Business Context and Reporting Period
This Form 8-K Current Report was filed by i3 Verticals, Inc. on April 8, 2019, covering events occurring on April 2 and April 3, 2019. The Company, an emerging growth corporation incorporated in Delaware, operates in the software and services sector.
Key Financial Metrics and Transactions
- Acquisition Consideration: The Company completed the acquisition of Northeast Texas Data, LLC ("NET Data") and Graves Humphries Stahl, LLC ("GHS") for approximately $24 million in cash.
- Contingent Consideration: Sellers are eligible for an additional $1 million based on performance conditions over the following 12 months.
- Executive Compensation: CEO Greg Daily's annual base salary was increased to $300,000, effective April 1, 2019, up from a nominal amount of approximately $12,000.
- Financial Statements: The filing does not provide current revenue, profit, cash flow, or debt metrics for the Company. Financial statements for the acquired businesses and pro forma information are scheduled to be filed within 71 days.
Material Changes
The primary material change is the expansion of the Company's portfolio through the acquisition of NET Data and GHS, entities focused on software products and services for small and midsize county governments and city court systems. Additionally, the Company materially altered its executive compensation structure by significantly increasing the CEO's base salary.
Outlook, Risks, and Contingencies
- Performance Contingency: A portion of the acquisition cost ($1 million) is contingent upon the acquired entities meeting specific performance targets within 12 months.
- Working Capital Adjustments: The $24 million cash consideration is subject to pre- and post-closing net working capital adjustments.
- Regulatory Disclosure: The Company issued a press release on April 8, 2019, to disclose the transaction details under Regulation FD.
Investor Verification Checklist
- Verify the final purchase price after net working capital adjustments are calculated.
- Monitor the upcoming filing (within 71 days) for the acquired businesses' financial statements and pro forma financial information.
- Assess the impact of the $24 million cash outflow on the Company's current liquidity and debt levels, as these figures are not disclosed in this report.
- Review the specific performance metrics required for the $1 million earn-out payment.