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ANNUAL REPORT & ACCOUNTS AND AGM UPDATE

30 July 2021

TechFinancials, Inc

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

Annual Report & Accounts and AGM Update​

TechFinancials Inc. (AQSE: TECH),  announces that its audited Annual Report and Accounts, for the year ended 31 December 2020, is available to view on the Company’s corporate website at https://group.techfinancials.com.

Based on the latest available advice, the Company will hold the AGM via a zoom meeting. A notice containing the full text of the resolutions to be proposed along with the place of the meeting will be sent in due course.

    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

As at 31 December 2020, the Company discontinued all its traditional operational activities and continues to look for investment opportunities

Revenues of US$1.3 million (2019: US$3.4 million) a decrease of 62%

Pre-tax profit attributable to shareholders of US$1.0 million (2019: loss of US$5.7 million)

Cash position of US$1.4 million as at 31 December 2020 (2019: US$0.7 million)Basic earnings per share (‘EPS’) US$0.01 (2019: (US$0.07))

In January 2020, the Company’s admission to trading on AIM was cancelled and subsequently the Company remains quoted solely on the AQSE Growth Market (“AQSE”)

In April 2020, the Company exercised its option over Cedex Holdings Limited (“Cedex”), Consequently the accounts of Cedex are consolidated for the first time from this date with the Company accounts. In November 2020 the Company purchased additional shares of Cedex from a third party for a total consideration of US$17,500. Following the above, the Company hold 99.84% of Cedex’ issued share capital (93.62% on a fully diluted basis)

In October 2020, the IP of Footies Ltd. (“Footies), the wholly owned subsidiary, was transferred to the Company. Footies has an application for voluntary strike-off, and unless cause is shown against strike-off, Footies will be dissolved on approximately 15 August 2021

In October 2020, the Company terminated all its agreements with the Company’s B2B clients. Consequently, the Company no longer operates any B2B business

In October 2020 Cedex, the Company’s 99% subsidiary, terminated all its engagements with its employees and consultants. Consequently, the Company no longer operates any Blockchain business

In November 2020, the Company signed a Simple Agreement for Future Equity (“SAFE”) with RenewSenses Ltd. (“RenewSenses”), an Israeli Company, developing assistive technologies for the visual impaired, for a total amount of US$152k. The conversion of the loan will entitle the Company to hold not less than 17% of RenewSenses issued share capital

At the beginning of 2021, the Company acquired shares of companies entering into transactions and listed on the LSE and AIM

Covid-19 crisis along with the continuing regulatory challenges led eventually to the closing all the Company’s core operations.

 

Operational Highlights 

Blockchain Trading Technology  

The Company decided to close the operations of Footies during the year due to the negative business conditions that existed in the market resulting from the Covid-19 pandemic and relating restrictions, which put on hold sports and other events that Footies’ controlling tickets solutions target. As a result of the lack of capital and interest by the market, in October 2020, the Company acquired from Footies its entire IP and subsequently notified HMRC of Footies’ impending strike off.

The Company exercised its option over Cedex in April 2020 in order to gain full control over Cedex. The Company continued to support Cedex during the period in the blockchain-related projects, while continuing to look for opportunities to materialize Cedex’s assets or join forces with other companies, in order to move forward with its Cedex blockchain diamond exchange and related projects. The various attempts to close a deal with potential partners, investors or purchasers did not martialize, in some cases due to the market conditions related to the Covid -19 pandemic in the second half of the year. As a result, the Company decided to close Cedex’s operations and in October 2020 terminated all Cedex’ contracts with employees and other technical consultants.

Software Licensing (B2B)

The Company continued to support customers of its B2B division through 1 November 2020, when all contract obligations ended. Subsequently the Company laid of all its B2B employees and service providers.

Simple Agreement Future Equity (SAFE)

 In November 2020, the Company signed with RenewSenses, an Israeli start-up, a SAFE, following which the Company invested in RenewSenses a total amount of US$ 152k.

The investment will be automatically converted at a 20% discount to the next round valuation, with a valuation cap of 2M NIS (US$0.6 million). The Company will therefore hold at least 17% of RenewSenses share capital. RenewSenses aims to revolutionize the way people with visual impairment experience the world. The company develops a wearable mobile device that combines cutting-edge computer vision, vision-to-audio and vision-to-touch sensory substitution methods. The device will enable users to detect and locate objects, people, and general visual characteristics in their immediate surroundings through alternative senses. The company is in the final stages of developing its MVP and will be raising additional funds during 2021 to support its go to market plans 

Chairman’s Statement

 2020 continued to be a very challenging year, mainly due to the impact of the Covid-19 pandemic, following which the Board has taken major decisions to close all the Blockchain related operations in Footies and Cedex.

As informed in the previous year’s accounts, the Company closed in October 2020 the entire B2B historical business, which suffered from ongoing declining revenues and losses due to challenging regulatory environment affecting its customers’ ability to operate.

In order to reduce costs, in January 2020 the Company’s admission on AIM was cancelled and following that the Company remained listed solely on the AQSE Growth Market (“AQSE”).

The Board decided to look for new business opportunities which led the Company in November 2020 to engage in a SAFE with a start-up company that it believes has the potential for creating value for the shareholders. The Company will continue to look for new ways to increase its value.

 

Dividends

The Board will not be recommending a final dividend to the shareholders of the Company for FY2020 (2019: $nil).

Outlook and current trading

The year was a turning point for the Group, where it had to close its operations, release all employees and cancel its admission to AIM while seeking new business opportunities to increase the value of the company.

The Company will continue to look for business opportunities to maximize the Company’s value, leveraging its available cash and investment in RenewSenses.

I would like to thank our shareholders 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

 

Going concern (extracted from the Auditor Report note 3u)

The Consolidated Financial Statements have been prepared under the going concern assumption, which presumes that the Group will be able to meet its obligations as they fall due for at least the next twelve months from the date of the signing of the Financial Statements.

Directors have prepared a budget plan till the end of 2022. Analysing the expected expenses and the current cash position, the directors believe that the company can meet its obligations throughout 2022.

The Financial Statements do not include any adjustments that may be required should the Group be unable to continue as a going concern.

 

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, Executive Board member

Going concern (extracted from the Auditor Report note 3u)

The Consolidated Financial Statements have been prepared under the going concern assumption, which presumes that the Group will be able to meet its obligations as they fall due for at least the next twelve months from the date of the signing of the Financial Statements.

Directors have prepared a budget plan till the end of 2022. Analysing the expected expenses and the current cash position, the directors believe that the company can meet its obligations throughout 2022.

The Financial Statements do not include any adjustments that may be required should the Group be unable to continue as a going concern.

 

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, Executive Board member

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

Guy Miller and Mark Anwyl

 

 

Consolidated Statement of Comprehensive Income  

 

For the year ended 31 December 2020

2018                                                                                              2019             

US$’000                                                                                         US$’000

Revenue                                1,309                                                                                             3,418

Cost of sales                           (87)                                                                                              *(911)

Gross profit                             1,222                                                                                              2,507

 Expenses:

Research and development          (512)                                                                                          (2,177)

Selling and marketing                    (53)                                                                                              (648)

Administrative                                  (654)                                                                                            (2,648)

                        Impairment of goodwill                                        –                                                                        (2,606)

                    Operating Income (Loss)                 3                                                                              (5,725)

 

 

Bank fees                                            (50)                                                                                         (31)

Foreign exchange gain (loss)                       70                                                                                         (58)

Other financial (expenses) / income           (1)                                                                                           (10)

Financing Income (expenses)                   19                                                                                            (99)

Other Income (expenses)

Other non-operational income

(expenses)                                               875                                                                                        (400)

Profit (Loss) before taxation                                 897                                                                                    (6,224)

Taxation                                                            70                                                                                         (47)

Profit (Loss) for the year from

 continuing operations**                                           967                                                                                     (6,271)  

Gain (Loss) from discontinued                                                                                     50                                        (19)

operations

 Capital gain from a sale of

 subsidiary                                    ______________65_                                      ____________________ _

 

Gain / (loss) for the year from

discontinued operations, net                                                                                         50                                       46

Other comprehensive income

Total comprehensive Profit (Loss)*                                           1,017                                                                             (6,225)

Total comprehensive Profit (Loss)*                                           1,017                                                                             (6,225)

Profit (Loss) attributeable to:

Owners of the Company                                                         997                                                                             (5,774)

Non-controlling interest                                                            20                                                                               (451)

Profit (Loss) for the period                                                      1,017                                                                             (6,225)

Consolidated Statement of Financial Position 

 

 

 

 

As at 31 December 2020

                                                                                                                           31 December                            31 December

                                                                                                                          2020                                                   2019

                                                                                                                            US$’000                                           US$’000

Non-current assets

Intangible assets,net                                                                                                  –                                                   112

Property and equipment, net                                                                                      –                                                  16

Investment in related party                                                                                         –                                                  200

Financial asset held at FVTPL                                                                                      152                                                –

                                                                                                                               152                                                –

Current assets

Trade receivables, net and other receivables                                                                   13                                            606

Restricted bank deposits                                                                                                 –                                             71

                                                                                                                              1,432                                       1,349

Total Assets                                                                                                                  1,584                                      1,677

Current liabilities

Trade and other payables                                                                                                88                                         1,173

Income tax payable                                                                                                     –                                              103

Income tax provision                                                                                                      86                                                 –

                                                                                                                                   174                                           1,276

Non-current liabilities

Shareholders loan                                                                                                        84                                                92

Equity

Share capital                                                                                                                 61                                             61

Share premium account                                                                                                    12,022                                     12,022

Share-based payment reserve                                                                                            798                                         934

Accumulated profits / (losses)                                                                                               (11,555)                                   (12, 459)

Equity attributable to owners of the Company                                                                         1,326                                       558

Non-controlling interests                                                                                                            –                                       (249)

Total equity                                                                                                                         1,326                                      309

Total Equity and Liabilities                                                                                                        1,584                                    1,677

Consolidated statements of cash flows

 

For the year ended 31 December 2020

                                                                                                                                                         Years ended 31 December

                                                                                                                                           2020                                      2019

                                                                                                                                            US$’000                                 US$’000

Cash Flows from operating activities

Profit (Loss) before tax for the period

Adjustment for:

Amortisation of intangible                                                                                                              75                                    404

Impairment of intangibleassets, net                                                                                                   37                                   2,696

Gain on bargain purchases                                                                                                           (309)                                    –

Depreciation of property and equipment                                                                                         4                                       61

Share option charge                                                                                                                      6                                       17

Impairment of account receivables                                                                                                 –                                      153

Forgiveness of loan due to NCI                                                                                                      (51)

Capital loss on disposal of property and equipment                                                                        12                                     400

Gain from revaluation of intangible assets                                                                                     (577)                                     –

Income tax expenses

Operating cash flows before movements in working capital:

Decrease in trade and other receivables                                                                                           589                                 1,414

Decrease in long term receivables                                                                                                   –                                          –

Decrease in trade and other payables                                                                                        (1,453)                                    (267)

Interest Income                                                                                                                            –                                        (1)

Income tax received                                                                                                                     –                                         1

R&D tax credit received                                                                                                                163                                      –

Income tax paid                                                                                                                          (109)                                 (43)

Net cash used for operating activities                                                                                              (575)                                (1,343)

Cash flows from investing activities

Proceeds from selling a subsidiary                                                                                                      –                                   112

Proceeds from a refund of deposit                                                                                                       –                                     51

 Decrease in restricted bank deposits                                                                                                71                                   205

Consideration from sale of intangible assets                                                                                       974                                     –

Net cash acquired on acquisition (note A)                                                                                                                                    –

Loans eliminated from obtaining control of a subsidiary                                                                          (296)                               79

Loans refunded to the Company                                                                                                             –                                   68

Funds advanced under SAFE agreement                                                                                                (152 )                                –

Acquisition of property and equipment                                                                                                                                      (4)

Net cash generated from investing activities                                                                                          1,246                              511

Cash flows from financing activities

Lease payments                                                                                                                                –                                   (262)

Net cash used in financing activities                                                                                                          –                                  (262)

Cash and equivalents at beginning of period                                                                                        672                               1,712

Effect of changes in exchange rates on Cash                                                                                         76                                 54

Cash and equivalents at end of period                                                                                                  1,419                             672