Argentum 47 Inc (ARGQ)

[gemmerling]

I know you can answer this question. Did the second installment payment happen yet my guess is NO? See bold below. Seems like the old owner of Cheshire Trafford didn't manage the fund very well based on the filing info below. What do you think?

Note 5 – Acquisition of Cheshire Trafford (U.K.) Limited

On August 1, 2018, the Company completed the acquisition of Cheshire Trafford (UK) Limited (“Cheshire Trafford”) pursuant to a Share Purchase Agreement dated as of August 1, 2018 and acquired 100% of the ordinary shares of Cheshire Trafford.

Cheshire Trafford acts as a broker for the sale of Lump Sum or Single Premium Insurance Policies and Regular Premium Investment or Insurance Policies that are issued by reputable third-party insurance companies.

The purchase consideration for the acquisition of Cheshire Trafford is based on a formula of 2.7 times Cheshire Trafford’s projected annual recurring revenues for the calendar year ending December 31, 2018. We took the gross revenues of Cheshire Trafford for the five months ended May 31, 2018 and annualized those recurring revenues and multiplied those revenues by 2.7 times in arriving at the contractual purchase consideration of $516,795. The purchase consideration is payable in following three installments:

? The first installment of $175,710 has been paid upon closing of the transaction.
? The second installment of $170,542 is due 18 months after the acquisition date which is February 1, 2020. Management is currently in negotiation with the seller about a possible reduction in the second installment per the terms of the acquisition agreement.
? The third installment of $170,542 is due 36 months after the acquisition date.


The second and third installments could be reduced (but not increased) in the event that Cheshire Trafford’s trailing or recurring revenues are less than agreed recurring income target of GBP 144,185 during the 12-month period commencing on the Acquisition date; hence these two installments are treated as contingent purchase consideration. Based on the historical data available regarding the recurring/trail revenues of Cheshire Trafford, Management believes that there is a 95% probability that Cheshire Trafford will achieve the recurring income target of GBP 144,185 during the 12-month period ending on July 31, 2019. Hence, the contingent purchase consideration is adjusted to take into account this probability factor.


To calculate the fair value of the contingent purchase consideration, our Management has discounted the remaining two installments of $341,084 to be paid, at a discount rate of 6% (our borrowing rate for the purpose of acquisitions) to arrive at the present value of $284,298 at the acquisition date. Total fair value of the purchase consideration is as follows:

The purchase consideration is payable in three tranches. The first and initial tranche of U.S. $175,710 (132,362 GBP) was paid upon closing of the transaction. The second tranche of U.S. $170,542 (128,469 GBP) would be due 18 months after the closing. The August 31, 2018 acquisition agreement contemplated that the third and final tranche payment of U.S. $170,542 (128,469 GBP) that is due 36 months after the closing could be adjusted down (but not increased). This adjustment would only happen if Cheshire Trafford’s trail or recurring revenues between August 1, 2018 and July 31, 2019 (agreed testing period) was less than the “Recurring Target” of 144,185 GBP or, at current exchange rates, $168,365. At December 31, 2019, management carried out this testing and determined that the fair value of third and final tranche payment will be reduced by approximately $100,000.

https://www.otcmarkets.com/filing/html?id=14129514&guid=wQbHUnjLcZOHtth