Acquisition of Vardisto Investments Limited

6 Months Ended

Jun. 30, 2011

Acquisition of Vardisto Investments Limited [Text Block]

Note 4

Acquisition of Vardisto Investments Limited

On December 29, 2010, the Company completed a transaction by which it acquired 100% of the issued and outstanding shares of Vardisto Investments Limited (“Vardisto”), a private company located in Cyprus for consideration consisting of a promissory note (“the Note”). The promissory note is due on or before December 31, 2013 for the principal sum of $2,000,000, together with interest thereon at a rate equal to four ( 4%) percent per annum compounded annually.

The Company will have the option and right at any time until the Note is fully paid to convert any amount outstanding, including accrued interest into common shares at the average closing price of the three days prior to conversion.

The promissory note has been recorded at its fair value on issuance in the amount of $1,394,969 by determining its present value at inception using a risk-adjusted discount rate of 17.3% . The resulting discount from its face value in the amount of $605,031 will be accreted to income over the term of the note. The Company’s charges for interest, fees and accretion totalling $162,927 for the six months ended June 30, 2011 includes an expense of $85,608 in respect of accretion of this debt discount (Note 6).

ACRONGENOMICS INC 10-Q