11. Commitments and Contingencies
|9 Months Ended|
Sep. 30, 2013
|Notes to Financial Statements|
|11. Commitments and Contingencies||
On March 12, 2013, a landlord over premises leased by the Company commenced a lawsuit in the New York City Civil Court, County of New York (Index No. 58738/13), in which the landlord is seeking to recover specified rent and related charges of approximately $97,000 due under a lease agreement between the landlord and the Company, and, as a result thereof, to evict the Company from the premises. The Company has since made all of the payments demanded by the landlord in the lawsuit, and the lawsuit has been dismissed.
On or about September 4, 2013, a landlord over premises leased by the Company commenced a lawsuit in the New York City Civil Court, County of New York (Index No. 79154/13), in which the landlord is seeking to recover specified rent and related charges of approximately $88,000 due under a lease agreement between the landlord and the Company, plus interest and attorneys fees, and to evict the Company from the premises. The Company intends to contest and dispute the claims set forth in the landlords petition. However, due to the uncertainties of litigation and other unknown factors, there can be no assurances that the Company will be able to reach a favorable resolution to this proceeding.
The Company is from time to time involved in claims and legal actions arising in the ordinary course of business. Management does not expect that the outcome of any such claims or actions will have a material effect on the Companys operations or financial condition. In addition, due to the regulatory nature of the telecommunications industry, the Company periodically receives and responds to various inquiries from state and federal regulatory agencies. Management does not expect the outcome of any such regulatory inquiries to have a material impact on the Companys liquidity, results of operations or financial condition.
On August 30, 2013, the Company and its newly-formed subsidiary, Fusion Broadvox Acquisition Corp. (FBAC), entered into an Asset Purchase and Sale Agreement (the Agreement) to acquire specified assets owned by BroadvoxGo! LLC and Cypress Communications, LLC (collectively, the Sellers) and used in the operation of the cloud communications services segment of the Sellers business (the Acquired Business). The Company also agreed to assume substantially all of the on-going liabilities of the Acquired Business incurred in the ordinary course of business.
The aggregate purchase price for the assets to be purchased from the Sellers, net of the assumed liabilities, is $32.1 million (subject to adjustment as provided in the Agreement), payable in cash, at closing. In accordance with the Agreement, the Company delivered $200,000 into escrow as a good faith deposit to be refunded to the Company only under certain limited circumstances, such as Sellers wrongful failure to complete the sale or the Companys termination of the Agreement due to Sellers failure to satisfy a condition precedent to closing not waived by the Company.
While the Agreement contemplates that a closing of the sale of the Acquired Business will take place in the fourth quarter of 2013, the conditions precedent to closing are such that there can be no assurance that the Company will complete its acquisition of the Acquired Business in that time or at all.
The Companys operations were impacted by Hurricane Sandy in October of 2012, and the Company filed a business interruption insurance claim with its insurance carrier for the Companys estimate of losses it incurred as a result of the storm. The Companys consolidated statement of operations for the three months ended September 30, 2013 reflects insurance proceeds received in the amount of $85,000, which is reflected as a reduction to Cost of sales in the Companys Carrier Services business segment. The Companys consolidated statement of operations for the nine months ended September 30, 2013 reflects approximately $248,000 of insurance proceeds, of which approximately $109,000 is reflected as Revenues, $85,000 is reflected as a reduction in Cost of sales and the remainder as a reduction to Selling, general and administrative expenses.
The entire disclosure for commitments and contingencies.
Reference 1: http://www.xbrl.org/2003/role/presentationRef