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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15 (d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported) May 18, 2000
PentaStar Communications, Inc.
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(Exact name of registrant as specified in its charter)
Delaware 0-27709 84-1502003
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(State or other jurisdiction (Commission File Number) (IRS Employer
of incorporation) Identification No.)
1522 Blake Street, Denver CO 80202
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (303) 825-4400
None
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(Former name or former address, if changed since last report.)
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Item 2. Acquisition or Disposition of Assets
On May 18, 2000, PentaStar Communications, Inc., ("PentaStar") through a
wholly-owned subsidiary, completed the acquisition of the assets and business of
VSI Network Solutions, Inc., dba Eastern Telecom ("ETI"), pursuant to a Purchase
Agreement ("Agreement") dated February 18, 2000. PentaStar is integrating the
business acquired from ETI with PentaStar's earlier announced acquisitions of
the assets and business of USTelecenters, Inc. and Vermont Network Services
Corporation (collectively referred to as "UST").
The purchase price paid at closing for the assets consisted of
$2,100,000 of cash, the issuance of 57,122 shares of PentaStar common stock,
$.0001 par value (which shares had an agreed upon value of $950,000, based upon
the trading price for the five day period ending on February 18, 2000) and the
assumption of certain assumed liabilities. Of the cash paid at closing, $500,000
was placed in escrow until June 30, 2000 for application against accounts
receivable of ETI which are not collected on June 30, 2000. The cash portion of
the consideration is subject to post-closing adjustments based upon certain
closing balance sheet amounts. The 57,122 shares of PentaStar common stock were
placed in a general indemnification escrow until November 18, 2001. The purchase
price also includes an earn-out arrangement based upon four times the earnings
before interest, taxes and amortization (EBITA) of the operations acquired by
PentaStar from ETI and UST for the period January 1, 2000 to December 31, 2000
minus the amounts already paid at the UST and ETI closings. The earnout amount,
if any, is payable in cash, PentaStar common stock or a combination thereof, at
PentaStar's option.
The consideration was determined based upon negotiations between the
parties. The source of funds used by PentaStar to pay the cash portion of the
consideration was proceeds from PentaStar's October 1999 initial public offering
of equity securities.
ETI, founded in 1992, is a full-service communications agent primarily
servicing customers in Boston, New York, Albany, Providence and Warwick. ETI is
an authorized agent for Bell Atlantic and Bell South. ETI is a wholly-owned
subsidiary of VSI Enterprises, Inc. (OTCBB: VSIN). VSI Enterprises develops,
manufactures, markets and supports software based audio/visual command and
control systems and videoconferencing products that operate on PC platforms.
Item 7. Financial Statements and Exhibits
a) Financial Statements.
In accordance with Item 7(a)(4) of Form 8-K, the financial
statements required to be filed with the Commission will be filed
by an amendment to this report no later than 60 days after the due
date of this report.
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b) Pro Forma Financial Information.
In accordance with Item 7(b)(2) of Form 8-K, any pro forma
financial information required to be filed with the Commission
will be filed by an amendment to this report no later than 60 days
after the due date of this report.
c) Exhibits.
EXHIBIT NUMBER DESCRIPTION
2.8* Purchase Agreement dated February 18, 2000
among PentaStar Communications, Inc.,
OC Mergerco 4, Inc. , VSI Network Solutions,
Inc. and the Shareholder of VSI Network
Solutions, Inc.
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* Incorporated by reference from the Company's Quarterly Report on Form
10-QSB for the quarterly period ended March 31, 2000.
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SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
Date: June 2, 2000 PENTASTAR COMMUNICATIONS, INC.
By: /s/ David L. Dunham
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David L. Dunham
Chief Financial Officer