PART
I
BUSINESS
DEVELOPMENT
BACKGROUND
Argentum
47, Inc. (“Company” or “ARG”) was incorporated on October 1, 2010, as a Nevada corporation, for the express
purpose of acquiring Global Equity Partners Plc., a corporation formed under the laws of the Republic of Seychelles (“GEP”)
on September 2, 2009. On August 22, 2014, GE Professionals DMCC was incorporated in Dubai as a wholly owned subsidiary of Global
Equity Partners Plc. On June 10, 2016, ARG incorporated its wholly owned subsidiary, called GEP Equity Holdings Limited, under
the laws of the Republic of Seychelles.
On
March 24, 2017, the Board of Directors of Global Equity Partners Plc. approved the assignment and transfer of GE Professionals
DMMC to GEP Equity Holdings Limited.
On
June 5, 2017, the Company sold 100% of the common stock of Global Equity Partners Plc. to a private citizen of the Kingdom of
Thailand. The consideration for the purchase of Global Equity Partners Plc. was the assumption by the purchaser of all liabilities
and indebtedness of Global Equity Partners Plc. in the approximate amount of $626,000. At the time of this sale, Global Equity
Partners Plc. had assets consisting of common shares of other companies having a book value of approximately $603,000.
GEP
Equity Holdings Limited provides consulting services, such as corporate restructuring, Exchange Listings and development for corporate
marketing, investor and public relations, regulatory compliance and introductions to financiers, to companies desiring to be listed
on stock exchanges in various parts of the world.
On
December 12, 2017, we incorporated a United Kingdom company under the name of Argentum 47 Financial Management Limited (“Argentum
FM”). Argentum FM is a wholly owned subsidiary of the Company. Argentum FM was formed to serve as a holding company for
the acquisition of United Kingdom based advisory firms. During 2020, the Company intends to acquire more licensed financial advisory
firms.
On
January 12, 2018, the Company secured a 12-month fixed price convertible loan from Xantis Private Equity Fund (Luxembourg) for
a minimum of 2,000,000 Great Britain Pounds (equivalent to approximately U.S. $2,680,000) carrying an interest at the rate of
6% per annum. The Company has a right to pay this note on the maturity date by issuing shares of common stock at a conversion
price equal to the greater of $0.02 or the average closing price of the Company’s common stock on the OTCBB for the prior
60 trading days. To date, the Company received $400,000 under this loan, which including the accrued interest of $24,000 was converted
into 21,200,000 shares of the Company’s common stock on January 14, 2019.
On
January 12, 2018, the Company secured a 12-month fixed price convertible loan from William Marshal Plc., a United Kingdom Public
Limited Company listed on the Cyprus Public Exchange Emerging Companies Market, for a maximum of 2,000,000 Great Britain Pounds
(equivalent to approximately U.S. $2,680,000) carrying an interest at the rate of 6% per annum. The Company has a right to pay
this note on the maturity date, by issuing shares of common stock at a conversion price equal to the greater of $0.02 or the average
closing price of the Company’s common stock on the OTCBB for the prior 60 trading days. To date, the Company received $100,000
under this loan, which including the accrued interest of $6,000 was converted to 5,300,000 common shares of the Company on January
24, 2019.
On
March 29, 2018, we changed our corporate name to Argentum 47, Inc.
On
June 6, 2018, the Company secured a 12-month fixed price convertible loan, from Xantis Aion Securitization Fund (Luxembourg),
for a minimum of 1,700,000 Great Britain Pounds (equivalent to approximately $1,940,000) carrying an interest at the rate of 6%
per annum. The Company has a right to pay this note no earlier than 366 days’ post investment of each tranche of funding,
by issuing common shares at a conversion price equal to the greater of $0.02 or the average closing ask price of the Company’s
common stock on the OTCBB for the prior 60 trading days. To date, the Company has received $1,388,040 under this loan, of which
$735,000 and related accrued interest was converted into 38,955,000 shares of the Company’s common stock on June 5, 2019.
On
August 1, 2018, Argentum FM consummated a Share Purchase Agreement with Mr. Rodney Leonard and Equilibrium Pensions Limited (trustees
of The Leonard R. Personal Pension), pursuant to which Argentum FM would acquire 100% of the ordinary shares (equity) of Cheshire
Trafford (U.K.) Limited of Hull, United Kingdom (“Cheshire Trafford”) from Mr. Leonard and Equilibrium Pensions Limited
(trustees of The Leonard R. Personal Pension).
In
March 2019, Management decided that it made overall economic sense for the Company to close its employment placement services
business in Dubai; hence, on March 18, 2019, in order to fully concentrate on its core business of Independent Financial Advisory
services and Consultancy Business, the Board of Directors decided to initiate liquidation proceedings of the Dubai subsidiary
“GE Professionals DMCC” (with an effective date of March 31, 2019). As a result of this decision to liquidate the
subsidiary, the Board of Directors also decided to discontinue its Human Resources and Placement business in Dubai. On February
11, 2020, the deregistration and liquidation process of our Dubai subsidiary was formally completed.
Cheshire
Trafford (U.K.) Limited (www.cheshire-trafford.co.uk) was incorporated under the laws of the United Kingdom on January 26, 1976,
as a limited liability company. Cheshire Trafford is a very well established and UK FCA regulated Independent Financial Advisory
firm that offers a fully computerized investment management service, including advising on investments in Unit Trusts, Investment
Bonds, Shares, Investment Trusts, Government Bonds and Individual Savings Accounts. In addition, Cheshire Trafford advises investors
on various types of Pension contracts, including Personal Pensions, Executive Pensions, Small Self-Administered Plans, Pension
Mortgages and many more.
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.
Cheshire
Trafford currently has four full time employees and in excess of 430 clients.
The
funds that Cheshire Trafford currently has under administration are invested with well-known and reputable Investment Houses such
as:
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AJ
Bell
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Canada
Life International
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Fidelity
International
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Old
Mutual International
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Old
Mutual Wealth Life
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Royal
London
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Aviva
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Prudential
Assurance
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Cheshire
Trafford’s primary customer base resides in the United Kingdom. Cheshire Trafford is licensed (Register Number 115194) and
regulated by the Financial Conduct Authority (“FCA”) of the United Kingdom. Confirmation of Cheshire Trafford’s
license can be made by visiting the FCA’s website: www.fca.gov.uk/register.
The
purchase consideration for the acquisition of Cheshire Trafford is based on a formula of 2.7 times Cheshire Trafford’s projected
annualized 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 U.S.$516,795 (389,300 Great Britain Pounds or “GBP”).
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.
The
funds for the first tranche were obtained via a June 8, 2018 loan in the amount of U.S. $735,000 from the Xantis Aion Securitisation
Fund, as previously reported in the Company’s Form 8-K Current Report filed with the Securities and Exchange Commission
on June 11, 2018.
On December 18, 2019,
the Company secured a 24-month convertible loan, from Aegeus Securitization Fund (Luxembourg), for 500,000 Great Britain Pounds
(equivalent to approximately $658,200) carrying an interest at the rate of 6% per annum. The lender has an option to convert this
note into common stock of the Company after (2) years and one (1) day from December 18, 2019 at a conversion price equivalent
to the closing market price two days prior the new conversion date. Aegeus Securitization Fund and Xantis AION Securitization
Fund both have the same fund administrators, Xantis S.A., hence Aegeus Securitization Fund is treated as a related party of the
Company as at December 31, 2019. The Company simultaneously also entered into a Receivables Assignment Agreement whereby an amount
of the receivables from the Company and/or the next Independent Financial Advisory Firm acquired will be securitized to the lender.
Pursuant to the terms of this Assignment Agreement, the Company assigned its receivables for the period from June 2020 to May
2025 to the lender. To date, the Company has received GBP 250,000 (equivalent to approximately $329,000) under this loan.
Our
authorized capital consists of 950,000,000 shares of common stock having a par value of $0.001 per share and 50,000,000 shares
of preferred stock having a par value of $0.001. As of December 31, 2018, we had 525,534,409 shares of common stock issued and
outstanding. As of December 31, 2019, we had 590,989,409 shares of common stock issued and outstanding. We also have two series
of preferred stock designated and authorized: Series “B” Preferred Stock and Series “C” Preferred Stock.
As of December 31, 2018, and 2019, we had 45,000,000 shares of Series “B” Preferred Stock authorized, issued and outstanding.
As of December 31, 2018, and 2019, we had designated and authorized 5,000,000 shares of Series “C” Preferred Stock,
3,200,000 shares of which were issued and outstanding. In March 2020, we issued an additional 100,000 shares of Series “C”
Preferred Stock to Mr. Nicholas Tuke, our new Chief Executive Officer, so we currently have a total of 3,300,000 shares of Series
“C” Preferred Stock issued and outstanding on the date of this report. We do not have any Series “A” Preferred
Stock authorized, issued or outstanding. We have 1,700,000 shares of Series “C” Preferred Stock designated and authorized,
which could be issued in the future. All shares of our Series “B” and Series “C” Preferred Stock are contractually
locked-up until September 27, 2020; hence, they cannot be sold or converted into common stock at any time prior to that date.
We
provide corporate advisory services to companies desiring to have their shares listed on stock exchanges or quoted on quotation
bureaus in various parts of the world. We had an office in Dubai until March 31, 2019. Our current offices are located in the
United Kingdom. We have affiliations with firms located in some of the world’s leading financial centers such as London,
New York, Frankfurt and Dubai. These affiliations are informal and are comprised of personal relationships with groups of people
or people with whom our Company or our management has done, or attempted to do, business in the past. We do not have any contractual
arrangements, written or otherwise, with our affiliations.
Argentum
47 Financial Management Limited is a United Kingdom based holding company that will acquire, in due course, more financial advisory
firms with funds under administration around the world. These financial advisory firms act as intermediaries between their clients
and the insurance companies. In effect, the advisory firms sell insurance policies to their clients. These types of financial
advisory firms receive recurring and non-recurring trail fees for each insurance policy that is sold. Cheshire Trafford U.K. Limited
is the first acquisition of Argentum 47 Financial Management Limited and it provides corporate and retail independent financial
advisory services and generates our revenues by acting as broker for sale of Lump Sum or Single Premium Insurance Policies and/or
the sale of Regular Premium Investment or Insurance Policies that are issued by third party insurance companies.
GEP
Equity Holdings Limited looks for companies that require capital funding for growth and acquisition, and ultimately a listing
of their shares on a recognized stock exchange or quotation on the OTC Markets quotation boards. The Company introduces these
clients to private and institutional investors in our network of over 100 “financial introducers” around the world.
These financial introducers are groups of people or institutions that are presently introducing new clients to us or who have
introduced new clients to our management in the past. We do not have any contractual arrangements, written or otherwise, with
these financial introducers.
Presently,
GEP Equity Holdings Limited, Argentum 47 Financial Management Limited and Cheshire Trafford (U.K.) Limited are our only operating
businesses. ARG´s present operations are limited to ensuring compliance with regional, state and national securities regulatory
agencies and organizations. In addition, ARG, as the parent company, is charged with (i) handling our periodic reporting obligations
under the Securities Exchange Act of 1934; (ii) managing our investor relations; and (iii) raising debt and equity capital necessary
to fund our operations in order to enhance and grow our business. ARG does not offer or conduct any consulting or advisory services,
as such services are now performed solely by GEP Equity Holdings Limited. As stated above, Argentum 47 Financial Management Limited
will serve as a holding company for the financial advisory firms to be acquired. Cheshire Trafford (U.K.) Limited is a financial
advisory firm with funds under administration.
We
currently offer the following services to our clients:
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General
business consulting
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Corporate
restructuring
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Fund
administration
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Exchange
listings and quotations on OTC Markets quotation boards
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IMPLICATIONS
OF BEING AN EMERGING GROWTH COMPANY
As
a Company with less than $1 billion in revenue during our last fiscal year, we qualify as an “emerging growth company”
as defined in the Jumpstart Our Business Startups Act of 2012 (also known as the “JOBS Act”). As an emerging growth
company, we are entitled to take advantage of specified reduced disclosure and other requirements that are otherwise applicable
generally to public companies. These provisions include:
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Only
two years of audited financial statements in addition to any required unaudited interim financial statements with correspondingly
reduced “Management’s Discussion and Analysis of Financial Condition and Results of Operations” disclosure;
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Reduced
disclosure about our executive compensation arrangements;
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Not
having to obtain non-binding advisory votes on executive compensation or golden parachute arrangements; and
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Exemption
from the auditor attestation requirement in the assessment of our internal control over financial reporting.
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We
may take advantage of these exemptions for up to five years or such earlier time that we are no longer an emerging growth company.
We would cease to be an emerging growth company if we have more than $1 billion in annual revenues, if we have more than U.S.$700
million in market value of our stock held by non-affiliates, or if we issue more than U.S.$1 billion of non-convertible debt over
a three-year period. We may take advantage of these exemptions until the last day of the fiscal year of the Company following
the fifth anniversary of the date of the first sale of our common equity securities in an effective registration statement under
the Securities Act of 1933, as amended. Note: To date, we have not sold or issued any of our common equity securities under
an effective Form S-1, Form S-3, Form S-4 or Form S-8 or other form of registration statement under the Securities Act
of 1933, as amended. We may choose to take advantage of some but not all of these reduced burdens in the future. We have irrevocably
elected to opt out of the extended transition period for complying with new or revised accounting standards pursuant Section 107(b)
of the JOBS Act.
FUND
MANAGEMENT
In
common with the overall financial services sector, the micro fund management market is undergoing significant changes. We intend
to take advantage of these changes and acquire a significant selection of international and United Kingdom based financial advisory
firms with funds under administration. These acquisitions will form part of Argentum 47 Financial Management Limited, which is
under one efficient and cost-effective umbrella. Argentum 47 Financial Management Limited’s wholly owned subsidiary, Cheshire
Trafford (U.K.) Limited currently has approximately 430 clients that have authorized our company to administrate between $8,000
and $650,000 of their money, the total representing tens of millions of dollars of funds under administration.
EXCHANGE
LISTINGS
We
also assist our clients with the selection of stock exchanges and over the counter quotation boards and markets that may be suitable
to our clients. Various exchanges have listing requirements and standards that vary from one exchange to another. Typical listing
requirements and standards relate to a number of things, such as pre-tax income, cash flows, revenue, net tangible assets, market
value of a company’s listed securities, minimum trading prices of a company’s securities, minimum shareholders’
equity, operating history, number of shareholders, number of market makers, and corporate governance. We will try to identify
appropriate exchanges for our clients based on the particular client’s operating history, pre-tax income, cash flow, revenue,
net tangible assets, shareholder base and other factors described above.
We
will assist our clients with retention of attorneys and accountants having experience with publicly held companies and stock exchanges
in various countries. We will also assist our clients in locating market makers, investment bankers and broker-dealers to assist
them with accessing capital markets.
INTRODUCTIONS
TO FINANCIERS
After
reviewing the business plans, prospects and problems that are unique to each of our clients, we will use our best efforts to introduce
our clients to various third party financial resources around the world who may be able to assist them with their capital funding
requirements.
Special
Note: As used throughout this Annual Report, references to “Argentum 47, Inc.”, “ARG”, “Company”,
“we”, “our”, “ours”, and “us” refer to Argentum 47, Inc. and our subsidiaries,
unless the context otherwise requires. In addition, references to “financial statements” are to our consolidated financial
statements contained herein, except as the context otherwise requires. References to “fiscal year” are to our fiscal
year which ends on December 31 of each calendar year. Unless otherwise indicated, the terms “Common Stock,” “common
stock” and “shares” refer to our shares of $0.001 par value, common stock.
HISTORICAL
BUSINESS TRANSACTED
BUSINESS
TRANSACTED IN 2016
During
2016, we provided our consultancy services to the following 9 clients:
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1.
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Granite
Power Limited
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2.
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Deutsche
Oel and Gas SA
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3.
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Majestic
Wealth Limited
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4.
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Unite
Global AS
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5.
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Teralight
FZ LLC
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6.
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The
Stakis Collections Limited
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7.
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Ali
Group MENA FZ LLC
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8.
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Veolia
Middle East
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9.
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Emaar,
The Economic City
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BUSINESS
TRANSACTED IN 2017
During
2017, we provided our consultancy services to the following 8 clients:
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1.
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Blackstone
Natural Resources S.A.
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2.
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Graphite
Resources (DEP) Limited
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3.
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OCS
ROH
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4.
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Fly-A-Deal
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5.
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Falcon
Eye Technology
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6.
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Ali
Group MENA FZ LLC
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7.
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Veolia
Middle East
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8.
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Emaar,
The Economic City
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BUSINESS
TRANSACTED IN 2018
During
2018, we provided our consultancy services to the following 4 clients:
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1.
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Emaar,
The Economic City.
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2.
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OCS
ROH.
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3.
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Blackstone
Natural Resources S.A.
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4.
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Creditum
Limited.
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After
the acquisition of Cheshire Trafford U.K. Limited on August 1, 2018, the Company also gained access to the Cheshire Trafford U.K.
Limited’s client’s database, currently comprised of more than 430 individual clients, which are now part of our insurance
brokerage business segment.
OUR
BUSINESS IN 2019
Since
August 1, 2018, the Company operated in two reportable business segments:
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1)
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Management
Consultancy Services (the “Consultancy” segment); and
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2)
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A
segment which concentrates on third party insurance policy sales and renewals (the “Insurance brokerage” segment).
The Company’s reportable segments were strategic business units that offered different products.
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Both
business segments are managed separately based on the fundamental differences in their operations and locations.
Under
the Consultancy segment, we have three distinct divisions (none of which will be treated as a segment for financial reporting
purposes):
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1.
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Introducers
Network. We have developed and continue to develop several finance professionals, accountants, attorneys and financial
advisers who will introduce us to their clients. We will review businesses introduced to us through these introducers and
we will compensate them in manners “to be determined” based on the event that we are engaged to assist the companies
they introduce to us.
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2.
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Project
Review. Our management team and advisors will carefully review and vet each business plan and opportunity submitted to
us. Our management team and advisors will determine which services we can offer these clients and assess the potential propositions
to best assist our clients in achieving their goals.
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3.
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Placing.
Working with our business associates in Dubai, Europe and the United States, we will use our best efforts to assist our clients
with listings on stock exchanges in these cities and countries in order to maximize their exposure to capital markets and
to access funding via debt and equity offerings.
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FUTURE
PLANS
Our
specific plan of operations and milestones from March 2020 through March 2021 are as follows:
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1.
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CONTINUE
TO DEVELOP AND GROW ALREADY ACQUIRED IFA BUSINESSES – CHESHIRE TRAFFORD (U.K.) LIMITED.
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In
January 2020, we revised the Terms of Business that we send out to all current and new clients. This revision contemplates offering
these clients two types of services packages, “Basic” and “Comprehensive,” at a fee rate of 0.75% per
annum (a minimum annual fee of 750 GBP or $980) and 1% per annum (a minimum annual fee of 1,000 GBP or $1,300), respectively.
The “Basic” service package is what we are legally obliged to offer under U.K. FCA guidelines and the “Comprehensive”
service package is much more complete and contemplates additional added value for the client. Within the revised Terms of Business,
we have also implemented an upfront 3% fee that is payable by each new client that is onboarded to our client base. Both the upfront
fee and annual fee are based on the amount of Funds that legacy clients and new clients authorize our Company to Administrate
and ultimately look after their financial affairs.
So
far this year, we have 25 new business clients that have sent us signed letters of authority and wish to engage our Company. Most
of these new clients have opted for the “Comprehensive” service package. It is important to note that the Funds that
we currently administrate range from $8,000 to $650,000 per client (equivalent to 6,000 GBP to 500,000 GBP) and that we have calculated
that the average amount of Funds that we administrate per client, taking into consideration our historical data, is approximately
$72,500.
Our
goal for 2020, is to attract at least 100 new business clients (25 of which already are in the process of being onboarded as new
business clients) hence our intent is to raise the Funds that we currently administrate by between $7.25 million to up $10 million.
Between the 3% initial upfront fee and the ongoing/recurring 1% or 0.75% administration fee, we are aiming to raise our gross
income by at least $250,000 on the low side and up to $400,000 on the high side in 2020. This uplift in gross revenue would represent
2 to 3 times the currently gross income.
Finally,
it is our intent in 2020 to continue to leverage the licenses that we now own as believe that we can significantly increase our
business and revenues at very little extra cost and improve profitability.
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2.
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SEEK
FURTHER FUNDING FOR FURTHER INORGANIC GROWTH VIA ACQUISITION
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The
Company is looking into entering a long-term funding agreement up to $10 million U.S. Dollars with a with a new European based
Regulated Fund in order to accelerate our inorganic growth and acquisition plan with a view to consolidate our Company in the
marketplace. Currently all negotiations are verbal negotiations.
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3.
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ACQUIRE
CERTAIN INDEPENDENT FINANCIAL ADVISORY FIRMS WITH FUNDS UNDER ADMINISTRATION:
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During
the year ended December 31, 2019, management commenced certain negotiations to acquire 100% of an Independent Financial Advisory
(IFA) firm based in London (United Kingdom). This targeted IFA currently has 136 Million GBP (approximately U.S. $179 Million)
of Funds under Administration and historical recurring revenues of a little more than One Million GBP (approximately U.S. $1.32
million). However, we do not currently have any written agreements as management is still in verbal negotiations with the owners
of this IFA.
The
Company intends to target and acquire more Independent Financial Advisory firms with funds under administration during the next
12 to 24 months.
As
the Company acquires more Financial Advisory firms, each book of business will be analyzed to achieve the maximum return and revenue
from the client bank without affecting the client offering. In addition, certain cost savings will be managed into the budgets
by using technology for the administration, looking for duplication of services and by managing the client and the funds under
administration in a more efficient way.
The
acquisition of these entities will open a new network for the services of:
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New
capital markets clients.
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Distribution
of new funds / products.
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Maximizing
the current books of business being bought.
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Expand
and thus increase business via more financial advisors.
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Seek
products that offer both a minimum of 1% trail (recurring) income and a secure risk averse home for clients’ funds.
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Seek
cost savings, where possible, due to elimination of duplicate services.
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Implement
rapid and efficient systems in order to allow information to flow to the clients and to management more effectively.
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Acquiring
smaller, active client banks into our licenses and procedures for cost effective growth.
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4.
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COMMENCE
A TARGETED MARKETING PLAN
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During
2020, our United Kingdom regulated business, Cheshire Trafford (U.K.) Limited, will continue with the direct marketing campaign
that commenced in the second quarter of 2019, within the region using traditional print media, radio advertising, social media
and editorial pieces. In conjunction with this campaign, the website and marketing of the Company will be refocused with a completely
new image based around “Over 40 years of serving the community.” Two days per month in our office in the United Kingdom,
we will offer free consultation to prospective clients that come and visit us, thus enabling us to potentially recruit them as
new clients.
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5.
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FURTHER
EXPAND OUR RANGE OF SERVICES TO OUR FINANCIAL SERVICES CLIENTS
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We
will bring additional products to the client bank in order to maximize the potential returns per client with complementary products
such as mortgages, trusts and more attractive funds.
The
Company intends to continue its mandate to assist its client, Creditum Limited, with the listing of the Creditum Limited´s
shares on the London Stock Exchange (“LSE”). Management believes that this public listing should be fully executed
and finalized by sometime in the year 2020.
COMPETITION
We
face intense competition in every aspect of our business, and particularly from other firms that offer management, compliance
and other consulting services to private and public companies. We would prefer to accept a relatively low cash component as our
fee for management consulting and regulatory compliance services and take a greater portion of our fee in the form of restricted
shares of our private clients’ common stock. We also face competition from many consulting firms, investment banks, venture
capitalists, merchant banks, financial advisors and other management consulting and regulatory compliance services firms similar
to ours. Many of our competitors have greater financial and management resources and some have greater market recognition than
we do. There are many institutions around the globe that are executing a roll-up strategy by acquiring Financial Advisory firms
around the world; hence, we will face completion, but we believe that there is plenty of room for our Company to compete within
the Financial Advisory world.
REGULATORY
REQUIREMENTS.
Regarding
the Corporate Consultancy Service segment of our business, we are not required to obtain any special licenses, nor meet any special
regulatory requirements before establishing our business, other than a simple business license. If new government regulations,
laws, or licensing requirements are passed that would restrict or eliminate delivery of any of our intended products, then our
business may suffer. Presently, to the best of our knowledge, no such regulations, laws, or licensing requirements exist or are
likely to be implemented in the near future that would reasonably be expected to have a material impact on our sales, revenues,
or income from our business operations. Furthermore, we are not a broker-dealer. We are not an investment adviser or an investment
company. We are not a hedge fund or a mutual fund or any similar type of fund.
Regarding
the Independent Financial Advisory (IFA) segment of our business, our subsidiary Cheshire Trafford UK Limited is required to be
fully registered and licensed by the United Kingdom Financial Conduct Authority (FCA).
EFFECT
OF EXISTING OR PROBABLE GOVERNMENTAL REGULATIONS.
The
Company’s common stock is registered pursuant to Section 12(g) of the Securities Exchange Act of 1934 (“1934 Act”).
As a result of such registration, the Company is subject to Regulation 14A of the “1934 Act,” which regulates proxy
solicitations. Section 14(a) requires all companies with securities registered pursuant to Section 12(g) thereof to comply with
the rules and regulations of the Commission regarding proxy solicitations, as outlined in Regulation 14A. Matters submitted to
stockholders of the Company at a special or annual meeting thereof or pursuant to a written consent will require the Company to
provide its stockholders with the information outlined in Schedules 14A or 14C of Regulation 14; preliminary copies of this information
must be submitted to the Securities and Exchange Commission (“Commission”) at least 10 days prior to the date that
definitive copies of this information are forwarded to stockholders.
The
Company is also required to file annual reports on Form 10-K and quarterly reports on Form 10-Q with the Commission on a regular
basis, and will be required to disclose certain events in a timely manner (e.g., changes in corporate control; acquisitions or
dispositions of a significant amount of assets other than in the ordinary course of business, etc.) in Current Reports on Form
8-K.
WE
ARE SUBJECT TO THE REQUIREMENTS OF SECTION 404 OF THE SARBANES-OXLEY ACT OF 2002. IF WE ARE UNABLE TO TIMELY COMPLY WITH SECTION
404 OR IF THE COSTS RELATED TO COMPLIANCE ARE SIGNIFICANT, OUR PROFITABILITY, STOCK PRICE AND RESULTS OF OPERATIONS AND FINANCIAL
CONDITION COULD BE MATERIALLY ADVERSELY AFFECTED.
The
Company is required to comply with the provisions of Section 404 of the Sarbanes-Oxley Act of 2002, which requires that we document
and test our internal controls and certify that we are responsible for maintaining an adequate system of internal control procedures
for the 2019 and 2020 fiscal years. We are currently evaluating our existing controls against the standards adopted by the Committee
of Sponsoring Organizations of the Treadway Commission. During the course of our ongoing evaluation and integration of the internal
controls of our business, we may identify areas requiring improvement, and we may have to design enhanced processes and controls
to address issues identified through this review (see Item 9A., below, for a discussion of our internal controls and procedures).
We
believe that the out-of-pocket costs, the diversion of management’s attention from running the day-to-day operations and
operational changes caused by the need to comply with the requirement of Section 404 of the Sarbanes-Oxley Act could be significant.
If the time and costs associated with such compliance exceed our current expectations, our results of operations and the future
filings of our Company could be materially adversely affected.
DEPENDENCE
ON KEY EMPLOYEES.
The
Company is heavily dependent on the abilities of our newly appointed President and CEO, Mr. Nicholas Tuke, and our Chief Financial
Officer, Enzo Taddei. The loss of the services of Mr. Tuke and/or Mr. Taddei would seriously undermine our ability to carry out
our business plan.
In
the event of future growth in administration, advisory, marketing and customer support functions, the Company may have to increase
the depth and experience of its management team by adding new members. The Company’s success will depend to a large degree
upon the active participation of our key officers and employees, as well as the continued service of our key management personnel
and our ability to identify, hire, and retain additional qualified personnel. There can be no assurance that we will be able to
recruit such qualified personnel to enable us to conduct our proposed business successfully.
REPORTS
TO SECURITY HOLDERS.
We
are subject to the informational requirements of the Securities Exchange Act of 1934, as amended, and in accordance therewith,
we file annual, quarterly and current reports, proxy and information statements and other information with the Securities and
Exchange Commission. Such reports, proxy statements and other information can be read and copied at the Securities and Exchange
Commission’s public reference facilities at 100 F Street, N.E., Washington, D.C. 20549, at prescribed rates. Please call
the Securities and Exchange Commission at 1-800-732-0330 for further information on the operation of the public reference facilities.
In addition, the Securities and Exchange Commission maintains a website that contains reports, proxy and information statements
and other information regarding registrants that file electronically with the Securities and Exchange Commission. The address
of the Securities and Exchange Commission’s website is www.sec.gov.
We
make available free of charge on or through our website at www.arg47.com, our Annual Reports on Form 10-K, Quarterly Reports
on Form 10-Q, Current Reports on Form 8-K and amendments to those reports filed or furnished pursuant to Section 13(a) or 15(d)
of the Securities Exchange act of 1934, as amended, as soon as reasonably practicable after we electronically file such material
with or otherwise furnish it to the Securities and Exchange Commission. Information on our website is not incorporated by reference
in this Annual Report and is not a part of this Annual Report.
ITEM
1A. RISK FACTORS.
An
investment in our Common Stock involves a high degree of risk. Prospective investors should carefully consider the following risk
factors and the other information in this Annual Report and in our other filings with the Securities and Exchange Commission (sometimes
referred to herein as the “SEC”) before investing in our Common Stock. Our business and results of operations could
be seriously harmed by any of the following risks. You should carefully consider the risks described below, the other information
in this Annual Report and the documents incorporated by reference herein when evaluating our Company and our business. If any
of the following risks actually occurs, our business could be harmed. In such case, the trading price of our Common Stock could
decline and investors could lose all or a part of the money paid for our Common Stock.
INVESTING
IN OUR COMMON STOCK INVOLVES A HIGH DEGREE OF RISK. IF ANY OF THE FOLLOWING RISKS ACTUALLY MATERIALIZES, OUR BUSINESS, FINANCIAL
CONDITION AND RESULTS OF OPERATIONS WOULD SUFFER AND OUR SHAREHOLDERS COULD LOSE ALL OR PART OF THEIR INVESTMENT IN OUR SHARES.
RISKS
ASSOCIATED WITH OUR COMPANY
THERE
IS SUBSTANTIAL UNCERTAINTY THAT WE WILL CONTINUE OPERATIONS. IN THAT CASE, INVESTORS COULD LOSE THEIR INVESTMENTS IN OUR COMMON
STOCK.
Our
auditors have issued a going concern opinion. This means that there is substantial doubt that we can continue as an ongoing business
for the next twelve months. The consolidated financial statements do not include any adjustments that might result from the uncertainty
about our ability to continue in business. As such, we may have to cease operations and you could lose your investment.
WE
ARE AN “EMERGING GROWTH COMPANY” AND WE CANNOT BE CERTAIN IF WE WILL BE ABLE TO MAINTAIN SUCH STATUS OR IF THE REDUCED
DISCLOSURE REQUIREMENTS APPLICABLE TO EMERGING GROWTH COMPANIES WILL MAKE OUR COMMON STOCK LESS ATTRACTIVE TO INVESTORS.
We
are an “emerging growth company,” as defined in the Jumpstart Our Business Startups Act of 2012 or “JOBS Act,”
and we may adopt certain exemptions from various reporting requirements that are applicable to other public companies that are
not “emerging growth companies,” including, but not limited to, not being required to comply with the auditor attestation
requirements of Section 404(b) of the Sarbanes-Oxley Act of 2002, reduced disclosure obligations regarding executive compensation
in our periodic reports and proxy statements, and exemptions from the requirement of holding a nonbinding advisory vote on executive
and stockholder approval of any golden parachute payments not previously approved. We may remain an “emerging growth company”
for up to five full fiscal years following our initial public offering of our common equity securities. Note: To date, we have
not sold or issued any of our common equity securities under an effective Form S-1, Form S-3, Form S-4 or Form S-8 or other
form of registration statement under the Securities Act of 1933, as amended. We would cease to be an emerging growth company,
and, therefore, ineligible to rely on the above exemptions, if we have more than $1 billion in annual revenue in a fiscal year,
if we issue more than $1 billion of non-convertible debt over a three-year period, or if we have more than $700 million in market
value of our common stock held by non-affiliates as of June 30 in the fiscal year before the end of the five full fiscal years.
Additionally, we cannot predict if investors will find our common stock less attractive because we may rely on these exemptions.
If some investors find our common stock less attractive as a result of our reduced disclosures, there may be less active trading
in our common stock and our stock price may be more volatile.
AS
A RESULT OF OUR INTENSELY COMPETITIVE INDUSTRY, WE MAY NOT GAIN ENOUGH MARKET SHARE TO BE PROFITABLE.
The
corporate consulting and funds management businesses are intensely competitive and due to our small size and limited resources,
we may be at a competitive disadvantage, especially as a public company. There are several firms offering similar services. Many
of our competitors have proven track records and substantial human and financial resources, as opposed to our Company who has
limited human resources and little cash. Also, the financial burden of being a public company, which will cost us approximately
U.S.$65,000 per year in auditing fees and legal fees to comply with our reporting obligations under the Securities Exchange Act
of 1934 and compliance with the Sarbanes-Oxley Act of 2002, will strain our finances and stretch our human resources to the extent
that we may have to price our consultancy service fees higher than our non-publicly held competitors just to cover the costs of
being a public company.
WE
ARE VULNERABLE TO THE CATASTROPHIC EVENTS WHICH MAY NEGATIVELY AFFECT OUR PROFITABILITY AND ABILITY TO CARRY OUT OUR BUSINESS
PLAN.
We
are potentially vulnerable to catastrophic events that could affect our profitability and our ability to carry out our business
plan. For example, sudden disruptions in business conditions may result from terrorist attacks similar to the events of September
11, 2001 in the United States, many other terrorist attacks in Europe and the United States in the past three years, including
further attacks, retaliation and the threat of further attacks or retaliation, war, civil unrest in the Middle East, chaotic immigration
problems in Europe, adverse weather conditions or other natural disasters, such as hurricanes and tsunamis, pandemic situations
such as the current COVID-19 virus spreading around the world, interruptions to the Internet or large scale power outages can
have a short term or, sometimes, long term impact on spending.
BECAUSE
OUR FORMER BUSINESS MODEL ANTICIPATED OUR RECEIVING EQUITY STAKES IN OUR CLIENTS, MOST OF WHOM WERE DEVELOPMENT STAGE COMPANIES,
WE MAY NOT BE ABLE TO RESELL SUCH EQUITY AT SUITABLE PRICES, IF AT ALL, WHICH COULD MATERIALLY IMPACT OUR EARNINGS AND ABILITY
TO REMAIN IN BUSINESS.
Our
former business model anticipated that we would receive, as partial compensation for our consulting services, equity stakes in
our clients, many of whom were development stage companies. We valued those equity stakes at the time we received them. Investments
in development stage companies are risky because many of such companies’ securities are illiquid, thinly traded (if at all)
and the value of such securities will be subject to adjustments should the value of such securities decline, should such securities
be delisted from an exchange or cease being quoted on a stock quotation medium or should such businesses fail, which could cause
us to write-down or write-off the value of such securities and result in a negative impact to our earnings and possibly cause
us to cease or curtail our operations.
OUR
SHAREHOLDERS MAY BE DILUTED THROUGH OUR EFFORTS TO OBTAIN FINANCING, FUND OUR OPERATIONS AND SATISFY OUR OBLIGATIONS THROUGH ISSUANCE
OF ADDITIONAL SHARES OF OUR COMMON STOCK.
We
will likely have to issue additional shares of our common Stock to fund our operations and to implement our plan of operation.
Wherever possible, our board of directors will attempt to use non-cash consideration to satisfy obligations. In many instances,
we believe that the non-cash consideration will consist of restricted shares of our common stock issued in lieu of cash. Our board
of directors has authority, without action or vote of the shareholders, to issue all or part of the 359,010,591 authorized, but
unissued, shares of our common stock. Future issuances of shares of our common stock will result in dilution of the ownership
interests of existing shareholders, may further dilute common stock book value and that dilution may be material.
FINRA
SALES PRACTICE REQUIREMENTS MAY LIMIT A STOCKHOLDER’S ABILITY TO BUY AND SELL OUR STOCK.
The
FINRA has adopted rules that require that in recommending an investment to a customer, a broker-dealer must have reasonable grounds
for believing that the investment is suitable for that customer. Prior to recommending speculative low-priced securities to their
non-institutional customers, broker-dealers must make reasonable efforts to obtain information about the customer’s financial
status, tax status, investment objectives and other information. Under interpretations of these rules, FINRA believes that there
is a high probability that speculative low-priced securities will not be suitable for at least some customers. FINRA requirements
make it more difficult for broker-dealers to recommend that their customers buy our common stock, which may have the effect of
reducing the level of trading activity and liquidity of our common stock. Further, many brokers charge higher transactional fees
for penny stock transactions. As a result, fewer broker-dealers may be willing to make a market in our common stock, which may
limit your ability to buy and sell our stock.
OUR
ARTICLES OF INCORPORATION AUTHORIZE THE ISSUANCE OF PREFERRED STOCK.
Our
Articles of Incorporation authorize the issuance of up to 50,000,000 shares of preferred stock with designations, rights and preferences
determined from time to time by its Board of Directors. Accordingly, our Board of Directors is empowered, without stockholder
approval, to issue preferred stock with dividend, liquidation, conversion, voting, or other rights which could adversely affect
the voting power or other rights of the holders of the common stock.
We
have 45,000,000 shares of Series “B” Preferred Stock outstanding at this time, which shares are owned by our management.
We have 3,300,000 shares of Series “C” Preferred Stock outstanding at this time, 2,900.000 of which shares are owned
by our management. All shares of our Series “B” and “C” Preferred Stock are contractually locked-up until
September 27, 2020; hence, such shares cannot be sold or converted into common stock on any prior date.
We
have an additional 1,700,000 shares of Series “C” Preferred Stock authorized and designated, but not issued or outstanding.
We
no longer have any shares of Series “A” Preferred Stock authorized, designated or outstanding.
THIS
ANNUAL REPORT CONTAINS FORWARD-LOOKING STATEMENTS AND INFORMATION RELATING TO US, OUR INDUSTRY AND TO OTHER BUSINESSES.
These
forward-looking statements in this Annual Report are based on the beliefs of our management, as well as assumptions made by and
information currently available to our management. When used in this Annual Report, the words “estimate,” “project,”
“believe,” “anticipate,” “intend,” “expect” and similar expressions are intended
to identify forward-looking statements. These statements reflect our current views with respect to future events and are subject
to risks and uncertainties that may cause our actual results to differ materially from those contemplated in our forward-looking
statements. We caution you not to place undue reliance on these forward-looking statements, which speak only as of the date of
this Annual Report. We do not undertake any obligation to publicly release any revisions to these forward-looking statements to
reflect events or circumstances after the date of this Annual Report or to reflect the occurrence of unanticipated events.
ITEM
1B. UNRESOLVED STAFF COMMENTS.
Not
applicable.
ITEM
2. PROPERTIES.
The
Company does not own any property. Our executive offices are located at 34 St. Augustine’s Gate, Hedon, HU12 8EX, Hull,
United Kingdom; we pay a monthly rent of U.S. $1,230 (1,000 GBP) for this office. Mr. Nicholas Tuke, our President and Chief Executive
Officer and Mr. Peter Smith, a member of the Board of Directors, are both based in the United Kingdom, and Mr. Enzo Taddei, our
Chief Financial Officer, is based on mainland Europe.
ITEM
3. LEGAL PROCEEDINGS.
We
are not subject to any other pending or threatened litigation.
ITEM
4. MINE SAFETY DISCLOSURES.
Not
applicable.
PART
II
ITEM
5.
|
MARKET
FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES.
|
As
of December 31, 2019, the Company’s Common Stock was quoted on the Over-the-Counter Bulletin Board under the symbol ARGQ.
The market for the Company’s Common Stock is limited, volatile and sporadic and the price of the Company’s Common
Stock could be subject to wide fluctuations in response to quarterly variations in operating results, news announcements, trading
volume, sales of Common Stock by officers, directors and principal shareholders of the Company, general market trends, changes
in the supply and demand for the Company’s shares, and other factors. The following table sets forth the high and low sales
prices for each quarter relating to the Company’s Common Stock for the last two fiscal years. These quotations reflect inter-dealer
prices without retail mark-up, markdown, or commissions, and may not reflect actual transactions.
Fiscal
2019
|
|
High
|
|
|
Low
|
|
First Quarter
(1)
|
|
$
|
0.0042
|
|
|
$
|
0.0029
|
|
Second Quarter (1)
|
|
$
|
0.0048
|
|
|
$
|
0.0031
|
|
Third Quarter (1)
|
|
$
|
0.0039
|
|
|
$
|
0.0022
|
|
Fourth Quarter (1)
|
|
$
|
0.0037
|
|
|
$
|
0.0022
|
|
|
|
|
|
|
|
|
|
|
Fiscal
2018
|
|
|
High
|
|
|
|
Low
|
|
First Quarter(1)
|
|
$
|
0.0071
|
|
|
$
|
0.0035
|
|
Second Quarter (1)
|
|
$
|
0.0070
|
|
|
$
|
0.0038
|
|
Third Quarter (1)
|
|
$
|
0.0084
|
|
|
$
|
0.0040
|
|
Fourth Quarter (1)
|
|
$
|
0.0061
|
|
|
$
|
0.0022
|
|
|
(1)
|
This
represents the closing bid information for the stock on the OTC Bulletin Board. The bid and ask quotations represent prices
between dealers and do not include retail markup, markdown or commission. They do not represent actual transactions and have
not been adjusted for stock dividends or splits.
|
The
Securities and Exchange Commission has adopted Rule 15g-9 which establishes the definition of a “Penny Stock,” for
purposes relevant to us, as any equity security that has a market price of less than $5.00 per share or with an exercise price
of less than $5.00 per share, subject to certain exceptions. For any transaction involving a penny stock, unless exempt, the rules
require: (i) that a broker or dealer approve a person’s account for transactions in penny stocks and (ii) the broker or
dealer receive from the investor a written agreement to the transaction, setting forth the identity and quantity of the penny
stock to be purchased. In order to approve a person’s account for transactions in penny stocks, the broker or dealer must
(i) obtain financial information and investment experience and objectives of the person; and (ii) make a reasonable determination
that the transactions in penny stocks are suitable for that person and that person has sufficient knowledge and experience in
financial matters to be capable of evaluating the risks of transactions in penny stocks. The broker or dealer must also deliver,
prior to any transaction in a penny stock, a disclosure schedule prepared by the SEC relating to the penny stock market, which,
in highlight form, (i) sets forth the basis on which the broker or dealer made the suitability determination and (ii) that the
broker or dealer received a signed, written agreement from the investor prior to the transaction. Disclosure also has to be made
about the risks of investing in penny stocks in both public offerings and in secondary trading, and about commissions payable
to both the broker-dealer and the registered representative, current quotations for the securities and the rights and remedies
available to an investor in cases of fraud in penny stock transactions. Finally, monthly statements must be sent disclosing recent
price information for the penny stock held in the account and information on the limited market in penny stocks.
Shareholders
should be aware that, according to SEC Release No. 34-29093 dated April 17, 1991, the market for penny stocks has suffered in
recent years from patterns of fraud and abuse. Such patterns include (1) control of the market for the security by one or a few
broker-dealers that are often related to the promoter or issuer; (2) manipulation of prices through prearranged matching of purchases
and sales and false and misleading press releases; (3) boiler room practices involving high-pressure sales tactics and unrealistic
price projections by inexperienced sales persons; (4) excessive and undisclosed bid-ask differential and markups by selling broker
dealers; and (5) the wholesale dumping of the same securities by promoters and broker-dealers after prices have been manipulated
to a desired level, along with the resulting inevitable collapse of those prices and with consequent investor losses. The occurrence
of these patterns or practices could increase the volatility of our share price.
Our
management is aware of the abuses that have occurred historically in the penny stock market.
HOLDERS.
As
of the date of this filing, there were 89 record holders of the shares of the Company’s issued and outstanding Common Stock.
DIVIDENDS.
The
Company has not paid any cash dividends to date and does not anticipate or contemplate paying dividends in the foreseeable future.
It is the present intention of management to utilize all available funds for the development of the Company’s business.
RECENT
ISSUANCES OF UNREGISTERED SECURITIES
SECURITIES
ISSUED IN 2020
In
March 2020, the Company issued 100,000 shares of Series “C” Preferred Stock to Nicholas Tuke, our new Chief Executive
Officer, as a signing bonus.
All
of the foregoing stock was issued in reliance on the exemption from registration requirements of the 33 Act provided by Section
4.(a)(2) of the 33 Act and/or the exclusion from registration requirements of the 33 Act provided by Regulation S promulgated
under the 33 Act.
SECURITIES
ISSUED IN 2019
On
January 14, 2019, the Company issued 21,200,000 common shares valued at a contractually agreed value of $0.02 per share or $424,000
(including $400,000 of principal and $24,000 of accrued interest) to Xantis Aion Securitisation Fund (at Xantis Private Equity
Fund´s request) upon conversion of a convertible promissory note.
On
January 24, 2019, the Company issued 5,300,000 common shares valued at a contractually agreed value of $0.02 per share or $106,000
(including $100,000 of principal and $6,000 of accrued interest) to William Marshal Plc. upon conversion of a convertible promissory
note.
On
June 9, 2019, the Company issued 38,955,000 common shares valued at a contractually agreed value of $0.02 per share or $779,100
(including $735,000 of principal and $44,100 of accrued interest) to Xantis Aion Securitisation Fund upon conversion of a convertible
promissory note.
All
of the foregoing stock was issued in reliance on the exemption from registration requirements of the 33 Act provided by Section
4.(a)(2) of the 33 Act and/or the exclusion from registration requirements of the 33 Act provided by Regulation S promulgated
under the 33 Act.
SECURITIES
ISSUED IN 2018
We
did not issue any shares of our Common Stock in 2018.
We
issued 800,000 shares of Series “C” Preferred stock in 2018 to two of our officers in lieu of accrued salaries. These
preferred shares are contractually locked up until September 27, 2020.
SECURITIES
ISSUED IN 2017
On
February 2, 2017, the Company issued 5,000,000 common shares valued at an agreed value of $0.01 per share or $50,000 to Mammoth
Corporation upon conversion of a portion of a convertible promissory note.
On
March 28, 2017, the Company issued 6,178,560 common shares valued at an agreed value of $0.0080925 per share or $50,000 to Mammoth
Corporation upon conversion of a portion of a convertible promissory note.
On
April 13, 2017, the Company issued 10,224,676 common shares valued at an agreed value of $0.006565 per share or $67,125, with
the common shares valued at their fair value of $133,652 based on the quoted trading price, to Mammoth Corporation upon conversion
of a portion of a convertible promissory note.
On
May 12, 2017, the Company issued 7,823,310 common shares valued at an agreed value of $0.00429 per share or $33,562, with the
common shares valued at their fair value of $88,543 based on the quoted trading price, to Mammoth Corporation upon conversion
of a portion of a convertible promissory note.
On
June 2, 2017, the Company issued 9,388,252 common shares valued at an agreed value of $0.003575 per share or $33,563, with the
common shares valued at their fair value of $92,133 based on the quoted trading price, to Mammoth Corporation upon conversion
of remaining portion of a convertible promissory note.
On
July 10, 2017, the Company issued 10,000,000 common shares valued at an agreed value of $0.00234 per share or $23,400, with the
common shares valued at their fair value of $54,795 based on the quoted trading price, to Mammoth Corporation upon conversion
of a portion of a convertible promissory note.
On
August 2, 2017, the Company issued 10,000,000 common shares valued at an agreed value of $0.00204 per share or $20,400, with the
common shares valued at their fair value of $51,940 based on the quoted trading price, to Mammoth Corporation upon conversion
of a portion of a convertible promissory note.
On
September 11, 2017, the Company issued 20,000,000 common shares valued at an agreed value of $0.00169 per share or $33,800, with
the common shares valued at their fair value of $102,533 based on the quoted trading price, to Mammoth Corporation upon conversion
of a portion of a convertible promissory note.
On
October 25, 2017, the Company issued 20,000,000 common shares valued at an agreed value of $0.00108 per share or $21,600, with
the common shares valued at their fair value of $59,820 based on the quoted trading price, to Mammoth Corporation upon conversion
of a portion of a convertible promissory note.
On
December 4, 2017, the Company issued 47,000,000 common shares valued at an agreed value of $0.0013362 per share or $62,800, with
the common shares valued at their fair value of $313,400 based on the quoted trading price, to Mammoth Corporation upon conversion
of final portion of a convertible promissory note.
On
December 27, 2017, the Company issued 5,443,836 common shares valued at an agreed value of $0.012 per share or $65,326, with the
common shares valued at their fair value of $27,764 based on the quoted trading price, to private investor based in Malta upon
conversion of a convertible promissory note.
All
of the foregoing stock was issued in reliance on the exemption from registration requirements of the 33 Act provided by Section
4.(a)(2) of the 33 Act and/or the exclusion from registration requirements of the 33 Act provided by Regulation S promulgated
under the 33 Act.
ISSUER
REPURCHASES OF EQUITY SECURITIES
None.
ITEM
6. SELECTED FINANCIAL DATA.
Not
applicable.
ITEM
7.
|
MANAGEMENT’S
DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATION.
|
CAUTIONARY
FORWARD - LOOKING STATEMENT
The
following discussion and analysis of the results of operations and financial condition of Argentum 47, Inc. should be read in
conjunction with our financial statements and related notes. References to “we”, “our,” or “us”
in this section refers to the Company and its subsidiaries. Our discussion includes forward-looking statements based upon current
expectations that involve risks and uncertainties, such as our plans, objectives, expectations and intentions. We use words such
as “anticipate”, “estimate”, “plan”, “project”, “continuing”, “ongoing”,
“expect”, “believe”, “intend”, “may”, “will”, “should”,
“could”, and similar expressions to identify forward-looking statements.
Certain
matters discussed herein may contain forward-looking statements that are subject to risks and uncertainties. Such risks and uncertainties
include, but are not limited to, the following:
|
●
|
the
volatile and competitive nature of our industry,
|
|
●
|
the
uncertainties surrounding the rapidly evolving markets in which we compete,
|
|
●
|
the
uncertainties surrounding technological change of the industry,
|
|
●
|
our
dependence on our intellectual property rights,
|
|
●
|
the
success of marketing efforts by third parties,
|
|
●
|
the
changing demands of customers,
|
|
●
|
uncertainties
due to the current pandemic COVID-19 virus on the global market and its possible impact on the Company’s business, and
|
|
●
|
the
arrangements with present and future customers and third parties.
|
Should
one or more of these risks or uncertainties materialize or should any of the underlying assumptions prove incorrect, actual results
of current and future operations may vary materially from those anticipated.
Our
MD&A is comprised of the following sections:
|
A.
|
Critical
accounting estimates and policies.
|
|
B.
|
Business
overview.
|
|
C.
|
Results
of operations for the years ended December 31, 2019 and 2018.
|
|
D.
|
Financial
condition as at December 31, 2019 and 2018.
|
|
E.
|
Liquidity
and capital reserves.
|
|
F.
|
Business
development.
|
A.
|
Critical
Accounting Estimates and Policies:
|
Our
consolidated financial statements are prepared in accordance with generally accepted accounting principles in the United States
(“GAAP”), which requires management to make estimates and assumptions that affect reported and disclosed amounts of
assets and liabilities and the reported amounts of revenues and expenses during the reporting period.
We
believe that the critical accounting policies set forth in the accompanying consolidated financial statements describe the more
significant judgments and estimates used in the preparation of our consolidated financial statements. These critical accounting
policies pertain to revenues recognition, valuation of investments, convertible notes and derivatives and stock-based compensation.
If
actual events differ significantly from the underlying judgments or estimates used by management in the application of these accounting
policies, there could be a material effect on our results of operations and financial condition.
Argentum
47, Inc. (“Company” or “ARG”) was incorporated on October 1, 2010, as a Nevada corporation, for the express
purpose of acquiring Global Equity Partners Plc., a corporation formed under the laws of the Republic of Seychelles (“GEP”)
on September 2, 2009. On August 22, 2014, GE Professionals DMCC was incorporated in Dubai as a wholly owned subsidiary of Global
Equity Partners Plc. On June 10, 2016, ARG incorporated its wholly owned subsidiary, called GEP Equity Holdings Limited, under
the laws of the Republic of Seychelles.
On
March 24, 2017, the Board of Directors of Global Equity Partners Plc. approved the assignment and transfer of GE Professionals
DMMC to GEP Equity Holdings Limited.
On
June 5, 2017, the Company sold 100% of the common stock of Global Equity Partners Plc. to a private citizen of the Kingdom of
Thailand. The consideration for the purchase of Global Equity Partners Plc. was the assumption by the purchaser of all liabilities
and indebtedness of Global Equity Partners Plc. in the approximate amount of $626,000. At the time of this sale, Global Equity
Partners Plc. had assets consisting of common shares of other companies having a book value of approximately $603,000.
GEP
Equity Holdings Limited provides consulting services, such as corporate restructuring, Exchange Listings and development for corporate
marketing, investor and public relations, regulatory compliance and introductions to financiers, to companies desiring to be listed
on stock exchanges in various parts of the world.
On
December 12, 2017, we incorporated a United Kingdom company under the name of Argentum 47 Financial Management Limited (“Argentum
FM”). Argentum FM is a wholly owned subsidiary of the Company. Argentum FM was formed to serve as a holding company for
the acquisition of United Kingdom based advisory firms. During 2019, the Company intends to acquire more licensed financial advisory
firms.
On
January 12, 2018, the Company secured a 12-month fixed price convertible loan from Xantis Private Equity Fund (Luxembourg) for
a minimum of 2,000,000 Great Britain Pounds (equivalent to approximately U.S. $2,680,000) carrying an interest at the rate of
6% per annum. The Company has a right to pay this note on the maturity date by issuing shares of common stock at a conversion
price equal to the greater of $0.02 or the average closing price of the Company’s common stock on the OTCBB for the prior
60 trading days. To date, the Company received $400,000 under this loan, which including the accrued interest of $24,000 was converted
into 21,200,000 shares of the Company’s common stock on January 14, 2019.
On
January 12, 2018, the Company secured a 12-month fixed price convertible loan from William Marshal Plc., a United Kingdom Public
Limited Company listed on the Cyprus Public Exchange Emerging Companies Market, for a maximum of 2,000,000 Great Britain Pounds
(equivalent to approximately U.S. $2,680,000) carrying an interest at the rate of 6% per annum. The Company has a right to pay
this note on the maturity date, by issuing shares of common stock at a conversion price equal to the greater of $0.02 or the average
closing price of the Company’s common stock on the OTCBB for the prior 60 trading days. To date, the Company received $100,000
under this loan, which including the accrued interest of $6,000 was converted to 5,300,000 common shares of the Company on January
24, 2019.
On
March 29, 2018, we changed our corporate name to Argentum 47, Inc.
On
June 6, 2018, the Company secured a 12-month fixed price convertible loan, from Xantis Aion Securitization Fund (Luxembourg),
for a minimum of 1,700,000 Great Britain Pounds (equivalent to approximately $1,940,000) carrying an interest at the rate of 6%
per annum. The Company has a right to pay this note on earlier than 366 days’ post investment of each tranche of funding,
by issuing common shares at a conversion price equal to the greater of $0.02 or the average closing ask price of the Company’s
common stock on the OTCBB for the prior 60 trading days. To date, the Company has received $1,388,040 under this loan, of which
$735,000 and related accrued interest was converted into 38,955,000 shares of the Company’s common stock on June 5, 2019.
On
August 1, 2018, Argentum FM consummated a Share Purchase Agreement with Mr. Rodney Leonard and Equilibrium Pensions Limited (trustees
of The Leonard R. Personal Pension), pursuant to which Argentum FM would acquire 100% of the ordinary shares (equity) of Cheshire
Trafford (U.K.) Limited of Hull, United Kingdom (“Cheshire Trafford”) from Mr. Leonard and Equilibrium Pensions Limited
(trustees of The Leonard R. Personal Pension).
In
March 2019, Management decided that it made overall economic sense for the Company to close its employment placement services
business in Dubai; hence, on March 18, 2019, in order to fully concentrate on its core business of Independent Financial Advisory
services and Consultancy Business, the Board of Directors decided to initiate liquidation proceedings of the Dubai subsidiary
“GE Professionals DMCC” (with an effective date of March 31, 2019). As a result of this decision to liquidate the
subsidiary, the Board of Directors also decided to discontinue its Human Resources and Placement business in Dubai. On February
11, 2020, the deregistration and liquidation process of our Dubai subsidiary was formally completed.
Cheshire
Trafford (U.K.) Limited (www.cheshire-trafford.co.uk) was incorporated under the laws of the United Kingdom on January
26, 1976, as a limited liability company. Cheshire Trafford is a very well established and UK FCA regulated Independent Financial
Advisory firm that offers a fully computerized investment management service, including advising on investments in Unit Trusts,
Investment Bonds, Shares, Investment Trusts, Government Bonds and Individual Savings Accounts. In addition, Cheshire Trafford
advises investors on various types of Pension contracts, including Personal Pensions, Executive Pensions, Small Self-Administered
Plans, Pension Mortgages and many more.
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.
Cheshire
Trafford currently has four full time employees and approximately 430 clients that have authorized our company to administrate
between $8,000 and $650,000 of their money.
The
funds that Cheshire Trafford currently has under administration are invested with well-known and reputable Investment Houses such
as:
|
●
|
AJ
Bell
|
|
●
|
Canada
Life International
|
|
●
|
Fidelity
International
|
|
●
|
Old
Mutual International
|
|
●
|
Old
Mutual Wealth Life
|
|
●
|
Royal
London
|
|
●
|
Aviva
|
|
●
|
Prudential
Assurance
|
Cheshire
Trafford’s primary customer base resides in the United Kingdom. Cheshire Trafford is licensed (Register Number 115194) and
regulated by the Financial Conduct Authority (“FCA”) of the United Kingdom. Confirmation of Cheshire Trafford’s
license can be made by visiting the FCA’s website: www.fca.gov.uk/register.
The
purchase consideration for the acquisition of Cheshire Trafford is based on a formula of 2.7 times Cheshire Trafford’s projected
annualized 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 U.S.$516,795 (389,300 Great Britain Pounds or “GBP”).
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.
The
funds for the first tranche were obtained via a June 8, 2018 loan in the amount of U.S. $735,000 from the Xantis Aion Securitisation
Fund, as previously reported in the Company’s Form 8-K Current Report filed with the Securities and Exchange Commission
on June 11, 2018.
On December 18, 2019,
the Company secured a 24-month convertible loan, from Aegeus Securitization Fund (Luxembourg), for 500,000 Great Britain Pounds
(equivalent to approximately $658,200) carrying an interest at the rate of 6% per annum. The lender has an option to convert this
note into common stock of the Company after (2) years and one (1) day from December 18, 2019 at a conversion price equivalent
to the closing market price two days prior the new conversion date. Aegeus Securitization Fund and Xantis AION Securitization
Fund both have the same fund administrators, Xantis S.A., hence Aegeus Securitization Fund is treated as a related party of the
Company as at December 31, 2019. The Company simultaneously also entered into a Receivables Assignment Agreement whereby an amount
of the receivables from the Company and/or the next Independent Financial Advisory Firm acquired will be securitized to the lender.
Pursuant to the terms of this Assignment Agreement, the Company assigned its receivables for the period from June 2020 to May
2025 to the lender. To date, the Company has received GBP 250,000 (equivalent to approximately $329,000) under this loan.
Our
authorized capital consists of 950,000,000 shares of common stock having a par value of $0.001 per share and 50,000,000 shares
of preferred stock having a par value of $0.001. As of December 31, 2018, we had 525,534,409 shares of common stock issued and
outstanding. As of December 31, 2019, we had 590,989,409 shares of common stock issued and outstanding. We also have two series
of preferred stock designated and authorized: Series “B” Preferred Stock and Series “C” Preferred Stock.
As of December 31, 2018, and 2019, we had 45,000,000 shares of Series “B” Preferred Stock authorized, issued and outstanding.
As of December 31, 2018, and 2019, we had designated and authorized 5,000,000 shares of Series “C” Preferred Stock,
3,200,000 shares of which were issued and outstanding. In March 2020, we issued an additional 100,000 shares of Series “C”
Preferred Stock to Mr. Nicholas Tuke, our new Chief Executive Officer, so we currently have a total of 3,300,000 shares of Series
“C” Preferred Stock issued and outstanding. We do not have any Series “A” Preferred Stock authorized,
issued or outstanding. We have 1,700,000 shares of Series “C” Preferred Stock designated and authorized, which could
be issued in the future. All shares of our Series “B” and Series “C” Preferred Stock are contractually
locked-up until September 27, 2020; hence, they cannot be sold or converted into common stock at any time prior to that date.
We
provide corporate advisory services to companies desiring to have their shares listed on stock exchanges or quoted on quotation
bureaus in various parts of the world. We had an office in Dubai until March 31, 2019. Our current offices are located in the
United Kingdom. We have affiliations with firms located in some of the world’s leading financial centers such as London,
New York, Frankfurt and Dubai. These affiliations are informal and are comprised of personal relationships with groups of people
or people with whom our Company or our management has done, or attempted to do, business in the past. We do not have any contractual
arrangements, written or otherwise, with our affiliations.
C.
|
Results
of operations for the years ended December 31, 2019 and 2018:
|
The
Company had revenues from continuing operations amounting to $112,080 and $98,613, respectively, for the years ended December
31, 2019 and 2018.
|
|
December
31, 2019
|
|
|
December
31, 2018
|
|
|
Changes
|
|
|
|
|
|
|
|
|
|
|
|
Revenue
from continuing operations
|
|
$
|
112,080
|
|
|
$
|
98,613
|
|
|
$
|
13,467
|
|
|
|
$
|
112,080
|
|
|
$
|
98,613
|
|
|
$
|
13,467
|
|
During
the year ended December 31, 2019, we generated all our revenue from our insurance brokerage business segment amounting to $112,080,
while during the comparative year ended December 31, 2018, we recognized a revenue from continuing operations from following business
segments:
|
a)
|
$32,000
was recognized as revenue from continuing operations for services rendered to various clients related to our consultancy business
segment.
|
|
b)
|
$66,613
was recognized as revenue from continuing operations for services rendered to various clients related to our insurance brokerage
business segment.
|
For
the years ended December 31, 2019 and 2018, the Company had the following concentrations of revenues with customers from continuing
operations:
Customer
|
|
Location
|
|
December
31, 2019
|
|
|
December
31, 2018
|
|
|
|
|
|
|
|
|
|
|
DUO
|
|
Sri Lanka
|
|
|
0
|
%
|
|
|
2.03
|
%
|
GRL
|
|
United Kingdom
|
|
|
0
|
%
|
|
|
30.42
|
%
|
CT
clients (see below)
|
|
United
Kingdom
|
|
|
100
|
%
|
|
|
67.55
|
%
|
|
|
|
|
|
100
|
%
|
|
|
100
|
%
|
During
the year ended December 31, 2019 and post-acquisition five months ended December 31, 2018, the Company had following concentrations
of revenues regarding insurance brokerage business, which was 100% and 67.55% of the consolidated revenues of the Company, respectively:
|
|
Year
ended
December 31, 2019
|
|
|
Five
months ended
December 31, 2018
|
|
|
|
|
|
|
|
|
Initial
advisory fees
|
|
|
3.81
|
%
|
|
|
30.06
|
%
|
Ongoing advisory
fees
|
|
|
29.50
|
%
|
|
|
10.57
|
%
|
Renewal commissions
|
|
|
5.80
|
%
|
|
|
17.57
|
%
|
Trail or recurring
commissions
|
|
|
60.28
|
%
|
|
|
39.85
|
%
|
Other
revenue
|
|
|
0.61
|
%
|
|
|
1.95
|
%
|
|
|
|
100
|
%
|
|
|
100
|
%
|
The
total operating expenditures of continuing operations amounted to $730,902 and $1,130,190, respectively, for the years ended December
31, 2019 and 2018. The following table sets forth the Company’s operating expenditure analysis for both years:
|
|
December
31, 2019
|
|
|
December
31, 2018
|
|
|
Change
|
|
|
|
|
|
|
|
|
|
|
|
General
and administrative expenses
|
|
$
|
162,655
|
|
|
$
|
133,440
|
|
|
$
|
29,215
|
|
Compensation
|
|
|
380,770
|
|
|
|
645,769
|
|
|
|
(264,999
|
)
|
Professional services
|
|
|
162,078
|
|
|
|
309,648
|
|
|
|
(147,570
|
)
|
Depreciation
|
|
|
2,586
|
|
|
|
1,828
|
|
|
|
758
|
|
Amortization of intangibles
|
|
|
22,813
|
|
|
|
9,505
|
|
|
|
13,308
|
|
Bad
debt expense
|
|
|
-
|
|
|
|
30,000
|
|
|
|
(30,000
|
)
|
Total
operating expenses of continuing operations
|
|
$
|
730,902
|
|
|
$
|
1,130,190
|
|
|
$
|
(399,288
|
)
|
During
the year ended December 31, 2019, total operating expenses from continuing operations decreased by $399,288 from the comparative
year ended December 31, 2018. The decrease is mainly due to a decrease in the compensation expense in 2018 as all of the officers
and directors received additional stock-based compensation of $160,000 in the form of shares of Series “C” Preferred
Stock in lieu of accrued salaries. There was no such stock-based compensation given during the current year ended December 31,
2019. Furthermore, in September 2019, both of the officers and directors of the Company renewed their employment agreements at
a reduced salary, resulting in a decrease in salaries expense during the year ended December 31, 2019 amounting to $100,000. Also,
there was a decrease of $147,570 in the professional services because the Company received services related to introduction of
new business and acquisition targets during the year ended December 31, 2018. There were no such professional services received
during the year ended December 31, 2019.
The
loss from continuing operations for the years ended December 31, 2019 and 2018, was $618,822 and $1,031,577, respectively.
The
Company´s other income / (expenses) of continuing operations, net for the years ended December 31, 2019 and 2018, were $(1,216,146)
and $(479,254), respectively. The following table sets forth the Company’s other income and (expenses) analysis for both
periods:
|
|
December
31, 2019
|
|
|
December
31, 2018
|
|
|
Changes
|
|
Interest
expense
|
|
$
|
(65,408
|
)
|
|
$
|
(68,537
|
)
|
|
$
|
3,129
|
|
Change in fair value
of acquisition payable
|
|
|
(11,206
|
)
|
|
|
(7,561
|
)
|
|
|
(3,645
|
)
|
Amortization of debt
discount
|
|
|
(130,422
|
)
|
|
|
(120,505
|
)
|
|
|
(9,917
|
)
|
Loss on available for
sale securities, net
|
|
|
(1,084,168
|
)
|
|
|
(501,334
|
)
|
|
|
(582,834
|
)
|
Gain on extinguishment
of debt and other liabilities
|
|
|
2,500
|
|
|
|
224,046
|
|
|
|
(221,546
|
)
|
Gain on revaluation
of payable for acquisition
|
|
|
67,897
|
|
|
|
-
|
|
|
|
67,897
|
|
Other income
|
|
|
-
|
|
|
|
317
|
|
|
|
(317
|
)
|
Exchange
rate gain / (loss)
|
|
|
4,661
|
|
|
|
(5,680
|
)
|
|
|
10,341
|
|
Total
other (expenses) / other income of continuing operations
|
|
$
|
(1,216,146
|
)
|
|
$
|
(479,254
|
)
|
|
$
|
(736,892
|
)
|
During
the year ended December 31, 2019, our total other expenses increased by $736,892 when compared to our total other income (expenses)
for the year ended December 31, 2018. This increase was mainly due to the fact that during the year ended December 31, 2019 and
2018, the Company recorded a net loss on available for sale securities amounting to $1,084,168 and $501,334, respectively. This
resulted in an increase in other expenses amounting to $582,834. In addition, the Company recorded a gain on extinguishment of
debt and other liabilities of $224,046 during year ended December 31, 2018, while the Company only recorded a gain on debt extinguishment
of $2,500 during the year ended December 31, 2019. This resulted in an increase in other expense of $221,546. The Company also
revalued fair value of contingent acquisition payable as at December 31, 2019 which resulted in a gain on revaluation of payable
for acquisition of $67,897 during the year ended December 31, 2019.
The
net loss from continuing operations for the year ended December 31, 2019 and 2018, was $1,834,968 and $1,510,831, respectively.
Net
loss from discontinued operations for the year ended December 31, 2019 and 2018 amounted to $35,005 and 109,668, respectively.
Net
loss for the year ended December 31, 2019 and 2018 amounted to $1,869,973 and 1,620,499, respectively.
The
comprehensive loss for the years ended December 31, 2019 and 2018 amounted to $1,889,113 and $1,607,027, respectively. The Company’s
other comprehensive loss includes (loss) / gain recorded on foreign currency translation of $(19,140) and $13,472 for the years
ended December 31, 2019 and 2018, respectively.
|
|
December
31, 2019
|
|
|
December
31, 2018
|
|
Comprehensive
income (loss):
|
|
|
|
|
|
|
|
|
Net
loss
|
|
$
|
(1,869,973
|
)
|
|
$
|
(1,620,499
|
)
|
Gain
on foreign currency translation
|
|
|
(19,140
|
)
|
|
|
13,472
|
|
Comprehensive
(loss) / income
|
|
$
|
(1,889,113
|
)
|
|
$
|
(1,607,027
|
)
|
At
December 31, 2019 and December 31, 2018, the Company had 590,989,409 and 525,534,409 common shares issued and outstanding, respectively.
The weighted average number of common shares outstanding for the years ended December 31, 2019 and 2018 was 573,178,505 and 525,534,409
common shares, respectively. Hence, the net loss per share at December 31, 2019 and 2018 was $(0.00) and $(0.00), respectively.
D.
|
Financial
condition as at December 31, 2019 and 2018:
|
Assets:
The
Company reported total assets of $1,079,648 and $2,156,054 as of December 31, 2019 and December 31, 2018, respectively. These
mainly included our investments in securities of our clients that we received as part of our consulting fees in previous years.
We had marketable securities at fair value of $204,239 and $1,458,848 as at December 31, 2019 and December 31, 2018, respectively.
At
December 31, 2019 and December 31, 2018, our non-current assets included fixed assets, right of use leased asset, intangibles
and goodwill. Fixed assets were comprised of office equipment having a net book value of $3,672 and $5,180 as at December 31,
2019 and December 31, 2018, respectively. Right-of-use leased asset at December 31, 2019 amounting to $75,786 represents fair
value of our UK office lease for a period of six years. Intangibles of $309,876 and $332,689 as at December 31, 2019 and 2018,
respectively, included fair value of customer list that was recognized as part of the business combination. We also recorded goodwill
of $142,924 as the excess of the fair value of the consideration paid over the fair value of the identified net assets acquired
at the date of acquisition. Furthermore, our current assets at December 31, 2018 amounted to $1,675,261, and at December 31, 2019,
these current assets amounted to $547,390 comprised of cash of $326,245, accounts receivable of $7,422, prepaid and other current
assets of $9,484 and marketable securities valued at fair value of $204,239.
Liabilities:
Our
current liabilities at December 31, 2018 totaled $2,450,149. At December 31, 2019, the Company reported its current liabilities
amounting to $1,128,476, which represents a decrease of 54%. This decrease was due to the Company converting three of its convertible
debts into its common stock during the year ended December 31, 2019. All our current liabilities reported at December 31, 2019
mainly include third party debt which is due to various lenders, short term payable for acquisition, current portion of operating
lease liability, trade creditors and payables to related parties on account of accrued salaries and expenses and notes payable.
Following
is the summary of all notes, net of debt discount and debt issue costs, including the accrued interest as at December 31, 2018:
Date
of Note
|
|
Total
Debt
|
|
|
Remarks
|
October
17, 2013
|
|
$
|
277,642
|
|
|
Non-convertible
and non-collateralized
|
November 26, 2013
|
|
|
37,971
|
|
|
Non-convertible and
non-collateralized
|
January 17, 2018
|
|
|
421,777
|
|
|
Fixed price convertible
and non-collateralized
|
January 23, 2018
|
|
|
105,819
|
|
|
Fixed price convertible
and non-collateralized
|
June 8, 2018
|
|
|
709,186
|
|
|
Fixed price convertible
and non-collateralized
|
October
10, 2018
|
|
|
578,269
|
|
|
Fixed
price convertible and non-collateralized
|
Balance,
December 31, 2018
|
|
$
|
2,130,664
|
|
|
|
Following
is the summary of all notes, net of debt discount, including the accrued interest as at December 31, 2019:
Date
of Note
|
|
Total
Debt
|
|
|
Remarks
|
October
17, 2013
|
|
$
|
268,642
|
|
|
Non-convertible
and non-collateralized
|
November 26, 2013
|
|
|
37,971
|
|
|
Non-convertible and
non-collateralized
|
October 10, 2018
(Related party)
|
|
|
701,132
|
|
|
Convertible and non-collateralized
|
December
20, 2019 (Related party)
|
|
|
329,749
|
|
|
Convertible
and collateralized from June 2020 to May 2025 to the amount of the receivables from the Company and/or the next Independent
Financial Advisory Firm acquired
|
Balance,
December 31, 2019
|
|
$
|
1,337,495
|
|
|
|
The
Company’s long term liabilities amounted to $1,109,012 as at December 31, 2019 relating to long term payable for acquisition,
long term convertible notes and a long term lease liability for UK office, while at December 31, 2018, the Company reported a
long term liability of $283,732 on account of fair value of the contingent purchase consideration for the acquisition of Cheshire
Trafford.
Stockholders’
Deficit:
At
December 31, 2018, the Company had Stockholders´ Deficit of $577,827. At December 31, 2019, the Company had Stockholders´
Deficit of $1,157,840. We reported accumulated other comprehensive (loss) / income of $(5,548) and $13,592 as at December 31,
2019 and December 31, 2018, respectively.
The
Company had 590,989,409 and 525,534,409 shares of common stock issued and outstanding at December 31, 2019 and December 31, 2018,
respectively. The Company also had issued and outstanding 45,000,000 shares of Series “B” Convertible Preferred Stock
as at December 31, 2019 and December 31, 2018. The Company further had issued and outstanding 3,200,000 shares of Series “C”
Convertible Preferred Stock as at December 31, 2019 and December 31, 2018, respectively.
E.
|
Liquidity
and Capital reserves:
|
The
accompanying consolidated financial statements have been prepared on a going concern basis, which contemplates the realization
of assets and the satisfaction of liabilities in the normal course of business. These consolidated financial statements do not
include any adjustments relating to the recovery of the recorded assets or the classification of the liabilities that might be
necessary should the Company be unable to continue as a going concern.
As
reflected in the accompanying consolidated financial statements, the Company had a net loss of $1,869,973 and net cash used in
operations of $346,645 for the year ended December 31, 2019; working capital deficit, stockholder’s deficit and accumulated
deficit of $581,086, $1,157,840 and $13,223,188 as of December 31, 2019. It is management’s opinion that these factors raise
substantial doubt about the Company’s ability to continue as a going concern for twelve months from the issuance date of
this report.
The
ability for the Company to mitigate this risk and continue its operations is primarily dependent on management’s plans as
follows:
|
a)
|
Maximizing
the revenues of Cheshire Trafford (U.K.) Limited, the Independent Financial Advisory firm we acquired on August 1, 2018, by
way of servicing the current client base in the most professional and efficient manner possible.
|
|
b)
|
Organically
growing the amount of Funds under Administration of Cheshire Trafford (U.K.) Limited to new and higher levels.
|
|
c)
|
Consummating
and executing all current engagements related to the business consulting division.
|
|
d)
|
Continually
engaging with new clients via our business consulting division.
|
|
e)
|
Continuing
to source funding, via equity or debt, for acquisition, growth and working capital from one or various European Funds.
|
|
f)
|
Acquiring
and managing more Independent Financial Advisory firms with funds under administration located around the globe.
|
|
g)
|
Sell
the Company´s marketable securities, if and, when possible.
|
In
January of 2018, the Company secured two funding agreements, one with Xantis Private Equity Fund (Luxembourg) for a minimum of
2,000,000 Great Britain Pounds (approximately $2.68 million at the time) and another with William Marshal Plc., a United Kingdom
Public Limited Company listed on the Cyprus Public Exchange Emerging Companies Market, for up to a further 2,000,000 Great Britain
Pounds (approximately $2.68 million at the time). The Company has a unilateral right to pay each Note, by issuing common shares,
366 days after each tranche of funding is received, at a conversion price equal to the greater of $0.02 or the average closing
price of the Company’s common stock on the OTCBB for the prior 60 trading days. To date, the Company has received an aggregate
of $500,000 from Xantis Private Equity Fund and William Marshal Plc. During the year ended December 31, 2019, these loans and
accrued interest were converted into 26,500,000 shares of the Company’s common stock ($0.02 per shares as contractually
agreed).
In
June of 2018, the Company secured another funding agreement with Xantis AION Securitisation Fund (Luxembourg) for a minimum of
1,700,000 Great Britain Pounds (equivalent to approximately U.S. $1.94 million at the time). The Company has a unilateral right
to pay each note, by issuing common shares, 366 days after each tranche of funding is received, at a conversion price equal to
the greater of $0.02 or the average closing price of the Company’s common stock on the OTCBB for the prior 60 trading days.
To date, the Company has received $1,388,040 under this loan, of which $735,000 and related accrued interest was converted into
38,955,000 shares of the Company’s common stock during the year ended December 31, 2019.
The
remaining funding received from Xantis Aion Securitisation Fund on October 10, 2018 amounting to $653,040, represents 29% of the
Company’s total liabilities as of December 31, 2019. The management has recently negotiated revised terms for this funding
with the lender whereby the Company has deferred the conversion of the second tranche of the June 6, 2018 funding agreement for
a further two (2) years and one (1) day from December 13, 2019. The conversion price of the second tranche of the June 6, 2018
funding agreement into equity of the Company will be equivalent to the closing market price two days prior the new conversion
date.
In
December of 2019, the Company secured a two-year funding agreement with Aegeus Securitisation Fund (Luxembourg) for a minimum
of 500,000 Great Britain Pounds (equivalent to approximately U.S. $658,200 at the time) carrying an interest at the rate of 6%
per annum. The lender has a sole discretion to convert the loan into common shares of the Company, 2 years and 1 day from the
execution date of funding agreement, at a conversion price equal to the closing market price of the Company’s common stock
on the OTCBB 2 trading days prior to the conversion. To date, the Company has received $329,100 under this loan.
The
accounts payable and accrued liabilities due to related parties currently amount to $458,518. These accounts payable and accrued
liabilities due to related parties represent 41% of the Company’s current liabilities and is primarily due to management.
It is important to note that this related party debt can or may be forgiven by management or alternatively converted into equity
at any time, if required.
These
obligatory conversions of debt into equity and the possibility of forgiveness of the related party debt are both factors that
will help towards mitigating the risks of not being able to continue operating as a Going Concern.
During
2018, the Company´s management decided to implement its inorganic growth plan hence commenced to target the acquisition
of various licensed financial advisory firms with millions of U.S. Dollars of funds under administration.
On
August 1, 2018, the Company acquired its first financial advisory firm that administrated approximately U.S. $44,000,000 and its
intent is to continue growing these funds under administration organically (internal growth of the business acquired) and inorganically
(by way of acquiring more independent financial advisory firms when the correct opportunities arise).
During
the latter part of 2018 and early 2019, the Company´s IFA business, Cheshire Trafford (U.K.) Limited, commenced leveraging
its licenses in order to put in motion an aggressive marketing strategy with a view to significantly increase the business (funds
under administration) and, by defect, the revenues. This was implemented at very little extra cost and will improve, over time,
our current recurring and non-recurring revenues. The Company also started to market its IFA business as a United Kingdom fully
licensed entity for various Appointed Representatives (“AR”) and also Introducer Appointed Representatives (“IAR”);
hence, in late 2018, Aurum Wealth Management Limited was approved by the UK Financial Authority (“FCA”) as an AR of
Cheshire Trafford and in early 2019, Global Alternative Administration (The Pension Admin Team) was appointed as an IAR to Cheshire
Trafford. The Company has also completely revamped the website of our IFA business (www.ctifa.com) and started a UK radio
campaign as part of the IFA Business´ marketing strategy.
Finally,
any short fall in our projected operating revenues will be covered by:
|
●
|
The
cash fees and commissions received by our subsidiary Cheshire Trafford UK Limited.
|
|
●
|
Receiving
short term loans from one or more of our directors even though at the present time, we do not have verbal or written commitments
from any of our directors to lend us money.
|
|
●
|
Continuing
to receive capital funding from any of the lenders that have a contractual agreement in place with the Company.
|
|
●
|
Liquidating
(selling), when necessary, part or all our investments and/or Marketable Securities.
|
MILESTONES
FOR 2020-2021:
Our
specific plan of operations and milestones from March 2020 through March 2021 are as follows:
|
1)
|
CONTINUE
TO DEVELOP AND GROW ALREADY ACQUIRED IFA BUSINESSES – CHESHIRE TRAFFORD (U.K.)
LIMITED.
|
In
January 2020, we revised the Terms of Business that we send out to all current and new clients. This revision contemplates offering
these clients two types of services packages, “Basic” and “Comprehensive” at a fee rate of 0.75% per annum
(a minimum annual fee of 750 GBP or $980) and 1% per annum (a minimum annual fee of 1,000 GBP or $1,300), respectively. The “Basic”
service package is what we are legally obliged to offer under U.K. FCA guidelines and the “Comprehensive” service
package is much more complete and contemplates additional added value for the client. Within the revised Terms of Business, we
have also implemented an upfront 3% fee that is payable by each new client that is onboarded to our client base. Both the upfront
fee and annual fee are based on the amount of Funds that legacy clients and new clients authorize our Company to Administrate
and ultimately look after their financial affairs.
So
far this year, we have 25 new business clients that have sent us signed letters of authority and wish to engage our Company. Most
of these new clients have opted for the “Comprehensive” service package. It is important to note that the Funds that
we currently administrate range from $8,000 to $650,000 per client (equivalent to 6,000 GBP to 500,000 GBP) and that we have calculated
that the average amount of Funds that we administrate per client, taking into consideration our historical data, is approximately
$72,500.
Our
goal for 2020 is to attract at least 100 new business clients (25 of which already are in the process of being onboarded as new
business clients); hence, our intent is to raise the Funds that we currently administrate by between $7.25 million to up $10 million.
Between the 3% initial upfront fee and the ongoing/recurring 1% or 0.75% administration fee, we are aiming to raise our gross
income by at least $250,000 on the low side and up to $400,000 on the high side in 2020. This uplift in gross revenue would represent
2 to 3 times the current gross income.
Finally,
it is our intent in 2020 to continue to leverage the licenses that we now own as believe that we can significantly increase our
business and revenues at very little extra cost and improve profitability.
|
2)
|
SEEK
FURTHER FUNDING FOR FURTHER INORGANIC GROWTH VIA ACQUISITION
|
The
Company is looking into entering a long-term funding agreement up to $10 million U.S. Dollars with a with a new European based
Regulated Fund in order to accelerate our inorganic growth and acquisition plan with a view to consolidate our Company in the
marketplace. Currently all negotiations are verbal negotiations.
|
3)
|
ACQUIRE
CERTAIN INDEPENDENT FINANCIAL ADVISORY FIRMS WITH FUNDS UNDER ADMINISTRATION:
|
During
the year ended December 31, 2019, management commenced certain negotiations to acquire 100% of an Independent Financial Advisory
(IFA) firm based in London (United Kingdom). This targeted IFA currently has 136 Million GBP (approximately U.S. $179 Million)
of Funds under Administration and historical recurring revenues of a little more than One Million GBP (approximately U.S. $1.32
million). However, we do not currently have any written agreements as management is still in verbal negotiations with the owners
of this IFA.
The
Company intends to target and acquire more Independent Financial Advisory firms with funds under administration during the next
12 to 24 months.
As
the Company acquires more Financial Advisory firms, each book of business will be analyzed to achieve the maximum return and revenue
from the client bank without affecting the client offering. In addition, certain cost savings will be managed into the budgets
by using technology for the administration, looking for duplication of services and by managing the client and the funds under
administration in a more efficient way.
The
acquisition of these entities will open a new network for the services of:
|
o
|
New
capital markets clients.
|
|
o
|
Distribution
of new funds / products.
|
|
o
|
Maximizing
the current books of business being bought.
|
|
o
|
Expand
and thus increase business via more financial advisors.
|
|
o
|
Seek
products that offer both a minimum of 1% trail (recurring) income and a secure risk averse home for clients’ funds.
|
|
o
|
Seek
cost savings, where possible, due to elimination of duplicate services.
|
|
o
|
Implement
rapid and efficient systems in order to allow information to flow to the clients and to management more effectively.
|
|
o
|
Acquiring
smaller, active client banks into our licenses and procedures for cost effective growth.
|
|
4)
|
COMMENCE
A TARGETED MARKETING PLAN
|
During
2020, our United Kingdom regulated business, Cheshire Trafford (U.K.) Limited, will continue with the direct marketing campaign
that commenced in the second quarter of 2019, within the region using traditional print media, radio advertising, social media
and editorial pieces. In conjunction with this campaign, the website and marketing of the Company will be refocused with a completely
new image based around “Over 40 years of serving the community.” Two days per month in our office in the United Kingdom,
we will offer free consultation to prospective clients that come and visit us, thus enabling us to potentially recruit them as
new clients.
|
5)
|
FURTHER
EXPAND OUR RANGE OF SERVICES TO OUR FINANCIAL SERVICES CLIENTS
|
We
will bring additional products to the client bank in order to maximize the potential returns per client with complementary products
such as mortgages, trusts and more attractive funds.
The
Company intends to continue its mandate to assist its client, Creditum Limited, with the listing of the Creditum Limited´s
shares on the London Stock Exchange (“LSE”). Management believes that this public listing should be fully executed
and finalized by sometime in the year 2020.
ITEM
7A.
|
QUANTITATIVE
AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK.
|
Not
applicable.
ITEM
8.
|
FINANCIAL
STATEMENTS AND SUPPLEMENTARY DATA.
|
Our
financial statements and supplementary data may be found beginning at page F-1.
ITEM
9.
|
CHANGES
IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE.
|
Not
applicable.
ITEM
9A.
|
CONTROLS
AND PROCEDURES.
|
EVALUATION
OF DISCLOSURE CONTROLS AND PROCEDURES
As
of the end of the period covered by this report, we carried out an evaluation, under the supervision and with the participation
of our Principal Executive Officer and Principal Financial Officer of the effectiveness of the design and operation of our disclosure
controls and procedures. Based on this evaluation, our Principal Executive Officer and Principal Financial Officer concluded that
our disclosure controls and procedures (as defined in Rules 13a-15(e) and Rule 15d-15(e) under the Securities Exchange Act of
1934) were effective.
MANAGEMENT’S
REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING
Our
management is responsible for establishing and maintaining adequate internal control over financial reporting as defined in Rules
13a-15(f) and 15d-15(f) under the Exchange Act. Our internal control over financial reporting is designed to provide reasonable
assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in
accordance with generally accepted accounting principles. Our internal control over financial reporting includes those policies
and procedures that:
|
(1)
|
pertain
to the maintenance of records that in reasonable detail accurately and fairly reflect the transactions and dispositions of
our assets;
|
|
|
|
|
(2)
|
provide
reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance
with U.S. GAAP, and that our receipts and expenditures are being made only in accordance with the authorization of our management
and directors; and
|
|
|
|
|
(3)
|
provide
reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of our assets
that could have a material effect on the financial statements.
|
Because
of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections
of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes
in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
Management
assessed the effectiveness of our internal control over financial reporting as of December 31, 2019. In making this assessment,
management used the framework set forth in the report entitled Internal Control—Integrated Framework issued by the Committee
of Sponsoring Organizations of the Treadway Commission, or COSO (2013). The COSO framework summarizes each of the components of
a company’s internal control system, including (i) the control environment, (ii) risk assessment, (iii) control activities,
(iv) information and communication, and (v) monitoring. This annual report does not include an attestation report of our registered
public accounting firm regarding internal control over financial reporting. Management’s report was not subject to attestation
by our registered public accounting firm pursuant to the rules of the Securities and Exchange Commission that permits us to provide
only management’s report in this Annual Report.
IDENTIFIED
MATERIAL WEAKNESSES AND SIGNIFICANT DEFICIENCIES
A
material weakness is a control deficiency, or combination of control deficiencies, that results in more than a remote likelihood
that a material misstatement of the financial statements will not be prevented or detected. During our assessment of our internal
control over financial reporting as of December 31, 2019, no material weaknesses were found.
CONCLUSION
Our
management concluded that the Company´s internal controls over financial reporting were effective.
CHANGES
IN INTERNAL CONTROL OVER FINANCIAL REPORTING.
We
did not change our internal control over financial reporting during our last fiscal quarter that materially affected, or is reasonably
likely to materially affect, the Company’s internal control over financial reporting.
ITEM
9B.
|
OTHER
INFORMATION.
|
Not
applicable.
Notes
to Consolidated Financial Statements
December
31, 2019 and 2018
Note
1 - Organization and Nature of Operations
Argentum
47, Inc., formerly Global Equity International Inc. (the “Company” or “ARG”), a reporting company since
June 21, 2012, was organized under the laws of the state of Nevada on October 1, 2010. Global Equity Partners, Plc. (“GEP”),
a private company, was organized under the laws of the Republic of Seychelles on September 2, 2009. On November 15, 2010, GEP
executed a reverse recapitalization with ARG. On August 22, 2014, we formed a Dubai subsidiary of GEP called GE Professionals
DMCC. On June 10, 2016, ARG incorporated its wholly owned subsidiary, called GEP Equity Holdings Limited (“GEP EH”),
under the laws of the Republic of Seychelles. On March 14, 2017, the Company´s board of directors unanimously voted to transfer
the ownership of GE Professionals DMCC (Dubai) to GEP EH. On June 5, 2017, the Company sold 100% of the issued and outstanding
common stock of GEP to a citizen of the Republic of Thailand by entering into a Stock Purchase and Debt Assumption Agreement.
On December 12, 2017, ARG incorporated another wholly owned subsidiary, called Argentum 47 Financial Management Limited (“Argentum
FM”), under the Companies Act 2006 of England and Wales as a private limited company. Argentum FM was formed to serve as
a holding Company for the acquisition of various advisory firms.
On
March 29, 2018, the Company formally changed its name from Global Equity International, Inc. to Argentum 47, Inc.
On
August 1, 2018, Argentum FM entered into a Share Purchase Agreement with a third party, pursuant to which Argentum FM acquired
100% of the ordinary shares of Cheshire Trafford (U.K.) Limited of Hull, United Kingdom (“Cheshire Trafford”). Cheshire
Trafford was incorporated under the laws of the United Kingdom on January 26, 1976, as a limited liability company.
On
March 18, 2019, the Board of Directors of GEP Equity Holdings Limited decided to commence the process to formally and legally
liquidate GE Professionals DMCC and its related employment placement services business with an effective date of March 31, 2019.
This decision was made so to allow management of Argentum 47, Inc. to fully concentrate on the Company´s core businesses,
Independent Financial Advisory and Business Consulting. Accordingly, GE Professionals DMCC has been presented as a discontinued
operation for all periods presented in the accompanying consolidated financial statements and footnotes (See Note 6). On February
11, 2020, the liquidation proceedings of GE Professionals DMCC were completed and it is formally liquidated as of the filing of
this report.
The
Company´s consolidated revenues from continuing operations are generated from business consulting services and by acting
as broker for sale of Lump Sum or Single Premium Insurance Policies and/or the sale of Regular Premium Investment or Insurance
Policies that are issued by third party insurance companies.
Note
2 - Basis of Presentation
The
accompanying consolidated financial statements have been prepared in accordance with accounting principles generally accepted
in the United States of America (“GAAP”). All amounts in the consolidated financial statements are stated in U.S.
dollars.
Argentum
47, Inc. and Subsidiaries
Notes
to Consolidated Financial Statements
December
31, 2019 and 2018
Note
3 - Going Concern
The
accompanying consolidated financial statements have been prepared on a going concern basis, which contemplates the realization
of assets and the satisfaction of liabilities in the normal course of business. These consolidated financial statements do not
include any adjustments relating to the recovery of the recorded assets or the classification of the liabilities that might be
necessary should the Company be unable to continue as a going concern.
As
reflected in the accompanying consolidated financial statements, the Company had a net loss of $1,869,973 and net cash used in
operations of $346,645 for the year ended December 31, 2019; working capital deficit, stockholder’s deficit and accumulated
deficit of $581,086, $1,157,840 and $13,223,188 as of December 31, 2019. It is management’s opinion that these factors raise
substantial doubt about the Company’s ability to continue as a going concern for twelve months from the issuance date of
this report.
The
ability for the Company to mitigate this risk and continue its operations is primarily dependent on management’s plans as
follows:
|
a)
|
Consummating
and executing all current engagements related to the business consulting division.
|
|
b)
|
Continually
engaging with new clients via our business consulting division.
|
|
c)
|
Maximizing
the already acquired Independent Financial Advisory firm´s revenues by way of servicing the current client base in the
most professional manner possible.
|
|
d)
|
Organically
growing the amount of funds under administration of the already acquired Independent Financial Advisory firm to new and higher
levels.
|
|
e)
|
Continuing
to receive fixed funding, via equity or debt, for acquisition, growth and working capital from parties that have already executed
funding agreement with the Company.
|
|
f)
|
Continuing
to negotiate new fixed funding via equity or debt, for further acquisitions, growth and working capital.
|
|
g)
|
Acquiring
and managing more Independent Financial Advisory firms with funds under administration located around the globe.
|
Note
4 - Summary of Significant Accounting Policies
Principles
of Consolidation
Argentum
47, Inc. (“ARG”) is the parent company of its two 100% owned subsidiaries called GEP Equity Holdings Limited (“GEP
EH”) and Argentum 47 Financial Management Limited (“Argentum FM”). GEP EH is the parent company of its 100%
owned subsidiary, GE Professionals DMCC (Dubai). GE Professionals DMCC has been presented as a discontinued operation as of December
31, 2019 as it has completed the liquidation proceedings on February 11, 2020. Argentum FM is the parent company of its 100% owned
subsidiary, Cheshire Trafford U.K. Limited (U.K.) from August 1, 2018 pursuant to a Share Purchase Agreement dated August 1, 2018.
All significant inter-company accounts and transactions have been eliminated in consolidation.
Reclassifications
Certain
amounts in the 2018 consolidated statements of operations have been reclassified from Interest expense to Change in fair value
of acquisition payable to conform to the 2019 presentation. This reclassification increased Change in fair value of acquisition
payable, in Other expenses of the consolidated statements of operations by $7,561 and decreased Interest expense in Other expenses
of the consolidated statements of operations by the same amount in 2018.
Argentum
47, Inc. and Subsidiaries
Notes
to Consolidated Financial Statements
December
31, 2019 and 2018
Use
of Estimates
The
preparation of consolidated financial statements in conformity with U.S. generally accepted accounting principles requires management
to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets
and liabilities at the date of the consolidated financial statements and the reported amounts of revenue and expenses during the
reporting period.
Making
estimates requires management to exercise significant judgment. It is at least reasonably possible that the estimate of the effect
of a condition, situation, or set of circumstances that existed at the date of the consolidated financial statements, which management
considered in formulating its estimate could change in the near term due to one or more future non-confirming events. Accordingly,
the actual results could differ from those estimates. Significant estimates in the accompanying consolidated financial statements
include accounts receivable and related revenues for our subsidiary, Cheshire Trafford, allowance for doubtful accounts and loans,
estimates of fair value of securities received for services, estimates of fair value of securities held, depreciation period of
fixed assets, valuation of fair value of assets acquired and liabilities assumed of acquired businesses, fair value of business
purchase consideration, fair value of the lease liabilities, valuation allowance on deferred tax assets and equity valuations
for non-cash equity grants.
Risks
and Uncertainties
The
Company’s operations are subject to significant risk and uncertainties including financial, operational, competition and
potential risk of business failure.
Segment
Reporting
A
business segment is a group of assets and operations engaged in providing products or services that are subject to risks and returns
that are different from those of other business segments. A geographical segment is engaged in providing products or services
within a particular economic environment that is subject to risks and returns that are different from those of segments operating
in other economic environments.
The
Company uses “the management approach” in determining reportable operating segments. The management approach considers
the internal organization and reporting used by the Company’s chief operating decision maker for making operating decisions
and assessing performance as the source for determining the Company’s reportable segments. The Company’s chief operating
decision maker is the Chief Executive Officer of the Company, who reviews operating results to make decisions about allocating
resources and assessing performance for the entire Company.
Cash
Equivalents
The
Company considers all highly liquid investments with an original maturity of three months or less to be cash equivalents. At December
31, 2019 and 2018, the Company had no cash equivalents. At times balances may exceed federally insured limits of $250,000. We
have not experienced any losses related to these balances. At December 31, 2019 and 2018, balance in one financial institution
exceeded federally insured limits by $73,480 and $0, respectively.
Accounts
Receivable and Allowance for Doubtful Accounts
The
Company recognizes accounts receivable in connection with the services provided. The Company recognizes an allowance for doubtful
accounts based on an analysis of current receivables aging and expected future write-offs, as well as an assessment of specific
identifiable customer accounts considered at risk or uncollectible. There was no allowance for bad debt at December 31, 2019 and
2018. However, there were direct write offs of $30,000 during the year ended December 31, 2018.
Argentum
47, Inc. and Subsidiaries
Notes
to Consolidated Financial Statements
December
31, 2019 and 2018
Foreign
currency policy
The
Company’s accounting policies related to the consolidation and accounting for foreign operations are as follows: The accompanying
consolidated financial statements are presented in U.S. dollars. The functional currency of the Company’s discontinued Dubai
subsidiary is the Arab Emirates Dirham (“AED”) and the functional currency of the Company’s U.K. subsidiaries
is Great Britain Pounds (“GBP”). All foreign currency balances and transactions are translated into United States
dollars (“$” and/or “USD”) as the reporting currency. Assets and liabilities are translated at the exchange
rate in effect at the balance sheet date. Revenues and expenses are translated at the average rate of exchange prevailing during
the reporting period. Equity transactions are translated at each historical transaction date spot rate. Translation adjustments
arising from the use of different exchange rates from period to period are included as a component of our stockholders’
equity (deficit) as “Accumulated other comprehensive income (loss).” Gains and losses resulting from foreign currency
transactions are included in the non-operating income or expenses of the statement of operations.
Investments
|
(A)
|
Classification
of Securities
|
Marketable
Securities
As
of January 1, 2018, the Company adopted Accounting Standards Update (“ASU”) 2016-01, “Financial Instruments
- Overall (Topic 825-10): “Recognition and Measurement of Financial Assets and Financial Liabilities.” which amends
the guidance on the classification and measurement of financial instruments. Some of the amendments in ASU 2016-01 include the
following: 1) requires equity investments (except those accounted for under the equity method of accounting or those that result
in consolidation of the investee) to be measured at fair value with changes in fair value recognized in net income. 2) It simplifies
the impairment assessment of equity investments without readily determinable fair values by requiring a qualitative assessment
to identify impairment. 3) It requires public business entities to use the exit price notion when measuring the fair value of
financial instruments for disclosure purposes. 4) It requires an entity to present separately in other comprehensive income the
portion of the total change in the fair value of a liability resulting from a change in the instrument-specific credit risk when
the entity has elected to measure the liability at fair value; among others. After evaluating the potential impact of this guidance
on our consolidated financial statements, the management has reversed $1,181,675 from accumulated other comprehensive income to
opening retained earnings as a cumulative effect adjustment on January 1, 2018 using the modified retrospective method.
At
the time of the acquisition, a marketable security is designated as held-to-maturity, available-for-sale or trading, which depends
on the ability and intent to hold such security to maturity. Securities classified as trading and available-for-sale are reported
at fair value, while securities classified as held-to-maturity are reported at amortized cost.
All
changes in the fair value of the securities are reported in the earnings as they occur in a single line item “Gain (loss)
on available for sale securities, net.” Therefore, no gain/loss is recognized on the sale of securities.
Cost
Method Investments
Securities
that are not classified as marketable securities are accounted for under the cost method. These securities are recorded at their
original cost basis and are subject to impairment testing.
|
(B)
|
Other
than Temporary Impairment
|
The
Company reviews its equity investment portfolio for any unrealized losses that would be deemed other than temporary and require
the recognition of an impairment loss in the statement of operations. If the cost of an investment exceeds its fair value, the
Company evaluates, among other factors, general market conditions, the duration and extent to which the fair value is less than
cost, and the Company’s intent and ability to hold the investments. Management also considers the type of security, related-industry
and sector performance, as well as published investment ratings and analyst reports, to evaluate its portfolio. Once a decline
in fair value is determined to be other than temporary, an impairment charge is recorded and a new cost basis in the investment
is established. If market, industry, and/or investee conditions deteriorate, the Company may incur future impairments. The Company
did not record any such impairment during the years ended December 31, 2019 and 2018.
Argentum
47, Inc. and Subsidiaries
Notes
to Consolidated Financial Statements
December
31, 2019 and 2018
Fixed
Assets
Fixed
assets are stated at cost of acquisition less accumulated depreciation. Depreciation is provided based on estimated useful lives
of the assets. Cost of improvements that substantially extend the useful lives of assets are capitalized. Repairs and maintenance
expenses are charged to expense when incurred. In case of sale or disposal of an asset, the cost and related accumulated depreciation
are removed from the consolidated financial statements.
Leases
On
January 1, 2019, the Company adopted ASU 2016-02, Leases (Topic 842) which requires a lessee to recognize on the balance sheet
the assets and liabilities for the rights and obligations created by leases. Leases will continue to be classified as either financing
or operating, with classification affecting the recognition, measurement and presentation of expenses and cash flows arising from
a lease. We adopted this standard by applying the optional transition method on the adoption date and did not adjust comparative
periods. In addition, the Company elected the practical expedient to not reassess whether any expired contracts contained leases.
Furthermore, the Company has elected to not apply the recognition standards of ASU 2016-02 to operating leases with effective
terms of twelve months or less (“Short-Term Leases”). For Short-Term Leases, the Company recognizes lease payments
on a straight-line basis over the lease term in the period in which the obligation for those payments is incurred. On the adoption
date, all of the Company’s contracts containing leases were expired or were Short Term Leases. Accordingly, upon the adoption
of ASU 2016-02, there was no cumulative effect adjustment.
Beneficial
Conversion Feature
For
conventional convertible debt where the rate of conversion is below market value, the Company records any “beneficial conversion
feature” (“BCF”) intrinsic value as additional paid in capital and related debt discount.
When
the Company records a BCF, intrinsic value of the BCF is recorded as a debt discount against the face amount of the respective
debt instrument. The discount is amortized over the life of the debt. If a conversion of the underlying debt occurs, a proportionate
share of the unamortized amounts is immediately expensed.
Debt
Issue Costs
The
Company may pay debt issue costs in connection with raising funds through the issuance of debt whether convertible or not or with
other consideration. These costs are recorded as debt discounts and are amortized over the life of the debt to the statement of
operations as amortization of debt discount.
Original
Issue Discount
If
debt is issued with an original issue discount, the original issue discount is recorded to debt discount, reducing the face amount
of the note and is amortized over the life of the debt to the statement of operations as amortization of debt discount. If a conversion
of the underlying debt occurs, a proportionate share of the unamortized amounts is immediately expensed.
Argentum
47, Inc. and Subsidiaries
Notes
to Consolidated Financial Statements
December
31, 2019 and 2018
Valuation
of Derivative Instruments
ASC
815 “Derivatives and Hedging” requires that embedded derivative instruments be bifurcated and assessed, along with
free-standing derivative instruments such as warrants, on their issuance date and measured at their fair value for accounting
purposes. In determining the appropriate fair value, the Company uses the Black-Scholes option pricing formula. Upon conversion
of a note where the embedded conversion option has been bifurcated and accounted for as a derivative liability, the Company records
the shares at fair value, relieves all related notes, derivatives and debt discounts and recognizes a net gain or loss on debt
extinguishment.
Business
combinations
The
Company accounts for its business acquisitions under the acquisition method of accounting as indicated in ASC No. 805, “Business
Combinations”, which requires the acquiring entity in a business combination to recognize the fair value of all assets acquired,
liabilities assumed and any non-controlling interest in the acquiree, and establishes the acquisition date as the fair value measurement
point. Accordingly, the Company recognizes assets acquired and liabilities assumed in business combinations, including contingent
assets and liabilities and non-controlling interest in the acquiree, based on fair value estimates as of the date of acquisition.
Where
applicable, the consideration for the acquisition includes amounts resulting from a contingent consideration arrangement, measured
at its acquisition-date fair value. Subsequent changes in such fair values are adjusted against the cost of acquisition where
they qualify as measurement period adjustments (see below). The subsequent accounting for changes in the fair value of the contingent
consideration that do not qualify as measurement period adjustments depends on how the contingent consideration is classified.
Contingent consideration that is classified as equity is not re-measured at subsequent reporting dates and its subsequent settlement
is accounted for within equity. Contingent consideration that is classified as an asset or a liability is re-measured at subsequent
reporting dates at fair value, with changes in fair value recognized in statement of operations.
The
measurement period is the period from the date of acquisition to the date the group obtains complete information about facts and
circumstances that existed as of the acquisition date, resulting in a final valuation, and is subject to a maximum of one year
from acquisition date.
Goodwill
and Other Intangible Assets
In
accordance with ASC No. 805, the Company recognizes and measures goodwill, if any, as of the acquisition date, as the excess of
the fair value of the consideration paid over the fair value of the identified net assets acquired. Goodwill and intangible assets
acquired in a business combination and determined to have an indefinite useful life are not amortized, but instead are reviewed
for impairment annually or more frequently if impairment indicators arise. Intangible assets with estimable useful lives are amortized
over such lives and reviewed for impairment if impairment indicators arise. For the purpose of impairment testing, goodwill is
allocated to each of the group’s reporting units expected to benefit from the synergies of the combination. Reporting units
to which goodwill has been allocated are tested for impairment annually, or more frequently when there is an indication that the
unit may be impaired. If the fair value of a reporting unit is less than its carrying amount, an impairment loss calculated as
the amount by which the carrying value exceeds the fair value is recorded to goodwill but cannot exceed the goodwill amount. An
impairment loss recognized for goodwill is not reversed in a subsequent period. On disposal of a subsidiary or the relevant reporting
unit, the attributable amount of goodwill is included in the determination of the profit or loss on disposal.
Argentum
47, Inc. and Subsidiaries
Notes
to Consolidated Financial Statements
December
31, 2019 and 2018
Impairment
of Long-Lived Assets
The
Company reviews long-lived assets, such as property and equipment for impairment whenever events or changes in circumstances indicate
that the carrying amount of an asset may not be recoverable. Recoverability of assets to be held and used is measured by a comparison
of the carrying amount of an asset to estimated undiscounted future cash flows expected to be generated by the asset. If the carrying
amount of an asset exceeds its estimated future cash flows, an impairment charge is recognized by the amount by which the carrying
amount of the asset exceeds the fair value of the asset. Assets to be disposed of by sale would be separately presented in the
balance sheet and reported at the lower of the carrying amount or fair value less costs related to the sale, and are no longer
depreciated. The assets and liabilities of a group classified as held for sale would be presented separately in the appropriate
asset and liability sections of the balance sheet.
Discontinued
operations
Components
of an entity divested or discontinued are recognized in the consolidated statements of operations until the date of divestment
or discontinuation. For periods prior to the designation as discontinued operations, we reclassify the results of operations to
discontinued operations. Gains or losses on divestment or winding up of subsidiaries are stated as the difference between the
sales or disposal amount and the carrying amount of the net assets at the time of sale or winding up plus sales or winding up
costs.
The
assets and liabilities for business components meeting the criteria for discontinued operations are reclassified and presented
separately as assets of discontinued operations and liabilities relating to discontinued operations in the accompanying consolidated
balance sheet. The change in presentation for discontinued operations does not have any impact on our financial condition or results
of operations. We combine the cash flows and assets and liabilities attributable to discontinued operations with the respective
cash flows and assets and liabilities from continuing operations in the accompanying consolidated statement of cash flows.
Revenue
Recognition
As
of January 1, 2018, the Company adopted Accounting Standards Update (“ASU”) 2014-09, Revenue from Contracts with Customers
(“ASC 606”), that affects the timing of when certain types of revenue will be recognized.
Revenue
is recognized when the Company satisfies a performance obligation by transferring services promised in a contract to a customer,
in an amount that reflects the consideration that the Company expects to receive in exchange for those services. A single contract
could include one or multiple performance obligations. For those contracts that have multiple performance obligations, the Company
allocates the total transaction price to each performance obligation based on its relative standalone selling price, which is
determined based on the Company´s overall pricing objectives, taking into consideration market conditions and other factors.
Performance obligations in the Company´s contracts generally include general due diligence, assistance in designing client’s
capitalization strategy, introductions to potential capital funding sources and arranging third party insurance policies.
Revenue
is recognized by evaluating our revenue contracts with customers based on the five-step model under ASC 606:
|
1.
|
Identify
the contract with the customer;
|
|
2.
|
Identify
the performance obligations in the contract;
|
|
3.
|
Determine
the transaction price;
|
|
4.
|
Allocate
the transaction price to separate performance obligations; and
|
|
5.
|
Recognize
revenue when (or as) each performance obligation is satisfied.
|
Argentum
47, Inc. and Subsidiaries
Notes
to Consolidated Financial Statements
December
31, 2019 and 2018
The
Company generates its revenue from continuing operations by providing following services:
|
a)
|
Business
consulting services including advisory services to various clients.
|
|
b)
|
Earning
commissions from insurance companies on insurance policy sales and renewals, which are based on a percentage of the insurance
products sold.
|
Most
of the Company´s business consultancy and advisory services contracts are based on a combination of both fixed fee arrangements
and performance based or contingent arrangement. In addition, the Company generates initial and trail commissions by acting as
a broker of third-party lump sum or single premium insurance policies and regular premium investment or insurance policies.
Fees from clients for advisory and consulting services are dependent on the extent and value of the services provided. The Company
recognizes revenue when the promised services are rendered to the customer in the amount that best reflects the consideration
to which the Company expects to be entitled in exchange for those services.
In
fixed-fee billing arrangements, the Company agrees to a pre-established fee in exchange for a predetermined set of professional
services. The Company sets the fees based on its estimates of the costs and timing for completing the engagements. The Company
generally recognizes revenues under fixed fee billing arrangements using the input method, which is based on work completed to
date versus the Company´s estimates of the total services to be provided under the engagement.
Performance
based or contingent arrangements represent forms of variable consideration. In these arrangements, the Company´s fees are
linked to the attainment of contractually defined objectives with its clients. These arrangements include conditional payments,
commonly referred to as cash success fees and/or equity success fees. The Company typically satisfies its performance obligations
for these services over time as the related contractual objectives are met. The Company determines the transaction price based
on the expected probability of achieving the agreed upon outcome and recognizes revenue earned to date by applying the input method.
Reimbursable
expenses, including those relating to travel, out-of-pocket expenses, outside consultants and other outside service costs, are
generally included in revenues, and an equivalent amount of reimbursable expenses is included in costs of services in the period
in which the expense is incurred.
The
payment terms and conditions in the Company´s customer contracts vary. Differences between the timing of billings and the
recognition of revenue are recognized as either accrued accounts receivable, an asset or deferred revenues, a liability. Revenues
recognized for services performed but not yet billed to clients are recorded as accrued accounts receivable. Client pre-payments
and retainers are classified as deferred revenues and recognized over future periods as earned in accordance with the applicable
engagement agreement.
We
receive consideration in the form of cash and/or securities. We measure securities received at fair value on the date of receipt.
If securities are received in advance of completion of our services, the fair value will be recorded as deferred revenue and recognized
as revenue as the services are completed.
Argentum
47, Inc. and Subsidiaries
Notes
to Consolidated Financial Statements
December
31, 2019 and 2018
All
revenues are generated from clients whose operations are based outside of the United States. For the years ended December 31,
2019 and 2018, the Company had following concentrations of revenues from continuing operations:
Customer
|
|
Location
|
|
December 31, 2019
|
|
|
December 31, 2018
|
|
|
|
|
|
|
|
|
|
|
DUO
|
|
Sri Lanka
|
|
|
0
|
%
|
|
|
2.03
|
%
|
GRL
|
|
United Kingdom
|
|
|
0
|
%
|
|
|
30.42
|
%
|
CT clients (see below)
|
|
United Kingdom
|
|
|
100
|
%
|
|
|
67.55
|
%
|
|
|
|
|
|
100
|
%
|
|
|
100
|
%
|
During
the year ended December 31, 2019 and post-acquisition five months ended December 31, 2018, the Company had following concentrations
of revenues regarding insurance brokerage business, which was 100% and 67.55% of the consolidated revenues of the Company, respectively:
|
|
Year
ended
December
31, 2019
|
|
|
Five
months ended
December
31, 2018
|
|
|
|
|
|
|
|
|
Initial
advisory fees
|
|
|
3.81
|
%
|
|
|
30.06
|
%
|
Ongoing
advisory fees
|
|
|
29.50
|
%
|
|
|
10.57
|
%
|
Renewal
commissions
|
|
|
5.80
|
%
|
|
|
17.57
|
%
|
Trail
or recurring commissions
|
|
|
60.28
|
%
|
|
|
39.85
|
%
|
Other
revenue
|
|
|
0.61
|
%
|
|
|
1.95
|
%
|
|
|
|
100
|
%
|
|
|
100
|
%
|
At
December 31, 2019 and 2018, the Company had the following concentrations of accounts receivables with customers:
Customer
|
|
December
31, 2019
|
|
|
December
31, 2018
|
|
|
|
|
|
|
|
|
OMI
IRE
|
|
|
0
|
%
|
|
|
30.94
|
%
|
CLI
|
|
|
26.68
|
%
|
|
|
16.62
|
%
|
OMW
|
|
|
25.24
|
%
|
|
|
16.55
|
%
|
Others
having a concentration of less than 10%
|
|
|
48.08
|
%
|
|
|
35.89
|
%
|
|
|
|
100
|
%
|
|
|
100
|
%
|
Share-based
payments
Under
ASC 718 “Compensation – Stock Compensation”, the Company recognizes all forms of share-based payments to employees,
including stock option grants, warrants and restricted stock grants at their fair value on the grant date, which is based on the
estimated number of awards that are ultimately expected to vest.
On
January 1, 2019, the Company adopted ASU 2018-07 “Compensation – Stock Compensation” whereby share based payment
awards issued to non-employees will be treated the same as for employees. The guidance has been applied using the modified prospective
method which may result in a cumulative effect adjustment to retained earnings on the adoption date. The adoption of ASU 2018-07
did not result in a cumulative effect adjustment.
Share
based payments, excluding restricted stock, are valued using a Black-Scholes pricing model.
Argentum
47, Inc. and Subsidiaries
Notes
to Consolidated Financial Statements
December
31, 2019 and 2018
When
computing fair value, the Company considered the following variables:
|
●
|
The
risk-free interest rate assumption is based on the U.S. Treasury yield for a period consistent with the expected term of the
share-based payment in effect at the time of the grant.
|
|
●
|
The
expected term is developed by management estimate.
|
|
●
|
The
Company has not paid any dividends on common stock since inception and does not anticipate paying dividends on its common
stock in the near future.
|
|
●
|
The
expected volatility is based on management estimates which are based upon our historical volatility.
|
|
●
|
The
forfeiture rate is based on historical experience.
|
Income
Taxes
Income
taxes are accounted for under the asset and liability method. Deferred income tax assets and liabilities are recognized for the
future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities
and their respective tax bases, and operating loss carry-forwards. Deferred income tax assets and liabilities are measured using
enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered
or settled. The effect on deferred income tax assets and liabilities of a change in tax rates is recognized in income in the period
that includes the enactment date. A valuation allowance is provided to reduce the carrying amount of deferred income tax assets
if it is considered more likely than not that some portion, or all, of the deferred income tax assets will not be realized.
On
November 15, 2010, the date of the reverse recapitalization, the Company became subject to U.S. federal and the state of Nevada
income taxes. The Company files an unconsolidated income tax return to the tax authorities in U.S.
On
December 22, 2017, the United States signed into law the Tax Cuts and Jobs Act (the “Act”), a tax reform bill, which,
among other items, reduces the current federal income tax rate to 21% from 34%. The rate reduction is effective January 1,
2018 and is permanent. The Act has caused the Company’s deferred income taxes to be revalued as of December 31, 2017.
As changes in tax laws are enacted, deferred tax assets and liabilities are adjusted through income tax expense. Pursuant to the
guidance within SEC Staff Accounting Bulletin No. 118 (“SAB 118”), as of December 31, 2019 and 2018, the Company recognized
the provisional effects of the enactment of the Act for which measurement could be reasonably estimated. The ultimate impact of
the Act may differ from these estimates due to the Company’s continued analysis or further regulatory guidance that may
be issued as a result of the Act.
The
Company recognizes the effect of income tax positions only if those positions are more likely than not of being sustained. Recognized
income tax positions are measured at the largest amount that is greater than 50 percent likely of being realized. Changes in recognition
or measurement are reflected in the period in which the change in judgment occurs. The Company will record interest and penalties
related to unrecognized tax benefits in income tax expense. There were no penalties or interest related to income tax positions
for the years ended December 31, 2019 and 2018.
The
Company may be subject to examination by the Internal Revenue Service (“IRS”) and state taxing authorities for the
2017, 2018 and 2019 tax years.
The
Company’s two subsidiaries, Global Equity Partners Plc. (sold and ceased to be a subsidiary on June 5, 2017) and GEP Equity
Holdings Limited, were incorporated under the laws of the Republic of Seychelles (“Seychelles”). A company is only
subject to Seychelles income tax if it does business in Seychelles. A company that is incorporated in Seychelles, but that does
not do business in Seychelles, is not subject to income tax there. None of these two subsidiaries did business in Seychelles for
the years ended December 31, 2019 and 2018, and do not intend to do business in Seychelles in the future. Accordingly, the Company
is not subject to income tax in Seychelles for the years ended December 31, 2019 and 2018. All business activities were performed
by GEP Equity Holdings Limited in Dubai for the years ended December 31, 2019 and 2018. Dubai does not have an income tax. Regarding
UK subsidiaries, Argentum 47 Financial Management Limited, was incorporated under the laws of England and Wales on December 12,
2017. There was no business transacted from this subsidiary during the year ended December 31, 2019 and 2018 as it is just a holding
company for UK subsidiaries, hence there is no income tax impact during the year ended December 31, 2019 and 2018. Cheshire Trafford
UK Limited was acquired, through Argentum 47 Financial Management Limited, on August 1, 2018 and is subject to the laws of the
United Kingdom. Under the Corporation Tax Act, 2010 as applicable in the United Kingdom, income tax is to be calculated based
on 19% of the taxable income.
Argentum
47, Inc. and Subsidiaries
Notes
to Consolidated Financial Statements
December
31, 2019 and 2018
Earnings
per Share
The
basic net earnings (loss) per share are computed by dividing net income (loss) by weighted average number of shares of common
stock outstanding during each period. Diluted earnings (loss) per share are computed by dividing net income (loss) by the weighted
average number of shares of common stock and common stock equivalents outstanding during the period.
As
at December 31, 2019 and 2018, the Company had common stock equivalents of 363,755,756 and 94,401,975 common shares, respectively,
in the form of convertible notes, which, if converted, may be dilutive. See Note 9(E and F).
As
at December 31, 2019 and 2018, the Company had common stock equivalents of 770,000,000 common shares, in the form of convertible
preferred stock, which, if converted, may be dilutive. See Note 10(A).
|
|
Number
of Common Shares
|
|
|
|
December
31, 2019
|
|
|
December
31, 2018
|
|
Potential
dilutive common stock
|
|
|
|
|
|
|
|
|
Convertible
notes
|
|
|
363,755,756
|
|
|
|
94,401,975
|
|
Series
“B” preferred stock
|
|
|
450,000,000
|
|
|
|
450,000,000
|
|
Series
“C” preferred stock
|
|
|
320,000,000
|
|
|
|
320,000,000
|
|
Total
potential dilutive common stock
|
|
|
1,133,755,756
|
|
|
|
864,401,475
|
|
|
|
|
|
|
|
|
|
|
Weighted
average number of common shares – Basic
|
|
|
573,178,505
|
|
|
|
525,534,409
|
|
Weighted
average number of common shares – Dilutive
|
|
|
1,706,934,261
|
|
|
|
1,389,936,384
|
|
As
of December 31, 2019 and 2018, diluted weighted average number of common shares exceeds total authorized common shares. However,
770,000,000 common shares would result from the conversion of the preferred “B” and preferred “C” stock
into common stock. The option to convert the abovementioned preferred “B” and “C” stock into common stock
could not be any earlier than September 27, 2020.
Comprehensive
Income / (Loss)
The
Comprehensive Income Topic of the FASB Accounting Standards Codification establishes standards for reporting and presentation
of comprehensive income and its components in a full set of financial statements. Comprehensive income from January 1, 2018 through
December 31, 2019, includes only foreign currency translation gain / (loss), and is presented in the Company’s consolidated statements
of comprehensive income / (loss). Pursuant to ASU 2016-01, the Company reclassified the opening balance of unrealized gain on
available for sale marketable securities from other comprehensive income to retained earnings as a cumulative effect adjustment
as at January 1, 2018.
Argentum
47, Inc. and Subsidiaries
Notes
to Consolidated Financial Statements
December
31, 2019 and 2018
Changes
in Accumulated Other Comprehensive Income (Loss) by Component during the year ended December 31, 2018 were as follows:
|
|
Foreign
Currency Translation Adjustment
|
|
|
Unrealized
gain on available for sale marketable securities
|
|
|
Total
|
|
Balance,
December 31, 2017
|
|
$
|
120
|
|
|
$
|
1,181,675
|
|
|
$
|
1,181,795
|
|
Other
comprehensive loss before reclassification
|
|
|
13,472
|
|
|
|
-
|
|
|
|
13,472
|
|
Amounts
reclassified from accumulated other comprehensive income as a cumulative effect adjustment
|
|
|
-
|
|
|
|
(1,181,675
|
)
|
|
|
(1,181,675
|
)
|
Net
current-period other comprehensive loss
|
|
|
13,472
|
|
|
|
(1,181,675
|
)
|
|
|
(1,168,203
|
)
|
Balance,
December 31, 2018
|
|
$
|
13,592
|
|
|
$
|
-
|
|
|
$
|
13,592
|
|
Changes
in Accumulated Other Comprehensive Income (Loss) by Component during the year ended December 31, 2019 were as follows:
Balance,
December 31, 2018
|
|
$
|
13,592
|
|
Foreign
currency translation adjustment for the period
|
|
|
(19,140
|
)
|
Balance,
December 31, 2019
|
|
$
|
(5,548
|
)
|
Fair
Value of Financial Assets and Liabilities
The
Company measures assets and liabilities at fair value based on an expected exit price as defined by the authoritative guidance
on fair value measurements, which represents the amount that would be received on the sale of an asset or paid to transfer a liability,
as the case may be, in an orderly transaction between market participants. As such, fair value may be based on assumptions that
market participants would use in pricing an asset or liability.
The
authoritative guidance on fair value measurements establishes a consistent framework for measuring fair value on either a recurring
or nonrecurring basis whereby inputs, used in valuation techniques, are assigned a hierarchical level. The following are the hierarchical
levels of inputs to measure fair value:
|
●
|
Level
1: Observable inputs that reflect quoted prices (unadjusted) for identical assets or liabilities in active markets.
|
|
|
|
|
●
|
Level
2: Inputs reflect quoted prices for identical assets or liabilities in markets that are not active; quoted prices for similar
assets or liabilities in active markets; inputs other than quoted prices that are observable for the assets or liabilities;
or inputs that are derived principally from or corroborated by observable market data by correlation or other means.
|
|
|
|
|
●
|
Level
3: Unobservable inputs reflecting the Company’s assumptions incorporated in valuation techniques used to determine fair
value. These assumptions are required to be consistent with market participant assumptions that are reasonably available.
|
The
carrying amounts reported in the balance sheet for prepaid expenses, accounts receivable, accounts payable, accounts payable to
related parties, loans payable to related parties and notes payable, approximate fair value are based on the short-term nature
of these instruments.
Argentum
47, Inc. and Subsidiaries
Notes
to Consolidated Financial Statements
December
31, 2019 and 2018
The
Company measures its derivative liabilities and marketable securities at fair market value on a recurring basis and measures its
non-marketable securities at fair value on a non-recurring basis. Consequently, the Company may have gains and losses reported
in the statement of operations.
The
following is the Company’s assets and liabilities measured at fair value on a recurring and nonrecurring basis at December
31, 2019 and 2018, using quoted prices in active markets for identical assets (Level 1), significant other observable inputs (Level
2), and significant unobservable inputs (Level 3):
|
|
December
31, 2019
|
|
|
December
31, 2018
|
|
Level
1 – Marketable Securities – Recurring
|
|
$
|
204,239
|
|
|
$
|
-
|
|
Level
2 – Marketable Securities – Recurring
|
|
$
|
-
|
|
|
$
|
1,458,848
|
|
Management
analyzed the historical volume and the variation in the price that the marketable securities were bought and sold at during the
year 2018 and 2019 and has concluded that the level 2 and level 1 valuation respectively, regarding the fair value of the marketable
securities should be $0.25 per share as at December 31, 2018 and $0.035 per share as at December 31, 2019.
Marketable
Securities — The Level 1 position consists of the Company’s investment in equity securities of stock held in publicly
traded companies. The valuation of these securities is based on quoted prices in active markets.
Changes
in Level 1 or Level 2 marketable securities measured at fair value for the years ended December 31, 2019 and 2018 were as follows:
Balance,
December 31, 2017
|
|
$
|
2,029,340
|
|
Securities
transferred from long term investments valued at cost
|
|
|
136
|
|
Sales
and settlements during the year
|
|
|
(69,294
|
)
|
Loss
on available for sale marketable securities, net
|
|
|
(501,334
|
)
|
Balance,
December 31, 2018
|
|
$
|
1,458,848
|
|
Sales
and settlements during the period
|
|
|
-
|
|
Loss
on available for sale marketable securities, net
|
|
|
(1,254,609
|
)
|
Balance,
December 31, 2019
|
|
$
|
204,239
|
|
Non-Marketable
Securities at Fair Value on a Non-Recurring Basis — Certain assets are measured at fair value on a nonrecurring basis.
The level 3 position consist of investments accounted for under the cost method. The Level 3 position consists of investments
in equity securities held in private companies.
Management
believes that an “other-than-temporary impairment” would be justified, as according to ASC 320-10 an investment is
considered impaired when the fair value of an investment is less than its amortized cost basis. The impairment is considered either
temporary or other-than-temporary. The accounting literature does not define other-than-temporary. It does, however, state that
other-than-temporary does not mean permanent, although, all permanent impairments are considered other-than-temporary. The literature
does provide some examples of factors, which may be indicative of an “other-than-temporary impairment”, such as:
|
●
|
the
length of time and extent to which market value has been less than cost;
|
|
●
|
the
financial condition and near-term prospects of the issuer; and
|
|
●
|
the
intent and ability of the holder to retain its investment in the issuer for a period of time sufficient to allow for any anticipated
recovery in market value.
|
Argentum
47, Inc. and Subsidiaries
Notes
to Consolidated Financial Statements
December
31, 2019 and 2018
Management
believes that the fair value of its investment has been correctly measured, as the length of time that the stock has been less
than cost is nominal.
Balance,
December 31, 2017
|
|
$
|
136
|
|
Securities
received for services during the period
|
|
|
-
|
|
Securities
transferred to marketable securities
|
|
|
(136
|
)
|
Impairment
loss
|
|
|
-
|
|
Balance,
December 31, 2018
|
|
|
-
|
|
Securities
received for services during the period
|
|
|
-
|
|
Impairment
loss
|
|
|
-
|
|
Balance,
December 31, 2019
|
|
$
|
-
|
|
Recent
Accounting Pronouncements
There
are no new accounting pronouncements that we expect to have an impact on the Company’s financial statements.
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 instalment 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.
Argentum
47, Inc. and Subsidiaries
Notes
to Consolidated Financial Statements
December
31, 2019 and 2018
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:
|
|
Fair
Value
|
|
Cash
payment
|
|
$
|
175,710
|
|
Fair value
of contingent consideration
|
|
|
284,298
|
|
Total
Fair Value of Purchase Consideration
|
|
$
|
460,008
|
|
Below
table depicts the allocation of fair value of the purchase consideration to the fair value of the net assets of Cheshire Trafford
at the acquisition date:
Assets
acquired
|
|
Fair
Value
|
|
Cash
|
|
$
|
4,743
|
|
Accounts
receivable – net
|
|
|
6,555
|
|
Intangibles
– customer list
|
|
|
342,194
|
|
Goodwill
|
|
|
142,924
|
|
Property
and equipment, net
|
|
|
614
|
|
|
|
|
497,030
|
|
Liabilities
assumed
|
|
|
|
|
Accounts
payable and accrued liabilities
|
|
|
4,012
|
|
Due
to director of Cheshire Trafford
|
|
|
33,010
|
|
|
|
|
(37,022
|
)
|
Purchase
consideration allocated
|
|
$
|
460,008
|
|
This
acquisition was accounted for under the acquisition method of accounting. Accordingly, the Company recognized amounts for identifiable
assets acquired and liabilities assumed at their initial estimated acquisition date fair values. During the purchase price measurement
period, which may be one year from the business acquisition date, the Company may record adjustments to the assets acquired and
liabilities assumed based on completion of valuations.
The
excess of the purchase consideration over the fair value of assets acquired, net of liabilities assumed was initially recognized
as the fair value of customer list intangible asset totaling to $485,118. Upon finalizing the fair value of customer list intangible
based on the Multi Period Excess Earnings Model, Management believed that fair value of the customer list intangible asset amounted
to $342,194 and the remaining $142,924 is recognized as goodwill as at December 31, 2018. This intangible asset is amortized on
a straight line basis over a life of 15 years which is the average service duration of a customer that has invested with Cheshire
Trafford.
Estimated
life of intangibles
|
|
15
years
|
|
|
|
|
|
Fair
value of customer list intangible asset at date of acquisition
|
|
$
|
485,118
|
|
Fair
value adjustment at December 31, 2018
|
|
|
(142,924
|
)
|
Adjusted
fair value of customer list intangible asset at December 31, 2018
|
|
$
|
342,194
|
|
Amortization
charge for 5 months ended December 31, 2018
|
|
|
(9,505
|
)
|
Net
Book Value at December 31, 2018
|
|
$
|
332,689
|
|
Amortization
charge for the period
|
|
|
(22,813
|
)
|
Net
Book Value at December 31, 2019
|
|
$
|
309,876
|
|
Argentum
47, Inc. and Subsidiaries
Notes
to Consolidated Financial Statements
December
31, 2019 and 2018
As
at December 31, 2019, the management recalculated the third installment of the purchase price consideration as the recurring income
period of 12 months ended on July 31, 2019 based upon the terms of the purchase agreement. Accordingly, the fair value of contingent
acquisition payable was reduced, and the Company recorded a gain on revaluation of payable for acquisition of $67,897 in
the accompanying consolidated statement of operations during the year ended December 31, 2019.
Note
6 – Discontinued Operations
In
March 2019, Management decided that it made overall economic sense for the Company to close its employment placement services
business in Dubai; hence, in order to fully concentrate on its core business of Independent Financial Advisory services and consultancy
business, the Board of Directors decided to initiate liquidation proceedings of the Dubai subsidiary “GE Professionals DMCC”
and discontinue the related employment placement services business. As a result, Dubai subsidiary operations for the years ended
December 31, 2019 and 2018 are treated as discontinued operations in the accompanying consolidated financial statements. The consolidated
statements of operations only comprise the continuing operations. Net income from the discontinued operations is presented on
a single line after the net income from the continuing operations.
Major
classes of assets and liabilities from discontinued operations as at December 31, 2019 and December 31, 2018 were as follows:
Assets
|
|
December 31, 2019
|
|
|
December 31, 2018
|
|
Cash
|
|
$
|
-
|
|
|
$
|
10,219
|
|
Prepaids
|
|
|
-
|
|
|
|
1,974
|
|
Other current assets
|
|
|
-
|
|
|
|
4,732
|
|
Total Assets
|
|
$
|
-
|
|
|
$
|
16,925
|
|
|
|
|
|
|
|
|
|
|
Liabilities
|
|
|
|
|
|
|
|
|
Accounts payable and accrued liabilities
|
|
$
|
-
|
|
|
$
|
79,534
|
|
Accounts payable and accrued liabilities - related parties
|
|
|
-
|
|
|
|
5,648
|
|
Total Liabilities
|
|
$
|
-
|
|
|
$
|
85,182
|
|
Statement
of Operations from discontinued operations for the years ended December 31, 2019 and 2018 was as follows:
|
|
December
31, 2019
|
|
|
December
31, 2018
|
|
Revenue
|
|
$
|
-
|
|
|
$
|
45,334
|
|
|
|
|
|
|
|
|
|
|
General
and administrative expenses
|
|
$
|
9,452
|
|
|
$
|
57,361
|
|
Compensation
expense
|
|
|
22,743
|
|
|
|
114,046
|
|
Professional
services
|
|
|
2,382
|
|
|
|
1,361
|
|
Depreciation
|
|
|
77
|
|
|
|
454
|
|
Loss
from discontinued operations
|
|
$
|
(34,654
|
)
|
|
$
|
(127,888
|
)
|
Other
income (expenses)
|
|
|
|
|
|
|
|
|
Loss
due to fixed assets write off
|
|
$
|
(164
|
)
|
|
$
|
-
|
|
Gain
on extinguishment of debt and other liabilities
|
|
|
-
|
|
|
|
19,317
|
|
Exchange
rate loss
|
|
|
(187
|
)
|
|
|
(1,097
|
)
|
Total
other (expenses) / income
|
|
$
|
(351
|
)
|
|
$
|
18,220
|
|
Net
loss from discontinued operations
|
|
$
|
(35,005
|
)
|
|
$
|
(109,668
|
)
|
Argentum
47, Inc. and Subsidiaries
Notes
to Consolidated Financial Statements
December
31, 2019 and 2018
Note
7 – Investments
A.
Marketable Securities at Fair Value
Following
is the summary of Company’s investment in marketable securities at fair value as at December 31, 2019 and 2018:
|
|
December
31, 2019
|
|
|
December
31, 2018
|
|
Company
|
|
No.
of Shares
|
|
|
Book
value
|
|
|
No.
of Shares
|
|
|
Book
value
|
|
DUO
|
|
|
5,835,392
|
|
|
$
|
204,239
|
|
|
|
5,835,392
|
|
|
$
|
1,458,848
|
|
|
|
|
5,835,392
|
|
|
$
|
204,239
|
|
|
|
5,835,392
|
|
|
$
|
1,458,848
|
|
On
January 12, 2018, the Company converted its investment in 136,600 preferred shares of Duo World Inc. valued at cost of
$0.001 per share or $136 to 1,366,000 common shares of Duo World Inc. having the same cost basis of $136; no gain or loss was
recorded on this conversion. (See Note 7(B))
On
May 31, 2018, the Company received common stock dividend of 1,187,059 common shares of Duo World Inc. based on the stock split
ratio of 4:5. There was no net accounting effect of the receipt of these shares.
On
June 28, 2018, the Company sold 200 common shares of Duo World Inc. at $0.60 per share or $120.
During
the quarter ended September 30, 2018, the Company sold 99,700 common shares of Duo World Inc. at various selling prices totaling
to $69,174. At December 31, 2018, the Company revalued 5,835,392 common shares at their fair value of $0.25 per share, totaling
$1,458,848. As a result of year end revaluation at December 31, 2018 and sale of common stock during the year ended December 31,
2018, the Company recorded a net loss on available for sale marketable securities of $501,334 into the consolidated statement
of operations.
At
December 31, 2019, the Company revalued 5,835,392 common shares at their quoted market price of $0.035 per share, to $204,239;
hence, recording a net loss on available for sale securities of $1,254,609 into the statement of operations for the year ended
December 31, 2019.
B.
Investments at Cost
The
Company, through its subsidiary, GEP Equity Holdings Limited, holds the following common equity securities in private and reporting
companies as at December 31, 2019 and 2018:
|
|
December
31, 2019
|
|
|
December
31, 2018
|
|
|
|
Company
|
|
No.
of Shares
|
|
|
Book
value
|
|
|
No.
of Shares
|
|
|
Book
value
|
|
|
Status
|
PDI
|
|
|
5,006,521
|
|
|
$
|
-
|
|
|
|
5,006,521
|
|
|
$
|
-
|
|
|
Private
Company
|
QFS
|
|
|
-
|
|
|
|
-
|
|
|
|
2,271
|
|
|
|
-
|
|
|
Private
Company
|
|
|
|
5,006,521
|
|
|
$
|
-
|
|
|
|
5,008,792
|
|
|
$
|
-
|
|
|
|
On
December 4, 2019, the Company sold its investment in QFS stock to Quartal Financial Solutions AG (QFS) at a mutually agreed price
of $170,441, hence for the year ended December 31, 2019, the Company recorded a gain on sale of available for sale securities
amounting to $170,441 into the consolidated statement of operations.
Argentum
47, Inc. and Subsidiaries
Notes
to Consolidated Financial Statements
December
31, 2019 and 2018
The
Company, through its subsidiary, GEP Equity Holdings Limited, holds the following preferred equity securities in private and reporting
companies as at December 31, 2019 and 2018:
|
|
December
31, 2019
|
|
|
December
31, 2018
|
|
|
|
Company
|
|
No.
of Shares
|
|
|
Book
value
|
|
|
No.
of Shares
|
|
|
Book
value
|
|
|
Status
|
PDI
|
|
|
450,000
|
|
|
$
|
-
|
|
|
|
450,000
|
|
|
$
|
-
|
|
|
Private
Company
|
|
|
|
450,000
|
|
|
$
|
-
|
|
|
|
450,000
|
|
|
$
|
-
|
|
|
|
On
January 12, 2018, the Company converted its investment in 136,600 preferred shares of Duo World Inc. valued at cost of
$0.001 per share or $136 to 1,366,000 common shares of Duo World Inc., having the same cost basis of $136; no gain or loss was
recorded on this conversion.
Note
8 – Fixed Assets
Following
table reflects net book value of furniture and equipment as of December 31, 2019 and 2018:
|
|
Furniture
and Equipment
|
|
Useful
Life
|
|
3
to 10 years
|
|
|
|
|
|
Cost
|
|
|
|
|
Balance
as at December 31, 2018
|
|
$
|
82,010
|
|
Addition
during the period
|
|
|
1,284
|
|
Cost
write off – discontinued operations
|
|
|
(38,348
|
)
|
Translation
rate differences
|
|
|
1,501
|
|
Balance
as at December 31, 2019
|
|
$
|
46,447
|
|
|
|
|
|
|
Accumulated
depreciation
|
|
|
|
|
Balance
as at December 31, 2018
|
|
$
|
76,830
|
|
Depreciation
expense for the period – continuing operations
|
|
|
2,586
|
|
Depreciation
expense for the period - discontinued operations
|
|
|
77
|
|
Accumulated
depreciation write off – discontinued operations
|
|
|
(38,185
|
)
|
Translation
rate differences
|
|
|
1,467
|
|
Balance
as at December 31, 2019
|
|
$
|
42,775
|
|
Net
book value as at December 31, 2019
|
|
$
|
3,672
|
|
Net
book value as at December 31, 2018
|
|
$
|
5,180
|
|
Note
9 – Debt, Accounts Payable and Accrued Liabilities
(A)
Accounts Payable and Other Accrued Liabilities
The
following table represents breakdown of accounts payable and other accrued liabilities as of December 31, 2019 and 2018, respectively:
|
|
December
31, 2019
|
|
|
December
31, 2018
|
|
Accrued
salaries and benefits
|
|
$
|
61,452
|
|
|
$
|
12,794
|
|
Accounts
payable and other accrued liabilities
|
|
|
68,127
|
|
|
|
56,941
|
|
|
|
$
|
129,579
|
|
|
$
|
69,735
|
|
Argentum
47, Inc. and Subsidiaries
Notes
to Consolidated Financial Statements
December
31, 2019 and 2018
(B)
Accounts Payable and Accrued Liabilities – Related Parties
The
following table represents the accounts payable and accrued expenses to related parties as of December 31, 2019 and 2018, respectively:
|
|
December
31, 2019
|
|
|
December
31, 2018
|
|
Accrued
salaries and benefits
|
|
$
|
382,165
|
|
|
$
|
156,175
|
|
Expenses
payable
|
|
|
76,353
|
|
|
|
8,393
|
|
|
|
$
|
458,518
|
|
|
$
|
164,568
|
|
On
June 5, 2018, all of the officers and directors of the Company decided to convert their partial accrued salaries balance amounting
to $160,000 to 800,000 Series “C” preferred stock at par value of $0.001 per share having an equivalent common stock
fair value of $0.004 per share or $320,000 at the date of issuance of preferred stock. Each share of the Series “C”
preferred stock is convertible into 100 common shares, resulting in an equivalent 80,000,000 shares of common stock having a fair
value of $320,000, thereby recognizing additional stock based compensation of $160,000. (See Note 10 (A)). As a result of this
conversion, the Company issued following shares of Series “C” preferred stock to its officers and directors:
|
●
|
400,000
shares of Series “C” preferred stock to the Company´s CEO, having a par value of $0.001 per share or $400
for his accrued salary balance of $80,000. The equivalent common stock issued would be 40,000,000 having a fair value of $0.004
per share or $160,000 at the date of issuance of preferred stock, thereby recognizing a stock-based compensation of
$80,000, and
|
|
|
|
|
●
|
400,000
shares of Series “C” preferred stock to the Company´s CFO, having a par value of $0.001 per share or $400
for his accrued salary balance of $80,000. The equivalent common stock issued would be 40,000,000 having a fair value of $0.004
per share or $160,000 at the date of issuance of preferred stock, thereby recognizing a stock-based compensation of
$80,000.
|
(C)
Loans Payable – Related Parties
The
Company received short-term loans from its officers and directors. The loans were non-interest bearing, unsecured and due on demand.
The following table represents the related parties’ loans payable activity during the years ended December 31, 2019 and
2018:
Balance,
December 31, 2017
|
|
$
|
-
|
|
Proceeds
from loans
|
|
|
12,663
|
|
Repayments
|
|
|
(12,663
|
)
|
Balance,
December 31, 2018
|
|
$
|
-
|
|
Proceeds
from loans
|
|
|
109,178
|
|
Repayments
|
|
|
(109,178
|
)
|
Balance,
December 31, 2019
|
|
$
|
-
|
|
Argentum
47, Inc. and Subsidiaries
Notes
to Consolidated Financial Statements
December
31, 2019 and 2018
(D)
Short Term Notes Payable
Following
is the summary of all non-convertible notes, net of debt discount, including the accrued interest as at December 31, 2018:
Date
of Note
|
|
Principal
|
|
|
Accrued
Interest
|
|
|
Total
|
|
November
26, 2013 – JSP
|
|
$
|
-
|
|
|
$
|
37,971
|
|
|
$
|
37,971
|
|
September
30, 2018 – EDEN
|
|
|
260,584
|
|
|
|
17,058
|
|
|
|
277,642
|
|
Balance
– December 31, 2018
|
|
$
|
260,584
|
|
|
$
|
55,029
|
|
|
$
|
315,613
|
|
Following
is the summary of all non-convertible notes, net of debt discount, including the accrued interest as at December 31, 2019:
Date
of Note
|
|
Principal
|
|
|
Accrued
Interest
|
|
|
Total
|
|
November
26, 2013 – JSP
|
|
$
|
-
|
|
|
$
|
37,971
|
|
|
$
|
37,971
|
|
September
30, 2018 – EDEN
|
|
|
260,584
|
|
|
|
8,058
|
|
|
|
268,642
|
|
Balance
– December 31, 2019
|
|
$
|
260,584
|
|
|
$
|
46,029
|
|
|
$
|
306,613
|
|
·
|
●
|
On
November 26, 2013, the Company secured from a private individual, a twelve-month fixed price convertible loan amounting to
$450,000 having an interest at 10% per annum and an agreed fixed conversion price of $0.5 per share. During the year ended
December 31, 2014, the Company recorded a total accrued interest of $42,971 on this Note. On December 23, 2014, the Company
fully repaid the principal note balance of $450,000 in cash and also paid $5,000 on account of accrued interest payment, thereby
leaving an accrued and unchanged interest balance of $37,971 as of December 31, 2019 and 2018.
|
|
|
|
·
|
●
|
On
October 17, 2013, the Company secured a non-convertible three-month bridge loan for 200,000 GBP (equivalent to $319,598) with
the agreement to repay the principal plus 5% per month interest on or before January 18, 2014. The note holder received, as
a form of guarantee, 1,600,000 shares of an investment we held then in a company called Direct Security Integration Inc. The
shares used as a form of guarantee formed part of the assets of our Company at that time but are not considered an asset since
the date we provided them to the lender as we were no longer in control of such shares.
|
On
September 18, 2015, the Company and the note holder agreed to amend the previous terms of the agreement and both parties agreed
on the new terms whereby the Company was now liable to pay $500,000 as full and final payment of the October 17, 2013 loan principal,
accrued interest, and all other related penalties. This repayment will not accrue any further interest or penalties.
On
December 21, 2015, the Company repaid the first installment of the accrued interest amounting to $20,000, leaving the accrued
interest balance of $160,402 and principal loan balance of $319,598 as on December 31, 2015.
On
September 30, 2018, the Company and the lender agreed to amend the previous terms of the agreement and both parties agreed on
the new terms whereby the Company is now liable to pay GBP 220,000 or $286,642 as full and final payment regarding this loan.
This repayment will not accrue any further interest or penalties. Both parties also agreed on a repayment plan of $3,000 monthly
payment commencing on the date of signature of this addendum and additional ad hoc interim payments will be made to fully settle
this loan within 36 months of this addendum dated September 30, 2018.
During
the year ended December 31, 2018, the Company repaid three monthly payments against accrued interest totaling to $9,000 as per
the addendum dated September 30, 2018 and the outstanding note balance amounted to $260,584 and accrued interest balance amounted
to $17,058 as of December 31, 2018.
Argentum
47, Inc. and Subsidiaries
Notes
to Consolidated Financial Statements
December
31, 2019 and 2018
During
the year ended December 31, 2019, the Company repaid three monthly payments against accrued interest totaling to $9,000 as per
the addendum dated September 30, 2018 and the outstanding note balance amounted to $260,584 and accrued interest balance amounted
to $8,058 as of December 31, 2019.
(E)
Short Term Fixed Price Convertible Notes Payable
Following
is the summary of all fixed price convertible notes, net of debt discounts including the accrued interest as at December 31, 2018:
Date
of Note
|
|
Principal
|
|
|
Discount
|
|
|
Principal,
net of discounts
|
|
|
Accrued
Interest
|
|
|
Total
|
|
June
5, 2017 - Mammoth Corp.
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
-
|
|
August
9, 2017 - Mammoth Corp.
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
November
15, 2017 – Power up Lending
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
January
17, 2018 - Xantis PE Fund
|
|
|
400,000
|
|
|
|
1,500
|
|
|
|
398,500
|
|
|
|
23,277
|
|
|
|
421,777
|
|
January
23, 2018 - William Marshal Plc.
|
|
|
100,000
|
|
|
|
-
|
|
|
|
100,000
|
|
|
|
5,819
|
|
|
|
105,819
|
|
June
8, 2018 - Xantis AION Sec Fund
|
|
|
735,000
|
|
|
|
50,824
|
|
|
|
684,176
|
|
|
|
25,010
|
|
|
|
709,186
|
|
October
10, 2018 - Xantis AION Sec Fund
|
|
|
653,040
|
|
|
|
78,099
|
|
|
|
574,941
|
|
|
|
3,328
|
|
|
|
578,269
|
|
Balance,
December 31, 2018
|
|
$
|
1,888,040
|
|
|
$
|
130,423
|
|
|
$
|
1,757,617
|
|
|
$
|
57,434
|
|
|
$
|
1,815,051
|
|
Following
is the summary of all fixed price convertible notes, net of debt discounts including the accrued interest as at December 31, 2019:
Date
of Note
|
|
Principal
|
|
|
Discount
|
|
|
Principal,
net of discounts
|
|
|
Accrued
Interest
|
|
|
Total
|
|
January
17, 2018 - Xantis PE Fund
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
-
|
|
January 23,
2018 - William Marshal Plc.
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
June 8, 2018
- Xantis AION Sec Fund
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance,
December 31, 2019
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
●
|
On
June 5, 2017, after receipt of $167,500 from Mammoth Corporation (New Lender), St. George (Previous Lender) assigned and transferred
to the Mammoth Corporation all of its rights, title and interest in and to the promissory note initially issued by the Company
to St. George Investments LLC for $167,500 dated December 6, 2016. The Company re-negotiated the loan terms with new lender
(Mammoth Corporation) after the above assignment and issued a restated 9 months fixed price convertible promissory note amounting
to $184,250 dated June 5, 2017. The terms of this exchanged note were a one-time 10% increase in the principal loan of $16,750,
increasing the principal sum from $167,500 to $184,250. The new lender also has a right, at any time after the issue date
of the revised note until the outstanding balance has been paid in full, to convert all or any part of the outstanding balance
into common shares of the Company at a fixed conversion price of $0.012. Fair value of the Company´s stock as on the
date of the note was $0.0071. Hence, there was no beneficial conversion feature (BCF) of the Note, as the agreed conversion
price is higher than the fair value of the Company´s stock as on June 5, 2017. The Company accounted for this exchange
as a debt extinguishment of previous note dated December 6, 2016 and $16,750 was recognized as loss on debt extinguishment.
|
Argentum
47, Inc. and Subsidiaries
Notes
to Consolidated Financial Statements
December
31, 2019 and 2018
|
|
On
December 4, 2017, the Company re-negotiated the loan terms and entered into a rider agreement with the noteholder. The terms
of this rider agreement were a one-time 35% increase in the principal loan of $64,487, increasing the principal sum from $184,250
to $248,737. In addition, both parties also agreed to re-negotiate the loan terms of another note dated August 9, 2017 with
a one-time 35% increase in the principal loan of $19,775, increasing the principal sum from $56,500 to $76,275. This rider
agreement further consolidated the revised principal note balances of the two notes into a single payable of $325,012. The
Company agreed a monthly repayment plan of six installments of $54,168 commencing from January 15, 2018 and ending
on June 15, 2018. The noteholder agreed to suspend the conversion of the notes if the company continue to repay all six installments
as per the revised payment plan. The Company accounted for this one-time increase on both notes amounting to $64,487 and $19,775
as a loss on debt extinguishment. As of December 31, 2017, the outstanding balance amounted to $248,737 and $73,386, net of
$2,889 discount, against the two notes dated June 5, 2017 and August 9, 2017, respectively.
|
|
|
|
|
|
During
the year ended December 31, 2018, the Company fully repaid the six installments of $54,168 each, thereby leaving an outstanding
principal loan balance of $0 as on December 31, 2018.
|
|
|
|
|
●
|
On
August 9, 2017, the Company secured a 9 months fixed price convertible loan for $56,500 (see amendment discussed in above
paragraph) carrying an original issue discount of $6,500. Interest will not be accrued on the outstanding principal balance
unless an event of default occurs. The lender has a right, at any time after the issue date of the note until the outstanding
balance has been paid in full, to convert all or any part of the outstanding balance into common shares of the Company at
a fixed conversion price of $0.012 subject to change based on certain default provisions as defined in the Note. Fair value
of the Company´s stock as on the date of issuance of this note was $0.0045. Hence, there was no beneficial conversion
feature (BCF) of the Note, as the agreed conversion price is higher than the fair value of the Company´s stock as on
August 9, 2017.
|
|
|
|
|
|
During
the year ended December 31, 2017, $3,611 of the debt discount balance was amortized to income statement. During the year ended
December 31, 2018, $2,889 of the debt discount balance was amortized to income statement, leaving an unamortized discount
balance of $0.
|
|
|
|
|
|
With
the payments of all six installments of $54,168 each as per the amendment discussed in above paragraph, the Company first
settled these payments against this convertible note in full amounting to $76,275, thereby leaving an outstanding principal
loan balance of $0 as on December 31, 2018.
|
|
|
|
|
●
|
On
November 15, 2017, the Company secured a 9-month convertible loan for $53,000 carrying an original issue discount of $3,000
and an interest at the rate of 12% accrued on the outstanding principal balance. The lender has a right, at any time after
the issue date of the note until the outstanding balance has been paid in full, to convert all or any part of the outstanding
balance into common shares of the Company at a conversion price of 65% of the average of the lowest 2 trading prices during
the ten trading days’ period ending on the latest trading day prior to the conversion date, subject to change based
on certain default provisions as defined in the Note. The Company recorded this fixed discount of 35% as a premium on stock
settled debt amounting to $28,538.
|
|
|
|
|
|
During
the year ended December 31, 2017, $500 of the debt discount balance was amortized to income statement, leaving an unamortized
discount balance of $2,500. The Company also recorded an accrued interest expense of $819 during the year ended December 31,
2017. The outstanding convertible note balance amounted to $53,000 and the premium on stock settled debt amounted to $28,538
as of December 31, 2017.
|
|
|
|
|
|
On
January 17, 2018, the Company opted for the prepayment of this note by paying 117% of the outstanding note balance. This early
settlement of this note in cash resulted in a prepayment charge of $9,188. Hence, the Company paid $53,000 of principal, $1,045
of accrued interest and $9,188 of prepayment charge in cash totaling to $63,233 as a full and final settlement of this convertible
note.
|
Argentum
47, Inc. and Subsidiaries
Notes
to Consolidated Financial Statements
December
31, 2019 and 2018
|
●
|
On
January 12, 2018, the Company secured a 12-month fixed price convertible loan from Xantis Private Equity Fund (Luxembourg),
for a minimum of 2,000,000 Great Britain Pounds (equivalent to approximately $2,680,000) carrying an interest at the rate
of 6% per annum. The Company has a right to pay this note no earlier than 366 days’ post investment of each tranche
of funding, by issuing common shares at greater of $0.02 or the average closing ask price of the Company’s common stock
on the OTCBB for the prior 60 trading days.
|
|
|
|
|
|
On
January 17, 2018, the Company received an initial tranche of funding from Xantis Private Equity Fund amounting to $400,000.
There was no beneficial conversion feature since the conversion price exceeded the quoted trading price on the funding date.
The Company paid a $36,000 cash commission, which is treated as debt issuance cost for this note. This particular Convertible
Note issued to Xantis Private Equity Fund matured on January 13, 2019, as January 12, 2018 was the date that the funds were
effectively wired to the Company.
|
|
|
|
|
|
During
the year ended December 31, 2018, $34,500 of the debt issuance costs was amortized to income statement, leaving an unamortized
debt issue cost balance of $1,500. The Company further recorded $23,277 as interest expense during the year ended December
31, 2018 and the outstanding note balance amounted to $400,000 as of December 31, 2018.
|
|
|
|
|
|
During
the year ended December 31, 2019, $1,500 of the debt issuance costs was amortized to income statement, leaving an unamortized
debt issue cost balance of $0. The company further recorded an interest expense of $723, making the total accrued interest
balance to $24,000. On January 14, 2019, the Company issued 21,200,000 common shares to the lender at an agreed conversion
price of $0.02 per share amounting to $424,000, thereby leaving an outstanding principal loan and accrued interest balance
of $0 as on December 31, 2019. As the note was converted at the contractual rate, no gain on conversion was recorded upon
conversion of this note and accrued interest.
|
|
|
|
|
●
|
On
January 12, 2018, the Company secured a 12-month fixed price convertible loan from William Marshal Plc., a United Kingdom
Public Limited Company listed on the Cyprus Public Exchange Emerging Companies Market, for a maximum of 2,000,000 Great Britain
Pounds (equivalent to approximately $2,680,000) carrying an interest at the rate of 6% per annum. The Company has a right
to pay this note no earlier than 366 days’ post investment of each tranche of funding, by issuing common shares at greater
of $0.02 or the average closing ask price of the Company’s common stock on the OTCBB for the prior 60 trading days.
|
|
|
|
|
|
On
January 23, 2018, the Company received its first tranche of funding from William Marshal Plc. amounting to $100,000. There
was no beneficial conversion feature since the conversion price exceeded the quoted trading price on the funding date. This
particular Convertible Note issued to William Marshal Plc. matured on January 24, 2019.
|
|
|
|
|
|
During
the year ended December 31, 2018, the Company recorded $5,819 as interest expense and the outstanding note balance
amounted to $100,000 as of December 31, 2018.
|
|
|
|
|
|
During
the year ended December 31, 2019, the Company further recorded an interest expense of $181, making the total accrued
interest balance to $6,000. On January 24, 2019, the Company issued 5,300,000 common shares to William Marshal Plc. at an
agreed conversion price of $0.02 per share amounting to $106,000, thereby leaving an outstanding principal loan and accrued
interest balance of $0 as on December 31, 2019. As the note was converted at the contractual rate, no gain on conversion was
recorded upon conversion of this note and accrued interest.
|
Argentum
47, Inc. and Subsidiaries
Notes
to Consolidated Financial Statements
December
31, 2019 and 2018
|
●
|
On
June 6, 2018, the Company secured a 12-month fixed price convertible loan, from Xantis AION Securitization Fund (Luxembourg),
for a minimum of 1,700,000 Great Britain Pounds (equivalent to approximately $1,940,000) carrying an interest at the rate
of 6% per annum. The Company has a right to pay this note no earlier than 366 days’ post investment of each tranche
of funding, by issuing common shares at greater of $0.02 or the average closing ask price of the Company’s common stock
on the OTCBB for the prior 60 trading days.
|
|
|
|
|
|
On
June 8, 2018, the Company received an initial tranche of funding from Xantis AION Securitization Fund amounting to $735,000.
There was no beneficial conversion feature since the conversion price exceeded the quoted trading price on the funding date.
The Company paid $110,887 cash commission, which is treated as debt issuance costs for this note. This particular Convertible
Note issued to Xantis AION Securitization Fund will mature on June 9, 2019.
|
|
|
|
|
|
During
the year ended December 31, 2018, $60,064 of the debt issuance costs was amortized to income statement, leaving an unamortized
debt issue cost balance of $50,824. The Company further recorded $25,010 as interest expense during the year ended December
31, 2018 and the outstanding note balance amounted to $735,000 as of December 31, 2018.
|
|
|
|
|
|
During
the year ended December 31, 2019, $50,824 of the debt issuance costs was amortized to income statement, leaving an unamortized
debt issue cost balance of $0. The Company further recorded an interest expense of $19,090, making the total accrued interest
balance to $44,100. On June 5, 2019, the Company issued 38,955,000 common shares to the lender at an agreed conversion price
of $0.02 per share amounting to $779,100, thereby leaving an outstanding principal loan and accrued interest balance of $0
as on December 31, 2019. As the note was converted at the contractual rate, no gain on conversion was recorded upon conversion
of this note and accrued interest. At December 31, 2019, the lender holds 10.17% beneficial ownership of the issued and outstanding
common stock of the Company, hence the lender is deemed to be a related party of the company.
|
(F)
Long Term Convertible Notes Payable
Following
is the summary of all long-term convertible notes, net of debt discounts including the accrued interest as at December
31, 2019:
Date
of Note
|
|
Principal
|
|
|
Discount
|
|
|
Principal,
net of discounts
|
|
|
Accrued
Interest
|
|
|
Total
|
|
October
10, 2018 - Xantis AION Sec Fund
|
|
$
|
653,040
|
|
|
$
|
-
|
|
|
$
|
653,040
|
|
|
$
|
48,092
|
|
|
$
|
701,132
|
|
December
18, 2018 - Aegeus Sec Fund
|
|
|
329,100
|
|
|
|
-
|
|
|
|
329,100
|
|
|
|
649
|
|
|
|
329,749
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance,
December 31, 2019
|
|
$
|
982,140
|
|
|
$
|
-
|
|
|
$
|
982,140
|
|
|
$
|
48,742
|
|
|
$
|
1,030,882
|
|
|
|
On
October 10, 2018, the Company received second tranche of funding from Xantis AION Securitization Fund amounting to $653,040
pursuant to the funding agreement dated June 6, 2018. There was no beneficial conversion feature since the conversion price
exceeded the quoted trading price on the funding date. The Company paid $98,651 cash commission, which is treated as debt
issuance cost discount for this note. This particular Convertible Note issued to Xantis AION Securitization Fund was
to mature on October 11, 2019.
|
|
|
|
|
|
During
the year ended December 31, 2018, $20,552 of the debt issuance cost discount was amortized to income statement, leaving
an unamortized debt issue cost balance of $78,099. The Company further recorded $3,328 as interest expense during the year
ended December 31, 2018 and the outstanding note balance amounted to $653,040 as of December 31, 2018.
|
Argentum
47, Inc. and Subsidiaries
Notes
to Consolidated Financial Statements
December
31, 2019 and 2018
|
|
On
December 13, 2019, the Company and the lender mutually agreed to defer the conversion of the second tranche of the June 6,
2018 funding agreement for a further two (2) years and one (1) day from December 18, 2019. In this case, the agreed conversion
price will be the closing market price two days prior the new conversion date. The Company will continue to accrue 6% interest
on the outstanding principal until the note is fully converted to its common stock.
|
|
|
|
|
|
During
the year ended December 31, 2019, $78,099 of the debt issuance cost discount was amortized to income statement, leaving
an unamortized debt issuance cost discount balance of $0. The Company further recorded $44,764 as interest expense
during the year ended December 31, 2019 and the outstanding note balance amounted to $653,040 as of December 31, 2019.
|
|
|
|
|
|
On
December 18, 2019, the Company secured a 24-month convertible loan, from Aegeus Securitization Fund (Luxembourg), for 500,000
Great Britain Pounds (equivalent to approximately $658,200) carrying an interest at the rate of 6% per annum and received
the first tranche amounting to GBP 250,000 (equivalent to approximately $329,000). The lender has an option to convert this
note into common stock of the Company after (2) years and one (1) day from December 18, 2019 at a conversion price equivalent
to the closing market price two days prior the new conversion date. Aegeus Securitization Fund and Xantis AION Securitization
Fund both have the same fund administrators, Xantis S.A., hence Aegeus Securitization Fund is treated as a related party of
the Company as at December 31, 2019. The Company simultaneously also entered into a Receivables Assignment Agreement whereby
an amount of the receivables from the Company and/or the next Independent Financial Advisory Firm acquired will be securitized
to the lender. Pursuant to the terms of this Assignment Agreement, the Company assigned its receivables for the period from
June 2020 to May 2025 to the lender.
|
|
|
|
|
|
During
the year ended December 31, 2019, the Company recorded $649 as interest expense and the outstanding note balance amounted
to $329,100 as of December 31, 2019.
|
Note
10 - Stockholders’ Equity (Deficit)
(A)
|
|
Preferred
Stock
|
|
|
|
|
●
|
Series
“A” Convertible Preferred Stock
|
|
|
|
|
|
On
November 30, 2011, the Company designated 5,000,000 of its authorized preferred stock as Series “A” convertible
preferred shares. On November 13, 2012, the Company’s board of directors approved an amendment to the Certificate of
Designation; to amend the voting rights and conversion rights of the Company’s Series “A” preferred shares
as follows:
|
|
●
|
Voting
Rights: 10 votes per share (votes along with common stock);
|
|
●
|
Conversion
Rights: Each share of Series “A” Preferred is convertible into ten (10) shares of common stock 1 day after the
second anniversary of issuance;
|
|
●
|
Dividend
Rights: None;
|
|
●
|
Liquidation
Rights: None
|
|
|
|
|
|
On
May 19, 2015, the board of directors agreed to the non-redemption of the redeemable Series “A” Preferred Shares
and the officers of the company that held these Preferred Shares, returned all 1,983,332 Shares of the Company to Treasury.
Since the preferred shares were vested upon issuance in prior years, the cancellation of these shares was considered a contribution
back to the company at zero cost with no gain or loss recognized.
|
|
|
|
|
|
On
July 15, 2015 the designation of the 5,000,000 Series “A” preferred shares was withdrawn.
|
Argentum
47, Inc. and Subsidiaries
Notes
to Consolidated Financial Statements
December
31, 2019 and 2018
|
●
|
Series
“B” Convertible Preferred Stock
|
|
|
|
|
|
On
November 10, 2016, the Company designated 45,000,000 of its authorized preferred stock as Series “B” convertible
preferred shares. The Certificate of Designation stated the following:
|
|
●
|
Voting
Rights: 10 votes per share (votes along with common stock);
|
|
●
|
Conversion
Rights: Each share of Series “B” Preferred is convertible at any time, and from time to time, into ten (10) shares
of common stock 1 day after the first anniversary of issuance. Pursuant to two funding agreements entered into in January
2018, the management contractually agreed to not convert or sell any of these preferred shares until September 27, 2020;
|
|
●
|
Dividend
Rights: In the event the Board of Directors declares a dividend on the common stock, each Series “B” Preferred
share will be entitled to receive an equivalent dividend as if the Series “B” Preferred share had been converted
into common stock prior to the declaration of such dividend.
|
|
●
|
Liquidation
Rights: None
|
|
|
On
November 11, 2016, certain Officers and Directors of the Company, offered to retire and exchange an aggregate 450,000,000
shares of Common Stock owned by them for 45,000,000 Series “B” Preferred Stock. The Company permitted Officers
and Directors of the Company to exchange 200,000,000, 50,000,000 and 200,000,000 shares of Common Stock, respectively, for
20,000,000, 5,000,000 and 20,000,000 shares of Series “B” Preferred Stock, respectively.
|
|
|
|
|
●
|
Series
“C” Convertible Preferred Stock
|
|
|
|
|
|
On
September 18, 2017, the Company designated 5,000,000 of its authorized preferred stock as Series “C” convertible
preferred shares. The Certificate of Designation stated the following:
|
|
●
|
Voting
Rights: 100 votes per share (votes along with common stock);
|
|
●
|
Conversion
Rights: Each share of Series “C” Preferred is convertible at any time, and from time to time, into one hundred
(100) shares of common stock 1 day after the third anniversary of issuance;
|
|
●
|
Dividend
Rights: In the event the Board of Directors declares a dividend on the common stock, each Series “C” Preferred
share will be entitled to receive an equivalent dividend as if the Series “C” Preferred stock had been converted
into common stock prior to the declaration of such dividend.
|
|
●
|
Liquidation
Rights: None
|
|
|
On
September 26, 2017, all of the officers and directors of the Company decided to convert their partial accrued salaries balance
amounting to $240,000 to 2,400,000 series “C” preferred stock at par value of $0.001 per share having an equivalent
common stock fair value of $0.0028 per share or $672,000 at the date of issuance of preferred stock.
|
|
|
|
|
|
On
June 5, 2018, all of the officers and directors of the Company decided to convert their partial accrued salary balances amounting
to $160,000 into 800,000 shares of Series “C” Preferred Stock at par value of $0.001 per share, having an equivalent
common stock fair value of $0.004 per share or $320,000 at the date of issuance of such preferred stock.
|
|
|
|
|
|
During
the year ended December 31, 2019, the Company did not issue any new preferred shares.
|
|
|
|
|
|
After
December 31, 2019, specifically on March 19, 2019, the Company issued 100,000 shares of Series “C” Preferred Stock
to Nicholas Paul Tuke, our new President and Chief Executive Officer, as a signing bonus agreed in his February 1, 2020 employment
agreement.
|
Argentum
47, Inc. and Subsidiaries
Notes
to Consolidated Financial Statements
December
31, 2019 and 2018
(B)
Common Stock
As
at December 31, 2019 and 2018, the Company had 950,000,000 authorized shares of common stock having a par value of $0.001. As
at December 31, 2019 and 2018, the Company had 590,989,409 and 525,534,409 shares of common stock issued and outstanding, respectively.
During
the year ended December 31, 2018, the Company did not issue any new shares of common stock.
During
the year ended December 31, 2019, the Company issued 65,455,000 common shares because of conversions of three convertible notes
and related accrued interest in following manner:
●
|
On
January 14, 2019, the Company issued 21,200,000 common shares to Xantis Private Equity at an agreed contractual conversion
price of $0.02 per share amounting to $424,000. See Note 9(E)
|
|
|
●
|
On
January 24, 2019, the Company issued 5,300,000 common shares to William Marshal Plc. at an agreed contractual conversion price
of $0.02 per share amounting to $106,000. See Note 9(E)
|
|
|
●
|
On
June 5, 2019, the Company issued 38,955,000 common shares to Xantis AION Securitization Fund at an agreed contractual conversion
price of $0.02 per share amounting to $779,100. See Note 9(E)
|
Note
11 – Revenue
For
the year ended December 31, 2019 and 2018, the Company recognized total revenues amounting to $112,080 and $98,613, respectively.
Unfulfilled
performance obligations represent the remaining contract transaction prices allocated to the performance obligations that are
unsatisfied, or partially unsatisfied, and therefore revenues have not yet been recorded. Unfulfilled performance obligations
primarily consist of the remaining fees not yet recognized under the Company´s proportional performance method for both
our fixed fee arrangements, and the portion of performance based and contingent arrangements, which we have deemed probable. As
of December 31, 2019 and, 2018, the Company´s management believes that all of the fixed fee, performance based and contingent
arrangements have an original expected duration of one year or less; hence, the Company elected to utilize the optional exemption
to exclude it from this disclosure.
Contract
Assets and Liabilities
Contract
assets are defined as assets for which we have recorded revenue because we determined that it is probable that we will earn a
performance based or contingent fee, but we are not yet entitled to receive our fees, because certain events, such as completion
of the measurement period or client approval, must occur. The contract asset balance was immaterial as of December 31, 2019 and
2018.
Contract
liabilities are defined as liabilities incurred when we have received consideration from a client but have not yet performed the
agreed upon services. This may occur when we receive advance billings before delivery of services when clients pay us up-front
fees before we begin work for them. The contract liability balance was immaterial as of December 31, 2019 and 2018.
Argentum
47, Inc. and Subsidiaries
Notes
to Consolidated Financial Statements
December
31, 2019 and 2018
Note
12 – Pension Plan
The
Company operates a defined “contribution pension plan” for its subsidiary in the United Kingdom, Cheshire Trafford
UK Limited. Each participant needs to complete a probation period before being included in the pension plan. The contributions
payable to the company’s pension plan are charged to the consolidated statement of operations in the period to which they
relate. We contributed a total of $2,776 and $2,069 to this pension plan during the year ended December 31, 2019 and post-acquisition
five months’ period ended December 31, 2018, respectively.
Note
13 – Related Party Transactions
On
June 5, 2018, all of the officers and directors of the Company decided to convert their partial accrued salary balances amounting
to $160,000 into 800,000 shares of Series “C” Preferred Stock at par value of $0.001 per share, having an equivalent
common stock fair value of $0.004 per share or $320,000 at the date of issuance of such preferred stock. See Note 9(B).
On
January 14, 2019, the Company issued 21,200,000 common shares valued at a contractually agreed value of $0.02 per share or $424,000
(including $400,000 of principal and $24,000 of accrued interest) to Xantis Aion Securitisation Fund (at Xantis Private Equity
Fund´s request) upon conversion of a convertible promissory note.
On
June 9, 2019, the Company issued 38,955,000 common shares valued at a contractually agreed value of $0.02 per share or $779,100
(including $735,000 of principal and $44,100 of accrued interest) to Xantis Aion Securitisation Fund upon conversion of a convertible
promissory note.
At
December 31, 2019 and 2018, there were accounts payable, accrued liabilities and loans payable due to related parties. (See Note
9(B, E and F).
Note
14 - Income Taxes
The
income tax provision differs from the amount of tax determined by applying the US federal statutory rate of 21% in 2018 and 2019
as follows:
|
|
2019
|
|
|
2018
|
|
Income
Tax (benefit) provision at statutory rate:
|
|
$
|
(392,694
|
)
|
|
$
|
(338,309
|
)
|
|
|
|
|
|
|
|
|
|
Increase
(decrease) in income tax due to:
|
|
|
|
|
|
|
|
|
Non-Taxable
foreign earnings / losses
|
|
|
86,900
|
|
|
|
208,797
|
|
Amortization
of debt discount
|
|
|
27,389
|
|
|
|
25,306
|
|
Unrealized
loss on marketable securities
|
|
|
263,468
|
|
|
|
107,248
|
|
Other
|
|
|
-
|
|
|
|
(3,042
|
)
|
Change
in valuation allowance
|
|
|
14,937
|
|
|
|
-
|
|
Total
|
|
$
|
-
|
|
|
$
|
-
|
|
Deferred
income taxes reflect the net tax effects of temporary differences between the carrying amount of assets and liabilities for financial
reporting purposes and the amounts used for income taxes.
Argentum
47, Inc. and Subsidiaries
Notes
to Consolidated Financial Statements
December
31, 2019 and 2018
Net
deferred tax assets and liabilities are comprised of the following:
|
|
2019
|
|
|
2018
|
|
Deferred
tax assets (liabilities), current
|
|
$
|
-
|
|
|
$
|
-
|
|
|
|
|
|
|
|
|
|
|
Deferred
tax assets (liabilities), non-current
|
|
|
|
|
|
|
|
|
Net
operating loss carry-forward
|
|
$
|
14,937
|
|
|
$
|
-
|
|
Valuation
allowance
|
|
|
(14,937
|
)
|
|
|
-
|
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
|
|
|
|
|
|
|
|
Net
deferred tax assets (liabilities)
|
|
$
|
-
|
|
|
$
|
-
|
|
Non-current
assets (liabilities)
|
|
$
|
-
|
|
|
$
|
-
|
|
|
|
$
|
-
|
|
|
$
|
-
|
|
The
US parent entity´s expenses are funded by the foreign subsidiaries through a management fee, which is, included in the US
parent´s unconsolidated US annual income tax return as taxable revenues.
The
Company has not recorded deferred income taxes applicable to undistributed earnings of the foreign subsidiaries because there
are cumulative losses in those subsidiaries through December 31, 2019. In the future, the Company does not intend to record deferred
income taxes applicable to undistributed future earnings of the foreign subsidiaries because it is the present intention of management
to reinvest the undistributed earnings indefinitely in those foreign subsidiaries.
In
assessing the realizability of deferred tax assets, management considers that whether it is more-likely-than-not that some portion
or all of the deferred tax assets will not be realized. The ultimate realization of deferred tax assets is dependent upon the
generation of future taxable income during the periods in which those temporary differences become deductible. Management considers
the scheduled reversal of deferred tax liabilities, projected future taxable income, and tax planning strategies in making this
assessment. There was no income tax liability for 2018 and no additional net operating loss carryforwards. As of December
31, 2019, based upon the levels of historical taxable income and the limited experience of the Company, the Company believes that
it is more-likely-than-not that it will not be able to realize the benefits of some or all of these deductible differences. Accordingly,
a valuation allowance of approximately $(14,937) has been provided in the accompanying consolidated financial statements as of
December 31, 2019.
At
December 31, 2019, the Company had $71,129 of U.S. net operating loss carryforwards that may be carried forward
indefinitely.
The
Company has not incurred any foreign income taxes for the years ended December 31, 2019 and 2018. The Company may be subject
to enquiries by the U.K. Taxation authority regarding its U.K. subsidiaries for the 2018 and 2019 tax years. The Company may
also be subject to examination by the U.S. Internal Revenue Service (“IRS”) and state taxing authorities
for the 2017, 2018 and 2019 tax years.
Note
15 – Commitments and Contingencies
Contingencies
●
|
From
time to time, the Company may be involved in litigation or disputes relating to claims arising out of its operations in the
normal course of business. As of December 31, 2019, the Company is not involved in any such litigation or disputes other than
as discussed above.
|
On
August 1, 2018, the Company entered into a rent agreement for its UK office at Hull for a period of one year amounting to a rental
of GBP 2,000 or $2,890 per month (from August 2018 until July 2019). This rental agreement expired on July 31, 2019 and was not
renewed.
Argentum
47, Inc. and Subsidiaries
Notes
to Consolidated Financial Statements
December
31, 2019 and 2018
The
Company entered into a non-cancelable operating lease for its UK office in the city of Hull (United Kingdom) on August 29, 2019,
for a period of six years amounting to a rental of GBP 1,000 or approximately $1,230 per month. In August 2019, the Company paid
a deposit of GBP 3,000 or $3,690 that was settled against 3 months of operating lease liability pertaining to fourth quarter of
2019.
In
adopting ASC Topic 842, Leases, the Company has elected the package of practical expedients which permits it not to reassess its
prior conclusions about lease identifications, lease classifications and initial direct costs under the new standard. In addition,
the Company elected not to apply ASC Topic 842 to arrangements with lease terms of 12 months or less. Upon adoption of this ASC,
the Company recorded right-of-use leased asset and operating lease liability of $79,129. On December 31, 2019, the balance of
the right-of-use leased asset and operating lease liability was $75,786.
The
significant assumptions used to determine the present value of the operating lease liability was a discount rate of 6% which was
based on the Company’s estimated incremental borrowing rate.
At
December 31, 2019, the right-of-use leased asset (ROU) is summarized as follows:
|
|
December
31, 2019
|
|
Office
lease right-of-use asset
|
|
$
|
79,129
|
|
Less:
Accumulated amortization
|
|
|
(3,343
|
)
|
Balance
of ROU asset as at December 31, 2019
|
|
$
|
75,786
|
|
At
December 31, 2019, operating lease liability is summarized as follows:
|
|
December
31, 2019
|
|
Lease
liability related to office lease right-of-use asset
|
|
$
|
79,129
|
|
Less:
Lease reduction
|
|
|
(3,343
|
)
|
Less:
Current portion of operating lease liability
|
|
|
(13,374
|
)
|
Long
term operating lease liability as at December 31, 2019
|
|
$
|
62,412
|
|
The
following is a schedule, by years, of the future minimum lease payments as of December 31, 2019 required under the non-cancelable
operating lease:
Year
ended December 31,
|
|
|
Operating
Lease
|
|
2020
|
|
|
$
|
15,921
|
|
2021
|
|
|
|
15,921
|
|
2022
|
|
|
|
15,921
|
|
2023
|
|
|
|
15,921
|
|
2024
|
|
|
|
15,921
|
|
Thereafter
|
|
|
|
10,614
|
|
Total
minimum lease payments
|
|
|
$
|
90,219
|
|
Less:
Discount to fair value
|
|
|
|
(14,433
|
)
|
Total
Operating Lease Liability at December 31, 2019
|
|
|
$
|
75,786
|
|
Total
rent expense for the year ended December 31, 2019 and 2018 was $25,206 and $37,041, respectively.
Argentum
47, Inc. and Subsidiaries
Notes
to Consolidated Financial Statements
December
31, 2019 and 2018
Note
16 – Segment Information
During
the years ended December 31, 2019 and 2018, the Company operated in two reportable business segments - (1) Management Consultancy
Services (the “Consultancy” segment) consisting of management consultancy and employment placement services such as
assistance in designing client’s capitalization strategy, introductions to potential capital funding sources and human resources
placements; and (2) a segment which concentrates on third party insurance policy sales and renewals (the “Insurance brokerage”
segment). The Company’s reportable segments were strategic business units that offered different products. They were managed
separately based on the fundamental differences in their operations and locations. All goodwill in the accompanying consolidated
balance sheets is assigned to the Insurance brokerage segment.
Information
with respect to these reportable business segments for the years ended December 31, 2019 and 2018 was as follows:
|
|
For
the year ended December 31,
|
|
|
2019
|
|
|
2018
|
|
Revenues:
|
|
|
|
|
|
|
|
|
Consultancy
|
|
$
|
-
|
|
|
$
|
32,000
|
|
Insurance
brokerage
|
|
|
112,080
|
|
|
|
66,613
|
|
|
|
$
|
112,080
|
|
|
$
|
98,613
|
|
Depreciation
and amortization:
|
|
|
|
|
|
|
|
|
Consultancy
|
|
$
|
2,586
|
|
|
$
|
1,756
|
|
Insurance
brokerage
|
|
|
22,813
|
|
|
|
9,577
|
|
|
|
$
|
25,399
|
|
|
$
|
11,333
|
|
Net
loss from continuing operations:
|
|
|
|
|
|
|
|
|
Consultancy
|
|
$
|
(1,798,480
|
)
|
|
$
|
(1,480,589
|
)
|
Insurance
brokerage
|
|
|
(36,488
|
)
|
|
|
(30,242
|
)
|
|
|
$
|
(1,834,968
|
)
|
|
$
|
(1,510,831
|
)
|
|
|
December
31, 2019
|
|
|
December
31, 2018
|
|
Identifiable
long-lived tangible assets at December 31, 2019 and 2018 by segment:
|
|
|
|
|
|
|
|
|
Consultancy
|
|
$
|
2,734
|
|
|
$
|
4,654
|
|
Insurance
brokerage
|
|
|
938
|
|
|
|
526
|
|
|
|
$
|
3,672
|
|
|
$
|
5,180
|
|
Note
17 – Subsequent Events
|
|
On
February 11, 2020, GE Professionals DMCC (the Dubai Subsidiary of the Company) was formally deregistered and liquidated in
Dubai, United Arab Emirates.
|
|
|
|
|
|
On
March 19, 2020, the Company issued 100,000 shares of Series “C” Preferred Stock to Nicholas Paul Tuke, our new
President Chief Executive Officer, as a signing bonus agreed in his February 1, 2020 employment agreement.
|
Item
16.
|
Form
10-K Summary
|
The
Company has opted out of including a summary of the information required by Form 10-K.