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Monday, November 18, 2019 11:48:48 AM
Their 8K clearly shows profit for all years projected, starting on year 1, and only if at least 70% of the annual Business Plan is reached, they pay dividend to the sellers, which is clearly the opposite of what was stated in the post I'm replying to. This 70% limit is clearly in favor of VRUS.
From 8K:
Section 2.6 Distributions
to
SELLERs
and
BUYER.
(a) Distributions to SELLERs. Beginning one (1)-year after the Closing Date until the five (5)-year anniversary thereof (such period the “Distribution Period”), SELLERs shall have an opportunity to receive an annual preferred dividend (“Dividend”), up to $4,500,000 per fiscal year, totaling no more than $18,000,000 over the Distribution Period, based upon the cumulative consolidated financial performance (“Financial Performance”) of the Companies. Such Financial Performance must initially achieve at least 100% of the Business Plan for the Dividend to become earned and payable to SELLERs. Additionally, each annual dividend will be determined and paid by the Free Cash Flow (“FCF”) of the Companies Financial Performance, whereby the payment amount of each earned annual Dividend will not exceed the annual FCF. Subject to the preceding sentence, if the amount paid in any fiscal year is less than the maximum amount established for such fiscal year, then the maximum amount for the subsequent year will be increased by the amount of such “shortfall.” Each Dividend will be determined at the end of each fiscal year utilizing the cumulative net income of the Companies, and be paid by Holdings immediately upon completion of the annual financial statement audit by BUYER’s PCAOB registered public accounting firm. After the initial Financial Performance of the Companies achieves 100% of the Business Plan, in order for the Dividend to continue to be earned and payable, the Financial Performance of the Companies must achieve at least 70% of the annual Business Plan. Additionally, although the financial performance of each fiscal year will determine the annual Dividend earned and payable, the Financial Performance over the five (5)-year period within the Business Plan, will determine the final Dividend earned and due to SELLERs. For example, in the event the Companies achieve 100% of the Business Plan during fiscal years one (1) through five (5), an example of the FCF, earned Dividend, payment and payment shortfall of such earned Dividend, and subsequent payment of Dividend shortfall are as follows:
Year 1: $1,533K / $18,430K = 8.3%
Year 2: $5,870K / $42,241K = 13.9%
Toal for 5 years: $80,222K / $366,989 = 21.9%
Exactly as stated in Verus Tweet:
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