EX-99.1 2 v084965_ex99-1.htm
 
Company Contact:
Investor Relations
Thomas P Rosato
John McNamara
CEO
Cameron Associates
Fortress International Group
(212) 245-8800 Ext. 205
Phone: 410.312.9988 x 222
john@cameronassoc.com


FOR IMMEDIATE RELEASE:
 

Fortress International Group Announces 2007 Second Quarter Financial Results

Backlog reaches $55.3 million



COLUMBIA, MD - August 14, 2007 - Fortress International Group (NASDAQ: FIGI), holding company for Total Site Solutions (TSS), a company providing comprehensive services for the planning, design and development of mission critical facilities and information infrastructure, today announced financial results for the 2007 second quarter.

For the second quarter ended June 30, 2007, the Company reported on a pro forma basis revenue of $10.9 million and a loss before income taxes of $2.4 million compared to pro forma revenue of $18.4 million and income before taxes of $ 0.7 million for the second quarter of 2006. The loss for the quarter ended June 30, 2007 includes $1.0 million of non cash costs including depreciation, amortization and restricted stock compensation.
 
For the six months ended June 30, 2007, the Company reported pro forma combined revenues of $ 21.0 million and a loss before income taxes of $4.2 million compared to revenue of $34.7 million and income before taxes of $1.7 million for the six months ended June 30, 2006. The loss for the six months ended June 30, 2007 includes $1.8 million of non cash costs including depreciation, amortization and restricted stock compensation..

Commenting on the quarter and six month period, CEO Tom Rosato said, “We continue to make strides in growing our company. The increased costs incurred to become a public company and more importantly to pursue and capture new business has greatly increased our selling, general and administrative expenses over historic levels and combining that with lower than expected revenues, we experienced a loss for the quarter and six months ended June 30, 2007. Our public company infrastructure is now in place and operating and should not require any significant increase in costs. Our sales, marketing and proposal activity produced a large increase in backlog and our new proposals pipeline remains strong. We closed $44.9 million in new business during the quarter and our backlog increased to a record high level of $55.3 million. We see a continued strong demand for our services. If the backlog converts to revenues, and new sales activity continues to improve, we believe that we can achieve positive cash flow in the near future”.
 
 


In order to assist investors in better understanding the changes in our business between the three and six months ended June 30, 2007 and June 30, 2006, we discussed above pro forma results of operations for the Company and TSS/Vortech for the three and six months ended June 30, 2007 and June 30, 2006 as if the acquisition of TSS/Vortech occurred on January 1, 2007 and January 1, 2006, respectively. We derived the pro forma results of operations from (i) the unaudited consolidated financial statements of TSS/Vortech for the period from December 31, 2006 to January 19, 2007 (the date of the acquisition) and the six months ended June 30, 2006, and (ii) our unaudited consolidated financial statements for the six months ended June 30, 2007 and June 30, 2006.

The Company will conduct a conference call and webcast to discuss its financial results on Wednesday August 15 at 8:30 a.m. EST. The call may be accessed live by dialing (877) 704-5391 five minutes before the start of the call. An accompanying slide presentation will be available via the Internet at:

www.thefigi.com

The webcast and conference call will be archived after its completion and will remain available through August 22, 2007 by dialing (888) 203-1112 and entering replay passcode 9643657.  



ABOUT TOTAL SITE SOLUTIONS

Total Site Solutions (TSS) plans, designs, builds and maintains specialized facilities such as data centers, trading floors, call centers, network operation centers, communication facilities, laboratories and secure facilities. For more than a quarter-century, the TSS team has pioneered building robust and scalable infrastructure into mission-critical facilities. The firm offers unsurpassed expertise in the infrastructure systems (electrical, mechanical, telecommunications, security, fire protection and building automation) that are the critical facility's lifeblood. TSS’s comprehensive portfolio of services and multi-disciplinary expertise provide customers a highly respected single source for critical services that bridge the gap between IT and facilities.

Headquartered in the Baltimore-Washington corridor, TSS provides complete turnkey facility services from the initial planning stages, to construction, to ongoing maintenance of the completed project. Its clients include the world's most demanding mission-critical organizations, including Fortune 500 firms and US government agencies. For more information, visit www.totalsiteteam.com or call 888-321-4TSS (4877).

FORWARD-LOOKING STATEMENTS

This document may contain “forward-looking statements”—that is, statements related to future—not past—events, plans, and prospects. In this context, forward-looking statements may address matters such as our expected future business and financial performance, and often contain words such as “guidance,” “expects,” “anticipates,” “intends,” “plans,” “believes,” “seeks,” “should,” or “will.” Forward-looking statements by their nature address matters that are, to different degrees, uncertain. For Fortress, particular uncertainties that could adversely or positively affect the Company’s future results include: the Company’s reliance on a significant portion of its revenues from a limited number of customers; the uncertainty as to whether the Company can replace its declining backlog; risks involved in properly managing complex projects; risks relating to revenues under customer contracts, many of which can be canceled on short notice; risks related to the implementation of the Company’s strategic plan, including the ability to make acquisitions and the performance and future integration of acquired businesses; and other risks and uncertainties disclosed in the Company’s filings with the Securities and Exchange Commission. These uncertainties may cause the Company’s actual future results to be materially different than those expressed in the Company’s forward-looking statements. The Company does not undertake to update its forward-looking statements.
 

 
Fortress International Group, Inc.
Consolidated Balance Sheets
 
 
   
(Successor)
     
(Predecessor)
   
June 30,
 
December 31,
     
January 19,
 
December 31,
   
2007
 
2006
     
2007
 
2006
   
(unaudited)
 
(audited)
     
(unaudited)
 
(audited)
 
Assets
                  
                    
Current Assets
                  
Cash and cash equivalents
 
$
21,106,976
 
$
7,347
 
$
1,322,317
 
$
2,361,838
 
Contract and other receivables, net
   
8,977,676
   
   
6,261,988
   
9,960,851
 
Prepaid expenses and other current assets
   
746,264
   
3,750
   
233,894
   
125,276
 
Costs and estimated earnings in excess of billings
   
1,400,868
                   
on uncompleted contracts
         
   
1,559,045
   
480,540
 
Income tax recoverable
   
840,000
   
   
   
 
Due from affiliated entities
   
   
   
   
201,670
 
                           
Total Current Assets
   
33,071,784
   
11,097
   
9,377,244
   
13,130,175
 
                           
Investments held in trust
   
   
44,673,994
   
   
 
                           
Property and equipment, net
   
924,363
   
   
904,689
   
810,747
 
                           
Goodwill
   
14,912,946
   
   
   
 
                           
Intangible assets, net
   
19,185,065
   
   
   
 
                           
Deferred acquisition costs
   
   
869,853
   
   
 
                           
Other assets
   
371,823
   
   
64,158
   
21,190
 
                           
Deferred tax assets
   
   
490,675
   
   
 
                           
Total Assets
 
$
68,465,981
 
$
46,045,619
 
$
$10,346,091
 
$
13,962,112
 

 

 
Fortress International Group, Inc.
Consolidated Balance Sheets-Continued
 

   
(Successor)
 
 (Predecessor)
 
   
June 30,
 
December 31,
 
 January 19,
 
December 31,
 
   
2007
 
2006
 
 2007
 
2006
 
   
(unaudited)
 
(audited)
 
 (unaudited)
 
(audited)
 
                    
Liabilities and Stockholders’ Equity
                         
                           
Current Liabilities
                         
Notes payable–current portion
 
$
64,359
 
$
 
$
72,808
 
$
76,934
 
Accounts payable and accrued expenses
   
7,909,827
   
913,222
   
6,641,718
   
8,503,024
 
Advances from stockholder
         
20,000
   
   
 
Income taxes payable
   
   
586,283
   
   
 
Billings in excess of costs and estitmated earnings
                         
on uncompleted contracts
   
1,072,911
   
   
1,662,718
   
1,243,042
 
Deferred compensation payable
   
   
   
   
643,571
 
                           
Total Current Liabilities
   
9,047,097
   
1,519,505
   
8,377,244
   
10,466,571
 
                           
Notes payable
   
10,055,523
   
   
79,524
   
81,679
 
                           
                           
Total Liabilities
   
19,102,620
   
1,519,505
   
8,456,768
   
10,548,250
 
                           
Common stock, subject to possible redemption 1,559,220 shares
   
   
8,388,604
   
   
 
                           
Interest income on common stock subject to possible redemption
   
   
541,735
   
   
 
                           
Total common stock subject to redemption
   
   
8,930,339
   
   
 
                           
Commitments and Contingencies
   
   
   
   
 
                           
Stockholders’ Equity
                         
Preferred stock- $.0001 par value; 1,000,000 shares authorized;
                         
no shares issued or outstanding
   
   
   
   
 
Common stock-- $.0001 par value, 100,000,000 shares authorized;
   
1,185
                   
11,856,545 and 9,550,000 issued; 11,856,545 and 9,550,000
                         
outstanding, respectively (which includes 0 and 1,559,220
                         
shares subject to possible redemption, respectively
         
955
   
   
 
Additional paid-in capital
   
52,864,132
   
34,819,062
   
   
 
Treasury stock, at cost 133,775 and 0 shares (successor);
   
(686,743
)
 
   
   
 
Retained earnings
   
(2,815,213
)
 
775,758
   
   
 
Members' equity
   
   
   
1,889,323
   
3,732,115
 
Note receivable from affiliate
   
   
   
   
(318,253
)
                           
Total Stockholders’ Equity
   
49,363,361
   
35,595,775
   
1,889,323
   
3,413,862
 
                           
Total Liabilities and Stockholders’ Equity
 
$
68,465,981
 
$
46,045,619
 
$
10,346,091
 
$
13,962,112
 
                           
 
 
 

 
 
                    
FORTRESS INTERNATIONAL GROUP, INC.
                  
Pro Forma Consolidated Statements of Operations
                  
                    
   
(Successor)
 
 (Successor)
 
(Predecessor)
 
(Proforma)
 
   
For the Three Months Ended
 
 For the Three Months Ended
 
For the Three Months Ended
 
For the Three Months Ended
 
   
June 30,
 
June 30,
 
June 30,
 
June 30,
 
   
2007
 
 2006
 
2006
 
2006
 
                    
Revenue
 
$
10,862,307
 
$
 
$
18,445,839
 
$
18,445,839
 
Cost of Revenue
   
9,424,029
   
114,075
   
15,507,437
   
15,621,512
 
                           
Gross Profit
   
1,438,278
   
(114,075
)
 
2,938,402
   
2,824,327
 
                           
Operating costs and expenses
                         
Selling, general and administrative
   
3,424,040
   
121,753
   
1,598,894
   
1,720,647
 
Depreciation and amortization
   
97,245
   
   
82,275
   
82,275
 
Amortization of intangible assets
   
567,108
   
567,108
   
   
567,108
 
                           
Total operating costs and expenses
   
4,088,393
   
688,861
   
1,681,169
   
2,370,030
 
                           
Operating income
   
(2,650,115
)
 
(802,936
)
 
1,257,233
   
454,297
 
                           
Other Income (Expense)
                         
Interest income
   
423,898
   
410,904
   
   
410,904
 
Interest (expense)
   
(150,431
)
 
(150,431
)
 
(4,733
)
 
(155,164
)
                           
Income (Loss) Before Income Taxes
   
(2,376,648
)
 
(542,463
)
 
1,252,500
   
710,037
 
                           
As a Percentage of Revenue
                         
                           
Revenue
   
100.0
%
 
   
100.0
%
 
100.0
%
Cost of Revenue
   
86.8
%
 
   
84.1
%
 
84.7
%
                           
Gross Profit
   
13.2
%
 
   
15.9
%
 
15.3
%
                           
Operating costs and expenses
                         
Selling, general and administrative
   
31.5
%
 
   
8.7
%
 
9.3
%
Depreciation and amortization
   
0.9
%
 
   
0.4
%
 
0.4
%
Amortization of intangible assets
   
5.2
%
 
   
0.0
%
 
3.1
%
                           
Total operating costs and expenses
   
37.6
%
 
0.0
%
 
9.1
%
 
12.8
%
                           
Operating income
   
-24.4
%
 
0.0
%
 
6.8
%
 
2.5
%
                           
Other Income (Expense)
                         
Interest income
   
3.9
%
 
100.0
%
 
0.0
%
 
2.2
%
Interest (expense)
   
-1.4
%
 
-36.6
%
 
0.0
%
 
-0.8
%
                           
 
 

 
 

                            
FORTRESS INTERNATIONAL GROUP, INC.
                          
Pro Forma Consolidated Statements of Operations
                          
                            
   
(Successor)
 
(Predecessor)
   
 (Successor)
 
(Predecessor)
   
       
For the period
 
Proforma
combined
 
  
     
Proforma
combined
 
   
For the Six Months
 
from January 1,
 
For the Six Months
 
 For the Six Months
 
For the Six Months
 
For the Six Months
 
   
 Ended
 
2007 through
 
 Ended
 
  Ended
 
Ended 
 
Ended 
 
   
June 30,
 
January 19,
 
June 30,
 
 June 30,
 
June 30,
 
June 30,
 
   
2007
 
2007
 
2007
 
 2006
 
2006
 
2006
 
                            
Revenue
 
$
19,539,244
   
1,412,137
   
20,951,381
 
$
 
$
34,726,161
 
$
34,726,161
 
Cost of Revenue
   
16,629,595
   
1,108,276
   
17,737,871
   
202,673
   
28,719,264
   
28,921,937
 
                                       
Gross Profit
   
2,909,649
   
303,861
   
3,213,510
   
(202,673
)
 
6,006,897
   
5,804,224
 
                                       
Operating costs and expenses
                                     
Selling, general and administrative
   
6,061,980
   
555,103
   
6,617,083
   
297,955
   
3,207,944
   
3,505,899
 
Depreciation and amortization
   
152,676
   
33,660
   
186,336
   
   
126,000
   
126,000
 
Amortization of intangible assets
   
1,007,562
   
   
1,007,562
   
1,007,562
   
   
1,007,562
 
                                       
Total operating costs and expenses
   
7,222,218
   
588,763
   
7,810,981
   
1,305,517
   
3,333,944
   
4,639,461
 
                                       
Operating income
   
(4,312,569
)
 
(284,902
)
 
(4,597,471
)
 
(1,508,190
)
 
2,672,953
   
1,164,763
 
                                       
Other Income (Expense)
                                   
Interest income
   
640,069
   
4,117
   
644,186
   
772,465
   
   
772,465
 
Interest (expense)
   
(267,797
)
 
(368
)
 
(268,165
)
 
(266,302
)
 
(9,698
)
 
(276,000
)
                                       
Income (Loss) Before Income Taxes
   
(3,940,297
)
 
(281,153
)
 
(4,221,450
)
 
(1,002,027
)
 
2,663,255
   
1,661,228
 
                                       
As a Percentage of Revenue
                                     
                                       
Revenue
   
100.0
%
 
100.0
%
 
100.0
%
 
   
100.0
%
 
100.0
%
Cost of Revenue
   
85.1
%
 
78.5
%
 
84.7
%
 
   
82.7
%
 
83.3
%
                                       
Gross Profit
   
14.9
%
 
21.5
%
 
15.3
%
       
17.3
%
 
16.7
%
                                       
Operating costs and expenses
                                     
Selling, general and administrative
   
31.0
%
 
39.3
%
 
31.6
%
       
9.2
%
 
10.1
%
Depreciation and amortization
   
0.8
%
 
2.4
%
 
0.9
%
       
0.4
%
 
0.4
%
Amortization of intangible assets
   
5.2
%
 
0.0
%
 
4.8
%
       
0.0
%
 
2.9
%
 
                                     
Total operating costs and expenses
   
37.0
%
 
41.7
%
 
37.3
%
       
9.6
%
 
13.4
%
                                       
Operating income
   
-22.1
%
 
-20.2
%
 
-21.9
%
 
0.0
%
 
7.7
%
 
3.4
%
                                       
Other Income (Expense)
                                     
Interest income
   
3.3
%
 
0.3
%
 
3.1
%
 
100.0
%
 
0.0
%
 
2.2
%
Interest (expense)
   
-1.4
%
 
0.0
%
 
-1.3
%
 
-34.5
%
 
0.0
%
 
-0.8
%