EF Hutton plans to launch MeggaCoin on Oct. 1. The company describes it as a digital currency customers can collect by using its social media applications. FILE

EF Hutton plans to become player in cryptocurrency markets

HUTN, Inc. reported a net loss of more than $4 million for the first six months of this year in the company’s most recent financial statement, while company officials said they plan to raise about $60 million by issuing cryptocurrencies

The company, whose subsidiaries include EF Hutton Inc. and Megga Inc., reported approximately $150,000 in revenue for a six-month period that ended on June 30 this year, according to documents filed with the OTC Markets Group. The company’s net loss from operations was listed at slightly higher than $4 million.

MORE: EF Hutton borrows $3M against prominent downtown Springfield site

Company officials said the losses reflected the firm’s investments as it has begun to ramp up its operations. The firm is a financial services company that opened in downtown Springfield in 2016 in the former Credit Life Building. The firm’s latest financial statements filed with the OTC show the company had about $332,000 cash on hand at the end of the quarter ending June 30.

“At our stage it is misleading to describe the result of our financial statement as a loss, because it is in truth an investment in new products and technology,” said Chris Daniels, the company’s CEO.

RELATED: EF Hutton America CEO buys $1M of stock in company

Along with its facilities in Springfield, company documents show the company also established a roughly 2,200 square foot office in Miami Fla., in February this year. The firm’s total assets are listed at about $21.5 million. The company took over two downtown Springfield buildings and previously said it plans to invest $22 million and add up to 400 new jobs downtown over five years. Springfield is the company’s headquarters.

A press release from the company on Monday said the firm will launch MeggaCoin on Oct. 1. The company describes it as a digital currency customers can collect by using its social media applications. Users that accumulate 20 million Meggacoin can redeem them for cash held by an independent trust.

Company officials also said the firm plans to generate about $60 million from issuing cryptocurrency. The company said in a press release it will issue “multiple instruments, coins and tokens.”

READ MORE: Firm reports $3.6M loss while ramping up operations

“EF Hutton has engaged an advisor that has assisted other companies who collectively have raised over $290 million in initial coin offerings,” the company said in a recent news release. “Proceeds will be used to fund marketing, technology and to redeem debt and for general corporate expenses. The first offering is expected to close by January 2019.”

The company also said earlier this month it will provide subscription-based research on cryptocurrencies, and is establishing a cryptocurrency exchange. The exchange is expected to be operational in January next year. Daniels said the research on cryptocurrencies will be produced by a team of workers at the company’s Springfield headquarters. The company will initially cover about a dozen coins and tokens on the market, he said.

“We provide market intelligence as well as specific information on coins and tokens,” Daniels said.

He said the company gained experience with cryptocurrencies when developing its Megga Inc. social network services, which allow users to accrue points depending on how often they use the firm’s social media products. Company officials have said Meggalife awards points to users as they use its apps for tasks like searching the Internet, listening to music or sharing messages.

Meggalife users will be able to redeem those points at the age of 68 to provide additional funds for their retirement

“In the course of that we have developed a great deal of know-how,” Daniels said. “We decided to apply that in ways to help people in the market in general.”

Various firms have sprung up to provide recommendations to investors regarding cryptocurrencies, said Kevin Werbach, a professor of legal studies and business ethics at the Wharton School at the University of Pennsylvania. He said prices for cryptocurrencies have dropped significantly this year, but noted the industry is still a roughly $200 billion market.

“There is great uncertainty about valuations for a number of reasons,” Werbach said. “These cryptocurrencies are new, highly volatile, subject to manipulation, and function differently than traditional assets like stocks. There are also regulatory issues with investment managers offering cryptocurrency products to retail investors. Individuals can buy cryptocurrencies directly, but the SEC has so far rejected proposals for exchange-traded funds.”

The company’s most recent financial statements also describe several subsidiaries under HUTN Inc.

Those include HUTN Group Inc. an operating holding company that owns several subsidiaries and provides administrative services to those subsidiaries. They also list EF Hutton Investments LLC, which is described as an investment advisor offering traditional investment accounts as well as specialized accounts including 529 plans, individual retirement accounts and 401k accounts.

The latest statement shows Megga Inc. a subsidiary developed to provide social network services, is slated to complete beta testing this fall. The company has said Megga Inc. will generate advertising revenue through its Meggalife.com website and deposit a portion into a trust overseen by independent third-party trustees, based on the number of points users accrue. Meggalife users will be able to redeem those points at the age of 68 to provide additional funds for their retirement, according to a news release. The company said it began beta testing in late April this year.

Some of the social media applications developed by the company are nearing the end of beta testing while others should be finished by the end of this year, he said.

The company’s financial documents also show in August this year, a subsidiary called EF Hutton insurance was granted a license to sell life, health and disability insurance in Ohio. The company also said it has applied for licenses in additional states.

Daniels said this week the company has a total of about 65 employees, with about half of those workers located in Springfield. He said it has been a challenge finding workers with the specific skills needed by the company locally. He said the company employs about 11 people at the Miami site, and the company also plans to open an office in Scottsdale, Ariz. He said the company also employs workers in other states including Maine and New York.

Financial documents did not provide any further information about the Miami Office, and Daniels also declined to provide an office address for that site.

“We purposely excluded that because we don’t want people knocking on the door of what is an important facility for us, and we don’t want people to recruit our people,” he said.

He said the company’s workers in Arizona and Florida will not be required to move to Springfield. The Scottsdale office is expected to open early next year, he said.

“For some of the specialized skill sets those folks are not prepared to make a move to Springfield,” he said.

Thank you for reading the Springfield News-Sun and for supporting local journalism. Subscribers: log in for access to your daily ePaper and premium newsletters.

Thank you for supporting in-depth local journalism with your subscription to the Springfield News-Sun. Get more news when you want it with email newsletters just for subscribers. Sign up here.

X