Document_and_Entity_Informatio
Document and Entity Information (USD $) | 12 Months Ended |
Dec. 31, 2013 | |
Document And Entity Information | ' |
Entity Registrant Name | 'NTS, INC. |
Entity Central Index Key | '0001126216 |
Document Type | '10-K |
Document Period End Date | 31-Dec-13 |
Amendment Flag | 'false |
Current Fiscal Year End Date | '--12-31 |
Is Entity a Well-known Seasoned Issuer? | 'No |
Is Entity a Voluntary Filer? | 'No |
Is Entity's Reporting Status Current? | 'Yes |
Entity Filer Category | 'Smaller Reporting Company |
Entity Public Float | $0 |
Entity Common Stock, Shares Outstanding | 0 |
Document Fiscal Period Focus | 'FY |
Document Fiscal Year Focus | '2013 |
Condensed_Consolidated_Balance
Condensed Consolidated Balance Sheets (USD $) | Dec. 31, 2013 | Dec. 31, 2012 |
CURRENT ASSETS: | ' | ' |
Cash and cash equivalents | $4,981,942 | $3,908,620 |
Accounts receivable, net | 5,465,724 | 5,156,598 |
Prepaid expenses and other receivables | 3,554,645 | 3,283,231 |
Deferred taxes | 1,063,237 | 815,563 |
Inventories | 202,746 | 222,735 |
Total current assets | 15,268,294 | 13,386,747 |
BONDS ISSUANCE COSTS, NET | 1,054,701 | 1,379,334 |
OTHER LONG-TERM ASSETS | 2,392,796 | 2,783,083 |
FIXED ASSETS, NET | 105,174,830 | 89,468,282 |
INTANGIBLE ASSETS, NET | 1,090,618 | 1,465,553 |
Total assets | 124,981,239 | 108,482,999 |
CURRENT LIABILITIES: | ' | ' |
Short-term bank credit and current maturities of notes payable | 5,679,457 | 2,541,703 |
Trade payables | 14,969,482 | 8,498,688 |
Other liabilities and accrued expenses | 5,640,869 | 5,068,640 |
Current maturities of obligations under capital leases | 261,894 | 424,719 |
Current maturities of bonds | 4,197,510 | 3,627,205 |
Total current liabilities | 30,749,212 | 20,160,955 |
DEFERRED TAXES, NET | 1,187,370 | 2,073,530 |
NOTES PAYABLE TO THE UNITED STATES DEPARTMENT OF AGRICULTURE, NET OF CURRENT MATURITIES | 41,920,254 | 35,519,847 |
NOTES PAYABLE, NET OF CURRENT MATURITIES | 17,336,250 | 14,410,774 |
BONDS PAYABLES, NET OF CURRENT MATURITIES | 3,528,049 | 7,026,523 |
OBLIGATIONS UNDER CAPITAL LEASES, NET OFÂ CURRENT MATURITIES | 484,933 | 207,883 |
OTHER LONG-TERM LIABILITIES | 1,499,794 | 1,679,619 |
Total liabilities | 96,705,862 | 81,079,131 |
COMMITMENTS AND CONTINGENT LIABILITIES | ' | ' |
SHAREHOLDERS' EQUITY: | ' | ' |
Common stock of $0.001 par value per share: 75,000,000 shares authorized at December 31, 2013 and 2012; 43,418,847 and 41,186,596 issued and outstanding at December 31, 2013 and 2012, respectively | 43,419 | 41,187 |
Additional paid-in capital | 57,493,518 | 54,669,894 |
Foreign currency translation adjustment | -1,805,791 | -1,805,791 |
Retained earnings (deficit) | -27,455,769 | -25,501,422 |
Total Equity | 28,275,377 | 27,403,868 |
Total liabilities and shareholders' equity | $124,981,239 | $108,482,999 |
Condensed_Consolidated_Balance1
Condensed Consolidated Balance Sheets (Parenthetical) (USD $) | Dec. 31, 2013 | Dec. 31, 2012 |
Stockholders' equity: | ' | ' |
Common stock, par value | $0.00 | $0.00 |
Common stock, authorized shares | 75,000,000 | 75,000,000 |
Common stock, issued shares | 43,418,847 | 41,186,596 |
Common stock, outstanding shares | 43,418,847 | 41,186,596 |
Condensed_Consolidated_Stateme
Condensed Consolidated Statements of Operations (USD $) | 12 Months Ended | |
Dec. 31, 2013 | Dec. 31, 2012 | |
Revenues | ' | ' |
Services on Fiber-To-The-Premise network | $23,454,091 | $18,219,615 |
Leased local loop services and other | 36,133,155 | 41,650,853 |
Total Revenues | 59,587,246 | 59,870,468 |
Expenses | ' | ' |
Cost of services (excluding depreciation and amortization shown below) | 25,643,381 | 27,489,743 |
Selling, general and administrative | 22,246,333 | 20,802,001 |
Depreciation and amortization | 7,380,483 | 6,274,488 |
Financing expenses, net | 6,388,327 | 5,551,080 |
Other expenses, net | 845,035 | 686,519 |
Total Expenses | 62,503,559 | 60,803,831 |
Loss before taxes | -2,916,313 | -933,363 |
Income tax benefit | 961,966 | 386,370 |
Net loss | ($1,954,347) | ($546,993) |
Basic and diluted loss per share | ($0.05) | ($0.01) |
Basic and diluted weighted average number of shares outstanding: | 43,418,847 | 41,186,596 |
Consolidated_Statements_of_Cha
Consolidated Statements of Changes in Shareholders' Equity (USD $) | Common Stock | Additional Paid-In Capital | Accumulated Other Comprehensive Income / Loss | Retained Earnings (Deficit) | Total |
Beginning Balance - Amount at Dec. 31, 2011 | $41,187 | $54,386,459 | ($1,805,791) | ($24,954,429) | $27,667,426 |
Beginning Balance - Shares at Dec. 31, 2011 | 41,186,596 | ' | ' | ' | ' |
Equity-based compensation expenses resulting from ASC 718-10-35 | ' | 283,435 | ' | ' | 283,435 |
Net income (loss) | ' | ' | ' | -546,993 | -546,993 |
Ending Balance, Amount at Dec. 31, 2012 | 41,187 | 54,669,894 | -1,805,791 | -25,501,422 | 27,403,868 |
Beginning Balance - Shares at Dec. 31, 2012 | 41,186,596 | ' | ' | ' | ' |
Equity-based compensation expenses resulting from ASC 718-10-35 | ' | 391,372 | ' | ' | 391,372 |
Exercise of options, Shares | 2,232,251 | ' | ' | ' | ' |
Exercise of options, Amount | 2,232 | 2,432,252 | ' | ' | 2,434,484 |
Net income (loss) | ' | ' | ' | -1,954,347 | -1,954,347 |
Ending Balance, Amount at Dec. 31, 2013 | $43,419 | $57,493,518 | ($1,805,791) | ($27,455,769) | $28,275,377 |
Ending Balance, Shares at Dec. 31, 2013 | 43,418,847 | ' | ' | ' | ' |
Condensed_Consolidated_Stateme1
Condensed Consolidated Statements of Cash Flows (USD $) | 12 Months Ended | |
Dec. 31, 2013 | Dec. 31, 2012 | |
Cash flow from operating activities: | ' | ' |
Net loss | ($1,954,347) | ($546,993) |
Adjustments required to reconcile net loss to net cash provided by operating activities: | ' | ' |
Depreciation and amortization | 7,380,483 | 6,274,488 |
Amortization of bonds issuance and finance costs | 533,401 | 468,685 |
Compensation in connection with the issuance of warrants and options issued for professional services | 391,372 | 283,435 |
Increase in bad debt provision | 453,225 | 275,087 |
Accrued interest and exchange rate on bonds | 502,595 | 62,224 |
Unearned loss due to hedging | ' | -32,250 |
Expense of discounted debt from related party and related warrants | ' | 237,454 |
Gain on buy back of bonds | ' | -221,643 |
Deferred tax provision | -1,133,834 | -682,114 |
Changes in operating assets and liabilities: | ' | ' |
Increase in accounts receivable | -762,351 | -1,669,435 |
Decrease (increase) in inventories | 19,989 | -29,658 |
Decrease (increase) in long-term receivables | 390,287 | -13,851 |
Decrease (increase) in prepaid expenses and other receivables | 750,248 | -8,782 |
Increase in prepaid financing costs | -221,698 | -427,764 |
Increase (decrease) in other long-term liabilities | -1,529,831 | 593,035 |
Increase (decrease) in trade payables | 2,033,922 | -1,482,871 |
Increase in other liabilities and accrued expenses | 572,229 | 446,777 |
Net cash provided by (used in) operating activities | 7,425,690 | 3,525,824 |
Cash flow from investing activities: | ' | ' |
Purchase of equipment | -8,558,583 | -3,226,019 |
Purchase of equipment for the projects under the United States Department of Agriculture, net of grants received | -8,553,249 | -17,187,267 |
Net cash used in investing activities | -17,111,832 | -20,413,286 |
Cash flow from financing activities: | ' | ' |
Repayment of short-term loans from banks and others | ' | -4,385,735 |
Repayment of capital lease obligation | -540,117 | -536,939 |
Proceeds from long-term loans from the United States Department of Agriculture | 9,166,790 | 16,477,528 |
Repayment of principal on bonds | -3,430,764 | -3,780,722 |
Repayment of long-term loans from United States Department of Agriculture | -2,317,838 | -1,578,817 |
Repayment of note payable | -800,966 | ' |
Decrease in restricted cash | ' | 769,331 |
Proceeds from exercise of options | 2,266,707 | ' |
Proceeds from loans from banks and others | 6,415,652 | 7,267,922 |
Net cash provided by financing activities | 10,759,464 | 14,232,568 |
Net increase (decrease) in cash and cash equivalents | 1,073,322 | -2,654,894 |
Cash and cash equivalents at the beginning of the period | 3,908,620 | 6,563,514 |
Cash and cash equivalents at the end of period | 4,981,942 | 3,908,620 |
Cash paid for: | ' | ' |
Interest | 4,327,438 | 3,703,404 |
Taxes | 98,387 | 167,138 |
Purchase of fixed assets by capital lease arrangements | 654,342 | 298,532 |
Purchase of fixed assets included in accounts payable | 5,954,656 | 4,304,999 |
Grants receivable from the United States Department of Agriculture | 1,008,733 | 974,120 |
Proceeds from exercise of options after December 31, 2013 | $167,778 | ' |
1_Organization_and_Nature_of_B
1. Organization and Nature of Business | 12 Months Ended | ||
Dec. 31, 2013 | |||
Notes to Financial Statements | ' | ||
1. Organization and Nature of Business | ' | ||
A. | NTS, Inc. (“NTSI” or “the Company”) was incorporated in the State of Nevada, U.S.A. in September 2000 as Xfone, Inc. The Company provides through its subsidiaries, integrated communications services which include voice, video and data over its Fiber-To-The-Premise (“FTTP”) and other networks. The Company currently has operations in Texas, Mississippi and Louisiana. Effective as of February 1, 2012, the Company changed its name to “NTS, Inc.” and as of February 2, 2012 the Company's common shares began trading on the NYSE MKT (f/k/a NYSE Amex) and the Tel Aviv Stock Exchange (“TASE”) under a new ticker symbol “NTS”. The name change is a reflection of the Company's refined and enhanced business strategy which began with its acquisition of NTS Communications, Inc. (“NTSC”) in 2008 and its focus on the build out of its high-speed FTTP network. | ||
NTSI’s wholly owned subsidiaries as of December 31, 2013 were as follows: | |||
● | NTSC and its seven wholly owned subsidiaries, NTS Construction Company, Garey M. Wallace Company, Inc., Midcom of Arizona, Inc., Communications Brokers Inc., NTS Telephone Company, LLC, NTS Management Company, LLC and PRIDE Network, Inc. | ||
● | Xfone USA, Inc. and its two wholly owned subsidiaries, eXpeTel Communications, Inc. and Gulf Coast Utilities, Inc. (collectively, “Xfone USA”). | ||
B. | Liquidity | ||
As of December 31, 2013, the Company reported a working capital deficit of $15,480,918 compared to a working capital deficit of $6,774,208 as of December 31, 2012. On February 12, 2013, the Company entered into an amendment to the Original ICON Agreement providing for an additional secured delayed draw term loan in the amount of $6,000,000 for the purchase of equipment in connection with the Company's project to expand its fiber network in the region of West Texas and the delay of the amortization schedules of the previously drawn down loans by six months. | |||
The Company believes that increased revenues from the higher margin Fiber-To-The-Premise network together with increasing operating efficiency will result in increased profitability and cash flows, which will lead to improvement in the working capital deficit to meet its anticipated cash requirements for at least the next 12 months. If, however, the Company does not generate sufficient cash from operations, or if the Company incurs additional unanticipated liabilities or the Company is unable to renew and/or extend a portion of its short-term liabilities, the Company may be required to seek additional financing or sell equity or debt on terms which may not be as favorable as it could have otherwise obtained. No assurance can be given that any refinancing, additional borrowing or sale of equity or debt will be possible when needed or that the Company will be able to negotiate acceptable terms. In addition, the Company’s access to capital is affected by prevailing conditions in the financial and equity capital markets, as well as the Company’s own financial condition. While management believes that the Company will be able to meet its liquidity needs for at least the next 12 months, no assurance can be given that the Company will be able to do so. | |||
2_Significant_Accounting_Polic
2. Significant Accounting Policies | 12 Months Ended | ||
Dec. 31, 2013 | |||
Notes to Financial Statements | ' | ||
2. Significant Accounting Policies | ' | ||
The financial statements are prepared in accordance with generally accepted accounting principles in the United States. The significant accounting policies followed in the preparation of the financial statements, applied on a consistent basis, are as follows: | |||
A. | Principles of Consolidation and Basis of Financial Statement Presentation | ||
The consolidated financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America ("US GAAP") and include the accounts of the Company and its subsidiaries. All significant inter-company balances and transactions have been eliminated in consolidation. | |||
B. | Foreign Currency Translation | ||
Foreign currency transactions gains and losses are included in the results of operations. | |||
C. | Subsequent Events | ||
The Company evaluates events occurring after the date of the financial statements, and through the date of issuance, for events requiring recording or disclosure in the financial statements. | |||
D. | Cash and Cash Equivalents | ||
Cash and cash equivalents consist of cash and temporary investments with maturities of three months or less when purchased. | |||
E. | Accounts Receivable | ||
Accounts receivable are recorded at net realizable value consisting of the carrying amount less the allowance for uncollectible accounts. | |||
The Company uses the allowance method to account for uncollectible and unsecured accounts receivable balances. Under the allowance method, estimate of uncollectible customer balances is made using factors such as the credit quality of the customer and the economic conditions in the market. An allowance for doubtful accounts is determined with respect to those amounts that the Company has determined to be doubtful of collection. When an account balance is past due and attempts have been made to collect the receivable through legal or other means the amount is considered uncollectible and is written off against the allowance balance. | |||
Accounts receivable are presented net of an allowance for doubtful accounts of $1,534,185 and $1,080,960 at December 31, 2013 and 2012, respectively. | |||
F. | Inventories | ||
Inventory consists primarily of fiber optic equipment and telephone equipment to be installed at the Company's customers, which is carried at the lower of cost (determined principally on either an average cost or first-in, first-out basis) or market. | |||
G. | Fixed Assets | ||
Fixed Assets are stated at cost. Depreciation is calculated based on a straight-line method over the estimated useful lives of the assets. Leasehold improvements are depreciated at the shorter of the estimated useful lives or lease term. Annual lives of depreciation are as follows: | |||
Useful Life | |||
Communication equipment | 3-20 years | ||
Fiber network | 13-30 years | ||
Construction equipment | 5 years | ||
Equipment held under lease | 4-15 years | ||
Office furniture and equipment | 5-15 years | ||
Development costs | 3 years | ||
Computer equipment | 5-7 years | ||
Motor vehicles | 4-5 years | ||
Building and plant | 4-35 years | ||
Depreciation expenses amounted to $7,005,548 and $5,824,486 for the years ended December 31, 2013 and 2012, respectively. | |||
The Company charges the cost of maintenance and repairs, including the cost of replacing minor items not constituting substantial betterments, principally to cost of revenues as these costs are incurred. | |||
H. | Intangible Assets | ||
Other intangible assets with determinable lives consist of customer relations related to mergers and acquisitions are amortized over a period between 2-13 years from the date of the purchase. | |||
I. | Long-Lived Assets | ||
The Company periodically evaluates the recoverability of the carrying amount of long-lived assets (including fixed assets and intangible assets with determinable lives) whenever events or changes in circumstances indicate that the carrying amount of an asset may not be fully recoverable. The Company evaluates events or changes in circumstances based on a number of factors including operating results, business plans and forecasts, general and industry trends, and economic projections and anticipated cash flows. Impairment, if any, is assessed when the undiscounted expected future cash flows derived from an asset are less than its carrying amount. Impairment losses are measured as the amount by which the carrying value of an asset exceeds its fair value and are recognized in earnings. The Company also continually evaluates the estimated useful lives of all long-lived assets and periodically revises such estimates based on current events. No impairment loss was recorded for the years ended December 31, 2013 and 2012. At December 31, 2013, the Company believes its long- lived assets are recoverable. | |||
J. | Revenue Recognition | ||
Revenues derived from local telephone, long-distance, data and video services are recognized when services are provided. This is based upon either usage (e.g., minutes of traffic/bytes of data processed), period of time (e.g., monthly service fees) or other established fee schedules. | |||
Service revenues also include billings to customers for various regulatory fees imposed on us by governmental authorities. Cash incentives given to customers are recorded as a reduction of revenue. For contracts that involve the bundling of services, revenue is allocated to the services based on their relative fair value. We record the resale of third-party services and the sale of equipment to customers as gross revenue when we are the primary obligor in the arrangement. | |||
Payments received in advance are deferred until the service is provided. | |||
The Company reports taxes imposed by governmental authorities on revenue producing transactions between it and its customers in the consolidated financial statements on a net basis. | |||
K. | Advertising expenses | ||
Advertising expenses are carried to the statement of operations as incurred. Advertising expenses for the years ended December 31, 2013 and 2012 were $235,753 and $237,420, respectively. | |||
L. | Use of Estimates | ||
The preparation of financial statements in conformity with 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 financial statements, and the reported amounts of revenues and expenses during the reported period. Actual results could differ from those estimates. | |||
Examples of significant estimates include: the allowance for doubtful accounts, the recoverability of fixed assets, the recoverability of intangible assets and other long-lived assets, unbilled revenues, fair values of financial instruments, unrecognized tax benefits, valuation allowances on tax assets, accrued expenses, and contingencies. | |||
M. | Loss Per Share | ||
Basic loss per share (EPS) is computed by dividing net loss by the weighted average number of common shares outstanding for the period. Diluted EPS reflects the potential dilution that could occur if securities or other contracts to issue common stock were exercised or converted into common stock or resulted in the issuance of common stock that then shared in the earnings of the entity. Warrants and options were excluded from the calculation of diluted loss per share since they would have an anti-dilutive effect due to the Company's net loss, which was reported for both years ended December 31, 2013 and 2012. | |||
N. | Income Taxes | ||
The Company and its subsidiaries account for income taxes in accordance with FASB ASC No. 740, “Income Taxes.” This topic prescribes the use of the liability method, whereby deferred tax asset and liability account balances are determined based on differences between financial reporting and tax bases of assets and liabilities and are measured using the enacted tax rates that will be in effect when the differences are expected to reverse. The Company and its subsidiaries provide a valuation allowance, if necessary, to reduce deferred tax assets to their estimated realizable value. | |||
Deferred tax liabilities and assets are classified as current or non-current based on the classification of the related asset or liability for financial reporting, or according to the expected reversal dates of the specific temporary differences if not related to an asset or liability for financial reporting. | |||
The Company uses a two-step approach for recognizing and measuring tax benefits taken or expected to be taken in a tax return. The first step is recognition: the Company determines whether it is more likely than not that a tax position will be sustained upon examination, including resolution of any related appeals or litigation processes, based on the technical merits of the position. In evaluating whether a tax position has met the more-likely-than-not recognition threshold, the Company presumes that the position will be examined by the appropriate taxing authority that has full knowledge of all relevant information. The second step is measurement: a tax position that meets the more-likely-than-not recognition threshold is measured to determine the amount of benefit to recognize in the financial statements. The tax position is measured at the largest amount of benefit that is greater than 50 percent likely of being realized upon ultimate settlement. Differences between tax positions taken in a tax return and amounts recognized in the financial statements will generally result in one or more of the following: an increase in a liability for income taxes payable, a reduction of an income tax refund receivable, a reduction in a deferred tax asset, or an increase in a deferred tax liability. | |||
O. | Fair Value Measurements | ||
The carrying amounts of the Company’s financial instruments, including cash equivalents, prepaid expenses and other receivables, and other liabilities and accrued expenses approximate fair value due to their short maturities. The Company’s notes payable and capital lease obligations are carried at historical cost, which approximates fair value. | |||
P. | Stock-Based Compensation | ||
The Company accounts for stock-based compensation in accordance with FASB ASC No. 718-10, "Compensation - Stock Compensation". Stock-based compensation expense recognized during the period is based on the value of the portion of share-based awards that are ultimately expected to vest during the period. The fair value of each stock option grant is estimated on the date of grant using the Black-Scholes option pricing model. The fair value of restricted stock is determined based on the number of shares granted and the closing price of the Company’s common stock on the date of grant. Compensation expense for all share-based payment awards is recognized using the straight-line amortization method over the vesting period. | |||
Q. | Derivative instruments | ||
The Company and its subsidiaries account for derivative instruments and hedging activities in accordance with FASB ASC No. 815, "Derivatives and Hedging". ASC 815 requires entities to provide qualitative disclosures about the objectives and strategies for using derivatives, quantitative data about the fair value of any gains and losses on derivative contracts, and details of credit risk related contingent features in their hedged positions. ASC 815 also requires entities to disclose more information about the location and amounts of derivative instruments in financial statements; how derivatives and related hedges are accounted for; and how the hedges affect the entity's financial position, financial performance, and cash flows. | |||
The Company recognizes all of its derivative instruments as either assets or liabilities on the balance sheet at fair value. For derivative instruments that are designated and qualify as a cash flows hedge (i.e., hedging the exposure to variability in expected future cash flows that is attributable to a particular risk), the effective portion of the gain or loss on the derivative instrument is reported as a component of other comprehensive income and reclassified into earnings in the same period or periods during which the hedged transaction affects earnings. Any gain or loss on a derivative instrument in excess of the cumulative change in the present value of future cash flows of the hedged item is recognized in current earnings during the period of change. For the years ended December 31, 2013 and 2012, the forward contracts did not qualify for hedge accounting and as such, changes in the fair value of the derivative instrument were reported in current period earnings. During January 2012, the Company entered into two foreign currency hedging transactions of $596,842 maturing on May 29, 2012 to buy NIS 2,303,809, and $4,306,570 maturing on November 28, 2012 to buy NIS 16,640,591, in order to hedge against the risk of principal and interest payments of its bonds during 2012. The Company hedged some of its forecasted interest payments denominated in NIS with currency forward contracts. As of December 31, 2012, the Company recognized an unearned gain of $32,250 in financing expenses in the Consolidated Statements of Operations against an increase in its Current Maturities of Bonds in the Consolidated Balance Sheet. | |||
R. | Grants | ||
Grants from United States Department of Agriculture are recognized at their fair value when there is reasonable assurance that the grant will be received and all attaching conditions will be complied with. The grants are credited to the cost of the assets and are released to the statement of operations over the expected useful life in a consistent manner with the depreciation method for the relevant asset. | |||
S. | Reclassification | ||
Certain prior period balances have been reclassified to conform to the current year presentation. Such reclassifications did not impact the Company’s net loss or stockholders’ equity. | |||
3_Prepaid_Expenses_and_Other_R
3. Prepaid Expenses and Other Receivables | 12 Months Ended | ||||||||
Dec. 31, 2013 | |||||||||
Notes to Financial Statements | ' | ||||||||
3. Prepaid Expenses and Other Receivables | ' | ||||||||
Prepaid Expenses and Other Receivables consisted of the following: | |||||||||
December 31, | |||||||||
2013 | 2012 | ||||||||
Prepaid expenses | $ | 1,160,406 | $ | 1,072,417 | |||||
Grant receivables from United States Department of Agriculture | 1,008,733 | 974,120 | |||||||
Other receivables | 1,385,506 | 1,236,694 | |||||||
$ | 3,554,645 | $ | 3,283,231 | ||||||
4_Fixed_Assets
4. Fixed Assets | 12 Months Ended | ||||||||
Dec. 31, 2013 | |||||||||
Property, Plant and Equipment [Abstract] | ' | ||||||||
4. Fixed Assets | ' | ||||||||
Fixed Assets consisted of the following: | |||||||||
December 31, | |||||||||
2013 | 2012 | ||||||||
Cost | |||||||||
Communication equipment | $ | 86,124,427 | $ | 80,649,694 | |||||
Fiber network | 85,094,060 | 70,168,573 | |||||||
Office furniture and equipment | 3,827,299 | 3,823,563 | |||||||
Computer equipment | 10,605,973 | 10,435,430 | |||||||
Construction equipment | 544,691 | 531,612 | |||||||
Motor vehicles | 1,707,827 | 1,553,566 | |||||||
Building and plant | 11,923,780 | 10,851,254 | |||||||
Work in Progress | 8,467,622 | 7,569,891 | |||||||
208,295,679 | 185,583,583 | ||||||||
Accumulated Depreciation | |||||||||
Communication equipment | 65,615,540 | 63,318,762 | |||||||
Fiber network | 17,257,242 | 13,774,412 | |||||||
Office furniture and equipment | 3,533,795 | 3,521,850 | |||||||
Computer equipment | 10,287,617 | 9,720,225 | |||||||
Construction equipment | 483,829 | 451,237 | |||||||
Motor vehicles | 1,158,462 | 967,029 | |||||||
Building | 4,784,364 | 4,361,786 | |||||||
103,120,849 | 96,115,301 | ||||||||
Fixed assets, net | $ | 105,174,830 | $ | 89,468,282 | |||||
5_Intangible_Assets
5. Intangible Assets | 12 Months Ended | ||||||||||||||||
Dec. 31, 2013 | |||||||||||||||||
Goodwill and Intangible Assets Disclosure [Abstract] | ' | ||||||||||||||||
5. Intangible Assets | ' | ||||||||||||||||
The breakdown of intangible assets as of December 31, 2013 and 2012 was as follows: | |||||||||||||||||
Customer | License | Total | |||||||||||||||
Relationships | |||||||||||||||||
31-Dec-13 | |||||||||||||||||
Cost | $ | 4,463,474 | $ | 250,000 | $ | 4,713,474 | |||||||||||
Accumulated amortization | 3,622,856 | - | 3,622,856 | ||||||||||||||
Net | $ | 840,618 | $ | 250,000 | $ | 1,090,618 | |||||||||||
31-Dec-12 | |||||||||||||||||
Cost | $ | 4,463,474 | $ | 250,000 | $ | 4,713,474 | |||||||||||
Accumulated amortization | 3,247,921 | - | 3,247,921 | ||||||||||||||
Net | $ | 1,215,553 | $ | 250,000 | $ | 1,465,553 | |||||||||||
Based on the intangible assets in service as of December 31, 2013, estimated amortization expense for each of the next three years ending December 31 is as follows: | |||||||||||||||||
2014 | 2015 | 2016 | |||||||||||||||
Amortization expense | $ | 319,193 | $ | 307,797 | $ | 213,628 | |||||||||||
Amortization expenses amounted to $374,935 and $450,002 for the years ended December 31, 2013 and 2012, respectively. |
6_Other_Liabilities_and_Accrue
6. Other Liabilities and Accrued Expenses | 12 Months Ended | ||||||||
Dec. 31, 2013 | |||||||||
Notes to Financial Statements | ' | ||||||||
6. Other Liabilities and Accrued Expenses | ' | ||||||||
Other Liabilities and Accrued Expenses consisted of the following: | |||||||||
December 31, | |||||||||
2013 | 2012 | ||||||||
Payroll and payroll related | $ | 608,220 | $ | 807,978 | |||||
Accrued expenses | 2,533,903 | 2,477,213 | |||||||
Accrued merger and acquisition costs | 667,361 | - | |||||||
Deferred revenues | 961,321 | 1,060,237 | |||||||
Tax authorities | 551,400 | 551,400 | |||||||
Others | 318,664 | 171,812 | |||||||
$ | 5,640,869 | $ | 5,068,640 |
7_Notes_Payable_to_the_United_
7. Notes Payable to the United States Department of Agriculture | 12 Months Ended | ||||||||
Dec. 31, 2013 | |||||||||
Notes to Financial Statements | ' | ||||||||
7. Notes Payable to the United States Department of Agriculture | ' | ||||||||
Long-term and short-term portions of the notes payable to the United States Department of Agriculture are presented in the following table: | |||||||||
December 31, | |||||||||
2013 | 2012 | ||||||||
Notes Payable to the United States Department of Agriculture | $ | 44,186,615 | $ | 37,337,663 | |||||
Less current portion | 2,266,361 | 1,817,816 | |||||||
Long-term portion | $ | 41,920,254 | $ | 35,519,847 | |||||
The notes payable from the United States Department of Agriculture mature as follows: | |||||||||
Year | |||||||||
2014 | $ | 2,266,361 | |||||||
2015 | 2,266,360 | ||||||||
2016 | 2,266,361 | ||||||||
2017 | 2,266,360 | ||||||||
2018 | 2,266,361 | ||||||||
2019 and thereafter | 32,854,812 | ||||||||
$ | 44,186,615 | ||||||||
A. | NTS Telephone Company, LLC | ||||||||
NTS Telephone Company, LLC, a wholly owned subsidiary of NTSC, received from the Rural Utilities Service (“RUS”), a division of the United States Department of Agriculture, an $11.5 million debt facility to complete a telecommunications overbuild project in Levelland, Texas. The principal of the RUS loan is repaid monthly starting one year from the advance date until full repayment after 17 years from each advance date. Each advance bears interest that will become fixed at the date of the advance at the average yield on outstanding marketable obligations of the United States having the final maturity comparable to the final maturity of the advance. The note is non-recourse to NTSC and all other NTSC subsidiaries and is secured by NTS Telephone's assets which were $16.1 million at December 31, 2013. As of December 31, 2013, the annual average weighted interest rate on the outstanding advances was 3.52%. | |||||||||
The total outstanding amount of these loans as of December 31, 2013 and December 31, 2012 were $8,839,862 and $9,589,321, respectively. The loans are to be repaid in monthly installments until 2024. | |||||||||
B. | PRIDE Network, Inc. | ||||||||
PRIDE Network, Inc., a wholly owned subsidiary of NTSC, received approval from the Broadband Initiative Program of the American Recovery and Reinvestment Act for a total of $99.9 million funding in the form of $45.9 million in grants and $54 million in 19 to 20-year loans. The aggregate amount of these loans and grants received by the Company as of December 31, 2013 is $37,861,612 and $31,871,189, respectively. Each advance bears interest that will become fixed at the date of the advance at the average yield on outstanding marketable obligations of the United States having the final maturity comparable to the final maturity of the advance. The funding created an opportunity for the Company to expand the rollout of its FTTP infrastructure, known as the PRIDE Network, and bring broadband services to northwestern Texas and southern Louisiana. Construction work of PRIDE Network's FTTP infrastructure started in October 2010.The loans are non-recourse to NTSC and all other NTSC subsidiaries and are secured by PRIDE Network's assets which were $56.9 million at December 31, 2013. As of December 31, 2013, the annual average weighted interest rate on the outstanding advances was 2.69%. As of December 31, 2013, the total amount of loans and grants available in the future was $16,131,426 and $14,005,730, respectively. | |||||||||
The loans are to be repaid in monthly installments until 2030. The total outstanding amounts of these loans as of December 31, 2013 and December 31, 2012 are $35,346,753 and $27,748,342, respectively. | |||||||||
As of December 31, 2013 and 2012, the Company recorded grants receivable at the amount of $1,008,733 and $974,120, respectively, (see also Note 3 above). Accounts payable in the amount of $1,350,006 and $1,013,880 that was financed by long-term loans received during 2014 and 2013, respectively, is included in other long-term liabilities. |
8_Notes_Payable
8. Notes Payable | 12 Months Ended | ||||||||||||
Dec. 31, 2013 | |||||||||||||
Notes to Financial Statements | ' | ||||||||||||
8. Notes Payable | ' | ||||||||||||
Notes payable consisted of the following: | |||||||||||||
Annual Interest | December 31, | ||||||||||||
Rate | 2013 | 2012 | |||||||||||
Promissory note to ICON Agent, LLC (1) | 12.75 | % | $ | 20,100,000 | $ | 14,100,000 | |||||||
Promissory note to CoBridge Telecom, LLC (2) | 6 | % | 141,833 | 373,244 | |||||||||
Promissory note to Reach Broadband (3) | 7 | % | 168,941 | 327,357 | |||||||||
Note to a finance company | 3.99 | % | 249,392 | 244,880 | |||||||||
Others | 89,180 | 89,180 | |||||||||||
20,749,346 | 15,134,661 | ||||||||||||
Less current portion | 3,413,096 | 723,887 | |||||||||||
Long-term portion | $ | 17,336,250 | $ | 14,410,774 | |||||||||
1 | On October 6, 2011, the Company entered into a term loan, guarantee and security agreement (the “Original ICON Agreement”), as amended by the Amended & Restated Consent, Waiver & Amendment Agreement dated November 1, 2011 by and between the following: (1) ICON Agent, LLC (the “Agent”), acting as agent for the Lenders signatory thereto; (2) the Company, as Guarantor; (3) Xfone USA, Inc., NTS Communications, Inc., Gulf Coast Utilities, Inc., eXpeTel Communications, Inc., NTS Construction Company, Garey M. Wallace Company, Inc., Midcom of Arizona, Inc., Communications Brokers, Inc., and NTS Management Company, LLC, acting as Borrowers and Guarantors; and (4) PRIDE Network, Inc., and NTS Telephone Company, LLC (together with the Borrowers and Guarantors acting as Credit Parties) that provided for a secured term loan in the amount of $7,500,000 (the “First ICON Loan”). | ||||||||||||
On June 22, 2012, the Company entered into Amendment No. 1 to the Original ICON Agreement providing for: | |||||||||||||
(i) An additional secured term loan in the amount of $3,500,000, for the payment of all liabilities owed to Burlingame (the “Second ICON Loan”), | |||||||||||||
(ii) A secured delayed draw loan in the amount of $3,100,000, for the purchase of equipment in connection with the Company's project to construct a fiber network in Wichita Falls, Texas (the “Third ICON Loan”), and | |||||||||||||
(iii) Certain other amendments to the Original ICON Agreement and the First ICON Loan as described in Amendment No. 1. | |||||||||||||
Each of the First ICON Loan, Second ICON Loan and Third ICON Loan bear interest at 12.75% per annum. | |||||||||||||
The fundings of the First ICON Loan and the Second ICON Loan were made on October 27, 2011 and June 22, 2012, respectively. | |||||||||||||
On August 9, 2012, the Company entered into Amendment No. 2 to the Original ICON Agreement providing for revised amortization schedules of the First ICON Loan and the Second ICON Loan. | |||||||||||||
On September 27, 2012, the Company drew down the Third ICON Loan in the amount of $3,100,000. | |||||||||||||
On February 12, 2013, the Company entered into Amendment No. 3 to the Original ICON Agreement (“Amendment No. 3”) providing for: | |||||||||||||
(i) | An additional secured delayed draw term loans in the aggregate amount of $6,000,000, bearing interest of 12.75% per annum for the purchase of equipment in connection with the Company's project to expand its fiber network in the region of West Texas, | ||||||||||||
(ii) | Revised amortization schedules of the First ICON Loan, Second ICON Loan and Third ICON Loan (as described below), and | ||||||||||||
(iii) | Certain other amendments to the Original ICON Agreement (as amended by Amendment No. 1 and Amendment No. 2), described in Amendment No. 3. | ||||||||||||
Pursuant to Amendment No. 3, the principal amount of the First ICON Loan is payable in 69 consecutive monthly installments with the first 27 monthly payments being payments of accrued interest only. The principal amount of the Second ICON Loan is payable in 61 consecutive monthly installments with the first 19 monthly payments being payments of accrued interest only. The principal amount of the Third ICON Loan is payable in 58 consecutive monthly installments with the first 16 monthly payments being payments of accrued interest only. | |||||||||||||
Each of the foregoing loans are secured by a lien against all of each Borrower's and Guarantor's property and assets, whether real or personal, tangible or intangible, and whether now owned or hereafter acquired, or in which it now has or at any time in the future may acquire any right, title, or interest; provided, however, that none of the assets of PRIDE Network, Inc. and NTS Telephone Company are being used as collateral for the loans and are specifically excluded. | |||||||||||||
The Company is required to maintain fixed charge coverage ratio of not less than 1.15 to 1.00 for the trailing four fiscal quarter period most recently ended if at any time cash was less than $3,000,000 as of the last day of any fiscal quarter. Pursuant to Amendment No. 3, senior leverage ratio should not exceed 2.25 to 1.00 from June 30, 2012 through March 31, 2013, 2.00 to 1.00 from June 30, 2013 through December 31, 2013, and 1.75 to 1.00 from March 31, 2014 and thereafter. As of December 31, 2013, the Company complied with the foregoing financial covenants. | |||||||||||||
The total outstanding amount of the loans as of December 31, 2013 is $20,100,000. | |||||||||||||
2 | On April 25, 2011, NTSC entered into an Asset Purchase Agreement with CoBridge Telecom, LLC, (“CoBridge”), pursuant to which CoBridge agreed to sell NTSC all of CoBridge’s assets in and around the communities of Colorado City, Levelland, Littlefield, Morton, and Slaton Texas pursuant to the terms of that agreement. As part of the agreement, a note for $1,010,101 was issued on July 1, 2011 at an interest rate of 6% per annum and is payable in 36 equal monthly installments of $20,626.The total outstanding amount of the note as of December 31, 2013 was $141,833. | ||||||||||||
3 | On September 16, 2011, NTSC entered into an Asset Purchase Agreement with RB3, LLC, and Arklaoktex, LLC, each doing business as Reach Broadband (“Reach”), pursuant to which Reach agreed to sell NTSC all of Reach’s assets in and around the communities of Abernathy, Anton, Brownfield, Hale Center, Idalou, Levelland, Littlefield, Meadow, New Deal, O’Donnell, Olton, Reese, Ropesville, Shallowater, Smyer, Tahoka, and Wollforth Texas pursuant to the terms of that agreement. As part of the agreement, a note for $475,093 was issued on December 1, 2011 at an interest rate of 7% per annum and is payable in 36 equal monthly installments of $14,693. The total outstanding amount of the note as of December 31, 2013 was $168,941. | ||||||||||||
The notes payable mature as follows: | |||||||||||||
Year | |||||||||||||
2014 | $ | 3,413,096 | |||||||||||
2015 | 3,015,000 | ||||||||||||
2016 | 3,015,000 | ||||||||||||
2017 | 11,306,250 | ||||||||||||
$ | 20,749,346 | ||||||||||||
9_Bonds_Payable
9. Bonds Payable | 12 Months Ended | ||||||||
Dec. 31, 2013 | |||||||||
Notes to Financial Statements | ' | ||||||||
9. Bonds Payable | ' | ||||||||
A. | Issuance of Bonds | ||||||||
On December 13, 2007, the Company issued a total of NIS 100,382,100 (approximately $25,562,032, based on the exchange rate as of December 13, 2007) unsecured Series A Bonds (the “Bonds”) to Israeli institutional investors. The principal of the Bonds is repaid in 8 equal annual payments on the 1st of December of every year from 2008 until 2015 (inclusive). On November 11, 2008 (the “Date of Listing”), the Bonds commenced trading on the TASE. From the date of issuance until the Date of Listing, the Bonds accrued annual interest at a rate of 9%. As of the Date of Listing, the interest rate for the unpaid balance of the Bonds was reduced by 1% to an annual interest rate of 8%. The interest on the Bonds is paid semi-annually on the 1st of June and on the 1st of December of every year from 2008 until 2015 (inclusive). The principal and interest of the Bonds are linked to the Israeli Consumer Price Index (“CPI”). The known CPI at December 31, 2013 was 119.9. | |||||||||
The components of the bonds payable are as follows: | |||||||||
December 31, | |||||||||
2013 | 2012 | ||||||||
Outstanding balance (in NIS) | 25,095,525 | 37,643,288 | |||||||
Accrued interest (in NIS) | 165,012 | 247,518 | |||||||
Increase in debt due to CPI adjustments (in NIS) | 4,576,883 | 6,026,770 | |||||||
Unearned gain due to hedging (in NIS) | - | (120,389 | ) | ||||||
Total outstanding debt (in NIS) | 29,837,420 | 43,797,187 | |||||||
Exchange rate for year end | 3.471 | 3.733 | |||||||
Total outstanding debt (USD) | $ | 8,596,203 | $ | 11,732,437 | |||||
Debt discount related to warrants | (237,639 | ) | (359,307 | ) | |||||
Bonds held by subsidiary | (633,005 | ) | (719,402 | ) | |||||
Total outstanding debt | 7,725,559 | 10,653,728 | |||||||
Less current portion | 4,197,510 | 3,627,205 | |||||||
Long-term portion | $ | 3,528,049 | $ | 7,026,523 | |||||
The Company issued the holders of the Bonds, for no additional consideration, 956,020 (non-tradable) warrants, each exercisable at an exercise price of $3.50 with a term of 4 years, beginning on September 2, 2008. In November 2011, following the completion of the rights offering, the exercise price of these warrants was adjusted to $2.04 per share. The warrants expired unexercised in September 2012. | |||||||||
The Company attributed the composition of the proceeds from the Bonds offering as follows: | |||||||||
Bonds Series A | $ | 24,588,726 | |||||||
Stock Purchase Warrants (1) | 973,306 | ||||||||
Total | $ | 25,562,032 | |||||||
(1) | Presented as part of Additional Paid-in Capital. | ||||||||
The resulting debt discount and bonds issuance costs are being amortized into interest expense over the life of the Bonds. | |||||||||
On November 5, 2013, Midroog Limited, an Israeli rating company which is a subsidiary of Moody’s Investor Services (“Midroog”) filed with the TASE an annual monitoring report, reaffirming the Ba1 rating of the Series A Bonds, however, Midroog’s rating committee decided on a developing outlook on the rating of the Series A Bonds in light of the Company’s pending merger agreement with Tower Three as described in Note 21 below. | |||||||||
B. | Aggregate maturities are as follows: | ||||||||
2014 | $ | 4,150,721 | |||||||
2015 | 3,528,049 | ||||||||
7,678,770 | |||||||||
Accrued interest | 46,789 | ||||||||
$ | 7,725,559 | ||||||||
During 2013, principal and interest payments (including CPI adjustments) on the Bonds were $3,430,764 and $983,650, respectively. During 2012, principal and interest payments on the Bonds were $3,780,722 and $1,122,504, respectively. | |||||||||
10_Capital_Lease_Obligations
10. Capital Lease Obligations | 12 Months Ended | ||||
Dec. 31, 2013 | |||||
Leases [Abstract] | ' | ||||
10. Capital Lease Obligations | ' | ||||
The Company is the lessee of switching and other telecom equipment and motor vehicles under capital leases expiring on various dates from 2014 through 2018. The assets and liabilities under capital leases are recorded at the lower of the present value of the minimum lease payments or the fair value of the asset. The assets are amortized (or depreciated) over the lower of their related lease terms or their estimated productive lives. | |||||
Future minimum lease payments under capital leases as of December 31, 2013 are: | |||||
2014 | $ | 261,894 | |||
2015 | 158,645 | ||||
2016 | 133,967 | ||||
2017 | 108,145 | ||||
2018 | 84,176 | ||||
Total | $ | 746,827 | |||
Total minimum lease payments | $ | 810,459 | |||
Less: amount representing interest at average rate of 8.5% | (63,632 | ) | |||
Present value of net minimum lease payment | $ | 746,827 | |||
At December 31, 2013 and 2012, fixed assets held under capital leases had a cost of $1,426,331 and $1,385,174, respectively, and accumulated depreciation of $477,071 and $529,154, respectively. |
11_Employee_Benefit_Plan
11. Employee Benefit Plan | 12 Months Ended |
Dec. 31, 2013 | |
Compensation and Retirement Disclosure [Abstract] | ' |
11. Employee Benefit Plan | ' |
The Company maintains an employee's savings and retirement plan under Section 401(k) of the Internal Revenue Code. All full-time U.S. employees who have completed six months of service become eligible to participate in the semi-annual plan that is nearest to their entry dates. The Company's contribution to the plan, as determined by the Board of Directors, is discretionary and is limited to a portion of the employee's contribution. The Company contributed $49,355 and $60,016 during the years ended December 31, 2013 and 2012, respectively. | |
12_Income_Taxes
12. Income Taxes | 12 Months Ended | ||||||||
Dec. 31, 2013 | |||||||||
Income Tax Disclosure [Abstract] | ' | ||||||||
12. Income Taxes | ' | ||||||||
The benefit from income taxes is based on loss before income taxes reported for financial statement purposes. The loss before income taxes for the year 2013 and 2012 was $2,916,313 and $933,363 respectively. | |||||||||
The income tax benefit was as follows: | |||||||||
December 31, | |||||||||
2013 | 2012 | ||||||||
Current: | |||||||||
Federal | $ | _- | $ | - | |||||
State | -171,868 | (295,744 | ) | ||||||
Deferred: | |||||||||
Federal | 1,133,834 | 682,114 | |||||||
State | - | - | |||||||
Total benefit | $ | 961,966 | $ | 386,370 | |||||
Deferred taxes arise because of the different treatment of transactions for financial statement accounting and income tax accounting, known as temporary differences. The Company records the tax effect of these temporary differences as deferred tax assets and deferred tax liabilities in its Consolidated Balance Sheets. Deferred tax assets generally represent items that can be used as a tax deduction or credit in a tax return in future years for which the Company has already recorded the tax benefit in the Consolidated Statements of Operations. The components of net deferred tax assets and liabilities were as follows: | |||||||||
December 31, | |||||||||
2013 | 2012 | ||||||||
Deferred Tax Liabilities: | |||||||||
Accelerated tax depreciation of fixed assets | $ | 11,050,028 | $ | 10,075,757 | |||||
Deferred Tax Assets: | |||||||||
Carry forward losses | 9,357,105 | 7,291,609 | |||||||
Allowance for bad debts | 537,432 | 378,665 | |||||||
Evaluation of bonds payable to the Israeli Consumer Price Index and exchange rate | 462,176 | 566,305 | |||||||
Accrued vacation and severance pay | 147,668 | 189,960 | |||||||
Expenses related to warrants and non qualified stock options | 421,514 | 391,251 | |||||||
Net deferred taxes liabilities | $ | 124,133 | $ | 1,257,967 | |||||
The current and non-current components of the Company's deferred tax balances are generally based on the balance sheet classification of the asset or liability creating the temporary difference. | |||||||||
Significant judgment is required in determining the realizability of the Company's deferred tax assets. The assessment of whether valuation allowances are required considers, among other matters, the nature, frequency and severity of current and cumulative losses, forecasts of future profitability, the duration of statutory carryforward periods, the Company's experience with loss carryforwards expiring unused and tax planning alternatives. | |||||||||
The Company's analysis of the need for valuation allowances considered the timing of the reversal of the long-term deferred tax liability. The Company determined the reversal of these deferred tax liabilities would be over the period in which the loss carryforward can be used. | |||||||||
The benefit from income taxes differs from the amount computed by applying the statutory income tax rates to loss before taxes as follows: | |||||||||
December 31, | |||||||||
2013 | 2012 | ||||||||
Income tax benefit computed at statutory rate | $ | -839,017 | $ | (317,343 | ) | ||||
State income taxes, net of Federal benefit | 113,433 | 158,448 | |||||||
Difference between income reported for tax purposes and income for financial reporting purposes | -59,305 | (72,334 | ) | ||||||
Adjustment to deferred tax items | -177,077 | (155,141 | ) | ||||||
Benefit for income taxes | $ | -961,966 | $ | (386,370 | ) | ||||
The Company has not recorded a liability as of December 31, 2013 and 2012 for uncertain tax positions as it does not believe there will be any differences between the tax positions taken by the Company and expected to be taken by the tax authorities. The Company’s policy for recording interest and penalties associated with uncertain tax positions is to record such items as a component of income tax expense (benefit) in the consolidated statement of operations. During the years ended December 31, 2013 and 2012, the Company did not recognize income tax expense related to interest and penalties. | |||||||||
It is reasonably possible that the unrecognized tax benefits could increase or decrease significantly during the next twelve months due to the resolution of certain U.S. and international tax uncertainties; however it is not possible to estimate the potential change at this time. | |||||||||
As of December 31, 2013, the Company had federal net operation loss, or NOL, carryforwards of approximately $27 million, which will begin to expire in 2024. The Company also has various state net operating loss carryforwards for income tax purposes of approximately $3.5 million, which will begin to expire in 2027. The utilization of a portion of the Company’s NOLs and carryforwards is subject to annual limitations under Internal Revenue Code Section 382 (“382”). Subsequent equity changes could limit the utilization of these NOLs and credit carryforwards including the proposed merger as noted in Note 22. The Company had not undertaken a 382 study as of December 31, 2013. | |||||||||
The Company files income tax returns in the U.S. federal jurisdiction and various state and local jurisdictions. With respect to U.S. federal, state and local jurisdictions, the Company is no longer subject to income tax audits for years before 2009. | |||||||||
13_Fair_Value_Measurements
13. Fair Value Measurements | 12 Months Ended | ||||||||||||||||
Dec. 31, 2013 | |||||||||||||||||
Fair Value Disclosures [Abstract] | ' | ||||||||||||||||
13. Fair Value Measurements | ' | ||||||||||||||||
Fair value of financial and non-financial assets and liabilities is defined as an exit price, representing the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants. The three-tier hierarchy for inputs used in measuring fair value, which prioritizes the inputs used in the methodologies of measuring fair value for assets and liabilities, is as follows: | |||||||||||||||||
Level 1 – | Quoted prices in active markets for identical assets or liabilities | ||||||||||||||||
Level 2 – | Observable inputs other than quoted prices in active markets for identical assets and liabilities | ||||||||||||||||
Level 3 – | No observable pricing inputs in the market | ||||||||||||||||
Financial assets and financial liabilities are classified in their entirety based on the lowest level of input that is significant to the fair value measurements. The Company’s assessment of the significance of a particular input to the fair value measurements requires judgment, and may affect the valuation of the assets and liabilities being measured and their placement within the fair value hierarchy. | |||||||||||||||||
The fair value of our bonds payable is primarily determined by adjusting the principal and interest amounts payable by a published consumer price index and applicable NIS to USD currency exchange rate. | |||||||||||||||||
The following table describes, by level within the hierarchy, the fair value of our financial liabilities that were accounted for at fair value on a recurring basis as of December 31, 2013 and 2012: | |||||||||||||||||
Level 1 | Level 2 | Level 3 | Total | ||||||||||||||
31-Dec-13 | |||||||||||||||||
Bonds payable | $ | - | $ | 7,725,559 | $ | - | $ | 7,725,559 | |||||||||
31-Dec-12 | |||||||||||||||||
Bonds payable | $ | - | $ | 10,653,728 | $ | - | $ | 10,653,728 | |||||||||
14_Contingent_Liabilities_and_
14. Contingent Liabilities and Commitments | 12 Months Ended | ||||
Dec. 31, 2013 | |||||
Commitments and Contingencies Disclosure [Abstract] | ' | ||||
14. Contingent Liabilities and Commitments | ' | ||||
The Company leases its facilities in the USA under operating lease agreements expiring on various dates through 2018. The minimum lease payments under non-cancelable operating leases are as follows: | |||||
Year ended December 31, | |||||
2014 | $ | 444,206 | |||
2015 | 262,496 | ||||
2016 | 157,629 | ||||
2017 | 26,837 | ||||
2018 | 16,037 | ||||
$ | 907,205 | ||||
Total operating lease and rent expenses for the years ended December 31, 2013 and 2012, were $2,170,973 and $2,641,848, respectively. |
15_Capital_Structure
15. Capital Structure | 12 Months Ended | ||||||||||||||
Dec. 31, 2013 | |||||||||||||||
Notes to Financial Statements | ' | ||||||||||||||
15. Capital Structure | ' | ||||||||||||||
1. Shares and Warrants | |||||||||||||||
A. | The holders of the Company's shares of common stock are entitled to one vote for each share held of record on all matters submitted to a vote of the stockholders. The common stock has no pre-emptive or conversion rights or other subscription rights. There are no sinking fund provisions applicable to the common stock. | ||||||||||||||
B. | On June 13, 2012, the Company granted, under and subject to the Company's 2007 Stock Incentive Plan, to one of NTSC's senior employees options to purchase 791,212 shares of common stock. The options are exercisable at $1.10 per share and expire seven years from the date of grant. On the date of grant, 197,803 of the options were fully vested and the remaining 593,409 of the options shall vest in equal installments over a period of ten quarters with the first quarterly installment vesting on June 30, 2013. The options are also subject to certain provisions which shall apply in the event of termination of employment. In the event of a change of control of the Company or the sale of most of its assets, any unvested and outstanding portion of the options shall immediately and fully vest. | ||||||||||||||
C. | On December 13, 2012, the Company granted, under and subject to the Company's 2007 Stock Incentive Plan, to its employees options to purchase 153,468 shares of common stock. The options are exercisable at $1.10 per share and expire seven years from the date of grant. The options shall vest over a period of 4 years, 25% of the options after 12 months from the grant date and the remaining 75% of the options shall vest over the following 3 years in equal quarterly installments beginning 15 months from the grant date. | ||||||||||||||
D. | On May 8, 2013, the Company granted, under and subject to the Company's 2007 Stock Incentive Plan, to several of the Company’s directors and employee options to purchase 269,780 shares of common stock. The options are exercisable at $1.10 per share and expire five years from the date of grant. Commencing on June 8, 2013, 250,000 options vest in equal monthly installments of 10,000. The remaining 19,780 vest over a period of 4 years, 25% of the options after 12 months from the grant date and the remaining 75% of the options shall vest over the following 3 years in equal quarterly installments beginning 15 months from the grant date. | ||||||||||||||
The following table presents warrant activity as of December 31, 2013 and changes during years then ended: | |||||||||||||||
Number of | Weighted average exercise price | ||||||||||||||
warrants | |||||||||||||||
Warrants outstanding and exercisable at December 31, 2011 | 3,670,384 | $ | 1.67 | ||||||||||||
Cancelled or expired | (2,270,384 | ) | $ | 1.87 | |||||||||||
Warrants outstanding and exercisable at December 31, 2012 | 1,400,000 | $ | 1.35 | ||||||||||||
Cancelled or expired | - | $ | - | ||||||||||||
Warrants outstanding and exercisable at December 31, 2013 | 1,400,000 | $ | 1.35 | ||||||||||||
The following table summarizes information about warrants vested and exercisable at December 31, 2013: | |||||||||||||||
Warrants vested and exercisable | |||||||||||||||
Range price ($) | Number of | Weighted average remaining | Weighted average | ||||||||||||
warrants | contractual life (years) | exercise price | |||||||||||||
$ | 1.1 | 950,000 | 3.84 | $ | 1.1 | ||||||||||
$ | 1.87 | 450,000 | 0.33 | $ | 1.87 | ||||||||||
2. Stock Option Plan | |||||||||||||||
The Company has two stock option plans allowing the issuance of 13,500,000 shares. As of December 31, 2013, there were 4,663,887 shares available to be granted under these plans. The fair value of each option award is estimated on the date of grant using the Black-Scholes option pricing model. The assumptions used in the valuation model are supported primarily by historical indicators and current market conditions. Volatility was calculated using the historical weekly close rate for a period of time equal to the expected term. The risk-free rate of return was determined by using the U.S. Treasury yield curve in effect at the time of grant. The expected term was calculated on an aggregated basis and estimated based on an analysis of options already exercised and any foreseeable trends or changes in recipients’ behavior. In determining the expected term, the Company considered the vesting period of the awards, the contractual term of the awards, historical average holding periods, stock price history, impacts from recent restructuring initiatives and the relative weight for each of these factors. The dividend yield was based on the latest dividend payments made on or announced by the date of the grant. | |||||||||||||||
The following table summarizes the Company's weighted average assumptions used in the valuation of options for the years ended December 31, 2013 and 2012: | |||||||||||||||
Year ended December 31, | |||||||||||||||
2013 | 2012 | ||||||||||||||
Volatility | 91.2 | % | 62.25 | % | |||||||||||
Risk-free interest rate | 0.75 | % | 0.7 | % | |||||||||||
Dividend yield | 0 | % | 0 | % | |||||||||||
Forfeiture rate | 20 | % | 20 | % | |||||||||||
Expected life (years) | 5 | 6.3 | |||||||||||||
The Company's aggregate compensation cost for the years ended December 31, 2013 and 2012 totaled $391,372 and $283,435, respectively. | |||||||||||||||
The following table presents option activity under the Company's stock option plans as of December 31, 2013 and changes during years then ended: | |||||||||||||||
Number of | Weighted average exercise price | Aggregate | |||||||||||||
options | Intrinsic value | ||||||||||||||
Options outstanding at December 31, 2011 | 9,344,856 | $ | 1.63 | $ | - | ||||||||||
Granted | 944,680 | $ | 1.1 | ||||||||||||
Exercised | - | $ | - | ||||||||||||
Cancelled or expired | (388,737 | ) | $ | 1.26 | |||||||||||
Options outstanding at December 31, 2012 | 9,900,799 | $ | 1.59 | $ | - | ||||||||||
Granted | 269,780 | $ | 1.1 | ||||||||||||
Exercised | (2,250,216 | ) | $ | 1.12 | |||||||||||
Cancelled or expired | (1,414,371 | ) | $ | 2.71 | |||||||||||
Options outstanding at December 31, 2013 | 6,505,992 | $ | 1.49 | $ | 4,987,900 | ||||||||||
Options vested and exercisable as of December 31, 2012 | 8,301,035 | $ | 1.68 | $ | - | ||||||||||
Options vested and exercisable as of December 31, 2013 | 5,800,956 | $ | 1.54 | $ | 4,375,086 | ||||||||||
Weighted average fair value of options granted in 2012 | 0.31 | ||||||||||||||
Weighted average fair value of options granted in 2013 | 0.77 | ||||||||||||||
On December 31, 2013 the Company’s stock price was $1.97, reflecting an intrinsic value at December 31, 2013 of $4,987,900. There was no aggregate intrinsic value at December 31, 2012 as the Company's stock price of $0.86 on December 31, 2012 was below the exercise price of the outstanding stock options. As of December 31, 2013, there was $78,752 of total unrecognized compensation costs related to non-vested awards that are expected to be recognized over a weighted average period of 0.88 years. | |||||||||||||||
The following table summarizes information about options vested and exercisable at December 31, 2013: | |||||||||||||||
Options vested and exercisable | |||||||||||||||
Range price ($) | Number of options | Weighted average remaining | Weighted average exercise price | ||||||||||||
contractual life (years) | |||||||||||||||
$ | 1.10-$1.50 | 5,066,956 | 2.87 | $ | 1.11 | ||||||||||
$ | 3.15 | 200,000 | 0.25 | $ | 3.15 | ||||||||||
$ | 5 | 534,000 | 1.16 | $ | 5 | ||||||||||
The following table summarizes information about options expected to vest after December 31, 2013: | |||||||||||||||
Options expected to vest | |||||||||||||||
Range price ($) | Number of | Weighted average remaining contractual life (years) | Weighted average | ||||||||||||
options | exercise price | ||||||||||||||
$ | 1.10-$1.50 | 705,036 | 5.18 | $ | 1.1 |
16_Earnings_Per_Share
16. Earnings Per Share | 12 Months Ended | ||||||||||||
Dec. 31, 2013 | |||||||||||||
Earnings Per Share [Abstract] | ' | ||||||||||||
16. Earnings Per Share (Details) | ' | ||||||||||||
The following table sets forth the computation of basic and diluted net loss per share: | |||||||||||||
Year Ended December 31, 2013 | |||||||||||||
Net loss | Weighted Average | Per share | |||||||||||
Shares | amounts | ||||||||||||
Basic EPS: | |||||||||||||
Net loss | $ | (1,954,347 | ) | 43,418,847 | $ | (0.05 | ) | ||||||
Effect of dilutive securities: | |||||||||||||
Options and warrants (*) | - | - | - | ||||||||||
Diluted EPS: | |||||||||||||
Net loss | $ | (1,954,347 | ) | 43,418,847 | $ | (0.05 | ) | ||||||
Year Ended December 31 , 2012 | |||||||||||||
Net loss | Weighted Average | Per share | |||||||||||
Shares | amounts | ||||||||||||
Basic EPS: | |||||||||||||
Net loss | $ | (546,993 | ) | 41,186,596 | $ | (0.01 | ) | ||||||
Effect of dilutive securities: | |||||||||||||
Options and warrants (*) | - | - | - | ||||||||||
Diluted EPS: | |||||||||||||
Net loss | $ | (546,993 | ) | 41,186,596 | $ | (0.01 | ) | ||||||
(*) As of December 31, 2013 and 2012 the Company did not have any dilutive securities. |
17_Related_Party_Transactions
17. Related Party Transactions | 12 Months Ended |
Dec. 31, 2013 | |
Related Party Transactions [Abstract] | ' |
17. Related Party Transactions | ' |
Guy Nissenson Employment and Severance Agreement | |
On March 6, 2012, the Company entered into an Employment and Severance Agreement (the “Employment and Severance Agreement”), which became effective on April 1, 2012, with Mr. Nissenson, the Company’s Chairman of the Board, President, CEO and significant shareholder. The Employment and Severance Agreement supersedes the following prior agreements between the Company and Mr. Nissenson: (i) Employment Agreement, dated June 30, 2010; (ii) Consulting Agreement, dated March 28, 2007, as amended on June 30, 2010; and (iii) Severance Agreement, dated September 20, 2010 (collectively, the “Prior Agreements”). | |
The Employment and Severance Agreement provides that Mr. Nissenson shall serve as the President and CEO of NTSI, and as the Chairman and CEO of NTSC. | |
The Employment and Severance Agreement was entered into primarily to provide for relocation benefits for Mr. Nissenson in his relocation from Israel to Texas. The Employment and Severance Agreement is on substantially similar terms to the Prior Agreements; provided, however that the Employment and Severance Agreement also provides for (i) the employment of Mr. Nissenson as Chairman and CEO of NTSC, (ii) certain relocation benefits, and (iii) a change in seniority related to the severance pay calculation that references Mr. Nissenson’s initial employment in 1999. | |
The initial term of the Employment and Severance Agreement is five years, beginning on April 1, 2012. The term shall be automatically renewed for additional terms of three years for as long as the Employment and Severance Agreement is in effect. | |
18_Economic_Dependency_and_Cre
18. Economic Dependency and Credit Risk | 12 Months Ended |
Dec. 31, 2013 | |
Accounting Policies [Abstract] | ' |
18. Economic Dependency and Credit Risk | ' |
Approximately 37.4% and 56.4% of the Company's purchases are from one supplier for the years ended December 31, 2013 and 2012, respectively. | |
The Company’s cash and cash equivalents are maintained with financial institutions located in the United States and Israel. Deposits in these institutions may exceed the amount of insurance provided on such deposits. The Company has not recognized any losses from credit risks during the periods presented and management does not believe that the Company is exposed to significant credit risk from its cash and cash equivalents. | |
. |
19_Buyback_Plan
19. Buy-back Plan | 12 Months Ended |
Dec. 31, 2013 | |
Notes to Financial Statements | ' |
19. Buy-back Plan | ' |
The Board of Directors of the Company adopted a buy-back plan (the “Plan”), effective as of February 13, 2012, according to which the Company was allowed, from time to time, to repurchase its Bonds which are traded on the TASE. | |
Under the Plan the Company was authorized to repurchase Bonds for up to a total amount of NIS 5 million (approximately USD 1.35 million) in transactions on the TASE or outside the TASE, until December 31, 2012. Any repurchases of the Bonds were financed from the Company’s internal sources. The Board of Directors has authorized the Company’s management to manage the performance of repurchases according to the Plan, including the conduct of negotiations, at such times, scopes, prices and other terms as management deems fit. The timing, amounts and terms of any Bonds repurchased by the Company were determined, at the discretion of management, based on market conditions, opportunities, economic advisability and other customary criteria and factors. | |
Repurchases of the Bonds were carried out by the Company and/or its subsidiaries, either directly and/or through a third party. The Board of Directors' resolution was not a commitment to repurchase any Bonds under the Plan. | |
On July 4, 2012, NTSC, the Company’s wholly-owned subsidiary, purchased pursuant to the Plan, in a single transaction outside the TASE, NIS 1,339,310 in par value of Bonds at an aggregate purchase price of NIS 1,091,538 (approximately $314,474). On September 23, 2012, NTSC purchased pursuant to the Plan, in several transactions on the TASE, additional NIS 1,062,528 in par value of Bonds at an aggregate purchase price of NIS 838,228 (approximately $241,495). Pursuant to the indenture governing the Bonds, any Bonds purchased by a subsidiary of the Company (as opposed to Bonds repurchased by the Company itself) are not canceled or removed from trading on the TASE. The gain on the Bonds purchased by NTSC is $221,643. | |
The Plan expired on December 31, 2012. | |
20_Legal_Proceedings
20. Legal Proceedings | 12 Months Ended | ||
Dec. 31, 2013 | |||
Commitments and Contingencies Disclosure [Abstract] | ' | ||
20. Legal Proceedings | ' | ||
1 | Class Actions Related to the Merger Agreement | ||
Between October 23, 2013 and November 20, 2013, six complaints styled as class actions and relating to the Merger were filed in Nevada state court (Eighth Judicial District, Clark County) against us, our officers and directors, Tower Three, Holdings and Merger Sub. On December 20, 2013, plaintiffs filed a Consolidated Amended Class Action Complaint (the “Consolidated Amended Complaint”) alleging that the individual defendants breached their fiduciary duties of care, good faith, fair dealing, loyalty and full and candid disclosure in connection with the process surrounding the Merger and that Tower Three, Holdings and Merger Sub aided and abetted these alleged breaches of fiduciary duty. The Consolidated Amended Complaint seeks, among other things, preliminary and permanent injunctive relief against the Merger. | |||
On February 19, 2014, the parties to the litigation entered into a memorandum of understanding (the “MOU”) reflecting an agreement in principle to resolve the claims asserted in the litigation (the “Settled Claims”). The MOU provides, among other things, that Plaintiffs will withdraw their motion for preliminary injunction and will not seek to enjoin consummation of the Merger or any transactions contemplated by the Merger Agreement and that the parties will enter into a stipulation of settlement. The stipulation of settlement will be subject to customary conditions, including court approval. If the settlement is finally approved, the Settled Claims will be dismissed with prejudice. As part of the settlement, the defendants in the litigation deny all allegations of wrongdoing and deny that the disclosures in the Proxy Statement were inadequate, but NTS has agreed to provide certain supplemental disclosures. The settlement will not affect the timing of the Special Meeting of NTS stockholders or the Merger, or the amount of consideration to be paid in the Merger. | |||
The defendants believe that no further disclosure is required under applicable laws; however, to avoid the risk of the litigation delaying or adversely affecting the Merger and to minimize the expense of defending such action, we have agreed, pursuant to the terms of the MOU, to make certain supplemental disclosures related to the Merger. We and the other named defendants have vigorously denied, and continue to vigorously to deny, that we have committed or aided and abetted in the commission of any violation of law or engaged in any of the wrongful acts that were or could have been alleged in the litigation, and expressly maintain that, to the extent applicable, we diligently and scrupulously complied with their fiduciary and other legal duties and are providing these supplemental disclosures solely to seek to eliminate the burden and expense of further litigation, to put to rest claims relating to the Merger that have been or could have been asserted, and to avoid any possible delay to the closing of the Merger that might arise from further litigation. | |||
2 | Eliezer Tzur et al. vs. 012 Telecom Ltd. et al. | ||
On January 19, 2010, Eliezer Tzur et al. (the “Petitioners”) filed a request to approve a claim as a class action (the “Class Action Request”) against Xfone 018 Ltd. (“Xfone 018”), NTS’ former 69% Israel-based subsidiary, and four other Israeli telecom companies, all of which are entities unrelated to NTS (collectively with Xfone 018, the “Defendants”), in the Central District Court, Israel (the “Israeli Court”). The Petitioners’ claim alleges that the Defendants have not fully fulfilled their alleged legal requirement to bear the cost of telephone calls by customers to the Defendants’ respective technical support centers. One of the Petitioners, Mr. Eli Sharvit (“Mr. Sharvit”), seeks damages from Xfone 018 for the cost such telephone calls allegedly made by him during the 5.5-year period preceding the filing of the Class Action Request, which he assessed at NIS 54.45 (approximately $15). The Class Action Request, to the extent it pertains to Xfone 018, states total damages of NIS 7,500,000 (approximately $2,099,076) which reflects the Petitioners’ estimation of damages caused to all customers that (pursuant to the Class Action Request) allegedly called Xfone 018’s technical support number during a certain period defined in the Class Action Request. | |||
On February 22, 2011, Xfone 018 and Mr. Sharvit entered into a settlement agreement, which following the instructions of the Israeli Court was supplemented on May 3, 2011 and amended on July 18, 2011 and on March 21, 2012 (the “Settlement Agreement”). Pursuant to the Settlement Agreement, Xfone 018 agreed to compensate its current and past registered customers of international calling services who called its telephone service center from July 4, 2004 until February 21, 2010, due to a problem with the international calling services, and were charged for such calls. The compensation includes a right for a single, up to ten minutes, free of charge, international call to one landline destination around the world, and shall be valid for a period of six months. In addition, Xfone 018 agreed to pay Mr. Sharvit a one-time special reward in the amount of NIS 10,000 (approximately $2,827) (the “Reward”). Xfone 018 further agreed to pay Mr. Sharvit attorneys' fee for professional services in the amount of NIS 40,000 (approximately $11,309) plus VAT (the “Attorneys Fee”). In return, Mr. Sharvit and the members of the Represented Group (as defined in the Settlement Agreement) agreed to waive any and all claims in connection with the Class Action Request. As required by Israeli law in such cases, the Settlement Agreement is subject to the approval of the Israeli Court. On April 30, 2012, the Israeli Court appointed a CPA as an examiner to review and assess the Settlement Agreement (the “Examiner”). The Examiner was instructed to advise the Israeli Court whether in his opinion the Settlement Agreement is reasonable. On October 18, 2012 the Examiner submitted his assessment to the Israeli Court. According to the Examiner's assessment, there are a number of impediments that will deter the Represented Group from making use of the right to a free call described above including the low value of the call and its limited utility. According to the Examiner, the appropriate solution would have been to compensate the specific affected customers for the damage caused. However, since the Examiner recognizes that, pursuant to Xfone 018's claims, the foregoing solution is impractical, the Examiner proposes to consider revising the manner in which the alleged damage, which he estimates at NIS 98,000 (approximately $27,707), will be paid for by Xfone 018. Following the Examiner’s assessment, Xfone 018 and Mr. Sharvit have agreed to amend the Settlement Agreement, by giving the Israeli Court the discretion to decide whether Xfone 018 shall grant the free call benefit described above or donate a sum of NIS 49,000 (approximately $13,854) to Ezer Mizion, a non-profit organization (“Ezer Mizion”) (the “Amended Settlement Agreement”). The Amended Settlement Agreement has been submitted to the Israeli Court, which ruled that a notice to the general public concerning the Amended Settlement Agreement shall be published in two daily papers. The said notices have been published and the period for submitting objections to the Amended Settlement Agreement has expired. On July 2, 2013, the Israeli Court requested that the Attorney General submit its position with respect to the Amended Settlement Agreement, after which it is expected that the Israeli Court will issue its final decision. | |||
In the response submitted by the Attorney General to the Court, the Attorney General stated that he leaves to the Court`s discretion to decide whether or not to approve the Amended Settlement Agreement. The Attorney General further noted that: (i) the first alternative for compensation (free call benefit) is dissatisfactory; (ii) per the second alternative for compensation (a donation of NIS 49,000), there is a significant gap between the damages assessed by the Examiner (NIS 98,000) and the sum of the donation; the Attorney General noted that the sum of the compensation should be reviewed based on the fact that, according to the Attorney General, the Petitioners have a good cause for their claim; (iii) in the event that the court will approve a compensation by way of donation (the second alternative), Xfone 018 should not be entitled to a claim for any tax credits in connection with the sum of the donation; and (iv) the Attorneys Fee is disproportionate to the sum of the donation (NIS 49,000). | |||
On May 14, 2010, we entered into an agreement (including any amendment and supplement thereto, the “Marathon Agreement”) with Marathon Telecom Ltd. for the sale of our majority (69%) holdings in Xfone 018. Pursuant to Section 10 of the Marathon Agreement, we are fully and exclusively liable for any and all amounts, payments or expenses incurred by Xfone 018 as a result of the Class Action Request. Section 10 of the Marathon Agreement provides that we shall bear any and all expenses or financial costs which are entailed by conducting the defense on behalf of Xfone 018 and/or the financial results thereof, including pursuant to a judgment or settlement (it was agreed that in the event that Xfone 018 will be obligated to provide services at a reduced price, we shall bear only the cost of such services). Section 10 of the Marathon Agreement further provides that the defense by Xfone 018 shall be performed in full cooperation with us and with mutual assistance. It is agreed between us and Xfone 018 that subject to and upon the approval of the Settlement Agreement by the Israeli Court, we shall bear and/or pay: (i) the costs of the free call benefit or donation described above; (ii) the Reward; (iii) the Attorneys Fee; (iv) Xfone 018 attorneys' fees for professional services in connection with the Class Action Request, estimated at approximately NIS 75,000 (approximately $21,204); and (v) any other related costs (such as publication expenses and the Examiner’s fees). | |||
In the event the Amended Settlement Agreement is not approved by the Israeli Court, Xfone 018 intends to vigorously defend the Class Action Request. | |||
The Company is subject to various legal matters in the normal course of business. Management believes the outcome of these matters will not have a material adverse effect on the Company’s financial position or results of operations. |
21_UK_Earnout_Proceeds
21. UK Earnout Proceeds | 12 Months Ended |
Dec. 31, 2013 | |
Notes to Financial Statements | ' |
21. UK Earnout Proceeds | ' |
On January 29, 2010, the Company entered into an agreement (the “Agreement”) with Abraham Keinan, a significant shareholder and Chairman of the Board of Xfone (“Keinan”), and AMIT K LTD, a company registered in England & Wales which is wholly owned and controlled by Keinan (“Buyer”), pursuant to which Keinan, through Buyer, agreed to purchase from the Company, and the Company agreed to sell, 100% of the entire issued share capital of Swiftnet Limited (“Swiftnet”), Auracall Limited, Equitalk.co.uk Limited, Story Telecom, Inc. and Story Telecom Limited (the “UK Subsidiaries”), which the Company owned (the “Transaction”). | |
Pursuant to the Agreement, the Company shall be entitled to an annual earn-out payment, commencing after the accumulative EBITDA of the UK Subsidiaries, over the years beginning on the consummation of the Transaction (the “Closing”), has reached an aggregate amount equal to the first payment and payable not later than March 31 of each successive year, calculated as follows: the product of (A) twenty percent (20%) and (B) the accumulative EBITDA of the UK Subsidiaries for the applicable year (the “Earn-Out Payments”). The aggregate Earn-Out Payments shall be equal to but shall not exceed $1,858,325 in the aggregate (the “Earn-Out Consideration”). In the event that Buyer and/or Keinan sell the UK Subsidiaries after the Closing and before the Earn-Out Consideration has been paid to the Company in full and therefore Buyer and/or Keinan cannot pay the Earn-Out Payments out of the accumulative EBITDA of the UK Subsidiaries, Buyer and/or Keinan shall immediately pay to the Company, upon the Company’s demand, in cash, $1,858,325, less any amounts previously paid to the Company as Earn-Out Consideration. As of December 31, 2013, no amounts have been received toward the Earn-Out Consideration. | |
22_Merger_Agreement
22. Merger Agreement | 12 Months Ended | |||
Dec. 31, 2013 | ||||
Notes to Financial Statements | ' | |||
22. Merger Agreement | ' | |||
As reported in the Current Report on Form 8-K filed with the SEC on October 21, 2013, on October 20, 2013, the Company entered into an Agreement and Plan of Merger (the “Merger Agreement”) with T3 North Intermediate Holdings, LLC, a Nevada limited liability company (“Holdings”) and North Merger Sub, Inc., a Nevada corporation and a wholly-owned subsidary of Holdings (“Merger Sub”). Upon the terms and subject to the conditions set forth in the Merger Agreement, the Company will become a wholly-owned subsidiary of Holdings through a merger of Merger Sub with and into the Company, with the Company as the surviving corporation (the “Merger”). Holdings and Merger Sub are affiliates of Tower Three Partners LLC (“Tower Three”). Consummation of the Merger is subject to a number of closing conditions, including, among other things, (i) the adoption and approval of the Merger Agreement by the requisite vote of the Company’s stockholders; (ii) receipt of certain third party consents; (iii) the absence of any law or order prohibiting the Merger; (iv) the accuracy of the representations and warranties, subject to customary materiality qualifiers; and (v) the absence of a Material Adverse Effect (as defined in the Merger Agreement). Consummation of the Merger is not subject to a financing condition. | ||||
Simultaneously with the execution of the Merger Agreement, Guy Nissenson, the Company’s Chairman, President and Chief Executive Officer, entered into a Voting Agreement with Holdings and the Company (the “Voting Agreement”). Pursuant to the Voting Agreement, Mr. Nissenson has agreed, among other things, to vote the shares of the Company’s common stock held by him: | ||||
o | in favor of the Merger Agreement proposal; | |||
o | against alternative transactions; and | |||
o | in favor of any action in furtherance of the transactions contemplated by the Merger Agreement. | |||
The Voting Agreement generally prohibits Mr. Nissenson from transferring his shares of common stock prior to the consummation of the Merger. The Voting Agreement will automatically terminate upon the first to occur of (i) the consummation of the Merger, or (ii) the termination of the Merger Agreement in accordance with its terms. | ||||
In addition, the sole member of Holdings and Mr. Nissenson have entered into a Rollover Agreement (the “Rollover Agreement”), whereby Mr. Nissenson has committed to contribute, immediately prior to the effective time of the Merger, an aggregate of 1,390,871 shares of the Company’s common stock to the sole member of Holdings in exchange for equity interests of such entity. Mr. Nissenson’s commitments pursuant to such agreement are conditioned upon the satisfaction or waiver of the conditions to closing contained in the Merger Agreement and will take place immediately prior to the consummation of the Merger. In addition, it is expected that Mr. Nissenson will enter into an equityholders agreement that will, among other things, provide that Mr. Nissenson may serve on the board of directors of the sole member of Holdings for so long as he continues to own a specified amount of equity in such entity. | ||||
The parties to the Merger Agreement intend to complete the Merger in the second quarter of 2014. However, the Merger is subject to approvals and other conditions, and it is possible that factors outside the control of the parties could result in the Merger being completed at a later time, or not at all. | ||||
The Company and Tower Three have had discussions related to assistance with financing after the closing of the Merger Agreement, if necessary. While there is no formal or legal commitment from Tower Three to provide assistance, it is the Company's belief financing will be available after the closing of the Merger Agreement, if needed. |
2_Significant_Accounting_Polic1
2. Significant Accounting Policies (Policies) | 12 Months Ended | |
Dec. 31, 2013 | ||
Notes to Financial Statements | ' | |
A. Principles of Consolidation and Basis of Financial Statement Presentation | ' | |
The consolidated financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America ("US GAAP") and include the accounts of the Company and its subsidiaries. All significant inter-company balances and transactions have been eliminated in consolidation. | ||
B. Foreign Currency Translation | ' | |
Foreign currency transactions gains and losses are included in the results of operations. | ||
C. Subsequent Events | ' | |
The Company evaluates events occurring after the date of the financial statements, and through the date of issuance, for events requiring recording or disclosure in the financial statements. | ||
D. Cash and Cash Equivalents | ' | |
Cash and cash equivalents consist of cash and temporary investments with maturities of three months or less when purchased. | ||
E. Accounts Receivable | ' | |
Accounts receivable are recorded at net realizable value consisting of the carrying amount less the allowance for uncollectible accounts. | ||
The Company uses the allowance method to account for uncollectible and unsecured accounts receivable balances. Under the allowance method, estimate of uncollectible customer balances is made using factors such as the credit quality of the customer and the economic conditions in the market. An allowance for doubtful accounts is determined with respect to those amounts that the Company has determined to be doubtful of collection. When an account balance is past due and attempts have been made to collect the receivable through legal or other means the amount is considered uncollectible and is written off against the allowance balance. | ||
Accounts receivable are presented net of an allowance for doubtful accounts of $1,534,185 and $1,080,960 at December 31, 2013 and 2012, respectively. | ||
F. Inventories | ' | |
Inventory consists primarily of fiber optic equipment and telephone equipment to be installed at the Company's customers, which is carried at the lower of cost (determined principally on either an average cost or first-in, first-out basis) or market. | ||
G. Fixed Assets | ' | |
Fixed Assets are stated at cost. Depreciation is calculated based on a straight-line method over the estimated useful lives of the assets. Leasehold improvements are depreciated at the shorter of the estimated useful lives or lease term. Annual lives of depreciation are as follows: | ||
Useful Life | ||
Communication equipment | 3-20 years | |
Fiber network | 13-30 years | |
Construction equipment | 5 years | |
Equipment held under lease | 4-15 years | |
Office furniture and equipment | 5-15 years | |
Development costs | 3 years | |
Computer equipment | 5-7 years | |
Motor vehicles | 4-5 years | |
Building and plant | 4-35 years | |
Depreciation expenses amounted to $7,005,548 and $5,824,486 for the years ended December 31, 2013 and 2012, respectively. | ||
The Company charges the cost of maintenance and repairs, including the cost of replacing minor items not constituting substantial betterments, principally to cost of revenues as these costs are incurred. | ||
H. Intangible Assets | ' | |
Other intangible assets with determinable lives consist of customer relations related to mergers and acquisitions are amortized over a period between 2-13 years from the date of the purchase. | ||
I. Long-Lived Assets | ' | |
The Company periodically evaluates the recoverability of the carrying amount of long-lived assets (including fixed assets and intangible assets with determinable lives) whenever events or changes in circumstances indicate that the carrying amount of an asset may not be fully recoverable. The Company evaluates events or changes in circumstances based on a number of factors including operating results, business plans and forecasts, general and industry trends, and economic projections and anticipated cash flows. Impairment, if any, is assessed when the undiscounted expected future cash flows derived from an asset are less than its carrying amount. Impairment losses are measured as the amount by which the carrying value of an asset exceeds its fair value and are recognized in earnings. The Company also continually evaluates the estimated useful lives of all long-lived assets and periodically revises such estimates based on current events. No impairment loss was recorded for the years ended December 31, 2013 and 2012. At December 31, 2013, the Company believes its long- lived assets are recoverable. | ||
J. Revenue Recognition | ' | |
Revenues derived from local telephone, long-distance, data and video services are recognized when services are provided. This is based upon either usage (e.g., minutes of traffic/bytes of data processed), period of time (e.g., monthly service fees) or other established fee schedules. | ||
Service revenues also include billings to customers for various regulatory fees imposed on us by governmental authorities. Cash incentives given to customers are recorded as a reduction of revenue. For contracts that involve the bundling of services, revenue is allocated to the services based on their relative fair value. We record the resale of third-party services and the sale of equipment to customers as gross revenue when we are the primary obligor in the arrangement. | ||
Payments received in advance are deferred until the service is provided. | ||
The Company reports taxes imposed by governmental authorities on revenue producing transactions between it and its customers in the consolidated financial statements on a net basis. | ||
K. Advertising expenses | ' | |
Advertising expenses are carried to the statement of operations as incurred. Advertising expenses for the years ended December 31, 2013 and 2012 were $235,753 and $237,420, respectively. | ||
L. Use of Estimates | ' | |
The preparation of financial statements in conformity with 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 financial statements, and the reported amounts of revenues and expenses during the reported period. Actual results could differ from those estimates. | ||
Examples of significant estimates include: the allowance for doubtful accounts, the recoverability of fixed assets, the recoverability of intangible assets and other long-lived assets, unbilled revenues, fair values of financial instruments, unrecognized tax benefits, valuation allowances on tax assets, accrued expenses, and contingencies. | ||
M. Loss Per Share | ' | |
Basic loss per share (EPS) is computed by dividing net loss by the weighted average number of common shares outstanding for the period. Diluted EPS reflects the potential dilution that could occur if securities or other contracts to issue common stock were exercised or converted into common stock or resulted in the issuance of common stock that then shared in the earnings of the entity. Warrants and options were excluded from the calculation of diluted loss per share since they would have an anti-dilutive effect due to the Company's net loss, which was reported for both years ended December 31, 2013 and 2012. | ||
N. Income Taxes | ' | |
The Company and its subsidiaries account for income taxes in accordance with FASB ASC No. 740, “Income Taxes.” This topic prescribes the use of the liability method, whereby deferred tax asset and liability account balances are determined based on differences between financial reporting and tax bases of assets and liabilities and are measured using the enacted tax rates that will be in effect when the differences are expected to reverse. The Company and its subsidiaries provide a valuation allowance, if necessary, to reduce deferred tax assets to their estimated realizable value. | ||
Deferred tax liabilities and assets are classified as current or non-current based on the classification of the related asset or liability for financial reporting, or according to the expected reversal dates of the specific temporary differences if not related to an asset or liability for financial reporting. | ||
The Company uses a two-step approach for recognizing and measuring tax benefits taken or expected to be taken in a tax return. The first step is recognition: the Company determines whether it is more likely than not that a tax position will be sustained upon examination, including resolution of any related appeals or litigation processes, based on the technical merits of the position. In evaluating whether a tax position has met the more-likely-than-not recognition threshold, the Company presumes that the position will be examined by the appropriate taxing authority that has full knowledge of all relevant information. The second step is measurement: a tax position that meets the more-likely-than-not recognition threshold is measured to determine the amount of benefit to recognize in the financial statements. The tax position is measured at the largest amount of benefit that is greater than 50 percent likely of being realized upon ultimate settlement. Differences between tax positions taken in a tax return and amounts recognized in the financial statements will generally result in one or more of the following: an increase in a liability for income taxes payable, a reduction of an income tax refund receivable, a reduction in a deferred tax asset, or an increase in a deferred tax liability. | ||
O. Fair Value Measurements | ' | |
The carrying amounts of the Company’s financial instruments, including cash equivalents, prepaid expenses and other receivables, and other liabilities and accrued expenses approximate fair value due to their short maturities. The Company’s notes payable and capital lease obligations are carried at historical cost, which approximates fair value. | ||
P. Stock-Based Compensation | ' | |
The Company accounts for stock-based compensation in accordance with FASB ASC No. 718-10, "Compensation - Stock Compensation". Stock-based compensation expense recognized during the period is based on the value of the portion of share-based awards that are ultimately expected to vest during the period. The fair value of each stock option grant is estimated on the date of grant using the Black-Scholes option pricing model. The fair value of restricted stock is determined based on the number of shares granted and the closing price of the Company’s common stock on the date of grant. Compensation expense for all share-based payment awards is recognized using the straight-line amortization method over the vesting period. | ||
Q. Derivative Instruments | ' | |
The Company and its subsidiaries account for derivative instruments and hedging activities in accordance with FASB ASC No. 815, "Derivatives and Hedging". ASC 815 requires entities to provide qualitative disclosures about the objectives and strategies for using derivatives, quantitative data about the fair value of any gains and losses on derivative contracts, and details of credit risk related contingent features in their hedged positions. ASC 815 also requires entities to disclose more information about the location and amounts of derivative instruments in financial statements; how derivatives and related hedges are accounted for; and how the hedges affect the entity's financial position, financial performance, and cash flows. | ||
The Company recognizes all of its derivative instruments as either assets or liabilities on the balance sheet at fair value. For derivative instruments that are designated and qualify as a cash flows hedge (i.e., hedging the exposure to variability in expected future cash flows that is attributable to a particular risk), the effective portion of the gain or loss on the derivative instrument is reported as a component of other comprehensive income and reclassified into earnings in the same period or periods during which the hedged transaction affects earnings. Any gain or loss on a derivative instrument in excess of the cumulative change in the present value of future cash flows of the hedged item is recognized in current earnings during the period of change. For the years ended December 31, 2013 and 2012, the forward contracts did not qualify for hedge accounting and as such, changes in the fair value of the derivative instrument were reported in current period earnings. During January 2012, the Company entered into two foreign currency hedging transactions of $596,842 maturing on May 29, 2012 to buy NIS 2,303,809, and $4,306,570 maturing on November 28, 2012 to buy NIS 16,640,591, in order to hedge against the risk of principal and interest payments of its bonds during 2012. The Company hedged some of its forecasted interest payments denominated in NIS with currency forward contracts. As of December 31, 2012, the Company recognized an unearned gain of $32,250 in financing expenses in the Consolidated Statements of Operations against an increase in its Current Maturities of Bonds in the Consolidated Balance Sheet. | ||
R. Grants | ' | |
Grants from United States Department of Agriculture are recognized at their fair value when there is reasonable assurance that the grant will be received and all attaching conditions will be complied with. The grants are credited to the cost of the assets and are released to the statement of operations over the expected useful life in a consistent manner with the depreciation method for the relevant asset. | ||
S. Reclassification | ' | |
Certain prior period balances have been reclassified to conform to the current year presentation. Such reclassifications did not impact the Company’s net loss or stockholders’ equity. |
2_Significant_Accounting_Polic2
2. Significant Accounting Policies (Tables) | 12 Months Ended | |
Dec. 31, 2013 | ||
Significant Accounting Policies Tables | ' | |
Fixed Assets | ' | |
Useful Life | ||
Communication equipment | 3-20 years | |
Fiber network | 13-30 years | |
Construction equipment | 5 years | |
Equipment held under lease | 4-15 years | |
Office furniture and equipment | 5-15 years | |
Development costs | 3 years | |
Computer equipment | 5-7 years | |
Motor vehicles | 4-5 years | |
Building and plant | 4-35 years |
3_Prepaid_Expenses_and_Other_R1
3. Prepaid Expenses and Other Receivables (Tables) | 12 Months Ended | ||||||||
Dec. 31, 2013 | |||||||||
Notes to Financial Statements | ' | ||||||||
Prepaid Expenses and Other Receivables | ' | ||||||||
December 31, | |||||||||
2013 | 2012 | ||||||||
Prepaid expenses | $ | 1,160,406 | $ | 1,072,417 | |||||
Grant receivables from United States Department of Agriculture | 1,008,733 | 974,120 | |||||||
Other receivables | 1,385,506 | 1,236,694 | |||||||
$ | 3,554,645 | $ | 3,283,231 |
4_Fixed_Assets_Tables
4. Fixed Assets (Tables) | 12 Months Ended | ||||||||
Dec. 31, 2013 | |||||||||
Property, Plant and Equipment [Abstract] | ' | ||||||||
Fixed Assets | ' | ||||||||
December 31, | |||||||||
2013 | 2012 | ||||||||
Cost | |||||||||
Communication equipment | $ | 86,124,427 | $ | 80,649,694 | |||||
Fiber network | 85,094,060 | 70,168,573 | |||||||
Office furniture and equipment | 3,827,299 | 3,823,563 | |||||||
Computer equipment | 10,605,973 | 10,435,430 | |||||||
Construction equipment | 544,691 | 531,612 | |||||||
Motor vehicles | 1,707,827 | 1,553,566 | |||||||
Building and plant | 11,923,780 | 10,851,254 | |||||||
Work in Progress | 8,467,622 | 7,569,891 | |||||||
208,295,679 | 185,583,583 | ||||||||
Accumulated Depreciation | |||||||||
Communication equipment | 65,615,540 | 63,318,762 | |||||||
Fiber network | 17,257,242 | 13,774,412 | |||||||
Office furniture and equipment | 3,533,795 | 3,521,850 | |||||||
Computer equipment | 10,287,617 | 9,720,225 | |||||||
Construction equipment | 483,829 | 451,237 | |||||||
Motor vehicles | 1,158,462 | 967,029 | |||||||
Building | 4,784,364 | 4,361,786 | |||||||
103,120,849 | 96,115,301 | ||||||||
Fixed assets, net | $ | 105,174,830 | $ | 89,468,282 |
5_Intangible_Assets_Tables
5. Intangible Assets (Tables) | 12 Months Ended | ||||||||||||||||
Dec. 31, 2013 | |||||||||||||||||
Goodwill and Intangible Assets Disclosure [Abstract] | ' | ||||||||||||||||
Intangible Assets | ' | ||||||||||||||||
Customer | License | Total | |||||||||||||||
Relationships | |||||||||||||||||
31-Dec-13 | |||||||||||||||||
Cost | $ | 4,463,474 | $ | 250,000 | $ | 4,713,474 | |||||||||||
Accumulated amortization | 3,622,856 | - | 3,622,856 | ||||||||||||||
Net | $ | 840,618 | $ | 250,000 | $ | 1,090,618 | |||||||||||
31-Dec-12 | |||||||||||||||||
Cost | $ | 4,463,474 | $ | 250,000 | $ | 4,713,474 | |||||||||||
Accumulated amortization | 3,247,921 | - | 3,247,921 | ||||||||||||||
Net | $ | 1,215,553 | $ | 250,000 | $ | 1,465,553 | |||||||||||
Schedule for future estimated amortization | ' | ||||||||||||||||
2014 | 2015 | 2016 | |||||||||||||||
Amortization expense | $ | 319,193 | $ | 307,797 | $ | 213,628 |
6_Other_Liabilities_and_Accrue1
6. Other Liabilities and Accrued Expenses (Tables) | 12 Months Ended | ||||||||
Dec. 31, 2013 | |||||||||
Notes to Financial Statements | ' | ||||||||
Other Liabilities and Accrued Expenses | ' | ||||||||
December 31, | |||||||||
2013 | 2012 | ||||||||
Payroll and payroll related | $ | 608,220 | $ | 807,978 | |||||
Accrued expenses | 2,533,903 | 2,477,213 | |||||||
Accrued merger and acquisition costs | 667,361 | - | |||||||
Deferred revenues | 961,321 | 1,060,237 | |||||||
Tax authorities | 551,400 | 551,400 | |||||||
Others | 318,664 | 171,812 | |||||||
$ | 5,640,869 | $ | 5,068,640 |
7_Notes_Payable_to_the_United_1
7. Notes Payable to the United States Department of Agriculture (Tables) | 12 Months Ended | ||||||||
Dec. 31, 2013 | |||||||||
Notes to Financial Statements | ' | ||||||||
Long-term and short-term portions of the notes payable to the United States Department of Agriculture | ' | ||||||||
December 31, | |||||||||
2013 | 2012 | ||||||||
Notes Payable to the United States Department of Agriculture | $ | 44,186,615 | $ | 37,337,663 | |||||
Less current portion | 2,266,361 | 1,817,816 | |||||||
Long-term portion | $ | 41,920,254 | $ | 35,519,847 | |||||
Schedule of maturities United States Department of Agriculture | ' | ||||||||
Year | |||||||||
2014 | $ | 2,266,361 | |||||||
2015 | 2,266,360 | ||||||||
2016 | 2,266,361 | ||||||||
2017 | 2,266,360 | ||||||||
2018 | 2,266,361 | ||||||||
2019 and thereafter | 32,854,812 | ||||||||
$ | 44,186,615 |
8_Notes_Payable_Tables
8. Notes Payable (Tables) | 12 Months Ended | ||||||||||||
Dec. 31, 2013 | |||||||||||||
Notes Payable [Abstract] | ' | ||||||||||||
Notes payable | ' | ||||||||||||
Annual Interest | December 31, | ||||||||||||
Rate | 2013 | 2012 | |||||||||||
Promissory note to ICON Agent, LLC (1) | 12.75 | % | $ | 20,100,000 | $ | 14,100,000 | |||||||
Promissory note to CoBridge Telecom, LLC (2) | 6 | % | 141,833 | 373,244 | |||||||||
Promissory note to Reach Broadband (3) | 7 | % | 168,941 | 327,357 | |||||||||
Note to a finance company | 3.99 | % | 249,392 | 244,880 | |||||||||
Others | 89,180 | 89,180 | |||||||||||
20,749,346 | 15,134,661 | ||||||||||||
Less current portion | 3,413,096 | 723,887 | |||||||||||
Long-term portion | $ | 17,336,250 | $ | 14,410,774 | |||||||||
Schedule notes payable maturites | ' | ||||||||||||
Year | |||||||||||||
2014 | $ | 3,413,096 | |||||||||||
2015 | 3,015,000 | ||||||||||||
2016 | 3,015,000 | ||||||||||||
2017 | 11,306,250 | ||||||||||||
$ | 20,749,346 |
9_Bonds_Payable_Tables
9. Bonds Payable (Tables) | 12 Months Ended | ||||||||
Dec. 31, 2013 | |||||||||
Notes to Financial Statements | ' | ||||||||
Components Of Bonds Payable | ' | ||||||||
December 31, | |||||||||
2013 | 2012 | ||||||||
Outstanding balance (in NIS) | 25,095,525 | 37,643,288 | |||||||
Accrued interest (in NIS) | 165,012 | 247,518 | |||||||
Increase in debt due to CPI adjustments (in NIS) | 4,576,883 | 6,026,770 | |||||||
Unearned gain due to hedging (in NIS) | - | (120,389 | ) | ||||||
Total outstanding debt (in NIS) | 29,837,420 | 43,797,187 | |||||||
Exchange rate for year end | 3.471 | 3.733 | |||||||
Total outstanding debt (USD) | $ | 8,596,203 | $ | 11,732,437 | |||||
Debt discount related to warrants | (237,639 | ) | (359,307 | ) | |||||
Bonds held by subsidiary | (633,005 | ) | (719,402 | ) | |||||
Total outstanding debt | 7,725,559 | 10,653,728 | |||||||
Less current portion | 4,197,510 | 3,627,205 | |||||||
Long-term portion | $ | 3,528,049 | $ | 7,026,523 | |||||
Composition Of Proceeds From Bonds Offering | ' | ||||||||
Bonds Series A | $ | 24,588,726 | |||||||
Stock Purchase Warrants (1) | 973,306 | ||||||||
Total | $ | 25,562,032 | |||||||
Schedule of Bonds maturities | ' | ||||||||
2014 | $ | 4,150,721 | |||||||
2015 | 3,528,049 | ||||||||
7,678,770 | |||||||||
Accrued interest | 46,789 | ||||||||
$ | 7,725,559 |
10_Capital_Lease_Obligations_T
10. Capital Lease Obligations (Tables) | 12 Months Ended | ||||
Dec. 31, 2013 | |||||
Leases [Abstract] | ' | ||||
Future minimum lease payments | ' | ||||
2014 | $ | 261,894 | |||
2015 | 158,645 | ||||
2016 | 133,967 | ||||
2017 | 108,145 | ||||
2018 | 84,176 | ||||
Total | $ | 746,827 | |||
Total minimum lease payments | $ | 810,459 | |||
Less: amount representing interest at average rate of 8.5% | (63,632 | ) | |||
Present value of net minimum lease payment | $ | 746,827 |
12_Income_Taxes_Tables
12. Income Taxes (Tables) | 12 Months Ended | ||||||||
Dec. 31, 2013 | |||||||||
Income Tax Disclosure [Abstract] | ' | ||||||||
Schedule of income tax (benefit) provision from continuing operations | ' | ||||||||
December 31, | |||||||||
2013 | 2012 | ||||||||
Current: | |||||||||
Federal | $ | _- | $ | - | |||||
State | -171,868 | (295,744 | ) | ||||||
Deferred: | |||||||||
Federal | 1,133,834 | 682,114 | |||||||
State | - | - | |||||||
Total benefit | $ | 961,966 | $ | 386,370 | |||||
Schedule of components of net deferred tax assets and liabilities | ' | ||||||||
December 31, | |||||||||
2013 | 2012 | ||||||||
Deferred Tax Liabilities: | |||||||||
Accelerated tax depreciation of fixed assets | $ | 11,050,028 | $ | 10,075,757 | |||||
Deferred Tax Assets: | |||||||||
Carry forward losses | 9,357,105 | 7,291,609 | |||||||
Allowance for bad debts | 537,432 | 378,665 | |||||||
Evaluation of bonds payable to the Israeli Consumer Price Index and exchange rate | 462,176 | 566,305 | |||||||
Accrued vacation and severance pay | 147,668 | 189,960 | |||||||
Expenses related to warrants and non qualified stock options | 421,514 | 391,251 | |||||||
Net deferred taxes liabilities | $ | 124,133 | $ | 1,257,967 | |||||
Schedule of income tax rates reconciliation | ' | ||||||||
December 31, | |||||||||
2013 | 2012 | ||||||||
Income tax benefit computed at statutory rate | $ | -839,017 | $ | (317,343 | ) | ||||
State income taxes, net of Federal benefit | 113,433 | 158,448 | |||||||
Difference between income reported for tax purposes and income for financial reporting purposes | -59,305 | (72,334 | ) | ||||||
Adjustment to deferred tax items | -177,077 | (155,141 | ) | ||||||
Benefit for income taxes | $ | -961,966 | $ | (386,370 | ) |
13_Fair_Value_Measurements_Tab
13. Fair Value Measurements (Tables) | 12 Months Ended | ||||||||||||||||
Dec. 31, 2013 | |||||||||||||||||
Fair Value Measurements Tables | ' | ||||||||||||||||
Schedule of fair value measurements | ' | ||||||||||||||||
Level 1 | Level 2 | Level 3 | Total | ||||||||||||||
31-Dec-13 | |||||||||||||||||
Bonds payable | $ | - | $ | 7,725,559 | $ | - | $ | 7,725,559 | |||||||||
31-Dec-12 | |||||||||||||||||
Bonds payable | $ | - | $ | 10,653,728 | $ | - | $ | 10,653,728 | |||||||||
14_Contingent_Liabilities_and_1
14. Contingent Liabilities and Commitments (Tables) | 12 Months Ended | ||||
Dec. 31, 2013 | |||||
Commitments and Contingencies Disclosure [Abstract] | ' | ||||
Schedule of minimum lease payments under non-cancelable operating leases | ' | ||||
Year ended December 31, | |||||
2014 | $ | 444,206 | |||
2015 | 262,496 | ||||
2016 | 157,629 | ||||
2017 | 26,837 | ||||
2018 | 16,037 | ||||
$ | 907,205 |
15_Capital_Structure_Tables
15. Capital Structure (Tables) | 12 Months Ended | ||||||||||||||
Dec. 31, 2013 | |||||||||||||||
Capital Structure Tables | ' | ||||||||||||||
Schedule of warrants activity | ' | ||||||||||||||
Number of | Weighted average exercise price | ||||||||||||||
warrants | |||||||||||||||
Warrants outstanding and exercisable at December 31, 2011 | 3,670,384 | $ | 1.67 | ||||||||||||
Cancelled or expired | (2,270,384 | ) | $ | 1.87 | |||||||||||
Warrants outstanding and exercisable at December 31, 2012 | 1,400,000 | $ | 1.35 | ||||||||||||
Cancelled or expired | - | $ | - | ||||||||||||
Warrants outstanding and exercisable at December 31, 2013 | 1,400,000 | $ | 1.35 | ||||||||||||
Schedule warrants vested and exercisable | ' | ||||||||||||||
Warrants vested and exercisable | |||||||||||||||
Range price ($) | Number of | Weighted average remaining | Weighted average | ||||||||||||
warrants | contractual life (years) | exercise price | |||||||||||||
$ | 1.1 | 950,000 | 3.84 | $ | 1.1 | ||||||||||
$ | 1.87 | 450,000 | 0.33 | $ | 1.87 | ||||||||||
Schedule of assumptions used in the valuation of options | ' | ||||||||||||||
Year ended December 31, | |||||||||||||||
2013 | 2012 | ||||||||||||||
Volatility | 91.2 | % | 62.25 | % | |||||||||||
Risk-free interest rate | 0.75 | % | 0.7 | % | |||||||||||
Dividend yield | 0 | % | 0 | % | |||||||||||
Forfeiture rate | 20 | % | 20 | % | |||||||||||
Expected life (years) | 5 | 6.3 | |||||||||||||
Schedule of option activity | ' | ||||||||||||||
Number of | Weighted average exercise price | Aggregate | |||||||||||||
options | Intrinsic value | ||||||||||||||
Options outstanding at December 31, 2011 | 9,344,856 | $ | 1.63 | $ | - | ||||||||||
Granted | 944,680 | $ | 1.1 | ||||||||||||
Exercised | - | $ | - | ||||||||||||
Cancelled or expired | (388,737 | ) | $ | 1.26 | |||||||||||
Options outstanding at December 31, 2012 | 9,900,799 | $ | 1.59 | $ | - | ||||||||||
Granted | 269,780 | $ | 1.1 | ||||||||||||
Exercised | (2,250,216 | ) | $ | 1.12 | |||||||||||
Cancelled or expired | (1,414,371 | ) | $ | 2.71 | |||||||||||
Options outstanding at December 31, 2013 | 6,505,992 | $ | 1.49 | $ | 4,987,900 | ||||||||||
Options vested and exercisable as of December 31, 2012 | 8,301,035 | $ | 1.68 | $ | - | ||||||||||
Options vested and exercisable as of December 31, 2013 | 5,800,956 | $ | 1.54 | $ | 4,375,086 | ||||||||||
Weighted average fair value of options granted in 2012 | 0.31 | ||||||||||||||
Weighted average fair value of options granted in 2013 | 0.77 | ||||||||||||||
Schedule options vested and exercisable | ' | ||||||||||||||
Options vested and exercisable | |||||||||||||||
Range price ($) | Number of options | Weighted average remaining | Weighted average exercise price | ||||||||||||
contractual life (years) | |||||||||||||||
$ | 1.10-$1.50 | 5,066,956 | 2.87 | $ | 1.11 | ||||||||||
$ | 3.15 | 200,000 | 0.25 | $ | 3.15 | ||||||||||
$ | 5 | 534,000 | 1.16 | $ | 5 | ||||||||||
Schedule options expected to vest | ' | ||||||||||||||
Options expected to vest | |||||||||||||||
Range price ($) | Number of | Weighted average remaining contractual life (years) | Weighted average | ||||||||||||
options | exercise price | ||||||||||||||
$ | 1.10-$1.50 | 705,036 | 5.18 | $ | 1.1 |
16_Earnings_Per_Share_Tables
16. Earnings Per Share (Tables) | 12 Months Ended | ||||||||||||
Dec. 31, 2013 | |||||||||||||
Earnings Per Share [Abstract] | ' | ||||||||||||
Schedule of computation of basic and diluted net loss per share | ' | ||||||||||||
Year Ended December 31, 2013 | |||||||||||||
Net loss | Weighted Average | Per share | |||||||||||
Shares | amounts | ||||||||||||
Basic EPS: | |||||||||||||
Net loss | $ | (1,954,347 | ) | 43,418,847 | $ | (0.05 | ) | ||||||
Effect of dilutive securities: | |||||||||||||
Options and warrants (*) | - | - | - | ||||||||||
Diluted EPS: | |||||||||||||
Net loss | $ | (1,954,347 | ) | 43,418,847 | $ | (0.05 | ) | ||||||
Year Ended December 31 , 2012 | |||||||||||||
Net loss | Weighted Average | Per share | |||||||||||
Shares | amounts | ||||||||||||
Basic EPS: | |||||||||||||
Net loss | $ | (546,993 | ) | 41,186,596 | $ | (0.01 | ) | ||||||
Effect of dilutive securities: | |||||||||||||
Options and warrants (*) | - | - | - | ||||||||||
Diluted EPS: | |||||||||||||
Net loss | $ | (546,993 | ) | 41,186,596 | $ | (0.01 | ) | ||||||
(*) As of December 31, 2013 and 2012 the Company did not have any dilutive securities. |
1_Organization_and_Nature_of_B1
1. Organization and Nature of Business (Details) | Dec. 31, 2013 |
Organization And Nature Of Business Details | ' |
Communication equipment | '3-20 years |
Fiber network | '13-30 years |
Construction equipment | '5 years |
Equipment held under lease | '4-15 years |
Office furniture and equipment | '5-15 years |
Development costs | '3 years |
Computer equipment | '5-7 years |
Motor vehicles | '4-5 years |
Building and plant | '4-35 years |
1_Organization_and_Nature_of_B2
1. Organization and Nature of Business (Details Narrative) (USD $) | Dec. 31, 2013 | Dec. 31, 2012 |
Notes to Financial Statements | ' | ' |
Working capital deficit | $15,480,918 | $6,774,208 |
2_Significant_Accounting_Polic3
2. Significant Accounting Policies (Details Narrative) (USD $) | Dec. 31, 2013 | Dec. 31, 2012 |
Significant Accounting Policies Details Narrative | ' | ' |
Allowance for doubtful accounts | $1,534,185 | $1,080,960 |
3_Prepaid_Expenses_and_Other_R2
3. Prepaid Expenses and Other Receivables (Details) (USD $) | Dec. 31, 2013 | Dec. 31, 2012 |
Notes to Financial Statements | ' | ' |
Prepaid expenses | $1,160,406 | $1,072,417 |
Grants receivables from United States Department of Agriculture | 1,008,733 | 974,120 |
Other receivables | 1,385,506 | 1,236,694 |
Total | $3,554,645 | $3,283,231 |
4_Fixed_Assets_Details
4. Fixed Assets (Details) (USD $) | Dec. 31, 2013 | Dec. 31, 2012 |
Cost | ' | ' |
Communication equipment | $86,124,427 | $80,649,694 |
Fiber network | 85,094,060 | 70,168,573 |
Office furniture and equipment | 3,827,299 | 3,823,563 |
Computer equipment | 10,605,973 | 10,435,430 |
Construction equipment | 544,691 | 531,612 |
Motor vehicles | 1,707,827 | 1,553,566 |
Building and plant | 11,923,780 | 10,851,254 |
Work in Progress | 8,467,622 | 7,569,891 |
Total | 208,295,679 | 185,583,583 |
Accumulated Depreciation | ' | ' |
Communication equipment | 65,615,540 | 63,318,762 |
Fiber network | 17,257,242 | 13,774,412 |
Office furniture and equipment | 3,533,795 | 3,521,850 |
Computer equipment | 10,287,617 | 9,720,225 |
Construction equipment | 483,829 | 451,237 |
Motor vehicles | 1,158,462 | 967,029 |
Building | 4,784,364 | 4,361,786 |
Total | 103,120,849 | 96,115,301 |
Fixed assets, net | $105,174,830 | $89,468,282 |
5_Intangible_Assets_Details
5. Intangible Assets (Details) (USD $) | Dec. 31, 2013 | Dec. 31, 2012 |
Cost | $4,713,474 | $4,713,474 |
Accumulated amortization | 3,622,856 | 3,247,921 |
Net | 1,090,618 | 1,465,553 |
Customer Relationships | ' | ' |
Cost | 4,463,474 | 4,463,474 |
Accumulated amortization | 3,622,856 | 3,247,921 |
Net | 840,618 | 1,215,553 |
License | ' | ' |
Cost | 250,000 | 250,000 |
Accumulated amortization | ' | ' |
Net | $250,000 | $250,000 |
5_Intangible_Assets_Details_1
5. Intangible Assets (Details 1) (USD $) | Dec. 31, 2013 |
Goodwill and Intangible Assets Disclosure [Abstract] | ' |
2014 | $319,193 |
2015 | 307,797 |
2016 | $213,628 |
6_Other_Liabilities_and_Accrue2
6. Other Liabilities and Accrued Expenses (Details) (USD $) | Dec. 31, 2013 | Dec. 31, 2012 |
Notes to Financial Statements | ' | ' |
Payroll and payroll related | $608,220 | $807,978 |
Accrued expenses | 2,533,903 | 2,477,213 |
Accrued merger and acquisition costs | 667,361 | ' |
Deferred revenues | 961,321 | 1,060,237 |
Tax authorities | 551,400 | 551,400 |
Others | 318,664 | 171,812 |
Other liabilities and accrued expenses | $5,640,869 | $5,068,640 |
7_Notes_Payable_to_the_United_2
7. Notes Payable to the United States Department of Agriculture (Details) (USD $) | Dec. 31, 2013 | Dec. 31, 2012 |
Notes to Financial Statements | ' | ' |
Notes Payable to the United States Department of Agriculture | $44,186,615 | $37,337,663 |
Less current portion | 2,266,361 | 1,817,816 |
Long-term portion | $41,920,254 | $35,519,847 |
7_Notes_Payable_to_the_United_3
7. Notes Payable to the United States Department of Agriculture (Details 1) (USD $) | Dec. 31, 2012 |
Notes payable from the United States Department of Agriculture mature as follows: | ' |
2014 | $2,266,361 |
2015 | 2,266,360 |
2016 | 2,266,361 |
2017 | 2,266,360 |
2018 | 2,266,361 |
2019 and thereafter | 32,854,812 |
Total | $44,186,615 |
8_Notes_Payable_Details
8. Notes Payable (Details) (USD $) | 12 Months Ended | |
Dec. 31, 2013 | Dec. 31, 2012 | |
Notes Payable [Abstract] | ' | ' |
Promissory note to ICON Agent, LLC (1) | '12.75% | ' |
Promissory note to ICON Agent, LLC (1), Value | $20,100,000 | $14,100,000 |
Promissory note to CoBridge Telecom, LLC (2) | '6.0% | ' |
Promissory note to CoBridge Telecom, LLC (2), Value | 141,833 | 373,244 |
Promissory note to Reach Broadband (3) | '7.0% | ' |
Promissory note to Reach Broadband (3), Value | 168,941 | 327,357 |
Note to a finance company | '3.99% | ' |
Note to a finance company, Value | 249,392 | 244,880 |
Others, Value | 89,180 | 89,180 |
Notes payable | 20,749,346 | 15,134,661 |
Less current portion, Value | 3,413,096 | 723,887 |
Long-term portion, Value | $17,336,250 | $14,410,774 |
8_Notes_Payable_Details_1
8. Notes Payable (Details 1) (USD $) | Dec. 31, 2013 |
Notes payable mature as follows: | ' |
2014 | $3,413,096 |
2015 | 3,015,000 |
2016 | 3,015,000 |
2017 | 11,306,250 |
Total | $20,749,346 |
9_Bonds_Payable_Details
9. Bonds Payable (Details) (USD $) | Dec. 31, 2013 | Dec. 31, 2012 |
Notes to Financial Statements | ' | ' |
Outstanding balance (in NIS) | $25,095,525 | $37,643,288 |
Accrued interest (in NIS) | 165,012 | 247,518 |
Increase in debt due to CPI adjustments (in NIS) | 4,576,883 | 6,026,770 |
Unearned loss due to hedging (in NIS) | ' | -120,389 |
Total outstanding debt (in NIS) | 29,837,420 | 43,797,187 |
Exchange rate | '3.471 | '3.733 |
Total outstanding debt (USD) | 8,596,203 | 11,732,437 |
Debt discount related to warrants | -237,639 | -359,307 |
Bonds held by subsidiary | -633,005 | -719,402 |
Total outstanding debt | 7,725,559 | 10,653,728 |
Less current portion | 4,197,510 | 3,627,205 |
Long-term portion | $3,528,049 | $7,026,523 |
9_Bonds_Payable_Details_1
9. Bonds Payable (Details 1) (USD $) | 12 Months Ended |
Dec. 31, 2013 | |
Notes to Financial Statements | ' |
Bonds Series A | $24,588,726 |
Stock Purchase Warrants (1) | 973,306 |
Total | $25,562,032 |
9_Bonds_Payable_Details_2
9. Bonds Payable (Details 2) (USD $) | Dec. 31, 2013 |
Notes to Financial Statements | ' |
2014 | $4,150,721 |
2015 | 3,528,049 |
Total | 7,678,770 |
Accrued interest | 46,789 |
Total | $7,725,559 |
10_Capital_Lease_Obligations_D
10. Capital Lease Obligations (Details) (USD $) | Dec. 31, 2013 |
Leases [Abstract] | ' |
2014 | $261,894 |
2015 | 158,645 |
2016 | 133,967 |
2017 | 108,145 |
2018 | 84,176 |
Total | 746,827 |
Total minimum lease payments | 810,459 |
Less: amount representing interest at average rate of 8.5% | -63,632 |
Present value of net minimum lease payment | $746,827 |
12_Income_Taxes_Details
12. Income Taxes (Details) (USD $) | 12 Months Ended | |
Dec. 31, 2013 | Dec. 31, 2012 | |
Current: | ' | ' |
Federal | $0 | $0 |
State | -171,868 | -295,744 |
Deferred: | ' | ' |
Federal | 1,133,834 | 682,114 |
State | 0 | 0 |
Total benefit (expense) | $961,966 | $386,370 |
12_Income_Taxes_Details_1
12. Income Taxes (Details 1) (USD $) | Dec. 31, 2013 | Dec. 31, 2012 |
Deferred Tax Liabilities: | ' | ' |
Accelerated tax depreciation of fixed assets | $11,050,028 | $10,075,757 |
Deferred Tax Assets: | ' | ' |
Carry forward losses | 9,357,105 | 7,291,609 |
Allowance for bad debts | 537,432 | 378,665 |
Evaluation of bonds payable to the Israeli Consumer Price Index and exchange rate | 462,176 | 566,305 |
Accrued vacation and severance pay | 147,668 | 189,960 |
Expenses related to warrants and non qualified stock options | 421,514 | 391,251 |
Net deferred taxes liabilities | $124,133 | $1,257,967 |
12_Income_Taxes_Details_2
12. Income Taxes (Details 2) (USD $) | 12 Months Ended | |
Dec. 31, 2013 | Dec. 31, 2012 | |
Income Tax Disclosure [Abstract] | ' | ' |
Income tax expense (benefit) computed at statutory rate | $124,133 | ($317,343) |
State income taxes, net of Federal benefit | 113,433 | 158,448 |
Difference between income reported for tax purposes and income for financial reporting purposes | -59,305 | -72,334 |
Adjustment to deferred tax items | -177,077 | -155,141 |
Expense (benefit) for income taxes | ($961,966) | ($386,370) |
13_Fair_Value_Measurements_Det
13. Fair Value Measurements (Details) (USD $) | Dec. 31, 2013 | Dec. 31, 2012 |
Bonds payable | $7,725,559 | $10,653,728 |
Level 1 | ' | ' |
Bonds payable | ' | ' |
Level 2 | ' | ' |
Bonds payable | 7,725,559 | 10,653,728 |
Level 3 | ' | ' |
Bonds payable | ' | ' |
14_Contingent_Liabilities_and_2
14. Contingent Liabilities and Commitments (Details) (USD $) | Dec. 31, 2013 |
Year ended December 31, | ' |
2014 | $444,206 |
2015 | 262,496 |
2016 | 157,629 |
2017 | 26,837 |
2018 | 16,037 |
Total | $907,205 |
15_Capital_Structure_Details
15. Capital Structure (Details) (USD $) | 12 Months Ended | |
Dec. 31, 2013 | Dec. 31, 2012 | |
Capital Structure Tables | ' | ' |
Warrants outstanding at December 31, 2011 | ' | 3,670,384 |
Warrants outstanding at December 31, 2011, Per Share | ' | $1.67 |
Cancelled or expired before the Rights Offering | ' | -2,270,384 |
Cancelled or expired before the Rights Offering, Per Share | ' | $1.87 |
Warrants outstanding and exercisable at December 31, 2012 | 1,400,000 | ' |
Warrants outstanding and exercisable at December 31, 2012, Per Share | $1.35 | ' |
Cancelled or expired | ' | ' |
Cancelled or expired, Per Share | ' | ' |
Warrants outstanding and exercisable at December 31, 2013 | 1,400,000 | ' |
Warrants outstanding and exercisable at December 31, 2013, Per Share | $1.35 | ' |
15_Capital_Structure_Details_1
15. Capital Structure (Details 1) (USD $) | Dec. 31, 2013 |
Price Range 1.10 | ' |
Warrants vested and exercisable | ' |
Weighted average exercise price | $1.10 |
Range price ($) | '$1.10 |
Number of warrants | 950,000 |
Weighted average remaining contractual life (years) | '3.84 years |
Price Range 1.87 | ' |
Warrants vested and exercisable | ' |
Weighted average exercise price | $1.87 |
Range price ($) | '$1.87 |
Number of warrants | 450,000 |
Weighted average remaining contractual life (years) | '0.33 years |
15_Capital_Structure_Details_2
15. Capital Structure (Details 2) | 12 Months Ended | |
Dec. 31, 2013 | Dec. 31, 2012 | |
Capital Structure Tables | ' | ' |
Volatility | 91.20% | 62.25% |
Risk-free interest rate | 0.75% | 0.70% |
Dividend yield | 0.00% | 0.00% |
Forfeiture rate | 20.00% | 20.00% |
Expected life (years) | '5 years | '6 years 3 months 18 days |
15_Capital_Structure_Details_3
15. Capital Structure (Details 3) (USD $) | 12 Months Ended | |
Dec. 31, 2013 | Dec. 31, 2012 | |
Capital Structure Tables | ' | ' |
Options outstanding at December 31, 2011 | ' | 9,344,856 |
Options outstanding at December 31, 2011, Per Share | ' | $1.63 |
Granted | 269,780 | 944,680 |
Granted, Per Share | $1.10 | $1.10 |
Exercised | -2,250,216 | ' |
Exercised, Per Share | $1.12 | ' |
Cancelled or expired | -1,414,371 | -388,737 |
Cancelled or expired, Per Share | $2.71 | $1.26 |
Options outstanding at December 31, 2012 | 9,900,799 | ' |
Options outstanding at December 31, 2012, Per Share | $1.59 | ' |
Options outstanding at December 31, 2012, Value | $0 | ' |
Options outstanding at December 31, 2013 | 6,505,992 | ' |
Options outstanding at December 31, 2013, Per Share | $1.49 | ' |
Options outstanding at December 31, 2013, Value | $4,987,900 | ' |
Options vested and exercisable as of December 31, 2012 | ' | 8,301,035 |
Options vested and exercisable as of December 31, 2012, Per Share | ' | $1.68 |
Options vested and exercisable as of December 31, 2013 | 5,800,956 | ' |
Options vested and exercisable as of December 31, 2013, Per Share | $1.54 | ' |
Weighted average fair value of options granted in 2012, Per Share | $0.31 | ' |
Weighted average fair value of options granted in 2013, Per Share | $0.77 | ' |
15_Capital_Structure_Details_4
15. Capital Structure (Details 4) (USD $) | Dec. 31, 2013 |
Price Range 1.10 to 1.50 | ' |
Number of options vested and exercisable | 5,066,956 |
Weighted average remaining contractual life (years) of Options vested and exercisable | '2.87 years |
Weighted average exercise price Options vested and exercisable | $1.11 |
Price Range 3.15 | ' |
Number of options vested and exercisable | 200,000 |
Weighted average remaining contractual life (years) of Options vested and exercisable | '0.25 years |
Weighted average exercise price Options vested and exercisable | $3.15 |
Price Range 5.00 | ' |
Number of options vested and exercisable | 534,000 |
Weighted average remaining contractual life (years) of Options vested and exercisable | '1.16 years |
Weighted average exercise price Options vested and exercisable | $5 |
15_Capital_Structure_Details_5
15. Capital Structure (Details 5) (USD $) | Dec. 31, 2013 |
Options expected to vest | ' |
Range price ($) | '1.10-$1.50 |
Number of options | 705,036 |
Weighted average remaining contractual life (years) | '5.18 |
Weighted average exercise price | $1.10 |
16_Earnings_Per_Share_Details
16. Earnings Per Share (Details) (USD $) | 12 Months Ended | |
Dec. 31, 2013 | Dec. 31, 2012 | |
Basic EPS: | ' | ' |
Net loss | ($1,954,347) | ($546,993) |
Net loss, Shares | 43,418,847 | 41,186,596 |
Net loss, Per Share | ($0.05) | ($0.01) |
Effect of dilutive securities: | ' | ' |
Options and warrants (*) | 0 | 0 |
Options and warrants (*), Shares | 0 | 0 |
Options and warrants (*), Per Share | $0 | $0 |
Diluted EPS: | ' | ' |
Net loss | ($1,954,347) | ($546,993) |
Net loss, Shares | 43,418,847 | 41,186,596 |
Net loss, Per Share | ($0.05) | ($0.01) |