has completed a Letter of Intent to acquire the assets of a telecom company providing services to small and medium enterprises and other groups in the United States. Under the terms of the non-binding letter of intent, Flint Telecom will acquire all of the customers, equipment, contracts and operating licenses on completion of definitive agreements and required regulatory filings.
The assets being acquired are currently generating positive net income of approximately 10% on annual revenues in excess of $3 million. When consolidated with other announced and pending acquisitions, operating costs should be further reduced due to shared common services and network cost reductions that are expected to further improve net income.
Under the terms of the letter of intent, definitive agreements are planned to complete within 45 days following standard due diligence at which point Flint Telecom will have to provide a $100,000 non-refundable deposit to move to closing. The agreed purchase price for the assets is $1 million in cash with a further $250,000 at closing with the remaining balance spread over 14 months from closing.
In 2010, Fierce VoIP magazine quoted an In-Stat report stating that VoIP penetration will double by 2013 to 79 percent from about 33 percent of companies in 2009. Broadband IP Telephony revenue will also double by 2013, In-Stat said, fueled by single user applications as well as the mobile workforce.
Vincent Browne, Chairman and Chief Executive of Flint Telecom Group, said, "This continues our stated acquisition strategy to achieve our target of ten acquisitions this year, creating a highly profitable business unit delivering integrated voice, data and wireless services to small and medium sized enterprises with profitable annual revenues in excess of $20 million. This deal comes on the back of our first Form-S1 filing, in conjunction with our Kodiak Capital equity line, being made effective. With that milestone achieved, we can now show prospective acquisitions and customers that we have access to sufficient capital over the next two years to fund operations and strengthen our balance sheet. It will also free up management resources to concentrate on completing this and previously announced letters of intent that have been delayed due to the current Form-S1 filing process."