TechFinancials considering feasibility of continuing its “remaining businesses”
Once high-flying Binary Options platform provider and broker TechFinancials made some disclosures regarding the first half of 2020 – including on the potential future of the company and its operating subsidiaries.
In 2019 TechFinancials posted a loss of $6.2 million, as the company shuttered its own DragonFinancials Asia-focused binary options brokerage brand. Earlier this year the company took the decision to shut down its B2B (i.e. binary options platform) business in the face of falling demand, informing all its licensees that operations will be stopped by November 2020.
The company poured its remaining resources into two Blockchain based projects – Cedex and Footies. Cedex is a Blockchain based diamond exchange. Footies was established to develop a Blockchain based digital ticketing and fan engagement solution for sports, with TechFinancials pouring in more than $1 million into Footies’ development.
However the decision to close down financial brokerage and focus on event ticketing seems to have been a victim of bad timing, with the Covid-19 global crisis all but putting a (temporary) halt to the event ticketing business worldwide.
In the first half of 2020, TechFinancials revenues amounted to just USD $610,000 (H1 2019: USD $2.07 million), and the company posted a loss of USD $550,000 (H1 2019: loss of USD $1.09 million). The company’s cash position at the period end (30/06/2020) was USD $720,000.
Asaf Lahav, Group Chief Executive Officer of TechFinancials, commented as follows:
“In the first half of the year we have gained full control of Footies, following a conversion of a convertible loan in March 2020 and the signing of a separation agreement with Footies partners which led to holdings of 100% of Footies by the Group. The Group also decided to get full control over Cedex and, in March 2020, exercised its option that led to holdings of 97.3% of Cedex’ issued share capital (90.81% on a fully diluted basis).”
“Nonetheless, the Covid-19 crisis has affected dramatically all the plans of the Company. Footies’ plan to complete the development of its ticketing solution and launching the product in 2020 was put on hold. It is unclear when and how the Event market will return to normal. It is clear that event organizers are suffering major losses and may not be in a position to try new technologies. Therefore, the Company will take a decision in the near future whether or not to continue to pursue this opportunity. The Company’s plans to sell all or part of its interest in Cedex to a third party were also slowed down as a result of the new business atmosphere.”
“The Company will cease its core software licensing business by the end of October this year. It is still uncertain how long the Covid-19 disruption will continue and what ongoing effect it will have on the remaining business of the Group.”
More interesting was the statement made by TechFinancials Chairman Eitan Yanuv, in that it included disclosure that management will make decisions regarding the feasibility to continue the remaining businesses (Footies and Cedex):
In H1 2020 the Company gained full control over the remaining businesses it owns (Footies and Cedex). Nevertheless, and in light of the Covid-19 epidemic, the plans to take these businesses forward were disrupted.
The next twelve months will continue to be challenging for the Company. In the next few months we will close our B2B business and the entire historical trading solutions of the Group. We will make decisions regarding the feasibility to continue the remaining businesses (Footies and Cedex) in light of the negative business conditions that currently exist in the market. We will continue to look for opportunities to materialize our assets or join forces with other companies in order to be able move forward.
I would like to thank our shareholders and staff for their continued support in what has been a difficult period globally as well as to the Group.
We look forward to updating the market on our progress in due course.
TechFinancials’ full release and disclosure regarding 1H-2020 results can be seen here.