Tech: Shares in Fintech Chain take a hit as blockchain revenue falls to zero
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Fintech Chain (ASX:FTC) presented its interim six-month financial report this morning, but the result left investors underwhelmed.
The company reported revenue to the end of September of 17.796m Chinese yuan ($3.7m), a decline of 37 per cent from the prior year comparative period of 28.3m yuan ($5.94m).
The company also said it had extended the terms of an 3m yuan convertible note facility with an “unrelated party”, that was initially signed on May 31, 2017. However, in its director’s report Fintech Chain’s board flagged a “material uncertainty” about the company’s ability to operate as a going concern.
Shares in FTC fell almost 30 per cent in morning trade to 11.5c.
In analysing the result, Fintech Chain attributed the decline in sales momentum to its blockchain operations, which came to a halt.
“Revenue from blockchain technology services significantly dropped from 14.8 million [yuan] to nil,” the company said.
“This was due to blockchain market fluctuations which management believes is as a result of the sector’s relative immaturity. Sector interest is expected to increase as a result of government initiatives.”
However, the company reported more momentum with its T-Linx payments platform — a point-of-sale system that’s linked directly to customer bank accounts.
The company has agreements with more than 400 Chinese banks and has even pushed into regional Chinese markets.
But Fintech Chain’s director’s report shows the company’s board has doubts about its capacity to survive.
In particular, the company notes highlighted that FTC’s current liabilities exceed its current assets by 19.269m yuan ($4.04m).
The current numbers “indicate that a material uncertainty exists that may cast significant doubt on the Group’s ability to continue as going concern”, the report said.
Along with the extension of its convertible bond terms, the company is also looking to further reduce costs and operational efficiencies. In addition, FTC said two major shareholders Mr Xiong Qiang and Mr Chow Ki Shui are on standby to provide further emergency funding if required.
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