Annual Report & Accounts and AGM Update

19 June 2020

Techfinancials, Inc

(“TechFinancials” or the “Company” or the “Group”)

Annual Report & Accounts and AGM Update

TechFinancials Inc. (AQSE: TECH), a fintech software provider of financial solutions including blockchain-based digital assets and traditional financial trading solutions for retail clients, announces that its audited Annual Report and Accounts, for the year ended 31 December 2019, is available to view on the Company’s corporate website at

In light of the Covid-19 situation and the recent announcements by the UK Government, which the Board has reviewed carefully, providing that all international arrivals into the UK, will be required to self-isolate for 14 days, the Directors being non UK residents, will not be able to attend the AGM in the near future. Based on the latest available advice, the Company will hold the AGM as soon as it becomes more practicable to do so. A notice containing the full text of the resolutions to be proposed along with the place of the meeting will be sent in due time.

Financial Highlights 

  • – Revenues of US$3.4 million (2018: US$7.8 million)  a decrease of 56%
  • – Blockchain trading technology revenues of US$1.9 million (2018: US$3.8 million)      a decrease by 50% – representing services provided to CEDEX
  • – Core software licensing revenues of US$0.6 million (2018: US$1.3 million) a decrease  by 54%
  • – Trading platform revenues of US$1.0 million (2018: US$2.7 million) decreased by 63%
  • – Gross margins decreased slightly to 73% (2018: 79%)
  • – Impairment provision of US$2.6 million made to write-down the value of goodwill relating to the Group’s 51% investment in DragonFinancials
  • – Operating loss of US$5.7 million (2018: loss of US$4.7 million)* 
  • – EBITDA loss attributable to shareholders of US$1.9 million (2018: loss US$1.9 million) 
  • – Pre-tax loss attributable to shareholders of US$5.7 million (2018: loss of US$5.3   million)* 
  • – Cash position of US$0.7 million as at 31 December 2019 (2018: US$1.7 million)
  • – Basic earnings per share (‘EPS’) has decreased further to (US$0.068) (2018:  (US$0.066))
  • – In February 2019, the Company established Footies Ltd. (“Footies) in the UK,  held 75% and 25% by the Company and Footies.Tech respectively 
  • – In October 2019, the Company sold its entire shareholding in MarketFinancials (“MF”), a fully owned subsidiary for a total amount of EURO 100 thousand 
  • – In December 2019 DragonFinancials, the Company’s 51% subsidiary, ceased its operation. Consequently, the Company no longer operates any B2C business in its traditional systems unit 
  • – In January 2020 the Company’s Shareholders approved the cancellation of admission of Ordinary Shares to trading on AIM and sole listing on the Aquis Stock Exchange (“AQSE”) 
  • – In March 2020 the Company exercised its option over Cedex Holdings Limited (“Cedex”). Following the exercise, the Company will hold 97.3% of Cedex’ issued share capital (90.81% on a fully diluted basis) 
  • – Covid-19 crisis led to development of the Footies product being delayed

*     including an impairment of intangible assets of US$2.6 million and US$2.4 million in 2019 and 2018, respectively.

Operational Highlights  

Blockchain Trading Technology Activity 

  • The Company has devoted significant resources in its subsidiary Footies, to develop a Blockchain based ticketing software and app, for Sports Venues and teams. Footies continues to broaden its solution by adding new software components to serve Event Creators. These new software components allow creators to establish and manage events while controlling the tickets. While Footies development expenses were capitalised in the interim reports of 2019, the uncertainty caused by the Covid-19 led to the decision to reverse the capitalised expenses and recognise them as development costs.  
  • The Company continued to support Cedex in the blockchain-related projects, providing the infrastructure and key software components to the Cedex blockchain diamond exchange.

Software Licensing (B2B)

  • The Company continued to support customers of its B2B division. However, this division of the Company has seen declining revenues which will also suffer from losing DragonFinancials revenues, its major customer. With the continuing regulatory challenges facing the Company’s traditional brokerage business unit, in May 2020 the Company has taken the decision to give its licensees a six months termination notice according to the license agreement in place. The Company will terminate all its B2B brokerage services activities by 1 November 2020 or earlier in the case that all licensees will choose to terminate their agreement any time before 1 November 2020.

Trading Platform (B2C)

  • The Company’s 51 per cent owned B2C subsidiary, DragonFinancials, has suffered from an increasingly challenging regulatory and business environment which has resulted in it incurring losses which started in 2018 and which have continued throughout H1 2019. As prospects for DragonFinancials have not improved in H2 2019, in conjunction with its joint-venture partners at DragonFinancials, in December 2019 the Company has decided to cease DragonFinancials trading with immediate effect, in order to stem further losses. Consequently, the Company will no longer operate any B2C business in its traditional systems unit.
  • The Company completed the sale of MarketFinancials in October 2019 for a cash amount of EURO 100 thousand.

Chairman’s Statement

2019 was a very challenging year, following which the Board has taken major decisions to make substantial adjustments to its operating structure and cost base, in order to allow the continuation of the Group, in its quest to establish new business’ in Blockchain related products.

During the period the continuing regulatory challenges affected revenues and profitability of the Group’s historical B2C business in Asia and led to the decision to close DragonFinancials and the entire B2C business which resulted in a write-off of goodwill balance which arose from the acquisition of DragonFinancials.

Whilst the B2B business suffered as well, both from the loss of DragonFinancials, its major customer in the first half of 2019, along with the decline in the number of the remaining active customers, the Company proposed to its shareholders, in order to reduce costs, to cancel the admission of the Company’s Ordinary Shares to trading on AIM and to remain listed solely on the AQSE Growth Market (“AQSE”). Subsequently the Company’s admission on AIM was cancelled on 20 January 2020. 

In October 2019, the Company managed to complete the sale of its entire holdings in MarketFinancials for a cash amount of EURO 100 thousand, and hence the associated transaction is presented in the reports as discontinued operations.


In February 2019, the Group established Footies Limited (“Footies”), a subsidiary incorporated in the UK, in which TechFinancials had an interest of 75 per cent. It has been established to develop a Blockchain based digital ticketing and fan engagement solution for sports organizations and venues. 

The Company provided funding during the year to Footies totalling circa US$1 million (US$0.4 million of the amount by way of Convertible Loans), to be used to develop the product and for sales efforts. At the beginning of Q3, the first version of the platform has become available for testing with potential clients following which Footies has started approaching potential customers with a ‘demo’ product. 

With the feedback received from potential prospects combined with market research Footies management has decided to develop and broaden its solution by adding new software components to serve Event Creators. These new software components allow creators to establish and manage events while controlling the tickets. 


During the year the Company continued to provide development and support services to Cedex allowing it to maintain its Cedex trading platform.

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’ proprietary technology, comprising the DEX algorithm, and the Cedex trading platform. 


The Board will not be recommending a final dividend to the shareholders of the Company for FY2019 (2018: $nil). 

Outlook and current trading

The year was a turning point for the Group, where it had to close its subsidiary DragonFinancials, historically the most profitable business for the Group, and cancel its admission to AIM while entering into the new ticketing business of Footies.  

The next twelve months will continue to be challenging for the team while by the end of the year we will close our B2B business and the entire historical trading solutions of the Group, and continue to operate our Blockchain technology related solutions through Footies and Cedex, subject to developments around the Covid-19 pandemic.

We have continued to focus on developing Footies’ new technology and 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.

Following the recent global pandemic, the Company’s management believes that Footies’ capabilities in controlling tickets and attendance has some advantages in coping with Covid-19. Nonetheless, the Covid-19 crisis has affected dramatically Footies’ plan to complete the development of its ticketing solution and launching the product in 2020. The Company understands that the ticketing market, which is currently on halt, will not recover to its previous stage this year, and maybe not even in 2021, creating a big question mark around Footies plans going forward. 

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).

Cedex’s vision is to transform diamonds into a new financial asset class. 

Business development efforts in Cedex were also affected by the Covid-19 crisis, and in the current business atmosphere the Company finds it hard to promote its solution in the financial sector. Nevertheless, Cedex’s board will be looking for other opportunities to commercialise the Cedex technology. The Company will consider selling all or part of its interest in Cedex to a third party if it believes that to be in the best interests of the Company.

I would like to thank our shareholders and staff for their continued support in what has been a difficult year. 

We look forward to updating the market on our progress in due course.

Eitan Yanuv

Independent Non-Executive Chairman


Material uncertainty related to going concern (extracted from the Auditor Report)

We draw attention to note 3u in the financial statements, which indicates that the group are loss making, having made a loss of $6,225k in 2019, and dependent on obtaining financing and the COVID-19 lockdown restrictions on the events industry being lifted globally in order to meet its working capital requirements over the next 12 months. As stated in note 3u, these events or conditions, along with the other matters as set forth in note 3u, indicate that a material uncertainty exists that may cast significant doubt on the company’s ability to continue as a going concern. 

Our opinion is not modified in respect of this matter.

Consolidated Statement of Comprehensive Income

For the year ended 31 December 2019

2019 2018
US$’000 US$’000
Revenue 3,418 7,764
Cost of sales (911)    (1,650)
Gross profit 2,507 6,114
Research and development (2,177) (3,478)
Selling and marketing  (648) (1,396)
Administrative  (2,648) (3,499)
Other expenses (153) (41)
Impairment of goodwill                          (2,606)  (2,434)
Operating Loss (5,725) (4,734)
Bank fees (31) (59)
Foreign exchange loss (58) (166)
Other financial (expenses) / income (10) 4
Financing expenses (99) (221)
Other expenses
Loss from a disposal of fixed assets (400)
Loss before taxation (6,224) (4,955)
Taxation (47) (85)
Loss for the year from continuing operations (6,271) (5,040)
Loss from discontinued operations (19) (35)
Capital gain from a sale of subsidiary 
Gain / (loss) for the year from discontinued operations, net  46 (35)
Other comprehensive income 
Total comprehensive Loss (6,225) (5,075)
Loss attributeable to:
Owners of the Company (5,774) (5,274)
Non-controlling interest (451) 199
Loss for the period (6,225) (5,075)


Consolidated Statement of Financial Position

As at 31 December 2019

31 December 31 December
2019 2018
US$’000 US$’000
Non-current assets 
Intangible assets, net 112 3,212
Property and equipment, net 16 471
Long term deposits  51
Investment in related party 200 200
Loans to related parties 147
328 4,081
Current assets
Trade receivables, net and other receivables 606 2,020
Restricted bank deposits 71 276
Cash  672 1,712
1,349 4,008
Total Assets 1,677 8,089
Current liabilities 
Trade and other payables  1,173 1,440
Income tax payable  103 90
1,276 1,530
Non-current liabilities
Shareholders loan 92 92
Share capital 61 61
Share premium account 12,022 12,022
Share-based payment reserve 934 937
Accumulated profits / (losses) (12,459) (6,755)
Equity attributable to owners of the Company 558 6,265
Non-controlling interests  (249) 202
Total equity  309 6,467
Total Equity and Liabilities 1,677 8,089

Consolidated statements of cash flows

For the year ended 31 December 2019

Years ended 31 December
2019 2018
US$’000 US$’000
Cash Flows from operating activities
Loss before tax for the period  (6,178) (4,990)
Adjustment for:
Amortisation of intangible assets 404 403
Impairment of intangible assets 2,696 2,434
Depreciation of property and equipment 61 227
Share option charge 17 44
Impairment of account receivables 153 41
Capital loss on disposal of property and equipment 400
Operating cash flows before movements in working capital:
Decrease in trade and other receivables 1,414 1,026
Decrease in long term receivables 39
Decrease in trade and other payables (267) (28)
Interest Income (1) (4)
Income tax received 1 13
Income tax paid (43)  (83)
Net cash used for operating activities (1,343) (878)
Cash flows from investing activities
Proceeds from selling a subsidiary 112
Proceeds from a refund of deposit  51
Proceeds from disposal of property, plant and equipment 1
Decrease in restricted bank deposits 205 29
Increase in software license –   (25)
Loans given by the Company to related party  –    (79)
Loans eliminated from obtaining control of a subsidiary   79
Loans refunded to the Company 68 332
Investment in Equity –  (200)
Acquisition of property and equipment (4) (27)
Net cash generated from investing activities 511 31
Cash flows from financing activities
Dividends paid to NCI –    (833)
Lease payments  (262)
Net cash used in financing activities (262) (833)
Net decrease in cash and cash equivalents (1,094) (1,680)
Cash and equivalents at beginning of period 1,712 3,499
Effect of changes in exchange rates on Cash 54 (107)
Cash and equivalents at end of period 672 1,712

The directors of the Company accept responsibility for the contents of this announcement.

For further information:

TechFinancials, Inc. Tel: +972 54 5233 943
Asaf Lahav, Group Chief Executive Officer  
Yuval Tovias, Chief Financial Officer  


Peterhouse Capital Limited (AQSE Growth Market Advisor and  Broker) Tel: +44 (0) 20 7469 0930
Guy Miller and Allie Feuerlein   



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