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#ASX Announcements
Added 4 weeks ago

4Q20 Appendix 4C and Business Activity ReportMelbourne, 29thJanuary 2021

iSignthis Ltd(the Company), and its subsidiaries (the Group) are pleased to present their 7th consecutive, positive, quarterly cash flow from operating activities.

  • Cash and cash equivalents at the end of the quarter of $16.6m remain broadly flat to the prior quarter($16.7m)
  • Cash receipts of $8.0m were down 10% versus the prior quarter
  • Costs of $7.2m were down 2% versus the prior quarter
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#ISX vs ASIC
Last edited 3 months ago

08-Dec-2020:  Having read through the ASIC allegations - see here - it seems clear why the NSX (ASX:NSX) might be impacted by this.  As the CEO and MD of ISX and the person who authorised all of their ASX announcements and responses to the ASX and ASIC on behalf of the ISX board, the buck definitely stops with Karantzis.  He is also the guy who initiated the court case(s) against the ASX.  He is also the guy who benefitted the MOST financially from the share issue that is the subject of the main (and first) part of the ASIC allegations.  He is also the guy who decided to form a relationship with the NSX during his battle with the ASX, buy almost 20% of the NSX and become a director of NSX and the NSX's interim CEO (a position he has held now for 9 months - since March 12th, 2020 - see here.)  In the announcement about Karantzis' appointment to that role, the NSX board said:

"John holds academic qualifications in engineering (University of Western Australia), law, and enterprise (University of Melbourne), with a broad understanding of international regulatory regimes as they relate to securities, payments, anti-money laundering and identity. John has over 27 years’ experience across a number of sectors including payments, transactional banking, online media, natural resources and telecommunications. John has held directorships with ASX listed entities since 2004, including Data & Commerce Ltd ASX : PNW (DCL), Reeltime Media ASX : RMA, and is the founder and current managing director of iSignthis Ltd (ASX : ISX)."

We know he has lied about his own qualifications, including stating that he was a qualified patent attorney, a lie exposed earlier this year by the AFR, which resulted in that qualification being removed from JK's LinkedIn profile.

As far as his broad understanding of anti-money laundering, I wouldn't argue that he has a broad understanding of it, it's just that his company, iSignthis, has been proven to have been used by others to launder money, according to articles I have read.  Visa seemed to agree, hence the reasons given for terminating its relationship with ISX and iSignthis eMoney Ltd. 

ASIC clearly has similar concerns, because they have stated yesterday that they are seeking declarations and pecuniary penalties against iSignthis and Mr Karantzis, and they are also seeking orders that Mr Karantzis be disqualified from managing corporations.

...such as ISX and the NSX. 

The NSX said in an ASX announcement late yesterday afternoon - 

ASIC commences proceedings against isSignthis Limited (ASX:ISX) and Nickolas John Karantzis

NSX Limited (ASX: NSX), wishes to advise that it has become aware of an ASIC Media release dated 7 December 2020 concerning the above.

None of these proceedings involve any NSX activities.

For further information NSX would refer all interested parties to both the ASIC website and the iSignthis announcements lodged onto the ASX Market Announcements platform by iSignthis.

NSX requests that the Trading Halt to be removed.

--- ends ---

NSX hit a 52-week intra-day high a couple of weeks ago - on the 24-Nov-2020 - of 42 cps, and closed at 39.5c two days later (on 26-Nov).  They closed yesterday at 29 cps, and are set to open around -20% down today, if they are released from this trading halt today - at around 23 cps.

I remain unconvinced that the NSX (the National Stock Exchange of Australia, a much smaller and less relevant competitor of the ASX) have done themselves any favours by allowing themselves to become associated with Karantzis, particularly as he is now their largest shareholder and their CEO, and ASIC is now seeking court orders to prevent him from managing ALL companies/corporations.  ASIC obviously do NOT want him managing a stock exchange!

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#ISX vs ASIC
Added 3 months ago

07-Dec-2020:  4:17pm:  Australian Securities and Investment Commission (ASIC) Statement of Claim

Also:  07-Dec-2020:  5:08pm:  ASIC commences proceedings against iSignthis

Interesting.  So, ASIC have finally waded in.  ISX was already suspended, and the NSX has now joined them and is requesting their trading halt be lifted.  Making Mr Nickolas John Karantzis their Interim Chief Executive Officer earlier this year (a position he continues to hold), and ISX/Karantzis becoming a 19.22% shareholder of NSX (their largest shareholder by a large margin) might work against them in this regard.

[I do NOT hold ISX shares, and never have.]

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#Ongoing saga
Added 4 months ago

Here I found some notes on the ISX Vs. ASX battle that is still ongoing.

 

Not my own work, but I have highlighted what I think is relevant. Thought people would enjoy.

View Attachment

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#ISX vs ASX
Added 4 months ago

27-Oct-2020:  Firstly, ISX released this today:  Appendix 4C - Quarterly Business Activity Report

I won't comment on that, other than to note that their revenue and margins continue to decline, as do their Client funds held "...due to a slight reduction in customer confidence as a result of the ASX suspension."  They've invested a further $0.3m ($300K) into NSX Ltd during the quarter and their legal fees have continued to rise (due to their court battles with the ASX, initiated by ISX).  

However, what really got my attention was the announcement yesterday afternoon (26-Oct-2020:  2:58pm) by the ASX, titled, ASX Query Letters re ISX suspension & termination by Visa

There is a fair bit there to digest, but the crux of it is that there have been other query letters sent to ISX by the ASX that ISX have either ignored, refused to respond to, or have responded to in a manner that the ASX found to be inadequate (to satisfy their listing rules).  This correspondence has not been published previously (until yesterday) because it was based on information ("Additional Materials") about ISX and Visa that was provided to the ASX by ASIC, and ASIC have only just given ASX permission to publish/disclose that information.  

Excerpt from the ASX announcement yesterday:

Relevance of the Additional Materials:

The Additional Materials indicated to ASX that:

  • Visa had advised ISX by letter dated 6 March 2020 of its decision to suspend ISX’s participation effective immediately. The letter states:
    • ‘The above-mentioned anomalies and issues, taken collectively, raise serious concerns about whether IsignThis is operating appropriate programs to manage AML [Anti-Money Laundering] and Risk. Therefore, in accordance with the Visa Rules, and to safeguard Visa's global payment system from the excessive level of risk presented by the IsignThis relationship, Visa has decided to suspend IsignThis' Bank Identification Numbers (BINs) in Europe and Australia, and its activities as a registered third party for any other Visa members or clients, effective immediately. This suspension will remain in place until such time as the required further information (as set out below) is provided by IsignThis on its AML and Risk programs, to the satisfaction of Visa.’
  • Visa had advised ISX by letter dated 17 April 2020 of its decision to terminate ISX’s participation in the Visa network. The letter states:
    • ‘The [response from ISX] has not allayed the concerns outlined in the Suspension Letter, and in fact further evidence has been provided that IsignThis is not operating appropriate programs to manage Anti-Money Laundering and Risk. Therefore, in accordance with the Visa Rules, and to safeguard Visa’s global payment system from the excessive level of risk presented by the IsignThis relationship, Visa has decided to terminate its relationship with IsignThis in Europe and Australia. It must also cease acting as a registered third party for any other Visa members or clients.’
  • ISX sent correspondence to Visa, in which ISX provided additional material and disputed certain findings made by Visa and the validity of the termination.
  • Visa reiterated its decision to terminate ISX’s participation in its network in letters to ISX dated 1 May 2020 and 12 May 2020, with the letter dated 12 May 2020 stating that Visa’s decision to terminate was final.

In ASX’s view, the Additional Materials raised questions as to whether ISX’s response to ASX’s May Query Letter, and its disclosures to the market about its relationship with Visa since it received the 6 March 2020 letter from Visa, had complied with the Listing Rules.

--- end of excerpt ---

My view here is that ISX definitely SHOULD have notified the market that they had been permanently removed from the Visa network by Visa based on Visa's concerns around ISX's lack of adequate risk management and particularly around their lacking AML (anti-money laundering) procedures.  In my opinion, it has been clearly demonstrated in numerous AFR articles that ISX's services were used to launder money by very shady international people/entities/companies/corporations that had previously been banned from operating in various countries due to their various crimes including fraud.  The reality is that ISX consistently framed the Visa suspension as being a dispute which was in the progress of being sorted out, rather than that they had been permanently removed from the Visa network, and that Visa's decision was final.  They clearly did not accept Visa's decision, and therefore chose not to disclose it.  And that clearly is yet another breach of the ASX listing rules.  Further, ISX chose not to be honest about the situation with the ASX when asked about it.  ISX clearly did not know that the ASX already knew the answers because they had been provided with them by ASIC.  The ASX have yet again been able to easily prove that ISX management do not respect or obey the ASX listing rules, and so therefore have no place being listed on the ASX.

The final and permanent termination of ISX's association with the Visa network (by Visa, based on AML & Risk concerns)  IS  market sensitive information, and SHOULD have been disclosed to the market (in an ASX announcement by ISX) in a timely manner.  And it wasn't.

Yesterday's announcement from the ASX ends with:  

ISX’s responses to the further query letters

ISX has advanced a number of reasons as to why it has not responded directly to the July Query Letter, the August Query Letter and questions 3a) to d) of the September Query Letter. ASX has considered, but does not accept, ISX’s purported reasons for failing to properly respond directly to those matters. This includes, without limitation, ISX’s argument that the release of the Additional Materials to ASX and ASX’s use of the Additional Materials was unlawful and that use of the Additional Materials would involve the disclosure of personal information of ISX customers in breach of UK and European privacy laws. The Additional Materials were released to, and used by ASX, as permitted under section 127 of the ASIC Act, and the Additional Materials do not include any personal information of ISX customers provided in breach of any applicable privacy laws relating to the protection of personal information.

ISX has also submitted that it is not required to respond to the Query Letters because the matters the subject of the Query Letters are addressed by the findings of the Independent Expert. ASX does not accept this view given the limited scope of the review and the limited findings made by the Independent Expert in relation to the Visa suspension and termination and the fact that key findings were made on the basis of representations made by ISX that were not independently verified by the Independent Expert.

In ASX’s view, and as advised to ISX, ISX has failed to properly respond to the July Query Letter, the August Query Letter and questions 3a) to d) of the September Query Letter, in each case in breach of Listing Rule 18.7. These breaches of Listing Rule 18.7 will operate as a further impediment to the reinstatement of ISX’s securities to quotation on ASX.

Further, as a result of ISX’s failure to properly respond to the Query Letters, ASX has not been able to satisfy itself that ISX has been complying with the Listing Rules in relation to ISX’s disclosures to the market about its relationship with Visa, and in particular Visa’s suspension and termination of ISX’s participation in the Visa network. ASX is now considering what further action should be taken in relation to these matters.

--- end of excerpt ---

It's just further nails in the ISX coffin really.  If people thought the ASX was unfairly targeting ISX, hopefully those people are beginning to realise that there were very good reasons for the unusually strong focus that the ASX have had towards ISX, and part of that has to do with information and documents supplied to the ASX by ASIC, the Australian financial market regulator, who have their own concerns about ISX clearly.

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#Positive ASX Announcements
Added 5 months ago

(I have no idea what a straw is). This is a comment on the UK issued AEMI that was announced today (14Sep20). An entry was done saying that for ISX but there was no reply option on that entry.... so here it is.

ISX CEO previously suggested a 2nd EU licence was about to happen in June20 or July20 in the FinMagnet? FinMarkets? online publication. From that single mention it then went very quiet on that topic until today with the AEMI.

My observation is that various mechanisms seem to telegraph future events for this company from the CEO (shareholder emails, twitter posts, online interviews). This is the point of my message as a note to myself for possible future trade events (if there are any future trades).

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#Positive ASX Announcements
Added 5 months ago

14-Sep-2020:  UK Financial Conduct Authority approves AEMI

This appears to be a rare piece of positive news for ISX.

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#ISX vs ASX
Added 6 months ago

08-Sep-2020:  Clayton Utz: Continuous Disclosure Independent Expert Report & Supplementary

Plenty of room for improvement found by Clayton Utz in ISX's policies and procedures.  They have made 9 recommendations on ways ISX can and should improve those policies and procedures - which can be found on pages 4 and 5.

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#ISX vs ASX
Added 6 months ago

01-Sep-2020:  ISX damages claim increases by $200.7m to over $464.7m

iSignthis Ltd (“ISX”) has now filed in the Federal Court of Australia further and better particulars of the damages which it claims against ASX Limited (“ASX”).

The damages of $200.7 million(*) relate to ASX’s decisions to suspend, and continue to keep suspended, trading in ISX’s shares. These damages are in addition to the $264 million(**) already claimed by ISX against ASX for misleading or deceptive conduct in breach of section 1041H of the Corporations Act 2001 (Cth), which arises from ASX’s publication of the “Statement of Reasons”.  Accordingly, ISX’s claim against the ASX now stands at a total of $464.7 million.(*)

As part of its claim, ISX contends that in deciding to suspend, and continue to keep suspended, trading in ISX’s shares, ASX has failed to act in good faith and/or honestly and fairly and/or reasonably in exercising its powers under the Listing Rules.

Mr Karantzis, CEO of ISX, said “By any measure, the increase in damages claimed by ISX and the impact of any adverse finding continues to make this a high stakes and material case for the ASX, as the impact goes beyond monetary damages and challenges ASX’s conduct and suitability to operate a market.

"The ASX has to substantiate its reasons for the suspension of iSignthis Ltd, based upon the facts as they were known to it on the 2nd October 2019. To date, we still have seen no evidence of any investigation into “price volatility” by the ASX, nor how price volatility could have been the reason for suspension.”

“It would seem inconceivable under the ASX’s own Listing Rules that the board of the ASX would consider this action as ‘not material’, especially given both the quantum and the impact any contravention of s1041H of the Corporations Act would have on the ASX’s Australian market operators license.”

Notes:

  1. (*) Based on today’s AUD$ exchange rates against foreign currencies (€ and GBP)
  2. (**) Based on AUD$ exchange rates against foreign currencies (€ and USD$) as at 21st August 2020

--- ends ---

 

Yawn!

Yep Johnny, you're going to bring down the ASX with this one.  They'll definitely lose their Australian market operators license, and that'll leave you in the box seat, as the interim CEO of NSX to - along with Chi-X - mop up the whole Australian listed company market.  I can see the headlines now...

What a rediculous waste of ISX shareholders money this is - particularly when the courts order ISX to pay the ASX's costs as well as their own.

JK has backed himself into a corner and he's trying to appear a lot scarier than he really is.  I've seen stray cats do the same.

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#LHC Capital & ISX
Added 8 months ago

02-July-2020:  Thanks to @Pete2Peer for their straw on the Risks around Etherstack plc (ASX: ESK) this morning.  I found that AFR article on ESK very interesting and it certainly involves John Karantzis from ISX and the boys at LHC Capital:

Etherstack pump straight from iSignthis playbook

Joe Aston, AFR Columnist, Jul 1, 2020 – 11.25pm

Before Tuesday, professional investors hadn’t even heard of wireless radio technology developer Etherstack. Its market capitalisation was $15.9 million. A grand total of 6.5 million of its shares had changed hands in the nearly eight years since it listed on the Australian Securities Exchange.

On Tuesday alone, 19.6 million Etherstack shares were traded. Its share price opened at 18¢ and closed at $1.75, up 872 per cent. Who said Australia doesn’t have Robinhood traders?

This was all seemingly down to the company’s announcement half an hour before the market opened (and marked as “price sensitive”) that it had “entered a global teaming agreement with Samsung Electronics to deliver next generation Mission Critical Push To Talk (MCPTT) over LTE solutions to telecommunications carriers and governments across the globe.”

Which sounded vaguely lucrative. Yet the announcement contained no reference to the revenue this partnership is expected to generate – a fairly dependable indicator that it won’t be generating any.

Lending the whole performance a powerful sense of culmination was the bashful admission – almost an afterthought! – from chief executive David Deacon that “Etherstack has been quietly working with Samsung over the past 12 months…”

But nearly three hours later (after a pause in trading imposed by the bourse), Etherstack released “additional information”, elaborating that it “derives revenues from this global agreement in the future when Samsung and Etherstack together supply technology to Samsung’s customers”. So theirs is an agreement to develop a product both parties hope they might then sell – when and if it exists. An outright non-event.

The announcements – and the market’s ecstatic reaction to them – invited unhappy comparisons to GetSwift, which in November 2017 announced a “deal” with Amazon, had its shares frozen by the ASX on the basis the announcement was too vague, then saw its stock nearly double. Ten days later, GetSwift raised $75 million issuing new shares.

In fairness to Etherstack, its announcement at least quotes a junior Samsung executive, Wonil Roh, and was also released on Samsung’s own website. The Federal Court heard two weeks ago that GetSwift announced its Amazon trial despite Amazon explicitly asking it not to.

But does Etherstack now, with a heavy heart, turn to the market for fresh capital? Its balance at March 31? A mere US$474,000 ($687,000). Meanwhile, its share price closed at $1.04 on Wednesday, holding on to more than half of Tuesday's gains. So that would be a “yes” to the capital raising.

The moral of the story here is that good things happen to good people. By happy accident, Etherstack’s “news” came on the final day of fiscal 2020, meaning its institutional investors will mark the performance of their shareholding in the company to that $1.75 closing price (it started FY20 at 22¢). We should say Etherstack’s institutional investor (singular), being LHC Capital – the extremely lively hedge fund of Marcus Hughes and Stephen Aboud. Nobody can ever accuse them of index hugging.

In August, LHC paid $2 million for 6.7 million convertible notes (or 30¢ per unit). At June 30, they were worth $11.7 million. And on Tuesday, LHC converted half of them.

This stunning turn will at least partially obscure the epic value destruction Hughes and Aboud caused their fund investors by allocating more than 20 per cent of LHC’s total assets to shadowy fintech iSignthis, which we now know became an international money-laundering colony. Its shares have been suspended from the ASX since October and, in protest, the company is now seeking to delist.

Which perfectly explains how LHC ended up lending to this tadpole. Listed among Etherstack’s Top 20 shareholders is none other than iSignthis’ truly unique chief executive John Karantzis. Through one of his various entities in the British Virgin Islands, Karantzis controls 410,000 shares now worth $426,400.

Deacon and Karantzis were classmates in electrical engineering at the University of Western Australia. Etherstack and iSignthis share a common non-executive director, in Scott Minehane. And iSignthis even loaned Etherstack $1 million in 2018.

Etherstack’s is a most brazen exercise in calf-fattening on market day. Which makes Karantzis’ association so fitting – given the outlandish route he took to hit performance targets for 337 million new iSignthis shares in the first half of 2018.

As we said, good things happen to good people. Now for that capital raising…

--- ends ---

Bear77 note:  While recovering from my recent total hip replacement surgery I took a call from Martyn McCathie, Head of Operations at Wilson Asset Management, about some feedback I had given to FGX about them continuing to use LHC Capital as one of FGX's fund managers.  I have invested some of my children's money into FGX and I'm not comfortable with some of that money being managed by LHC Capital, and I don't think LHC Capital is a good fit as a capital manager for a fund like Future Generation Australia who have high ideals and a charitable focus (donating 1% of their FUM every year to children's charities, particularly supporting children at risk and disadvantaged children, while charging zero management or performance fees).  Martyn, like Louise Walsh, works out of the WAM head office, but spends a lot of time working for FGX and FGG - the two Future Generation Funds - FGG being the global fund and FGX being the Australian-focused fund.  Geoff Wilson was the founder of both FG funds and his company (WAM: Wilson Asset Management) supports them in many ways including by allowing their own staff to assist the FG Funds and also by providing FG staff with an office to work in and covering those expenses.  Martyn is very involved in the FG funds and said that they are aware of the concerns around LHC and are keeping a close eye on developments.  I got the feeling that I'm not the first person to have contacted them about similar concerns regarding FGX's relationship with LHC Capital.  While I received no clear indication about what action FGX might or might not take regarding LHC, I certainly got a sympathetic ear, and I do note that FGX have cut a couple of their fund managers loose in prior years and added a couple more.  The reason given at the relevant roadshow for dropping fund managers in the past was persistent underperformance, and while LHC have underperformed massively recently mostly due to their huge exposure to ISX, I don't think you could yet call them consistent underperformers.  Morally bankrupt perhaps, but not consistent underperformers - yet.  However, one of FGX's claims is that they use the "best" boutique fund managers to manage their money, and I certainly don't rate LHC as being one of Australia's "best" fund managers.  While there are no guarantees, I do look forward to hearing that FGX have quietly dropped LHC Capital from their list of FGX fund managers.  I don't think FGX should be associated with them from either a financial risk standpoint (risk of losing capital) or from a reputational risk standpoint (risk of losing credibility).  Watching closely.

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#"Ownership Matters" Report
Last edited 10 months ago

12-Sep-2019:  https://www.afr.com/markets/equity-markets/isignthis-plunges-on-governance-concerns-20190912-p52qjc

iSignthis plunges on governance concerns

Vesna Poljak, Yolanda Redrup and Jonathan Shapiro,  Sep 12, 2019 – 6.23pm

The key architects behind $1 billion ASX payments darling iSignthis were the recipients of a stock windfall worth more than $500 million at this week's prices, but the difference between collecting this award and missing out came down to just $1,347 in revenue.

Once the award was claimed, iSignthis' top-line subsequently crashed the next half - a fact pointed out in a widely discussed governance report amid huge interest in the stock.

On Tuesday, the stock hit a high of $1.76, but only two days later it had suffered a 43 per cent fall to 93¢. An Ownership Matters report, sighted by AFR, examined the origins of the performance shares and the firm's early compensation arrangements.

iSignthis' payments network is similar in principle to that of PayPal, but is targeted at companies that need to comply with anti-money laundering regulations. It also offers electronic money deposit taking and is an issuer of electronic money in the European Union.

On Monday it declared that annualised gross processing turnover volume reached $1.1 billion in August. iSignthis' spectacular ascent means it will be promoted to the S&P/ASX 300 Index on September 23.

The payments technology company has been backed by some of the smartest hedge funds in Australia, including Marcus Hughes and Stephen Aboud's LHC Capital, which was the best long-short strategy over 2018-19, and Regal Funds Management.

On August 29, 2018, 336.6 million shares were issued after the company struck performance hurdles referred to as classes A, B and C. These date back to when the business was trading as Otis Energy, the company which acquired iSignthis BV and subsequently transformed itself into a digital identity phenomenon.

Performance hurdles were required to be met within three years of completing the transaction, based on annualised revenue over a six-month reporting period, or the shares would expire worthless.

The hurdles were broken down as class A: 112.2 million shares if it hit $5 million; class B: 112.2 million shares if it hit $7.5 million; and class C: 112.2 million shares if it hit $10 million. It was later clarified in the 2015 annual report that half-year revenue of $2.5m will be sufficient to satisfy milestone A; $3.75m for milestone B; and $5m for milestone C.

For the first-half of 2017-18 it reported revenue of only $826,912. On the same day, it announced plans to change the end of financial year to December 31. That had the effect of changing its first-half balance date to June 30. At this point, none of the milestones had been met.

But on June 22, 2018, iSignthis told the market it had blitzed through the A and B hurdles:  cash receipts for "half 2" were above $3.75m. Hurdle C - the $5m - was still unclear - dependent upon "end of financial year June 2018 invoicing".

The next accounts showed revenue for the six months from January to June 2018 was in excess of $5.5m - all three milestones had now been met.

More specifically it was $5,512,057 based on 12-month revenue of $6,338,969, including interest (implied as $32,191 for the half) and an R&D tax concession ($478,519 disclosed only for the 12 months). Removing the benefit of the R&D grant would mean only clearing the $5m mark by $33,538 and excluding interest income the hurdle was only cleared by $1,347.

In the next reporting period, now the 2018 full-year (reported in February) revenue was $6,623,413. That implies a half-on-half plunge to $1.1m.

But CEO & MD John Karantzis told the AFR that changing the reporting timeline of the company had not helped the vendors to meet their performance hurdles and its fall in revenue had been because one of its service providers fell over. Subsequently the company invested in building its own payments network.

“We contracted parties, started servicing clients, but we were reliant on third party networks (other banks). Think of us as a ‘virtual’ provider at that point in time, just like Virgin mobile was on the Optus network back in the day,” he said.

Supporters of ISX underscored that such information was already in the public domain.

LHC's Hughes, which invested in the company early, said that he was prepared to take the good with the bad when buying into ISX and was unperturbed by the issues recently raised.

“All the information was publicly discoverable and we were aware of it when we did our due diligence prior to making our investment.”

He said he was extremely happy with the performance of the business which he said was highly cash generative, and the forthcoming 4C quarterly statement to be released in October would provide an important validation of the company’s progress.

[In early March 2020, LHC Capital told their investors that they had now written down the value of their 89.4 million ISX shares to just 7.7 cents each]

[full article]

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#ISX vs ASX
Last edited one year ago

09-Feb-2020:  Update:  On 22-Jan-2020, ISX published a "Letter To Shareholders" which outlined an overview of the court action they have initiated against the ASX over (in part) their continued suspension from trading.  They explained that as the matter was now before the court, all further information would have to be accessed via the court's website's "List of Orders" page for that case.  

As the first hearing was held on Friday (7-Feb-2020), the first orders have now been published.  Basically, (1) ISX have to provide further details (by Feb 14) to the ASX, as requested by them (ASX), presumably regarding ISX's claims against the ASX, (2) the ASX have to file and serve their defence (by Feb 28) of the claims made by ISX, and (3) a further case management hearing is currently scheduled to take place on March 13.

On 30-Jan-2020, the ASX released this "Update on Suspension from Official Quotation" regarding ISX, in which they explained that:

  • Since suspending trading in ISX shares, the ASX has issued four formal query letters to ISX using its power under Listing Rule 18.7 to request information, documents and explanations to enable ASX to be satisfied that ISX, as a listed entity, is and has been complying with the Listing Rules.
  • Having carefully reviewed ISX’s responses to these query letters, on 6 December 2019, ASX sent to ISX a draft of ASX’s proposed findings and proposed actions.  ASX gave ISX until the close of trading on Friday 10 January 2020 to provide any representations it wished to make on the draft findings.  On 8 January 2020, at ISX’s request, ASX granted ISX an extension to the close of business on Friday 24 January 2020 to provide its representations.
  • ISX responded to ASX’s draft findings on Friday 24 January 2020. ASX is currently considering ISX’s response.
  • Given this matter is now before the Court and the first case management hearing in the Proceedings is scheduled for Friday 7 February 2020, ASX has agreed not to publish any findings prior to that hearing.
  • Further, since this matter is now before the Court, ASX will not be responding individually to any further communications concerning the Suspension.  If the need arises to update the market on any material developments regarding the Suspension, ASX will do so via a market announcement. 

It's interesting.  One could come to the conclusion that ISX may have shot itself in the foot, metaphorically speaking, in that if the ASX were now in a position to state that they were satisifed with ISX's formal response to the ASX's proposed findings and proposed actions concerning their investigation into the matters outlined (and there clearly isn't any evidence for or against that hypothetical eventuality it must be noted, we're just spitballing and hypothesising here), then the ASX may now find themselves in a position where they have to defer any further action (such as the potential reinstatement of trading in ISX's shares) until the natural completion of the court action that the ISX has initiated against them (specifically concerning the trading suspension).

What I mean by that is that it looked like the ASX investigation into ISX was either complete or very near completion, and they had presented their proposed findings and proposed actions to ISX and requested ISX respond to those findings and proposed actions - and ISX have now done so, and neither the ASX or ISX can comment on any of the details of that now, because the matter is before the court.

Interesting...  As we know, court cases can drag out for a Loooooooooong time...

Meanwhile ISX has plenty of time on its hands to respond to "unfair" media targeting - via further letters to their shareholders:

23-Jan-2020:  Letter to Shareholders re SMH and the Age

06-Feb-2020:  Letter to Shareholders

This may be a bit of oversimplification, but it seems to me that Karantzis wants on the one hand to say that ISX's KYC tech (and systems) are critical tools to allow AFSL-holders (licenced financial services providers) to avoid money laundering and the funding of terrorism (etc.), but on the other hand to say that while they provide those tools to their customers (AFSL holders), they rely on ASIC to vet those customers (if they hold an AFSL, they're good to go, from ISX's perspective) and ISX have no visability or interest in what the end users are buying or paying for when transactions take place.  ISX are just there to assist with establishing whether the end-user is entitled to use the credit card that they are attempting to use at that point in time.

KYC = Know Your Customer, and KYCC=Know Your Customer's Customer, but ISX claim to possibly not know their own customers much beyond the point of knowing that they hold an AFSL, and their KYCC doesn't extend to purchase details - but rather just trying to ascertain if the person attempting to make the transaction is (a) who they say they are, and (b) is entitled to use that card.

It's easy to understand why ASIC and the ASX have had concerns with ISX.

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