Financial Analysis 1Q20
- 1Q20 is the Company's 4th quarter of positive operating cash flows, +$1.78m for the quarter.
- Cash balance at end of quarter was $17.5m in consolidated Group Cash, broadly flat from $17.7m as at 31 December 2019.
- 1Q20 receipts from customers were down 33% from 4Q19 to $10.5m due to the impacts from COVID-19, combined with seasonality in some merchants' volumes and other issues mentioned below.
- Client funds held are now over $100m, up from $96m as at 31 December to $101m as at 31 March 2020.
- The Company made a $4.2m investment in NSX Limited during the quarter for a 12.96% stake, per our announcement dated 20/2/2020.
- In the Quarter the Company completed the acquisition of UAB Baltic Banking Service for a total cost of EUR75k cash and 1,394,533 ordinary ISX shares.
- Administration and corporate costs were up circa $430k in the quarter, due mainly to the ASX related legal proceedings.
- Cash flows in the quarter also include a $3.2m cash contribution from the joint venture partner, as previously announced.
Business Activities 1Q20
- Probanx executed a A$4.5m agreement to develop a Delivery versus Payment (DvP) Platform for the NSXA, to be delivered over 24 months (excluding any COVID Delays).
- Probanx mobilised key personnel to meet its obligations under the ClearPay JV agreement.
- Integrated UAB Baltic Banking Service team under "Probanx" banner.
- UAB Baltic Banking Service's SEPA Core and SEPA Instant services now integrated with Probanx COREPlus system. Available as a service by ISXPay under our Bank Institution Code (BIC) of ISEMCY22XXX.
- SEPA Instant also now available as a SaaS module to Probanx COREPlus third party financial institution customers.
- Injunctive relief was sought against the Australian Securities Exchange (ASX), with the Federal Court hearing the matter on the 16th April 2020. Judgment is scheduled for 30th April 2020.
- Enquiries for Probanx CORE banking and network products increased, with several (individually non-material) agreements executed with EU regulated entities.
- Flykk(R) app approved by Apple Inc, with release to worldwide app store expected during May/June 2020. Refer to www.flykk.it for details.
- Focus on enhancing AML compliance, including:
o Partnership agreement executed with Lexis Nexis, allowing the incorporation of Lexis Nexis data into our systems for resale to third parties consuming our Paydentity service or Probanx solutions.
o Paydentity(TM) cascade extended to include BankID from Norway and Sweden, with Finland under integration, to complement the previously integrated 3rd party instant electronic verification sources, further expanding our 'instant' KYC(C) capability. The Company's patented Payment Instrument Verification (PIV) processes continue to be utilised where instant electronic verification methods are not available, reducing KYC(C) from a manual process that takes days, to a process that is online and takes minutes. PIV relies upon verification of bank accounts and regulated cards.
- Integration completed to two key gaming platforms, extending our platform integrations beyond the exchange and trading platforms integrated during 2018.
- Due to the COVID-19 lock down requirements of Federal and State governments in Australia, and Governments of Cyprus, Lithuania, the Netherlands, and the United Kingdom, ISX, similar to other companies, implemented work from home and other operational strategies, as part of its Pandemic Policy and Business Continuity Plans, to mitigate the effects on staff and operations of the spread of the virus in the wider community.
- COVID-19 impacted March revenues indirectly, with almost 3 weeks of processing time being lost. The Company failed to process transactions across a number of card schemes as a consequence of either the scheme itself being technically or commercially un-responsive, arrangements with the schemes being subject to further commercial or due diligence requirements, or the Company itself changing its systems without taking into consideration the impact on the scheme. By way of example, our PCI DSS certification, despite having been successfully audited and submitted to the relevant scheme on time, was not updated by one of the card schemes, leading to suspension of some processing services.
- Processing to merchants across the Visa network was also suspended for parts of March pending response to Visa re queries on ASX "investigation", concerns re "derogatory media" and the focus on high risk merchants. The Company is providing Visa with information regarding the ASX "investigation" and other matters. Visa has notified that their response times on this matter have been impacted by COVID-19.
- Other COVID-19 impacted matters include:
o Our Tier 1 Australian processing rollout being delayed and will not meet the May 2020 anticipated timetable, due to unavailability of test slots from the major card schemes. This is as yet to be rescheduled but is anticipated to be later in the year.
o SWIFT rollout has also been deferred, until such time as test slots will become available. The Company does not at this stage have visibility on expected dates.
o ASIC has advised that as a direct consequence of COVID-19, consideration of our application under Corporations Regulation 7.2.16 is taking longer than anticipated to assess.
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About iSignthis Ltd
Australian Securities and Frankfurt Stock Exchange listed iSignthis Ltd (ASX:ISX) (FRA:TA8) is the global RegTech leader in remote identity verification, payment authentication with deposit taking, transactional banking and payment processing capability. iSignthis provides an end-to-end on-boarding service for merchants, with a unified payment and identity service via our Paydentity(TM) and ISXPay(R) solutions.
By converging payments and identity, iSignthis delivers regulatory compliance to an enhanced customer due diligence standard, offering global reach to any of the world's 4.2Bn 'bank verified' card or account holders, that can be remotely on-boarded to meet the Customer Due Diligence requirements of AML regulated merchants in as little as 3 to 5 minutes. Paydentity(TM) has now onboarded and verified more than 1.5m persons to an AML KYC standard.
iSignthis Paydentity(TM) service is the trusted back office solution for regulated entities, allowing merchants to stay ahead of the regulatory curve, and focus on growing their core business. iSignthis' subsidiary, iSignthis eMoney Ltd, trades as ISXPay(R), and is an EEA authorised eMoney Monetary Financial Institution, offering card acquiring in the EEA, and Australia.
ISXPay(R) is a principal member of Visa Inc, Mastercard Inc, Diners, Discover, (China) Union Pay International and JCB International, an American Express aggregator, and provides merchants with access to payments via alternative methods including SEPA, Poli Payments, Sofort, Trustly, WeChat, AliPay and others.
UAB Baltic Banking Service, a wholly owned subsidiary of iSignthis Ltd, provides API based access to SEPA Core, SEPA Instant and SEPA business scheme, for neobanks, banks, credit unions and emoney institutions, and provides a bridge to the Central Bank of Lithuania's CENTROLink service.
Probanx Information Systems Ltd (Probanx(R)), a wholly owned subsidiary of iSignthis Ltd, is an international banking software company which has been serving the banking industry since the year 2000 by developing comprehensive banking software solutions to financial institutions around the globe. Probanx offers web-based banking solutions using the latest technology and international standard business rules. Our customers are located on five continents and supported from our technical centres in Europe and Australia.
iSignthis' Probanx delivers core banking software, including a fully comprehensive and versatile banking solution for retail, corporate and private banks, emoney and payment institutions, offering capabilities that up until now were affordable only by large commercial banks.
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