Dylan Gouws Managing Director A : 51 William Street, Observatory, Cape Town, South Africa
Date: January 10, 2022 Date: Date, 10 july, 2020
W : info@gouwsconsulting.com, www.gouwsconsulting.com P : +27 72 807 7983234 Start typing from here. 56789
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Fortius Capital Foundation Trading Challenge Valuation Report Valuation Date: January 10, 2022 Report Date: January 10, 2022
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Dylan
Dylan Gouws Managing Director 51 William Street, Observatory, Cape Town, South Africa +27 72 807 7983 dylan@gouwsconsulting.com www.gouwsconsulting.com
1/10/2022
Fortius Capital Foundation Trading Challenge Valuation Report
Dylan Gouws GOUWS CONSULTING & ADVISORY
Monday, January 10, 2022 Jose Javier Rivera Olalquiaga Fortuis Capital Foundation Trading Challenge Currency Tower 2, DIFC-Dubai UAE We have been engaged by Jose Javier Rivera Olalquiaga, to estimate the fair market value of the tangible and intangible assets of Fortius Capital Foundation Trading Challenge for the purposes of a possible sale. The Valuation Engagement was performed in accordance with the National Association of Certified Valuation Analysts Statement on Standards for Valuation Services. This letter is strictly advisory and requires only exhibits and minimal explanations. The term "Fair Market Value" is defined as the cash or cash equivalent price in which property changes hands between a willing buyer and a willing seller, neither being under a compulsion to buy or sell and both having reasonable knowledge of relevant facts. Gouws Consulting & Advisory, along with its analysts, are independent of Fortius Capital Foundation Trading Challenge and do not perform its services under the supervision or direction of Fortius Capital Foundation Trading Challenge or any of its members. Based on our analysis, as described in this Valuation Report, the Conclusion of Value for Fortius Capital Foundation Trading Challenge was $15 000 000 to $20 000 000 as of January 10, 2022. The assumptions and financial data presented in this report reflect the information contained in the Company’s financial statements.
Respectfully Submitted,
Dylan Gouws, FMVA Managing Director Gouws Consulting & Advisory
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Contents Subject Company ........................................................................................................................................... 3 The Company ................................................................................................................................................. 4 Customers .................................................................................................................................................. 4 Opportunity ............................................................................................................................................... 4 Industry Overview .......................................................................................................................................... 5 Product Overview....................................................................................................................................... 5 Market Highlights ....................................................................................................................................... 5 Global Cryptocurrency: Segments............................................................................................................... 5 Bitcoins segment to grow with the highest CAGR during 2020-30 ........................................................... 5 Payment segment to grow with the highest CAGR during 2020-30 ......................................................... 5 Global Cryptocurrency Market Dynamics.................................................................................................... 5 Drivers.................................................................................................................................................... 5 Restraint ................................................................................................................................................ 6 Crypto ETF Approval ................................................................................................................................... 6 What a crypto ETF means for investors ...................................................................................................... 6 Broader Institutional Cryptocurrency Adoption .......................................................................................... 6 What more institutional adoption means for investors ............................................................................... 7 Bitcoin’s Future Outlook ............................................................................................................................. 7 What Bitcoin price volatility means for investors .................................................................................... 7 The Future of Cryptocurrency ..................................................................................................................... 7 Financials ....................................................................................................................................................... 8 Revenue Scenarios ..................................................................................................................................... 8 Financial projections .................................................................................................................................. 8 Financial Analysis ....................................................................................................................................... 8 VALUATION .................................................................................................................................................. 10 Introduction ............................................................................................................................................. 10 Company-Specific Risk Analysis ................................................................................................................ 10 Capitalization & Discount Rates ................................................................................................................ 13 General Capitalization Rates..................................................................................................................... 15 Income Approach ..................................................................................................................................... 15 Summary of Discounted Cash Flow – 5 Year Forecast ........................................................................... 15 Summary of all values .............................................................................................................................. 19 Appendices .................................................................................................................................................. 20 Valuation Analyst’s Representations......................................................................................................... 20
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Subject Company Company Name:
Fortius Capital Foundation Trading Challenge
Owners:
Jose Javier Rivera Olalquiaga
Address:
Currency Tower 2, DIFC-Dubai UAE
Valuation Date:
January 10, 2022
Report Date:
January 10, 2022
Purpose:
Sale of Trading Challenge
Standard of Value:
Fair Market Value
Premise of Value:
Going Concern
Business Interest Valued:
100%
Appraiser Name:
Dylan Gouws
Appraiser’s Firm:
Gouws Consulting & Advisory
Conclusion of Value:
$15 000 000 to $20 000 000
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The Company The Fortius Capital Foundation Trading Challenge (the “Company”) is primarily a Bitcoin fund or blue-chip stock trading challenge which operates under the license of Fortius Capital Foundation. One of the key selling points and focuses of Fortius Capital Foundation and the trading challenge is to reduce trading fees within this high-growth market while also teaching financial literacy to millions of users worldwide. These trading challenges will be launched under a foundation license in Dubai. The goal for the promoters of the trading challenge will be to find Coinbase users who are interested in lower crypto trading fees and can trade blue-chip stocks with the same trading account. These promoters can recruit a maximum of 100`000 applicants per challenge with the promoter earning $10 in revenue for each trader who joins their challenge.
Customers • •
The target customers for these trading challenges will be current Crypto traders who may be seeking lower fees or just some enticing competition New crypto traders who are seeking a challenge and are wanting to learn
Opportunity This is an opportunity for any potential promoters to start their trading challenge. These trading challenges promise strong revenues if the promoter can market their challenges well and create a community around the challenge to encourage participation and copy trading. These trading challenges are under one-year contracts and have been valued as such by the assessor.
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Industry Overview Product Overview Digital cash or digital assets are cryptocurrencies. It is used to protect money transfers, monitor the development of additional units, and significant transfer of assets as a medium of exchange with data encryption. Bitcoin, bitcoin cash, Ethereum, Ripple, Litecoin, Dash coin, and many more are available in different forms of cryptocurrency. Bitcoin alternatives are termed as 'altcoins.' Cryptocurrency, except onscreen numbers representing cryptocurrencies as compared to other currencies such as the dollar, is coarsely the correspondent by using a debit card or PayPal.
Market Highlights Global Cryptocurrency is expected to project a notable CAGR of 30.32% in 2030. Global Cryptocurrency market to surpass USD 3474.31 million by 2030 from USD 842.36 million in 2020 at a CAGR of 30.32 % in the coming years, i.e., 2021-30. Some of the variables that increase consumer growth globally are low ownership costs, safer, and increased efficiency. Moreover, it is further expected that minimum exchange rates, interest rates, or charges for all international transactions will fuel the cryptocurrency market over the forecast period. Increased adoption of bitcoins in developing countries, greater investment in blockchain technology, and increased demand for secure international-border transactions are alleged to provide favorable prospects for advances in the cryptocurrency industry.
Global Cryptocurrency: Segments Bitcoins segment to grow with the highest CAGR during 2020-30 Global Cryptocurrency is segmented by Product Type into Bitcoin and Altcoins. During the projected timeline, Bitcoin is expected to have the highest market share. Cryptocurrency is driven by increasing demand for trade, compliance-free transfer, and the simplicity of cross-border payments. The strong growth in the cryptocurrency market is driven by the expectation that Bitcoin will be "digital gold" and that blockchain-based tokens will reshape industries.
Payment segment to grow with the highest CAGR during 2020-30 Global Cryptocurrency is divided by Application into Peer-to-Peer Payment, Retail, Trading, Remittance, Ecommerce, and Payment. The benefits of cryptocurrency payments include improved transactional security, security from fraud, a decentralized system, low fees, and consumer protection fees, and rapid international transactions. These variables help to increase crypto-currency adoption rates.
Global Cryptocurrency Market Dynamics Drivers Blockchain reduces the cost of ownership The principle of blockchain and cryptography is used in cryptocurrency transactions. Cryptocurrency greatly reduces the cost of ownership, and transfers are much faster and more reliable. These dimensions are projected to increase the worldwide market growth. In addition, the cryptocurrency market is anticipated to enhance in the coming years at minimum exchange rates, interest rates, and charges for all international transactions. Distributed ledger Distributed ledger systems allow a decentralized model of paying for a digital currency system by eliminating the requirement for centralized intermediary processing. Distributed headline technology enables the tracking of financial transactions. It provides virtual tracking and trading of any value by generating digital money. Blockchain offers a robust information-sharing platform. Blockchain is a kind of distributed ledger 5|P ag e
system that provides greater security in real-time for the digital economic process. In the coming years, such parameters could influence the crypto-currency market.
Restraint Lack of Regulation There is still no regulation of the cryptocurrency market. The lack of regulations and instability about it is currently one of the main restrictive factors of crypto-monetary adoption. While financial regulators all over the globe work to develop common cryptocurrency guidelines, regulatory recognition continues to be one of the major hurdles for cryptocurrency adoption. Since distributed leader technology is still in its infancy, it raises numerous issues at national and international levels for regulators and policymakers.
Crypto ETF Approval There’s already been a breakthrough on this front, with the first Bitcoin ETF making its debut on the New York Stock Exchange in October. The development represents a new and more conventional way to invest in crypto. The BITO Bitcoin ETF allows investors to buy in on cryptocurrency directly from traditional investment brokerages they may already have accounts with, like Fidelity or Vanguard. But some say the BITO ETF is not enough, because while the fund is linked to Bitcoin, it does not hold the crypto directly. The fund instead holds Bitcoin futures contracts. While Bitcoin futures follow the general trends of the actual crypto, experts say it may not track the price of Bitcoin directly. For now, investors must continue waiting for an ETF that holds Bitcoin directly. ETF approval has been in consideration by the SEC multiple times over the past few years, but BITO is the first to gain approval.
What a crypto ETF means for investors It’s too soon to tell how many investors will get in on BITO — but the fund did see lots of trading activity in its first weeks. In general, the more accessible cryptocurrency assets are within traditional investment products, the more Americans could buy-in and influence the crypto market. Instead of learning to navigate a cryptocurrency exchange to trade your digital assets, you can add crypto to your portfolio directly from the same brokerage with which you already have a retirement or other traditional investment account. However, investing in a crypto ETF, like BITO, still carries the same risk as any crypto investment. It’s still a speculative and volatile investment. If you’re not willing to lose the money you put into crypto by purchasing on an exchange, then you shouldn’t put it in a crypto fund either. Carefully consider if you’re willing to take on the risk of having cryptocurrency in your portfolio at all.
Broader Institutional Cryptocurrency Adoption Mainstream companies across multiple industries took an interest — and in some cases, themselves invested in — cryptocurrency and blockchain in 2021. AMC, for example, recently announced it will be able to accept Bitcoin payments by the end of this year. Fintech companies like PayPal and Square are also betting on crypto by allowing users to buy on their platforms. Tesla continues to go back and forth on its acceptance of Bitcoin payments, though the company holds billions in crypto assets. Experts predict more and more of this buy-in. Some experts predict bigger, global corporations could jumpstart this adoption even more in the latter half of this year. Indeed, Amazon has recently sparked rumors that it’s making moves to that end by sharing a job posting for a “digital currency and blockchain product lead.” Walmart is also recruiting a crypto expert to oversee its blockchain strategy.
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What more institutional adoption means for investors While paying for things in cryptocurrencies doesn’t make sense for most people right now, more retailers accepting payments might change that landscape in the future. It’ll likely be much longer before it’ll be a smart financial decision to spend Bitcoin on goods or services, but further institutional adoption could bring about more use-cases for everyday users, and in turn, have an impact on crypto prices. Nothing is guaranteed, but if you buy cryptocurrency as a long-term store of value, the more “real world” uses it has, the more likely demand and value will increase.
Bitcoin’s Future Outlook Bitcoin is a good indicator of the crypto market in general because it’s the largest cryptocurrency by market cap and the rest of the market tends to follow its trends. Bitcoin’s price had a wild ride in 2021, and in November set another new all-time high price when it went over $68,000. This latest record high follows previous high points over $60,000 in April and October, as well as a summer drop to less than $30,000 in July. This volatility is a big part of why experts recommend keeping your crypto investments to less than 5% of your portfolio, to begin with. But how high will Bitcoin go? Plenty of experts say it’s only a matter of when, not if, Bitcoin hits $100,000. Bitcoin’s past may provide some clues as to what to expect looking forward.
What Bitcoin price volatility means for investors Bitcoin’s volatility is more reason for investors to play a steady long game. If you’re buying for long-term growth potential, then don’t worry about short-term swings. The best thing you can do is not look at your cryptocurrency investment, or “set it and forget it.” As experts continue to tell us each time there’s a price swing — whether up or down — emotional reaction can cause investors to act rashly and make decisions that result in losses on their investment.
The Future of Cryptocurrency We can speculate on what value cryptocurrency may have for investors in the coming months and years (and many will), but the reality is it’s still a new and speculative investment, without much history on which to base predictions. No matter what a given expert thinks or says, no one knows. That’s why it’s important to only invest what you’re prepared to lose and stick to more conventional investments for long-term wealth building. Keep your investments small, and never put crypto investments above any other financial goals like saving for retirement and paying off high-interest debt.
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Financials Estimated (2022), the company’s total revenue is $13 000 000 under our base case. The company will be assumed to be in its start-up phase, as each challenge will essentially be a new company. The revenue and growth projections are therefore likely to differ from the actual performance of the company.
Revenue Scenarios Trading Challenge Revenue Assumptions Applicant traders Application Fee Number of copy traders per month Copy trading monthly fee Copy trader per year Total Revenue
Bear Case
10 000 10 10 000 10 1 200 000 1 300 000
Base Case
100 000 10 100 000 10 12 000 000 13 000 000
Bull Case
100 000 10 1 000 000 10 120 000 000 121 000 000
Financial projections
Financial Analysis The financials and valuation have been modeled under 3 different scenarios, however, only the base case scenario, submitted by management is displayed in this report.
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Forecast
Gouws Consulting & Advisory
Financial Statements
Bear Case
Base Case
Bull Case
Income Statement Total Revenue Application Fee Monthly Copy Trading Fee Other Income Cost of Goods Sold (Excl. D&A) Gross Profit Operating Expenses Advertising and Marketing Application Fee Prizes Miscellaneous Expenses Net Profit
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1 300 000 100 000 1 200 000 1 300 000 143 999 130 000 999 13 000 1 156 001
13 000 000 1 000 000 12 000 000 13 000 000 1 105 999 975 000 999 130 000 11 894 001
121 000 000 1 000 000 120 000 000 121 000 000 6 655 999 6 050 000 999 605 000 114 344 001
VALUATION Introduction A business is defined as an organized method of routinely producing revenues over a period of time; and fair market value is "the price at which property would change hands between a willing buyer and a willing seller when the former is not under compulsion to buy and the latter is not under compulsion to sell; both parties having reasonable knowledge of relevant facts". The worth of a business can be divided into two major categories: 1. The asset value - machinery, equipment, building, land, usable stock, and other legal rights. 2. The business/goodwill value - the premium, over asset value, which a buyer will pay for the organization, historically recorded cash flows, and projected future earnings. Factors that play a part in determining a business' value include: • • • • • • •
The market value of assets The value of rights, privileges, and knowledge. Historic trends, along with future projections of revenues, expenses, and cash flows. The perception of risk associated with the quality and continuity of earnings. The type or class of buyer that can be attracted to the opportunity and their perception of the opportunity represented. Aesthetic appeal.
The techniques and formulas, which will be used in arriving at values, are those, which are generally accepted by business buyers and their professional advisors. Results assume buyer and seller are considering alternative investments so that a transaction occurs when the economic incentive to purchase is equal to the economic incentive to sell. Generally, there is no economic incentive to invest monies in a business, which is not capable of producing a net income in excess of both an operator's salary and a reasonable return on invested capital. The application of financial formulas is generally straightforward. However, it must be recognized that the marketplace is made up of many buyers and that each can make an estimate of value, which may be generous or conservative, depending upon perceptions of a range of criteria. Allowing for these differences is not always straightforward since feelings, desires, and judgments must be quantified. Such considerations result in calculations, which must take probability into account. Therefore, a proper valuation will develop a range of values which indicates how the marketplace of the different buyers and investors is likely to view the business. This range suggests the highest price a seller can expect and the lowest price a seller should accept.
Company-Specific Risk Analysis This exhibit converts the probable subjective view of the Risk, Stability, and other factors into a numeral that should represent an appropriate Capitalization Rate (Risk/Reward Ratio) for the business. Risk Rating
Rating
1.5 - Continuity of income at risk .75 - Steady income likely 0 - Growing income assured 10 | P a g e
1.50
Competitive Rating 1.5 - Highly competitive in an unstable market .75 - Normal competitive conditions
0.75
0 - Few competitors, high cost of entry for new competition Industry Rating 1.5 - Declining industry .75 - Industry growing slightly faster than inflation
0.00
0 - Dynamic industry, rapid growth expected Company Rating 1.5 - Recent start-up, not established .75 - Well established with satisfactory environment
1.50
0 - Long record of sound operation with an outstanding reputation Company Growth Rating 1.5 - Revenues have been declining .75 - Steady growth slightly faster than inflation
0.00
0 - Dynamic growth rate Desirability Factor 1.5 - No status, rough or dirty work .75 - Respected business in a satisfactory environment
0.00
0 - Challenging business in an attractive environment Operating Ratios 1.5 - All operating ratios well below industry norms .75 - Most operating ratios at or slightly better than industry norms
0.00
0 - All operating ratios well above industry norms Liquidity Ratios 1.5 - Company consistently burdened with heavy debt .75 - Liquidity ratios at or slightly better than industry norms
0.00
0 - Low debt and Liquidity ratios above industry norms Capacity Rating 1.5 - Immediate and substantial expense required for growth .75 - Moderate growth possible without additional capital investment 11 | P a g e
0.00
0 - Rapid growth possible without capital infusion Management Depth Rating 1.5 - Owner operated without supervisory depth .75 - Owner operated with some supervisory depth
1.50
0 - Management strata for smooth succession in place Customer Base Rating 1.5 - Highly dependent upon one or few customers or sales segment .75 - Revenues evenly distributed
0.00
0 - No change in any one customer or sector will affect earnings Execution Risk Rating 1.5 – Growth forecasts are extremely optimistic compared to industry growth .75 – Growth forecasts are at a slight premium
1.50
0 – Growth Forecasts are in line with industry growth Market Area Rating 1.5 - Market area is declining or negative changes in area environment .75 - Stable market area
0.75
0 - Rapid economic growth predicted Marketability Rating 1.5 - Marginal or negative earnings, cash price demanded .75 - Initial investment commensurate with earnings, moderate growth possible
0.25
0 - Substantial cash flow, transaction readily financed, exciting opportunity for growth Bankability Rating 1.5 - Banks or other lenders unwilling to fund transfer or growth .75 - Limited financing available
0.75
0 - Substantial funding available at competitive rates Environmental Rating 1.5 - Produces or uses a large number of hazardous materials, strict licensing .75 - Minimal amounts of hazardous materials used, no licensing required 0 - No hazardous materials used or produced Union Rating 1.5 - Union shop 12 | P a g e
0.00
.75 - No union, some unionization in the industry
0.00
0 - No union, no history of unions in the industry Occupancy Rating 1.5 - No lease available, business is location-sensitive .75 - Lease, with options, extends for eight years - rents predetermined
0.00
0 - Real estate included or long lease (15 years +) with predetermined rents Total of Ratings
21.50%
Capitalization & Discount Rates The discount and capitalization rates represent the risk an investor is willing to accept for the potential reward an investment in the subject company will return. Different rates apply to types of businesses. It is also known as the return that an investor requires for generating the investment. This risk is not calculated in a vacuum or a sterile environment but rather it is calculated based on the factors that can be contrasted against investing in other vehicles that are available and in the specific environment as of the valuation date. The buildup method layers different risk estimates to build up a discount rate. The appropriate discount rate components for the Company are the risk-free rate, equity risk premium, size premium, and company-specific premium. Risk-Free Rate of Return
1.50%
Beta
4.00
Market Premium
7.00%
Cost of Debt
0.00%
Size Premium
4.00%
Company Specific Premium
21.50%
Discount Rate
55.00%
Sustainable Growth Rate
0.00%
WACC
55.00%
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Gouws Consulting and Advisory WACC Calculation Cost of Equity CAPM Risk-free rate Beta Market Premium Ke
1.50% 20 Year Treasury Rate, adjusted for inflation and country specific differentials. 4 Morningstar 7.00% Statista 29.50%
Cost of Debt Interest Debt Kd Tax Rate Kd (After tax)
0.00%
WACC Ke Ve Kd Vd WACC Risk Rating Competitive Rating Industry Rating Company Rating Company Growth Rating Desirability Factor Operating Ratios Liquidity Ratios Capacity Rating Management Depth Rating Customer Base Rating Execution Risk Market Area Rating Marketability Rating Bankability Rating Environmental Rating Union Rating Occupancy Rating WACC Private Company Premium Sustainable Growth WACC
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29.50% 100 0.00% 29.50% 1.50% 1.50% 1.50% 1.00% 1.50% 0.75% 1.50% 1.50% 1.50% 1.50% 1.00% 1.25% 1.50% 1.50% 1.00% 0.00% 0.75% 0.75% 51.00% 4.00% 0.00% 55.00%
21.50%
General Capitalization Rates The rate of capitalization ("Cap Rate"), also known as the risk-reward ratio, is commonly used in valuing businesses by the more sophisticated investor. As noted below, capitalization rates vary depending upon the business venture's risk as perceived by the buyer. High Risk 61% to 100% •
Venture Capital
Start-Up Companies 51% to 60% Medium-High Risk 31% to 50% • • • • •
Existing Company Mature Products Company, Industry Owner Leaving Easy Market Entry
Medium Low Risk 21% to 30% • • • • •
Established Company, Existing Markets Normal Competition Owner May Remain Somewhat Ease of Market Entry
Low Risk 11% to 20% • • • • • •
Established Company Established Market Little or No Competition Profitable, Low-Risk Markets, Owner Remain Difficult Entry into Market
Risk-Free 3% to 10% •
Money Market Rate
Income Approach Summary of Discounted Cash Flow – 5 Year Forecast This income method is the most appropriate method to use because it focuses on the present value of the forecasted future benefits that would accrue to the hypothetical owner of the company. They vary greatly in the short run but are still estimable in the long run. This method requires an explicit forecast of the future benefits streams over a reasonably foreseeable short term and an estimate of a long-term benefits stream that is stable and sustainable (i.e. not varying from period to period and determined to continue into the future without compromise). An appropriate discount rate and an estimate of long-term growth beyond the forecast period allow discrete present values to be calculated and summed for all of the benefits streams to determine the entity’s value. Three scenarios were modeled out for the Company. A willing buyer should assess for what purpose they are planning to purchase the company and can therefore decipher which valuation may be most applicable to them. As the Company is in its start-up phase, the forecasts and valuation may not necessarily be reflective of actual results to come. 15 | P a g e
Base Case Trading Challenge
Revenue Assumptions Applicant traders Application Fee Number of copy traders per month Copy trading monthly fee Copy trader per year Total Revenue Prizes Marketing Fees
Discounted Cash Flow Date Net FCF
Base Case
100 000 10 100 000 10 12 000 000 13 000 000 1.0% 130 000 7.5% 975 000 999 999
Entry Base Case 2021-12-31 2022-12-31 -
11 894 001
The terminal growth rate was calculated using a combination of GDP growth rates, inflation, as well as forecasted company growth expectations – These, were used to assist in the determination of the perpetual growth rate and the WACC.
Intrinsic Value Enterprise Value Plus: Cash Less: Debt Equity Value Weighting Applied Weighted Value
7 673 549
7 673 549 50% 3 836 775
This method sometimes referred to as "Present Value of Future Earnings," uses projected earnings for a period of time and then calculates the present value of these earnings and terminal value. The sum of the discounted earnings represents the present value of the expected future earnings. Using a discounted cash flow model, a final equity value of the company of $7 673 549 was determined under our base case scenario, which was provided by the Company’s management. This is based on various factors, including management forecasts, analysts' estimates, and expectations, as well as industry growth expectations. An appropriate weighting of 50% was awarded to the base case as part of the wider valuation methodology.
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Bear Case Trading Challenge
Revenue Assumptions Applicant traders Application Fee Number of copy traders per month Copy trading monthly fee Copy trader per year Total Revenue Prizes Marketing Fees
Discounted Cash Flow Date
Bear Case
10 000 10 10 000 10 1 200 000 1 300 000 1.0% 13 000 10.0% 130 000 999 999
Entry Bear Case 2021-12-31 2022-12-31
Net FCF Intrinsic Value Enterprise Value Plus: Cash Less: Debt Equity Value Weighting Applied Weighted Value
-
1 156 001
745 807
745 807 30% 223 742
Using a discounted cash flow model, a final equity value of the company of $745 807 was determined under our bear/worst-case scenario, which was provided by the Company’s management. This is based on various factors, including management forecasts, analysts' estimates, and expectations, as well as industry growth expectations. An appropriate weighting of 30% was awarded to the bear case as part of the wider valuation methodology.
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Bull case Trading Challenge
Revenue Assumptions Applicant traders Application Fee Number of copy traders per month Copy trading monthly fee Copy trader per year Total Revenue Prizes Marketing Fees
Discounted Cash Flow Date Net FCF Intrinsic Value Enterprise Value Plus: Cash Less: Debt Equity Value Weighting Applied Weighted Value
Bull Case
100 000 10 1 000 000 10 120 000 000 121 000 000 0.5% 605 000 5.0% 6 050 000 999 999
Entry Bull Case 2021-12-31 2022-12-31 -
114 344 001
73 770 323
73 770 323 20% 14 754 065
Using a discounted cash flow model, a final equity value of the company of $73 770 323 was determined under our bull case scenario, which was provided by the Company’s management. This is based on various factors, including management forecasts, analysts' estimates, and expectations, as well as industry growth expectations. An appropriate weighting of 20% was awarded to the bear case as part of the wider valuation methodology.
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Summary of all values Based on the figures provided by the Company, making necessary adjustments for risk-based factors and the analysts’ expectations of future performance for the Company, an enterprise value of $7 673 549 was calculated using the DCF approach under the base case. Intrinsic Value - Worst Case Enterprise Value Plus: Cash Less: Debt Equity Value Weighting Applied Weighted Value Final Weighted Value
745 807
Intrinsic Value - Base Case Enterprise Value Plus: Cash Less: Debt Equity Value
30% 223 742
Weighting Applied Weighted Value
745 807
7 673 549
Intrinsic Value - Bull Case Enterprise Value Plus: Cash Less: Debt Equity Value
50% 3 836 775
Weighting Applied Weighted Value
7 673 549
18 814 581
Discounted Cash Flows: Base Case: $7 673 549 Bear Case: $745 807 Bull Case: $73 770 323 A final estimated fair value of The Trading Challenge is $18 814 581.
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73 770 323
73 770 323 20% 14 754 065
Appendices Valuation Analyst’s Representations The analysis, opinions, and conclusion of value included in the valuation report are subject to the specified assumptions and limiting conditions, and they are the personal analysis, opinions, and the conclusion of value by the valuation analyst. This report was based on the initial forecasts as submitted by the owner, subject to certain adjustments, and therefore, not all factors were independently compiled by the valuation analyst. The economic and industry data included in the valuation report have been obtained from various printed or electronic reference sources that the valuation analyst believes to be reliable as well as the owner of the Company. The valuation analyst has not performed any corroborating procedures to substantiate the data. The parties for which the information and use of the valuation report are restricted are identified above, the valuation report is not intended to be and should not be used by anyone other than such parties. The valuation analyst did not use the work of one or more outside specialists to assist in the valuation engagement. The valuation does not endorse, nor encourage participation in this challenge or competition. Any end user considering participating within this structure is encouraged to perform their due diligence and to understand the risks involved with any trading and/or trading challenge. The valuation analyst has no obligation to update the report or the opinion of value for information that comes to his or her attention after the date of the report.
Dylan Gouws Managing Director Gouws Consulting and Advisory
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