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Reffind, the newest addition to the ASX blockchain club, is only a member because its biggest shareholder began agitating for change last year.

Reffind (ASX:RFN) made waves yesterday when it said it was spending $US2.3 million to buy a 12.8 — 14.8 per cent piece of Loyyal Corporation, a global loyalty and rewards blockchain business.

Anthony Dunlop, a director of Reffind and chief investment officer of its biggest shareholder Chapmans, told Stockhead they’ll be using the performance-based licensing rights for Asia Pacific in Australia, Singapore, Malaysia and Hong Kong.

But this has come after a year of change for the maker of recruitment and employee engagement software.

Chapmans (ASX:CHP), which now owns 9.33 per cent of Reffind, began pressing for changes at the AGM late last year and after a tumultuous 2017, wrested control of the board and set it on a course for blockchain.

Mr Dunlop says they weren’t happy with the cost control and “there was a fair bit of tension at the board, the shareholder level”.

It didn’t help that shares in Reffind were in the toilet.

Mr Dunlop says Reffind shares rode the 1-Page wave – a high flying tech company that crashed and burned – before coming back to earth.

Pic: Investing.com
Reffind, which listed in 2015, benefited from the hype-wave created by 1-Page. It also felt the dismal aftermath. Source: Investing.com

On Tuesday Reffind closed down 12.12 per cent — in spite of the blockchain deal — to land at 2.9c.

Chapmans, which already owned an indirect stake through a shareholding in the incubator that spun Reffind out, got a seat on the board, started a strategic review, and began cutting costs in November.

Mr Dunlop says they cut monthly operating expenditure from $450,000 to $80,000, getting rid of the “fortune” spend on marketing staff, ineffective salespeople and top dollar board salaries.

Director salaries were slashed by 40-65 per cent.

This year it reduced its full year loss from $9 million to $2.7 million, thanks to those cuts. It still made just over $523,000 in revenue for the year from its product.

See ya later
Mr Dunlop says the founders, Jamie Pride and Ben McGrath, and Chapmans were ready to part ways.

But while Mr Pride stepped out in July 2016, Mr McGrath wasn’t so ready.

In January this year, Chapmans bought a direct 5.13 per cent stake and called a meeting to push Mr McGrath out of Reffind.

It called that off in May when it looked like they were closing in on a resolution.

However, round two in August was successful and Mr McGrath was removed as a director.

The resolution finally came in October, when Chapmans sold its stakes in two associated Reffind companies to Mr McGrath for $700,000, and gained control of proxy votes over about 11 per cent of Reffind shares that one of the entities owned.

Mr Dunlop says this was because Mr McGrath didn’t want to sell them the shares, but they wanted to prevent further disputes and tensions while trying to rebuild Reffind.

They also both agreed to cease all existing court proceedings against each other, without explaining what these pertained to.

Struggle-town
The Loyyal deal – which will see Reffind buying into US blockchain leader for the global loyalty market, Loyyal Corporation – is as much a coup for Chapmans as for Reffind.

Where Reffind has been a turnaround project this year, Chapmans has also struggled.

Its share price had plummeted 25 per cent by the close on Tuesday, to 0.9c.

Pic: Investing.com
Investors began dumping CHP stock at the end of June. Pic: Investing.com

Mr Dunlop said that was due to “one party in particular who might have had some end of year sales pressure to sell”.

But the middle part of the year has been marred by ASIC “noting” its restated full year accounts which reduced net assets by $3.2 million and the ASX questioning consultancy fees collected from Capital Mining.

Mr Dunlop says investments in early stage companies had been capital intensive, but it now has a portfolio of listed or to-be-listed companies that should bump up investor confidence.

Another investment in a business process blockchain outfit, like Loyyal, might also be in the offing.