Business Context and Reporting Period
This Form 8-K is filed by Fortress International Group, Inc. (the "Company") for the reporting period ending December 29, 2009. The filing reports the completion of a material asset disposition involving the Company's wholly-owned subsidiary, Rubicon Integration, LLC ("Rubicon").
Key Financial Metrics and Transaction Details
The Company completed the sale of substantially all assets of Rubicon to Rubicon Acquisition Company, LLC ("Purchaser"). The aggregate consideration received includes:
- Cash: $1,000,000 (subject to a working capital adjustment within 60 days).
- Debt Assumption (Promissory Note): $235,714 (assumption of Company's obligation dated May 22, 2009).
- Debt Assumption (Bonus Payments): $104,711 (assumption of Rubicon's obligation for employee bonuses).
- Promissory Note: $534,574 issued by Purchaser, accruing 4.0% annual interest, payable in equal monthly installments over 18 months starting April 29, 2010. This note is guaranteed by James Embley, William Pirrone, and Eric Holzworth.
- Earn-out: Additional contingent amounts based on future project performance.
The filing does not provide specific revenue, profit, cash flow, or margin figures for the Company or Rubicon for the period.
Material Changes
The primary material change is the divestiture of the Rubicon subsidiary. As part of the transaction:
- The Company was released from obligations regarding earn-out payments from the original acquisition agreement.
- Key individuals (James Embley, William Pirrone, and Eric Holzworth) entered into separation and release agreements with the Company.
Outlook, Risks, and Contingencies
Contingencies: The final cash consideration is subject to a working capital adjustment to be determined within 60 days of the closing. Future consideration is contingent upon the performance of certain projects post-closing.
Liquidity Impact: The transaction provides immediate liquidity through cash and debt relief, with future cash flows dependent on the repayment schedule of the $534,574 promissory note.
Risks: The filing does not explicitly detail new risks, though the contingent earn-out introduces uncertainty regarding total transaction value.
Investor Verification Checklist
- Verify the final working capital adjustment amount to be determined within 60 days of December 29, 2009.
- Confirm the performance metrics and potential value of the additional earn-out amounts.
- Review the repayment status of the $534,574 promissory note and the creditworthiness of the guarantors (Embley, Pirrone, Holzworth).
- Examine the separation agreements to ensure no further liabilities remain with the departing individuals.