Document And Entity Information
Document And Entity Information - shares | 9 Months Ended | |
Sep. 30, 2015 | Nov. 03, 2015 | |
Document And Entity Information [Abstract] | ||
Entity Registrant Name | NUMEREX CORP /PA/ | |
Entity Central Index Key | 870,753 | |
Trading Symbol | nmrx | |
Current Fiscal Year End Date | --12-31 | |
Entity Filer Category | Accelerated Filer | |
Entity Common Stock, Shares Outstanding | 19,254,706 | |
Document Type | 10-Q | |
Document Period End Date | Sep. 30, 2015 | |
Amendment Flag | false | |
Document Fiscal Year Focus | 2,015 | |
Document Fiscal Period Focus | Q3 |
UNAUDITED CONDENSED CONSOLIDATE
UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands | Sep. 30, 2015 | Dec. 31, 2014 |
CURRENT ASSETS | ||
Cash and cash equivalents | $ 12,482 | $ 17,270 |
Accounts receivable, less allowance for doubtful accounts of $2,052 and $1,106 | 14,092 | 12,287 |
Financing receivables, current | 1,789 | 1,595 |
Inventory, net of reserves | 7,974 | 8,410 |
Prepaid expenses and other current assets | 2,054 | 2,329 |
Deferred tax assets, current | 3,161 | |
TOTAL CURRENT ASSETS | 38,391 | 45,052 |
Financing receivables, less current portion | 2,687 | 2,984 |
Property and equipment, net of accumulated depreciation and amortization | 4,492 | 4,889 |
Software, net of accumulated amortization | 6,958 | 6,106 |
Other intangible assets, net of accumulated amortization | 17,512 | 19,163 |
Goodwill | 43,424 | 44,348 |
Deferred tax assets, less current portion | 5,816 | |
Other assets | 1,107 | 2,585 |
TOTAL ASSETS | 114,571 | 130,943 |
CURRENT LIABILITIES | ||
Accounts payable | 12,011 | 12,257 |
Accrued expenses and other current liabilities | 3,062 | 2,471 |
Deferred revenues | 2,026 | 2,258 |
Current portion of long-term debt | 3,750 | 4,251 |
Obligations under capital lease | 148 | |
TOTAL CURRENT LIABILITIES | 20,849 | 21,385 |
Long-term debt, less current portion | 16,537 | 19,350 |
Noncurrent deferred taxes | 1,170 | |
Other liabilities | 1,759 | 1,346 |
TOTAL LIABILITIES | $ 40,315 | $ 42,081 |
COMMITMENTS AND CONTINGENCIES | ||
SHAREHOLDERS' EQUITY | ||
Preferred stock, no par value; 3,000 authorized; none issued | ||
Additional paid-in capital | $ 101,319 | $ 99,056 |
Treasury stock, at cost; 1,307 and 1,292 shares | (5,444) | (5,352) |
Accumulated other comprehensive loss | (95) | (48) |
Accumulated deficit | (21,524) | (4,794) |
TOTAL SHAREHOLDERS' EQUITY | 74,256 | 88,862 |
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY | $ 114,571 | $ 130,943 |
Class A Common Stock | ||
SHAREHOLDERS' EQUITY | ||
Common stock value | ||
Class B Common Stock | ||
SHAREHOLDERS' EQUITY | ||
Common stock value |
UNAUDITED CONDENSED CONSOLIDAT3
UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS (Parentheticals) - USD ($) shares in Thousands, $ / shares in Thousands, $ in Thousands | Sep. 30, 2015 | Dec. 31, 2014 |
Accounts receivable, allowance for doubtful accounts (in dollars) | $ 2,052 | $ 1,106 |
Preferred stock, no par value (in dollars per share) | $ 0 | $ 0 |
Preferred stock, shares authorized | 3,000 | 3,000 |
Preferred stock, shares issued | 0 | 0 |
Treasury stock, at cost, shares | 1,307 | 1,292 |
Class A Common Stock | ||
Common stock, no par value (in dollars per share) | $ 0 | $ 0 |
Common stock, shares authorized | 30,000 | 30,000 |
Common stock, shares issued | 20,532 | 20,284 |
Common stock, shares outstanding | 19,225 | 18,992 |
Class B Common Stock | ||
Common stock, no par value (in dollars per share) | $ 0 | $ 0 |
Common stock, shares authorized | 5,000 | 5,000 |
Common stock, shares issued | 0 | 0 |
UNAUDITED CONDENSED CONSOLIDAT4
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE (LOSS) INCOME - USD ($) shares in Thousands, $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2015 | Sep. 30, 2014 | Sep. 30, 2015 | Sep. 30, 2014 | |
Net revenues: | ||||
Subscription and support revenues | $ 15,624 | $ 17,429 | $ 48,874 | $ 47,530 |
Embedded devices and hardware | 7,710 | 8,234 | 21,791 | 21,483 |
Total net revenues | 23,334 | 25,663 | 70,665 | 69,013 |
Cost of sales, exclusive of a portion of depreciation and amortization shown below: | ||||
Subscription and support revenues | 6,538 | 7,011 | 19,728 | 18,647 |
Embedded devices and hardware | 6,958 | 7,236 | 19,582 | 18,102 |
Inventory reserves | 1,277 | 129 | 1,547 | 415 |
Impairment of other asset | 1,275 | 1,275 | ||
Gross profit | 7,286 | 11,287 | 28,533 | 31,849 |
Operating expenses: | ||||
Sales and marketing | 3,047 | 3,029 | 9,136 | 9,066 |
General and administrative | 4,507 | 3,429 | 12,108 | 11,207 |
Engineering and development | 2,201 | 2,430 | 6,695 | 5,794 |
Depreciation and amortization | 2,100 | 1,597 | 5,411 | 4,570 |
Impairment of goodwill and other intangible assets | 1,250 | 1,250 | ||
Operating (loss) income | (5,819) | 802 | (6,067) | 1,212 |
Interest expense | 188 | 278 | 604 | 564 |
Other income, net | (31) | (97) | (100) | (1,272) |
(Loss) income from continuing operations before income taxes | (5,976) | 621 | (6,571) | 1,920 |
Income tax expense | 10,404 | 358 | 10,159 | 283 |
(Loss) income from continuing operations, net of income taxes | (16,380) | 263 | (16,730) | 1,637 |
Loss from discontinued operations, net of income taxes | (492) | |||
Net (loss) income | (16,380) | 263 | (16,730) | 1,145 |
Other items of comprehensive income, net of income taxes: | ||||
Foreign currency translation adjustment | 30 | (13) | 47 | (10) |
Comprehensive (loss) income | $ (16,350) | $ 250 | $ (16,683) | $ 1,135 |
Basic (loss) earnings per share: | ||||
(Loss) income from continuing operations (in dollars per share) | $ (0.86) | $ 0.01 | $ (0.88) | $ 0.09 |
Loss from discontinued operations (in dollars per share) | (0.03) | |||
Net (loss) income (in dollars per share) | (0.86) | 0.01 | (0.88) | 0.06 |
Diluted (loss) earnings per share: | ||||
(Loss) income from continuing operations (in dollars per share) | (0.86) | 0.01 | (0.88) | 0.09 |
Loss from discontinued operations (in dollars per share) | (0.03) | |||
Net (loss) income (in dollars per share) | $ (0.86) | $ 0.01 | $ (0.88) | $ 0.06 |
Weighted average shares outstanding used in computing earnings per share: | ||||
Basic (in shares) | 19,137 | 18,956 | 19,053 | 18,900 |
Diluted (in shares) | 19,137 | 19,263 | 19,053 | 19,253 |
UNAUDITED CONDENSED CONSOLIDAT5
UNAUDITED CONDENSED CONSOLIDATED STATEMENT OF SHAREHOLDERS' EQUITY - 9 months ended Sep. 30, 2015 - USD ($) shares in Thousands, $ in Thousands | Common Shares | Additional Paid-in Capital | Treasury Stock | Accumulated Other Comprehensive Loss | Accumulated Deficit | Total |
Balance at Dec. 31, 2014 | $ 99,056 | $ (5,352) | $ (48) | $ (4,794) | $ 88,862 | |
Balance (in shares) at Dec. 31, 2014 | 20,284 | |||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||
Equity-based compensation expense | 2,319 | 2,319 | ||||
Equity-based compensation expense (in shares) | 133 | |||||
Equity-based compensation plan activity | 138 | 138 | ||||
Equity-based compensation plan activity (in shares) | 114 | |||||
Value of shares retained to pay employee taxes | (199) | (92) | (291) | |||
Translation adjustment | (47) | (47) | ||||
Other | 5 | 5 | ||||
Other (in shares) | 1 | |||||
Net loss | (16,730) | (16,730) | ||||
Balance at Sep. 30, 2015 | $ 101,319 | $ (5,444) | $ (95) | $ (21,524) | $ 74,256 | |
Balance (in shares) at Sep. 30, 2015 | 20,532 |
UNAUDITED CONDENSED CONSOLIDAT6
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Thousands | 9 Months Ended | |
Sep. 30, 2015 | Sep. 30, 2014 | |
Cash flows from operating activities: | ||
Net (loss) income | $ (16,730) | $ 1,145 |
Less loss from discontinued operations, net of income taxes | (492) | |
(Loss) income from continuing operations, net of income taxes | (16,730) | 1,637 |
Adjustments to reconcile net (loss) income from continuing operations to net cash provided by operating activities: | ||
Depreciation and amortization | 6,163 | 4,969 |
Impairment of goodwill, other intangible assets and other assets | 2,525 | |
Equity-based compensation expense | 2,319 | 1,833 |
Deferred income taxes | 10,147 | 36 |
Bad debt expense | 400 | 364 |
Inventory reserves | 1,547 | 415 |
Gain on sale of cost method investment | (1,109) | |
Other non-cash expense | 63 | 76 |
Changes in assets and liabilities, net of effects of acquisitions: | ||
Accounts and financing receivables | (1,898) | (1,638) |
Inventory, net | (861) | 613 |
Accounts payable | (31) | 208 |
Deferred revenue | 231 | (77) |
Other | 249 | (275) |
Net cash provided by operating activities | 4,124 | 7,052 |
Cash flows from investing activities: | ||
Net cash paid for acquisition | (37,113) | |
Purchases of property and equipment | (1,984) | (1,335) |
Capitalized software development and purchases of software | (3,314) | (2,709) |
Proceeds from sale of cost basis investment | 1,309 | |
Net cash used in investing activities | (5,298) | (39,848) |
Cash flows from financing activities: | ||
Principal payments on debt | (3,313) | (1,725) |
Principal payments on capital lease obligations | (148) | (221) |
Proceeds from long-term debt | 25,000 | |
Equity-based compensation plan activity | 138 | 935 |
Payment of taxes on equity-based awards | (291) | (288) |
Deferred financing costs | (293) | |
Net cash (used in) provided by financing activities | (3,614) | 23,408 |
Cash flows from discontinued operations: | ||
Cash provided by operating activities | 142 | |
Net decrease in cash and cash equivalents | (4,788) | (9,246) |
Cash and cash equivalents at beginning of period | 17,270 | 25,603 |
Cash and cash equivalents at end of period | 12,482 | 16,357 |
Supplemental disclosures of cash flow information: | ||
Cash paid for interest | 513 | 488 |
Cash paid for income taxes | 70 | 83 |
Disclosure of non-cash investing and financing activities: | ||
Capital expenditures in accounts payable | $ 203 | 386 |
Note issued in conjunction with disposal of discontinued operations | $ 35 |
NATURE OF OPERATIONS AND BASIS
NATURE OF OPERATIONS AND BASIS OF PRESENTATION | 9 Months Ended |
Sep. 30, 2015 | |
Nature Of Operations And Basis Of Presentation [Abstract] | |
NATURE OF OPERATIONS AND BASIS OF PRESENTATION | NOTE A – NATURE OF OPERATIONS AND BASIS OF PRESENTATION Numerex Corp. (NASDAQ: NMRX) is a leading provider of managed machine-to-machine (M2M) enterprise solutions enabling the Internet of Things (IoT). The Company provides its technology and services through its integrated M2M horizontal platforms, which are generally sold on a subscription basis. The Company offers Numerex DNA® that may include hardware and smart Devices, cellular and satellite Network services, and software applications that are delivered through our M2M platform. The Company also provides business services to enable the development of efficient, reliable, and secure solutions while accelerating deployment. Numerex is ISO 27001 information security-certified, highlighting the Company’s focus on M2M data security, service reliability and around-the-clock support of its customers’ M2M solutions. We prepared the accompanying unaudited condensed consolidated financial statements in accordance with accounting principles generally accepted in the United States of America, referred to as GAAP, for interim financial information and the Rules and Regulations issued by the Securities Exchange Commission, or SEC, as applicable. These financial statements include all of our accounts and those of our wholly-owned subsidiaries. We have eliminated intercompany transactions and balances in consolidation. Certain information and note disclosures normally included in annual financial statements prepared in accordance with GAAP have been condensed or omitted, although we believe that the disclosures made are adequate to make the information not misleading. In the opinion of management, the accompanying financial statements reflect all adjustments, which consist of normal recurring adjustments unless otherwise disclosed, considered necessary for a fair presentation of our financial position as of September 30, 2015 and our operating results and cash flows for the interim periods presented. The accompanying condensed consolidated balance sheet as of December 31, 2014 was derived from our audited financial statements, but does not include all disclosures required by GAAP. The financial information presented herein should be read in conjunction with our Annual Report on Form 10-K for the year ended December 31, 2014 which includes information and disclosures not included in this quarterly report. The preparation of financial statements requires us to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses and related disclosure of contingent assets and liabilities. Actual results may differ materially from these estimates. Operating results for the three and nine months ended September 30, 2015, may not be indicative of the results that may be expected for the year ending December 31, 2015 or any future periods. |
MERGER
MERGER | 9 Months Ended |
Sep. 30, 2015 | |
Acquisition [Abstract] | |
MERGER | NOTE B – MERGER On May 5, 2014, in accordance with the terms and conditions of the merger agreement, we merged our wholly-owned subsidiary with and into Omnilink Systems Inc. (Omnilink) with Omnilink surviving the merger as a wholly-owned subsidiary of Numerex. The purchase price of $37.5 million was composed of a cash payment of $37.3 million and a working capital adjustment of $0.2 million. Omnilink provides tracking and monitoring services for people and valuable assets via Omnilink’s M2M platform that connects hardware, networks, software, and support services. Our combination with Omnilink has provided operating synergies and created growth opportunities through product enhancement and channel expansion. The assets, liabilities and operating results of Omnilink are included in our condensed consolidated financial statements commencing from the merger date. The following table summarizes the fair values of the assets acquired and liabilities assumed as of the closing date of the Omnilink merger (dollars in thousands): Estimated Fair Value Useful Lives Cash $ 195 n/a Accounts receivable 2,677 n/a Inventory 873 n/a Prepaid and other assets 377 n/a Property and equipment 1,613 4 (a) Deferred tax asset 2,400 n/a Customer relationships 6,056 11 Technology 4,998 14 Trade names 3,632 Indefinite Goodwill 17,518 Indefinite Total identifiable assets acquired 40,339 Accounts payable (1,756 ) n/a Accrued expenses (1,037 ) n/a Deferred revenue (64 ) n/a Total liabilities assumed (2,857 ) Net assets acquired $ 37,482 ________________ (a) The weighted average remaining useful life for all property and equipment is approximately four years. The total purchase consideration for the merger was allocated to identifiable assets purchased and liabilities assumed based on fair value. The estimated fair value attributed to intangible assets, other than goodwill, was based on common valuation techniques. The fair value of acquired software was estimated using a cost approach based on assumptions of our historical software development costs. The fair value of trade names was based on an income approach with key assumptions including estimated royalty rates to license the trade names from a third party. The valuation of customer relationships utilized an income approach and discounted cash flows taking into consideration the number of customer relationships acquired and estimated customer turnover. The gross amount of accounts receivable in the table above is $2.9 million. Based on the nature and financial strength of the customers on the date of acquisition, we expected to collect amounts due for the accounts receivable of $2.7 million. The value of the deferred tax asset and goodwill as disclosed above reflect a subsequent measurement period adjustment of $0.2 million recorded during the three months ended June 30, 2015 to record the final calculation of acquired deferred tax assets. The residual allocation to goodwill results from such factors as an assembled workforce, expected significant synergies for market growth and profitability as well as Omnilink’s service and product lines contributing to our becoming the market leader in select M2M vertical markets. The total amount of goodwill will not be deductible for income tax purposes. The measurement period adjustment resulted in recasting the December 31, 2014 consolidated balance sheet, as follows (in thousands): December 31, Measurement December 31, 2014 Period 2014 As Reported Adjustment Recast Assets Goodwill $ 44,548 $ (200 ) $ 44,348 Deferred tax assets, less current portion 5,616 200 5,816 $ 50,164 $ - $ 50,164 The measurement period adjustment had no effect on the statements of operations and comprehensive (loss) income or cash flows. |
INVENTORY
INVENTORY | 9 Months Ended |
Sep. 30, 2015 | |
Inventory [Abstract] | |
INVENTORY | NOTE C - INVENTORY Inventory consisted of the following (in thousands): September 30, December 31, 2015 2014 Raw materials $ 2,109 $ 2,228 Finished goods 8,559 7,579 Inventory reserves (2,694 ) (1,397 ) $ 7,974 $ 8,410 In September 2015, we entered into new and amended agreements with wireless carriers that make adding 2G devices to wireless networks financially unfavorable under most circumstances. As a result of these agreements, we performed a lower of cost or market analysis leading to a significant increase in the inventory reserve of $1.1 million related to older, second generation (2G) cellular telecommunication devices and older satellite devices as well as an accrual for a purchase commitment related to raw materials for the older satellite devices that we will not fulfill. |
PROPERTY AND EQUIPMENT
PROPERTY AND EQUIPMENT | 9 Months Ended |
Sep. 30, 2015 | |
Property, Plant and Equipment [Abstract] | |
PROPERTY AND EQUIPMENT | NOTE D – PROPERTY AND EQUIPMENT Property and equipment consisted of the following (in thousands): September 30, December 31, 2015 2014 Computer, network and other equipment $ 6,394 $ 5,925 Monitoring equipment 2,834 1,705 Furniture and fixtures 888 746 Leasehold improvements 357 328 Total property and equipment 10,473 8,704 Accumulated depreciation and amortization (5,981 ) (3,815 ) $ 4,492 $ 4,889 Monitoring equipment includes devices and hardware owned by us and used by customers under managed service arrangements. Depreciation expense for monitoring equipment included in cost of sales for subscription and support revenues in the accompanying condensed consolidated statements of operations and comprehensive (loss) income was $0.3 million and $0.2 million for the three months ended September 30, 2015 and 2014, respectively, and $0.8 million and $0.4 million for the nine months ended September 30, 2015 and 2014, respectively. During the three and nine months ended September 30, 2015, we recognized additional depreciation expense of $0.4 million for managed service devices and hardware used by a financially troubled customer. |
INTANGIBLE ASSETS
INTANGIBLE ASSETS | 9 Months Ended |
Sep. 30, 2015 | |
Intangible Assets [Abstract] | |
INTANGIBLE ASSETS | NOTE E – INTANGIBLE ASSETS Intangible Assets Other Than Goodwill Intangible assets other than goodwill are summarized as follows (dollars in thousands): As of September 30, 2015 As of December 31, 2014 Gross Gross Remaining Carrying Accumulated Net Book Carrying Accumulated Net Book Useful Lives Amount Amortization Value Amount Amortization Value Purchased and developed software 1.2 $ 13,233 $ (8,658 ) $ 4,575 $ 11,176 $ (6,409 ) $ 4,767 Software in development n/a 2,383 - 2,383 1,339 - 1,339 Total software 15,616 (8,658 ) 6,958 12,515 (6,409 ) 6,106 Licenses 0.4 12,786 (12,081 ) 705 12,763 (11,886 ) 877 Customer relationships 7.8 8,287 (2,064 ) 6,223 8,287 (1,359 ) 6,928 Technologies 12.6 4,998 (506 ) 4,492 4,998 (237 ) 4,761 Patents and trademarks 3.6 4,018 (2,027 ) 1,991 3,343 (1,657 ) 1,686 Trade names Indefinite 3,632 - 3,632 3,632 - 3,632 Other n/a 469 - 469 1,279 - 1,279 Total other intangible assets 34,190 (16,678 ) 17,512 34,302 (15,139 ) 19,163 $ 49,806 $ (25,336 ) $ 24,470 $ 46,817 $ (21,548 ) $ 25,269 Remaining useful lives in the preceding table were calculated on a weighted average basis as of September 30, 2015. We did not incur significant costs to renew or extend the term of acquired intangible assets during the three or nine months ending September 30, 2015. Amortization expense related to intangible assets was $1.3 million and $3.8 million for the three and nine months ended September 30, 2015 compared to $1.2 million and $3.4 million and for the respective periods in 2014. Amortization expense recorded in cost of subscription revenues in the accompanying condensed consolidated statements of operations and comprehensive (loss) income was $0.3 million and $0.8 million for the three and nine months ended September 30, 2015, and $0.2 million and $0.4 million for the three and nine months ended September 30, 2014. Additionally, we have capitalized approximately $0.6 million and $1.8 million of internally generated software development costs for the three and nine months ended September 30, 2015, respectively and $0.6 million and $1.6 million for the three and nine months ended September 30, 2014, respectively. Impairment of Goodwill and Patents and Trademarks Our Do-It-Yourself (DIY) product line and reporting unit is not generating results of operations consistent with our expectations and previous forecasts and management is evaluating different strategic options for the reporting unit. These factors were triggering events that it was more likely than not that the fair value of the DIY reporting unit was less than its carrying amount. As a result, we performed our initial assessment of Goodwill for impairment of the DIY reporting unit, along with other intangible assets of the reporting unit, in the period ending September 30, 2015. The DIY reporting unit included $2.6 million in recorded goodwill and $0.6 million carrying value of patents along with an additional $1.3 million in other intangible assets. We estimated the fair value of the reporting unit using a combination of market and income approaches and concluded that the estimated fair value of the reporting unit was less than its carrying value. We assessed the implied fair value of goodwill in the same manner as if we were acquiring the reporting unit in a business combination. Specifically, we allocated the estimated fair value of the reporting unit to all of the assets and liabilities of that unit, including any unrecognized intangible assets, in a hypothetical calculation, referred to as Step 2. We assessed the amortizing long-lived assets for impairment based on undiscounted cash flows and concluded that the carrying value of patents may not be recoverable. As a result, the fair value of patents was estimated using an income approach. Based on preliminary Step 2 calculations, we have recorded impairments of $0.9 million for goodwill and $0.3 million for patents during the period ending September 30, 2015. The amount of the impairments is an estimate that has not been finalized prior to filing this quarterly report. We expect to finalize Step 2 of the goodwill analysis and finalize the impairment of patents during the quarter ended December 31, 2015. Activity for the carrying amount of goodwill for the nine months ended September 30, 2015 is summarized as follows (in thousands): January 1, 2015 $ 44,348 DIY reporting unit impairment (924 ) September 30, 2015 $ 43,424 The January 1, 2015 goodwill balance of $44,348 reflects a final measurement period adjustment of $0.2 million related to deferred tax assets. See Note B – Merger. |
OTHER ASSETS
OTHER ASSETS | 9 Months Ended |
Sep. 30, 2015 | |
Other Assets, Noncurrent [Abstract] | |
OTHER ASSETS | NOTE F – OTHER ASSETS Other noncurrent assets consisted of the following (in thousands): September 30, December 31, 2015 2014 Deferred activation fees $ 414 $ 310 Prepaid carrier fees 375 1,860 Deferred financing fees 201 260 Deposits 117 155 $ 1,107 $ 2,585 During 2011, we purchased and installed telecommunication infrastructure equipment and related equipment to improve the capacity and functionality of our devices operating on one of our carrier networks. To comply with the needs of one of our carriers and in exchange for more favorable carrier fees, we transferred the legal right to the equipment to the vendor. Thus, our existing agreement with this vendor was amended to provide for the new carrier fees and the legal transfer of the equipment. We accounted for this transaction as a non-monetary exchange. The $2.2 million cost of the equipment was determined to be its fair value and we recorded this transaction by transferring the equipment cost to prepaid carrier fees. During 2014, we made a prepayment of $0.4 million to the same carrier to license additional network access. Both prepaid expenses were being amortized in cost of sales for subscription and support revenue on a straight-line basis over the term of the agreement, which was to expire in 2021. In September 2015, we entered into a mutual agreement with the vendor to (1) cancel the existing agreement, (2) purchase certain equipment from the vendor and (3) assume certain national |
INCOME TAXES
INCOME TAXES | 9 Months Ended |
Sep. 30, 2015 | |
Income Taxes [Abstract] | |
INCOME TAXES | NOTE G – INCOME TAXES We calculate our interim income tax provision in accordance with the accounting guidance for income taxes in interim periods. At the end of each interim period, we make our best estimate of the annual expected effective tax rate and apply that rate to our ordinary year-to-date income or loss. In addition, we calculate a year-to-date adjustment to increase or decrease our income tax provision to take into account our current expected effective tax rate. The tax or benefit related to significant, unusual, or extraordinary items that will be separately reported or reported net of their related tax effect are individually computed and recognized in the interim period in which those items occur. In assessing the realizability of deferred tax assets, we consider whether it is more likely than not that some portion or all of the deferred tax assets will not be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during the periods in which those temporary differences become deductible. We consider projections of future taxable income, tax planning strategies and the reversal of temporary differences in making this assessment. At September 30, 2015, we determined that we would not meet the criteria of “more likely than not” that the cumulative federal net operating losses and certain other deferred tax assets would be recoverable. This determination was based on our cumulative loss over the past three years. Accordingly, we recorded a valuation allowance against these items. The deferred tax assets consist of federal net operating losses, state net operating losses, tax credits, and other deferred tax assets, most of which expire between 2015 and 2035. We will maintain the valuation allowance against the net deferred tax assets until sufficient positive evidence outweighs any negative evidence to support reversal. Future reversals or increases to the valuation allowance could have a significant impact on our future earnings. As a result of recording a valuation allowance as of September 30, 2015, we recognized deferred tax expense of $10.4 million, representing an effective tax rate of (174.1%), for the three months ended September 30, 2015 and deferred tax expense of $10.1 million, representing an effective tax rate of (154.6%), for the nine months ended September 30, 2015. The remaining difference of $0.3 million in income tax expense for the three months ended September 30, 2015 is primarily reversing the previous year-to-date benefit. For the nine months ended September 30, 2015, the remaining difference of $0.1 million in income tax expense is for state income taxes that cannot utilize offsetting net operating losses. Income tax expense recorded in the future will be reduced or increased to the extent of offsetting decreases or increases to the valuation allowance. For the three and nine months ended September 30, 2014, we recorded income tax expense from continuing operations of $0.4 million and $0.3 million, respectively, representing effective tax rates of 57.6% and 14.7%, respectively. Our income tax expense of $0.4 million for the three months ended September 30, 2014 included a year-to-date adjustment of $0.2 million or 31.3% of the quarter’s pre-tax income, to increase our tax provision for the six months ended June 30, 2014 to the estimated annual effective tax rate. Our effective tax rates for the three and nine months ended September 30, 2014 differed from the federal statutory rate applied to income and losses before income taxes primarily as a result of a number of discrete items, including (1) the effect of expenses that are not deductible for income tax purposes, including a portion of transaction costs incurred in the Omnilink merger and (2) state income taxes, including the tax effect of changes in effective state income tax rates resulting from the merger with Omnilink. In addition, the effective tax rate for the nine months ended September 30, 2014, was reduced for the income tax benefit from the capital loss on the disposal of BNI due to the ability to offset capital gains in our current tax year and to carry back for capital gains in prior tax years. We file U.S., state and foreign income tax returns in jurisdictions with varying statutes of limitation. The 2012 through 2014 tax years generally remain subject to examination by federal and most state tax authorities. However, certain returns from years in which net operating losses have arisen are still open for examination by the tax authorities. |
DEBT
DEBT | 9 Months Ended |
Sep. 30, 2015 | |
Debt Disclosure [Abstract] | |
DEBT | NOTE H – DEBT Debt consisted of the following (dollars in thousands): September 30, December 31, 2015 2014 Note payable to Silicon Valley Bank, with interest at our option of prime rate or LIBOR rate plus margin $ 20,287 $ 23,125 Seller financed note payable, with interest at 4.25%, monthly payments of principal and interest, secured by equipment, due September 2015 - 476 20,287 23,601 Less current portion of long-term debt 3,750 4,251 Noncurrent portion of long-term debt $ 16,537 $ 19,350 On May 5, 2014, we entered into a Second Amended and Restated Loan and Security Agreement (the “Loan Agreement”) with Silicon Valley Bank in order to, among other things, establish a term loan of $25.0 million and a revolving line of credit of up to $5.0 million (collectively, the “Credit Facility”). As of September 30, 2015,we had no outstanding balance on the revolving line of credit. The proceeds from the term loan were used to finance the Omnilink merger. See Note B –– Merger. The maturity date of the loan is May 5, 2019 with regular required quarterly principal payments which began June 30, 2014. The scheduled outstanding principal balance of $5.0 million will be due at maturity if not otherwise repaid earlier by way of voluntary Permitted Prepayments or by mandatory Excess Cash Flow Recapture Payments (as defined in the Loan Agreement). The interest rate applicable to amounts drawn pursuant to the Loan Agreement is currently 2.75% and is, at our option, determined by reference to the prime rate or LIBOR rate plus a margin established in the Loan Agreement. Our obligations under the Credit Facility are secured by substantially all of our assets and the assets of our subsidiaries. In addition, we are required to meet certain financial and other restrictive covenants customary with this type of facility, including maintaining a senior leverage ratio, a fixed charge coverage ratio and minimum liquidity availability. We are also prohibited from entering into any debt agreements senior to the Credit Facility and paying dividends. The Amended Loan Agreement contains customary events of default. If a default occurs and is not cured within the applicable cure period or is not waived, any outstanding obligations under the Credit Facility may be accelerated. As of September 30, 2015, we did not meet the fixed charge coverage ratio covenant. We entered into the first amendment to the Loan Agreement on November 3, 2015 (the “Amendment”). The Amendment does not permit any subsequent advances under the Credit Facility, waived the fixed charge coverage ratio for the three months ended September 30, 2015 and added a monthly liquidity ratio covenant. As a result of the waiver and our expectation of maintaining compliance with all of the covenants in the future, we have continued to record scheduled principal payments due after twelve months as noncurrent. In connection with our acquisition of a small technology business in October 2012, we entered into a Promissory Note of $1.9 million payable to the sellers of the business. The Promissory Note was paid in full as of September 30, 2015. |
NET (LOSS) EARNINGS PER SHARE
NET (LOSS) EARNINGS PER SHARE | 9 Months Ended |
Sep. 30, 2015 | |
NET (LOSS) EARNINGS PER SHARE | |
NET (LOSS) EARNINGS PER SHARE | NOTE I – NET (LOSS) EARNINGS PER SHARE Basic (loss) earnings per share is computed by dividing net (loss) income available to common shareholders by the weighted average number of common shares outstanding during the period excluding the dilutive impact of common stock equivalents. Diluted earnings per share include the effect of all potentially dilutive securities on earnings per share. The dilutive effect of outstanding equity-based compensation awards is computed using the treasury stock method. The computation of diluted earnings per share does not assume exercise of securities that would have an anti-dilutive effect on earnings. The following table presents a reconciliation of the shares used in the calculation of basic and diluted net (loss) income per share from continuing operations contained in our condensed consolidated statements of operations and comprehensive (loss) income (in thousands): Three Months Ended Nine Months Ended September 30, September 30, 2015 2014 2015 2014 (Loss) income from continuing operations, net of income taxes $ (16,380 ) $ 263 $ (16,730 ) $ 1,637 Weighted average shares outstanding: Basic 19,137 18,956 19,053 18,900 Dilutive effect of common stock equivalents - 307 - 353 Total 19,137 19,263 19,053 19,253 Anti-dilutive equity-based compensation awards 2,294 757 2,294 757 |
RECENT ACCOUNTING PRONOUNCEMENT
RECENT ACCOUNTING PRONOUNCEMENTS | 9 Months Ended |
Sep. 30, 2015 | |
Recent Accounting Pronouncements [Abstract] | |
RECENT ACCOUNTING PRONOUNCEMENTS | NOTE J – RECENT ACCOUNTING PRONOUNCEMENTS In September 2015, the Financial Accounting Standards Board (FASB) issued an accounting standards update to simplify the accounting for measurement-period adjustments for an acquirer in a business combination. The update will require an acquirer to recognize any adjustments to provisional amounts of the initial accounting for a business combination with a corresponding adjustment to goodwill in the reporting period in which the adjustments are determined in the measurement period, as opposed to revising prior periods presented in financial statements. Thus, an acquirer shall adjust its financial statements as needed, including recognizing in its current-period earnings the full effect of changes in depreciation, amortization, or other income effects, by line item, if any, as a result of the change to the provisional amounts calculated as if the accounting had been completed at the acquisition date. This update is effective for fiscal years beginning after December 15, 2015, and interim periods within those fiscal years. We do not expect the adoption of this guidance to have a material impact on our financial statements. In July 2015, In March 2015, the FASB issued guidance about simplifying the presentation of debt issuance costs. The guidance is intended to help clarify debt issuance costs related to a recognized debt liability be presented in the balance sheet as a direct deduction from the carrying amount of that debt liability, consistent with debt discounts. The recognition and measurement guidance for debt issuance costs are not affected. The amendments are effective for financial stat e In August 2014, the FASB issued guidance about disclosing an entity’s ability to continue as a going concern. The guidance is intended to define management’s responsibility to evaluate whether there is substantial doubt about an entity’s ability to continue as a going concern and to provide related footnote disclosures. The standard will be effective for annual periods ending after December 15, 2016, and for interim and annual periods thereafter, with early application permitted. We do not expect the adoption of this guidance to have a material impact on our financial position or results of operations. In June 2014, the FASB issued guidance that applies to all reporting entities that grant their employees share-based payments in which the terms of the award provide that a performance target that affects vesting could be achieved after the requisite service period. It requires that a performance target that affects vesting, and that could be achieved after the requisite service period, be treated as a performance condition and follows existing accounting guidance for the treatment of performance conditions. The standard will be effective for us prospectively for fiscal years, and interim reporting periods within those years, beginning January 1, 2016, with early adoption permitted. We do not expect the adoption of this guidance to have a material impact on our financial position or results of operations. In May 2014, the FASB issued new accounting guidance for revenue recognized from contracts with customers. The core principle of the guidance is that a company will recognize revenue when it transfers promised goods or services to customers in an amount that reflects the consideration to which the company expects to be entitled in exchange for those goods or services. In doing so, companies will need to use more judgment and make more estimates than under current guidance. These may include identifying performance obligations in the contract, estimating the amount of variable consideration to include in the transaction price and allocating the transaction price to each separate performance obligation. The guidance was set to become effective for us for fiscal years, and interim reporting periods within those years, beginning January 1, 2017 and will require retrospective application when adopted. On July 9, 2015, the FASB voted to defer the effective date by one year to December 15, 2017 for interim and annual reporting periods beginning after that date and permitted early adoption of the standard, but not before the original effective date of December 15, 2016. We are currently evaluating how the adoption of this standard will impact our Consolidated Financial Statements. |
SUBSEQUENT EVENTS
SUBSEQUENT EVENTS | 9 Months Ended |
Sep. 30, 2015 | |
Subsequent Events [Abstract] | |
SUBSEQUENT EVENTS | NOTE K – SUBSEQUENT EVENTS On October 8, 2015, we closed on a mutual agreement with a vendor to (1) cancel the existing agreement, (2) purchase certain equipment from the vendor and (3) assume certain national On November 3, 2015, we entered into the first amendment to the Loan Agreement. See Note H – Debt. |
MERGER (Tables)
MERGER (Tables) | 9 Months Ended |
Sep. 30, 2015 | |
Acquisition [Abstract] | |
Schedule of fair values of the assets acquired and liabilities assumed as of the closing date of merger | Estimated Fair Value Useful Lives Cash $ 195 n/a Accounts receivable 2,677 n/a Inventory 873 n/a Prepaid and other assets 377 n/a Property and equipment 1,613 4 (a) Deferred tax asset 2,400 n/a Customer relationships 6,056 11 Technology 4,998 14 Trade names 3,632 Indefinite Goodwill 17,518 Indefinite Total identifiable assets acquired 40,339 Accounts payable (1,756 ) n/a Accrued expenses (1,037 ) n/a Deferred revenue (64 ) n/a Total liabilities assumed (2,857 ) Net assets acquired $ 37,482 ________________ (a) The weighted average remaining useful life for all property and equipment is approximately four years. |
Schedule of measurement period adjustments related to merger | December 31, Measurement December 31, 2014 Period 2014 As Reported Adjustment Recast Assets Goodwill $ 44,548 $ (200 ) $ 44,348 Deferred tax assets, less current portion 5,616 200 5,816 $ 50,164 $ - $ 50,164 |
INVENTORY (Tables)
INVENTORY (Tables) | 9 Months Ended |
Sep. 30, 2015 | |
Inventory [Abstract] | |
Schedule of inventory | September 30, December 31, 2015 2014 Raw materials $ 2,109 $ 2,228 Finished goods 8,559 7,579 Inventory reserves (2,694 ) (1,397 ) $ 7,974 $ 8,410 |
PROPERTY AND EQUIPMENT (Tables)
PROPERTY AND EQUIPMENT (Tables) | 9 Months Ended |
Sep. 30, 2015 | |
Property, Plant and Equipment [Abstract] | |
Schedule of components of property and equipment | September 30, December 31, 2015 2014 Computer, network and other equipment $ 6,394 $ 5,925 Monitoring equipment 2,834 1,705 Furniture and fixtures 888 746 Leasehold improvements 357 328 Total property and equipment 10,473 8,704 Accumulated depreciation and amortization (5,981 ) (3,815 ) $ 4,492 $ 4,889 |
INTANGIBLE ASSETS (Tables)
INTANGIBLE ASSETS (Tables) | 9 Months Ended |
Sep. 30, 2015 | |
Intangible Assets [Abstract] | |
Schedule of intangible assets other than goodwill | As of September 30, 2015 As of December 31, 2014 Gross Gross Remaining Carrying Accumulated Net Book Carrying Accumulated Net Book Useful Lives Amount Amortization Value Amount Amortization Value Purchased and developed software 1.2 $ 13,233 $ (8,658 ) $ 4,575 $ 11,176 $ (6,409 ) $ 4,767 Software in development n/a 2,383 - 2,383 1,339 - 1,339 Total software 15,616 (8,658 ) 6,958 12,515 (6,409 ) 6,106 Licenses 0.4 12,786 (12,081 ) 705 12,763 (11,886 ) 877 Customer relationships 7.8 8,287 (2,064 ) 6,223 8,287 (1,359 ) 6,928 Technologies 12.6 4,998 (506 ) 4,492 4,998 (237 ) 4,761 Patents and trademarks 3.6 4,018 (2,027 ) 1,991 3,343 (1,657 ) 1,686 Trade names Indefinite 3,632 - 3,632 3,632 - 3,632 Other n/a 469 - 469 1,279 - 1,279 Total other intangible assets 34,190 (16,678 ) 17,512 34,302 (15,139 ) 19,163 $ 49,806 $ (25,336 ) $ 24,470 $ 46,817 $ (21,548 ) $ 25,269 |
Schedule of activity for the carrying amount of goodwill | January 1, 2015 $ 44,348 DIY reporting unit impairment (924 ) September 30, 2015 $ 43,424 |
OTHER ASSETS (Tables)
OTHER ASSETS (Tables) | 9 Months Ended |
Sep. 30, 2015 | |
Other Assets, Noncurrent [Abstract] | |
Schedule of other noncurrent assets | September 30, December 31, 2015 2014 Deferred activation fees $ 414 $ 310 Prepaid carrier fees 375 1,860 Deferred financing fees 201 260 Deposits 117 155 $ 1,107 $ 2,585 |
DEBT (Tables)
DEBT (Tables) | 9 Months Ended |
Sep. 30, 2015 | |
Debt Disclosure [Abstract] | |
Schedule of debt | September 30, December 31, 2015 2014 Note payable to Silicon Valley Bank, with interest at our option of prime rate or LIBOR rate plus margin $ 20,287 $ 23,125 Seller financed note payable, with interest at 4.25%, monthly payments of principal and interest, secured by equipment, due September 2015 - 476 20,287 23,601 Less current portion of long-term debt 3,750 4,251 Noncurrent portion of long-term debt $ 16,537 $ 19,350 |
NET (LOSS) EARNINGS PER SHARE (
NET (LOSS) EARNINGS PER SHARE (Tables) | 9 Months Ended |
Sep. 30, 2015 | |
NET (LOSS) EARNINGS PER SHARE | |
Schedule of reconciliation of shares used in the calculation of basic and diluted net (loss) income per share from continuing operations | Three Months Ended Nine Months Ended September 30, September 30, 2015 2014 2015 2014 (Loss) income from continuing operations, net of income taxes $ (16,380 ) $ 263 $ (16,730 ) $ 1,637 Weighted average shares outstanding: Basic 19,137 18,956 19,053 18,900 Dilutive effect of common stock equivalents - 307 - 353 Total 19,137 19,263 19,053 19,253 Anti-dilutive equity-based compensation awards 2,294 757 2,294 757 |
MERGER - Summary of fair values
MERGER - Summary of fair values of assets acquired and liabilities assumed on closing date of the Omnilink merger (Details) - USD ($) $ in Thousands | May. 05, 2014 | Sep. 30, 2015 | Dec. 31, 2014 | |
Business Acquisition [Line Items] | ||||
Goodwill | $ 43,424 | $ 44,348 | ||
Omnilink Systems, Inc. | ||||
Business Acquisition [Line Items] | ||||
Cash | $ 195 | |||
Accounts receivable | 2,677 | |||
Inventory | 873 | |||
Prepaid and other assets | 377 | |||
Property and equipment | 1,613 | |||
Deferred tax asset | 2,400 | |||
Goodwill | 17,518 | |||
Total identifiable assets acquired | 40,339 | |||
Accounts payable | (1,756) | |||
Accrued expenses | (1,037) | |||
Deferred revenue | (64) | |||
Total liabilities assumed | (2,857) | |||
Net assets acquired | $ 37,482 | |||
Property and equipment, lives in years | [1] | 4 years | ||
Goodwill, lives in years | Indefinite | |||
Omnilink Systems, Inc. | Customer relationships | ||||
Business Acquisition [Line Items] | ||||
Intangible assets other than goodwill | $ 6,056 | |||
Estimated useful lives of acquired finite lived intangible assets | 11 years | |||
Omnilink Systems, Inc. | Technology | ||||
Business Acquisition [Line Items] | ||||
Intangible assets other than goodwill | $ 4,998 | |||
Estimated useful lives of acquired finite lived intangible assets | 14 years | |||
Omnilink Systems, Inc. | Trade names | ||||
Business Acquisition [Line Items] | ||||
Intangible assets other than goodwill | $ 3,632 | |||
Estimated useful lives of acquired indefinite lived intangible assets | Indefinite | |||
[1] | The weighted average remaining useful life for all property and equipment is approximately four years. |
MERGER - Measurement period adj
MERGER - Measurement period adjustment resulted in recasting (Details 1) - USD ($) $ in Thousands | Sep. 30, 2015 | Dec. 31, 2014 |
Business Acquisition [Line Items] | ||
Goodwill | $ 43,424 | $ 44,348 |
Deferred tax assets, less current portion | 5,816 | |
Assets | 50,164 | |
Previously Reported | ||
Business Acquisition [Line Items] | ||
Goodwill | 44,548 | |
Deferred tax assets, less current portion | 5,616 | |
Assets | 50,164 | |
Measurement Period Adjustment | ||
Business Acquisition [Line Items] | ||
Goodwill | (200) | |
Deferred tax assets, less current portion | $ 200 | |
Assets |
MERGER (Detail Textuals)
MERGER (Detail Textuals) - Omnilink Systems, Inc. - Merger agreement $ in Millions | May. 05, 2014USD ($) |
Business Acquisition [Line Items] | |
Purchase price | $ 37.5 |
Consideration paid in cash | 37.3 |
Working capital adjustment | $ 0.2 |
MERGER (Detail Textuals 1)
MERGER (Detail Textuals 1) - Omnilink Systems, Inc. - USD ($) $ in Thousands | 3 Months Ended | |
Jun. 30, 2015 | May. 05, 2014 | |
Business Acquisition [Line Items] | ||
Accounts receivable gross | $ 2,900 | |
Accounts receivable net | $ 2,677 | |
Subsequent measurement period adjustment | $ 200 |
INVENTORY - Summary of inventor
INVENTORY - Summary of inventory (Details) - USD ($) $ in Thousands | Sep. 30, 2015 | Dec. 31, 2014 |
Inventory [Abstract] | ||
Raw materials | $ 2,109 | $ 2,228 |
Finished goods | 8,559 | 7,579 |
Inventory reserves | (2,694) | (1,397) |
Inventory, net | $ 7,974 | $ 8,410 |
INVENTORY (Detail Textuals)
INVENTORY (Detail Textuals) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2015 | Sep. 30, 2014 | Sep. 30, 2015 | Sep. 30, 2014 | |
Inventory [Line Items] | ||||
Inventory reserves | $ 1,277 | $ 129 | $ 1,547 | $ 415 |
Second generation (2G) cellular telecommunication devices, older satellite equipment and an accrued purchase commitment | ||||
Inventory [Line Items] | ||||
Inventory reserves | $ 1,100 |
PROPERTY AND EQUIPMENT - Summar
PROPERTY AND EQUIPMENT - Summary of property and equipment (Details) - USD ($) $ in Thousands | Sep. 30, 2015 | Dec. 31, 2014 |
Property, Plant and Equipment [Line Items] | ||
Total property and equipment | $ 10,473 | $ 8,704 |
Accumulated depreciation and amortization | (5,981) | (3,815) |
Property and equipment, net | 4,492 | 4,889 |
Computer, network and other equipment | ||
Property, Plant and Equipment [Line Items] | ||
Total property and equipment | 6,394 | 5,925 |
Monitoring equipment | ||
Property, Plant and Equipment [Line Items] | ||
Total property and equipment | 2,834 | 1,705 |
Furniture and fixtures | ||
Property, Plant and Equipment [Line Items] | ||
Total property and equipment | 888 | 746 |
Leasehold improvements | ||
Property, Plant and Equipment [Line Items] | ||
Total property and equipment | $ 357 | $ 328 |
PROPERTY AND EQUIPMENT (Detail
PROPERTY AND EQUIPMENT (Detail Textuals) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2015 | Sep. 30, 2014 | Sep. 30, 2015 | Sep. 30, 2014 | |
Property, Plant and Equipment [Abstract] | ||||
Depreciation expense for monitoring equipment included in cost of sales | $ 0.3 | $ 0.2 | $ 0.8 | $ 0.4 |
Additional depreciation expense for managed service devices and hardware | $ 0.4 | $ 0.4 |
INTANGIBLE ASSETS - Summary of
INTANGIBLE ASSETS - Summary of intangible assets other than goodwill (Details) - USD ($) $ in Thousands | 9 Months Ended | |
Sep. 30, 2015 | Dec. 31, 2014 | |
Finite Lived And Indefinite Lived Intangible Assets [Line Items] | ||
Gross Carrying Amount | $ 49,806 | $ 46,817 |
Accumulated Amortization | (25,336) | (21,548) |
Net Book Value | $ 24,470 | 25,269 |
Purchased and developed software | ||
Finite Lived And Indefinite Lived Intangible Assets [Line Items] | ||
Remaining Useful Lives | 1 year 2 months 12 days | |
Gross Carrying Amount | $ 13,233 | 11,176 |
Accumulated Amortization | (8,658) | (6,409) |
Net Book Value | 4,575 | 4,767 |
Software in development | ||
Finite Lived And Indefinite Lived Intangible Assets [Line Items] | ||
Gross Carrying Amount | $ 2,383 | $ 1,339 |
Accumulated Amortization | ||
Net Book Value | $ 2,383 | $ 1,339 |
Total software | ||
Finite Lived And Indefinite Lived Intangible Assets [Line Items] | ||
Gross Carrying Amount | 15,616 | 12,515 |
Accumulated Amortization | (8,658) | (6,409) |
Net Book Value | $ 6,958 | 6,106 |
Licenses | ||
Finite Lived And Indefinite Lived Intangible Assets [Line Items] | ||
Remaining Useful Lives | 4 months 24 days | |
Gross Carrying Amount | $ 12,786 | 12,763 |
Accumulated Amortization | (12,081) | (11,886) |
Net Book Value | $ 705 | 877 |
Customer relationships | ||
Finite Lived And Indefinite Lived Intangible Assets [Line Items] | ||
Remaining Useful Lives | 7 years 9 months 18 days | |
Gross Carrying Amount | $ 8,287 | 8,287 |
Accumulated Amortization | (2,064) | (1,359) |
Net Book Value | $ 6,223 | 6,928 |
Technologies | ||
Finite Lived And Indefinite Lived Intangible Assets [Line Items] | ||
Remaining Useful Lives | 12 years 7 months 6 days | |
Gross Carrying Amount | $ 4,998 | 4,998 |
Accumulated Amortization | (506) | (237) |
Net Book Value | $ 4,492 | 4,761 |
Patents and trademarks | ||
Finite Lived And Indefinite Lived Intangible Assets [Line Items] | ||
Remaining Useful Lives | 3 years 7 months 6 days | |
Gross Carrying Amount | $ 4,018 | 3,343 |
Accumulated Amortization | (2,027) | (1,657) |
Net Book Value | $ 1,991 | 1,686 |
Trade names | ||
Finite Lived And Indefinite Lived Intangible Assets [Line Items] | ||
Weighted Remaining Average Useful Lives | Indefinite | |
Gross Carrying Amount | $ 3,632 | 3,632 |
Net Book Value | 3,632 | 3,632 |
Other | ||
Finite Lived And Indefinite Lived Intangible Assets [Line Items] | ||
Gross Carrying Amount | $ 469 | $ 1,279 |
Accumulated Amortization | ||
Net Book Value | $ 469 | $ 1,279 |
Total Other Intangibles | ||
Finite Lived And Indefinite Lived Intangible Assets [Line Items] | ||
Gross Carrying Amount | 34,190 | 34,302 |
Accumulated Amortization | (16,678) | (15,139) |
Net Book Value | $ 17,512 | $ 19,163 |
INTANGIBLE ASSETS - Activity fo
INTANGIBLE ASSETS - Activity for the carrying amount of goodwill (Details 1) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended |
Sep. 30, 2015 | Sep. 30, 2015 | |
Goodwill [Roll Forward] | ||
January 1, 2015 | $ 44,348 | |
September 30, 2015 | $ 43,424 | 43,424 |
Do-It-Yourself (DIY) | ||
Goodwill [Roll Forward] | ||
January 1, 2015 | 44,348 | |
DIY Reporting Unit Impairment | (924) | (924) |
September 30, 2015 | $ 43,424 | $ 43,424 |
INTANGIBLE ASSETS (Detail Textu
INTANGIBLE ASSETS (Detail Textuals) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2015 | Sep. 30, 2014 | Sep. 30, 2015 | Sep. 30, 2014 | Dec. 31, 2014 | |
Finite Lived And Indefinite Lived Intangible Assets [Line Items] | |||||
Amortization expense of intangible assets | $ 1,300 | $ 1,200 | $ 3,800 | $ 3,400 | |
Amortization of intangible assets recorded in cost of subscription revenue | 300 | 200 | 800 | 400 | |
Internally generated software development costs | 600 | $ 600 | 1,800 | $ 1,600 | |
Goodwill | 43,424 | 43,424 | $ 44,348 | ||
Do-It-Yourself (DIY) | |||||
Finite Lived And Indefinite Lived Intangible Assets [Line Items] | |||||
Fair value of DIY reporting unit | 2,600 | 2,600 | |||
Goodwill | 43,424 | 43,424 | $ 44,348 | ||
Goodwill impairment | 924 | 924 | |||
Carrying value of patents | 600 | 600 | |||
Carrying value of other intangible assets | 1,300 | 1,300 | |||
Impairments of patents | $ 300 | $ 300 |
OTHER ASSETS - Summary of other
OTHER ASSETS - Summary of other noncurrent assets (Details) - USD ($) $ in Thousands | Sep. 30, 2015 | Dec. 31, 2014 |
Other Assets, Noncurrent [Abstract] | ||
Deferred activation fees | $ 414 | $ 310 |
Prepaid carrier fees | 375 | 1,860 |
Deferred financing fees | 201 | 260 |
Deposits | 117 | 155 |
Other noncurrent assets | $ 1,107 | $ 2,585 |
OTHER ASSETS (Detail Textuals)
OTHER ASSETS (Detail Textuals) - USD ($) $ in Thousands | 9 Months Ended | 12 Months Ended | |
Sep. 30, 2015 | Dec. 31, 2014 | Dec. 31, 2011 | |
Other Assets, Noncurrent [Abstract] | |||
Equipment cost | $ 2,200 | ||
Prepayment to license additional network access | $ 400 | $ 400 | |
Payment to cancel agreement, purchase equipment and assume carrier agreements | $ 500 | ||
Common stock issued to cancel agreement, purchase equipment and assume carrier agreements | 30,000 | ||
Value of common stock issued to cancel agreement, purchase equipment and assume carrier agreements | $ 300 | ||
Total other assets | 1,107 | $ 2,585 | |
Write off carrying value of prepaid expenses | $ 1,300 |
INCOME TAXES (Detail Textuals)
INCOME TAXES (Detail Textuals) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2015 | Sep. 30, 2014 | Sep. 30, 2015 | Sep. 30, 2014 | |
Income Taxes [Abstract] | ||||
Deferred tax expense | $ 10,400 | $ 10,147 | $ 36 | |
Percentage of deferred tax expense effective tax rate | 174.10% | 57.60% | 154.60% | 14.70% |
Remaining difference in income tax expense | $ 300 | $ 100 | ||
Income tax expense (benefit) | 10,404 | $ 358 | 10,159 | $ 283 |
Gross deferred tax assets, valuation allowance | $ 10,100 | $ 10,100 | ||
Amount of year-to-date adjustment | $ 200 | |||
Percentage of year-to-date adjustment of quarter's pre-tax income | 31.30% |
DEBT - Summary of debt (Details
DEBT - Summary of debt (Details) - USD ($) $ in Thousands | Sep. 30, 2015 | Dec. 31, 2014 |
Debt Instrument [Line Items] | ||
Long-term debt, total | $ 20,287 | $ 23,601 |
Less current portion of long-term debt | 3,750 | 4,251 |
Noncurrent portion of long-term debt | 16,537 | 19,350 |
Note payable to Silicon Valley Bank, with interest at our option of prime rate or LIBOR rate plus margin | ||
Debt Instrument [Line Items] | ||
Long-term debt, total | $ 20,287 | 23,125 |
Seller financed note payable, with interest at 4.25%, monthly payments of principal and interest, secured by equipment, due September 2015 | ||
Debt Instrument [Line Items] | ||
Long-term debt, total | $ 476 |
DEBT - Summary of debt (Parenth
DEBT - Summary of debt (Parentheticals) (Details) | Sep. 30, 2015 |
Debt Disclosure [Abstract] | |
Interest rate of seller financed note payable | 4.25% |
DEBT (Detail Textuals)
DEBT (Detail Textuals) - Silicon Valley Bank - USD ($) | May. 05, 2014 | Sep. 30, 2015 |
Term loan | ||
Debt Instrument [Line Items] | ||
Available credit amount | $ 25,000,000 | |
Outstanding principal balance | $ 5,000,000 | |
Interest rate applicable to amounts drawn | 2.75% | |
Revolving line of credit | ||
Debt Instrument [Line Items] | ||
Available credit amount | $ 5,000,000 | |
Outstanding principal balance | $ 0 |
DEBT (Detail Textuals 1)
DEBT (Detail Textuals 1) $ in Millions | Oct. 31, 2012USD ($) |
Small technology company | Promissory Note | |
Debt Instrument [Line Items] | |
Promissory note payable | $ 1.9 |
NET (LOSS) EARNINGS PER SHARE -
NET (LOSS) EARNINGS PER SHARE - Reconciliation of shares used in the calculation of basic and diluted net (loss) income per share (Details) - USD ($) shares in Thousands, $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2015 | Sep. 30, 2014 | Sep. 30, 2015 | Sep. 30, 2014 | |
NET (LOSS) EARNINGS PER SHARE | ||||
(Loss) income from continuing operations, net of income taxes | $ (16,380) | $ 263 | $ (16,730) | $ 1,637 |
Weighted average shares outstanding: | ||||
Basic | 19,137 | 18,956 | 19,053 | 18,900 |
Dilutive effect of common stock equivalents | 307 | 353 | ||
Total | 19,137 | 19,263 | 19,053 | 19,253 |
Anti-dilutive equity-based compensation awards | 2,294 | 757 | 2,294 | 757 |
SUBSEQUENT EVENTS (Detail Textu
SUBSEQUENT EVENTS (Detail Textuals) - USD ($) $ in Millions | Oct. 08, 2015 | Sep. 30, 2015 |
Subsequent Event [Line Items] | ||
Payment to cancel agreement, purchase equipment and assume carrier agreements | $ 0.5 | |
Common stock issued to cancel agreement, purchase equipment and assume carrier agreements | 30,000 | |
Value of common stock issued to cancel agreement, purchase equipment and assume carrier agreements | $ 0.3 | |
Subsequent Event | ||
Subsequent Event [Line Items] | ||
Payment to cancel agreement, purchase equipment and assume carrier agreements | $ 0.5 | |
Common stock issued to cancel agreement, purchase equipment and assume carrier agreements | 30,000 | |
Value of common stock issued to cancel agreement, purchase equipment and assume carrier agreements | $ 0.3 |