Document_and_Entity_Informatio
Document and Entity Information | 9 Months Ended | |
Sep. 30, 2014 | Nov. 12, 2014 | |
Document and Entity Information [Abstract] | ' | ' |
Entity Registrant Name | 'GTT Communications, Inc. | ' |
Entity Central Index Key | '0001315255 | ' |
Current Fiscal Year End Date | '--12-31 | ' |
Entity Filer Category | 'Smaller Reporting Company | ' |
Trading Symbol | 'gtt | ' |
Entity Common Stock, Shares Outstanding | ' | 29,124,824 |
Document Type | '10-Q | ' |
Amendment Flag | 'false | ' |
Document Period End Date | 30-Sep-14 | ' |
Document Fiscal Period Focus | 'Q3 | ' |
Document Fiscal Year Focus | '2014 | ' |
Condensed_Consolidated_Balance
Condensed Consolidated Balance Sheets (USD $) | Sep. 30, 2014 | Dec. 31, 2013 |
In Thousands, unless otherwise specified | ||
ASSETS | ' | ' |
Cash and cash equivalents | $41,610 | $5,785 |
Accounts receivable, net of allowances of $546 and $702, respectively | 23,658 | 22,305 |
Deferred contract costs | 3,111 | 1,975 |
Prepaid expenses and other current assets | 2,391 | 2,878 |
Total current assets | 70,770 | 32,943 |
Property and equipment, net | 16,269 | 20,450 |
Intangible assets, net | 45,085 | 43,618 |
Other assets | 8,164 | 7,726 |
Goodwill | 71,082 | 67,019 |
Total assets | 211,370 | 171,756 |
LIABILITIES AND STOCKHOLDERS' EQUITY | ' | ' |
Accounts payable | 18,941 | 20,983 |
Accrued expenses and other current liabilities | 22,718 | 26,999 |
Short-term debt | 5,500 | 6,500 |
Deferred revenue | 7,486 | 6,797 |
Total current liabilities | 54,645 | 61,279 |
Long-term debt | 119,500 | 85,960 |
Deferred revenue | 989 | 1,480 |
Warrant liability | 0 | 12,295 |
Other long-term liabilities | 1,902 | 1,232 |
Total liabilities | 177,036 | 162,246 |
Commitments and contingencies | ' | ' |
Stockholders' equity: | ' | ' |
Common stock, par value $.0001 per share, 80,000,000 shares authorized, 28,889,596, and 23,311,023 shares issued and outstanding as of September 30, 2014 and December 31, 2013, respectively | 3 | 2 |
Additional paid-in capital | 116,244 | 76,014 |
Accumulated deficit | -81,551 | -66,226 |
Accumulated other comprehensive loss | -362 | -280 |
Total stockholders' equity | 34,334 | 9,510 |
Total liabilities and stockholders' equity | $211,370 | $171,756 |
Condensed_Consolidated_Balance1
Condensed Consolidated Balance Sheets [Parenthetical] (USD $) | Sep. 30, 2014 | Dec. 31, 2013 |
In Thousands, except Share data, unless otherwise specified | ||
Statement of Financial Position [Abstract] | ' | ' |
Allowance for doubtful accounts receivable, current (in dollars) | $546 | $702 |
Common stock, par value (in dollars per share) | $0.00 | $0.00 |
Common stock, shares authorized | 80,000,000 | 80,000,000 |
Common stock, shares, issued | 28,889,596 | 23,311,023 |
Common stock, shares, outstanding | 28,889,596 | 23,311,023 |
Condensed_Consolidated_Stateme
Condensed Consolidated Statements of Operations (USD $) | 3 Months Ended | 9 Months Ended | ||
In Thousands, except Share data, unless otherwise specified | Sep. 30, 2014 | Sep. 30, 2013 | Sep. 30, 2014 | Sep. 30, 2013 |
Revenue: | ' | ' | ' | ' |
Telecommunications services sold | $49,161 | $45,106 | $144,684 | $111,267 |
Operating expenses: | ' | ' | ' | ' |
Cost of telecommunications services provided | 29,891 | 29,538 | 89,233 | 73,421 |
Selling, general and administrative expense | 11,001 | 8,391 | 31,349 | 22,409 |
Restructuring costs, employee termination and other items | 3,342 | 0 | 3,342 | 7,677 |
Depreciation and amortization | 5,878 | 5,157 | 16,911 | 11,902 |
Total operating expenses | 50,112 | 43,086 | 140,835 | 115,409 |
Operating income (loss) | -951 | 2,020 | 3,849 | -4,142 |
Other expense: | ' | ' | ' | ' |
Interest expense, net | -1,761 | -2,445 | -6,755 | -5,624 |
Loss on debt extinguishment | -3,104 | 0 | -3,104 | -706 |
Other expense, net | -215 | -3,449 | -8,504 | -6,187 |
Total other expense, net | -5,080 | -5,894 | -18,363 | -12,517 |
Loss before income taxes | -6,031 | -3,874 | -14,514 | -16,659 |
Provision for income taxes | 605 | 416 | 811 | 437 |
Net loss | ($6,636) | ($4,290) | ($15,325) | ($17,096) |
Loss per share: | ' | ' | ' | ' |
Basic (in dollars per share) | ($0.23) | ($0.19) | ($0.59) | ($0.79) |
Diluted (in dollars per share) | ($0.23) | ($0.19) | ($0.59) | ($0.79) |
Weighted average shares: | ' | ' | ' | ' |
Basic (in shares) | 28,449,319 | 22,932,515 | 25,873,938 | 21,578,315 |
Diluted (in shares) | 28,449,319 | 22,932,515 | 25,873,938 | 21,578,315 |
Condensed_Consolidated_Stateme1
Condensed Consolidated Statements of Comprehensive Loss (USD $) | 3 Months Ended | 9 Months Ended | ||
In Thousands, unless otherwise specified | Sep. 30, 2014 | Sep. 30, 2013 | Sep. 30, 2014 | Sep. 30, 2013 |
Statement of Comprehensive Income [Abstract] | ' | ' | ' | ' |
Net loss | ($6,636) | ($4,290) | ($15,325) | ($17,096) |
Other comprehensive income (loss): | ' | ' | ' | ' |
Foreign currency translation | -334 | 262 | -82 | 132 |
Comprehensive loss | ($6,970) | ($4,028) | ($15,407) | ($16,964) |
Condensed_Consolidated_Stateme2
Condensed Consolidated Statement of Stockholders' Equity (USD $) | Total | Common Stock [Member] | Additional Paid-In Capital [Member] | Accumulated Deficit [Member] | Accumulated Other Comprehensive Income (Loss) [Member] |
In Thousands, except Share data, unless otherwise specified | |||||
Balance at Dec. 31, 2013 | $9,510 | $2 | $76,014 | ($66,226) | ($280) |
Balance (in shares) at Dec. 31, 2013 | ' | 23,311,023 | ' | ' | ' |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ' | ' | ' | ' | ' |
Share-based compensation for options issued | 660 | ' | 660 | ' | ' |
Share-based compensation for restricted stock issued | 1,155 | ' | 1,155 | ' | ' |
Share-based compensation for restricted stock issued (in shares) | ' | 342,508 | ' | ' | ' |
Tax withholding related to the vesting of restricted stock units | -1,347 | ' | -1,347 | ' | ' |
Tax withholding related to the vesting of restricted stock units (in shares) | ' | -127,766 | ' | ' | ' |
Shares issued in connection with acquisition earn-out | 3,704 | ' | 3,704 | ' | ' |
Shares issued in connection with acquisition earn-out (in shares) | ' | 306,122 | ' | ' | ' |
Shares issued in connection with acquisition | 1,000 | ' | 1,000 | ' | ' |
Shares issued in connection with acquisition (in shares) | ' | 93,899 | ' | ' | ' |
Shares issued in connection with settlement of warrant liability | 9,576 | ' | 9,576 | ' | ' |
Shares issued in connection with settlement of warrant liability (in shares) | ' | 913,749 | ' | ' | ' |
Stock issued in offering, net of offering costs | 24,581 | 1 | 24,580 | ' | ' |
Stock issued in offering, net of offering costs (in shares) | ' | 3,450,000 | ' | ' | ' |
Stock options exercised | 902 | ' | 902 | ' | ' |
Stock options exercised (in shares) | ' | 599,440 | ' | ' | ' |
Net loss | -15,325 | ' | ' | -15,325 | ' |
Foreign currency translation | -82 | ' | ' | ' | ' |
Balance at Sep. 30, 2014 | $34,334 | $3 | $116,244 | ($81,551) | ($362) |
Balance (in shares) at Sep. 30, 2014 | ' | 28,888,975 | ' | ' | ' |
Condensed_Consolidated_Stateme3
Condensed Consolidated Statements of Cash Flows (USD $) | 9 Months Ended | |
In Thousands, unless otherwise specified | Sep. 30, 2014 | Sep. 30, 2013 |
Cash flows from operating activities: | ' | ' |
Net loss | ($15,325) | ($17,096) |
Adjustments to reconcile net loss to net cash (used in) provided by operating activities: | ' | ' |
Depreciation and amortization | 16,911 | 11,902 |
Share-based compensation | 1,815 | 893 |
Debt discount amortization | 420 | 420 |
Change in fair value of warrant liability | 6,857 | 4,548 |
Loss on debt extinguishment | 3,104 | 706 |
Change in fair value of acquisition earn-out | 1,554 | 1,300 |
Changes in operating assets and liabilities, net of acquisitions: | ' | ' |
Accounts receivable, net | -1,636 | -3,425 |
Deferred contract costs | -1,213 | -2,049 |
Prepaid expenses and other current assets | 421 | 6,596 |
Other assets | -2,554 | -2,358 |
Accounts payable | -4,321 | 7,089 |
Accrued expenses and other current liabilities | -8,408 | -7,262 |
Deferred revenue and other long-term liabilities | 404 | -328 |
Net cash (used in) provided by operating activities | -1,971 | 936 |
Cash flows from investing activities: | ' | ' |
Acquisition of businesses, net of cash acquired | -7,827 | -51,884 |
Purchases of customer lists | 0 | -1,502 |
Purchases of property and equipment | -3,058 | -2,328 |
Net cash used in investing activities | -10,885 | -55,714 |
Cash flows from financing activities: | ' | ' |
Repayment of promissory note | 0 | -237 |
Proceeds from line of credit | 3,000 | 3,000 |
Repayment of line of credit | -6,000 | -26,919 |
Proceeds from term loan | 125,000 | 65,794 |
Repayment of term loan | -61,750 | 0 |
Proceeds from mezzanine debt | 1,500 | 7,151 |
Repayment of mezzanine debt | -31,000 | 0 |
Settlement of warrant liability | -9,576 | 0 |
Repayment of subordinate notes payable | 0 | -63 |
Repayment of subordinate notes payable | -1,347 | -117 |
Exercise of stock options | 902 | 38 |
Stock issued in offering, net of offering costs | 24,581 | 6,182 |
Net cash provided by financing activities | 45,310 | 54,829 |
Effect of exchange rate changes on cash | 3,371 | 120 |
Net increase in cash and cash equivalents | 35,825 | 171 |
Cash and cash equivalents at beginning of period | 5,785 | 4,726 |
Cash and cash equivalents at end of period | 41,610 | 4,897 |
Supplemental disclosure of cash flow information: | ' | ' |
Cash paid for interest | 6,554 | 4,824 |
Supplemental disclosure of non-cash investing and financing activities: | ' | ' |
Fair value of assets acquired | 13,841 | 60 |
Fair value of liabilities assumed | 4,035 | 34,814 |
Common stock issued in connection with the extinguishment of subordinated notes and accrued interest thereon | 0 | 2,880 |
Shares issued in connection with acquisition earn-out | 3,704 | 123 |
Shares issued in connection with acquisition | 1,000 | 0 |
Shares issued in connection with settlement of warrant liability | $9,576 | $0 |
ORGANIZATION_AND_BUSINESS
ORGANIZATION AND BUSINESS | 9 Months Ended |
Sep. 30, 2014 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | ' |
ORGANIZATION AND BUSINESS | ' |
ORGANIZATION AND BUSINESS | |
Organization and Business | |
GTT Communications, Inc. (“GTT” or the “Company”) is a Delaware corporation which was incorporated on January 3, 2005. GTT operates a global Tier 1 IP network with one of the most interconnected Ethernet service platforms around the world. GTT provides highly reliable, scalable and secure cloud networking services. Our clients trust us to deliver solutions with simplicity, speed, and agility. | |
Unaudited Interim Financial Statements | |
The accompanying unaudited condensed consolidated financial statements have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”) and should be read in conjunction with the Company’s audited financial statements and footnotes thereto for the year ended December 31, 2013, included in the Company’s Annual Report on Form 10-K filed on March 18, 2014. Certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) have been omitted pursuant to such rules and regulations. However, the Company believes that the disclosures are adequate to prevent the information from being misleading. The condensed consolidated financial statements reflect all adjustments (consisting primarily of normal recurring adjustments) that are, in the opinion of management, necessary for a fair presentation of the Company’s consolidated financial position and the results of operations. The operating results for the three and nine months ended September 30, 2014 are not necessarily indicative of the results to be expected for the full fiscal year 2014 or for any other interim period. The December 31, 2013 consolidated balance sheet has been derived from the audited financial statements as of that date, but does not include all disclosures required by GAAP. | |
There have been no changes in the Company’s significant accounting policies as of September 30, 2014 as compared to the significant accounting policies disclosed in Note 2, “Significant Accounting Policies” in the 2013 Annual Report on Form 10-K. | |
Use of Estimates and Assumptions | |
The preparation of financial statements in accordance with GAAP requires management to make estimates and assumptions that affect certain 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 revenue and expenses during the reporting period. Actual results can, and in many cases will, differ from those estimates. | |
Accounting for Derivative Instruments | |
The Company accounts for derivative instruments in accordance with Accounting Standards Codification ("ASC") 815, Derivatives and Hedging, which establishes accounting and reporting standards for derivative instruments and hedging activities, including certain derivative instruments embedded in other financial instruments or contracts. The Company also considers the ASC 815 Subtopic 40, Contracts in Entity’s Own Equity, which provides criteria for determining whether freestanding contracts that are settled in a company’s own stock, including common stock warrants, should be designated as either an equity instrument, an asset or as a liability. | |
The Company also considers in ASC 815, the guidance for determining whether an equity-linked financial instrument (or embedded feature) issued by an entity is indexed to the entity’s stock, and therefore, qualifying for the first part of the scope exception. On August 6, 2014, the warrant liability of $19.2 million was extinguished. See Notes 4 and 6 for additional information. | |
Comprehensive Income (Loss) | |
In addition to net loss, comprehensive income (loss) includes charges or credits to equity occurring other than as a result of transactions with stockholders. For the Company, this consists of foreign currency translation adjustments. |
RECENT_ACCOUNTING_PRONOUNCEMEN
RECENT ACCOUNTING PRONOUNCEMENTS | 9 Months Ended |
Sep. 30, 2014 | |
New Accounting Pronouncements and Changes in Accounting Principles [Abstract] | ' |
RECENT ACCOUNTING PRONOUNCEMENTS | ' |
RECENT ACCOUNTING PRONOUNCEMENTS | |
On May 28, 2014, the Federal Accounting Standards Board ("FASB") issued ASC 606, Revenue From Contracts With Customers. The guidance in ASC 606 supersedes the revenue recognition requirements in Topic 605, Revenue Recognition, and most industry-specific guidance throughout the Industry Topics of the Codification. ASC 606 states that an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. The Company is assessing the impact of ASC 606 and will adopt the guidance for annual reporting periods (including interim reporting periods within those periods) beginning after December 15, 2016. | |
On August 27, 2014, the FASB issued an Accounting Standard Update ("ASU") 2014-15, Disclosure of Uncertainties About an Entity's Ability to Continue as a Going Concern, which provides guidance on determining when and how reporting entities must disclose going-concern uncertainties in their financial statements. The new standard requires management to perform interim and annual assessments of an entity's ability to continue as a going concern within one year of the date of issuance of the entity's financial statements (or within one year after the date on which the financial statements are available to be issued, when applicable). Further, an entity must provide certain disclosures if there is "substantial doubt about the entity's ability to continue as a going concern". |
GOODWILL_AND_INTANGIBLE_ASSETS
GOODWILL AND INTANGIBLE ASSETS | 9 Months Ended | |||||||||||||
Sep. 30, 2014 | ||||||||||||||
Goodwill and Intangible Assets Disclosure [Abstract] | ' | |||||||||||||
GOODWILL AND INTANGIBLE ASSETS | ' | |||||||||||||
GOODWILL AND INTANGIBLE ASSETS | ||||||||||||||
During the third quarter of 2014, the Company completed its annual goodwill impairment testing. The Company performed a Step 1 fair value impairment test and determined that the fair value of the reporting unit is greater than its carrying amount; therefore, the Company concluded that no impairment existed. | ||||||||||||||
The Company recorded goodwill in the amount of $4.1 million during the nine months ended September 30, 2014 in connection with businesses added. Additionally, $11.0 million was preliminarily recorded for intangible assets related to customer relationships which are subject to straight-line amortization. | ||||||||||||||
Goodwill and intangible assets with indefinite lives are not amortized, but rather tested for impairment at least annually by comparing the estimated fair values to their carrying values. Acquired trade names are assessed as indefinite lived assets because there is no foreseeable limit on the period of time over which they are expected to contribute cash flows. | ||||||||||||||
The following table summarizes the Company’s intangible assets as of September 30, 2014 and December 31, 2013 (amounts in thousands): | ||||||||||||||
September 30, 2014 | ||||||||||||||
Amortization | Gross Asset | Accumulated | Net Book | |||||||||||
Period | Cost | Amortization | Value | |||||||||||
Customer contracts | 3-7 years | $ | 69,611 | $ | 25,570 | $ | 44,041 | |||||||
Carrier contracts | 1 year | 151 | 151 | — | ||||||||||
Non-compete agreements | 3-5 years | 4,331 | 4,087 | 244 | ||||||||||
Software | 7 years | 4,935 | 4,935 | — | ||||||||||
Trade name (non-amortizing) | N/A | 800 | — | 800 | ||||||||||
$ | 79,828 | $ | 34,743 | $ | 45,085 | |||||||||
December 31, 2013 | ||||||||||||||
Amortization | Gross Asset | Accumulated | Net Book | |||||||||||
Period | Cost | Amortization | Value | |||||||||||
Customer contracts | 3-7 years | $ | 58,611 | $ | 16,218 | $ | 42,393 | |||||||
Carrier contracts | 1 year | 151 | 151 | — | ||||||||||
Non-compete agreements | 3-5 years | 4,331 | 3,906 | 425 | ||||||||||
Software | 7 years | 4,935 | 4,935 | — | ||||||||||
Trade name (non-amortizing) | N/A | 800 | — | 800 | ||||||||||
$ | 68,828 | $ | 25,210 | $ | 43,618 | |||||||||
Amortization expense was $3.5 million and $3.0 million for the three months ended September 30, 2014 and 2013, respectively. Amortization expense was $9.5 million and $7.3 million for the nine months ended September 30, 2014 and 2013, respectively. | ||||||||||||||
Estimated amortization expense related to intangible assets subject to amortization at September 30, 2014 in each of the years subsequent to September 30, 2014 is as follows (amounts in thousands): | ||||||||||||||
2014 remaining | $ | 3,494 | ||||||||||||
2015 | 12,739 | |||||||||||||
2016 | 11,829 | |||||||||||||
2017 | 10,254 | |||||||||||||
2018 and beyond | 5,969 | |||||||||||||
Total | $ | 44,285 | ||||||||||||
FAIR_VALUE_MEASUREMENTS
FAIR VALUE MEASUREMENTS | 9 Months Ended | |||||||||||||||
Sep. 30, 2014 | ||||||||||||||||
Fair Value Disclosures [Abstract] | ' | |||||||||||||||
FAIR VALUE MEASUREMENTS | ' | |||||||||||||||
FAIR VALUE MEASUREMENTS | ||||||||||||||||
The Company accounts for fair value measurements in accordance with the fair value accounting standard as it relates to financial assets and financial liabilities. The Company establishes a fair value hierarchy that distinguishes between (1) market participant assumptions developed based on market data obtained from independent sources (observable inputs) and (2) an entity’s own assumptions about market participant assumptions developed based on the best information available in the circumstances (unobservable inputs). | ||||||||||||||||
The fair value hierarchy consists of three broad levels, which prioritizes the inputs used in measuring fair value as follows: observable inputs such as quoted prices in active markets (Level 1); inputs other than quoted prices in active markets that are observable either directly or indirectly (Level 2); and unobservable inputs in which there is little or no market data, which requires the Company to develop its own assumptions (Level 3). The following section describes the valuation methodologies that we used to measure financial instruments at fair value. | ||||||||||||||||
On April 30, 2014, the Company paid the sellers of nLayer Communications, Inc. the final earn-out payment of $3.7 million in equity and $0.8 million in cash. | ||||||||||||||||
On August 6, 2014, the Company extinguished the entire balance of the warrant liability of $19.2 million. The Company paid $9.6 million in cash for 1,172,080 of the outstanding warrants (or 50% of the total outstanding warrants) and the remaining warrants of 1,172,080 were exercised on a cash-less basis into 913,749 common shares. | ||||||||||||||||
The following table presents the liabilities that are measured and recognized at fair value on a recurring basis classified under the appropriate level of the fair value hierarchy as of September 30, 2014 (amounts in thousands): | ||||||||||||||||
Level 1 | Level 2 | Level 3 | Total | |||||||||||||
Liabilities: | ||||||||||||||||
Acquisition earn-out | $ | — | $ | — | $ | 3,779 | $ | 3,779 | ||||||||
Rollforward of Level 3 liabilities are as follows (amounts in thousands): | ||||||||||||||||
Warrant Liability | ||||||||||||||||
Balance, December 31, 2013 | $ | 12,295 | ||||||||||||||
Change in fair value of warrant liability | 6,857 | |||||||||||||||
Warrant liability paid in cash | (9,576 | ) | ||||||||||||||
Warrant liability settled in common stock | (9,576 | ) | ||||||||||||||
Balance, September 30, 2014 | $ | — | ||||||||||||||
Acquisition Earn-outs | ||||||||||||||||
Balance, December 31, 2013 | $ | 2,900 | ||||||||||||||
Acquisition earn-out paid in cash on April 30, 2014 | (750 | ) | ||||||||||||||
Acquisition earn-out paid in equity on April 30, 2014 | (3,704 | ) | ||||||||||||||
Change in the fair value of the acquisition earn-out thru April 30, 2014 | 1,554 | |||||||||||||||
Acquisition earn-outs | 3,779 | |||||||||||||||
Balance, September 30, 2014 | $ | 3,779 | ||||||||||||||
The carrying amounts of cash equivalents, receivables, accounts payable, and accrued expenses approximate fair value due to the immediate or short-term maturity of these financial instruments. The fair value of notes payable is determined using current applicable rates for similar instruments as of the condensed consolidated balance sheet date and approximates the carrying value of such debt. | ||||||||||||||||
Assets and liabilities measured at a fair value on a non-recurring basis include goodwill, tangible assets, and intangible assets. Such assets are reviewed quarterly for impairment indicators. If a triggering event has occurred, the assets are re-measured when the estimated fair value of the corresponding asset group is less than the carrying value. The fair value measurements, in such instances, are based on significant unobservable inputs (Level 3). There were no impairments recorded during the nine months ended September 30, 2014. |
EMPLOYEE_SHAREBASED_COMPENSATI
EMPLOYEE SHARE-BASED COMPENSATION BENEFITS | 9 Months Ended | |||||||||||
Sep. 30, 2014 | ||||||||||||
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | ' | |||||||||||
EMPLOYEE SHARE-BASED COMPENSATION BENEFITS | ' | |||||||||||
EMPLOYEE SHARE-BASED COMPENSATION BENEFITS | ||||||||||||
The Company adopted its 2006 Employee, Director and Consultant Stock Plan (the “2006 Plan”) in October 2006. In addition to stock options, the Company may also grant restricted stock or other stock-based awards under the 2006 Plan. The maximum number of shares issuable over the term of the 2006 Plan is limited to 3,500,000 shares. | ||||||||||||
The Company adopted its 2011 Employee, Director and Consultant Stock Plan (the “2011 Plan”) in June 2011. In addition to stock options, the Company may also grant restricted stock or other stock-based awards under the 2011 Plan. The maximum number of shares issuable over the term of the 2011 Plan is limited to 3,000,000 shares. The 2006 Plan will continue according to its terms. | ||||||||||||
The Plan permits the granting of stock options and restricted stock to employees (including employee directors and officers) and consultants of the Company, and non-employee directors of the Company. Options granted under the Plan have an exercise price of at least 100% of the fair market value of the underlying stock on the grant date and expire no later than ten years from the grant date. The options generally vest over four years with 25% of the option shares becoming exercisable one year from the date of grant and the remaining 75% annually or quarterly over the following three years. The Compensation Committee of the Board of Directors, as administrator of the Plan, has the discretion to use a different vesting schedule. | ||||||||||||
Stock Options | ||||||||||||
The Company recognized compensation expense for stock options of approximately $249,000 and $103,000 for the three months ended September 30, 2014 and 2013, respectively, and stock options of approximately $660,000 and $254,000 for the nine months ended September 30, 2014 and 2013, related to stock options issued to employees and consultants, which is included in selling, general and administrative expense on the accompanying consolidated statements of operations. The Company granted to employees 16,000 and 121,000 stock options with a total fair value of $99,000 and $301,000 during the three months ended September 30, 2014 and 2013, respectively. For the nine months ended September 30, 2014 and 2013, the Company granted to employees 425,000 and 472,000 stock options with a total fair value of $3.1 million and $961,000, respectively. | ||||||||||||
Restricted Stock | ||||||||||||
During the three and nine months ended September 30, 2014 and 2013, respectively, the Company granted to certain employees and members of its Board of Directors restricted stock. This includes shares issued to non-employee members of the Company’s Board of Directors who elected to be paid a portion of their annual fees in restricted stock. Total non-cash compensation expense is recorded in selling, general and administrative expenses on the accompanying condensed consolidated statement of operations. | ||||||||||||
The following tables summarize the Company’s restricted stock for the three months ended September 30, 2014 and 2013: | ||||||||||||
Amounts in thousands | Employees | Non-Employee | Total | |||||||||
Members of Board | ||||||||||||
of Directors | ||||||||||||
Three months ended September 30, 2014 | ||||||||||||
Restricted stock shares granted | 20 | 41 | 61 | |||||||||
Fair value of shares granted | $ | 212 | $ | 435 | $ | 647 | ||||||
Restricted stock compensation expense | $ | 343 | $ | 77 | $ | 420 | ||||||
Amounts in thousands | Employees | Non-Employee | Total | |||||||||
Members of Board | ||||||||||||
of Directors | ||||||||||||
Three months ended September 30, 2013 | ||||||||||||
Restricted stock shares granted | 91 | 7 | 98 | |||||||||
Fair value of shares granted | $ | 392 | $ | 36 | $ | 428 | ||||||
Restricted stock compensation expense | $ | 258 | $ | 36 | $ | 294 | ||||||
The following tables summarize the Company’s restricted stock for the nine months ended September 30, 2014 and 2013: | ||||||||||||
Amounts in thousands | Employees | Non-Employee | Total | |||||||||
Members of Board | ||||||||||||
of Directors | ||||||||||||
Nine Months Ended September 30, 2014 | ||||||||||||
Restricted stock shares granted | 294 | 48 | 342 | |||||||||
Fair value of shares granted | $ | 3,523 | $ | 506 | $ | 4,029 | ||||||
Restricted stock compensation expense | $ | 1,007 | $ | 148 | $ | 1,155 | ||||||
Amounts in thousands | Employees | Non-Employee | Total | |||||||||
Members of Board | ||||||||||||
of Directors | ||||||||||||
Nine Months Ended September 30, 2013 | ||||||||||||
Restricted stock shares granted | 587 | 131 | 718 | |||||||||
Fair value of shares granted | $ | 2,037 | $ | 509 | $ | 2,546 | ||||||
Restricted stock compensation expense | $ | 507 | $ | 131 | $ | 638 | ||||||
DEBT
DEBT | 9 Months Ended | |||||||||||||||||||
Sep. 30, 2014 | ||||||||||||||||||||
Debt Disclosure [Abstract] | ' | |||||||||||||||||||
DEBT | ' | |||||||||||||||||||
DEBT | ||||||||||||||||||||
The following summarizes the debt activity of the Company during the nine months ended September 30, 2014 (amounts in thousands): | ||||||||||||||||||||
Total Debt | Senior Term Loan | Delayed Draw Term Loan | Line of Credit | Mezzanine Notes | ||||||||||||||||
Debt obligation as of December 31, 2013 | $ | 92,460 | $ | 61,750 | $ | — | $ | 3,000 | $ | 27,710 | ||||||||||
Issuance | 129,500 | 110,000 | 15,000 | 3,000 | 1,500 | |||||||||||||||
Debt discount amortization | 420 | — | — | — | 420 | |||||||||||||||
Debt discount extinguishment | 1,370 | — | — | — | 1,370 | |||||||||||||||
Payments | (98,750 | ) | (61,750 | ) | — | (6,000 | ) | (31,000 | ) | |||||||||||
Debt obligation as of September 30, 2014 | $ | 125,000 | $ | 110,000 | $ | 15,000 | $ | — | $ | — | ||||||||||
Estimated annual commitments for debt maturities are as follows at September 30, 2014 (amounts in thousands): | ||||||||||||||||||||
Total Debt | ||||||||||||||||||||
2014 remaining | $ | 1,375 | ||||||||||||||||||
2015 | 5,500 | |||||||||||||||||||
2016 | 9,291 | |||||||||||||||||||
2017 | 9,069 | |||||||||||||||||||
2018 and beyond | 99,765 | |||||||||||||||||||
Total | $ | 125,000 | ||||||||||||||||||
Senior Term Loan and Line of Credit | ||||||||||||||||||||
On August 6, 2014, the Company completed a refinancing transaction (the “Refinancing Transaction”), which included amendments to the Credit Agreement as of December 31, 2013. The Credit Agreement, as amended, provides for $110.0 million in term loans; a $15.0 million revolving credit facility; an available $15.0 million delayed draw term loan and an available uncommitted $30.0 million incremental term loan. The maturity of the facilities under the Credit Agreement, as amended, were extended to August 6, 2019. The obligations of the Company under the Credit Agreement are secured by substantially all of the Company’s tangible and intangible assets. | ||||||||||||||||||||
On September 30, 2014, the Company drew $15.0 million on the delayed draw term loan, no amounts had been drawn on the revolving credit facility nor the uncommitted incremental term loan. Additionally, the Company is in compliance with the reporting and financial covenants stated in the Credit Agreement. | ||||||||||||||||||||
In connection with the Refinancing Transaction, the Company accelerated the amortization of ratable portions of the deferred | ||||||||||||||||||||
financing costs associated with the prior term loan facilities and portions of the deferred financing costs of the Credit Agreement, as amended, that do not qualify for deferral of $1.4 million. These amounts are reflected in Loss on Debt Extinguishment, net in the three months ended September 30, 2014. | ||||||||||||||||||||
The interest rate on the Credit Agreement, as amended, is a LIBOR-based tiered pricing tied to our net leverage ratio. As of September 30, 2014, the interest rate was 4.5%. | ||||||||||||||||||||
Mezzanine Notes | ||||||||||||||||||||
The Company entered into an agreement on August 6, 2014 ("Mezzanine Credit Agreement") that used the proceeds from the Refinancing Transaction to repay the remaining $31.0 million of indebtedness payable to BIA Digital Partners SBIC II LP, Plexus Fund II, L.P., and BNY Mellon-Alcentra Mezzanine III, L.P. ("Note Holders"). In accordance with the terms of the Mezzanine Credit Agreement, the Company also paid a prepayment penalty of $0.3 million, which is included in Loss on Debt Extinguishment. The remaining original issue discount of the warrant of $1.5 million is included in Loss on Debt Extinguishment. | ||||||||||||||||||||
Warrants | ||||||||||||||||||||
On August 6, 2014, in conjunction with the Refinancing Transaction, the Company entered into an agreement with the Note Holders that extinguished the entire balance of the warrant liability of $19.2 million (the "Warrant Purchase and Exercise Agreement"). Under the Warrant Purchase and Exercise Agreement, the Note Holders agreed to sell 1,172,080 of their outstanding Warrants (or 50% of the total outstanding warrants) to the Company for $9.6 million. In addition the Mezzanine Note Holders agreed to exercise the remaining 1,172,080 warrants on a cash-less basis into 913,749 common shares of the Company. |
INCOME_TAXES
INCOME TAXES | 9 Months Ended |
Sep. 30, 2014 | |
Income Tax Disclosure [Abstract] | ' |
INCOME TAXES | ' |
INCOME TAXES | |
Income taxes are accounted for under the asset and liability method. Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases and for operating loss and tax credit carryforwards. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the year in which those temporary differences are expected to be recovered or settled. Valuation allowances are recorded against deferred tax assets when it is more likely than not that some portion or all of a deferred tax asset will not be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during the period in which those temporary differences become deductible. The scheduled reversal of deferred tax liabilities, projected future taxable income and tax planning strategies are evaluated in determining whether it is more likely than not that deferred tax assets will be realized. | |
The Company and certain of its subsidiaries file income tax returns in the U.S. Federal jurisdiction, various states and foreign jurisdictions. The Company’s foreign jurisdictions are primarily in Italy and the United Kingdom. | |
A valuation allowance has been recorded against the Company’s deferred tax assets to the extent those assets are not offset by deferred tax liabilities which have a structural certainty of reversal or those assets that cannot be realized against prior period taxable income. | |
The Company recorded tax expense of $0.6 million and $0.4 million for income taxes for the three months ended September 30, 2014 and 2013, respectively. For the nine months ended September 30, 2014 and 2013 the Company recorded tax expense of $0.8 million and $0.4 million, respectively. |
LOSS_PER_SHARE
LOSS PER SHARE | 9 Months Ended | |||||||||||||||
Sep. 30, 2014 | ||||||||||||||||
Earnings Per Share [Abstract] | ' | |||||||||||||||
LOSS PER SHARE | ' | |||||||||||||||
LOSS PER SHARE | ||||||||||||||||
Basic loss per share is computed by dividing net loss available to common stockholders by the weighted average number of common shares outstanding. Diluted earnings per share reflect, in periods with earnings and in which they have a dilutive effect, the effect of common shares issuable upon exercise of stock options and warrants. | ||||||||||||||||
The table below details the calculations of loss per share (in thousands, except for share and per share amounts): | ||||||||||||||||
Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||
2014 | 2013 | 2014 | 2013 | |||||||||||||
Numerator for basic and diluted EPS – loss available to common stockholders | $ | (6,636 | ) | $ | (4,290 | ) | $ | (15,325 | ) | $ | (17,096 | ) | ||||
Denominator for basic EPS – weighted average shares | 28,449,319 | 22,932,515 | 25,873,938 | 21,578,315 | ||||||||||||
Effect of dilutive securities | — | — | — | — | ||||||||||||
Denominator for diluted EPS – weighted average shares | 28,449,319 | 22,932,515 | 25,873,938 | 21,578,315 | ||||||||||||
Loss per share: basic | $ | (0.23 | ) | $ | (0.19 | ) | $ | (0.59 | ) | $ | (0.79 | ) | ||||
Loss per share: diluted | $ | (0.23 | ) | $ | (0.19 | ) | $ | (0.59 | ) | $ | (0.79 | ) | ||||
The table below details the anti-dilutive items that were excluded in the computation of the loss per share (amounts in thousands): | ||||||||||||||||
Three months ended September 30, | Nine months ended September 30, | |||||||||||||||
2014 | 2013 | 2014 | 2013 | |||||||||||||
BIA warrant | — | 1,055 | — | 1,055 | ||||||||||||
Plexus warrant | — | 960 | — | 960 | ||||||||||||
Alcentra warrant | — | 329 | — | 329 | ||||||||||||
Stock options | 1,096 | 1,711 | 1,096 | 1,711 | ||||||||||||
Totals | 1,096 | 4,055 | 1,096 | 4,055 | ||||||||||||
CONTINGENCIESLEGAL_PROCEEDINGS
CONTINGENCIES-LEGAL PROCEEDINGS (Notes) | 9 Months Ended |
Sep. 30, 2014 | |
Commitments and Contingencies Disclosure [Abstract] | ' |
Contingencies-Legal Proceedings | ' |
CONTINGENCIES-LEGAL PROCEEDINGS | |
From time to time, the Company is a party to legal proceedings arising in the normal course of its business. Aside from the matters discussed below, the Company does not believe that it is a party to any pending legal action that could reasonably be expected to have a material adverse effect on its business or operating results, financial position or cash flows. | |
The Company filed a civil complaint against Artel, LLC on June 15, 2012 in the Fairfax County Virginia Circuit Court, docket number CL2012-04735, alleging breach of contract with respect to telecommunication services provided by the Company. In response to the Company’s complaint, Artel, LLC filed a counterclaim against the Company based on allegations of breach of contract and certain business torts. On December 20, 2013, the Court entered a judgment against the Company in the amount of $3.3 million. The Court suspended the judgment, subject to a letter of credit during GTT’s appeal, which is presently pending in the Supreme Court of Virginia. On October 29, 2014 the Supreme Court of Virginia granted in part and denied in part the Company's petition for appeal and this decision was communicated to the Company on October 30, 2014. The Company is currently evaluating the options to contest further the judgment. As a consequence of the decision by the Supreme Court of Virginia, the Company has established an accrual equal to the full amount of the judgment for the quarter ended September 30, 2014. |
SUBSEQUENT_EVENTS
SUBSEQUENT EVENTS | 9 Months Ended |
Sep. 30, 2014 | |
Subsequent Events [Abstract] | ' |
SUBSEQUENT EVENTS | ' |
SUBSEQUENT EVENTS | |
On October 1, 2014, the Company entered into an agreement and plan of merger ("Merger Agreement") with United Network Services, Inc. ("UNSi"), a Delaware corporation. UNSi is a communications company providing data services to large enterprise and carrier clients. | |
Pursuant to the Merger Agreement, the Company paid UNSi an aggregate purchase price of $40.0 million, payable in a combination of cash and 231,539 shares of common stock of the Company, subject to a net working capital adjustment and other deductions for UNSi. As security for UNSi's indemnification obligations under the Merger Agreement, 10% of the purchase price is being withheld by the Company for one year following the closing of the Merger. The Company expects to incur a restructuring charge in the fourth quarter related to a reduction in headcount and the termination of leases and contracts. |
GOODWILL_AND_INTANGIBLE_ASSETS1
GOODWILL AND INTANGIBLE ASSETS (Tables) | 9 Months Ended | |||||||||||||
Sep. 30, 2014 | ||||||||||||||
Goodwill and Intangible Assets Disclosure [Abstract] | ' | |||||||||||||
Schedule of Finite-Lived Intangible Assets | ' | |||||||||||||
The following table summarizes the Company’s intangible assets as of September 30, 2014 and December 31, 2013 (amounts in thousands): | ||||||||||||||
September 30, 2014 | ||||||||||||||
Amortization | Gross Asset | Accumulated | Net Book | |||||||||||
Period | Cost | Amortization | Value | |||||||||||
Customer contracts | 3-7 years | $ | 69,611 | $ | 25,570 | $ | 44,041 | |||||||
Carrier contracts | 1 year | 151 | 151 | — | ||||||||||
Non-compete agreements | 3-5 years | 4,331 | 4,087 | 244 | ||||||||||
Software | 7 years | 4,935 | 4,935 | — | ||||||||||
Trade name (non-amortizing) | N/A | 800 | — | 800 | ||||||||||
$ | 79,828 | $ | 34,743 | $ | 45,085 | |||||||||
December 31, 2013 | ||||||||||||||
Amortization | Gross Asset | Accumulated | Net Book | |||||||||||
Period | Cost | Amortization | Value | |||||||||||
Customer contracts | 3-7 years | $ | 58,611 | $ | 16,218 | $ | 42,393 | |||||||
Carrier contracts | 1 year | 151 | 151 | — | ||||||||||
Non-compete agreements | 3-5 years | 4,331 | 3,906 | 425 | ||||||||||
Software | 7 years | 4,935 | 4,935 | — | ||||||||||
Trade name (non-amortizing) | N/A | 800 | — | 800 | ||||||||||
$ | 68,828 | $ | 25,210 | $ | 43,618 | |||||||||
Schedule of Finite-Lived Intangible Assets, Future Amortization Expense | ' | |||||||||||||
Estimated amortization expense related to intangible assets subject to amortization at September 30, 2014 in each of the years subsequent to September 30, 2014 is as follows (amounts in thousands): | ||||||||||||||
2014 remaining | $ | 3,494 | ||||||||||||
2015 | 12,739 | |||||||||||||
2016 | 11,829 | |||||||||||||
2017 | 10,254 | |||||||||||||
2018 and beyond | 5,969 | |||||||||||||
Total | $ | 44,285 | ||||||||||||
FAIR_VALUE_MEASUREMENTS_Tables
FAIR VALUE MEASUREMENTS (Tables) | 9 Months Ended | |||||||||||||||
Sep. 30, 2014 | ||||||||||||||||
Fair Value Disclosures [Abstract] | ' | |||||||||||||||
Fair Value Inputs, Liabilities, Quantitative Information | ' | |||||||||||||||
The following table presents the liabilities that are measured and recognized at fair value on a recurring basis classified under the appropriate level of the fair value hierarchy as of September 30, 2014 (amounts in thousands): | ||||||||||||||||
Level 1 | Level 2 | Level 3 | Total | |||||||||||||
Liabilities: | ||||||||||||||||
Acquisition earn-out | $ | — | $ | — | $ | 3,779 | $ | 3,779 | ||||||||
Fair Value Liabilities Roll Forward | ' | |||||||||||||||
Rollforward of Level 3 liabilities are as follows (amounts in thousands): | ||||||||||||||||
Warrant Liability | ||||||||||||||||
Balance, December 31, 2013 | $ | 12,295 | ||||||||||||||
Change in fair value of warrant liability | 6,857 | |||||||||||||||
Warrant liability paid in cash | (9,576 | ) | ||||||||||||||
Warrant liability settled in common stock | (9,576 | ) | ||||||||||||||
Balance, September 30, 2014 | $ | — | ||||||||||||||
Acquisition Earn-outs | ||||||||||||||||
Balance, December 31, 2013 | $ | 2,900 | ||||||||||||||
Acquisition earn-out paid in cash on April 30, 2014 | (750 | ) | ||||||||||||||
Acquisition earn-out paid in equity on April 30, 2014 | (3,704 | ) | ||||||||||||||
Change in the fair value of the acquisition earn-out thru April 30, 2014 | 1,554 | |||||||||||||||
Acquisition earn-outs | 3,779 | |||||||||||||||
Balance, September 30, 2014 | $ | 3,779 | ||||||||||||||
EMPLOYEE_SHAREBASED_COMPENSATI1
EMPLOYEE SHARE-BASED COMPENSATION BENEFITS (Tables) | 9 Months Ended | |||||||||||
Sep. 30, 2014 | ||||||||||||
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | ' | |||||||||||
Schedule of Share-based Compensation, Stock Options, Activity | ' | |||||||||||
Total non-cash compensation expense is recorded in selling, general and administrative expenses on the accompanying condensed consolidated statement of operations. | ||||||||||||
The following tables summarize the Company’s restricted stock for the three months ended September 30, 2014 and 2013: | ||||||||||||
Amounts in thousands | Employees | Non-Employee | Total | |||||||||
Members of Board | ||||||||||||
of Directors | ||||||||||||
Three months ended September 30, 2014 | ||||||||||||
Restricted stock shares granted | 20 | 41 | 61 | |||||||||
Fair value of shares granted | $ | 212 | $ | 435 | $ | 647 | ||||||
Restricted stock compensation expense | $ | 343 | $ | 77 | $ | 420 | ||||||
Amounts in thousands | Employees | Non-Employee | Total | |||||||||
Members of Board | ||||||||||||
of Directors | ||||||||||||
Three months ended September 30, 2013 | ||||||||||||
Restricted stock shares granted | 91 | 7 | 98 | |||||||||
Fair value of shares granted | $ | 392 | $ | 36 | $ | 428 | ||||||
Restricted stock compensation expense | $ | 258 | $ | 36 | $ | 294 | ||||||
Nonvested Restricted Stock Shares Activity | ' | |||||||||||
The following tables summarize the Company’s restricted stock for the nine months ended September 30, 2014 and 2013: | ||||||||||||
Amounts in thousands | Employees | Non-Employee | Total | |||||||||
Members of Board | ||||||||||||
of Directors | ||||||||||||
Nine Months Ended September 30, 2014 | ||||||||||||
Restricted stock shares granted | 294 | 48 | 342 | |||||||||
Fair value of shares granted | $ | 3,523 | $ | 506 | $ | 4,029 | ||||||
Restricted stock compensation expense | $ | 1,007 | $ | 148 | $ | 1,155 | ||||||
Amounts in thousands | Employees | Non-Employee | Total | |||||||||
Members of Board | ||||||||||||
of Directors | ||||||||||||
Nine Months Ended September 30, 2013 | ||||||||||||
Restricted stock shares granted | 587 | 131 | 718 | |||||||||
Fair value of shares granted | $ | 2,037 | $ | 509 | $ | 2,546 | ||||||
Restricted stock compensation expense | $ | 507 | $ | 131 | $ | 638 | ||||||
DEBT_Tables
DEBT (Tables) | 9 Months Ended | |||||||||||||||||||
Sep. 30, 2014 | ||||||||||||||||||||
Debt Disclosure [Abstract] | ' | |||||||||||||||||||
Schedule of Debt | ' | |||||||||||||||||||
The following summarizes the debt activity of the Company during the nine months ended September 30, 2014 (amounts in thousands): | ||||||||||||||||||||
Total Debt | Senior Term Loan | Delayed Draw Term Loan | Line of Credit | Mezzanine Notes | ||||||||||||||||
Debt obligation as of December 31, 2013 | $ | 92,460 | $ | 61,750 | $ | — | $ | 3,000 | $ | 27,710 | ||||||||||
Issuance | 129,500 | 110,000 | 15,000 | 3,000 | 1,500 | |||||||||||||||
Debt discount amortization | 420 | — | — | — | 420 | |||||||||||||||
Debt discount extinguishment | 1,370 | — | — | — | 1,370 | |||||||||||||||
Payments | (98,750 | ) | (61,750 | ) | — | (6,000 | ) | (31,000 | ) | |||||||||||
Debt obligation as of September 30, 2014 | $ | 125,000 | $ | 110,000 | $ | 15,000 | $ | — | $ | — | ||||||||||
Schedule Of Estimated Annual Commitment For Debt Maturities | ' | |||||||||||||||||||
Estimated annual commitments for debt maturities are as follows at September 30, 2014 (amounts in thousands): | ||||||||||||||||||||
Total Debt | ||||||||||||||||||||
2014 remaining | $ | 1,375 | ||||||||||||||||||
2015 | 5,500 | |||||||||||||||||||
2016 | 9,291 | |||||||||||||||||||
2017 | 9,069 | |||||||||||||||||||
2018 and beyond | 99,765 | |||||||||||||||||||
Total | $ | 125,000 | ||||||||||||||||||
LOSS_PER_SHARE_Tables
LOSS PER SHARE (Tables) | 9 Months Ended | |||||||||||||||
Sep. 30, 2014 | ||||||||||||||||
Earnings Per Share [Abstract] | ' | |||||||||||||||
Schedule of Earnings Per Share Reconciliation | ' | |||||||||||||||
The table below details the calculations of loss per share (in thousands, except for share and per share amounts): | ||||||||||||||||
Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||
2014 | 2013 | 2014 | 2013 | |||||||||||||
Numerator for basic and diluted EPS – loss available to common stockholders | $ | (6,636 | ) | $ | (4,290 | ) | $ | (15,325 | ) | $ | (17,096 | ) | ||||
Denominator for basic EPS – weighted average shares | 28,449,319 | 22,932,515 | 25,873,938 | 21,578,315 | ||||||||||||
Effect of dilutive securities | — | — | — | — | ||||||||||||
Denominator for diluted EPS – weighted average shares | 28,449,319 | 22,932,515 | 25,873,938 | 21,578,315 | ||||||||||||
Loss per share: basic | $ | (0.23 | ) | $ | (0.19 | ) | $ | (0.59 | ) | $ | (0.79 | ) | ||||
Loss per share: diluted | $ | (0.23 | ) | $ | (0.19 | ) | $ | (0.59 | ) | $ | (0.79 | ) | ||||
Schedule of Antidilutive Securities Excluded from Computation of Earnings Per Share | ' | |||||||||||||||
The table below details the anti-dilutive items that were excluded in the computation of the loss per share (amounts in thousands): | ||||||||||||||||
Three months ended September 30, | Nine months ended September 30, | |||||||||||||||
2014 | 2013 | 2014 | 2013 | |||||||||||||
BIA warrant | — | 1,055 | — | 1,055 | ||||||||||||
Plexus warrant | — | 960 | — | 960 | ||||||||||||
Alcentra warrant | — | 329 | — | 329 | ||||||||||||
Stock options | 1,096 | 1,711 | 1,096 | 1,711 | ||||||||||||
Totals | 1,096 | 4,055 | 1,096 | 4,055 | ||||||||||||
ORGANIZATION_AND_BUSINESS_Deta
ORGANIZATION AND BUSINESS (Details Textual) (USD $) | Sep. 30, 2014 | Aug. 06, 2014 | Dec. 31, 2013 |
In Thousands, unless otherwise specified | |||
Organization, Consolidation and Presentation of Financial Statements [Abstract] | ' | ' | ' |
Warrant liability | $0 | $19,200 | $12,295 |
GOODWILL_AND_INTANGIBLE_ASSETS2
GOODWILL AND INTANGIBLE ASSETS (Details Textual) (USD $) | 3 Months Ended | 9 Months Ended | ||
In Millions, unless otherwise specified | Sep. 30, 2014 | Sep. 30, 2013 | Sep. 30, 2014 | Sep. 30, 2013 |
Goodwill and Intangible Assets Disclosure [Abstract] | ' | ' | ' | ' |
Goodwill, Acquired During Period | ' | ' | $4.10 | ' |
Finite-lived Intangible Assets Acquired | ' | ' | 11 | ' |
Amortization Of Intangible Assets | $3.50 | $3 | $9.50 | $7.30 |
GOODWILL_AND_INTANGIBLE_ASSETS3
GOODWILL AND INTANGIBLE ASSETS (Details) (USD $) | 9 Months Ended | 12 Months Ended |
In Thousands, unless otherwise specified | Sep. 30, 2014 | Dec. 31, 2013 |
Gross Asset Cost | 79,828 | 68,828 |
Accumulated Amortization | 34,743 | 25,210 |
Net Book Value | 45,085 | 43,618 |
Trade Names [Member] | ' | ' |
Trade name (non-amortizing) | 800 | 800 |
Accumulated Amortization | 0 | ' |
Customer Contracts [Member] | ' | ' |
Gross Asset Cost | 69,611 | 58,611 |
Accumulated Amortization | 25,570 | 16,218 |
Net Book Value | 44,041 | 42,393 |
Customer Contracts [Member] | Minimum [Member] | ' | ' |
Amortization Period | '3 years | '4 years |
Customer Contracts [Member] | Maximum [Member] | ' | ' |
Amortization Period | '7 years | '7 years |
Carrier Contracts [Member] | ' | ' |
Amortization Period | '1 year | '1 year |
Gross Asset Cost | 151 | 151 |
Accumulated Amortization | 151 | 151 |
Net Book Value | 0 | 0 |
Noncompete Agreements [Member] | ' | ' |
Gross Asset Cost | 4,331 | 4,331 |
Accumulated Amortization | 4,087 | 3,906 |
Net Book Value | 244 | 425 |
Noncompete Agreements [Member] | Minimum [Member] | ' | ' |
Amortization Period | '3 years | '4 years |
Noncompete Agreements [Member] | Maximum [Member] | ' | ' |
Amortization Period | '5 years | '5 years |
Software [Member] | ' | ' |
Amortization Period | '7 years | '7 years |
Gross Asset Cost | 4,935 | 4,935 |
Accumulated Amortization | 4,935 | 4,935 |
Net Book Value | 0 | 0 |
GOODWILL_AND_INTANGIBLE_ASSETS4
GOODWILL AND INTANGIBLE ASSETS (Details 1) (USD $) | Sep. 30, 2014 |
In Thousands, unless otherwise specified | |
Goodwill and Intangible Assets Disclosure [Abstract] | ' |
2014 remaining | $3,494 |
2015 | 12,739 |
2016 | 11,829 |
2017 | 10,254 |
2018 and beyond | 5,969 |
Net Book Value | $44,285 |
FAIR_VALUE_MEASUREMENTS_Detail
FAIR VALUE MEASUREMENTS (Details Textual) (USD $) | 0 Months Ended | 9 Months Ended | |||
Aug. 06, 2014 | Sep. 30, 2014 | Sep. 30, 2013 | Aug. 06, 2014 | Dec. 31, 2013 | |
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ' | ' | ' | ' | ' |
Asset Impairment Charges | ' | $0 | ' | ' | ' |
Shares issued in connection with acquisition | ' | 1,000,000 | 0 | ' | ' |
Warrant liability | ' | 0 | ' | 19,200,000 | 12,295,000 |
Payments for Repurchase of Warrants | 9,600,000 | 9,576,000 | 0 | ' | ' |
Class of Warrant or Right, Retired During Period, Number | 1,172,080 | ' | ' | ' | ' |
Class of Warrant or Right, Retired During Period, Percentage Of Outstanding | 50.00% | ' | ' | ' | ' |
Class of Warrant or Right, Exercises During Period, Number | 1,172,080 | ' | ' | ' | ' |
Stock Issued During Period, Shares, Conversion of Convertible Securities | 913,749 | ' | ' | ' | ' |
Warranty Liability [Member] | Fair Value, Inputs, Level 3 [Member] | ' | ' | ' | ' | ' |
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ' | ' | ' | ' | ' |
Payments for Repurchase of Warrants | ' | 9,576,000 | ' | ' | ' |
nLayer Communications [Member] | Earn-out Liability [Member] | Fair Value, Inputs, Level 3 [Member] | ' | ' | ' | ' | ' |
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ' | ' | ' | ' | ' |
Shares issued in connection with acquisition | ' | 3,704,000 | ' | ' | ' |
Payments for Previous Acquisition | ' | $750,000 | ' | ' | ' |
FAIR_VALUE_MEASUREMENTS_Detail1
FAIR VALUE MEASUREMENTS (Details) (Earn-out Liability [Member], USD $) | Sep. 30, 2014 |
In Thousands, unless otherwise specified | |
Liabilities, Fair Value Disclosure | $3,779 |
Fair Value, Inputs, Level 1 [Member] | ' |
Liabilities, Fair Value Disclosure | 0 |
Fair Value, Inputs, Level 2 [Member] | ' |
Liabilities, Fair Value Disclosure | 0 |
Fair Value, Inputs, Level 3 [Member] | ' |
Liabilities, Fair Value Disclosure | $3,779 |
FAIR_VALUE_MEASUREMENTS_Detail2
FAIR VALUE MEASUREMENTS (Details 1) (USD $) | 0 Months Ended | 9 Months Ended | |
In Thousands, unless otherwise specified | Aug. 06, 2014 | Sep. 30, 2014 | Sep. 30, 2013 |
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward] | ' | ' | ' |
Change in fair value of warrant liability | ' | $6,857 | $4,548 |
Warrant liability paid in cash | -9,600 | -9,576 | 0 |
Warrant liability settled in common stock | ' | -9,576 | 0 |
Change in the fair value of the acquisition earn-out thru April 30, 2014 | ' | -1,000 | 0 |
Change in the fair value of the acquisition earn-out thru April 30, 2014 | ' | 1,554 | 1,300 |
Acquisition earn-outs | ' | 3,704 | 123 |
Warranty Liability [Member] | Fair Value, Inputs, Level 3 [Member] | ' | ' | ' |
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward] | ' | ' | ' |
Balance, December 31, 2013 | ' | 12,295 | ' |
Change in fair value of warrant liability | ' | 6,857 | ' |
Warrant liability paid in cash | ' | -9,576 | ' |
Warrant liability settled in common stock | ' | -9,576 | ' |
Balance, September 30, 2014 | ' | 0 | ' |
Earn-out Liability [Member] | ' | ' | ' |
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward] | ' | ' | ' |
Balance, September 30, 2014 | ' | 3,779 | ' |
Earn-out Liability [Member] | Fair Value, Inputs, Level 3 [Member] | ' | ' | ' |
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward] | ' | ' | ' |
Balance, September 30, 2014 | ' | 3,779 | ' |
Earn-out Liability [Member] | Fair Value, Inputs, Level 3 [Member] | nLayer Communications [Member] | ' | ' | ' |
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward] | ' | ' | ' |
Balance, December 31, 2013 | ' | 2,900 | ' |
Acquisition earn-out paid in cash on April 30, 2014 | ' | -750 | ' |
Change in the fair value of the acquisition earn-out thru April 30, 2014 | ' | -3,704 | ' |
Change in the fair value of the acquisition earn-out thru April 30, 2014 | ' | 1,554 | ' |
Acquisition earn-outs | ' | 3,779 | ' |
Balance, September 30, 2014 | ' | $3,779 | ' |
EMPLOYEE_SHAREBASED_COMPENSATI2
EMPLOYEE SHARE-BASED COMPENSATION BENEFITS (Details) (USD $) | 3 Months Ended | 9 Months Ended | ||
In Thousands, unless otherwise specified | Sep. 30, 2014 | Sep. 30, 2013 | Sep. 30, 2014 | Sep. 30, 2013 |
Restricted stock shares granted | 61 | 98 | 342 | 718 |
Fair value of shares granted | $647 | $428 | $4,029 | $2,546 |
Restricted stock compensation expense | 420 | 294 | 1,155 | 638 |
Employee Stock Option [Member] | ' | ' | ' | ' |
Restricted stock shares granted | 20 | 91 | 294 | 587 |
Fair value of shares granted | 212 | 392 | 3,523 | 2,037 |
Restricted stock compensation expense | 343 | 258 | 1,007 | 507 |
Non Employee Member Of Board Of Directors [Member] | ' | ' | ' | ' |
Restricted stock shares granted | 41 | 7 | 48 | 131 |
Fair value of shares granted | 435 | 36 | 506 | 509 |
Restricted stock compensation expense | $77 | $36 | $148 | $131 |
EMPLOYEE_SHAREBASED_COMPENSATI3
EMPLOYEE SHARE-BASED COMPENSATION BENEFITS (Details Textual) (USD $) | 9 Months Ended | 3 Months Ended | 9 Months Ended | 12 Months Ended | 9 Months Ended | ||||||||||
In Thousands, except Share data, unless otherwise specified | Sep. 30, 2014 | Sep. 30, 2013 | Sep. 30, 2014 | Sep. 30, 2013 | Sep. 30, 2014 | Sep. 30, 2013 | Sep. 30, 2014 | Sep. 30, 2013 | Sep. 30, 2014 | Dec. 31, 2011 | Dec. 31, 2006 | Sep. 30, 2014 | Sep. 30, 2014 | Sep. 30, 2014 | Sep. 30, 2014 |
Employees and Consultants [Member] | Employees and Consultants [Member] | Employees and Consultants [Member] | Employees and Consultants [Member] | Additional Paid-In Capital [Member] | Additional Paid-In Capital [Member] | Periodic Vesting [Member] | Employee Director Consultant Stock Plan [Member] | Employee Director Consultant Stock Plan [Member] | Employee Director Consultant Stock Plan [Member] | Stock Option 25 [Member] | Stock Option 25 [Member] | Stock Option 75 [Member] | |||
Periodic Vesting [Member] | Periodic Vesting [Member] | ||||||||||||||
Stock Issued During Period, Shares, New Issues | ' | ' | ' | ' | ' | ' | ' | ' | ' | 3,000,000 | 3,500,000 | ' | ' | ' | ' |
Share-based Compensation Arrangement by Share-based Payment Award, Purchase Price of Common Stock, Percent | ' | ' | ' | ' | ' | ' | ' | ' | 100.00% | ' | ' | ' | ' | ' | ' |
Share-based Compensation Arrangement by Share-based Payment Award, Term of Award | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | '10 years | ' | ' | ' |
Share-Based Compensation Arrangement By Share-Based Payment Award, Options, Vested and Expected To Vest, Outstanding, Weighted Average Remaining Contractual Term | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | '4 years | ' | '3 years |
Share-based Compensation Arrangement by Share-based Payment Award, Annual Vesting Percentage | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 25.00% | ' |
Share-based Compensation Arrangement by Share-based Payment Award, Percent of Awards Vesting After Initial Year | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 75.00% |
Adjustments to Additional Paid in Capital, Share-based Compensation, Stock Options, Requisite Service Period Recognition | $660 | ' | ' | ' | ' | ' | $660 | $254 | ' | ' | ' | ' | ' | ' | ' |
Share-Based Compensation | 1,815 | 893 | 249 | 103 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Share-Based Compensation Arrangement By Share-Based Payment Award, Options, Grants In Period, Gross | ' | ' | 16,000 | 121,000 | 425,000 | 472,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Stock Options Granted Fair Value | ' | ' | $99 | $301 | $3,100 | $961 | ' | ' | ' | ' | ' | ' | ' | ' | ' |
DEBT_Details
DEBT (Details) (USD $) | 9 Months Ended | |
In Thousands, unless otherwise specified | Sep. 30, 2014 | Sep. 30, 2013 |
Debt [Roll Forward] | ' | ' |
Beginning balance | $92,460 | ' |
Issuance | 129,500 | ' |
Debt discount amortization | 420 | 420 |
Debt discount extinguishment | 1,370 | ' |
Payments | -98,750 | ' |
Ending balance | 125,000 | ' |
Senior Term Loan [Member] | ' | ' |
Debt [Roll Forward] | ' | ' |
Beginning balance | 61,750 | ' |
Issuance | 110,000 | ' |
Debt discount amortization | 0 | ' |
Debt discount extinguishment | 0 | ' |
Payments | -61,750 | ' |
Ending balance | 110,000 | ' |
Delayed Draw Term Loan [Member] | ' | ' |
Debt [Roll Forward] | ' | ' |
Beginning balance | 0 | ' |
Issuance | 15,000 | ' |
Debt discount amortization | 0 | ' |
Debt discount extinguishment | 0 | ' |
Payments | 0 | ' |
Ending balance | 15,000 | ' |
Line of Credit [Member] | ' | ' |
Debt [Roll Forward] | ' | ' |
Beginning balance | 3,000 | ' |
Issuance | 3,000 | ' |
Debt discount amortization | 0 | ' |
Debt discount extinguishment | 0 | ' |
Payments | -6,000 | ' |
Ending balance | 0 | ' |
Bia Note [Member] | ' | ' |
Debt [Roll Forward] | ' | ' |
Beginning balance | 27,710 | ' |
Issuance | 1,500 | ' |
Debt discount amortization | 420 | ' |
Debt discount extinguishment | 1,370 | ' |
Payments | -31,000 | ' |
Ending balance | $0 | ' |
DEBT_Details_1
DEBT (Details 1) (USD $) | Sep. 30, 2014 | Dec. 31, 2013 |
In Thousands, unless otherwise specified | ||
Debt Disclosure [Abstract] | ' | ' |
2014 remaining | $1,375 | ' |
2015 | 5,500 | ' |
2016 | 9,291 | ' |
2017 | 9,069 | ' |
2018 and beyond | 99,765 | ' |
Total | $125,000 | $92,460 |
DEBT_Details_Textual
DEBT (Details Textual) (USD $) | 0 Months Ended | 3 Months Ended | 9 Months Ended | ||||
Aug. 06, 2014 | Sep. 30, 2014 | Sep. 30, 2013 | Sep. 30, 2014 | Sep. 30, 2013 | Aug. 06, 2014 | Dec. 31, 2013 | |
Loss on debt extinguishment | ' | $3,104,000 | $0 | $3,104,000 | $706,000 | ' | ' |
Warrant liability | ' | 0 | ' | 0 | ' | 19,200,000 | 12,295,000 |
Class of Warrant or Right, Retired During Period, Number | 1,172,080 | ' | ' | ' | ' | ' | ' |
Class of Warrant or Right, Retired During Period, Percentage Of Outstanding | 50.00% | ' | ' | ' | ' | ' | ' |
Payments for Repurchase of Warrants | 9,600,000 | ' | ' | 9,576,000 | 0 | ' | ' |
Class of Warrant or Right, Exercises During Period, Number | 1,172,080 | ' | ' | ' | ' | ' | ' |
Stock Issued During Period, Shares, Conversion of Convertible Securities | 913,749 | ' | ' | ' | ' | ' | ' |
Amended Credit Agreement, August 2014 [Member] | ' | ' | ' | ' | ' | ' | ' |
Loss on debt extinguishment | 1,400,000 | ' | ' | ' | ' | ' | ' |
Debt Instrument, Interest Rate at Period End | ' | 4.50% | ' | 4.50% | ' | ' | ' |
Amended Credit Agreement, August 2014 [Member] | Bia Note [Member] | ' | ' | ' | ' | ' | ' | ' |
Loss on debt extinguishment | -1,500,000 | ' | ' | ' | ' | ' | ' |
Extinguishment of Debt, Amount | 31,000,000 | ' | ' | ' | ' | ' | ' |
Payments of Debt Extinguishment Costs | 300,000 | ' | ' | ' | ' | ' | ' |
Term Loan [Member] | Amended Credit Agreement, August 2014 [Member] | ' | ' | ' | ' | ' | ' | ' |
Debt Instrument, Face Amount | 110,000,000 | ' | ' | ' | ' | 110,000,000 | ' |
Revolving Credit Facility [Member] | Amended Credit Agreement, August 2014 [Member] | ' | ' | ' | ' | ' | ' | ' |
Line of Credit Facility, Maximum Borrowing Capacity | 15,000,000 | ' | ' | ' | ' | 15,000,000 | ' |
Long-term Debt | ' | 0 | ' | 0 | ' | ' | ' |
Delayed Term Revolver Facility [Member] | Amended Credit Agreement, August 2014 [Member] | ' | ' | ' | ' | ' | ' | ' |
Line of Credit Facility, Maximum Borrowing Capacity | 15,000,000 | ' | ' | ' | ' | 15,000,000 | ' |
Long-term Debt | ' | 15,000,000 | ' | 15,000,000 | ' | ' | ' |
Incremental Revolver [Member] | Amended Credit Agreement, August 2014 [Member] | ' | ' | ' | ' | ' | ' | ' |
Line of Credit Facility, Maximum Borrowing Capacity | $30,000,000 | ' | ' | ' | ' | $30,000,000 | ' |
INCOME_TAXES_Details
INCOME TAXES (Details) (USD $) | 3 Months Ended | 9 Months Ended | ||
In Thousands, unless otherwise specified | Sep. 30, 2014 | Sep. 30, 2013 | Sep. 30, 2014 | Sep. 30, 2013 |
Income Tax Disclosure [Abstract] | ' | ' | ' | ' |
Provision for income taxes | $605 | $416 | $811 | $437 |
LOSS_PER_SHARE_Details
LOSS PER SHARE (Details) (USD $) | 3 Months Ended | 9 Months Ended | ||
In Thousands, except Share data, unless otherwise specified | Sep. 30, 2014 | Sep. 30, 2013 | Sep. 30, 2014 | Sep. 30, 2013 |
Earnings Per Share [Abstract] | ' | ' | ' | ' |
Numerator for basic and diluted EPS b loss available to common stockholders | ($6,636) | ($4,290) | ($15,325) | ($17,096) |
Denominator for basic EPS b weighted average shares | 28,449,319 | 22,932,515 | 25,873,938 | 21,578,315 |
Effect of dilutive securities | 0 | 0 | 0 | 0 |
Denominator for diluted EPS b weighted average shares | 28,449,319 | 22,932,515 | 25,873,938 | 21,578,315 |
Loss per share: basic (in dollars per share) | ($0.23) | ($0.19) | ($0.59) | ($0.79) |
Loss per share: diluted (in dollars per share) | ($0.23) | ($0.19) | ($0.59) | ($0.79) |
LOSS_PER_SHARE_Details_1
LOSS PER SHARE (Details 1) | 3 Months Ended | 9 Months Ended | ||
In Thousands, unless otherwise specified | Sep. 30, 2014 | Sep. 30, 2013 | Sep. 30, 2014 | Sep. 30, 2013 |
Totals | 1,096 | 4,055 | 1,096 | 4,055 |
Stock Options [Member] | ' | ' | ' | ' |
Totals | 1,096 | 1,711 | 1,096 | 1,711 |
Bia Warrant [Member] | ' | ' | ' | ' |
Totals | 0 | 1,055 | 0 | 1,055 |
Plexus Warrant [Member] | ' | ' | ' | ' |
Totals | 0 | 960 | 0 | 960 |
Alecentra Warrants [Member] | ' | ' | ' | ' |
Totals | 0 | 329 | 0 | 329 |
CONTINGENCIESLEGAL_PROCEEDINGS1
CONTINGENCIES-LEGAL PROCEEDINGS (Details) (Artel, LLC [Member], USD $) | 0 Months Ended |
In Millions, unless otherwise specified | Dec. 20, 2013 |
Artel, LLC [Member] | ' |
Loss Contingencies [Line Items] | ' |
Damages Awarded, Value | $3.30 |
SUBSEQUENT_EVENTS_Details
SUBSEQUENT EVENTS (Details) (United Network Services, Inc. [Member], Subsequent Event [Member], USD $) | 0 Months Ended |
Oct. 01, 2014 | |
United Network Services, Inc. [Member] | Subsequent Event [Member] | ' |
Subsequent Event [Line Items] | ' |
Business Combination, Consideration Transferred | $40,000,000 |
Business Acquisition, Equity Interest Issued or Issuable, Number of Shares | 231,539 |
Business Combination, Payment Withheld, Percentage | 10.00% |
Business Combination, Payment Withheld, Period | '1 year |