Annual report pursuant to Section 13 and 15(d)


12 Months Ended
Dec. 31, 2018
Business Combinations [Abstract]  



2017 Acquisition


On April 20, 2017, FTE acquired all of the issued and outstanding shares of common stock of Benchmark Builders, Inc. (“Benchmark”), The purchase price consisted of (i) cash consideration of approximately $17,250 (ii) 1,069,538 shares of FTE common stock with a fair value of $21,658, (iii) convertible promissory notes in the aggregate principal amount of $12,500 to certain stockholders of Benchmark (the “Series A Notes”, which mature on April 20, 2019) and (iv) promissory notes in the aggregate principal amount of $30,000 to certain stockholders of Benchmark (the “Series B Notes”, which mature on April 20, 2020). On April 20, 2017, the Company’s senior lender, amended the original credit agreement to provide for approximately $10,100 towards the cash purchase price of the Benchmark acquisition, refinancing this new advance with the existing debt and extending the maturity date of the facility to March 31, 2019. See Note 14. In addition, certain sellers of Benchmark provided approximately $7,500 towards the cash purchase price for which they received promissory notes (the “Series C Notes”, which mature on October 20, 2018). The acquisition has been accounted for as a business combination in accordance with ASC Topic 805. Benchmark is a full-service general contracting management and general contracting firm, significantly expanding the Company’s presence in the New York area.


The following table summarizes the consideration transferred for the acquisition of Benchmark:


Cash consideration   $ 17,250  
Shares of common stock     21,658  
Series A notes*     11,263  
Series B notes*     24,574  
Less: Receivable from Benchmark     (500 )
Merger consideration   $ 74,245  


*: Series A and B notes were recorded at fair value.


The following table summarizes the acquisition date fair value of the purchase price allocation assigned to each major class of assets acquired and liabilities assumed as of April 20, 2017, the closing date for Benchmark:


Cash   $ 2,416  
Accounts receivable     20,577  
Costs and estimated earnings in excess of billings on uncompleted contracts     3,870  
Other current assets     4,235  
Property and equipment     47  
Total identifiable assets acquired     31,145  
Fair value of intangible assets acquired:        
Contracts in progress     10,632  
Trademarks and tradenames     2,749  
Customer relationships     22,743  
Non-compete     548  
Total fair value of intangible assets acquired     36,672  
Goodwill     45,007  
Total Assets Acquired     112,824  
Accounts payable     20,098  
Billings in excess of costs and estimated earnings on uncompleted contract     16,303  
Accrued expenses and other current liabilities     2,178  
Total Liabilities Assumed     38,579  
Total consideration transferred   $ 74,245  


Goodwill of $45,007 was recorded related to this acquisition. The Company believes the goodwill related to the acquisition was a result of the expected growth platform to be used for expanding the business. As of April 20, 2017, goodwill is expected to be fully deductible for tax purposes and will be amortized over 15 years.


The operating results of Benchmark for the period from April 21, 2017 to December 31, 2017 included revenues of $201,681 and net income of $15,315 and are included in the consolidated statements of operations for the year ended December 31, 2017. The net income in the Company’s Consolidated Statements of Operations reflects $8,976 of amortization expense for the year ended December 31, 2017, in connection with Benchmark’s intangible assets. The Company incurred a total of $701 in transaction costs in connection with the acquisition, which are included in the consolidated statement of operations for the year ended December 31, 2017, respectively. See Note 9. Goodwill and Intangible Assets, for information regarding the goodwill and intangible assets of the Benchmark acquisition.


Unaudited Supplemental Pro Forma Information


The pro forma results presented below include the effects of the Company’s 2017 acquisition of Benchmark as if the acquisition occurred on January 1, 2017. The pro forma net loss for the year ended December 31, 2017 includes the additional depreciation and amortization resulting from the adjustments to the value of property and equipment and intangible assets resulting from purchase accounting and elimination of transaction costs. The pro forma results also include interest expense associated with debt used to fund the acquisitions. The pro forma results do not include any anticipated synergies or other expected benefits of the acquisitions. The unaudited pro forma financial information is not necessarily indicative of either future results of operations or results that might have been achieved had the acquisitions been consummated as of January 1, 2017.


The unaudited pro forma combined results, which assumes the transaction was completed on January 1 are as follows for the twelve months ended December 31, 2017:


    Revenue     Net Loss     Loss per Share     Weighted
2017 supplemental pro forma from January 1, 2017 through December 31, 2017   $ 250,700       (103,596 )     (21.77 )     4,756,049