Our coverage of the planned merger between publicly traded shell company Nukkleus Inc (OTCMKTS:NUKK) and regulated retail forex brokers IronFX and FXDD (as well as FX platform provider Forexware) has been met with a little bit of puzzlement and misunderstanding by our audience.
Which is understandable.
Mergers, reverse takeovers of public companies, technology licensing, and multi-stage transactions are all fairly complicated issues to understand on their own. And they are all part of what is happening with Nukkleus, IronFX, FXDD and Forexware.
LeapRate has learned that Nukkleus has recently filed its Q2 financials (in the form of a 10-Q filing) with the U.S. Securities and Exchange Commission, and it provides a little more insight into the planned transaction. We’ll summarize some of the key parts, as well as give some more background on the transaction and what is likely to happen in the coming months.
FX and motorsport enthusiast Emil Assentato
First, who is behind what is going on.
That, actually, is fairly simple to explain. One person effectively controls three of the four entities mentioned above (all except IronFX) – Emil Assentato. Mr. Assentato is former Chairman of Tradition North America, the U.S. arm of Swiss interdealer broker Compagnie Financiere Tradition SA (SWX:CFT). Mr. Assentato has an effective 80% interest in both FXDD and Forexware via Currency Mountain Holdings which he controls (Tradition owns the other 20% in each), and he fully owns Nukkleus heading into the planned transaction.
Second, what is planned by Mr. Assentato for the companies he controls.
Mr. Assentato’s plan is multi-step:
1. merge Nukkleus with IronFX in a reverse takeover, which will give IronFX’s owners part ownership of the merged entity (already partially completed).
2. acquire rights to use and resell Forexware’s technology platform (already completed).
3. acquire all of Forexware (to come).
4. acquire FXDD (to come).
5. acquire and consolidate other brands in the Forex industry.
Steps 1 and 4 will require the approval of the regulators which license IronFX (primarily the FCA in the UK and CySEC in Cyprus) and FXDD (MFSA in Malta). We understand that the IronFX regulatory approvals process is well underway, with CySEC having approved the transaction and the FCA’s response still pending. The FXDD approvals will be sought at a later stage, after Steps 1-3 have been completed.
As a result of Step 2, Nukkleus disclosed in its Q2 filing that it already has an agreement with FXDD to provide a variety of services and technology to FXDD, in return for a $2 million per month payment.
We’d also note that the planned merger(s) does not mean that all the businesses and brands will take on one name, or even be folded under one management group. While that’s a decision for the company further down the road, we believe that the companies and brands – IronFX, FXDD and the Forexware platform business – will continue to have separate names and brands, separate management teams, and will keep their individual regulatory licenses.
They will just be owned by the same corporate entity (Nukkleus Inc), instead of separately by Mr. Assentato’s various holding companies.
There will probably be some behind-the-scenes pooling of resources where it makes sense between the aforementioned companies, but otherwise we see Nukkleus as an umbrella organization that plans to acquire and rationalize these as well as other FX industry brands, over time. Being a public company, Nukkleus should also have access to capital and acquisition currency which a private entity just doesn’t have.
Nukkleus Inc’s complete 10-Q filing for Q2 can be seen here.