Note 4 - Investment In and Loans to Equity Method Investee

3 Months Ended

Dec. 31, 2016

Notes to Financial Statements

Equity Method Investments and Joint Ventures Disclosure [Text Block]

Note

4

– Investment In and Loans to Equity Method Investee

The Company’s joint venture with YKTG Solutions, LLC (“YKTG Solutions”) primary purpose is to support decommission work on cell tower sites across

13

states in the northeast on behalf of a major U.S. wireless provider. YKTG Solutions is owned

51%

by YKTG, LLC and

49%

by the Company, and YTKG Solutions is certified as a minority-based enterprise. The joint venture is governed by an operating agreement for the purpose of completing the decommission project, but the operating agreement can be expanded to include other projects upon agreement by both owners. The Company accounts for its investment in YKTG Solutions using the equity-method of accounting.

For its role in the decommission project, the Company earns a management fee from YKTG Solutions based on billings. The Company is financing the decommission project pursuant to the terms of a loan agreement between the Company and YKTG Solutions by providing a revolving line of credit. The line of credit is for

$4.0

million and is secured by all of the assets of YKTG Solutions, YKTG, LLC and the personal guarantees by the owners of YKTG, LLC. The line of credit accrues interest at a fixed interest rate of

12%

and is paid monthly. At

December

31,

2016,

the amount outstanding under this line of credit was

$2.3

million. The management fee encompasses any interest earned on outstanding advances under the line of credit.

The Company’s carrying value in YKTG Solutions is reflected in investment in and loans to equity method investee in the Consolidated Condensed Balance Sheets. During the

three

months ended

December

31,

2016,

the Company received payments, net of advances, totaling

$1.0

million from YKTG Solutions. At

December

31,

2016,

the Company's total estimate of maximum exposure to loss as a result of its relationship with YKTG Solutions was approximately

$4.0

million, which represents the Company’s equity investment and available and outstanding line of credit with this entity. To help mitigate the risks associated with funding of the decommission project, the Company has obtained credit insurance for qualifying YKTG Solutions accounts receivable outstanding arising from the decommission project. In addition, YKTG Solutions entered into a

$2.0

million surety payment bond whereby the Company and YKTG, LLC are guarantors under the surety payment bond.

To date, this joint venture has incurred operating losses totaling

$0.4

million and, as of

December

31,

2016,

the total assets of the joint venture are less than the amount it owes to the Company.  The U.S. wireless provider recently changed the process for assigning the various sites within the decommission project, which YKTG Solutions believes would result in a negative cash flow for the joint venture. Accordingly, YKTG Solutions has elected to suspend the acceptance of any further work under the decommission project unless and until the U.S. wireless provider resumes its previous process of assigning the sites under the decommission project. As a result, for the

three

months ended

December

31,

2016,

the Company did not record management fees of

$0.2

million related to the joint venture billings as the management fees

may

not be ultimately collectible from YKTG Solutions and adjusted the investment in and loans to equity method investee to the net realizable amount.