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#ASX Announcements
Last edited 3 months ago

Melbourne, 26th February 2021

iSignthis Ltd (the Company), and its subsidiaries (the Group) are pleased to present theyear ended 31 December 2020 financial statements and Appendix 4E.

The Company is reporting an (unaudited) FY 2020 Net Profit After Tax (NPAT) of circa A$1.4 million for FY2020 (Jan to Dec), with underlying NPAT greater than circa A$4.0m when excluding one off costs.

The one-off costs of circa $2.6m (after tax) that impacted the NPAT include those costs associated with the ASX dispute, including legal fees, compliance costs and costs related to exploring alternative listing opportunities.

During FY2020, revenue from customers grew 21% to $36m, up from $30m in the same period in 2019. This growth was driven by regulated services in Europe, with ISXPay payment processing platform and eMoney revenues representing circa 90% of the Group’s revenues, due to strong customer retention together with new customer acquisition during the year and increased volumes from existing customers during the period.

In the year ended 31 December 2020 the Group’s expenses and other charges (inclusive of foreign exchange gains) increased by 20% or $5.8m to $34.4m, largely due to increased corporate costs and costs to support the Group’s revenue growth.

  • Revenues from ordinary activities up 21.6% to $36,290,517
  • Profit from ordinary activities after tax attributable to the owners of iSignthis Ltd up 20.1% to $1,913,528
  • Profit for the year attributable to the owners of iSignthis Ltd up 20.1% to $1,913,528

Dividends

There were no dividends paid, recommended or declared during the current financial period.

Comments

The profit for the consolidated entity after providing for income tax and non-controlling interest amounted to $1,913,528 (31 December 2019: $1,593,582). The total revenue increased by approximately $6.4 million when compared to last year to $36.3 million. The increase is largely attributable to continuing customer acquisition and increased volumes from existing customers during the year.

Net tangible assets per ordinary security 1.69 vs 1.34 from the previous period.

Details of associates and joint venture entities

NSX Limited Tier1 Securities Exchange 19.22% - $5,512,073

During the financial year 31 December 2020, the Company purchased a 19.22% stake in NSX Limited for $6.02m. During the year, the Company took a $0.5m write down to the investment in NSX Limited, reflecting the Group’s share of net loss of associates for NSX Limited. This investment is accounted for using the equity method.

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#ASX Announcements
Added 3 months 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 5 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 5 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
stale
Added 7 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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#Positive ASX Announcements
stale
Added 8 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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#Unaudited FY20 H1 Accounts
Last edited 9 months ago

28-August-2020:  Appendix 4D and Half Year Accounts

ISX have just changed auditors from Grant Thornton to BDO Audit (they notified the ASX on August 25th of this) thus these Half Year accounts (link above) have not been audited yet.  ISX will utilise the ASIC Relief and the corresponding ASX class waiver, to extend the lodgement deadline for the half year reviewed accounts to ASIC from 75 days to 106 days for the half year end.  The Company will immediately make a further announcement to the market if there is a material difference between 30 June 2020 accounts as published today and the auditor reviewed accounts.

If these accounts stand (after audit), they've done well to eke out a small profit in very trying circumstances - compared to the loss they made in the pcp (half year ended 30 June 2019).  Mind you, it's a $828K profit on $18m of revenue, so their margin was around 4.6%, not great - but better than losing money again.

In other news, also on the 25th (three days ago), ISX announced "that the requisition from a member, Select All Enterprise Ltd received on 23rd May 2020 has been withdrawn. As such the requested general meeting of shareholders will no longer be required."

They haven't given further details, but this appears to be that requisition that required the ISX board to take all available steps to seek removal of ISX from the ASX list and to seek a listing on the NSX.  The ASX have asked them to specify who those requisitioning shareholders were, including who the owners are of "Select All Enterprise Ltd", an entity known to be controlled by ISX's CEO, John Karantzis.  ISX have refused to provide the relevant information to the ASX in a format acceptable to the ASX, probably because in doing so they would have been providing the ASX with evidence that ISX's own CEO (and largest shareholder) was requisitioning his own board, via a controlled private company, to seek to be delisted from the ASX, something that the ASX are almost certainly going to do anyway at some point, but that John Karantzis doesn't want to be seen as pushing for considering that he is suing the ASX for damages at this point, and his claim would possibly carry more weight if he was kicked off the list, rather than asking to be removed.  He keeps digging holes, and then yelling out for larger shovels.  Perhaps a backhoe?

The day before that (24th August), they sent this to the ASX announcements platform:

Incorrect and Misleading Article by the Australian Financial Review

Melbourne 24th August 2020 : iSignthis Ltd (the “Company”) has been made aware of a misleading article published in todays’ Australian Financial Review.

The article was authored by gossip bloggist, Mr Joe Aston, and referred to a company that is not a customer of iSignthis, and with which iSignthis has not ever had a relationship.

The iSignthis customer referred to in the recent statement of claim at paragraph 73 in our Federal Court case VID1315/20191 against the ASXL Ltd is a different company, with a different website address, and is a licensed crypto exchange under the EU regulatory regime.

The company referred to in Aston’s blog is a Vanuatu FX or CFD dealer, and has no relationship to iSignthis or the iSignthis customer, which is an Estonian exchange.

Mr Aston has again not fact checked his article / blog with the Company.

The Company will be contacting the publisher today.

--- ends ---

On August 26th (two days later), the AFR replied with this:

https://www.afr.com/rear-window/isignthis-tries-fails-to-distract-from-scam-client-20200826-p55pj6

AFR - Rear Window:  iSignthis tries, fails to distract from scam client by Joe AstonColumnist

We can only marvel at the revolutionary audacity of iSignthis.

On Monday we pointed out that the company’s own statement of claim tendered to the Federal Court details its contractual relationship between October 2018 and May 2020 with an international financial scammer, Insight Group OÜ. The services rendered were “in respect of its OlympusMarkets brand”.

iSignthis responded by claiming our column was “based on an egregious error”, that “the article incorrectly identifies OlympusMarkets (olympusmarkets.com) as part of a claim by [iSignthis]” and that “the company that should have been referred to is Insight Group OÜ (olympusmarketss.com) [which] is a licensed Crypto exchange company, registered in Estonia and subject to the EU regulatory regime”.

This is classic John Karantzis, irately accusing us of saying something we never did in order to distract from his own epic embarrassment – this time the humiliation of iSignthis pleading in court proceedings that it was banking yet another client of international disrepute.

The link between Insight Group OÜ and “its OlympusMarkets brand” was first drawn by iSignthis, not us.

And anyone can read our Monday article and see it clearly identifies Insight Group OÜ as being registered in Estonia, and at no point mistakes Insight Group OÜ for olympusmarkets.com (which we wrote is based in Vanuatu). Our article even explained the differences and links between the online variations of this “OlympusMarkets brand”.

It is important to consider that the domain names olympusmarkets.com and olympusmarketss.com were both registered on the same date (October 9, 2018) by the same person who also created olympus-markets.com, insightgroupou.com, insightholdingsltd.com and wisebanccc.com. This is how online scam sites work – when regulators shut one down, the scammers phoenix it across to a barely-different domain name.

It is also noteworthy that ownership of olympusmarketss.com (the derivation that iSignthis on Monday specifically claimed it serviced) only transferred to Insight Group OÜ on May 5, 2020 – the day after Insight Group OÜ terminated its contract with iSignthis. Whoops!

It is also comical that Karantzis solemnly labours the highfalutin status of Insight Group OÜ as “a licenced crypto exchange”, as if a crummy Estonian crypto licence gives it licence to operate a scam!

Karantzis carefully omits to mention that Insight Group OÜ operates scam website wisebancc.com, whose twin wisebanc.com was wound up by German regulator BaFin in April 2019.

As we pointed out on Monday, wisebanc.com shared a notorious Bulgarian payment agent, Orion Service EOOD, with olympus-markets.com.

All of which is a roundabout way of saying we stand by our original story. There was absolutely nothing incorrect or misleading about it.

--- ends ---

This is one of a dozen or so articles published in the Australian Financial Review (AFR), Australia's most reputable finance and business newpaper, over the past 10 or so months about ISX's links to shady companies involved in such things as international money laundering and scams.  The evidence is overwhelming against ISX, but Karantzis keeps claiming it's either fiction, or a witchhunt, or both.  These matters are why neither the ASX or ASIC want ISX trading on a regulated Australian stock exchange.  It is my personal opinion that ASIC would like to see ISX shut down completely, but to date ASIC haven't said much publicly.  However, I think their position has been made reasonably clear.  The ASX have always stated that they are liasing with ASIC on all matters relating to ISX, and the ASX are very confident in their own position, as they should be.  ISX have the heat coming down on them from every direction, but that's what happens when you do business with crooks and scammers, and treat your own shareholders very poorly by gifting hundreds of millions of dollars worth of the company's stock to the CEO and his mates - for nothing - by cooking the books to make it look like they've met some reduced revenue hurdles via the use of one-off bogus contracts, many for websites that never ever went online.

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#LHC Capital & ISX
Added 10 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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#ASX releases findings on ISX d
stale
Added one year ago

Shareholders, I feel your pain.  I hope the perpetrators get wahts coming to them.......

Key takeaways:

"Having careful regard to the information ASX has received from ISX (including the 24 January Submissions 17), ASX remains of the view that ISX has committed a number of significant breaches of the Listing Rules and that ASX is obliged to refer those breaches to ASIC for consideration of enforcement 
action
"

"ASX understands that ASIC’s enquiries into ISX are ongoing"

"For completeness, during the course of its enquiries, ASX uncovered evidence to suggest that ISX may also have breached Listing Rules 3.19A, 3.19B, 4.3A, 4.3D, 4.10.3, 10.11, 12.5 and 19.11A. However, at this stage, ASX has concentrated its enquiries on whether ISX met its obligations under the Listing Rules in relation to the conversion of Performance Shares into the Milestone Shares, given the significance of that matter. "

 Unless the Federal Court orders otherwise,
ASX considers that it is appropriate for ISX’s shares to remain suspended pursuant to Listing Rule 17.3.4 and not reinstated to trading until
? the matters referred to in these statement of reasons are satisfactorily disclosed to the market; 
and 
? acceptable measures are put in place so that the current holders of the Milestone Shares (other 
than those who were bona fide purchasers for value of those shares on-market) are not able to 
sell them
for a reasonable period while ASIC has an opportunity to pursue its investigations and 
to determine whether it wishes to take action against those involved in the issue of the 
Milestone Shares. 
On this last point, ASX would note that the Milestone Shares account for approximately 31% of the 
Ordinary Shares currently on issue and that if ASX were to reinstate ISX shares to trading now, it would 
allow the holders of the Milestone Shares to immediately sell them on-market and walk away with the 
proceeds in circumstances where there are serious questions to be answered about the legitimacy of 
their issue

 

 

 

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#"Ownership Matters" Report
stale
Last edited one year 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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#Bull Case
stale
Last edited one year ago

Despite the argument below. There is no bull case. Going to get absolutely smashed when it is allowed to trade again!

 

Just bought in a week ago after watching from the side lines for many months.

It seems they have indeed reached an inflection point with pretty much all the hard work done in terms of building and getting regulatory approval.

The exciting part of that transcript with Alan Kohler was the comparison to Paypal, but B2B not B2C. If JK (CEO) is to be believed they have hefty patent protection (ie a decent moat) and are the only other player in the Know Your Customer (KYC) space so TAM is potentially astronomical

I really struggle to come to any meanignful valuation with the available data.

In addtion, performance options coming out plus total number of shares is pretty large giving hefty MC.

Next 4C will probably crystallize things and would expect to see a sizeable re-rate if progress is as good as intimated.

 

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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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#Management
stale
Added one year ago

Not sure what to make of this. Independent? Convenient timing given the stoush with ASX.

iSignthis rated “Prime” by ISS ESG

Independent review of corporate governance amongst other things with over 100 criteria. This is a worldwide consultancy doing the review.

https://www.asx.com.au/asxpdf/20191121/pdf/44bsmhp1qnyb5w.pdf

 

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