Business Context and Reporting Period
Data Storage Corporation (Nevada) filed this Form 8-K on October 19, 2017, reporting a significant corporate development. The filing details the initiation of a potential acquisition of Broadsmart Florida, Inc., a private telecommunications provider operating in Florida.
Key Financial Metrics
The filing does not provide specific financial metrics such as revenue, profit, cash flow, margins, debt, or liquidity for Data Storage Corporation or Broadsmart Florida, Inc. The document focuses exclusively on the terms of a proposed transaction rather than historical or current financial performance.
Material Changes and Transaction Details
- Proposed Acquisition: On October 19, 2017, the Company entered into a non-binding term sheet to acquire 100% of Broadsmart's outstanding common stock and related assets.
- Consideration Structure: The deal contemplates payment of incidental cash plus 15% of Broadsmart's net billing (net of taxes) on a monthly basis during the term of the end-user agreement.
- Regulatory Progress: On March 13, 2018, the Company's subsidiary, Nexxis Inc., and Broadsmart filed a Joint Application with the FCC. On April 20, 2018, the FCC granted authorization for the acquisition.
Outlook, Risks, and Contingencies
Management explicitly states there is no guarantee the acquisition will close or occur on the terms described. The transaction remains contingent upon several factors:
- Board approval from both parties.
- Completion of an audit for Broadsmart.
- Successful standard due diligence.
- Execution of a definitive agreement.
The filing notes that the term sheet is non-binding, and the final structure may differ from the initial proposal.
Investor Verification Checklist
- Verify if a definitive agreement has been signed following the FCC authorization in April 2018.
- Confirm the status of the required audit and due diligence for Broadsmart.
- Check for subsequent filings regarding the final consideration terms, as the initial 15% net billing structure was based on a non-binding term sheet.
- Review the Company's financial statements to assess its ability to fund the "incidental cash consideration" mentioned in the term sheet.