |
Principal payments of capital lease | -2,778 | ' |
Net cash used in financing activities | -223,036 | -260,422 |
NET INCREASE IN CASH AND CASH EQUIVALENTS | 811,952 | 861,960 |
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD | 2,295,190 | 1,433,230 |
CASH AND CASH EQUIVALENTS, END OF PERIOD | 3,107,142 | 2,295,190 |
SUPPLEMENTAL INFORMATION: | ' | ' |
Cash paid for interest | 12,925 | 19,405 |
Cash paid for income taxes | 97,839 | 42,398 |
NON-CASH INVESTING AND FINANCING ACTIVITIES | ' | ' |
Accrued purchase consideration for acquisition of subscribers | 386,866 | 82,702 |
Assets acquired through capital lease | $147,777 | ' |
General_Information_and_Summar
General Information and Summary of Significant Accounting Policies | 12 Months Ended | ||||||||
Jun. 30, 2014 | |||||||||
General Information and Summary of Significant Accounting Policies [Abstract] | ' | ||||||||
General Information and Summary of Significant Accounting Policies | ' | ||||||||
1. General Information and Summary of Significant Accounting Policies | |||||||||
Internet America, Inc. (the “Company” or “we”) is an internet service provider (“ISP”) that is focused on providing wireless high-speed broadband internet in rural markets to residential and business subscribers. The Company was founded in 1995. | |||||||||
Basis of Consolidation — The consolidated financial statements include the accounts of Internet America, Inc. and its wholly-owned subsidiaries. All intercompany balances and transactions have been eliminated upon consolidation. | |||||||||
Revenue Recognition — Revenues derived from set-up charges are amortized over the expectant life of the customer. The Company bills its subscribers in advance for direct access to the internet, but defers recognition of these revenues until the services are provided. Deferred revenue was approximately $798,000 and $768,000 at June 30, 2014 and 2013, respectively. | |||||||||
Business Combinations — We recognize assets acquired and liabilities assumed in business combinations, including contingent assets and liabilities, based on fair value estimates as of the date of acquisition. In accordance with Financial Accounting Standards Board ("FASB") Accounting Standards Codification 805, Business Combinations, we recognize and measure goodwill as of the acquisition date, as the excess of the fair value of the consideration paid over the fair value of the identified net assets acquired. If, in the rare occasion, fair value of net assets acquired exceeds purchase price, the excess is recognized as gain from a bargain purchase. All acquisition-related transaction costs have been expensed as incurred rather than capitalized as a part of the cost of the acquisition. | |||||||||
Credit Risk — Financial instruments that potentially subject the Company to concentrations of credit risk consist principally of cash equivalents and accounts receivable, as collateral is generally not required. We maintain cash accounts in major U.S. financial institutions. The balances of these accounts sometimes exceed the federally insured limits, although no losses have been incurred in connection with these deposits. During the years ended June 30, 2014 and 2013, the Company recorded net bad debt expense of approximately $28 and net bad debt recovery of approximately $7,700, respectively. Charges and recoveries were recorded as a result of monthly evaluations during the year of the collectability of accounts receivable and as accounts became 90 days or older from the date of billing. Delinquent accounts deemed uncollectable were disconnected but collection efforts were continued on such accounts. | |||||||||
Financial Instruments — The carrying amounts of cash, accounts receivable and accounts payable approximate fair value because of the short-term nature of these accounts and because the interest rates are commensurate with debt instruments carrying similar credit risk. The fair values for debt and lease obligations, which have fixed interest rates, do not differ materially from their carrying values. | |||||||||
Fair Value — U. S. generally accepted accounting principles defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date and establishes a three-level valuation hierarchy for disclosure of fair value measurements. The valuation hierarchy categorizes assets and liabilities measured at fair value into one of three different levels depending on the observability of the inputs employed in the measurement. The three levels are as follows: | |||||||||
Level 1 – Observable inputs such as quoted prices in active markets at the measurement date for identical, unrestricted assets or liabilities. | |||||||||
Level 2 – Other inputs that are observable, directly or indirectly, such as quoted prices in markets that are not active, or inputs which are observable, either directly or indirectly, for substantially the full term of the asset or liability. | |||||||||
Level 3 – Unobservable inputs for which there is little or no market data and which we make our own assumptions about how market participants would price the assets and liabilities. | |||||||||
Cash and Cash Equivalents — Cash and cash equivalents consist of cash on hand and cash deposited in money market accounts, occasionally in excess of federally insured limits. Cash and cash equivalents are stated at cost, which approximates fair value. | |||||||||
Inventory — The Company values inventory at the lower of cost or market using the weighted average method. Inventory consists primarily of wireless internet access equipment and routers. | |||||||||
Property and Equipment — Property and equipment are recorded at cost. Depreciation and amortization are provided using the straight-line or double declining method over the estimated useful lives of the assets, ranging from three to fifteen years. | |||||||||
Goodwill — Goodwill was recorded in the acquisition of NeoSoft, Inc. in 1998 and PDQ Net, Inc. in 1999. Goodwill is the excess of the acquisition costs of a reporting unit over the fair value of the identifiable net assets acquired. Pursuant to FASB guidance on goodwill and other intangibles, we perform a qualitative evaluation of goodwill at least annually or more frequently when events and circumstances occur indicating that the recorded goodwill may be impaired. If our qualitative evaluation indicates an impairment may exist we then complete the following two-step process. If the book value of an acquired reporting unit exceeds its fair value, the implied fair value of goodwill is compared with the carrying amount of goodwill. If the carrying amount of goodwill exceeds the implied fair value, an impairment loss is recorded equal to that excess. | |||||||||
The Company performed its annual impairment tests at June 30, 2014 and 2013. During the years ended June 30, 2014 and 2013, the Company recorded impairment losses of zero and $69,000, respectively. See Note 4 for further details. | |||||||||
Subscriber Acquisition Costs — Subscriber acquisition costs primarily relate to business combinations or acquisitions of subscribers. Subscriber acquisition costs are amortized over the average life of a customer which is estimated at 48 months. The Company reviews intangible assets with definite lives, including subscriber acquisition costs, for impairment whenever conditions arise that indicate the carrying value may not be recoverable, such as economic downturn in a market or a change in the assessment of future operations. | |||||||||
Long-Lived Assets — The Company periodically reviews the values assigned to long-lived assets, such as property and equipment, to determine if any impairments have occurred in accordance with the guidance on impairment or disposal of long-lived assets. If the undiscounted future cash flows of an asset to be held and used in operations are less than the carrying value, the Company would recognize a loss equal to the difference between the carrying value and fair market value. The Company has concluded that no impairment occurred in the years ended June 30, 2014 or 2013. | |||||||||
Stock-Based Compensation — The Company accounts for stock-based compensation in accordance with the FASB guidance, which requires the measurement and recognition of compensation expense for all share-based payment awards made to employees and directors, including employee stock options, based on estimated fair values as of the date of grant. | |||||||||
Advertising Expenses — The Company expenses advertising production costs in the period in which the advertisement is first aired. All other advertising costs are expensed as incurred. The Company focuses primarily on a direct mail form of advertising. Advertising expenses for the years ended June 30, 2014 and 2013 were approximately $30,000 and $58,000, respectively. | |||||||||
Income Taxes — Deferred tax assets and liabilities are determined using the asset and liability method in accordance with the FASB guidance on income taxes. Under this method, deferred tax assets and liabilities are established for future tax consequences of temporary differences between the financial statement carrying amounts of assets and liabilities and their tax basis. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to reverse. Deferred tax assets are offset by valuation allowances when we believe it is more likely than not that such net deferred tax assets will not be realized. | |||||||||
The Company's federal and state income tax returns for the years ended 2009 through 2013 are open to examination. At June 30, 2014 and 2013, the Company evaluated its open tax years in all known jurisdictions. Based on this evaluation, the Company did not identify any uncertain tax positions. We will account for interest and penalties relating to uncertain tax positions in the current period statement of operations as necessary. | |||||||||
Basic and Diluted Net Income Per Share — Basic earnings per share is computed using the weighted average number of common shares outstanding and excludes any anti-dilutive effects of options, warrants and convertible securities. Diluted earnings per share reflect the potential dilution that could occur upon exercise or conversion of these instruments. | |||||||||
Our diluted earnings per share calculation excludes zero and 1,189,026 of potentially dilutive shares for the years ended June 30, 2014 and 2013, respectively, due to their anti-dilutive effect. The following reconciles basic and diluted weighted average shares outstanding: | |||||||||
Year ended June 30, | |||||||||
2014 | 2013 | ||||||||
Basic weighted average shares outstanding | 16,734,981 | 16,729,562 | |||||||
Dilutive effect of: | |||||||||
Convertible preferred stock | 2,718,428 | 2,718,428 | |||||||
Stock options and warrants | 439,182 | 1,897 | |||||||
Diluted weighted average shares outstanding | 19,892,591 | 19,449,887 | |||||||
Use of Estimates — The preparation of 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. | |||||||||
Comprehensive Income — Because the Company has no components of other comprehensive income, comprehensive income is the same as net income for the years ended June 30, 2014 and 2013. | |||||||||
Reclassifications — Certain reclassifications have been made to the prior year financial statements in order to conform to the current year presentation. These reclassifications had no effect on net income, total assets, total liabilities or equity. Personnel expenses of $169,000 from the fiscal year ended June 30, 2013 were reclassified from connectivity and operations to general and administrative expenses. | |||||||||
New accounting standards — The Company has implemented all accounting pronouncements that are in effect and that may impact its consolidated financial statements and does not believe that there are any other accounting pronouncements that have been issued that might have a material impact on its financial position or results of operations. |
Acquisitions
Acquisitions | 12 Months Ended |
Jun. 30, 2014 | |
Acquisitions [Abstract] | ' |
Acquisitions | ' |
2. Acquisitions | |
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 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 $193,433 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: $530,486 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. | |
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 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 August 1, 2012, the Company completed an acquisition of the subscribers associated with the wireless ISP operations of AEI Wireless 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. |
Property_and_Equipment
Property and Equipment | 12 Months Ended | ||||||||
Jun. 30, 2014 | |||||||||
Property and Equipment [Abstract] | ' | ||||||||
Property and Equipment | ' | ||||||||
3. Property and Equipment | |||||||||
As of June 30, 2014 and 2013, property and equipment consisted of the following: | |||||||||
June 30, | |||||||||
2014 | 2013 | ||||||||
Land | $ | 30,000 | 30,000 | ||||||
Infrastructure in progress | 131,010 | 117,231 | |||||||
Data communications and office equipment | 5,014,456 | 4,523,382 | |||||||
Computer software | 832,371 | 831,298 | |||||||
Furniture and fixtures | 91,763 | 91,564 | |||||||
Vehicles-fleet trucks held under capital lease | 147,777 | - | |||||||
Leasehold improvements | 55,670 | 45,897 | |||||||
Building | 20,450 | 20,450 | |||||||
6,323,497 | 5,659,822 | ||||||||
Less accumulated depreciation | (4,737,951 | ) | (4,228,821 | ) | |||||
Total property and equipment, net | $ | 1,585,546 | 1,431,001 | ||||||
We own property in Victoria, Texas that includes an office for our Southwest Texas operations and a tower used in our wireless network. Infrastructure in progress relates to wireless equipment that was purchased by the Company for near future improvement and upgrades to its existing wireless networks. The equipment will be included in data communications equipment and depreciated when placed into service. The vehicles–fleet trucks are pursuant to a capital lease. | |||||||||
Depreciation expense charged to operations was approximately $516,000 and $640,000 for the years ended June 30, 2014 and 2013, respectively, which includes $3,037 related to assets held under capital lease for fiscal year 2014. |
Goodwill_and_Subscriber_Acquis
Goodwill and Subscriber Acquisition Costs | 12 Months Ended | ||||
Jun. 30, 2014 | |||||
Goodwill and Subscriber Acquisition Costs [Abstract] | ' | ||||
Goodwill and Subscriber Acquisition Costs | ' | ||||
4. Goodwill and Subscriber Acquisition Costs | |||||
Goodwill | |||||
The Company performs a qualitative evaluation of goodwill annually or more frequently when indicators of impairment exist, and if that evaluation indicates impairment has occurred, the following two-step process is applied. The first step is used to identify a potential impairment by comparing the fair value of a reporting unit with its net book value (or carrying amount) including goodwill. If the fair value exceeds the carrying amount, goodwill of the reporting unit is not considered impaired and the second step of the impairment test is unnecessary. If the carrying amount of the reporting unit exceeds its fair value, the second step of the goodwill impairment test compares the fair value of the reporting unit's goodwill with the carrying amount of that goodwill. If the carrying amount exceeds the implied fair value, an impairment loss is recognized in an amount equal to that excess. | |||||
Determining the fair value of multiple reporting units under the first step of the goodwill impairment test and determining the fair value of individual assets and liabilities of multiple reporting units (including previously unrecognized intangible assets) under the second test of the goodwill impairment test uses Level 3 inputs and includes multiple estimates and assumptions. These estimates and assumptions could have a significant impact on whether an impairment charge is recognized and the magnitude of any such charge. Estimates of fair value are primarily determined using discounted future net cash flows of the reportable units and are based on management's best estimate and general market conditions. This approach uses significant assumptions, including the discount rate, estimates of costs to operate our reporting units and changes to our future subscriber base. | |||||
The Company performed its annual goodwill impairment assessment as of June 30, 2013 and 2014 and determined an impairment of goodwill existed, resulting in an impairment loss of zero and $69,000, respectively for the years ended June 30, 2014 and 2013. | |||||
Subscriber Acquisition Costs | |||||
The amortization period for subscriber acquisition costs is 48 months for both dial-up and wireless customers. Total subscriber acquisition costs, net of accumulated amortization, were approximately $691,000 and $420,000 for the years ended June 30, 2014 and 2013, respectively. Amortization expense for the years ended June 30, 2014 and 2013 was approximately $261,000 and $156,000, respectively. As of June 30, 2014, expected amortization expense for future fiscal years is approximately as follows: | |||||
Fiscal year ending June 30,: | |||||
2015 | $ | 283,467 | |||
2016 | 215,619 | ||||
2017 | 147,902 | ||||
2018 | 44,205 | ||||
Total expected future amortization expense | $ | 691,193 |
Accrued_Liabilities
Accrued Liabilities | 12 Months Ended | ||||||||
Jun. 30, 2014 | |||||||||
Accrued Liabilities [Abstract] | ' | ||||||||
Accrued Liabilities | ' | ||||||||
5. Accrued Liabilities | |||||||||
As of June 30, 2014 and June 30, 2013, accrued liabilities consisted of the following: | |||||||||
June 30, | |||||||||
2014 | 2013 | ||||||||
Purchase consideration for acquisition of subscribers | $ | 193,433 | $ | - | |||||
Property, franchise and sales tax expense | 180,992 | 229,972 | |||||||
Employee wages and benefits | 117,229 | 114,794 | |||||||
Professional fees | 56,000 | 66,250 | |||||||
Deferred rent expense | 48,688 | - | |||||||
Other | 1,187 | 18,259 | |||||||
Total accrued liabilities | $ | 597,529 | $ | 429,275 |
Acquisition_Credit_Facility_an
Acquisition Credit Facility and Long-Term Debt | 12 Months Ended | ||||||||||||
Jun. 30, 2014 | |||||||||||||
Acquisition Credit Facility and Long-Term Debt [Abstract] | ' | ||||||||||||
Acquisition Credit Facility and Long-Term Debt | ' | ||||||||||||
6. 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 June 30, 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. | |||||||||||||
The notes payable reflected in the table below originated from acquisitions of subscribers and equipment from third party internet service providers. Where the notes bear no interest the Company imputed interest, which was recorded as a debt discount that will be amortized to interest expense over the term of the note. | |||||||||||||
As of June 30, 2014 and 2013, long-term debt consisted of: | |||||||||||||
June 30, | |||||||||||||
2014 | 2013 | ||||||||||||
Note payable due February 15, 2015, payable in monthly payments of $4,346 with fixed interest at 4.5% | $ | 34,190 | $ | 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 $1,081 and $6,239, respectively) | 88,432 | 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 $165 and $1,638, respectively) | 8,206 | 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 $884 and $3,600, respectively) | 21,850 | 43,933 | |||||||||||
Capital lease obligation due May 31, 2018, payable in monthly installments of $3,390 with interest imputed at 4.5% (net of unamortized discount of $13,730 and $0, respectively) | 144,998 | - | |||||||||||
Total | 297,676 | 379,060 | |||||||||||
Less current portion | (187,029 | ) | (226,383 | ) | |||||||||
Total long-term debt, less current portion | $ | 110,647 | $ | 152,677 | |||||||||
The following is a schedule by fiscal year of the principal payments due under these loan and capital lease arrangements as of June 30, 2014. | |||||||||||||
Fiscal year ending June 30: | Notes payable | Capital lease | Total | ||||||||||
2015 | $ | 152,678 | $ | 34,351 | $ | 187,029 | |||||||
2016 | - | 36,181 | 36,181 | ||||||||||
2017 | - | 38,012 | 38,012 | ||||||||||
2018 | - | 36,454 | 36,454 | ||||||||||
Total loan and capital lease principal payments | $ | 152,678 | $ | 144,998 | $ | 297,676 |
Commitments_and_Contingencies
Commitments and Contingencies | 12 Months Ended | ||||||||||||||||||||||||||||
Jun. 30, 2014 | |||||||||||||||||||||||||||||
Commitments and Contingencies [Abstract] | ' | ||||||||||||||||||||||||||||
Commitments and Contingencies | ' | ||||||||||||||||||||||||||||
7. Commitments and Contingencies | |||||||||||||||||||||||||||||
We are involved from time to time in disputes and legal proceedings. At this time, management believes that such matters, individually and in the aggregate, are not material to our financial condition, results of operations and cash flows. | |||||||||||||||||||||||||||||
In the normal course of business, the Company enters into telephone and internet backbone connectivity contracts with various vendors. The Company's minimum annual obligations under these contracts are listed below. | |||||||||||||||||||||||||||||
The Company leases certain facilities including tower space under operating leases. Rental expense for facilities operating leases and connectivity leases is $863,000 and $987,000, respectively, for the year ended June 30, 2014. Rental expense for facilities operating leases and connectivity leases is $833,000 and $990,000, respectively, for the year ended June 30, 2013. Future minimum lease payments on facilities operating leases and telecommunications contracts as of June 30, 2014 are listed below. | |||||||||||||||||||||||||||||
Payments Due During the Year Ending June 30, | |||||||||||||||||||||||||||||
Total | 2015 | 2016 | 2017 | 2018 | 2019 | Thereafter | |||||||||||||||||||||||
Connectivity contracts | $ | 546,509 | $ | 316,221 | $ | 187,314 | $ | 39,814 | $ | 3,160 | $ | - | $ | - | |||||||||||||||
Operating leases | 3,795,972 | 706,253 | 473,880 | 377,347 | 293,709 | 228,865 | 1,715,918 | ||||||||||||||||||||||
$ | 4,342,481 | $ | 1,022,474 | $ | 661,194 | $ | 417,161 | $ | 296,869 | $ | 228,865 | $ | 1,715,918 | ||||||||||||||||
Shareholders_Equity
Shareholders' Equity | 12 Months Ended | ||||||||||||||||||
Jun. 30, 2014 | |||||||||||||||||||
Shareholders' Equity [Abstract] | ' | ||||||||||||||||||
Shareholders' Equity | ' | ||||||||||||||||||
8. Shareholders' Equity | |||||||||||||||||||
Series A Preferred Stock | |||||||||||||||||||
The Company has 5,000,000 shares of $0.01 par value Series A Preferred Stock authorized for issuance. Each share of Series A Preferred Stock is convertible at any time, at the option of the holder, into one share of the Company's common stock. The Series A Preferred Stock is subject to mandatory conversion, at the option of the Company, in the event that the per share trading price of the Company's common stock is equal to or greater than $3.00 per share for 90 consecutive trading days. The Series A Preferred Stock has a liquidation preference of $0.586 per share, plus all accrued but unpaid dividends thereon, whether or not earnings are available in respect of such dividends and whether or not such dividends have been declared. The holders of Series A Preferred Stock are entitled to receive out of the assets of the Company, when and if declared by the Board out of funds legally available for that purpose, cumulative cash dividends at a rate of 10% per annum for each share of Series A Preferred Stock. Such dividends are cumulative from the date the Series A Preferred Stock was issued and payable in arrears, when and as declared by the Board, quarterly. At June 30, 2014 and 2013, cumulative dividends in arrears were approximately $1,054,000 and $897,000 (approximately $0.42 and $0.35 per Series A Preferred share), respectively, and at June 30, 2014 and 2013, aggregate liquidation preference approximated $2,647,000 and $2,490,000, respectively. | |||||||||||||||||||
The holders of Series A Preferred Stock are entitled to vote on an as-converted basis with the Company's common stock and separately with respect to specified corporate acts that would adversely affect the Series A Preferred Stock. | |||||||||||||||||||
Employee Stock Purchase Plan | |||||||||||||||||||
Effective April 30, 1999, the Company's Board of Directors adopted the Employee Stock Purchase Plan (the “Purchase Plan”), which initially provided for the issuance of a maximum of 200,000 shares of common stock. In fiscal 2002, the Board of Directors approved certain amendments to the Purchase Plan, including the reservation of an additional 500,000 shares for issuance under the Purchase Plan. Eligible employees can have up to 15% of their earnings withheld, up to certain maximums, to be used to purchase shares of the Company's common stock on every July 1, October 1, January 1 and April 1. The price of the common stock purchased under the Purchase Plan will be equal to 85% of the lower of the fair market value of the common stock on the commencement date of each three-month offering period or the specified purchase date. In April 2006, the Company temporarily suspended future purchases under the Purchase Plan due to lack of employee participation. There were no shares of common stock purchased by employees under the Purchase Plan during the years ended June 30, 2014 and 2013. At June 30, 2014, 155,959 shares were available under the Purchase Plan for future issuance. | |||||||||||||||||||
Stock Option Plan | |||||||||||||||||||
On March 30, 2007, the Board of Directors adopted the Internet America, Inc. 2007 Stock Option Plan (“2007 Plan”) under which options to purchase up to 2,000,000 shares of the Company's common stock may be granted as incentive and nonqualified stock options to employees, executives and directors. As of June 30, 2014, 755,974 shares were issuable under the 2007 Plan. | |||||||||||||||||||
A summary of the Company's stock options as of June 30, 2014 and 2013 and changes during those fiscal years is presented below: | |||||||||||||||||||
June 30, 2014 | June 30, 2013 | ||||||||||||||||||
Weighted | Weighted | ||||||||||||||||||
Average | Average | ||||||||||||||||||
Exercise | Exercise | ||||||||||||||||||
Shares | Price | Shares | Price | ||||||||||||||||
Outstanding at beginning of period | 1,241,526 | $ | 0.39 | 1,430,944 | $ | 0.41 | |||||||||||||
Granted | 100,000 | 0.45 | 245,000 | 0.35 | |||||||||||||||
Exercised | (17,500 | ) | 0.35 | - | - | ||||||||||||||
Forfeited | (97,500 | ) | 0.32 | (434,418 | ) | 0.44 | |||||||||||||
Outstanding at end of period | 1,226,526 | 0.4 | 1,241,526 | 0.39 | |||||||||||||||
Options exercisable at year end | 576,526 | 0.48 | 524,026 | 0.48 | |||||||||||||||
The following table summarizes nonvested share activity for the year ended June 30, 2014: | |||||||||||||||||||
Nonvested Share Activity | Number of | Weighted- | |||||||||||||||||
Shares | Average Grant- | ||||||||||||||||||
Date Fair Value | |||||||||||||||||||
Nonvested at beginning of period | 717,500 | $ | 0.09 | ||||||||||||||||
Granted | 100,000 | 0.16 | |||||||||||||||||
Vested | (80,000 | ) | 0.08 | ||||||||||||||||
Forfeited | (87,500 | ) | 0.08 | ||||||||||||||||
Nonvested at end of period | 650,000 | $ | 0.08 | ||||||||||||||||
The intrinsic value represents the pre-tax intrinsic value, based on the Company's closing stock price on June 30, 2014 which would have been received by the option holders had all option holders exercised their options as of that date. The intrinsic value of the exercised shares for the year ended June 30, 2014 is $3,300. | |||||||||||||||||||
The following table summarizes additional information about stock options outstanding at June 30, 2014: | |||||||||||||||||||
Weighted-Average | |||||||||||||||||||
Remaining | |||||||||||||||||||
Contractual Life | |||||||||||||||||||
of options outstanding | |||||||||||||||||||
Exercise | Options | and exercisable | Number | Intrinsic | |||||||||||||||
Price | Outstanding | (Years) | Exercisable | Value | |||||||||||||||
$ | 0.3 | 495,000 | 6.56 | - | $ | - | |||||||||||||
0.35 | 160,000 | 8.34 | 80,000 | 32,000 | |||||||||||||||
0.45 | 100,000 | 9.05 | 25,000 | 7,500 | |||||||||||||||
0.5 | 471,526 | 3.73 | 471,526 | 117,882 | |||||||||||||||
1,226,526 | 576,526 | $ | 157,382 | ||||||||||||||||
On October 30, 2012, the Company granted options to purchase 245,000 shares of its common stock at an exercise price of $0.35 per share to certain employees. If the employee was employed with the Company a year or longer at the time of the grant date, 25% vested immediately and 25% will vest each anniversary of the grant date until fully vested. If the employee was employed with the Company less than a year at the time of the grant date, 25% will vest on each anniversary of the grant date until fully vested. | |||||||||||||||||||
On July 16, 2013, the Company granted options to purchase 100,000 shares of its common stock at an exercise price of $0.45 per share to the Chief Financial Officer. Vesting is as follows: 25% vested immediately and 75% will vest if and when the price of the common stock has averaged $1.00 per share for the previous 90 consecutive business days. | |||||||||||||||||||
In calculating the Black-Scholes value of its stock option grants, the Company used the following assumptions: | |||||||||||||||||||
Risk Free | |||||||||||||||||||
Term in | Interest | Forfeiture | |||||||||||||||||
Grant Date | years | Volatility | Rate | Rate | |||||||||||||||
10/30/12 | 4.75 | 410 | % | 0.75 | % | 50 | % | ||||||||||||
7/16/13 | 4.75 | 453 | % | 1.38 | % | 50 | % | ||||||||||||
The expected term of options represents the period of time that options granted are expected to be outstanding. Expected volatility assumptions utilized in the model were based on historical volatility of the Company's stock price over the expected term. The risk-free rate is derived from the U. S. Treasury yield. The Company used an expected dividend yield of zero. After applying discounts based on the average stock price, the trading volume, and recent volatility, the Company valued the options granted during fiscal 2014 and 2013 at $0.16 and $0.12 per share, respectively. The simplified method was used to determine the option term for all options granted during fiscal 2014 as there has not been a history of option exercises upon which to establish a better estimate of the expected term. | |||||||||||||||||||
At June 30, 2014, the total compensation costs related to non-vested awards not yet recognized was $6,532. | |||||||||||||||||||
Warrants | |||||||||||||||||||
As of June 30, 2014, the Company had 394,922 warrants issued and outstanding, which were issued on September 14, 2009, equally to Mr. Mihaylo and Ambassador John Palmer, former non-employee directors of the Company. The warrants are exercisable at $0.38 per share and expire five years after the date of grant. |
Income_Taxes
Income Taxes | 12 Months Ended | ||||||||
Jun. 30, 2014 | |||||||||
Income Taxes [Abstract] | ' | ||||||||
Income Taxes | ' | ||||||||
9. Income Taxes | |||||||||
The provision for income taxes as of June 30, 2014 and 2013 consist of: | |||||||||
June 30, | |||||||||
2014 | 2013 | ||||||||
Federal: | |||||||||
Current tax expense | $ | - | $ | - | |||||
Deferred tax benefit | (5,000,000 | ) | (3,600,000 | ) | |||||
State: | |||||||||
Current tax expense | 53,789 | 57,613 | |||||||
Provision for income taxes | $ | (4,946,211 | ) | $ | (3,542,387 | ) | |||
The Company recognized current income tax expense for federal and state income taxes of $0 and $53,789, respectively, for the year ended June 30, 2014 and $0 and $57,613, respectively, for the year ended June 30, 2013. | |||||||||
Deferred tax assets and liabilities as of June 30, 2014 and 2013 consist of the following: | |||||||||
June 30, | |||||||||
2014 | 2013 | ||||||||
Deferred tax assets: | |||||||||
Net operating loss carryforwards | $ | 12,264,000 | $ | 12,658,000 | |||||
Intangible assets | (452,000 | ) | 1,484,000 | ||||||
Property and equipment | 19,000 | 135,000 | |||||||
Stock compensation | 154,000 | 146,000 | |||||||
Other | 67,000 | 66,000 | |||||||
Total deferred tax assets | 12,052,000 | 14,489,000 | |||||||
Valuation allowance | (3,452,000 | ) | (10,889,000 | ) | |||||
Deferred tax assets, net | $ | 8,600,000 | $ | 3,600,000 | |||||
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. In fiscal 2014 and 2013, the Company reversed $5,000,000 and $3,600,000, respectively of the valuation allowance in expectation of generating taxable income in the future. The Company has provided a valuation allowance totaling $3,452,000 and $10,889,000 of net deferred tax assets at June 30, 2014 and 2013 as it is deemed more likely than not that these assets will not be realized due to lack of positive evidence to suggest otherwise. 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 a change 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 June 30, 2014, the Company had net operating loss carry forwards of approximately $36 million for federal income tax purposes. These net operating loss carryforwards may be carried forward in varying amounts and expire beginning in 2019 continuing through 2034 and may be limited in their use due to significant changes in the Company's ownership. | |||||||||
A reconciliation of the federal statutory income tax rate to the Company's effective tax rate, as reported, is as follows for the years ended June 30, 2014 and 2013: | |||||||||
Year Ended June 30, | |||||||||
2014 | 2013 | ||||||||
Income taxes at federal statutory rate | 34 | % | 34 | % | |||||
State income tax, net of federal benefit | 5.9 | % | 6.6 | % | |||||
Nondeductible expenses | 0.2 | % | 0.3 | % | |||||
Prior year true up - Federal | 2.6 | % | (27.3 | )% | |||||
Deferred tax true up | 231.7 | % | 0 | % | |||||
Change in valuation allowance | (819.5 | )% | (486.6 | )% | |||||
Effective income tax rate | (545.1 | )% | (473.0 | )% |
Employee_Benefit_Plan
Employee Benefit Plan | 12 Months Ended |
Jun. 30, 2014 | |
Employee Benefit Plan [Abstract] | ' |
Employee Benefit Plan | ' |
10. Employee Benefit Plan | |
The Company has established a 401(k) plan for the benefit of its employees. Employees may contribute to the plan up to 15% of their salary, pursuant to a salary reduction agreement, upon meeting certain age requirements. The Company made no discretionary contributions to the 401(k) plan during the year ended June 30, 2014. |
Related_Party_Transactions
Related Party Transactions | 12 Months Ended |
Jun. 30, 2014 | |
Related Party Transactions [Abstract] | ' |
Related Party Transactions | ' |
11. Related Party Transactions | |
During the years ended June 30, 2014 and 2013, the Company paid cash fees of $41,329 and $42,492, respectively, to its non-employee directors for serving on the Company's Board of Directors. |
General_Information_and_Summar1
General Information and Summary of Significant Accounting Policies (Policies) | 12 Months Ended | ||||||||
Jun. 30, 2014 | |||||||||
General Information and Summary of Significant Accounting Policies [Abstract] | ' | ||||||||
Basis of Consolidation | ' | ||||||||
Basis of Consolidation — The consolidated financial statements include the accounts of Internet America, Inc. and its wholly-owned subsidiaries. All intercompany balances and transactions have been eliminated upon consolidation. | |||||||||
Revenue Recognition | ' | ||||||||
Revenue Recognition — Revenues derived from set-up charges are amortized over the expectant life of the customer. The Company bills its subscribers in advance for direct access to the internet, but defers recognition of these revenues until the services are provided. Deferred revenue was approximately $798,000 and $768,000 at June 30, 2014 and 2013, respectively. | |||||||||
Business Combinations | ' | ||||||||
Business Combinations — We recognize assets acquired and liabilities assumed in business combinations, including contingent assets and liabilities, based on fair value estimates as of the date of acquisition. In accordance with Financial Accounting Standards Board ("FASB") Accounting Standards Codification 805, Business Combinations, we recognize and measure goodwill as of the acquisition date, as the excess of the fair value of the consideration paid over the fair value of the identified net assets acquired. If, in the rare occasion, fair value of net assets acquired exceeds purchase price, the excess is recognized as gain from a bargain purchase. All acquisition-related transaction costs have been expensed as incurred rather than capitalized as a part of the cost of the acquisition. | |||||||||
Credit Risk | ' | ||||||||
Credit Risk — Financial instruments that potentially subject the Company to concentrations of credit risk consist principally of cash equivalents and accounts receivable, as collateral is generally not required. We maintain cash accounts in major U.S. financial institutions. The balances of these accounts sometimes exceed the federally insured limits, although no losses have been incurred in connection with these deposits. During the years ended June 30, 2014 and 2013, the Company recorded net bad debt expense of approximately $28 and net bad debt recovery of approximately $7,700, respectively. Charges and recoveries were recorded as a result of monthly evaluations during the year of the collectability of accounts receivable and as accounts became 90 days or older from the date of billing. Delinquent accounts deemed uncollectable were disconnected but collection efforts were continued on such accounts. | |||||||||
Financial Instruments | ' | ||||||||
Financial Instruments — The carrying amounts of cash, accounts receivable and accounts payable approximate fair value because of the short-term nature of these accounts and because the interest rates are commensurate with debt instruments carrying similar credit risk. The fair values for debt and lease obligations, which have fixed interest rates, do not differ materially from their carrying values. | |||||||||
Fair Value | ' | ||||||||
Fair Value — U. S. generally accepted accounting principles defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date and establishes a three-level valuation hierarchy for disclosure of fair value measurements. The valuation hierarchy categorizes assets and liabilities measured at fair value into one of three different levels depending on the observability of the inputs employed in the measurement. The three levels are as follows: | |||||||||
Level 1 – Observable inputs such as quoted prices in active markets at the measurement date for identical, unrestricted assets or liabilities. | |||||||||
Level 2 – Other inputs that are observable, directly or indirectly, such as quoted prices in markets that are not active, or inputs which are observable, either directly or indirectly, for substantially the full term of the asset or liability. | |||||||||
Level 3 – Unobservable inputs for which there is little or no market data and which we make our own assumptions about how market participants would price the assets and liabilities. | |||||||||
Cash and Cash Equivalents | ' | ||||||||
Cash and Cash Equivalents — Cash and cash equivalents consist of cash on hand and cash deposited in money market accounts, occasionally in excess of federally insured limits. Cash and cash equivalents are stated at cost, which approximates fair value. | |||||||||
Inventory | ' | ||||||||
Inventory — The Company values inventory at the lower of cost or market using the weighted average method. Inventory consists primarily of wireless internet access equipment and routers. | |||||||||
Property and Equipment | ' | ||||||||
Property and Equipment — Property and equipment are recorded at cost. Depreciation and amortization are provided using the straight-line or double declining method over the estimated useful lives of the assets, ranging from three to fifteen years. | |||||||||
Goodwill | ' | ||||||||
Goodwill — Goodwill was recorded in the acquisition of NeoSoft, Inc. in 1998 and PDQ Net, Inc. in 1999. Goodwill is the excess of the acquisition costs of a reporting unit over the fair value of the identifiable net assets acquired. Pursuant to FASB guidance on goodwill and other intangibles, we perform a qualitative evaluation of goodwill at least annually or more frequently when events and circumstances occur indicating that the recorded goodwill may be impaired. If our qualitative evaluation indicates an impairment may exist we then complete the following two-step process. If the book value of an acquired reporting unit exceeds its fair value, the implied fair value of goodwill is compared with the carrying amount of goodwill. If the carrying amount of goodwill exceeds the implied fair value, an impairment loss is recorded equal to that excess. | |||||||||
The Company performed its annual impairment tests at June 30, 2014 and 2013. During the years ended June 30, 2014 and 2013, the Company recorded impairment losses of zero and $69,000, respectively. See Note 4 for further details. | |||||||||
Subscriber Acquisition Costs | ' | ||||||||
Subscriber Acquisition Costs — Subscriber acquisition costs primarily relate to business combinations or acquisitions of subscribers. Subscriber acquisition costs are amortized over the average life of a customer which is estimated at 48 months. The Company reviews intangible assets with definite lives, including subscriber acquisition costs, for impairment whenever conditions arise that indicate the carrying value may not be recoverable, such as economic downturn in a market or a change in the assessment of future operations. | |||||||||
Long-Lived Assets | ' | ||||||||
Long-Lived Assets — The Company periodically reviews the values assigned to long-lived assets, such as property and equipment, to determine if any impairments have occurred in accordance with the guidance on impairment or disposal of long-lived assets. If the undiscounted future cash flows of an asset to be held and used in operations are less than the carrying value, the Company would recognize a loss equal to the difference between the carrying value and fair market value. The Company has concluded that no impairment occurred in the years ended June 30, 2014 or 2013. | |||||||||
Stock-Based Compensation | ' | ||||||||
Stock-Based Compensation — The Company accounts for stock-based compensation in accordance with the FASB guidance, which requires the measurement and recognition of compensation expense for all share-based payment awards made to employees and directors, including employee stock options, based on estimated fair values as of the date of grant. | |||||||||
Advertising Expenses | ' | ||||||||
Advertising Expenses — The Company expenses advertising production costs in the period in which the advertisement is first aired. All other advertising costs are expensed as incurred. The Company focuses primarily on a direct mail form of advertising. Advertising expenses for the years ended June 30, 2014 and 2013 were approximately $30,000 and $58,000, respectively. | |||||||||
Income Taxes | ' | ||||||||
Income Taxes — Deferred tax assets and liabilities are determined using the asset and liability method in accordance with the FASB guidance on income taxes. Under this method, deferred tax assets and liabilities are established for future tax consequences of temporary differences between the financial statement carrying amounts of assets and liabilities and their tax basis. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to reverse. Deferred tax assets are offset by valuation allowances when we believe it is more likely than not that such net deferred tax assets will not be realized. | |||||||||
The Company's federal and state income tax returns for the years ended 2009 through 2013 are open to examination. At June 30, 2014 and 2013, the Company evaluated its open tax years in all known jurisdictions. Based on this evaluation, the Company did not identify any uncertain tax positions. We will account for interest and penalties relating to uncertain tax positions in the current period statement of operations as necessary. | |||||||||
Basic and Diluted Net Income Per Share | ' | ||||||||
Basic and Diluted Net Income Per Share — Basic earnings per share is computed using the weighted average number of common shares outstanding and excludes any anti-dilutive effects of options, warrants and convertible securities. Diluted earnings per share reflect the potential dilution that could occur upon exercise or conversion of these instruments. | |||||||||
Our diluted earnings per share calculation excludes zero and 1,189,026 of potentially dilutive shares for the years ended June 30, 2014 and 2013, respectively, due to their anti-dilutive effect. The following reconciles basic and diluted weighted average shares outstanding: | |||||||||
Year ended June 30, | |||||||||
2014 | 2013 | ||||||||
Basic weighted average shares outstanding | 16,734,981 | 16,729,562 | |||||||
Dilutive effect of: | |||||||||
Convertible preferred stock | 2,718,428 | 2,718,428 | |||||||
Stock options and warrants | 439,182 | 1,897 | |||||||
Diluted weighted average shares outstanding | 19,892,591 | 19,449,887 | |||||||
Use of Estimates | ' | ||||||||
Use of Estimates — The preparation of 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. | |||||||||
Comprehensive Income | ' | ||||||||
Comprehensive Income — Because the Company has no components of other comprehensive income, comprehensive income is the same as net income for the years ended June 30, 2014 and 2013. | |||||||||
Reclassifications | ' | ||||||||
Reclassifications — Certain reclassifications have been made to the prior year financial statements in order to conform to the current year presentation. These reclassifications had no effect on net income, total assets, total liabilities or equity. Personnel expenses of $169,000 from the fiscal year ended June 30, 2013 were reclassified from connectivity and operations to general and administrative expenses. | |||||||||
New accounting standards | ' | ||||||||
New accounting standards — The Company has implemented all accounting pronouncements that are in effect and that may impact its consolidated financial statements and does not believe that there are any other accounting pronouncements that have been issued that might have a material impact on its financial position or results of operations. |
General_Information_and_Summar2
General Information and Summary of Significant Accounting Policies (Tables) | 12 Months Ended | ||||||||
Jun. 30, 2014 | |||||||||
General Information and Summary of Significant Accounting Policies [Abstract] | ' | ||||||||
Reconciliation of Weighted Average Shares Outstanding | ' | ||||||||
Our diluted earnings per share calculation excludes zero and 1,189,026 of potentially dilutive shares for the years ended June 30, 2014 and 2013, respectively, due to their anti-dilutive effect. The following reconciles basic and diluted weighted average shares outstanding: | |||||||||
Year ended June 30, | |||||||||
2014 | 2013 | ||||||||
Basic weighted average shares outstanding | 16,734,981 | 16,729,562 | |||||||
Dilutive effect of: | |||||||||
Convertible preferred stock | 2,718,428 | 2,718,428 | |||||||
Stock options and warrants | 439,182 | 1,897 | |||||||
Diluted weighted average shares outstanding | 19,892,591 | 19,449,887 |
Property_and_Equipment_Tables
Property and Equipment (Tables) | 12 Months Ended | ||||||||
Jun. 30, 2014 | |||||||||
Property and Equipment [Abstract] | ' | ||||||||
Schedule of property and equipment | ' | ||||||||
As of June 30, 2014 and 2013, property and equipment consisted of the following: | |||||||||
June 30, | |||||||||
2014 | 2013 | ||||||||
Land | $ | 30,000 | 30,000 | ||||||
Infrastructure in progress | 131,010 | 117,231 | |||||||
Data communications and office equipment | 5,014,456 | 4,523,382 | |||||||
Computer software | 832,371 | 831,298 | |||||||
Furniture and fixtures | 91,763 | 91,564 | |||||||
Vehicles-fleet trucks held under capital lease | 147,777 | - | |||||||
Leasehold improvements | 55,670 | 45,897 | |||||||
Building | 20,450 | 20,450 | |||||||
6,323,497 | 5,659,822 | ||||||||
Less accumulated depreciation | (4,737,951 | ) | (4,228,821 | ) | |||||
Total property and equipment, net | $ | 1,585,546 | 1,431,001 |
Goodwill_and_Subscriber_Acquis1
Goodwill and Subscriber Acquisition Costs (Tables) | 12 Months Ended | ||||
Jun. 30, 2014 | |||||
Goodwill and Subscriber Acquisition Costs [Abstract] | ' | ||||
Schedule of expected amortization expense | ' | ||||
As of June 30, 2014, expected amortization expense for future fiscal years is approximately as follows: | |||||
Fiscal year ending June 30,: | |||||
2015 | $ | 283,467 | |||
2016 | 215,619 | ||||
2017 | 147,902 | ||||
2018 | 44,205 | ||||
Total expected future amortization expense | $ | 691,193 |
Accrued_Liabilities_Tables
Accrued Liabilities (Tables) | 12 Months Ended | ||||||||
Jun. 30, 2014 | |||||||||
Accrued Liabilities [Abstract] | ' | ||||||||
Schedule of accrued liabilities | ' | ||||||||
As of June 30, 2014 and June 30, 2013, accrued liabilities consisted of the following: | |||||||||
June 30, | |||||||||
2014 | 2013 | ||||||||
Purchase consideration for acquisition of subscribers | $ | 193,433 | $ | - | |||||
Property, franchise and sales tax expense | 180,992 | 229,972 | |||||||
Employee wages and benefits | 117,229 | 114,794 | |||||||
Professional fees | 56,000 | 66,250 | |||||||
Deferred rent expense | 48,688 | - | |||||||
Other | 1,187 | 18,259 | |||||||
Total accrued liabilities | $ | 597,529 | $ | 429,275 |
Acquisition_Credit_Facility_an1
Acquisition Credit Facility and Long-Term Debt (Tables) | 12 Months Ended | ||||||||||||
Jun. 30, 2014 | |||||||||||||
Acquisition Credit Facility and Long-Term Debt [Abstract] | ' | ||||||||||||
Schedule of Long-Term Debt | ' | ||||||||||||
As of June 30, 2014 and 2013, long-term debt consisted of: | |||||||||||||
June 30, | |||||||||||||
2014 | 2013 | ||||||||||||
Note payable due February 15, 2015, payable in monthly payments of $4,346 with fixed interest at 4.5% | $ | 34,190 | $ | 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 $1,081 and $6,239, respectively) | 88,432 | 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 $165 and $1,638, respectively) | 8,206 | 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 $884 and $3,600, respectively) | 21,850 | 43,933 | |||||||||||
Capital lease obligation due May 31, 2018, payable in monthly installments of $3,390 with interest imputed at 4.5% (net of unamortized discount of $13,730 and $0, respectively) | 144,998 | - | |||||||||||
Total | 297,676 | 379,060 | |||||||||||
Less current portion | (187,029 | ) | (226,383 | ) | |||||||||
Total long-term debt, less current portion | $ | 110,647 | $ | 152,677 | |||||||||
Schedule of Future Principal Payments | ' | ||||||||||||
The following is a schedule by fiscal year of the principal payments due under these loan and capital lease arrangements as of June 30, 2014. | |||||||||||||
Fiscal year ending June 30: | Notes payable | Capital lease | Total | ||||||||||
2015 | $ | 152,678 | $ | 34,351 | $ | 187,029 | |||||||
2016 | - | 36,181 | 36,181 | ||||||||||
2017 | - | 38,012 | 38,012 | ||||||||||
2018 | - | 36,454 | 36,454 | ||||||||||
Total loan and capital lease principal payments | $ | 152,678 | $ | 144,998 | $ | 297,676 |
Commitments_and_Contingencies_
Commitments and Contingencies (Tables) | 12 Months Ended | ||||||||||||||||||||||||||||
Jun. 30, 2014 | |||||||||||||||||||||||||||||
Commitments and Contingencies [Abstract] | ' | ||||||||||||||||||||||||||||
Schedule of future minimum payments | ' | ||||||||||||||||||||||||||||
Future minimum lease payments on facilities operating leases and telecommunications contracts as of June 30, 2014 are listed below. | |||||||||||||||||||||||||||||
Payments Due During the Year Ending June 30, | |||||||||||||||||||||||||||||
Total | 2015 | 2016 | 2017 | 2018 | 2019 | Thereafter | |||||||||||||||||||||||
Connectivity contracts | $ | 546,509 | $ | 316,221 | $ | 187,314 | $ | 39,814 | $ | 3,160 | $ | - | $ | - | |||||||||||||||
Operating leases | 3,795,972 | 706,253 | 473,880 | 377,347 | 293,709 | 228,865 | 1,715,918 | ||||||||||||||||||||||
$ | 4,342,481 | $ | 1,022,474 | $ | 661,194 | $ | 417,161 | $ | 296,869 | $ | 228,865 | $ | 1,715,918 |
Shareholders_Equity_Tables
Shareholders' Equity (Tables) | 12 Months Ended | ||||||||||||||||||
Jun. 30, 2014 | |||||||||||||||||||
Shareholders' Equity [Abstract] | ' | ||||||||||||||||||
Schedule of Stock Options | ' | ||||||||||||||||||
A summary of the Company's stock options as of June 30, 2014 and 2013 and changes during those fiscal years is presented below: | |||||||||||||||||||
June 30, 2014 | June 30, 2013 | ||||||||||||||||||
Weighted | Weighted | ||||||||||||||||||
Average | Average | ||||||||||||||||||
Exercise | Exercise | ||||||||||||||||||
Shares | Price | Shares | Price | ||||||||||||||||
Outstanding at beginning of period | 1,241,526 | $ | 0.39 | 1,430,944 | $ | 0.41 | |||||||||||||
Granted | 100,000 | 0.45 | 245,000 | 0.35 | |||||||||||||||
Exercised | (17,500 | ) | 0.35 | - | - | ||||||||||||||
Forfeited | (97,500 | ) | 0.32 | (434,418 | ) | 0.44 | |||||||||||||
Outstanding at end of period | 1,226,526 | 0.4 | 1,241,526 | 0.39 | |||||||||||||||
Options exercisable at year end | 576,526 | 0.48 | 524,026 | 0.48 | |||||||||||||||
Schedule of Nonvested Share Activity | ' | ||||||||||||||||||
The following table summarizes nonvested share activity for the year ended June 30, 2014: | |||||||||||||||||||
Nonvested Share Activity | Number of | Weighted- | |||||||||||||||||
Shares | Average Grant- | ||||||||||||||||||
Date Fair Value | |||||||||||||||||||
Nonvested at beginning of period | 717,500 | $ | 0.09 | ||||||||||||||||
Granted | 100,000 | 0.16 | |||||||||||||||||
Vested | (80,000 | ) | 0.08 | ||||||||||||||||
Forfeited | (87,500 | ) | 0.08 | ||||||||||||||||
Nonvested at end of period | 650,000 | $ | 0.08 | ||||||||||||||||
Schedule of Additional Informationabout Stock Options | ' | ||||||||||||||||||
The following table summarizes additional information about stock options outstanding at June 30, 2014: | |||||||||||||||||||
Weighted-Average | |||||||||||||||||||
Remaining | |||||||||||||||||||
Contractual Life | |||||||||||||||||||
of options outstanding | |||||||||||||||||||
Exercise | Options | and exercisable | Number | Intrinsic | |||||||||||||||
Price | Outstanding | (Years) | Exercisable | Value | |||||||||||||||
$ | 0.3 | 495,000 | 6.56 | - | $ | - | |||||||||||||
0.35 | 160,000 | 8.34 | 80,000 | 32,000 | |||||||||||||||
0.45 | 100,000 | 9.05 | 25,000 | 7,500 | |||||||||||||||
0.5 | 471,526 | 3.73 | 471,526 | 117,882 | |||||||||||||||
1,226,526 | 576,526 | $ | 157,382 | ||||||||||||||||
Schedule of Stock Option Fair Value Assumptions | ' | ||||||||||||||||||
In calculating the Black-Scholes value of its stock option grants, the Company used the following assumptions: | |||||||||||||||||||
Risk Free | |||||||||||||||||||
Term in | Interest | Forfeiture | |||||||||||||||||
Grant Date | years | Volatility | Rate | Rate | |||||||||||||||
10/30/12 | 4.75 | 410 | % | 0.75 | % | 50 | % | ||||||||||||
7/16/13 | 4.75 | 453 | % | 1.38 | % | 50 | % |
Income_Taxes_Tables
Income Taxes (Tables) | 12 Months Ended | ||||||||
Jun. 30, 2014 | |||||||||
Income Taxes [Abstract] | ' | ||||||||
Schedule of Provision for Income Taxes | ' | ||||||||
The provision for income taxes as of June 30, 2014 and 2013 consist of: | |||||||||
June 30, | |||||||||
2014 | 2013 | ||||||||
Federal: | |||||||||
Current tax expense | $ | - | $ | - | |||||
Deferred tax benefit | (5,000,000 | ) | (3,600,000 | ) | |||||
State: | |||||||||
Current tax expense | 53,789 | 57,613 | |||||||
Provision for income taxes | $ | (4,946,211 | ) | $ | (3,542,387 | ) | |||
Schedule of deferred tax assets and liabilities | ' | ||||||||
Deferred tax assets and liabilities as of June 30, 2014 and 2013 consist of the following: | |||||||||
June 30, | |||||||||
2014 | 2013 | ||||||||
Deferred tax assets: | |||||||||
Net operating loss carryforwards | $ | 12,264,000 | $ | 12,658,000 | |||||
Intangible assets | (452,000 | ) | 1,484,000 | ||||||
Property and equipment | 19,000 | 135,000 | |||||||
Stock compensation | 154,000 | 146,000 | |||||||
Other | 67,000 | 66,000 | |||||||
Total deferred tax assets | 12,052,000 | 14,489,000 | |||||||
Valuation allowance | (3,452,000 | ) | (10,889,000 | ) | |||||
Deferred tax assets, net | $ | 8,600,000 | $ | 3,600,000 | |||||
Schedule to reconcile the income tax provision computed at statutory tax rates to the actual income 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 years ended June 30, 2014 and 2013: | |||||||||
Year Ended June 30, | |||||||||
2014 | 2013 | ||||||||
Income taxes at federal statutory rate | 34 | % | 34 | % | |||||
State income tax, net of federal benefit | 5.9 | % | 6.6 | % | |||||
Nondeductible expenses | 0.2 | % | 0.3 | % | |||||
Prior year true up - Federal | 2.6 | % | (27.3 | )% | |||||
Deferred tax true up | 231.7 | % | 0 | % | |||||
Change in valuation allowance | (819.5 | )% | (486.6 | )% | |||||
Effective income tax rate | (545.1 | )% | (473.0 | )% |
General_Information_and_Summar3
General Information and Summary of Significant Accounting Policies (Narrative) (Details) (USD $) | 12 Months Ended | |
Jun. 30, 2014 | Jun. 30, 2013 | |
General Information and Summary of Significant Accounting Policies [Abstract] | ' | ' |
Deferred revenue | $798,320 | $768,379 |
Bad debt (expense) recovery, net | -28 | 7,733 |
Impairment loss | ' | 69,000 |
Weighted average amortization period for subscriber acquisitions, months | '48 months | ' |
Advertising expenses | 30,000 | 58,000 |
Potentially dilutive shares excluded from earning per share calculations | 0 | 1,189,026 |
Amount of reclassification | $169,000 | ' |
Minimum [Member] | ' | ' |
Property and Equipment | ' | ' |
Estimated useful life | '3 years | ' |
Income Taxes | ' | ' |
Years open to examination | '2009 | ' |
Maximum [Member] | ' | ' |
Property and Equipment | ' | ' |
Estimated useful life | '15 years | ' |
Income Taxes | ' | ' |
Years open to examination | '2013 | ' |
General_Information_and_Summar4
General Information and Summary of Significant Accounting Policies (Reconciliation of Weighted Average Shares Outstanding) (Details) | 12 Months Ended | |
Jun. 30, 2014 | Jun. 30, 2013 | |
General Information and Summary of Significant Accounting Policies [Abstract] | ' | ' |
Basic weighted average shares outstanding | 16,734,981 | 16,729,562 |
Dilutive effect of: | ' | ' |
Convertible preferred stock | 2,718,428 | 2,718,428 |
Stock options and warrants | 439,182 | 1,897 |
Diluted weighted average shares outstanding | 19,892,591 | 19,449,887 |
Acquisitions_Details
Acquisitions (Details) (USD $) | 12 Months Ended | 0 Months Ended | 0 Months Ended | ||||||
Jun. 30, 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 | 193,433 |
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 | ' | ' | ' | ' | ' | 530,486 | 7,681 | ' | ' |
Fixed assets acquired | ' | ' | ' | ' | $42,132 | ' | ' | ' | ' |
Property_and_Equipment_Details
Property and Equipment (Details) (USD $) | 12 Months Ended | |
Jun. 30, 2014 | Jun. 30, 2013 | |
Property, Plant and Equipment [Line Items] | ' | ' |
Property and Equipment | $6,323,497 | $5,659,822 |
Less accumulated depreciation | -4,737,951 | -4,228,821 |
Total property and equipment, net | 1,585,546 | 1,431,001 |
Depreciation expense | 516,000 | 640,000 |
Depreciation expense, capital lease | 3,037 | ' |
Land [Member] | ' | ' |
Property, Plant and Equipment [Line Items] | ' | ' |
Property and Equipment | 30,000 | 30,000 |
Infrastructure in Progress [Member] | ' | ' |
Property, Plant and Equipment [Line Items] | ' | ' |
Property and Equipment | 131,010 | 117,231 |
Data Communications and Office Equipment [Member] | ' | ' |
Property, Plant and Equipment [Line Items] | ' | ' |
Property and Equipment | 5,014,456 | 4,523,382 |
Computer Software [Member] | ' | ' |
Property, Plant and Equipment [Line Items] | ' | ' |
Property and Equipment | 832,371 | 831,298 |
Furniture and Fixtures [Member] | ' | ' |
Property, Plant and Equipment [Line Items] | ' | ' |
Property and Equipment | 91,763 | 91,564 |
Vehicles - Fleet Trucks [Member] | ' | ' |
Property, Plant and Equipment [Line Items] | ' | ' |
Property and Equipment | 147,777 | ' |
Leasehold Improvements [Member] | ' | ' |
Property, Plant and Equipment [Line Items] | ' | ' |
Property and Equipment | 55,670 | 45,897 |
Building [Member] | ' | ' |
Property, Plant and Equipment [Line Items] | ' | ' |
Property and Equipment | $20,450 | $20,450 |
Goodwill_and_Subscriber_Acquis2
Goodwill and Subscriber Acquisition Costs (Narrative) (Details) (USD $) | 12 Months Ended | |
Jun. 30, 2014 | Jun. 30, 2013 | |
Goodwill and Subscriber Acquisition Costs [Abstract] | ' | ' |
Impairment loss | ' | $69,000 |
Weighted average amortization period for subscriber acquisitions, months | '48 months | ' |
Subscriber acquisition costs - net | 691,193 | 420,141 |
Amortization expense | $261,000 | $156,000 |
Goodwill_and_Subscriber_Acquis3
Goodwill and Subscriber Acquisition Costs (Schedule of Future Expected Amortization Expense) (Details) (USD $) | Jun. 30, 2014 |
Fiscal year ending June 30: | ' |
2015 | $283,467 |
2016 | 215,619 |
2017 | 147,902 |
2018 | 44,205 |
Total expected future amortization expense | $691,193 |
Accrued_Liabilities_Details
Accrued Liabilities (Details) (USD $) | Jun. 30, 2014 | Jun. 30, 2013 |
Accrued Liabilities [Abstract] | ' | ' |
Purchase consideration for acquisition of subscribers | $193,433 | ' |
Property, franchise and sales tax expense | 180,992 | 229,972 |
Employee wages and benefits | 117,229 | 114,794 |
Professional fees | 56,000 | 66,250 |
Deferred rent expense | 48,688 | ' |
Other | 1,187 | 18,259 |
Total accrued liabilities | $597,529 | $429,275 |
Acquisition_Credit_Facility_an2
Acquisition Credit Facility and Long-Term Debt (Narrative) (Details) (Line of Credit [Member], USD $) | 12 Months Ended |
Jun. 30, 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 | $2.50 |
Debt instrument fee, percentage | 0.10% |
Acquisition_Credit_Facility_an3
Acquisition Credit Facility and Long-Term Debt (Schedule of Long Term Debt) (Details) (USD $) | 12 Months Ended | |
Jun. 30, 2014 | Jun. 30, 2013 | |
Debt Instrument [Line Items] | ' | ' |
Long-term debt | $297,676 | $379,060 |
Less current portion | -187,029 | -226,383 |
Total long-term debt, less current portion | 110,647 | 152,677 |
Notes Payable [Member] | ' | ' |
Debt Instrument [Line Items] | ' | ' |
Long-term debt | 152,678 | ' |
Notes Payable [Member] | 4.5 % Note Payable Due February 15, 2015 [Member] | ' | ' |
Debt Instrument [Line Items] | ' | ' |
Long-term debt | 34,190 | 83,594 |
Periodic payments, frequency | 'monthly | ' |
Debt instrument, maturity date | 15-Feb-15 | ' |
Debt instrument, periodic payment | 4,346 | ' |
Effective interest rate | 4.50% | ' |
Notes Payable [Member] | Note Payable Due February 15, 2015 [Member] | ' | ' |
Debt Instrument [Line Items] | ' | ' |
Long-term debt | 88,432 | 217,544 |
Periodic payments, frequency | 'monthly | ' |
Debt instrument, maturity date | 15-Feb-15 | ' |
Debt instrument, periodic payment | 11,189 | ' |
Effective interest rate | 3.25% | ' |
Unamortized discount | 1,081 | 6,239 |
Notes Payable [Member] | 8.5% Note Payable Due February 10, 2014 [Member] | ' | ' |
Debt Instrument [Line Items] | ' | ' |
Long-term debt | ' | 2,985 |
Periodic payments, frequency | 'monthly | ' |
Debt instrument, maturity date | 10-Feb-14 | ' |
Debt instrument, periodic payment | 417 | ' |
Effective interest rate | 8.50% | ' |
Notes Payable [Member] | Note Payable Due January 1, 2014 [Member] | ' | ' |
Debt Instrument [Line Items] | ' | ' |
Long-term debt | ' | 4,182 |
Periodic payments, frequency | 'monthly | ' |
Debt instrument, maturity date | 1-Jan-14 | ' |
Debt instrument, periodic payment | 615 | ' |
Effective interest rate | 8.50% | ' |
Unamortized discount | 0 | 119 |
Notes Payable [Member] | Note Payable Due November 1, 2014 with no Interest [Member] | ' | ' |
Debt Instrument [Line Items] | ' | ' |
Long-term debt | 8,206 | 26,822 |
Periodic payments, frequency | 'monthly | ' |
Debt instrument, maturity date | 1-Nov-14 | ' |
Debt instrument, periodic payment | 1,674 | ' |
Effective interest rate | 8.00% | ' |
Unamortized discount | 165 | 1,638 |
Notes Payable [Member] | Note Payable Due May 1, 2015 with no Interest [Member] | ' | ' |
Debt Instrument [Line Items] | ' | ' |
Long-term debt | 21,850 | 43,933 |
Periodic payments, frequency | 'monthly | ' |
Debt instrument, maturity date | 1-May-15 | ' |
Debt instrument, periodic payment | 2,067 | ' |
Effective interest rate | 8.00% | ' |
Unamortized discount | 884 | 3,600 |
Capital Lease Obligations [Member] | ' | ' |
Debt Instrument [Line Items] | ' | ' |
Long-term debt | 144,998 | ' |
Periodic payments, frequency | 'monthly | ' |
Debt instrument, maturity date | 31-May-18 | ' |
Debt instrument, periodic payment | 3,390 | ' |
Effective interest rate | 4.50% | ' |
Unamortized discount | $13,730 | $0 |
Acquisition_Credit_Facility_an4
Acquisition Credit Facility and Long-Term Debt (Schedule of Future Principal Payments) (Details) (USD $) | Jun. 30, 2014 | Jun. 30, 2013 |
Debt Instrument [Line Items] | ' | ' |
2015 | $187,029 | ' |
2016 | 36,181 | ' |
2017 | 38,012 | ' |
2018 | 36,454 | ' |
Long-term debt | 297,676 | 379,060 |
Notes Payable [Member] | ' | ' |
Debt Instrument [Line Items] | ' | ' |
2015 | 152,678 | ' |
2016 | ' | ' |
2017 | ' | ' |
2018 | ' | ' |
Long-term debt | 152,678 | ' |
Capital Lease Obligations [Member] | ' | ' |
Debt Instrument [Line Items] | ' | ' |
2015 | 34,351 | ' |
2016 | 36,181 | ' |
2017 | 38,012 | ' |
2018 | 36,454 | ' |
Long-term debt | $144,998 | ' |
Commitments_and_Contingencies_1
Commitments and Contingencies (Details) (USD $) | 12 Months Ended | |
Jun. 30, 2014 | Jun. 30, 2013 | |
Connectivity contracts | ' | ' |
Total | $546,509 | ' |
2015 | 316,221 | ' |
2016 | 187,314 | ' |
2017 | 39,814 | ' |
2018 | 3,160 | ' |
2019 | ' | ' |
Thereafter | ' | ' |
Operating leases | ' | ' |
Total | 3,795,972 | ' |
2015 | 706,253 | ' |
2016 | 473,880 | ' |
2017 | 377,347 | ' |
2018 | 293,709 | ' |
2019 | 228,865 | ' |
Thereafter | 1,715,918 | ' |
Connectivity contracts and Operating leases: | ' | ' |
Total | 4,342,481 | ' |
2015 | 1,022,474 | ' |
2016 | 661,194 | ' |
2017 | 417,161 | ' |
2018 | 296,869 | ' |
2019 | 228,865 | ' |
Thereafter | 1,715,918 | ' |
Operating Leases [Member] | ' | ' |
Operating Leased Assets [Line Items] | ' | ' |
Rent expense under operating leases | 863,000 | 833,000 |
Connectivity Contracts [Member] | ' | ' |
Operating Leased Assets [Line Items] | ' | ' |
Rent expense under operating leases | $987,000 | $990,000 |
Shareholders_Equity_Narrative_
Shareholders' Equity (Narrative) (Details) (USD $) | 0 Months Ended | 12 Months Ended | 0 Months Ended | 12 Months Ended | 12 Months Ended | |||||||||
Jul. 16, 2013 | Oct. 30, 2012 | Jun. 30, 2014 | Jun. 30, 2013 | Jul. 16, 2013 | Oct. 30, 2012 | Oct. 30, 2012 | Jul. 16, 2013 | Jun. 30, 2014 | Dec. 31, 2002 | Apr. 30, 1999 | Jun. 30, 2014 | Jun. 30, 2014 | Jun. 30, 2013 | |
Vesting Immediately [Member] | Vesting Immediately [Member] | Vesting Each Anniversary [Member] | Vesting upon Achievement of Performance Target [Member] | Employee Stock [Member] | Employee Stock [Member] | Employee Stock [Member] | 2007 Stock Option Plan [Member] | Series A Preferred Stock [Member] | Series A Preferred Stock [Member] | |||||
Class of Stock [Line Items] | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Preferred stock, shares authorized | ' | ' | 5,000,000 | 5,000,000 | ' | ' | ' | ' | ' | ' | ' | ' | 5,000,000 | ' |
Preferred stock, par value | ' | ' | $0.01 | $0.01 | ' | ' | ' | ' | ' | ' | ' | ' | $0.01 | ' |
Common stock market price threshold to trigger a mandatory preferred stock conversion | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | $3 | ' |
Number of consecutive trading days threshold must be reached that is required to trigger conversion event | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | '90 days | ' |
Preferred stock, liquidation preference per share | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | $0.59 | ' |
Aggregate liquidation preference | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | $2,647,000 | $2,490,000 |
Preferred stock, cumulative cash dividends rate | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 10.00% | ' |
Preferred stock, cumulative amount of preferred dividends in arrears | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 1,054,000 | 897,000 |
Preferred stock, per share amounts of preferred dividends in arrears | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | $0.42 | $0.35 |
Common stock, shares authorized | ' | ' | 40,000,000 | 40,000,000 | ' | ' | ' | ' | ' | 500,000 | 200,000 | ' | ' | ' |
Maximum employee withholding percent for stock plan | ' | ' | ' | ' | ' | ' | ' | ' | 15.00% | ' | ' | ' | ' | ' |
Percent of fair market value used to determine stock purchase price | ' | ' | ' | ' | ' | ' | ' | ' | 85.00% | ' | ' | ' | ' | ' |
Number of shares authorized | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 2,000,000 | ' | ' |
Shares available for future issuance | ' | ' | ' | ' | ' | ' | ' | ' | 155,959 | ' | ' | ' | ' | ' |
Shares available for issuance | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 755,974 | ' | ' |
Intrinsic value of the exercised shares | ' | ' | 3,300 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Options granted in period | 100,000 | 245,000 | 100,000 | 245,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Stock options granted, exercise price | $0.45 | $0.35 | $0.45 | $0.35 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Vesting rate | ' | ' | ' | ' | 25.00% | 25.00% | 25.00% | 75.00% | ' | ' | ' | ' | ' | ' |
Option vesting terms | ' | ' | 'Vesting is as follows: 25% vested immediately and 75% will vest if and when the price of the common stock has averaged $1.00 per share for the previous 90 consecutive business days. | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Option value | ' | ' | $0.16 | $0.12 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Dividend yield | ' | ' | 0.00% | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Total compensation costs related to non-vested awards not yet recognized | ' | ' | $6,532 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Warrants issued and outstanding | ' | ' | 394,922 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Exercise price | ' | ' | $0.38 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Shareholders_Equity_Summary_of
Shareholders' Equity (Summary of Option Activity) (Details) (USD $) | 0 Months Ended | 12 Months Ended | ||
Jul. 16, 2013 | Oct. 30, 2012 | Jun. 30, 2014 | Jun. 30, 2013 | |
Shares | ' | ' | ' | ' |
Outstanding at beginning of period | ' | ' | 1,241,526 | 1,430,944 |
Granted | 100,000 | 245,000 | 100,000 | 245,000 |
Exercised | ' | ' | -17,500 | ' |
Forfeited | ' | ' | -97,500 | -434,418 |
Outstanding at end of period | ' | ' | 1,226,526 | 1,241,526 |
Options exercisable at year end | ' | ' | 576,526 | 524,026 |
Weighted Average Exercise Price | ' | ' | ' | ' |
Outstanding at beginning of period | ' | ' | $0.39 | $0.41 |
Granted | $0.45 | $0.35 | $0.45 | $0.35 |
Exercised | ' | ' | $0.35 | ' |
Forfeited | ' | ' | $0.32 | $0.44 |
Outstanding at end of period | ' | ' | $0.40 | $0.39 |
Options exercisable at year end | ' | ' | $0.48 | $0.48 |
Shareholders_Equity_Schedule_o
Shareholders' Equity (Schedule of Nonvested Share Activity) (Details) (USD $) | 0 Months Ended | 12 Months Ended | ||
Jul. 16, 2013 | Oct. 30, 2012 | Jun. 30, 2014 | Jun. 30, 2013 | |
Number of Shares | ' | ' | ' | ' |
Nonvested at beginning of year | ' | ' | 717,500 | ' |
Granted | 100,000 | 245,000 | 100,000 | 245,000 |
Vested | ' | ' | -80,000 | ' |
Forfeited | ' | ' | -87,500 | ' |
Nonvested at end of year | ' | ' | 650,000 | 717,500 |
Weighted- Average Grant- Date Fair Value | ' | ' | ' | ' |
Nonvested at beginning of year | ' | ' | $0.09 | ' |
Granted | ' | ' | $0.16 | $0.12 |
Vested | ' | ' | $0.08 | ' |
Forfeited | ' | ' | $0.08 | ' |
Nonvested at end of year | ' | ' | $0.08 | $0.09 |
Shareholders_Equity_Summary_of1
Shareholders' Equity (Summary of Additional Stock Option Information ) (Details) (USD $) | 12 Months Ended |
Jun. 30, 2014 | |
Number Outstanding | ' |
Options Outstanding | 1,226,526 |
Number Exercisable | ' |
Number Exercisable | 576,526 |
Intrinsic Value | $157,382 |
$0.30 Exercise Price Option [Member] | ' |
Share-based Compensation, Shares Authorized under Stock Option Plans, Exercise Price Range [Line Items] | ' |
Exercise Price, minimum | $0.30 |
Exercise Price, maximum | $0.30 |
Number Outstanding | ' |
Options Outstanding | 495,000 |
Weighted-Average Remaining Contractual Life of options outstanding and exercisable | ' |
Weighted-Average Remaining Contractual Life of options outstanding and exercisable (Years) | '6 years 6 months 22 days |
Number Exercisable | ' |
Number Exercisable | ' |
Intrinsic Value | ' |
$0.35 Exercise Price Option [Member] | ' |
Share-based Compensation, Shares Authorized under Stock Option Plans, Exercise Price Range [Line Items] | ' |
Exercise Price, minimum | $0.35 |
Exercise Price, maximum | $0.35 |
Number Outstanding | ' |
Options Outstanding | 160,000 |
Weighted-Average Remaining Contractual Life of options outstanding and exercisable | ' |
Weighted-Average Remaining Contractual Life of options outstanding and exercisable (Years) | '8 years 4 months 2 days |
Number Exercisable | ' |
Number Exercisable | 80,000 |
Intrinsic Value | 32,000 |
$0.45 Exercise Price Option [Member] | ' |
Share-based Compensation, Shares Authorized under Stock Option Plans, Exercise Price Range [Line Items] | ' |
Exercise Price, minimum | $0.45 |
Exercise Price, maximum | $0.45 |
Number Outstanding | ' |
Options Outstanding | 100,000 |
Weighted-Average Remaining Contractual Life of options outstanding and exercisable | ' |
Weighted-Average Remaining Contractual Life of options outstanding and exercisable (Years) | '9 years 18 days |
Number Exercisable | ' |
Number Exercisable | 25,000 |
Intrinsic Value | 7,500 |
$0.50 Exercise Price Option [Member] | ' |
Share-based Compensation, Shares Authorized under Stock Option Plans, Exercise Price Range [Line Items] | ' |
Exercise Price, minimum | $0.50 |
Exercise Price, maximum | $0.50 |
Number Outstanding | ' |
Options Outstanding | 471,526 |
Weighted-Average Remaining Contractual Life of options outstanding and exercisable | ' |
Weighted-Average Remaining Contractual Life of options outstanding and exercisable (Years) | '3 years 8 months 23 days |
Number Exercisable | ' |
Number Exercisable | 471,526 |
Intrinsic Value | $117,882 |
Shareholders_Equity_Summary_of2
Shareholders' Equity (Summary of Fair Value Assumptions) (Details) | 0 Months Ended | |
Jul. 16, 2013 | Oct. 30, 2012 | |
Share-based Compensation [Abstract] | ' | ' |
Grant Date | 16-Jul-13 | 30-Oct-12 |
Term in years | '4 years 9 months | '4 years 9 months |
Volatility | 453.00% | 410.00% |
Risk Free Interest Rate | 1.38% | 0.75% |
Forfeiture Rate | 50.00% | 50.00% |
Income_Taxes_Schedule_of_Provi
Income Taxes (Schedule of Provision for Income Taxes) (Details) (USD $) | 12 Months Ended | |
Jun. 30, 2014 | Jun. 30, 2013 | |
Federal: | ' | ' |
Current tax expense | ' | ' |
Deferred tax benefit | -5,000,000 | -3,600,000 |
State: | ' | ' |
Current tax expense | 53,789 | 57,613 |
Provision for income taxes | ($4,946,211) | ($3,542,387) |
Income_Taxes_Narrative_Details
Income Taxes (Narrative) (Details) (USD $) | 12 Months Ended | |
Jun. 30, 2014 | Jun. 30, 2013 | |
Income Taxes [Abstract] | ' | ' |
Current federal income taxes recognized | ' | ' |
Current state income taxes recognized | 53,789 | 57,613 |
Increase (decrease) in valuation allowance on deferred tax assets | -5,000,000 | -3,600,000 |
Valuation allowance | 3,452,000 | 10,889,000 |
Operating Loss Carryforwards [Line Items] | ' | ' |
Net operating loss carryforwards | $36,000,000 | ' |
Minimum [Member] | ' | ' |
Operating Loss Carryforwards [Line Items] | ' | ' |
Net operating loss carryforwards expiration year | 1-Jan-19 | ' |
Maximum [Member] | ' | ' |
Operating Loss Carryforwards [Line Items] | ' | ' |
Net operating loss carryforwards expiration year | 31-Dec-34 | ' |
Income_Taxes_Schedule_of_Defer
Income Taxes (Schedule of Deferred Tax Assets and Liabilities) (Details) (USD $) | Jun. 30, 2014 | Jun. 30, 2013 |
Deferred tax assets: | ' | ' |
Net operating loss carryforwards | $12,264,000 | $12,658,000 |
Intangible assets | -452,000 | 1,484,000 |
Property and equipment | 19,000 | 135,000 |
Stock compensation | 154,000 | 146,000 |
Other | 67,000 | 66,000 |
Total deferred tax assets | 12,052,000 | 14,489,000 |
Valuation allowance | -3,452,000 | -10,889,000 |
Deferred tax assets, net | $8,600,000 | $3,600,000 |
Income_Taxes_Summary_of_Comput
Income Taxes (Summary of Computed Statutory Tax Rates) (Details) | 12 Months Ended | |
Jun. 30, 2014 | Jun. 30, 2013 | |
Reconciliation of statutory income tax rates to effective income tax rates: | ' | ' |
Income taxes at federal statutory rate | 34.00% | 34.00% |
State income tax, net of federal benefit | 5.90% | 6.60% |
Nondeductible expenses | 0.20% | 0.30% |
Prior year true up - Federal | 2.60% | -27.30% |
Deferred tax true up | 231.70% | 0.00% |
Change in valuation allowance | -819.50% | -486.60% |
Effective income tax rate | -545.10% | -473.00% |
Employee_Benefit_Plan_Details
Employee Benefit Plan (Details) | 12 Months Ended |
Jun. 30, 2014 | |
Employee Benefit Plan [Abstract] | ' |
Maximum contribution rate | 15.00% |
Related_Party_Transactions_Det
Related Party Transactions (Details) (USD $) | 12 Months Ended | |
Jun. 30, 2014 | Jun. 30, 2013 | |
Related Party Transactions [Abstract] | ' | ' |
Fees paid to non-employee directors for serving on the Board of Directors | $41,329 | $42,492 |