Fintech software provider of financial solutions TechFinancials Inc (LON:TECH) announced that they have decided to make substantial adjustments to their operating structure and cost base while seeking to develop its newer blockchain based businesses.
The company’s 51% owned B2C subsidiary, DragonFinancials has suffered from an increasingly challenging regulatory and business environment, resulting in losses which started in 2018 and which have continued throughout H1 2019.
Prospects for DragonFinancials have not improved in H2 2019, in conjunction with its joint-venture partners at DragonFinancials, therefore TechFinancials have decided to close it with immediate effect in order to stem further losses. The closure of DragonFinancials will lead to an impairment in TechFinancials’ accounts of approximately US$2,600k. The Company informed that they will no longer operate any B2C business in their traditional systems unit.
As for TechFinancials’ B2B division, declining revenues can be seen there as well, however the company continues to support its clients.
TechFinancials’ board has undertaken a review of the benefits of being a quoted company on both the AIM Market of the London Stock Exchange and the NEX Exchange Growth Market. According to the board, NEX is a more appropriate market given TechFinancials’ currently reduced size and its focus on new business streams. A sole listing on NEX would also result in a reduction in total listing costs. The Board has concluded that the cancellation of admission of its Ordinary Shares to trading on AIM is in the best interests of the Company and its Shareholders as a whole.
The board has decided that TechFinancials will primarily focus its business efforts going forward on its initiatives in blockchain applications. The Company currently has two initiatives in this area:
- Footies Ltd. and
- Cedex Holdings Limited.
The Company’s strategy is to increase Footies’ value by closing sales contracts with its first customers, and is considering providing Footies an additional credit line by way of a Convertible Loan of up to $225k.
TechFinancials continue to hold an option to acquire 90% of Cedex at an exercise price of approximately £52,000.
In the past year, Cedex has concentrated its business efforts on business development activities in order to create the eco-system for issuing advanced financial instruments based on diamonds as an underlying asset, such as ETP and futures contracts utilizing CEDEX’s proprietary technology, comprising the DEX algorithm, and the Cedex trading platform.