TECH.L Regulatory News (TECH)

24 November 2017

TechFinancials, Inc.("TechFinancials, the "Company" or the "Group")

Binding Agreements for the Conditional Sale of shareholdings in two subsidiaries

TechFinancials (AIM: TECH), a leading technology provider to financial trading brokers, today is pleased to announce that it has entered into legally binding Share Purchase Agreements (the "SPA") with S. Win Holdings Limited, a Cyprus incorporated company held by Roy Shagan, Roy Winzelberg and Daniel Winzelberg (the "Buyer") to sell its holdings in B.O. TradeFinancials Limited ("BOT") and MarketFinancials Limited ("MF"). The total consideration for these subsidiaries, which the Company no longer considers to be core to its future business strategy, will be US$400,000, subject to any closing adjustments. Going forwards, TechFinancials intends to apply the extensive experience and knowledge accumulated over many years, to continue to develop its Forex and CFD and other innovative solutions including solutions for the rapidly growing blockchain-based products and technologies market. In this connection, the Group 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, the Group will continue to apply its technology and knowledge to support the innovative CEDEX project that intends to use blockchain technology to revolutionize the diamond-trading market.

BOT is a Cyprus Investment Firm ("CIF") licensed by the Cyprus Securities and Exchange Commission ("CySEC"), and is the operator of the Group's OptionFair trading platform. Until 30 June 2017, MF, a company regulated by the Seychelles Financial Services Authority ("SFSA"), was the provider of market maker services and risk management to DragonFinancials Ltd ("DF"), a subsidiary that is 51% owned by the Group operating in Asia. Since 1 July 2017, MF only provides market making services to BOT.

Under the SPA relating to BOT, which is conditional on the consent of CySEC, TechFinancials will sell its entire shareholding in BOT 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 BOT as at the closing date along with the loan amount owed by BOT to the Company which, as of the date of this announcement, was approximately US$200,000.

Under the SPA relating to MF and conditional the consent of SFSA, TechFinancials will sell its entire shareholding in MF to the Buyer for a purchase price of US$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 30 June 2017 were US$411,000.

BOT activity (operating OptionFair) continued to shrink in 2017 due to the tightening of regulations in the Binary Options industry. For the six months ended 30 June 2017, BOT's revenues were €164,000 (For the financial year 2016: €1.38m) and the loss for that period was €105,000 compared to a loss of €231,000 for the financial year 2016. Net assets at 30 June 2017 were €244,534.

MF's main source of income and profits during the six months ended 30 June 2017 was derived from the provision of market maker and risk management services to DF with a decreasing amount from BOT. Since 1 July 2017, MF has been providing market maker services only to BOT (with another wholly owned Group company providing market making services to DF). The decreasing levels of BOT activity during 2017 impacted the revenue generated by MF for the six months ended on 30 June 2017, which amounted to US$3.77m (For the financial year 2016: US$11.8m). The net profit of MF for the six months ended on 30 June 2017 was US$74,000 (For the financial year 2016: US$367,000). Net assets at 30 June 2017 were US$468,000.

Commenting on the share purchasing agreements, Asaf Lahav, 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."

This announcement contains inside information for the purposes of Article 7 of Regulation (EU) 596/2014.

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About TechFinancials

TechFinancials plc (AIM: TECH) is a leading innovator and supplier of financial trading solutions for retail clients. The Group operates a B2B division licensing white label trading platform solutions to online brokers. In addition, the Company operates a B2C division operating trading platforms worldwide and incorporating a strategic joint venture focusing on solutions for traders in the Asia Pacific region.

Further information can be found at http://techfinancials.com.