Item
1.01 Entry into a Material Definitive Agreement
On
December 11, 2017, Longfin Corp., (the “Company”), a Delaware corporation (“LFIN”), entered into a definitive
asset purchase agreement (the “Agreement”) with its affiliate Meridian Enterprises Pte.Ltd., a Singapore corporation
(“Meridian”) and with related affiliates collectively represented by the Galaxy Media Ltd., Hong Kong, for the purpose
of purchasing Meridian’s website, www. Ziddu.com, in exchange for 2.5 million restricted Class A common shares of the Company.
Our
acquisition of the Ziddu.com assets gave us access to a Blockchain empowered technology that can offer Micro-Lending against Collateralized
Warehouse Receipts in the form of Ziddu Tokens to Small and Medium Enterprises (SMEs), Processors, Manufactures, Importers and
Exporters across continents.
Our
Ethereum Blockchain Ziddu Token (www.ziddu.com) is a utility token powered by ERC20 Smart Contract. The Ziddu warehouse coin implements
a technology stack in which Smart Contracts run in distributed virtual machines. There is public availability for the view of
the open ledger, transparent execution, and the result of contract execution.
Pursuant
to the Agreement, the Company issued 2.5 million restricted Class A shares to Meridian and certain affiliated parties based on
an internal estimate of the value of the Website
.
These assets include intellectual property associated with the website
www.Ziddu.com and all of its content, and any other rights associated with the website, including, without limitation, any intellectual
property rights, copyrights to designs, graphics, logos and agreements, programming, database, email lists, passwords, usernames
and trade names; and all of the related social media accounts including but not limited to, Twitter, Facebook, Instagram, and
Pinterest and all internet traffic to the www. Ziddu.com (collectively, the “Website”). The Website did not produce
any revenue historically and the Website’s carrying value was zero as of the date of acquisition. Meridian had not incurred
any expenditures towards improvements of the Website prior to December 11, 2017. Beginning in January 2018, Longfin has incurred
$300,000 during the first quarter of 2018 and intends to continue to make certain improvements to the Website to incorporate it
into Longfin services which it estimates to cost an additional $700,000 during the remainder of fiscal 2018.
Meridian
Enterprises Pte.Ltd, is a Singapore a private company in which 92% of the equity is owned by the CEO and chairman of Longfin Corp,
Venkat S. Meenavalli.
The
foregoing description of the Agreement is qualified in its entirety by reference to the complete text of the Agreement, which
is filed as Exhibit 2.1, hereto and is incorporated herein by reference.
The
Website is accounted for as an asset acquisition between entities under common control with a carryover basis of $0 (zero) and
evaluating whether the Website’s technology had “alternative future use” pursuant to relevant accounting literature
(
Assets Acquired to Be Used in Research and Development Activities – Clarified
;
Chapter 3: Accounting for
Assets Acquired in an Asset Acquisition That Are to Be Used in Research and Development Activities) would not alter the initial
accounting treatment.
The
Company expects to spend $1.0 million to incorporate the Website’s technology into the Company’s service offerings.