Smart Sand, Inc. Form 8-K Summary
Business Context and Reporting Period
Smart Sand, Inc. (the "Company") filed this Current Report on Form 8-K on May 8, 2018. The Company is an emerging growth company incorporated in Delaware. The filing discloses the entry into a Material Definitive Agreement to acquire assets from Quickthree Solutions, Inc., a Canadian manufacturer of portable vertical frac sand storage solutions.
Key Financial Metrics and Transaction Details
This filing does not report standard periodic financial metrics such as revenue, profit, or cash flow for a specific reporting period. Instead, it details the financial terms of the proposed acquisition:
- Total Purchase Price: Up to $42.75 million.
- Closing Payment: $30 million payable at closing, subject to working capital adjustments.
- Earn-out: Up to $12.75 million in potential payments over three years based on silo and equipment production.
- Payment Method: Cash on hand and advances under the Company's credit facility.
- Stock Consideration Option: The Company may pay $5 million of the closing price via 728,004 shares of common stock valued at $6.8681 per share (20-day VWAP). If shares are not registered within 120 days, Quickthree may elect cash in lieu.
Material Changes and Conditions
The primary material change is the execution of the Asset Purchase Agreement. The transaction is subject to standard closing conditions, including the acceptance of employment offers by key Quickthree personnel. The closing must occur by May 31, 2018, with a potential 30-day extension if conditions are not met. The Company has agreed to offer employment to all Quickthree employees.
Outlook, Risks, and Unusual Items
Outlook: The acquisition is intended to expand the Company's capabilities in the oil and gas exploration and development industry through the addition of Quickthree's storage solutions.
Risks and Contingencies:
- Closing Risk: The transaction is not guaranteed and depends on satisfying closing conditions by the specified deadline.
- Financing Risk: The purchase relies on cash on hand and credit facility advances; the filing does not specify current liquidity levels.
- Registration Risk: If the Company cannot register the stock consideration within 120 days, the payment structure may shift entirely to cash.
Investor Verification Checklist
- Verify the Company's current cash position and available credit facility capacity to fund the $30 million closing payment.
- Confirm the status of the closing conditions, specifically the acceptance of employment by key Quickthree personnel.
- Review the full Asset Purchase Agreement (Exhibit 2.1) for specific working capital adjustment mechanics and earn-out production targets.
- Monitor the timeline for the registration statement regarding the potential stock consideration.