FIRST ADVANTAGE CORP current report, 05 May 2004

Business Context and Reporting Period

Company: First Advantage Corporation
Filing Type: Form 8-K (Current Report)
Date of Report: May 5, 2004
Event Date: April 21, 2004
Context: The Company reported the acquisition of all membership interests in CoreFacts, LLC, a provider of corporate investigative computer forensic and electronic discovery services. CoreFacts is now a wholly owned subsidiary.

Key Financial Metrics

Acquisition Consideration: $15,500,000 aggregate purchase price.
Payment Structure: Combination of cash, promissory notes guaranteed by The First American Corporation, and notes convertible into Class A common stock (also guaranteed by The First American Corporation).
Financing: The cash portion was funded through a $25 million line of credit with a bank.
Revenue, Profit, and Margins: The filing text does not provide specific revenue, profit, cash flow, or margin figures for the Company or the acquired entity.

Material Changes

  • Asset Acquisition: Addition of CoreFacts, LLC as a wholly owned subsidiary, expanding the Company's service offerings into computer forensics and electronic discovery.
  • Capital Structure: Incurrence of debt via a $25 million line of credit to fund the cash portion of the acquisition.
  • Equity Obligations: Issuance of convertible notes to sellers, contingent on future conversion into Class A common stock.

Guidance, Outlook, and Contingencies

  • Registration Statement: The Company agreed to file a Form S-3 registration statement as soon as practicable after eligibility, and in any event within 90 days of April 21, 2004, to register for resale the Class A common stock issuable upon conversion of the notes.
  • Financial Statements: Required financial statements and pro forma financial information reflecting the acquisition will be filed by amendment no later than 60 days after the filing of this 8-K.
  • Transaction Terms: Terms were determined through arms-length negotiations.

Investor Verification Checklist

  • Verify the specific breakdown of the $15.5 million purchase price between cash, promissory notes, and convertible notes.
  • Confirm the interest rates and maturity dates of the promissory notes and the conversion terms of the convertible notes.
  • Review the upcoming Form S-3 filing to understand the potential dilution from the convertible notes.
  • Monitor the 60-day deadline for the filing of pro forma financial statements to assess the acquisition's impact on the balance sheet.
  • Confirm the utilization status of the $25 million line of credit and any associated covenants.