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Screenshot of a breaking news alert e-mail from Q2 2017
Binary options technology and brokerage company TechFinancials Inc (LON:TECH) is getting out of the broker side of the business.
TechFinancials today announced that it has agreed to sell its CySEC licensed subsidiary B.O. TradeFinancials Limited which operates the OptionFair binary options brokerage brand, as well as another related subsidiary MarketFinancials Limited, to a Cyprus incorporated company called S. Win Holdings Limited, which is held by Roy Shagan, Roy Winzelberg and Daniel Winzelberg.
The total consideration for these subsidiaries, which the company said it no longer considers to be core to its future business strategy, will be USD $400,000.
TechFinancials shares are soaring on the news, up 57% as of the time of writing to 10.57 pence in London Stock Exchange trading.
So what will TechFinancials now be doing?
Going forward, the company said that it intends to apply the extensive experience and knowledge accumulated over many years, to continue to develop its Forex and CFD platforms and other innovative solutions including solutions for the rapidly growing blockchain-based products and technologies market. In this connection, the company has been developing technology to integrate the crypto-payment processing of Bitcoin, BitcoinCash and Etherium into TechFinancial’s core systems, scheduled to be implemented in Q1 2018.
Additionally, TechFinancials will continue to apply its technology and knowledge to support its recently announced CEDEX project that intends to use blockchain technology to revolutionize the diamond-trading market.
Commenting on the sale of OptionFair, Asaf Lahav, TechFinancials CEO, said:
As a consequence of the regulatory changes which have impacted the binary options sector, these subsidiary holdings have become non-core to future business growth strategy. The Company intends to use its expertise to develop its Forex and CFD solutions and target the rapidly growing blockchain-based products and technologies market, and will use the proceeds of the sale to help build its presence in these new areas.
B.O. TradeFinancials Limited is a Cyprus Investment Firm (CIF) licensed by the Cyprus Securities and Exchange Commission (CySEC), and is the operator of the OptionFair trading platform.
Until June 30, 2017, MarketFinancials, a company regulated by the Seychelles Financial Services Authority (SFSA), was the provider of market maker services and risk management to DragonFinancials Ltd, a subsidiary that is 51% owned by TechFinancials operating in Asia. Since July 1, MarketFinancials only provides market making services to OptionFair.
Under the sale agreement, which is conditional on the consent of CySEC, TechFinancials will sell its entire shareholding in B.O. TradeFinancials Limited to the buyer along with the CySEC license, the OptionFair brand (which includes its client’s balances as of the closing date), the Investors Compensation fund of US$50,000 and the fixed tangible assets for a purchase price of US$300,000, payable upon the closing date of the deal. In addition, the buyer will pay to the company any surplus net working capital in B.O. TradeFinancials Limited as at the closing date along with the loan amount owed by B.O. TradeFinancials Limited to the Company which, as of the date of this announcement, was approximately US$200,000.
Subject and conditional to the consent of the SFSA, TechFinancials will sell its entire shareholding in MarketFinancials to the buyer for a purchase price of USD $100,000, along with any working capital surplus. In addition, accumulated retained earnings as at the closing date will be distributed as a dividend to the company. The retained earnings as at the June 30, 2017 were USD $411,000.
B.O. TradeFinancials Limited activity (that is, operating OptionFair) continued to shrink in 2017 due to the tightening of regulations in the Binary Options industry. For the six months ended June 30, 2017, OptionFair’s revenues were €164,000 (for the financial year 2016: €1.38 million) and the loss for that period was €105,000 compared to a loss of €231,000 for the financial year 2016. Net assets at June 30, 2017 were €244,534.
MarketFinancials’ main source of income and profits during the six months ended June 30, 2017 was derived from the provision of market maker and risk management services to DragonFinancials with a decreasing amount from OptionFair. Since July 1, MarketFinancials has been providing market maker services only to OptionFair, with another wholly owned group company providing market making services to DragonFinancials. The decreasing levels of OptionFair activity during 2017 impacted the revenue generated by MarketFinancials for the six months ended on June 30, 2017, which amounted to USD $3.7 million (for the financial year 2016: USD $11.8 million). The net profit of MarketFinancials for the six months ended on June 30, 2017 was USD $74,000 (for the financial year 2016: USD $367,000). Net assets at June 30, 2017 were USD $468,000.
The full announcement on the OptionFair sale agreement can be seen here.