Note 20 - Subsequent Events

12 Months Ended

Dec. 31, 2019

Notes to Financial Statements

Subsequent Events [Text Block]

20.

Subsequent Events:

a. On October 31, 2019, the Company entered into a Stock Purchase Agreement to purchase all of the issued and outstanding shares of Cedar Holdings Group, Incorporated (“Cedar”), a fiber Internet provider business based in Durango, Colorado.  The transaction closed on January 1, 2020, following receipt of all regulatory approvals.  The purchase price w as $14.1  m illion, less an estimated purchase price adjustment of approxima tely $0.1  m illion relating to a working capital deficit and assessment of the fair value of contingent consideration, for net purchase consideration of $14.0  m illion.  The cash consideration due at closing of $9.0 million was financed by an advance on the 2019 Amended Credit Facility.  The Company also issued 32,374 of Tucows Inc. shares ( $2.0 million) of Tucows Inc. shares with a two -year restriction period at closing.  Included in the agreement is contingent consideration totaling up to $4.0  million, due on the 24th and 36th month anniversaries of the closing of the transaction dependent upon the achievement of certain milestones as defined in the Share Purchase Agreement. The fair value of the contingent consideration was determined to be $3.1 million using a discount rate of 11.3%. The Company has prepared a preliminary purchase price allocation of the assets acquired and the liabilities assumed of Cedar based on management’s best estimates of fair value.  The final purchase price allocation may vary based on final appraisals, valuations and analyses of the fair value of the acquired assets and assumed liabilities.    The following table shows the preliminary allocation of the purchase price for Cedar to the acquired identifiable assets, liabilities assumed and goodwill: 

Cash Consideration, including working capital adjustment	$	8,901
Share-based payment		2,000
Fair value of contingent payments		3,065
Total estimated purchase price		13,966
Cash and Cash Equivalents		66
Accounts Receivables, net		67
Other current assets		195
Property and equipment		4,488
Right of use operating lease		18
Intangible assets		5,570
Total identifiable assets		10,404
Accounts payable and accrued labilities		(254	)
Deferred tax liability		(2,207	)
Operating lease liability		(13	)
Total liabilities assumed		(2,474	)
Total net assets (liabilities) assumed		7,930
Total goodwill	$	6,036

b. On February 12,  2020, the Company announced that its Board has approved a stock buyback program to repurchase up to $40 million of its common stock in the open market. Purchases will be made exclusively through the facilities of the NASDAQ Capital Market. The stock buyback program commenced on February 13,  2020  and will terminate on or before February 12, 2021. The previously announced $40 million buyback program for the period February 14, 2019  to February 13, 2020  was terminated on February 13, 2020.  The Company repurchased 101,816 shares under this program, for a total of $5.0 million. According to the terms of our 2019 Amended Credit Facility, share repurchases require the Lenders’ consent if the Company’s Total Funded Debt to Adjusted EBITDA ratio exceeds 2.00:1.