Consolidated Statements of Income
Year ended December 31, | ||||||||
2010 | 2009 | |||||||
Revenue | $ | 76,128,419 | $ | 67,114,601 | ||||
Direct operating costs | 31,225,855 | 28,454,938 | ||||||
Selling, general and administrative | 26,624,095 | 24,592,162 | ||||||
Stock based compensation | 514,177 | 1,159,751 | ||||||
Provision for bad debt | 191,250 | 311,970 | ||||||
Depreciation and accretion | 7,765,411 | 7,879,165 | ||||||
Restructuring expense | 216,303 | 88,870 | ||||||
Operating income | 9,591,328 | 4,627,745 | ||||||
Net gain on settlements | 37,000 | 9,725,000 | ||||||
Net gain on sale or transfer of assets | 23,401,172 | 23,126 | ||||||
Interest expense | (79,415 | ) | (80,645 | ) | ||||
Interest and dividend income | 1,911,078 | 262,675 | ||||||
Other income | 3,256,065 | 1,075,515 | ||||||
Income before income taxes | 38,117,228 | 15,633,416 | ||||||
Provision for income taxes | 531,760 | 77,240 | ||||||
Net income | $ | 37,585,468 | $ | 15,556,176 | ||||
Earnings per share | ||||||||
Basic | $ | 3.63 | $ | 1.54 | ||||
Diluted | $ | 3.18 | $ | 1.34 |
360networks F-2
Consolidated Statements of Cash Flows
Year ended December 31 | ||||||||
2010 | 2009 | |||||||
Operating activities | ||||||||
Net income for the period | $ | 37,585,468 | $ | 15,556,176 | ||||
Add (deduct) items to reconcile to net cash from operating activities | ||||||||
Stock based compensation | 514,177 | 1,159,751 | ||||||
Provision for bad debts | 145,896 | 285,612 | ||||||
Depreciation and accretion | 7,765,411 | 7,879,165 | ||||||
Net gain on settlements | (37,000 | ) | (9,725,000 | ) | ||||
Net gain on sale of assets | (23,401,172 | ) | (23,126 | ) | ||||
Net gain on extinguishment of liabilities | (4,551,623 | ) | — | |||||
Loss on unsecured creditor settlement | 1,475,691 | — | ||||||
Loss on sale of investments | 21,622 | 3,216 | ||||||
Changes in operating working capital items | 10,803,853 | (5,302,452 | ) | |||||
Cash provided by operating activities | 30,322,323 | 9,833,342 | ||||||
Investing activities | ||||||||
Additions to property and equipment | (23,067,713 | ) | (9,064,413 | ) | ||||
Purchase of investments | (11,044,905 | ) | (8,000,000 | ) | ||||
Proceeds from sale of investments | — | 324,293 | ||||||
Proceeds from sale of assets | 907,746 | 23,126 | ||||||
Change in restricted cash | 109,275 | 193,225 | ||||||
Payments on note receivable | 160,689 | 149,856 | ||||||
Cash used by investing activities | (32,934,908 | ) | (16,373,913 | ) | ||||
Financing activities | ||||||||
Payment on capital leases | (79,358 | ) | (43,658 | ) | ||||
Repurchase of issued and outstanding stock | (492,425 | ) | (330,138 | ) | ||||
Exercise of stock options | 1,786 | 92,970 | ||||||
Cash used by financing activities | (569,997 | ) | (280,826 | ) | ||||
Net change in cash and cash equivalents | (3,182,582 | ) | (6,821,397 | ) | ||||
Cash and cash equivalents-beginning of period | 12,404,949 | 19,226,346 | ||||||
Cash and cash equivalents-end of period | $ | 9,222,367 | $ | 12,404,949 | ||||
360networks F-3
Consolidated Balance Sheets
Year ended December 31, | ||||||||
2010 | 2009 | |||||||
ASSETS | ||||||||
Current assets | ||||||||
Cash and cash equivalents | $ | 9,222,367 | $ | 12,404,949 | ||||
Accounts receivable | 4,142,024 | 14,269,888 | ||||||
Note receivable, current portion | 172,305 | 160,689 | ||||||
Other | 1,860,552 | 1,491,906 | ||||||
15,397,248 | 28,327,432 | |||||||
Restricted cash | 357,500 | 466,775 | ||||||
Investments | 43,533,302 | 8,185,209 | ||||||
Restricted investments | 14,917,186 | — | ||||||
Note receivable | 997,634 | 1,169,939 | ||||||
Property and equipment | 73,855,994 | 61,682,009 | ||||||
Intangible assets | 260,817 | 281,655 | ||||||
Deferred charge | 4,236,037 | — | ||||||
$ | 153,555,718 | $ | 100,113,019 | |||||
LIABILITIES | ||||||||
Current liabilities | ||||||||
Accounts payable | $ | 10,531,507 | $ | 6,210,542 | ||||
Wages payable | 5,177,391 | 3,952,322 | ||||||
Leases payable, current portion | 35,699 | 43,658 | ||||||
Income tax payable | 525,161 | 28,190 | ||||||
Other accrued liabilities | 17,176,009 | 22,251,707 | ||||||
Deferred revenue, current portion | 3,279,361 | 2,935,786 | ||||||
36,725,128 | 35,422,205 | |||||||
Deferred revenue | 35,873,832 | 36,365,739 | ||||||
Other long-term liabilities | 288,951 | 3,657,680 | ||||||
72,887,911 | 75,445,624 | |||||||
STOCKHOLDERS’ EQUITY | ||||||||
Capital stock | 75,709,898 | 75,708,112 | ||||||
Other capital accounts | 45,865,178 | 27,452,020 | ||||||
Retained deficit | (40,907,269 | ) | (78,492,737 | ) | ||||
80,667,807 | 24,667,395 | |||||||
$ | 153,555,718 | $ | 100,113,019 | |||||
360networks F-4
Consolidated Changes in Stockholders’ Equity
Common Shares | Other Capital Accounts | |||||||||||||||||||||||
Accumulated | ||||||||||||||||||||||||
other | ||||||||||||||||||||||||
Number of | Additional paid in | comprehensive | ||||||||||||||||||||||
shares | Amount | Capital | income | Retained Deficit | Total | |||||||||||||||||||
Balance, December 31, 2008 | 10,661,730 | $ | 75,636,404 | $ | 25,144,980 | $ | 1,555,405 | $ | (94,048,913 | ) | $ | 8,287,876 | ||||||||||||
Share options exercised | 39,836 | 92,970 | 92,970 | |||||||||||||||||||||
Repurchase of issued and outstanding common stock | (21,680 | ) | (21,262 | ) | (308,876 | ) | (330,138 | ) | ||||||||||||||||
Issuance of restricted stock | 237,500 | 225,058 | ||||||||||||||||||||||
Amortization of deferred stock based compensation | 407,488 | 1,159,751 | ||||||||||||||||||||||
Other stock based compensation | 527,205 | �� | ||||||||||||||||||||||
Comprehensive income | ||||||||||||||||||||||||
Net income for the 12 months ended December 31, 2009 | 15,556,176 | 15,556,176 | ||||||||||||||||||||||
Other comprehensive income | ||||||||||||||||||||||||
Unrealized loss on available-for-sale equity securities | (167,387 | ) | (167,387 | ) | ||||||||||||||||||||
Foreign currency translation | 68,147 | 68,147 | ||||||||||||||||||||||
Total comprehensive income | 15,556,176 | |||||||||||||||||||||||
Balance, December 31, 2009 | 10,917,386 | 75,708,112 | 25,995,855 | 1,456,165 | (78,492,737 | ) | $ | 24,667,395 | ||||||||||||||||
Share options exercised | 3,207 | 1,786 | 1,786 | |||||||||||||||||||||
Repurchase of vested stock options | — | — | (492,425 | ) | (492,425 | ) | ||||||||||||||||||
Issuance of restricted stock | 104,283 | |||||||||||||||||||||||
Amortization of deferred stock based compensation | 514,177 | 514,177 | ||||||||||||||||||||||
Comprehensive income | ||||||||||||||||||||||||
Net income for the 12 months ended December 31, 2010 | 37,585,468 | 37,585,468 | ||||||||||||||||||||||
Other comprehensive income | ||||||||||||||||||||||||
Reclassification of realized gain on available-for-sale securities | 105,147 | 105,147 | ||||||||||||||||||||||
Unrealized gain on available-for-sale equity securities | 15,525,867 | 15,525,867 | ||||||||||||||||||||||
Foreign currency translation | 2,760,392 | 2,760,392 | ||||||||||||||||||||||
Total comprehensive income | 55,976,874 | |||||||||||||||||||||||
Balance, December 31, 2010 | 11,024,876 | $ | 75,709,898 | $ | 26,017,607 | $ | 19,847,571 | $ | (40,907,269 | ) | $ | 80,667,807 | ||||||||||||
360networks F-5
Notes to Consolidated Financial Statements
360networks F-6
Notes to Consolidated Financial Statements
• | Fiber optic network assets — straight-line basis ranging from 20 to 25 years. |
• | Operating equipment — straight-line basis ranging from 2 to 10 years. |
• | Buildings — straight-line basis ranging from 15 to 20 years. |
• | Leasehold improvements — straight-line basis over the term of the lease. |
360networks F-7
Notes to Consolidated Financial Statements
360networks F-8
Notes to Consolidated Financial Statements
360networks F-9
Notes to Consolidated Financial Statements
• | Settlements applicable to the granting of current price adjustments, concession and/or rebates under the original revenue contract are accounted for as a reduction of revenue. |
• | Assets returned by customers to whom they were originally sold to or constructed for are accounted for as a reduction in revenue and an increase in assets at the lower of cost or fair value at the date the assets are returned. |
• | Cost incurred in situations where the Company is obligated to provide additional product and services for no further consideration are accounted for as operating costs. |
• | Uncollectable customer receivables when a customer has entered creditor protection or similar financial restructuring proceedings are accounted for as a bad debt expense. |
360networks F-10
Notes to Consolidated Financial Statements
360networks F-11
Notes to Consolidated Financial Statements
2010 | 2009 | |||||||
Foreign currency translation adjustment | 4,321,704 | 1,561,312 | ||||||
Unrealized gains (losses) from available for sale securities | 15,525,867 | (105,147 | ) | |||||
19,847,571 | 1,456,165 | |||||||
360networks F-12
Notes to Consolidated Financial Statements
Year ended December 31, | ||||||||
2010 | 2009 | |||||||
Balance beginning of period | $ | 3,284,706 | $ | 3,977,012 | ||||
Accrual for total anticipated restructuring expenses | 216,304 | 88,870 | ||||||
Less payments and settlements completed in the year | (670,951 | ) | (781,176 | ) | ||||
Balance end of period | $ | 2,830,059 | $ | 3,284,706 | ||||
360networks F-13
Notes to Consolidated Financial Statements
Year ended December 31, | ||||||||
2010 | 2009 | |||||||
Balance beginning of period | $ | 3,594,196 | $ | 3,191,400 | ||||
Changes due to: | ||||||||
Accretion and other adjustments | (3,333,029 | ) | 402,796 | |||||
Balance end of period | $ | 261,167 | $ | 3,594,196 | ||||
360networks F-14
Notes to Consolidated Financial Statements
Year ended December 31, | ||||||||
2010 | 2009 | |||||||
Revenue | ||||||||
Network and communication services | $ | 62,160,754 | $ | 53,655,717 | ||||
Infrastructure | 13,967,665 | 13,458,884 | ||||||
$ | 76,128,419 | $ | 67,114,601 | |||||
Operating costs | ||||||||
(excluding depreciation) | ||||||||
Network services | $ | 31,136,128 | $ | 28,351,172 | ||||
Infrastructure | 89,727 | 103,766 | ||||||
$ | 31,225,855 | $ | 28,454,938 | |||||
Depreciation, accretion and restructuring expense | ||||||||
Depreciation and accretion | $ | 7,765,411 | $ | 7,879,165 | ||||
Restructuring expense | 249,607 | 377,345 | ||||||
$ | 8,015,018 | $ | 8,256,510 | |||||
Net gain on settlements | ||||||||
Proceeds | ||||||||
Receivables settlements award | $ | 37,000 | $ | 11,750,000 | ||||
Disposals | ||||||||
Accrued liabilities incurred | — | (25,000 | ) | |||||
Property, plant, and equipment | — | (2,000,000 | ) | |||||
$ | 37,000 | $ | 9,725,000 | |||||
Net gain (loss) on sale of assets | ||||||||
Proceeds (a) | $ | 23,646,230 | $ | 23,126 | ||||
Carrying value | (245,058 | ) | — | |||||
$ | 23,401,172 | $ | 23,126 | |||||
Other income (expense) | ||||||||
Accrual releases (b) | $ | 4,551,623 | $ | 1,016,988 | ||||
Realized gains | — | 15,393 | ||||||
Other (c) | (1,295,558 | ) | 43,134 | |||||
$ | 3,256,065 | $ | 1,075,515 | |||||
360networks F-15
Notes to Consolidated Financial Statements
360networks F-16
Notes to Consolidated Financial Statements
Year ended December 31, | ||||||||
2010 | 2009 | |||||||
Basic earnings per share | ||||||||
Net income for the period | $ | 37,585,468 | $ | 15,556,176 | ||||
Weighted average number of common shares | 10,351,336 | 10,124,030 | ||||||
Basic earnings per common share | $ | 3.63 | $ | 1.54 | ||||
Diluted earnings per share | ||||||||
Net income for the period | $ | 37,585,468 | $ | 15,556,176 | ||||
Weighted average number of common shares | 11,817,099 | 11,649,104 | ||||||
Diluted earnings per common share | $ | 3.18 | $ | 1.34 | ||||
360networks F-17
Notes to Consolidated Financial Statements
Year ended December 31, | ||||||||
2010 | 2009 | |||||||
Changes in operating working capital items | ||||||||
Accounts receivable | $ | 10,048,120 | $ | (2,017,932 | ) | |||
Prepaid expenses and other assets | (368,646 | ) | (243,845 | ) | ||||
Accounts payable and other accrued liabilities | 775,742 | (2,303,446 | ) | |||||
Income taxes payable | 496,970 | 160,085 | ||||||
Deferred revenue | (148,333 | ) | (897,314 | ) | ||||
$ | 10,803,853 | $ | (5,302,452 | ) | ||||
Cash paid for income taxes | $ | 552,712 | $ | 48,112 | ||||
Cash paid for interest | 79,415 | 80,645 | ||||||
Noncash investing activities | ||||||||
Changes in unrealized gain (loss) on securities available for sale | $ | 15,631,015 | $ | (167,387 | ) | |||
Change in unrealized foreign currency translation | 2,760,392 | 68,147 | ||||||
Reduction in fixed assets due to changes in ARO assumptions | (1,863,746 | ) | — | |||||
Reconciliation of activities from Trilogy stock exchange: | ||||||||
Value of shares received | 32,703,742 | — | ||||||
Valuation allowance | (7,587,963 | ) | — | |||||
Closing costs | (2,622,352 | ) | — | |||||
Proceeds from sale of fiber | 1,200,000 | — | ||||||
Net book value of fiber | (243,351 | ) | — | |||||
Net gain | 23,450,076 | — |
360networks F-18
Notes to Consolidated Financial Statements
December 31, | December 31, | |||||||
2010 | 2009 | |||||||
Accounts receivable | ||||||||
Trade | $ | 4,937,056 | $ | 3,982,403 | ||||
Other | 847,111 | 11,726,380 | ||||||
Allowance for doubtful accounts | (1,642,143 | ) | (1,438,895 | ) | ||||
$ | 4,142,024 | $ | 14,269,888 | |||||
Restricted cash | ||||||||
Deposits | $ | 357,500 | $ | 466,775 | ||||
$ | 357,500 | $ | 466,775 | |||||
Note receivable | ||||||||
Note receivable (a) | $ | 1,169,939 | $ | 1,330,628 | ||||
Less current portion | (172,305 | ) | (160,689 | ) | ||||
$ | 997,634 | $ | 1,169,939 | |||||
Investments | ||||||||
Securities available for sale (b) | $ | 43,533,302 | $ | 8,185,209 | ||||
Securities Available for sale-restricted (b) | 14,917,186 | — | ||||||
$ | 58,450,488 | $ | 8,185,209 | |||||
Property and equipment | ||||||||
Fiber optic network assets (c) | ||||||||
Assets in service | $ | 77,756,487 | $ | 58,716,223 | ||||
Assets under lease to customers (d) | 14,903,027 | 14,903,027 | ||||||
Assets not in service (e) | — | 409,603 | ||||||
Land building and leasehold improvements | 7,147,656 | 6,057,488 | ||||||
Equipment | 8,840,663 | 10,282,345 | ||||||
Network assets under construction | 7,840,134 | 5,107,023 | ||||||
116,487,967 | 95,475,709 | |||||||
Less: accumulated depreciation (f) | (42,631,973 | ) | (33,793,700 | ) | ||||
Property and equipment — net | $ | 73,855,994 | $ | 61,682,009 | ||||
Intangible assets | ||||||||
Trademark | $ | 11,754 | $ | 13,433 | ||||
As-built drawing | 249,063 | 268,222 | ||||||
$ | 260,817 | $ | 281,655 | |||||
Deferred charge | ||||||||
Deferred charge-net (g) | $ | 4,236,037 | $ | — | ||||
$ | 4,236,037 | $ | — | |||||
360networks F-19
Notes to Consolidated Financial Statements
December 31, | December 31, | |||||||
2010 | 2009 | |||||||
Accounts payable | ||||||||
Accounts payable | ||||||||
Trade | $ | 7,041,327 | $ | 3,399,988 | ||||
Other | 3,490,180 | 2,810,554 | ||||||
$ | 10,531,507 | $ | 6,210,542 | |||||
Other accrued liabilities | ||||||||
Property and capital taxes | $ | 697,325 | $ | 1,562,801 | ||||
Restructuring | 2,830,059 | 3,284,706 | ||||||
Pre-petition (h) | 173,376 | 1,588,731 | ||||||
Rights of way and other (i) | 13,475,249 | 15,815,469 | ||||||
$ | 17,176,009 | $ | 22,251,707 | |||||
Deferred revenue | ||||||||
Deferred revenue (j) | $ | 39,153,193 | $ | 39,301,525 | ||||
Less current portion | (3,279,361 | ) | (2,935,786 | ) | ||||
$ | 35,873,832 | $ | 36,365,739 | |||||
Other long-term liabilities | ||||||||
Long term lease obligation | $ | 27,785 | $ | 63,484 | ||||
Asset retirement obligations | 261,166 | 3,594,196 | ||||||
$ | 288,951 | $ | 3,657,680 | |||||
(a) | On September 7, 2006 the Company entered into a 20 year IRU agreement and related note receivable to lease four fibers from Seattle, Washington to Klamath Falls, Oregon and 6 fibers from Merrill, Oregon to Klamath Falls, Oregon. The IRU fee was $1,785,000 and the term of the IRU ends May 31, 2026. The IRU fee is payable in 120 consecutive months over 10 years with an annual interest rate of 7%. | |
(b) | Investment in securities available for sale includes the fair value of the Trilogy stock retained by the Company pursuant to the February 5, 2010, transaction discussed in Note 5 (a). Investment in securities available for sale — restricted, represents the value of the Trilogy stock held in escrow pursuant to the provisions of the arrangement agreement. | |
(c) | Certain of the Company’s network assets leased from third parties are capitalized and included in fiber optic network assets. The carrying amount of such assets at December 31, 2010, is $1,269,962, net of accumulated depreciation of $637,195 (December 31, 2009 - $1,365,320, net of accumulated depreciation of $541,837). | |
(d) | Certain of the Company’s network assets are leased to other parties under operating leases. At December 31, 2010, the carrying amount of such assets included in fiber optic network assets is $9,244,855, net of accumulated depreciation of $5,546,527 (December 31, 2009 — $10,116,654, net of accumulated depreciation of $4,786,373). |
360networks F-20
Notes to Consolidated Financial Statements
(e) | Fiber optic network assets not in service represent network assets that the Company owns or holds under capital leases that are not currently utilized in providing network services. These assets are classified as held for sale and not depreciated at the same rates as assets in service. | |
(f) | Depreciation expense for the year ended December 31, 2010, was $9,050,821 (for the year ended December 2009 — $7,099,024). | |
(g) | The deferred charge represents the increase in the fair market value of the restricted Trilogy stock that was not recognized in the statement of operations when the Trilogy transaction was finalized during 2010. | |
(h) | Pre-petition liabilities are comprised of accrued expenses and settlements that occurred prior to bankruptcy that were not dismissed by the court. | |
(i) | The Company has elected to defer nonoperating income recognition on a portion of the preference recoveries due to litigation uncertainty regarding the final settlement amount. See Note 15. | |
(j) | The deferred revenue will be recognized in varying amounts between one and twenty years and is based on the contractual terms of each agreement. |
360networks F-21
Notes to Consolidated Financial Statements
Year ended December 31, | ||||||||
2010 | 2009 | |||||||
United States | $ | 16,238,895 | $ | 7,500,714 | ||||
Canada | 21,878,333 | 8,132,702 | ||||||
$ | 38,117,228 | $ | 15,633,416 | |||||
Year ended December 31, | ||||||||
2010 | 2009 | |||||||
United States | $ | 40,618 | $ | 77,240 | ||||
Canada | 491,142 | — | ||||||
$ | 531,760 | $ | 77,240 | |||||
Year ended December 31, | ||||||||
2010 | 2009 | |||||||
United States | $ | — | $ | — | ||||
Canada | — | — | ||||||
$ | — | $ | — | |||||
360networks F-22
Notes to Consolidated Financial Statements
Year ended December 31, | ||||||||
2010 | 2009 | |||||||
Current | ||||||||
Deferred tax assets | ||||||||
Expenses not deducted for tax in current year | $ | 1,250,924 | $ | 1,332,540 | ||||
Capital loss carryforward | 3,205,313 | |||||||
Valuation allowance | (1,250,924 | ) | (1,332,540 | ) | ||||
3,205,313 | — | |||||||
Deferred tax liabilities | ||||||||
Investment basis difference | (3,205,313 | ) | (1,332,540 | ) | ||||
Total current | $ | — | $ | — | ||||
Long-term | ||||||||
Deferred tax assets | ||||||||
Tax loss carry forwards | 185,527,606 | 182,577,159 | ||||||
Property and equipment | 94,535,613 | 271,899,229 | ||||||
Capital loss carry forwards | 21,083,253 | 4,829,412 | ||||||
Deferred revenue | 15,598,463 | 36,284,123 | ||||||
Suspended capital losses | 72,879,576 | 113,085,044 | ||||||
Investments and other | 241,869 | 475,632 | ||||||
Valuation allowance | (356,517,685 | ) | (609,150,599 | ) | ||||
33,348,695 | — | |||||||
Deferred tax liabilities | — | |||||||
Intercompany debt basis | (33,348,695 | ) | — | |||||
Total long-term | $ | — | $ | — | ||||
360networks F-23
Notes to Consolidated Financial Statements
Year ended December 31, | 2011 | 2012 | 2013 | 2014 | 2015 | Thereafter | ||||||||||||||||||
Canada | $ | — | $ | — | $ | — | $ | 2,818,253 | $ | — | $ | 7,288,854 | ||||||||||||
United States | $ | — | $ | — | $ | — | $ | — | $ | — | $ | 456,617,700 |
360networks F-24
Notes to Consolidated Financial Statements
Issued and | ||||||||||||
Common Shares | outstanding | Reserved | Total | |||||||||
Balance December 31, 2008 | 10,296,185 | 365,545 | 10,661,730 | |||||||||
Shares repurchased | (21,680 | ) | — | (21,680 | ) | |||||||
Restricted shares issued to certain employees | 237,500 | — | 237,500 | |||||||||
Shares issued upon exercise of stock options | 39,836 | — | 39,836 | |||||||||
Balance December 31, 2009 | 10,551,841 | 365,545 | 10,917,386 | |||||||||
Restricted shares issued to certain employees | 104,283 | 104,283 | ||||||||||
Shares issued upon exercise of stock options | 3,207 | 3,207 | ||||||||||
Balance December 31, 2010 | 10,659,331 | 365,545 | 11,024,876 | |||||||||
360networks F-25
Notes to Consolidated Financial Statements
360networks F-26
Notes to Consolidated Financial Statements
Weighted | ||||||||||||||||||||||||
average | ||||||||||||||||||||||||
Weighted | Weighted | minimum | Weighed | |||||||||||||||||||||
Number of | average | average | value of | Number of | average | |||||||||||||||||||
options | remaining | exercise | options | options | exercise | |||||||||||||||||||
outstanding | option life | price | granted | exercisable | price | |||||||||||||||||||
Balance December 31, 2008 | 2,324,546 | 7.2 | $ | 4.18 | $ | 0.92 | 1,623,718 | $ | 3.12 | |||||||||||||||
Option granted | — | $ | 0.00 | |||||||||||||||||||||
Options forfeited | (17,500 | ) | $ | 7.36 | ||||||||||||||||||||
Options purchased | (37,885 | ) | $ | 3.84 | ||||||||||||||||||||
Options exercised | (39,836 | ) | $ | 2.33 | �� | |||||||||||||||||||
Balance December 31, 2009 | 2,229,325 | 6.2 | $ | 4.19 | $ | 0.88 | 1,884,701 | $ | 3.64 | |||||||||||||||
Option granted | — | $ | 0.00 | |||||||||||||||||||||
Options forfeited | (3,625 | ) | $ | 3.02 | ||||||||||||||||||||
Options purchased | (84,547 | ) | $ | 5.82 | ||||||||||||||||||||
Options exercised | (3,207 | ) | $ | 0.56 | ||||||||||||||||||||
Balance December 31, 2010 | 2,137,944 | 5.2 | $ | 4.22 | $ | 0.86 | 2,014,345 | $ | 3.99 |
Options Outstanding | Exercisable Options | |||||||||||||||||||||||
Weighted- | Weighted- | |||||||||||||||||||||||
Number | Average | Weighted- | Number | Average | Weighted- | |||||||||||||||||||
Outstanding | Remaining | Average | Exercisable | Remaining | Average | |||||||||||||||||||
at End of | Contractual | Exercise | at End of | Contractual | Exercise | |||||||||||||||||||
Year | Life | Price | Year | Life | Price | |||||||||||||||||||
Option exercise price | ||||||||||||||||||||||||
$1.04 | 479,810 | 3.5 | $ | 1.04 | 479,810 | 3.5 | $ | 1.04 | ||||||||||||||||
$3.00 | 513,009 | 4.5 | $ | 3.00 | 513,759 | 4.5 | $ | 3.00 | ||||||||||||||||
$3.75 | 472,150 | 5.5 | $ | 3.75 | 472,150 | 5.5 | $ | 3.75 | ||||||||||||||||
$7.50 | 449,475 | 6.5 | $ | 7.50 | 399,564 | 6.5 | $ | 7.50 | ||||||||||||||||
$8.20 | 223,500 | 7.5 | $ | 8.20 | 149,063 | 7.5 | $ | 8.20 | ||||||||||||||||
Outstanding at end of year | 2,137,944 | 5.2 | $ | 4.22 | 2,014,346 | 5.1 | $ | 3.99 | ||||||||||||||||
360networks F-27
Notes to Consolidated Financial Statements
Exercise | Contractual | |||||||||||
Price | Term (Yrs) | Intrinsic Value (1) | ||||||||||
Weighted average options outstanding at December 31, 2010 | $ | 4.22 | 5.23 | $ | 11,298,114 | |||||||
Weighted average options exercisable at December 31, 2010 | 3.99 | 5.11 | 11,106,399 | |||||||||
Options exercised in 2010 | (3,207 | ) | ||||||||||
Options exercised in 2009 | (39,836 | ) |
(1) | Market value of options assuming they were vested and exercised as of December 31, 2010. |
Weighted-Average | ||||||||
Shares | Grant-Date Fair Value | |||||||
Unvested at December 31, 2008 | 701,028 | 1.51 | ||||||
Vested | (337,932 | ) | 1.38 | |||||
Forfeited | (17,500 | ) | 1.71 | |||||
Unvested at December 31, 2009 | 345,596 | $ | 1.38 | |||||
Vested | (217,623 | ) | 1.69 | |||||
Forfeited | (3,625 | ) | 0.33 | |||||
Unvested at December 31, 2010 | 124,348 | $ | 1.69 | |||||
Remaining | ||||||||||||
Number of shares | Shares subject to | vesting | ||||||||||
Shares issued subject to vesting | outstanding | vesting | period | |||||||||
Balance December 31, 2008 | 120,250 | 115,875 | 3.4 | |||||||||
Shares issued during the year | 237,500 | 237,500 | ||||||||||
Shares vested during the year | (30,063 | ) | ||||||||||
Balance December 31, 2009 | 357,250 | 322,813 | 3.1 | |||||||||
Shares issued during the year | 104,283 | 104,283 | ||||||||||
Shares vested during the year | (115,946 | ) | ||||||||||
Balance December 31, 20010 | 461,533 | 311,150 | 2.6 |
360networks F-28
Notes to Consolidated Financial Statements
Year ended December 31, | 2011 | 2012 | 2013 | 2014 | Total | |||||||||||||||
Stock based compensation expense | $ | 1,742,846 | $ | 775,539 | $ | 238,542 | $ | 36,620 | $ | 2,973,547 |
360networks F-29
Notes to Consolidated Financial Statements
December 31, 2010 | ||||||||||||
Fair Market | Unrealized Gain | |||||||||||
Investment Summary | Cost | Value | (Loss) | |||||||||
Corporate bonds | $ | 15,305,306 | $ | 15,305,306 | $ | — | ||||||
Government securities | 4,008,333 | 4,008,333 | — | |||||||||
Trilogy stock | 32,703,742 | 46,724,812 | 14,021,070 | |||||||||
Trilogy stock valuation allowance | (7,587,963 | ) | (7,587,963 | ) | — | |||||||
$ | 44,429,418 | $ | 58,450,488 | $ | 14,021,070 | |||||||
December 31, 2009 | ||||||||||||
Corporate bonds | $ | 236,449 | $ | 152,924 | $ | (83,525 | ) | |||||
Government securities | 8,032,285 | 8,032,285 | — | |||||||||
Stocks | 21,622 | — | (21,622 | ) | ||||||||
$ | 8,290,356 | $ | 8,185,209 | $ | (105,147 | ) | ||||||
2010 | 2009 | |||||||
Unrealized holding gains (loss) | $ | 14,021,070 | $ | (105,147 | ) |
2010 | 2009 | |||||||
Available for sale securities | ||||||||
Realized losses | $ | (8,822 | ) | $ | — | |||
Interest earned | 303,971 | 63,008 | ||||||
Dividends earned | 1,473,572 | — | ||||||
$ | 1,768,721 | $ | 63,008 | |||||
360networks F-30
Notes to Consolidated Financial Statements
Level 1 Quoted prices in active markets for identical assets or liabilities |
Level 2 Observable inputs other than Level 1 prices, such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities |
Level 3 Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities |
December 31, 2010 | December 31, 2009 | |||||||||||||||
Carrying value | Fair Value | Carrying value | Fair Value | |||||||||||||
Available for sale securities | $ | 58,450,488 | $ | 58,450,488 | $ | 8,185,209 | $ | 8,185,209 |
360networks F-31
Notes to Consolidated Financial Statements
Year ended December 31 | 2011 | 2012 | 2013 | 2014 | 2015 | |||||||||||||||
Future minimum payments | ||||||||||||||||||||
Lease and rights-of-way | $ | 6,887,888 | $ | 6,547,835 | $ | 5,936,449 | $ | 5,558,535 | $ | 5,059,815 | ||||||||||
Other | 2,985,379 | 3,000,556 | 3,036,706 | 3,073,854 | 3,112,030 |
360networks F-32
Notes to Consolidated Financial Statements
360networks F-33