Document And Entity Information
Document And Entity Information - shares | 9 Months Ended | |
Sep. 30, 2015 | Nov. 06, 2015 | |
Common Class B [Member] | ||
Entity Common Stock, Shares Outstanding (in shares) | 232,780 | |
Common Class A [Member] | ||
Entity Common Stock, Shares Outstanding (in shares) | 3,006,526 | |
Entity Registrant Name | OTELCO INC. | |
Entity Central Index Key | 1,288,359 | |
Trading Symbol | otel | |
Current Fiscal Year End Date | --12-31 | |
Entity Filer Category | Smaller Reporting Company | |
Entity Current Reporting Status | Yes | |
Entity Voluntary Filers | No | |
Entity Well-known Seasoned Issuer | No | |
Document Type | 10-Q | |
Document Period End Date | Sep. 30, 2015 | |
Document Fiscal Year Focus | 2,015 | |
Document Fiscal Period Focus | Q3 | |
Amendment Flag | false |
Condensed Consolidated Balance
Condensed Consolidated Balance Sheets (Unaudited) - USD ($) $ in Thousands | Sep. 30, 2015 | Dec. 31, 2014 |
Common Class A [Member] | ||
Stockholders' deficit | ||
Class A Common Stock, $.01 par value-authorized 10,000,000 shares; issued and outstanding 2,881,154 and 3,006,526 shares, respectively | $ 30 | $ 29 |
Common Class B [Member] | ||
Stockholders' deficit | ||
Class A Common Stock, $.01 par value-authorized 10,000,000 shares; issued and outstanding 2,881,154 and 3,006,526 shares, respectively | 2 | 2 |
Cash and cash equivalents | 5,893 | 5,082 |
Due from subscribers, net of allowance for doubtful accounts of $229 and $246, respectively | 3,878 | 3,732 |
Unbilled receivables | 1,627 | 1,675 |
Other | 2,060 | 1,931 |
Materials and supplies | 1,997 | 1,915 |
Prepaid expenses | 1,680 | 3,441 |
Total current assets | 17,135 | 17,776 |
Property and equipment, net | 49,780 | 51,237 |
Goodwill | 44,976 | 44,976 |
Intangible assets, net | 2,529 | 3,178 |
Investments | 1,851 | 1,870 |
Deferred financing costs, net | 521 | 1,161 |
Other assets | 313 | 471 |
Total assets | 117,105 | 120,669 |
Accounts payable | 898 | 1,104 |
Accrued expenses | 5,926 | 5,054 |
Advance billings and payments | 1,419 | 1,410 |
Deferred income taxes | 53 | 53 |
Customer Deposits | 72 | 70 |
Current maturity of long-term notes payable | 102,015 | 6,665 |
Total current liabilities | 110,383 | 14,356 |
Deferred income taxes | 24,027 | 24,027 |
Advance billings and payments | 641 | 681 |
Other liabilities | $ 137 | 142 |
Long-term notes payable | 105,470 | |
Total liabilities | $ 135,188 | 144,676 |
Additional paid in capital | 3,802 | 3,519 |
Retained deficit | (21,917) | (27,557) |
Total stockholders' deficit | (18,083) | (24,007) |
Total liabilities and stockholders' deficit | $ 117,105 | $ 120,669 |
Condensed Consolidated Balance3
Condensed Consolidated Balance Sheets (Unaudited) (Parentheticals) - USD ($) $ in Thousands | Sep. 30, 2015 | Dec. 31, 2014 |
Common Class A [Member] | ||
Common stock, par value (in dollars per share) | $ 0.01 | $ 0.01 |
Common stock, authorized (in shares) | 10,000,000 | 10,000,000 |
Common stock, issued (in shares) | 3,006,526 | 2,881,154 |
Common stock, outstanding (in shares) | 3,006,526 | 2,881,154 |
Common Class B [Member] | ||
Common stock, par value (in dollars per share) | $ 0.01 | $ 0.01 |
Common stock, authorized (in shares) | 250,000 | 250,000 |
Common stock, issued (in shares) | 232,780 | 232,780 |
Common stock, outstanding (in shares) | 232,780 | 232,780 |
Allowance for doubtful accounts | $ 246 | $ 229 |
Condensed Consolidated Statemen
Condensed Consolidated Statements of Operations (Unaudited) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2015 | Sep. 30, 2014 | Sep. 30, 2015 | Sep. 30, 2014 | |
Revenues | $ 17,850 | $ 18,421 | $ 53,385 | $ 55,692 |
Operating expenses | ||||
Cost of services | 8,301 | 8,763 | 24,964 | 26,760 |
Selling, general and administrative expenses | 2,458 | 2,552 | 7,544 | 7,823 |
Depreciation and amortization | 2,181 | 2,481 | 6,694 | 8,073 |
Total operating expenses | 12,940 | 13,796 | 39,202 | 42,656 |
Income from operations | 4,910 | 4,625 | 14,183 | 13,036 |
Other income (expense) | ||||
Interest expense | (1,949) | (2,167) | (5,988) | (6,733) |
Other income (expense) | 14 | (306) | 1,060 | 343 |
Total other expenses, net | (1,935) | (2,473) | (4,928) | (6,390) |
Income before income tax | 2,975 | 2,152 | 9,255 | 6,646 |
Income tax expense | (1,125) | (765) | (3,615) | (2,557) |
Net income | $ 1,850 | $ 1,387 | $ 5,640 | $ 4,089 |
Weighted average number of common shares outstanding: | ||||
Basic (in shares) | 3,239,306 | 3,103,728 | 3,239,306 | 3,103,728 |
Diluted (in shares) | 3,289,679 | 3,181,280 | 3,285,345 | 3,129,874 |
Basic net income per common share (in dollars per share) | $ 0.57 | $ 0.45 | $ 1.74 | $ 1.32 |
Diluted net income per common share (in dollars per share) | $ 0.56 | $ 0.44 | $ 1.72 | $ 1.31 |
Condensed Consolidated Stateme5
Condensed Consolidated Statements of Cash Flows (Unaudited) - USD ($) $ in Thousands | 9 Months Ended | |
Sep. 30, 2015 | Sep. 30, 2014 | |
Cash flows from operating activities: | ||
Net income | $ 5,640 | $ 4,089 |
Adjustments to reconcile net income to cash flows provided by operating activities: | ||
Depreciation | 5,756 | 6,793 |
Amortization | 938 | 1,280 |
Amortization of loan costs | $ 665 | 707 |
Provision for deferred income taxes | 1,122 | |
Provision for uncollectible accounts receivable | $ 350 | 360 |
Stock-based compensation | 283 | 383 |
Changes in operating assets and liabilities: | ||
Accounts receivable | (577) | 158 |
Material and supplies | (82) | (161) |
Prepaid expenses and other assets | 1,919 | 24 |
Accounts payable and accrued expenses | 666 | 414 |
Advance billings and payments | (31) | (67) |
Other liabilities | (3) | (33) |
Net cash from operating activities | 15,524 | 15,069 |
Cash flows used in investing activities: | ||
Acquisition and construction of property and equipment | $ (4,568) | (4,491) |
Proceeds from sale of property and equipment | 58 | |
Purchase of Reliable Networks, net of cash acquired | (500) | |
Net cash used in investing activities | $ (4,568) | (4,933) |
Cash flows used in financing activities: | ||
Principal repayment of long-term notes payable | (10,120) | $ (14,240) |
Loan origination costs | (25) | |
Net cash used in financing activities | (10,145) | $ (14,240) |
Net increase (decrease) in cash and cash equivalents | 811 | (4,104) |
Cash and cash equivalents, beginning of period | 5,082 | 9,916 |
Cash and cash equivalents, end of period | 5,893 | 5,812 |
Supplemental disclosures of cash flow information: | ||
Interest paid | 5,322 | 6,027 |
Income taxes paid | $ 1,726 | $ 721 |
Note 1 - Organization and Basis
Note 1 - Organization and Basis of Financial Reporting | 9 Months Ended |
Sep. 30, 2015 | |
Notes to Financial Statements | |
Organization, Consolidation and Presentation of Financial Statements Disclosure [Text Block] | 1. Organization and Basis of Financial Reporting Basis of Presentation and Principles of Consolidation The unaudited condensed consolidated financial statements include the accounts of Otelco Inc. (the “Company”) and its subsidiaries, all of which are either directly or indirectly wholly owned. These include: Blountsville Telephone LLC; Brindlee Mountain Telephone LLC; CRC Communications LLC (“CRC”); Granby Telephone LLC; Hopper Telecommunications LLC; Mid-Maine Telecom LLC; Mid-Maine TelPlus LLC; Otelco Mid-Missouri LLC (“MMT”) and its wholly owned subsidiary I-Land Internet Services LLC; Otelco Telecommunications LLC; Otelco Telephone LLC (“OTP”); Pine Tree Telephone LLC; Saco River Telephone LLC; Shoreham Telephone LLC; and War Telephone LLC. The accompanying unaudited condensed consolidated financial statements include the accounts of the Company and all of the aforesaid subsidiaries after elimination of all material intercompany balances and transactions. The unaudited operating results for the three months and nine months ended September 30, 2015 are not necessarily indicative of the results that may be expected for the year ending December 31, 2015 or any other period. The unaudited condensed consolidated financial statements and notes included in this Form 10-Q should be read in conjunction with the consolidated financial statements and notes thereto in the Company’s Annual Report on Form 10-K for the year ended December 31, 2014. The interim condensed consolidated financial information herein is unaudited. The information reflects all adjustments which are, in the opinion of management, necessary for a fair presentation of the financial position and results of operations for the periods included in the report. Recent Accounting Pronouncements During 2015, the Financial Accounting Standards Board (the “FASB”) issued Accounting Standards Updates (“ASU”) 2015-01 through 2015-16. Except for ASU 2015-03, 2015-05 and 2015-11, which are discussed below, these ASUs provide technical corrections or simplification to existing guidance and to specialized industries or entities and therefore have minimal, if any, impact on the Company. In April 2015, the FASB issued ASU 2015-03, a guidance that simplifies the presentation of debt issuance costs by amending the accounting guidance to require that debt issuance costs related to a recognized debt liability be presented in the balance sheet as a direct deduction from the carrying amount of the related debt liability. The amendments are consistent with the accounting guidance related to debt discounts. This guidance is effective for the first interim or annual period beginning after December 15, 2015. The Company will adopt this guidance beginning in the first quarter of fiscal 2016. The Company is currently assessing the impact of this guidance on its condensed consolidated financial statements. In April 2015, the FASB issued ASU 2015-05, which provides guidance regarding whether a cloud computing arrangement includes a software license (FASB Accounting Standard Codification Subtopic 350-40). If a cloud computing arrangement includes a software license, then the entity should account for the software license element of the arrangement consistent with the acquisition of other software licenses. If a cloud computing arrangement does not include a software license, the entity should account for the arrangement as a service contract. The guidance will not change accounting principles generally accepted in the United States (“U.S. GAAP”) for an entity’s accounting for service contracts. This pronouncement is effective for fiscal years, including interim periods within those fiscal years, beginning after December 15, 2015. The Company is currently evaluating the impact of this guidance on its condensed consolidated financial statements. In July 2015, the FASB issued ASU 2015-11, a guidance intended to simplify the accounting for inventory. Prior to this ASU, U.S. GAAP required an entity to measure inventory at the lower of cost or market. This pronouncement changed the measurement of inventory to the lower of cost or net realizable value. Net realizable value is the estimated selling prices in the ordinary course of business, less reasonably predictable costs of completion, disposal, and transportation. Methods excluded from the scope of this ASU are the last-in, first-out or the retail inventory method and they will continue to be measured at the lower of cost or market. The amendments are effective for public business entities for fiscal years, and for interim periods within those fiscal years, beginning after December 15, 2016. Early adoption is permitted, and the Company is currently assessing the impact of this guidance on its condensed consolidated financial statements. In July 2015, the FASB confirmed a one-year delay in the effective date of ASU 2014-09, making the effective date for the Company the first quarter of fiscal 2018 instead of the current effective date, which is the first quarter of fiscal 2017 . The Company is currently evaluating the impact of the pending adoption of ASU 2014-09 on its condensed consolidated financial statements and has not yet determined the method by which the Company will adopt the standard. Financial Condition and Management’s Plan The outstanding balance on the Company’s current credit facility has been reduced from $133.3 million in May 2013 to $102 .0 million at September 30, 2015 through both required and voluntary payments. The credit facility matures in April 2016. The Company will be in default under the credit facility if it is unable to refinance the debt thereunder at or prior to its maturity. Additionally, in the event the Company fails to comply with the financial covenants or other similar requirements in the credit facility, it would be in default under the credit facility and its ability to meet anticipated operating and capital expenditure requirements would be impaired. It is management’s current intent to refinance the credit facility prior to its maturity in April 2016; however, there can be no assurance that market conditions will allow the Company to refinance the debt under the credit facility at or prior to its maturity on terms that are acceptable to the Company, or at all. Reclassifications Certain items in the prior year’s condensed consolidated financial statements have been reclassified to conform with 2015 presentation. |
Note 2 - Notes Payable
Note 2 - Notes Payable | 9 Months Ended |
Sep. 30, 2015 | |
Notes to Financial Statements | |
Debt Disclosure [Text Block] | 2. Notes Payable Notes payable consists of the following (in thousands, except percentages): December 31, September 30, 2014 2015 Third amended and restated term credit facility; Antares Capital (formerly General Electric Capital Corporation); variable interest rate of 6.50% at December 31, 2014 and September 30, 2015. The credit facility is secured by the total assets of the subsidiary guarantors. The unpaid balance is due April 30, 2016. $ 112,135 $ 102,015 Less: current portion (6,665 ) (102,015 ) Long-term notes payable $ 105,470 $ — Associated with the notes payable, the Company has capitalized and amortized deferred financing costs using the effective interest method. The Company has capitalized $2.7 million in deferred financing costs associated with the credit facility. Amortization expense for the deferred financing costs associated with the third amendment and restatement of the Company’s credit facility was $707 thousand and $665 thousand for the nine months ended September 30, 2014 and 2015, respectively. The Company had a revolving credit facility on December 31, 2014 and September 30, 2015 of $5.0 million. The revolving credit facility is available until April 30, 2016. There was no balance outstanding as of December 31, 2014 or September 30, 2015. The Company pays a commitment fee of 0.50% per annum, payable quarterly in arrears, on the unused portion of the revolver loan. The commitment fee expense was $19 thousand in each of the nine months ended September 30, 2014 and 2015. Maturities of notes payable for each of the next two years are $2.0 million and $100.1 million in 2015 and 2016, respectively. The Company’s notes payable agreements are subject to certain financial covenants and restrictions on indebtedness, financial guarantees, business combinations and other related items. As of September 30, 2015, the Company was in compliance with all such covenants and restrictions. |
Note 3 - Income Tax
Note 3 - Income Tax | 9 Months Ended |
Sep. 30, 2015 | |
Notes to Financial Statements | |
Income Tax Disclosure [Text Block] | 3. Income Tax As of September 30, 2015, the Company had U.S. federal and state net operating loss carryforwards of $0 and $67 thousand, respectively. As of December 31, 2014, the Company had no U.S. federal or state net operating loss carryforwards. The Company had no alternative minimum tax credit carryforwards as of December 31, 2014 or September 30, 2015. The Company establishes valuation allowances when necessary to reduce deferred tax assets to amounts expected to be realized. As of September 30, 2015, the Company had no valuation allowance recorded. The effective income tax rate as of December 31, 2014 and September 30, 2015 was 38.8% and 39.1%, respectively. |
Note 4 - Net Income Per Common
Note 4 - Net Income Per Common Share | 9 Months Ended |
Sep. 30, 2015 | |
Notes to Financial Statements | |
Earnings Per Share [Text Block] | 4. Net Income per Common Share Basic net income per common share is computed by dividing net income by the weighted-average number of common shares outstanding for the period. Diluted net income per common share reflects the potential dilution that would occur should all of the shares of Class A common stock underlying restricted stock units (“RSUs”), as well as all of the shares of Class A common stock, for which the Company has accrued an expense, that may be delivered pursuant to the purchase agreement relating to the assets of Reliable Networks of Maine, LLC (“Reliable Networks”), be issued. A reconciliation of the Company’s basic and diluted net income per common share calculation is as follows (weighted average number of common shares outstanding in whole numbers and net income in thousands): Three Months Ended September 30, Nine Months Ended September 30, 2014 2015 2014 2015 Weighted average number of common shares outstanding - basic 3,103,728 3,239,306 3,103,728 3,239,306 Effect of dilutive securities 77,552 50,373 26,146 46,196 Weighted average number of common shares and potential common shares - diluted 3,181,280 3,289,679 3,129,874 3,285,502 Net income $ 1,387 $ 1,850 $ 4,089 $ 5,640 Net income per common share - basic $ 0.45 $ 0.57 $ 1.32 $ 1.74 Net income per common share - diluted $ 0.44 $ 0.56 $ 1.31 $ 1.72 |
Note 5 - Revenue Concentrations
Note 5 - Revenue Concentrations | 9 Months Ended |
Sep. 30, 2015 | |
Notes to Financial Statements | |
Concentration Risk Disclosure [Text Block] | 5. Revenue Concentrations Revenues for interstate access services are based on reimbursement of costs and an allowed rate of return. Revenues of this nature are received from the National Exchange Carrier Association in the form of monthly settlements. Such revenues amounted to 15.0% and 16.9% of the Company’s total revenues for the nine months ended September 30, 2014 and 2015, respectively. |
Note 6 - Commitments and Contin
Note 6 - Commitments and Contingencies | 9 Months Ended |
Sep. 30, 2015 | |
Notes to Financial Statements | |
Commitments and Contingencies Disclosure [Text Block] | 6. Commitments and Contingencies From time to time, the Company may be involved in various claims, legal actions and regulatory proceedings incidental to and in the ordinary course of business, including administrative hearings of the Alabama Public Service Commission, the Maine Public Utilities Commission, the Massachusetts Department of Telecommunications and Cable, the Missouri Public Service Commission, the New Hampshire Public Utilities Commission, the Vermont Public Service Board and the West Virginia Public Service Commission, relating primarily to rate making. In addition, the Company may be involved in similar proceedings with interconnection carriers and the Federal Communications Commission. Currently, except as set forth below, none of the legal proceedings are expected to have a material adverse effect on the Company’s business. Sprint Communications L.P. (“Sprint”), MCI Communications Services, Inc. (“MCI”) and Verizon Select Services, Inc. (“Verizon”) have filed more than 60 lawsuits in federal courts across the United States alleging that over 400 local exchange carriers overcharged Sprint, MCI and Verizon for so-called intraMTA traffic (wireless phone calls that originate and terminate in the same metropolitan transit area). The lawsuits seek a refund of previously-paid access charges for intraMTA traffic, as well as a discount related to intraMTA traffic on a going-forward basis. One of the Company’s subsidiaries, MMT, was named as a defendant in two of the lawsuits that are being brought before the District Court for the Western District of Missouri (one filed on May 2, 2014 by Sprint and the other filed on September 5, 2014 by MCI and Verizon). In addition, one of the Company’s other subsidiaries, OTP, has been named as a defendant in a lawsuit relating to these issues filed by MCI and Verizon in the District Court for the District of Delaware on September 5, 2014. As all of the lawsuits relating to these issues raise the same fundamental questions of law, the United States Judicial Panel on Multidistrict Litigation has consolidated the lawsuits in the District Court for the Northern District of Texas for all pre-trial proceedings. At this time, it is too soon to determine whether these lawsuits will have a material adverse effect on the Company’s business. |
Note 7 - Stock Plans and Stock
Note 7 - Stock Plans and Stock Associated with Acquisition | 9 Months Ended |
Sep. 30, 2015 | |
Notes to Financial Statements | |
Shareholders' Equity and Share-based Payments [Text Block] | 7. Stock Plans and Stock Associated with Acquisition The Company granted RSUs underlying 124,167 shares of Class A common stock on July 9, 2014. During the nine months ended September 30, 2015, the Company granted RSUs underlying 112,174 shares of Class A common stock. These RSUs (or a portion thereof) vest with respect to each recipient over a one to three year period from the date of grant, provided the recipient remains in the employment or service of the Company as of the vesting date and, in selected instances, certain performance criteria are attained. Additionally, these RSUs (or a portion thereof) could vest earlier in the event of a change in control of the Company, or upon involuntary termination without cause. These grants are made primarily to executive-level personnel at the Company and, as a result, no compensation costs have been capitalized. The following table summarizes RSU activity as of September 30, 2015: RSUs Weighted Average Grant Date Fair Value Outstanding at December 31, 2014 113,961 $ 4.96 Granted 112,174 $ 4.71 Vested 57,139 $ 4.96 Forfeited or cancelled 15,022 $ 4.96 Outstanding at September 30, 2015 153,974 $ 4.78 CRC acquired substantially all of the assets of Reliable Networks on January 2, 2014. Pursuant to the purchase agreement relating to the Reliable Networks acquisition, Class A common stock was issued to the former owner of Reliable Networks in 2015 and will be issued to the former owner of Reliable Networks in 2016 and 2017, contingent on Reliable Networks achieving certain financial objectives and certain other conditions being satisfied, including that certain individuals must be employed by the Company or any of its subsidiaries and in good standing on the last day of the applicable year (the “Earn-Out”). For the year ended December 31, 2014, the Company delivered 68,233 shares of Class A common stock to the former owner of Reliable Networks on March 12, 2015 as a result of the Earn-Out. The following table summarizes the Earn-Out activity as of September 30, 2015: Shares Weighted Average Earned Date Fair Value Earned at December 31, 2014 68,233 $ 5.69 Earned — $ — Issued 68,233 $ 5.69 Forfeited or cancelled — $ — Earned at September 30, 2015 — $ — Stock-based compensation expense related to RSUs and the Earn-Out was $72 thousand and $283 thousand for the three months and nine months ended September 30, 2015, respectively. Accounting standards require that the Company estimate forfeitures for RSUs and the Earn-Out and reduce compensation expense accordingly. The Company has reduced its expense by the assumed forfeiture rate and will evaluate actual experience against the assumed forfeiture rate going forward. The forfeiture rate has been developed using historical performance metrics which could impact the size of the final issuance of Class A common stock. The Company has no history before 2014 with RSU forfeiture or Earn-Out stock forfeiture. As of September 30, 2015, the unrecognized total compensation cost related to unvested RSUs was $525 thousand. That cost is expected to be recognized by the end of 2018. As stated above, accounting standards require the Company to estimate forfeitures in calculating the expense related to stock-based compensation, as opposed to only recognizing these forfeitures and the corresponding reduction in expense as they occur. |
Significant Accounting Policies
Significant Accounting Policies (Policies) | 9 Months Ended |
Sep. 30, 2015 | |
Accounting Policies [Abstract] | |
Basis of Accounting, Policy [Policy Text Block] | Basis of Presentation and Principles of Consolidation The unaudited condensed consolidated financial statements include the accounts of Otelco Inc. (the “Company”) and its subsidiaries, all of which are either directly or indirectly wholly owned. These include: Blountsville Telephone LLC; Brindlee Mountain Telephone LLC; CRC Communications LLC (“CRC”); Granby Telephone LLC; Hopper Telecommunications LLC; Mid-Maine Telecom LLC; Mid-Maine TelPlus LLC; Otelco Mid-Missouri LLC (“MMT”) and its wholly owned subsidiary I-Land Internet Services LLC; Otelco Telecommunications LLC; Otelco Telephone LLC (“OTP”); Pine Tree Telephone LLC; Saco River Telephone LLC; Shoreham Telephone LLC; and War Telephone LLC. The accompanying unaudited condensed consolidated financial statements include the accounts of the Company and all of the aforesaid subsidiaries after elimination of all material intercompany balances and transactions. The unaudited operating results for the three months and nine months ended September 30, 2015 are not necessarily indicative of the results that may be expected for the year ending December 31, 2015 or any other period. The unaudited condensed consolidated financial statements and notes included in this Form 10-Q should be read in conjunction with the consolidated financial statements and notes thereto in the Company’s Annual Report on Form 10-K for the year ended December 31, 2014. The interim condensed consolidated financial information herein is unaudited. The information reflects all adjustments which are, in the opinion of management, necessary for a fair presentation of the financial position and results of operations for the periods included in the report. |
New Accounting Pronouncements, Policy [Policy Text Block] | Recent Accounting Pronouncements During 2015, the Financial Accounting Standards Board (the “FASB”) issued Accounting Standards Updates (“ASU”) 2015-01 through 2015-16. Except for ASU 2015-03, 2015-05 and 2015-11, which are discussed below, these ASUs provide technical corrections or simplification to existing guidance and to specialized industries or entities and therefore have minimal, if any, impact on the Company. In April 2015, the FASB issued ASU 2015-03, a guidance that simplifies the presentation of debt issuance costs by amending the accounting guidance to require that debt issuance costs related to a recognized debt liability be presented in the balance sheet as a direct deduction from the carrying amount of the related debt liability. The amendments are consistent with the accounting guidance related to debt discounts. This guidance is effective for the first interim or annual period beginning after December 15, 2015. The Company will adopt this guidance beginning in the first quarter of fiscal 2016. The Company is currently assessing the impact of this guidance on its condensed consolidated financial statements. In April 2015, the FASB issued ASU 2015-05, which provides guidance regarding whether a cloud computing arrangement includes a software license (FASB Accounting Standard Codification Subtopic 350-40). If a cloud computing arrangement includes a software license, then the entity should account for the software license element of the arrangement consistent with the acquisition of other software licenses. If a cloud computing arrangement does not include a software license, the entity should account for the arrangement as a service contract. The guidance will not change accounting principles generally accepted in the United States (“U.S. GAAP”) for an entity’s accounting for service contracts. This pronouncement is effective for fiscal years, including interim periods within those fiscal years, beginning after December 15, 2015. The Company is currently evaluating the impact of this guidance on its condensed consolidated financial statements. In July 2015, the FASB issued ASU 2015-11, a guidance intended to simplify the accounting for inventory. Prior to this ASU, U.S. GAAP required an entity to measure inventory at the lower of cost or market. This pronouncement changed the measurement of inventory to the lower of cost or net realizable value. Net realizable value is the estimated selling prices in the ordinary course of business, less reasonably predictable costs of completion, disposal, and transportation. Methods excluded from the scope of this ASU are the last-in, first-out or the retail inventory method and they will continue to be measured at the lower of cost or market. The amendments are effective for public business entities for fiscal years, and for interim periods within those fiscal years, beginning after December 15, 2016. Early adoption is permitted, and the Company is currently assessing the impact of this guidance on its condensed consolidated financial statements. In July 2015, the FASB confirmed a one-year delay in the effective date of ASU 2014-09, making the effective date for the Company the first quarter of fiscal 2018 instead of the current effective date, which is the first quarter of fiscal 2017 . The Company is currently evaluating the impact of the pending adoption of ASU 2014-09 on its condensed consolidated financial statements and has not yet determined the method by which the Company will adopt the standard. |
Costs Associated with Exit or Disposal Activities or Restructurings, Policy [Policy Text Block] | Financial Condition and Management’s Plan The outstanding balance on the Company’s current credit facility has been reduced from $133.3 million in May 2013 to $102 .0 million at September 30, 2015 through both required and voluntary payments. The credit facility matures in April 2016. The Company will be in default under the credit facility if it is unable to refinance the debt thereunder at or prior to its maturity. Additionally, in the event the Company fails to comply with the financial covenants or other similar requirements in the credit facility, it would be in default under the credit facility and its ability to meet anticipated operating and capital expenditure requirements would be impaired. It is management’s current intent to refinance the credit facility prior to its maturity in April 2016; however, there can be no assurance that market conditions will allow the Company to refinance the debt under the credit facility at or prior to its maturity on terms that are acceptable to the Company, or at all. |
Reclassification, Policy [Policy Text Block] | Reclassifications Certain items in the prior year’s condensed consolidated financial statements have been reclassified to conform with 2015 presentation. |
Note 2 - Notes Payable (Tables)
Note 2 - Notes Payable (Tables) | 9 Months Ended |
Sep. 30, 2015 | |
Notes Tables | |
Schedule of Long-term Debt Instruments [Table Text Block] | December 31, September 30, 2014 2015 Third amended and restated term credit facility; Antares Capital (formerly General Electric Capital Corporation); variable interest rate of 6.50% at December 31, 2014 and September 30, 2015. The credit facility is secured by the total assets of the subsidiary guarantors. The unpaid balance is due April 30, 2016. $ 112,135 $ 102,015 Less: current portion (6,665 ) (102,015 ) Long-term notes payable $ 105,470 $ — |
Note 4 - Net Income Per Commo15
Note 4 - Net Income Per Common Share (Tables) | 9 Months Ended |
Sep. 30, 2015 | |
Notes Tables | |
Schedule of Earnings Per Share, Basic and Diluted [Table Text Block] | Three Months Ended September 30, Nine Months Ended September 30, 2014 2015 2014 2015 Weighted average number of common shares outstanding - basic 3,103,728 3,239,306 3,103,728 3,239,306 Effect of dilutive securities 77,552 50,373 26,146 46,196 Weighted average number of common shares and potential common shares - diluted 3,181,280 3,289,679 3,129,874 3,285,502 Net income $ 1,387 $ 1,850 $ 4,089 $ 5,640 Net income per common share - basic $ 0.45 $ 0.57 $ 1.32 $ 1.74 Net income per common share - diluted $ 0.44 $ 0.56 $ 1.31 $ 1.72 |
Note 7 - Stock Plans and Stoc16
Note 7 - Stock Plans and Stock Associated with Acquisition (Tables) | 9 Months Ended |
Sep. 30, 2015 | |
Reliable Networks [Member] | |
Notes Tables | |
Schedule of Business Acquisitions by Acquisition, Equity Interest Issued or Issuable [Table Text Block] | Shares Weighted Average Earned Date Fair Value Earned at December 31, 2014 68,233 $ 5.69 Earned — $ — Issued 68,233 $ 5.69 Forfeited or cancelled — $ — Earned at September 30, 2015 — $ — |
Schedule of Share-based Compensation, Restricted Stock Units Award Activity [Table Text Block] | RSUs Weighted Average Grant Date Fair Value Outstanding at December 31, 2014 113,961 $ 4.96 Granted 112,174 $ 4.71 Vested 57,139 $ 4.96 Forfeited or cancelled 15,022 $ 4.96 Outstanding at September 30, 2015 153,974 $ 4.78 |
Note 1 - Organization and Bas17
Note 1 - Organization and Basis of Financial Reporting (Details Textual) - USD ($) $ in Millions | Sep. 30, 2015 | May. 31, 2013 |
Long-term Line of Credit | $ 102 | $ 133.3 |
Note 2 - Notes Payable (Details
Note 2 - Notes Payable (Details Textual) - USD ($) | 9 Months Ended | |||
Sep. 30, 2015 | Sep. 30, 2014 | Dec. 31, 2014 | May. 31, 2013 | |
Revolving Credit Facility [Member] | ||||
Long-term Line of Credit | $ 0 | $ 0 | ||
Line of Credit Facility, Maximum Borrowing Capacity | 5,000,000 | $ 5,000,000 | ||
Line of Credit Facility, Commitment Fee Amount | $ 19,000 | $ 19,000 | ||
Line of Credit Facility, Commitment Fee Percentage | 0.50% | |||
Senior Credit Facility [Member] | ||||
Deferred Finance Costs, Gross | $ 2,700,000 | |||
Amortization of Financing Costs | 665,000 | 707,000 | ||
Long-term Line of Credit | 102,000,000 | $ 133,300,000 | ||
Amortization of Financing Costs | 665,000 | $ 707,000 | ||
Long-term Debt, Maturities, Repayments of Principal, Remainder of Fiscal Year | 2,000,000 | |||
Long-term Debt, Maturities, Repayments of Principal in Year Two | $ 100,100,000 |
Note 2 - Notes Payable - Summar
Note 2 - Notes Payable - Summary of Notes Payable (Details) - USD ($) $ in Thousands | Sep. 30, 2015 | Dec. 31, 2014 |
GE Capital 3rd [Member] | ||
Third amended and restated term credit facility; Antares Capital (formerly General Electric Capital Corporation); variable interest rate of 6.50% at December 31, 2014 and September 30, 2015. The credit facility is secured by the total assets of the subsidiary guarantors. The unpaid balance is due April 30, 2016. | $ 102,015 | $ 112,135 |
Less: current portion | $ (102,015) | (6,665) |
Long-term notes payable | $ 105,470 |
Note 3 - Income Tax (Details Te
Note 3 - Income Tax (Details Textual) - USD ($) | 9 Months Ended | 12 Months Ended |
Sep. 30, 2015 | Dec. 31, 2014 | |
Domestic Tax Authority [Member] | ||
Operating Loss Carryforwards | $ 0 | $ 0 |
State and Local Jurisdiction [Member] | ||
Operating Loss Carryforwards | 67,000 | 0 |
Deferred Tax Assets, Tax Credit Carryforwards, Alternative Minimum Tax | 0 | $ 0 |
Deferred Tax Assets, Valuation Allowance | $ 0 | |
Effective Income Tax Rate Reconciliation, Percent | 39.10% | 38.80% |
Note 4 - Net Income Per Commo21
Note 4 - Net Income Per Common Share - Reconciliation of Income (Loss) Per Common Share (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2015 | Sep. 30, 2014 | Sep. 30, 2015 | Sep. 30, 2014 | |
Weighted average number of common shares outstanding - basic (in shares) | 3,239,306 | 3,103,728 | 3,239,306 | 3,103,728 |
Effect of dilutive securities (in shares) | 50,373 | 77,552 | 46,196 | 26,146 |
Weighted average number of common shares and potential common shares - diluted (in shares) | 3,289,679 | 3,181,280 | 3,285,345 | 3,129,874 |
Net income | $ 1,850 | $ 1,387 | $ 5,640 | $ 4,089 |
Net income per common share - basic (in dollars per share) | $ 0.57 | $ 0.45 | $ 1.74 | $ 1.32 |
Net income per common share - diluted (in dollars per share) | $ 0.56 | $ 0.44 | $ 1.72 | $ 1.31 |
Note 5 - Revenue Concentratio22
Note 5 - Revenue Concentrations (Details Textual) | 9 Months Ended | |
Sep. 30, 2015 | Sep. 30, 2014 | |
National Exchange Carrier Association [Member] | Customer Concentration Risk [Member] | Sales Revenue, Net [Member] | ||
Concentration Risk, Percentage | 16.90% | 15.00% |
Note 7 - Stock Plans and Stoc23
Note 7 - Stock Plans and Stock Associated with Acquisition (Details Textual) - USD ($) | Jul. 09, 2014 | Sep. 30, 2015 | Sep. 30, 2015 | Dec. 31, 2014 |
Restricted Stock Units (RSUs) [Member] | Common Class A [Member] | ||||
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Grants in Period | 124,167 | 112,174 | ||
Restricted Stock Units (RSUs) [Member] | Minimum [Member] | ||||
Share-based Compensation Arrangement by Share-based Payment Award, Award Vesting Period | 1 year | |||
Restricted Stock Units (RSUs) [Member] | Maximum [Member] | ||||
Share-based Compensation Arrangement by Share-based Payment Award, Award Vesting Period | 3 years | |||
Restricted Stock Units (RSUs) [Member] | ||||
Employee Service Share-based Compensation, Allocation of Recognized Period Costs, Capitalized Amount | $ 0 | |||
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Grants in Period | 112,174 | |||
Allocated Share-based Compensation Expense | $ 72,000 | $ 283,000 | ||
Employee Service Share-based Compensation, Nonvested Awards, Compensation Cost Not yet Recognized | $ 525,000 | $ 525,000 | ||
Common Class A [Member] | Reliable Networks [Member] | ||||
Business Acquisition, Equity Interest Issued or Issuable, Number of Shares | 68,233 | |||
Reliable Networks [Member] | ||||
Business Acquisition, Equity Interest Issued or Issuable, Number of Shares | 68,233 | 68,233 |
Note 7 - Stock Plans and Stoc24
Note 7 - Stock Plans and Stock Associated with Acquisition - RSU Activity (Details) - Restricted Stock Units (RSUs) [Member] | 9 Months Ended |
Sep. 30, 2015$ / sharesshares | |
Outstanding at December 31, 2014 (in shares) | 113,961 |
Outstanding at December 31, 2014 (in dollars per share) | $ / shares | $ 4.96 |
Granted (in shares) | 112,174 |
Granted (in dollars per share) | $ / shares | $ 4.71 |
Vested (in shares) | 57,139 |
Vested (in dollars per share) | $ / shares | $ 4.96 |
Forfeited or cancelled (in shares) | 15,022 |
Forfeited or cancelled (in dollars per share) | $ / shares | $ 4.96 |
Outstanding at September 30, 2015 (in shares) | 153,974 |
Outstanding at September 30, 2015 (in dollars per share) | $ / shares | $ 4.78 |
Note 7 - Stock Plans and Stoc25
Note 7 - Stock Plans and Stock Associated with Acquisition - Earn-Out Activity (Details) - Reliable Networks [Member] - $ / shares | 9 Months Ended | 12 Months Ended |
Sep. 30, 2015 | Dec. 31, 2014 | |
Earned (in shares) | 68,233 | 68,233 |
Earned (in dollars per share) | $ 5.69 | $ 5.69 |