UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

 

 

FORM 10-Q

 

[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

For the quarterly period ended September 30, 2020

 

or

[  ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

FOR THE TRANSITION FROM ______ TO ______.

 

Commission File Number: 0-54557

 

 

ARGENTUM 47, INC.

(Exact name of registrant as specified in its charter)

 

Nevada		27-3986073
(State or other Jurisdiction of Incorporation or Organization)		(I.R.S. Employer Identification No.)

 

34 St. Augustine´s Gate, Hedon, HU12 8EX, Hull, United Kingdom.		00000
(Address of principal executive offices)		(Zip code)

 

Registrant’s telephone number: +(44) 1482 891 591/ +1 (321) 200-0142

 

Securities registered pursuant to Section 12(b) of the Act: None

 

Title of each class		Trading Symbol(s)		Name of exchange on which registered
NA		NA		NA

 

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes [X] No [  ]

 

Indicate by check mark whether the registrant has submitted electronically and posted on its Website, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (Sec.232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes [X] No [  ]

 

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

 

Large accelerated filer [  ]	Accelerated filer [  ]
Non-accelerated filer [  ]	Smaller reporting company [X]
	Emerging growth company [X]

 

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

 

Yes [  ] No [X]

 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. [  ]

 

APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY PROCEEDINGS
DURING THE PRECEDING FIVE YEARS

 

Indicate by check mark whether the registrant filed all documents and reports required to be filed by Section 12, 13 or 15(d) of the Exchange Act after the distribution of securities under a plan confirmed by a court. Yes [  ] No [  ]

 

APPLICABLE ONLY TO CORPORATE ISSUERS

 

State the number of shares outstanding of each of the issuer’s classes of common equity, as of the latest practicable date: As of November 11, 2020, there were 590,989,409 outstanding shares of the Registrant’s Common Stock, $0.001 par value.

 

 

 

INDEX

 

	Page
PART I – FINANCIAL INFORMATION
Item 1. Financial Statements.	F-1
Notes to Financial Statements (Unaudited)	F-6
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations	3
Item 3. Quantitative and Qualitative Disclosures about Market Risk	15
Item 4. Controls and Procedures	15
PART II – OTHER INFORMATION
Item 1. Legal Proceedings.	16
Item 1A. Risk Factors	16
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds	16
Item 3. Defaults Upon Senior Securities	16
Item 4. Mine Safety Disclosure	16
Item 5. Other Information.	16
Item 6. Exhibits	16
SIGNATURES	17

 

 

Argentum 47, Inc. and Subsidiaries

Consolidated Financial Statements

September 30, 2020

(Unaudited)

 

 

CONTENTS

 

	Page(s)
Consolidated Balance Sheets – September 30, 2020 (unaudited) and December 31, 2019	F-2
Consolidated Statements of Operations and Comprehensive Income (Loss) for the three and nine months ended September 30, 2020 and September 30, 2019 (unaudited)	F-3
Consolidated Statements of Changes in Stockholders’ Deficit for the three and nine months ended September 30, 2020 and September 30, 2019 (unaudited)	F-4
Consolidated Statements of Cash Flows for the nine months ended September 30, 2020 and September 30, 2019 (unaudited)	F-5
Notes to the Consolidated Financial Statements (unaudited)	F-6– F-30

 

 

Argentum 47, Inc. and Subsidiaries

Consolidated Balance Sheets

 

		September 30, 2020				December 31, 2019
		(Unaudited)
Assets
Current Assets
Cash		$	46,936			$	326,245
Accounts receivable			5,264				7,422
Marketable securities at fair value			583,539				204,239
Prepaids			5,401				9,484
Total current assets			641,140				547,390
Non-Current Assets
Intangibles, net			292,766				309,876
Goodwill			142,924				142,924
Right-of-use leased asset			64,020				75,786
Fixed assets, net			3,062				3,672
Total non-current assets			502,772				532,258
Total assets		$	1,143,912			$	1,079,648
Liabilities and Stockholders’ Deficit
Current Liabilities
Accounts payable and accrued liabilities		$	130,234			$	129,579
Accounts payable and accrued liabilities - related parties			471,877				458,518
Short term payable for acquisition			167,915				171,650
Current portion of operating lease liability			13,019				13,374
Accrued interest			100,955				94,771
Notes payable			260,584				260,584
Total current liabilities			1,144,584				1,128,476
Non-Current Liabilities
Long term payable for acquisition			65,508				64,460
Fixed price convertible notes payable, related party			982,140				982,140
Long term operating lease liability			51,001				62,412
Total non-current liabilities			1,098,649				1,109,012
Total liabilities		$	2,243,233			$	2,237,488
Commitments and contingencies (Note 14)
Stockholders’ Deficit
Preferred stock, 50,000,000 shares authorized, $.001 par value Preferred stock series “B” convertible, 45,000,000 designated, 45,000,000 and 45,000,000 shares issued and outstanding, respectively.		$	45,000			$	45,000
Preferred stock series “C” convertible, 5,000,000 designated, 3,300,000 and 3,200,000 shares issued and outstanding, respectively.			3,300				3,200
Common stock: 950,000,000 shares authorized; $0.001 par value: 590,989,409 and 590,989,409 shares issued and outstanding, respectively.			590,989				590,989
Additional paid in capital			11,460,607				11,431,707
Accumulated deficit			(13,205,665	)			(13,223,188	)
Accumulated other comprehensive income / (loss)			6,448				(5,548	)
Total stockholders’ deficit			(1,099,321	)			(1,157,840	)
Total liabilities and stockholders’ deficit		$	1,143,912			$	1,079,648

 

The accompanying notes are an integral part of these unaudited consolidated financial statements.

 

 

Argentum 47, Inc. and Subsidiaries

Consolidated Statements of Operations and Comprehensive Income (Loss)

For the three and nine months ended September 30, 2020 and September 30, 2019 (Unaudited)

 

		For the three months ended								For the nine months ended
		September 30, 2020				September 30, 2019				September 30, 2020				September 30, 2019
Revenue		$	19,382			$	23,549			$	65,785			$	86,582
General and administrative expenses			24,240				60,946				79,932				153,255
Compensation			63,451				93,834				206,989				347,538
Professional services			36,801				8,071				125,389				77,999
Depreciation			726				656				1,976				1,930
Amortization of intangibles			5,703				5,704				17,110				17,110
Total operating expenses			130,921				169,211				431,396				597,832
Loss from continuing operations		$	(111,539	)		$	(145,662	)		$	(365,611	)		$	(511,250	)
Other income (expenses):
Interest expense		$	(14,773	)		$	(9,698	)		$	(44,156	)		$	(49,300	)
Change in fair value of acquisition payable			(902	)			(4,188	)			(3,476	)			(12,800	)
Amortization of debt discount			-				(24,663	)			-				(126,312	)
(Loss) / gain on available for sale securities, net			(116,708	)			466,832				379,300				(525,185	)
Gain on extinguishment of debt and other liabilities			-				-				40,471				-
Loss on disposal of fixed asset			-				-				(260	)			-
Other income			-				-				12,612				-
Exchange rate gain / (loss)			13,953				(7,325	)			(1,357	)			(8,383	)
Total other income (expenses)			(118,430	)			420,958				383,134				(721,980	)
Net (loss) / income from continuing operations		$	(229,969	)		$	275,296			$	17,523			$	(1,233,230	)
Discontinued operations (Note 6)
Net loss from operations of discontinued subsidiary (including loss due to fixed assets write off of $164 during the nine months ended September 30, 2019)		$	-			$	(132	)		$	-			$	(35,005	)
Net (loss) / income		$	(229,969	)		$	275,164			$	17,523			$	(1,268,235	)
Net (loss) / income per common share from continuing operations - basic		$	(0.00	)		$	0.00			$	0.00			$	(0.00	)
Net (loss) / income per common share from continuing operations - diluted		$	(0.00	)		$	0.00			$	0.00			$	(0.00	)
Net loss per common share from discontinued operations - basic		$	-			$	(0.00	)		$	-			$	(0.00	)
Net loss per common share from discontinued operations - diluted		$	-			$	(0.00	)		$	-			$	(0.00	)
Weighted average number of common shares outstanding - basic			590,989,409				590,989,409				590,989,409				567,176,296
Weighted average number of common shares outstanding - diluted			590,989,409				1,393,641,384				1,882,911,897				567,176,296
Comprehensive (loss) / income:
Net (loss) / income		$	(229,969	)		$	275,164			$	17,523			$	(1,268,235	)
(Loss) / gain on foreign currency translation			(22,890	)			16,593				11,996				19,395
Comprehensive (loss) / income		$	(252,859	)		$	291,757			$	29,519			$	(1,248,840	)

 

The accompanying notes are an integral part of these unaudited consolidated financial statements.

 

 

Argentum 47, Inc. and Subsidiaries

Consolidated Statements of Changes in Stockholders’ Deficit

For the three and nine months ended September 30, 2020 and September 30, 2019 (Unaudited)

 

For the Three Months Ended September 30, 2019:

 

		Series “B” Preferred Stock								Series “C” Preferred Stock								Common Stock								Additional Paid-in				Accumulated				Accumulated Other Comprehensive				Total Stockholders’
		Shares				Amount				Shares				Amount				Shares				Amount				Capital				Deficit				Income / (Loss)				Deficit
Balance - June 30, 2019			45,000,000			$	45,000				3,200,000			$	3,200				590,989,409			$	590,989			$	11,431,707			$	(12,896,614	)		$	16,394			$	(809,324	)
Net income			-				-				-				-				-				-				-				275,164				-				275,164
Gain on foreign currency translation			-				-				-				-				-				-				-				-				16,593				16,593
Balance - September 30, 2019			45,000,000			$	45,000				3,200,000			$	3,200				590,989,409			$	590,989			$	11,431,707			$	(12,621,450	)		$	32,987			$	(517,567	)

 

For the Three Months Ended September 30, 2020:

 

		Series “B” Preferred Stock								Series “C” Preferred Stock								Common Stock								Additional Paid-in				Accumulated				Accumulated Other Comprehensive				Total Stockholders’
		Shares				Amount				Shares				Amount				Shares				Amount				Capital				Deficit				Income				Equity
Balance - June 30, 2020			45,000,000			$	45,000				3,300,000			$	3,300				590,989,409			$	590,989			$	11,460,607			$	(12,975,696	)		$	29,338			$	(846,462	)
Net loss			-				-				-				-				-				-				-				(229,969	)			-				(229,969	)
Loss on foreign currency translation			-				-				-				-				-				-				-				-				(22,890	)			(22,890	)
Balance - September 30, 2020			45,000,000			$	45,000				3,300,000			$	3,300				590,989,409			$	590,989			$	11,460,607			$	(13,205,665	)		$	6,448			$	(1,099,321	)

 

For the Nine Months Ended September 30, 2019:

 

		Series “B” Preferred Stock								Series “C” Preferred Stock								Common Stock								Additional Paid-in				Accumulated				Accumulated Other Comprehensive				Total Stockholders’
		Shares				Amount				Shares				Amount				Shares				Amount				Capital				Deficit				Income / (Loss)				Deficit
Balance - December 31, 2018			45,000,000			$	45,000				3,200,000			$	3,200				525,534,409			$	525,534			$	10,188,062			$	(11,353,215	)		$	13,592			$	(577,827	)
Common stock issued as conversion of loan notes and accrued interest			-				-				-				-				65,455,000				65,455				1,243,645				-				-				1,309,100
Net loss			-				-				-				-				-				-				-				(1,268,235	)			-				(1,268,235	)
Gain on foreign currency translation			-				-				-				-				-				-				-				-				19,395				19,395
Balance - September 30, 2019			45,000,000			$	45,000				3,200,000			$	3,200				590,989,409			$	590,989			$	11,431,707			$	(12,621,450	)		$	32,987			$	(517,567	)

 

For the Nine Months Ended September 30, 2020:

 

		Series “B” Preferred Stock								Series “C” Preferred Stock								Common Stock								Additional Paid-in				Accumulated				Accumulated Other Comprehensive				Total Stockholders’
		Shares				Amount				Shares				Amount				Shares				Amount				Capital				Deficit				Income / (Loss)				Deficit
Balance - December 31, 2019			45,000,000			$	45,000				3,200,000			$	3,200				590,989,409			$	590,989			$	11,431,707			$	(13,223,188	)		$	(5,548	)		$	(1,157,840	)
Series C preferred stock issued as a signing bonus			-				-				100,000				100				-				-				28,900				-				-				29,000
Net income			-				-				-				-				-				-				-				17,523				-				17,523
Gain on foreign currency translation			-				-				-				-				-				-				-				-				11,996				11,996
Balance - September 30, 2020			45,000,000			$	45,000				3,300,000			$	3,300				590,989,409			$	590,989			$	11,460,607			$	(13,205,665	)		$	6,448			$	(1,099,321	)

 

The accompanying notes are an integral part of these unaudited consolidated financial statements.

 

 

Argentum 47, Inc. And Subsidiaries

Consolidated Statements of Cash Flows

For the nine months ended September 30, 2020 and September 30, 2019 (Unaudited)

 

		September 30, 2020				September 30, 2019
Cash flows from operating activities
Net (loss) / income		$	17,523			$	(1,268,235	)
Adjustments to reconcile net income / (loss) from operations to net cash used in operating activities:
Depreciation			1,976				2,007
Amortization of intangibles			17,110				17,110
Stock compensation			29,000				-
Amortization of debt discount			-				126,312
(Gain) / loss on available for sale securities, net			(379,300	)			525,185
Gain on extinguishment of debt and other liabilities			(40,471	)			-
Change in fair value of acquisition payable			3,476				-
Loss due to fixed assets write off			260				164
Changes in operating assets and liabilities:
Accounts receivable			2,158				6,401
Prepaids			4,083				(1,021	)
Other current assets			-				4,732
Assets of discontinued operations			-				(1,972	)
Accounts payable and accrued liabilities			41,125				23,378
Accounts payable and accrued liabilities - related parties			13,359				247,382
Accrued interest			6,184				42,627
Net cash used in operating activities:		$	(283,517	)		$	(275,930	)
Cash Flows used in investing activities:
Purchase of office furniture and equipment		$	(1,639	)		$	(1,282	)
Net cash used in investing activities		$	(1,639	)		$	(1,282	)
Cash flows from financing activities:
Proceeds from loans - related parties		$	3,500			$	96,678
Repayment of loans - related parties			(3,500	)			(30,000	)
Net cash provided by financing activities		$	-			$	66,678
Net decrease in cash		$	(285,156	)		$	(210,534	)
Effect of Exchange Rates on Cash			5,847				19,430
Cash at Beginning of Period		$	326,245			$	193,807
Cash at End of Period		$	46,936			$	2,703
Supplemental disclosure of cash flow information:
Cash paid for interest		$	-			$	9,000
Cash paid for income taxes		$	-			$	-
Supplemental disclosure of non-cash investing and financing activities:
Notes payable and accrued interest converted into common stock		$	-			$	1,309,100

 

The accompanying notes are an integral part of these unaudited consolidated financial statements.

 

 

Argentum 47, Inc. and Subsidiaries

Notes to Consolidated Financial Statements

September 30, 2020

(Unaudited)

 

Note 1 - Organization and Nature of Operations

 

Argentum 47, Inc., formerly Global Equity International Inc. (the “Company”, “we”, “us”, “our” 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 unaudited 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.

 

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 unaudited consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America and the rules and regulations of the United States Securities and Exchange Commission for interim financial information. Accordingly, they do not include all the information and disclosures necessary for a comprehensive presentation of financial position, results of operations, or cash flows. It is management’s opinion, however, that all material adjustments (consisting of normal recurring adjustments) have been made which are necessary for a fair financial statement presentation.

 

 

Argentum 47, Inc. and Subsidiaries

Notes to Consolidated Financial Statements

September 30, 2020

(Unaudited)

 

The unaudited interim consolidated financial statements should be read in conjunction with the Company’s Annual Report on Form 10-K, which contains the audited financial statements and notes thereto, together with the Management’s Discussion and Analysis, for the year ended December 31, 2019. The interim results for the period ended September 30, 2020 are not necessarily indicative of results for the full fiscal year.

 

Note 3 - Going Concern

 

The accompanying unaudited 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 unaudited 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 unaudited consolidated financial statements, the Company had a net income of $17,523 and net cash used in operations of $283,517 for the nine months ended September 30, 2020; working capital deficit, stockholder’s deficit and accumulated deficit of $503,444, $1,099,321 and $13,205,665, respectively as of September 30, 2020. 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. The Company is currently negotiating terms for a $10 million funding agreement with a European regulated Fund.
	f)	Acquiring and managing more Independent Financial Advisory firms with funds under administration located around the globe.
	g)	Sell the Company´s investment in marketable securities, when possible.

 

In March 2020, the outbreak of the COVID-19 Coronavirus caused by a novel strain of the coronavirus was recognized as a Global Pandemic by the World Health Organization, and the outbreak has become increasingly widespread all over the World, including the geographical locations in which the Company and its subsidiaries operate. The COVID-19 Coronavirus Pandemic has and will continue affecting economies and businesses around the Globe. The Company continues to monitor the impact of the COVID-19 Coronavirus outbreak closely. Amongst the factors that could impact our results are the effectiveness of COVID-19 Coronavirus mitigation measures, global economic conditions, reduced business and consumer spending due to both job losses and reduced investing activity, and other factors. These factors could result in increased or decreased demand for our products and services. For the quarter ended September 30, 2020 and still to date, most European countries are still slowly easing out of the mandated lock-down imposed by their respective Governments due to the COVID-19 pandemic and its ramifications.

 

 

Argentum 47, Inc. and Subsidiaries

Notes to Consolidated Financial Statements

September 30, 2020

(Unaudited)

 

Impact of COVID-19 on Company’s Customers and Financial Performance

 

While the Company´s recurring revenues were not materially affected during the nine months ended September 30, 2020, the Company´s ability to speed-up the process of writing new business was hindered to a degree. This hindrance was mainly due to the fact that most of the Company´s new business clients that are seeking financial advice are of a certain age whereby they prefer to meet in person with one of our independent financial advisers and sign the paperwork in situ, and this has proven to be a slow process due to travel restrictions. However, the Company does believe that from now onwards, its team of Independent Financial Advisors (“IFA”) will be able to start organizing and attending these “face to face” meetings with these new business clients and will, therefore, be able to close most or all of the new business that was put in motion during the quarter ended September 30, 2020.

 

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”). Argentum FM is the parent company of its 100% owned subsidiary, Cheshire Trafford U.K. Limited (U.K.) since August 1, 2018 pursuant to a Share Purchase Agreement dated August 1, 2018. GEP EH was the parent company of its liquidated GE Professionals DMCC (Dubai) until February 11, 2020. GE Professionals DMCC has been presented as a discontinued operation for the three months ended September 30, 2019 and the nine months ended September 30, 2020 and 2019 as the Company was liquidated on February 11, 2020. All significant inter-company accounts and transactions have been eliminated in consolidation.

 

Reclassifications

 

Certain amounts in the unaudited consolidated statements of operations for the three and nine months ended September 30, 2019 have been reclassified from Interest expense to Change in fair value of acquisition payable to conform to the presentation for the three and nine months ended September 30, 2020. This reclassification increased Change in fair value of acquisition payable, in Other expenses of the unaudited consolidated statements of operations for the three and nine months ended September 30, 2019 by $4,188 and $12,800, respectively and decreased Interest expense in Other expenses of the unaudited consolidated statements of operations for the three and nine months ended September 30, 2019 by the same amount.

 

Use of Estimates

 

The preparation of unaudited 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 unaudited 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 unaudited 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 unaudited 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.

 

 

Argentum 47, Inc. and Subsidiaries

Notes to Consolidated Financial Statements

September 30, 2020

(Unaudited)

 

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 September 30, 2020 and December 31, 2019, 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 September 30, 2020 and December 31, 2019, balance in one financial institution exceeded federally insured limits by $0 and $73,480, 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 September 30, 2020 and December 31, 2019.

 

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’ 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.

 

 

Argentum 47, Inc. and Subsidiaries

Notes to Consolidated Financial Statements

September 30, 2020

(Unaudited)

 

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.”

 

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 three and nine months ended September 30, 2020 or September 30, 2019.

 

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.

 

 

Argentum 47, Inc. and Subsidiaries

Notes to Consolidated Financial Statements

September 30, 2020

(Unaudited)

 

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.

 

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.

 

 

Argentum 47, Inc. and Subsidiaries

Notes to Consolidated Financial Statements

September 30, 2020

(Unaudited)

 

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 it´s 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.

 

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.

 

 

Argentum 47, Inc. and Subsidiaries

Notes to Consolidated Financial Statements

September 30, 2020

(Unaudited)

 

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 unaudited 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 unaudited 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; and
	2.	Identify the performance obligations in the contract; and
	3.	Determine the transaction price; and
	4.	Allocate the transaction price to separate performance obligations; and
	5.	Recognize revenue when (or as) each performance obligation is satisfied.

 

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.

 

 

Argentum 47, Inc. and Subsidiaries

Notes to Consolidated Financial Statements

September 30, 2020

(Unaudited)

 

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.

 

All revenues are generated from clients whose operations are based outside of the United States and relate to the insurance brokerage business. For the nine months ended September 30, 2020 and 2019, the Company had following concentrations of revenues from continuing operations:

 

		September 30, 2020				September 30, 2019
Initial advisory fees			0	%			4.87	%
Ongoing advisory fees			28.41	%			30.57	%
Initial and renewal commissions			4.99	%			6.51	%
Trail or recurring commissions			66.60	%			57.30	%
Others			0	%			0.75	%
			100	%			100	%

 

 

Argentum 47, Inc. and Subsidiaries

Notes to Consolidated Financial Statements

September 30, 2020

(Unaudited)

 

At September 30, 2020 and December 31, 2019, the Company had the following concentrations of accounts receivables with customers:

 

Customer		September 30, 2020				December 31, 2019
Customer 1			26.84	%			26.68	%
Customer 2			11.91	%			8.59	%
Customer 3			10.08	%			6.94	%
Customer 4			9.77	%			25.24	%
Others having a concentration of less than 10%			41.40	%			32.55	%
			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.

 

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 soon.
	●	The expected volatility is based on management estimates which are based upon our historical volatility.
	●	The forfeiture rate is based on historical experience.

 

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.

 

At September 30, 2020 and December 31, 2019, the Company had common stock equivalents of 511,922,488 and 363,755,756 common shares, respectively, in the form of convertible notes, which, if converted, may be dilutive. See Note 9(D).

 

At September 30, 2020 and December 31, 2019, the Company had common stock equivalents of 780,000,000 and 770,000,000 common shares, respectively, in the form of convertible preferred stock, which, if converted, may be dilutive. See Note 10(A).

 

 

Argentum 47, Inc. and Subsidiaries

Notes to Consolidated Financial Statements

September 30, 2020

(Unaudited)

 

		Number of Common Shares
		September 30, 2020				December 31, 2019
Potential dilutive common stock
Convertible notes		*	511,922,488			*	363,755,756
Series “B” preferred stock			450,000,000				450,000,000
Series “C” preferred stock			330,000,000				320,000,000
Total potential dilutive common stock			1,291,922,488				1,133,755,756
Weighted average number of common shares – Basic			590,989,409				573,178,505
Weighted average number of common shares – Dilutive			1,882,911,897				1,706,934,261

 

* Convertible debt cannot be converted until December 2021.

 

As of September 30, 2020, and December 31, 2019, diluted weighted average number of common shares exceeds total authorized common shares. However, 780,000,000 and 770,000,000 common shares as of September 30, 2020 and December 31, 2019, respectively 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 December 31, 2022. See Note 10(A)

 

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 (loss) for the nine months ended September 30, 2020 and 2019, includes only foreign currency translation gain / (loss), and is presented in the Company’s consolidated statements of comprehensive income / (loss).

 

Changes in Accumulated Other Comprehensive Income (Loss) by Component during the nine months ended September 30, 2019 were as follows:

 

Balance, December 31, 2018		$	13,592
Foreign currency translation adjustment for the period			19,395
Balance, September 30, 2019		$	32,987

 

Changes in Accumulated Other Comprehensive Income (Loss) by Component during the nine months ended September 30, 2020 were as follows:

 

Balance, December 31, 2019		$	(5,548	)
Foreign currency translation adjustment for the period			11,996
Balance, September 30, 2020		$	6,448

 

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.

 

 

Argentum 47, Inc. and Subsidiaries

Notes to Consolidated Financial Statements

September 30, 2020

(Unaudited)

 

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.

 

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 September 30, 2020 and December 31, 2019, using quoted prices in active markets for identical assets (Level 1), significant other observable inputs (Level 2), and significant unobservable inputs (Level 3):

 

		September 30, 2020				December 31, 2019
Level 1 – Marketable Securities – Recurring		$	583,539			$	204,239

 

The following section describes the valuation methodologies the Company uses to measure financial instruments at fair value:

 

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 marketable securities measured at fair value for the nine months ended September 30, 2020 were as follows:

 

Balance, December 31, 2019		$	204,239
Sales and settlements during the period			-
Gain on available for sale marketable securities, net			379,300
Balance, September 30, 2020		$	583,539

 

 

Argentum 47, Inc. and Subsidiaries

Notes to Consolidated Financial Statements

September 30, 2020

(Unaudited)

 

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.

 

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. See Note 7(B)

 

Recent Accounting Pronouncements

 

There are no new accounting pronouncements that we expect to have an impact on the Company’s consolidated financial statements except as discussed below:

 

Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity (“ASU 2020-06”)

 

In August 2020, the FASB issued ASU 2020-06, which simplifies the guidance on the issuer’s accounting for convertible debt instruments by removing the separation models for (1) convertible debt with a cash conversion feature and (2) convertible instruments with a beneficial conversion feature. As a result, entities will not separately present in equity an embedded conversion feature in such debt. Instead, they will account for a convertible debt instrument wholly as debt, unless certain other conditions are met. The elimination of these models will reduce reported interest expense and increase reported net income for entities that have issued a convertible instrument that was within the scope of those models before the adoption of ASU 2020-06. Also, ASU 2020-06 requires the application of the if-converted method for calculating diluted earnings per share and treasury stock method will be no longer available. The provisions of ASU 2020-06 are applicable for fiscal years beginning after December 15, 2021, with early adoption permitted no earlier than fiscal years beginning after December 15, 2020. The Company is currently evaluating the impact of ASU 2020-06 on its unaudited consolidated 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.

 

 

Argentum 47, Inc. and Subsidiaries

Notes to Consolidated Financial Statements

September 30, 2020

(Unaudited)

 

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 was due 18 months after the acquisition date which was February 1, 2020. Management is still 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 were treated as contingent purchase consideration. Based on the historical data available regarding the recurring/trail revenues of Cheshire Trafford, Management believed that there was a 95% probability that Cheshire Trafford would achieve the recurring income target of GBP 144,185 during the 12-month period ending on July 31, 2019. Hence, the contingent purchase consideration was adjusted to consider this probability factor. (See below for update)

 

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

 

 

Argentum 47, Inc. and Subsidiaries

Notes to Consolidated Financial Statements

September 30, 2020

(Unaudited)

 

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 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
Amortization charge for the period			(17,110	)
Net Book Value at September 30, 2020		$	292,766

 

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 during the year ended December 31, 2019. The total amount owed under the purchase agreement was $233,423 as of September 30, 2020.

 

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 three months ended September 30, 2019 and the nine months ended September 30, 2019 and 2020 are treated as discontinued operations in the accompanying unaudited consolidated financial statements. The consolidated statements of operations only comprise the continuing operations. Net loss from the discontinued operations is presented on a single line after the net loss from the continuing operations.

 

There were no assets and liabilities from discontinued operations at September 30, 2020 and December 31, 2019.

 

 

Argentum 47, Inc. and Subsidiaries

Notes to Consolidated Financial Statements

September 30, 2020

(Unaudited)

 

Statement of Operations from discontinued operations for the three months ended September 30, 2019 was as follows:

 

		September 30, 2020				September 30, 2019
Revenue			N/A			$	-
General and administrative expenses			N/A			$	132
Net loss from discontinued operations			N/A			$	(132	)

 

Statement of Operations from discontinued operations for the nine months ended September 30, 2020 and 2019 was as follows:

 

		September 30, 2020				September 30, 2019
Revenue		$	-			$	-
General and administrative expenses		$	-			$	9,452
Compensation expense			-				22,743
Professional services			-				2,382
Depreciation			-				77
Loss from discontinued operations		$	-			$	(34,654	)
Other income (expenses)
Loss due to fixed assets write off		$	-			$	(164	)
Exchange rate loss			-				(187	)
Total other (expenses) / income		$	-			$	(351	)
Net loss from discontinued operations		$	-			$	(35,005	)

 

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 September 30, 2020 and December 31, 2019:

 

		September 30, 2020								December 31, 2019
Company		No. of Shares				Book value				No. of Shares				Book value
DUO			5,835,392			$	583,539				5,835,392			$	204,239
			5,835,392			$	583,539				5,835,392			$	204,239

 

At September 30, 2020, the Company revalued 5,835,392 common shares at their quoted market price of $0.1 per share, to $583,539; hence, recording a net gain on available for sale securities of $379,300 into the statement of operations for the nine months ended September 30, 2020. For the nine months ended September 30, 2019, loss on available for sale securities was $525,185.

 

 

Argentum 47, Inc. and Subsidiaries

Notes to Consolidated Financial Statements

September 30, 2020

(Unaudited)

 

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 September 30, 2020 and December 31, 2019:

 

			September 30, 2020								December 31, 2019
Company			No. of Shares				Book value				No. of Shares				Book value				Status
PDI				5,006,521			$	-				5,006,521			$	-			Private Company
				5,006,521			$	-				5,006,521			$	-

 

The Company, through its subsidiary, GEP Equity Holdings Limited, holds the following preferred equity securities in private and reporting companies as at September 30, 2020 and December 31, 2019:

 

			September 30, 2020								December 31, 2019
Company			No. of Shares				Book value				No. of Shares				Book value				Status
PDI				450,000			$	-				450,000			$	-			Private Company
				450,000			$	-				450,000			$	-

 

Note 8 – Fixed Assets

 

Following table reflects net book value of furniture and equipment as of September 30, 2020 and December 31, 2019:

 

		Furniture and Equipment
Useful Life		3 to 10 years
Cost
Balance as at December 31, 2019		$	46,447
Addition during the period			1,639
Disposals during the period			(17,291	)
Translation rate differences			(1,292	)
Balance as at September 30, 2020		$	29,503
Accumulated depreciation
Balance as at December 31, 2019		$	42,775
Depreciation expense for the period – continuing operations			1,976
Disposals during the period			(17,025	)
Translation rate differences			(1,285	)
Balance as at September 30, 2020		$	26,441
Net book value as at September 30, 2020		$	3,062
Net book value as at December 31, 2019		$	3,672

 

 

Argentum 47, Inc. and Subsidiaries

Notes to Consolidated Financial Statements

September 30, 2020

(Unaudited)

 

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 September 30, 2020 and December 31, 2019, respectively:

 

		September 30, 2020				December 31, 2019
Accrued salaries and benefits		$	61,843			$	61,452
Accounts payable and other accrued liabilities			68,391				68,127
		$	130,234			$	129,579

 

(B)	Accounts Payable and Accrued Liabilities – Related Parties

 

The following table represents the accounts payable and accrued expenses to related parties as of September 30, 2020 and December 31, 2019, respectively:

 

		September 30, 2020				December 31, 2019
Accrued salaries and benefits		$	446,285			$	382,165
Expenses payable			25,592				76,353
		$	471,877			$	458,518

 

(C)	Short Term Notes Payable

 

Following is the summary of all non-convertible notes, net of debt discount, including the accrued interest 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

 

Following is the summary of all non-convertible notes, net of debt discount, including the accrued interest at September 30, 2020:

 

Date of Note		Principal				Accrued Interest				Total
November 26, 2013 – JSP		$	-			$	-			$	-
September 30, 2018 – EDEN			260,584				8,058				268,642
Balance – September 30, 2020		$	260,584			$	8,058			$	268,642

 

 

Argentum 47, Inc. and Subsidiaries

Notes to Consolidated Financial Statements

September 30, 2020

(Unaudited)

 

●

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.

 

During the nine months ended September 30, 2020, the Company wrote off the aged accrued interest balance of $37,971 as this is past the State of Nevada´s Statute of Limitations of six years for written debt agreements and recorded a gain on debt extinguishment of $37,971 in the unaudited consolidated statement of operations.

 

●

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.

 

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.

 

During the nine months ended September 30, 2020, the Company did not repay any monthly installment, hence the outstanding note balance amounted to $260,584 and accrued interest balance amounted to $8,058 as of September 30, 2020.

 

 

Argentum 47, Inc. and Subsidiaries

Notes to Consolidated Financial Statements

September 30, 2020

(Unaudited)

 

(D)	Long Term Convertible Notes Payable – Related Party

 

Following is the summary of all long-term convertible notes, net of debt discounts including the accrued interest at December 31, 2019:

 

Date of Note		Principal				Accrued Interest				Total
October 10, 2018 - Xantis AION Sec Fund		$	653,040			$	48,092			$	701,132
December 18, 2019 - Aegeus Sec Fund			329,100				649				329,749
Balance, December 31, 2019		$	982,140			$	48,742			$	1,030,882

 

Following is the summary of all long-term convertible notes, net of debt discounts including the accrued interest at September 30, 2020:

 

Date of Note		Principal				Accrued Interest				Total
October 10, 2018 - Xantis AION Sec Fund		$	653,040			$	77,479			$	730,519
December 18, 2019 - Aegeus Sec Fund			329,100				15,418				344,518
Balance, September 30, 2020		$	982,140			$	92,897			$	1,075,037

 

●

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. The Company had 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. 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.

 

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.

 

During the nine months ended September 30, 2020, the Company recorded $29,388 as interest expense and the outstanding note balance amounted to $653,040 as of September 30, 2020.

 

●

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 which will act as collateral in the event of default.

 

 

Argentum 47, Inc. and Subsidiaries

Notes to Consolidated Financial Statements

September 30, 2020

(Unaudited)

 

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.

 

During the nine months ended September 30, 2020, the Company recorded $14,769 as interest expense and the outstanding note balance amounted to $329,100 as of September 30, 2020.

 

Note 10 - Stockholders’ Equity (Deficit)

 

(A)	Preferred Stock

 

●

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:

 

	1.	Voting Rights: 10 votes per share (votes along with common stock); and
	2.	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 in January 2018, the management contractually agreed to not convert or sell any of these preferred shares until September 27, 2020. On May 22, 2020, the Board of Directors voted unanimously to extend the lock-up period of the Company´s Preferred “B” shares from September 27, 2020 to December 31, 2022; and
	3.	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; and
	4.	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:

 

	1.	Voting Rights: 100 votes per share (votes along with common stock); and
	2.	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. Pursuant to two funding agreements entered in January 2018, the management contractually agreed to not convert or sell any of these preferred shares until September 27, 2020. On May 22, 2020, the Board of Directors voted unanimously to extend the lock-up period of the Company´s Preferred “C” shares from September 27, 2020 to December 31, 2022; and

 

 

Argentum 47, Inc. and Subsidiaries

Notes to Consolidated Financial Statements

September 30, 2020

(Unaudited)

 

	3.	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; and
	4.	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.

 

On March 19, 2020, 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. These shares were issued at par value of $0.001 per share having an equivalent common stock fair value of $0.0029 per share or $29,000 at the date of issuance of preferred stock.

 

(B)	Common Stock

 

At September 30, 2020 and December 31, 2019, the Company had 950,000,000 authorized shares of common stock having a par value of $0.001. At September 30, 2020 and December 31, 2019, the Company had 590,989,409 shares of common stock issued and outstanding.

 

During the nine months ended September 30, 2020, the Company did not issue any new shares of common stock.

 

Note 11 – Revenue

 

For the nine months ended September 30, 2020 and 2019, the Company recognized total revenues amounting to $65,785 and $86,582, 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 September 30, 2020 and, 2019, 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.

 

 

Argentum 47, Inc. and Subsidiaries

Notes to Consolidated Financial Statements

September 30, 2020

(Unaudited)

 

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 September 30, 2020 and 2019.

 

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 September 30, 2020 and 2019.

 

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 $2,073 and $2,076 to this pension plan during the nine months ended September 30, 2020 and 2019, respectively.

 

Note 13 – Related Party Transactions

 

At September 30, 2020 and December 31, 2019, there were accounts payable, accrued liabilities and loans payable due to related parties. (See Note 9(B and D).

 

Note 14 – 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 September 30, 2020, the Company is not involved in any such litigation or disputes.

 

Commitments

 

●

Leases

 

The Company entered into a non-cancelable operating lease for its United Kingdom 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 $1,290 per month.

 

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. At September 30, 2020, the balance of the right-of-use leased asset and operating lease liability was $64,020.

 

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.

 

 

Argentum 47, Inc. and Subsidiaries

Notes to Consolidated Financial Statements

September 30, 2020

(Unaudited)

 

At September 30, 2020, the right-of-use leased asset (ROU) is summarized as follows:

 

		September 30, 2020
Office lease right-of-use asset		$	79,129
Less: Accumulated amortization			(13,021	)
Less: Translation rate difference			(2,088	)
Balance of ROU asset as of September 30, 2020		$	64,020

 

At September 30, 2020, operating lease liability is summarized as follows:

 

		September 30, 2020
Lease liability related to office lease right-of-use asset		$	79,129
Less: Lease reduction			(13,021	)
Less: Translation rate difference			(2,088	)
Less: Current portion of operating lease liability			(13,019	)
Long term operating lease liability as of September 30, 2020		$	51,001

 

The following is a schedule, by years, of the future minimum lease payments as of September 30, 2020 required under the non-cancelable operating lease:

 

12 months period ended September 30,		Operating Lease
2021		$	15,501
2022			15,501
2023			15,501
2024			15,501
2025			14,209
Total minimum lease payments		$	76,213
Less: Discount to fair value			(12,193	)
Total Operating Lease Liability at September 30, 2020		$	64,020

 

Total rent expense for the nine months ended September 30, 2020 and 2019 was $11,439 and $21,375, respectively.

 

Note 15 – Segment Information

 

During the three and nine months ended September 30, 2020 and 2019, the Company operated in two reportable business segments - (1) Management Consultancy Services (the “Consultancy” segment) consisting of management consultancy such as assistance in designing client’s capitalization strategy, introductions to potential capital funding sources; 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.

 

 

Argentum 47, Inc. and Subsidiaries

Notes to Consolidated Financial Statements

September 30, 2020

(Unaudited)

 

Information with respect to these reportable business segments for the three and nine months ended September 30, 2020 and 2019 was as follows:

 

		For the three months ended September 30,								For the nine months ended September 30,
		2020				2019				2020				2019
Revenues:
Consultancy		$	-			$	-			$	-			$	-
Insurance brokerage			19,382				24,724				65,785				86,582
		$	19,382			$	24,724			$	65,785			$	86,582
Depreciation and amortization:
Consultancy		$	572			$	612			$	1,705			$	1,801
Insurance brokerage			5,857				5,749				17,381				17,239
		$	6,429			$	6,361			$	19,086			$	19,040
Net income / (loss) from continuing operations:
Consultancy		$	(206,526	)		$	289,470			$	68,381			$	(1,202,049	)
Insurance brokerage			(23,443	)			(14,174	)			(50,858	)			(31,181	)
		$	(229,969	)		$	275,296			$	17,523			$	(1,233,230	)

 

		September 30, 2020				December 31, 2019
Identifiable long-lived tangible assets as of September 30, 2020 and December 31, 2019 by segment:
Consultancy		$	1,030			$	2,734
Insurance brokerage			2,032				938
		$	3,062			$	3,672

 

 

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

 

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 the unaudited financial statements, and the 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 its intellectual property rights,
	●	the success of marketing efforts by third parties,
	●	the changing demands of customers 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 three months ended September 30, 2020 and September 30, 2019
	D. Results of operations for the nine months ended September 30, 2020 and September 30, 2019
	E. Financial condition as of September 30, 2020 and December 31, 2019
	F. Liquidity and capital reserves
	G. 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 unaudited 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 revenue 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.

 

B.	Business overview:

 

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 April 2, 2018, our trading symbol was changed from GEQU to ARGQ.

 

On May 30, 2018, the Isle of Man Financial Services Authority (FSA) approved the eventual change of control of an Isle of man based financial advisory firm albeit Management has decided not to acquire this Independent Financial Advisory firm as better and cheaper business propositions are currently in Management´s sights.

 

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).

 

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. On 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 Securitization Fund, as previously reported in the Company’s Form 8-K Current Report filed with the Securities and Exchange Commission on June 11, 2018.

 

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, liquidation process and deregistration of our Dubai subsidiary was formally completed.

 

 

Cheshire Trafford (UK) Limited (www.ctifa.com) 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 UK Limited currently has three full time employees, one external compliance officer, two Independent Financial Advisers and more than 450 revenue generating clients in the United Kingdom.

 

Cheshire Trafford invests the funds it has under administration 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.

 

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 of September 30, 2020. 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 serve as collateral for the loan. 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 September 30, 2020, and 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 September 30, 2020, and December 31, 2019, we had 45,000,000 shares of Series “B” Preferred Stock authorized, issued and outstanding. As of September 30, 2020, and December 31, 2019, we had designated and authorized 5,000,000 shares of Series “C” Preferred Stock, 3,300,000 and 3,200,000 shares of which, respectively, were 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 December 31, 2022; 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 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 three months ended September 30, 2020 and September 30, 2019:

 

The Company had revenues from continuing operations amounting to $19,382 and $23,549, for the three months ended September 30, 2020 and 2019, respectively.

 

		September 30, 2020				September 30, 2019				Changes
Revenue from continuing operations		$	19,382			$	23,549			$	(4,167	)
		$	19,382			$	23,549			$	(4,167	)

 

During the three months ended September 30, 2020 and September 30, 2019, all our revenue from continuing operations was recognized by providing services to various clients of our insurance brokerage business segment.

 

For the three months ended September 30, 2020 and 2019, the Company had the following concentrations of revenues with customers from continuing operations:

 

Customer		Location		September 30, 2020				September 30, 2019
Ongoing advisory fees		United Kingdom			29.70	%			27.81	%
Renewal commissions		United Kingdom			4.43	%			4.04	%
Trail or recurring commissions		United Kingdom			65.87	%			68.08	%
Other revenue		United Kingdom			0	%			0.07	%
					100	%			100	%

 

The total operating expenditures of continuing operations amounted to $130,921 and $169,211, for the three months ended September 30, 2020 and 2019, respectively. The following table sets forth the Company’s operating expenditure analysis for both periods:

 

		September 30, 2020				September 30, 2019				Changes
General and administrative expenses		$	24,240			$	60,946			$	(36,706	)
Compensation			63,451				93,834				(30,383	)
Professional services			36,801				8,071				28,730
Depreciation			726				656				70
Amortization of intangible asset			5,703				5,704				(1	)
Total operating expenses of continuing operations		$	130,921			$	169,211			$	(38,290	)

 

During the three months ended September 30, 2020, total operating expenses of continuing operations were reduced by $38,290 from the previous three months ending on September 30, 2019. The reason for this decrease is mainly due to the decrease in the compensation expense and decrease in general and administrative expenses, partially offset by increase in professional services received by the Company during the three months ended September 30, 2020.

 

The loss from continuing operations for the three months ended September 30, 2020 and 2019, was $111,539 and $145,662, respectively.

 

The Company´s other (expenses) and other income of continuing operations for the three months ended September 30, 2020 and 2019, were $(118,430) and $420,958, respectively. The following table sets forth the Company’s other income and (expenses) analysis for both periods:

 

		September 30, 2020				September 30, 2019				Changes
Interest expense		$	(14,773	)		$	(9,698	)		$	(5,075	)
Change in fair value of acquisition payable			(902	)			(4,188	)			3,286
Amortization of debt discount			-				(24,663	)			24,663
(Loss) / gain on available for sale marketable securities, net			(116,708	)			466,832				(583,540	)
Exchange rate (loss) / gain			13,953				(7,325	)			21,728
Total other (expenses) / other income of continuing operations		$	(118,430	)		$	420,958			$	(539,388	)

 

 

During the three months ended September 30, 2020, our total other income decreased by $539,388 when compared to our total other income (expenses) for the three months ended September 30, 2019. This decrease was mainly due to the reduction in gain on available for sale marketable securities amounting to $583,540 during the three months ended September 30, 2020.

 

The net (loss) / income from continuing operations for the three months ended September 30, 2020 and 2019 amounted to $(229,969) and $275,296, respectively.

 

Net loss from discontinued operations for the three months ended September 30, 2020 and 2019 amounted to $0 and $132, respectively.

 

Net (loss) / income for the three months ended September 30, 2020 and 2019 amounted to $(229,969) and $275,164, respectively.

 

The comprehensive (loss) / income for the three months ended September 30, 2020 and 2019 amounted to $(252,859) and $291,757, respectively. The Company’s other comprehensive (loss) / income includes (loss) / gain recorded on foreign currency translation of $(22,890) and $16,593 for the three months ended September 30, 2020 and 2019, respectively.

 

		September 30, 2020				September 30, 2019
Comprehensive (loss) / income:
Net (loss) / income		$	(229,969	)		$	275,164
(Loss) / gain on foreign currency translation			(22,890	)			16,593
Comprehensive (loss) / income		$	(252,859	)		$	291,757

 

The Company had 590,989,409 shares of common stock issued and outstanding at September 30, 2020 and September 30, 2019. Basic weighted average number of common shares outstanding for the three months ended September 30, 2020 and 2019, was 590,989,409. Basic net (loss) / income per share from continuing operations for both periods was $(0.00) and $0.00, respectively. Diluted weighted average number of common shares outstanding for the three months ended September 30, 2019 was 1,393,641,384 and the Diluted net income per share from continuing operations was $0.00. Basic and diluted net loss per share from discontinuing operations for the three months ended September 30, 2019 was $(0.00).

 

D.	Results of operations for the nine months ended September 30, 2020 and September 30, 2019:

 

The Company had revenues from continuing operations amounting to $65,785 and $86,582, for the nine months ended September 30, 2020 and 2019, respectively.

 

		September 30, 2020				September 30, 2019				Changes
Revenue from continuing operations		$	65,785			$	86,582			$	(20,797	)
		$	65,785			$	86,582			$	(20,797	)

 

During the nine months ended September 30, 2020 and 2019, we generated all our revenue from our insurance brokerage business segment.

 

 

For the nine months ended September 30, 2020 and 2019, the Company had the following concentrations of revenues with customers from continuing operations:

 

		September 30, 2020				September 30, 2019
Initial advisory fees			0	%			4.87	%
Ongoing advisory fees			28.41	%			30.57	%
Initial and renewal commissions			4.99	%			6.51	%
Trail or recurring commissions			66.60	%			57.30	%
Others			0	%			0.75	%
			100	%			100	%

 

The total operating expenditures of continuing operations amounted to $431,396 and $597,832, for the nine months ending on September 30, 2020 and 2019, respectively. The following table sets forth the Company’s operating expenditure analysis for both periods:

 

		September 30, 2020				September 30, 2019				Changes
General and administrative expenses		$	79,932			$	153,255			$	(73,323	)
Compensation			206,989				347,538				(140,549	)
Professional services			125,389				77,999				47,390
Depreciation			1,976				1,930				46
Amortization of intangible asset			17,110				17,110				-
Total operating expenses of continuing operations		$	431,396			$	597,832			$	(166,436	)

 

 

During the nine months ended September 30, 2020, total operating expenses from continuing operations decreased by $166,436 from the comparative period ended September 30, 2019. The decrease is mainly due to a decrease in the compensation expense pertaining to two of our officers and directors during the current nine months ended September 30, 2020.

 

The loss from continuing operations for the nine months ended September 30, 2020 and 2019, was $365,611 and $511,250, respectively.

 

The Company´s other income and (expenses) of continuing operations for the nine months ended September 30, 2020 and 2019, were $383,134 and $(721,980), respectively. The following table sets forth the Company’s other income and (expenses) analysis for both periods:

 

		September 30, 2020				September 30, 2019				Changes
Interest expense		$	(44,156	)		$	(49,300	)		$	5,144
Change in fair value of acquisition payable			(3,476	)			(12,800	)			9,324
Amortization of debt discount			-				(126,312	)			126,312
Gain / (loss) on available for sale marketable securities, net			379,300				(525,185	)			904,485
Gain on extinguishment of debt and other liabilities			40,471				-				40,471
Loss on disposal of fixed asset			(260	)			-				(260	)
Other income			12,612				-				12,612
Exchange rate (loss) / gain			(1,357	)			(8,383	)			7,026
Total other (expenses) / other income of continuing operations		$	383,134			$	(721,980	)		$	1,105,114

 

During the nine months ended September 30, 2020, our total other income increased by $1,105,114 when compared to our total other income (expenses) for the nine months ended September 30, 2019. This increase was mainly due to the fact that during the nine months ended September 30, 2020, the Company recorded a net gain on available for sale marketable securities amounting to $379,300, but recorded a loss of $(525,185) during the nine months ended September 30, 2019. In addition, the Company recorded amortization of debt discount of $126,312 during the nine months ended September 30, 2019 while the Company did not record any amortization of debt discount during the nine months ended September 30, 2020.

 

The net income / (loss) from continuing operations for the nine months ended September 30, 2020 and 2019 were $17,523 and $(1,233,230), respectively.

 

Net loss from discontinued operations for the nine months ended September 30, 2020 and 2019 amounted to $0 and $35,005, respectively.

 

Net income / (loss) for the nine months ended September 30, 2020 and 2019 amounted to $17,523 and $(1,268,235), respectively.

 

The comprehensive income / (loss) for the nine months ended September 30, 2020 and 2019 amounted to $29,519 and $(1,248,840), respectively. The Company’s other comprehensive income / (loss) includes gain recorded on foreign currency translation of $11,996 and $19,395 for the nine months ended September 30, 2020 and 2019, respectively.

 

		September 30, 2020				September 30, 2019
Comprehensive income (loss) / income:
Net income / (loss)		$	17,523			$	(1,268,235	)
Gain on foreign currency translation			11,996				19,395
Comprehensive (loss) / income		$	29,519			$	(1,248,840	)

 

The Company had 590,989,409 shares of common stock issued and outstanding at September 30, 2020 and September 30, 2019. Basic weighted average number of common shares outstanding for the nine months ended September 30, 2020 and 2019, was 590,989,409 and 567,176,296, respectively. Basic net income / (loss) per share from continuing operations for both periods was $0.00 and $(0.00), respectively. Diluted weighted average number of common shares outstanding for the nine months ended September 30, 2020 was 1,882,911,897 and the Diluted net income per share from continuing operations was $0.00. Basic and diluted net loss per share from discontinuing operations for both periods was $(0.00) and $(0.00), respectively.

 

E.	Financial condition as at September 30, 2020 and December 31, 2019:

 

Assets:

 

The Company reported total assets of $1,143,912 and $1,079,648 as of September 30, 2020 and December 31, 2019, 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 $583,539 and $204,239 as of September 30, 2020 and December 31, 2019, respectively.

 

On September 30, 2020 and December 31, 2019, 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 $3,062 and $3,672 as of September 30, 2020 and December 31, 2019, respectively. Right-of-use leased asset amounting to $64,020 and $75,786 as of September 30, 2020 and December 31, 2019, respectively, represents fair value of our UK office lease for a period of six years. Intangibles of $292,766 and $309,876 as of September 30, 2020 and December 31, 2019, 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, 2019 amounted to $547,390, and at September 30, 2020, these current assets amounted to $641,140 comprised of cash of $46,936, accounts receivable of $5,264, prepaid and other current assets of $5,401 and marketable securities valued at fair value of $583,539.

 

 

Liabilities:

 

Our current liabilities as of December 31, 2019 totaled $1,128,476. On September 30, 2020, the Company reported its current liabilities amounting to $1,144,584, which represents a nominal increase of 1%. All our current liabilities reported at September 30, 2020 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, including the accrued interest as of 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 18, 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		$	1,337,494

 

Following is the summary of all notes, net of debt discount, including the accrued interest as of September 30, 2020:

 

Date of Note		Total Debt				Remarks
October 17, 2013		$	268,642			Non-convertible and non-collateralized
October 10, 2018 (Related party)			730,519			Convertible and non-collateralized
December 18, 2019 (Related party)			344,518			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, September 30, 2020		$	1,343,679

 

The Company’s long-term liabilities amounted to $1,098,649 and $1,109,012 as of September 30, 2020 and December 31, 2019, respectively. These long-term liabilities included long term payable for acquisition, long term convertible notes to related party and a long-term lease liability for UK office.

 

Stockholders’ Deficit:

 

On December 31, 2019, the Company had Stockholders´ Deficit of $1,157,840. On September 30, 2020, the Company had Stockholders´ Deficit of $1,099,321. We reported accumulated other comprehensive income / (loss) of $6,448 and $(5,548) as of September 30, 2020 and December 31, 2019, respectively.

 

The Company had 590,989,409 shares of common stock issued and outstanding as of September 30, 2020 and December 31, 2019. The Company also had issued and outstanding 45,000,000 shares of Series “B” Convertible Preferred Stock as of September 30, 2020 and December 31, 2019. The Company further had issued and outstanding 3,300,000 and 3,200,000 shares of Series “C” Convertible Preferred Stock as of September 30, 2020 and December 31, 2019, respectively.

 

F.	Liquidity and capital reserves:

 

In March 2020, the outbreak of the COVID-19 Coronavirus caused by a novel strain of the coronavirus was recognized as a Global Pandemic by the World Health Organization, and the outbreak has become increasingly widespread all over the World, including the geographical locations in which the Company and its subsidiaries operate. The COVID-19 Coronavirus Pandemic has and will continue affecting economies and businesses around the Globe. The Company continues to monitor the impact of the COVID-19 Coronavirus outbreak closely. Amongst the factors that could impact our results are the effectiveness of COVID-19 Coronavirus mitigation measures, global economic conditions, reduced business, and consumer spending due to both job losses and reduced investing activity, and other factors. These factors could result in increased or decreased demand for our products and services. For the quarter ended September 30, 2020 and still to date, most European countries are still slowly easing out of the mandated lock-down imposed by their respective Governments due to the COVID-19 pandemic and its ramifications.

 

 

While the Company´s recurring revenues were not materially affected during the nine months ended September 30, 2020, the Company´s ability to speed-up the process of writing new business was hindered to a degree. This hindrance was mainly due to the fact that most of the Company´s new business clients that are seeking financial advice are of a certain age whereby they prefer to meet in person with one of our independent financial advisers and sign the paperwork in situ, and this has proven to be a slow process due to travel restrictions. However, the Company does believe that from now onwards, its team of Independent Financial Advisors (IFA´s) will be able to start organizing and attending these “face to face” meetings with these new business clients and will, therefore, be able to close most or all of the new business that was put in motion during the quarter ended September 30, 2020.

 

The accompanying unaudited 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 unaudited consolidated financial statements, the Company had a net income of $17,523 and net cash used in operations of $283,517 for the nine months ended September 30, 2020; working capital deficit, stockholder’s deficit and accumulated deficit of $503,444, $1,099,321 and $13,205,665, respectively as of September 30, 2020. 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, when possible.

 

In June of 2018, the Company secured a funding agreement with Xantis AION Securitization 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 Securitization Fund on October 10, 2018 amounting to $653,040, represents 30% of the Company’s total liabilities as of March 31, 2020. 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 Securitization 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 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 $471,877. These accounts payable and accrued liabilities due to related parties represent 41% of the Company’s current liabilities and are 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 of targeting 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 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.

 

 

F.	Business Development:

 

Our specific plan of operations and milestones from October 2020 through October 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 approximately $980) and 1% per annum (a minimum annual fee of 1,000 GBP or approximately $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 on boarded 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 administer and ultimately look after their financial affairs.

 

So far this year, we have identified 40 new business clients. A lot of them have already 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 administer 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 administer per client, taking into consideration our historical data, is approximately $72,500. These 40 new business clients represent approximately $3,750,000 of new funds under administration.

 

Our goal for the next 12 months is to attract at least 100 new business clients; hence, our intent is to raise the Funds that we currently administer 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 during the next 12 months. This uplift in gross revenue would represent 2 to 3 times the current gross revenue.

 

In summary, it is our intent in the next 12 months to continue to leverage the licenses that we now own, as we believe that we can significantly increase our business and revenues at 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 U.S.$10,000,000 Dollars with a new European based Regulated Fund to accelerate our inorganic growth and acquisition plan with a view to consolidate our Company in the marketplace. Recently, we sent the basic terms of a new funding agreement in the form of a draft Funding Agreement to this Regulated Fund for their legal department to review and we plan to close this new funding agreement this year.

 

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 180 Million GBP (approximately U.S. $225 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.

 

During 2020, Management also commenced certain negotiations to acquire between 51% and 100% of an Independent Financial Advisory (IFA) firm based in Hong Kong. This targeted IFA currently has approximately $200 Million of Funds under Administration and historical recurring revenues of a little more than $1.1 Million. However, we do not currently have any written agreements, as management is still in verbal negotiations with the owners of this IFA. Management also commenced certain negotiations to acquire between 51% and 100% of an Independent Financial Advisory (IFA) firm based in Eastern Europe This targeted IFA currently has approximately U.S.$50 Million of Funds under Administration and historical recurring revenues of a little more than $280,000 with a lot of room to grow this recurring revenue by restructuring the client base. However, we do not currently have any written agreements, as management is still in verbal negotiations with the owners of this IFA.

 

Depending on how successful we are with obtaining new funding, the Company intends to audit and then acquire one or more of these above-mentioned Independent Financial Advisory firms (partially or entirely) in the coming 12 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:

 

	○	New capital markets clients.
	○	Distribution of new funds / products.
	○	Maximizing the current books of business being bought.
	○	Expand and thus increase business via more financial advisors.
	○	Seek products that offer both a 1% trail (recurring) income and a secure risk averse home for clients’ funds.
	○	Seek cost savings, where possible, due to elimination of duplicate services.
	○	Implement rapid and efficient systems to allow information to flow to the clients and to management more effectively.
	○	Acquiring smaller, active client banks into our licenses and procedures for cost effective growth.

 

4.

COMMENCE A TARGETED MARKETING PLAN

 

During 2021, our United Kingdom regulated business, Cheshire Trafford (U.K.) Limited, will continue with the direct marketing campaign that commenced in 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 to maximize the potential returns per client with complementary products such as mortgages, trusts, and more attractive funds.

 

6.

CAPITAL MARKETS

 

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 may be fully executed and finalized by sometime in the year 2020 or even 2021 depending on the COVID-19 global pandemic and the effects that this can have on the listing process.

 

Item 3. Quantitative and Qualitative Disclosures about Market Risk

 

Not applicable.

 

Item 4. 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.

 

Changes in internal control over financial reporting

 

There were no changes in 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.

 

 

PART II – OTHER INFORMATION

 

Item 1. Legal Proceedings

 

We are not subject to any other pending or threatened litigation.

 

Item 1A. Risk Factors

 

Not applicable.

 

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

 

SECURITIES ISSUED IN 2020

 

The Company did not issue any common stock during the nine months ended September 30, 2020. However, the Company issued 100,000 shares of Series “C” Preferred Stock to our new President and Chief Executive Officer, Nicholas P. Tuke, as compensation effective February 1, 2020.

 

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 to Xantis Aion Securitization Fund (as formally requested by Xantis Private Equity Fund the Holder of the Note) upon conversion of a convertible promissory note and related accrued interest.

 

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 to William Marshal Plc. upon conversion of a convertible promissory note and related accrued interest.

 

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 Securitization Fund upon conversion of a convertible promissory note.

 

The above securities were issued by the Company in reliance on the exemption from registration provided by Section 4.(a)(2) of the Securities Act of 1933, as amended and/or the exclusion from the registration requirements of the Securities Act of 1933, as amended, pursuant to Regulation S promulgated thereunder.

 

Item 3. Defaults upon Senior Securities

 

None.

 

Item 4. Mine Safety Disclosures

 

Not applicable.

 

Item 5. Other Information

 

None.

Item 6. Exhibits

 

See Exhibit Index below for exhibits required by Item 601 of regulation S-K.

 

EXHIBIT INDEX

 

Exhibit No.

Description

 

List of Exhibits attached or incorporated by reference pursuant to Item 601 of Regulation S-K:

 

Exhibit		Description
31.1 *		Certification under Section 302 of Sarbanes-Oxley Act of 2002
31.2 *		Certification under Section 302 of Sarbanes-Oxley Act of 2002
32.1 *		Certification under Section 906 of Sarbanes-Oxley Act of 2002
32.2 *		Certification under Section 906 of Sarbanes-Oxley Act of 2002

 

*	Filed herewith.

 

 

SIGNATURES

 

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

 

	ARGENTUM 47, INC.
Date: November 12, 2020	/s/ Nicholas Tuke
	Nicholas Tuke
	President and Chief Executive Officer
	(Principal Executive Officer)

 

Date: November 12, 2020	/s/ Enzo Taddei
	Enzo Taddei
	Chief Financial Officer
	(Principal Accounting and Financial Officer)