Business Context and Reporting Period
This Form 6-K filing by Integrated Media Technology Ltd (IMTE) is dated December 30, 2021. The report discloses an "Other Event" involving the execution of an Assignment and Assumption Agreement on December 29, 2021, with Joint Investment Limited (JIL). Through this agreement, IMTE assumed JIL's rights and obligations to acquire a 60% equity interest in Ace Corporation Limited (ACE).
Key Financial Metrics
The filing does not provide consolidated revenue, profit, cash flow, or margin data for IMTE. Specific financial terms related to the ACE transaction include:
- Initial Investment: Up to US$1 million for 60% equity in ACE.
- Current Status: As of the filing date, US$500,000 has been subscribed for 300,000 shares (60% interest).
- Valuation of Non-Cash Contribution: The remaining 40% shareholders' contribution (business plans and management) is valued at approximately US$666,666.
- Deferred Performance Fee: IMTE must pay JIL a fee calculated as 5 times the average annualized consolidated profits of ACE for the two-year period following the completion of the operating platform (no later than March 31, 2022), less the Initial Investment.
- Listing Fee: If ACE lists on a recognized exchange within 5 years, IMTE must pay JIL 3% of ACE's market value at listing.
Material Changes
The primary material change is the transfer of the subscription agreement from JIL to IMTE. IMTE is now the party obligated to fund the remaining US$500,000 of the initial investment upon the achievement of specific milestones, specifically when the ACE website platform records US$5 million in Gross Merchandise Value (GMV).
Outlook, Risks, and Contingencies
Management Commentary and Milestones: The transaction is contingent on the completion of an operating platform by March 31, 2022. Future funding is tied to GMV targets.
Risks and Contingencies:
- Performance Obligation: IMTE faces a significant contingent liability regarding the deferred performance fee, which is based on ACE's future profitability.
- Liquidity Requirement: IMTE must be prepared to fund the remaining US$500,000 subscription upon hitting the GMV milestone.
- Listing Contingency: A potential future cash outflow of 3% of market value exists if ACE achieves a listing within five years.
Investor Verification Checklist
- Verify the current operational status and GMV of the ACE website platform to assess the likelihood of the next funding tranche.
- Review the full text of the Assignment and Assumption Agreement (Exhibit 99.1) for detailed terms on the deferred performance fee calculation.
- Confirm the timeline for the completion of the ACE operating platform relative to the March 31, 2022 deadline.
- Assess IMTE's current liquidity position to determine its ability to fund the remaining US$500,000 investment and potential future fees.