Appendix 4C - quarterly
- Cash Receipts Up 112% quarter on quarter
- Unaudited operating cash receipts more than doubled to $329,000 for the quarter ended 30 September 2017 vs $155,000 in the June quarter
- Transaction volumes continue to grow on an upward trending trajectory
- ISXPay Australia transactional banking services now live - processing, clearing and settling funds to merchants
- ISXPay Europe imminent for 'go live' status.
- iSignthis business model of i) verify, ii) process and iii) acquire, clear & settle to merchants now earning revenue across all segments.
- iSignthis joins the 'Big Four' Australian banks and other major financial institutions as a Principal Member of Visa Inc (NYSE:V), Mastercard Worldwide (NYSE:MA) and JCB International. ISXPay can both acquire card transactions as well as issue cards.
Summary of achievements this quarter include:
- Executed partnership agreement with the largest pan European card acquirer and e-payment services company, Worldline (EPA:WLN). Extends the Paydentity services across the European Union once launched
- Coinify and Blockchain services experiencing further growth, with increasing transaction volumes undertaken in the quarter.
- XM UK continues with a conservative growth trajectory, with further expansion into new Territories anticipated for this quarter.
- iSignthis eMoney Ltd is now a Principal Member of the world's leading card schemes: Visa Inc (NYSE:V), Mastercard (NYSE:MA), as well as JCB International
- First Australian Card Acquiring Contracts executed for retail merchants via the relationship with National Australia Bank (ASX:NAB). iSignthis' ISXPay is now contracted to process in excess of $40m per annum in e-commerce transactions. Immediately following the end of the quarter, the Company announced the addition of another customer, pushing the "book value" of transactions beyond $52m with a net margin of 77 basis points and 23cents per transaction.
- Post the end of the quarter the Company has announced that "live transactional processing" has commenced with BuyCoinNow and Tradefinancial. These merchants will contribute revenue in the current quarter
1.0 BUSINESS UPDATE
The Company is pleased to advise that momentum is building on a number of fronts. Following the end of the European summer and holiday period, the final stages of service integration with a number of existing customers is occurring leading to an increase in transactions being processed and the number of 'live' customers. The flow on effect will mean increased revenues and cash receipts from customers in the coming periods (refer to recent announcements in October 2017 for further details).
The business development focus on new accounts is also increasing now that the effects of new legislation is starting to shape the European merchant landscape and the compliance teams of online regulated merchants are getting a full understanding of what is required in order to remain compliant with the 4th AML Directive. iSignthis expects to be in a position to announce further signed agreements in the next quarter.
ISX is pleased with the diversity of its' customer base, with paying customers live and transacting in an expanding number of industry verticals, offering its range of identity verification, processing and card acquiring settlements services. The sectors in which the Company now offers either compliance and/or transactional banking payment facilitation includes banking, eWallets, Payment Service Providers, FX trading, CFD trading, Binary trading, Bitcoin trading, digital currency, retail e-commerce, online casinos, sports betting and wagering.
This diversity of customers not only provides a level of sector risk mitigation, but also proves the adaptability of the patented Paydentity and ISXPay processes to solve problems for regulated financial industries globally.
2.1 CASH POSITION
At the end of the Quarter, the consolidated group cash balance as reported in the Appendix 4C was $2.535 million (excluding A$400k held as cash on deposit with NAB). The cash usage for the quarter being within our projected usage for business growth, development, marketing and service deployment.
It should be noted that due to the nature of the regulated space in which the Company operates we are required to hold certain funds as security against revenue generating activities. These funds held currently account for in excess of A$1m in different forms such as a term deposit held with the National Australia Bank as security for acquiring services (A$400k) offered to our merchant customers, funds held as collateral for principal membership in the major card schemes (Visa and Mastercard) and a minimum cash balance held in the accounts of subsidiary company iSignthis eMoney Ltd as a requirement of the Central Bank under their licensing conditions.
The nature of the settlement side of the business operations requires adequate funds to be held on deposit in order to process merchant funds through our accounts. The requirement of funds to be held ranges between 2%-3% of the amounts being processed i.e. if iSignthis were to process A$200m in client funds, then the amount of unencumbered cash reserves to be held on the Balance Sheet under bank liquidity regulations would be approximately $5m at 2.5% average.
iSignthis continues to focus on delivering multiple services into its existing service customers and securing additional business development opportunities.
The Company's outlook for the coming quarter includes:
- Operational recurring revenues to commence from at least 5 previously announced and contracted merchant customers, plus new customers announced post the end of the quarter. The Company has announced two accounts now transacting since the closure of the quarter (BuyCoinNow and Tradefinancial).
- The Company has completed integration to the National Australia Bank as part of the previously announced payment facilitation agreement. Discussions are now in place to offer settlement services to existing contracted merchants for their Australian operations as well as securing agreements with new customers in both the regulated and non-regulated industries. As announced on 16 October 2017, Tradefinancial has commenced transacting via the NAB partnership.
- Completing integration with Worldline to offer similar settlement services to EU merchants.
- Completing direct integration to the major card schemes via third party operator Third Data in order to commence direct settlement services in Europe as per the terms of our license with the Central Bank of Cyprus.
- Transaction volumes growth expected to accelerate with the expansion of services to new geographic regions by major customers already announced.
- Operating expenditure to remain largely in line with previous quarters, providing operating leverage as transaction volumes and revenues grow
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About iSignthis Ltd
iSignthis Ltd (ASX:ISX) (FRA:TA8) is a hybrid monetary financial institution and also a 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, electronic money 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 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, PRZ24 and others.
Probanx Solutions Ltd, a wholly owned subsidiary of iSignthis Ltd, provides API based access to CORE Banking solutions, SEPA Core, SEPA Instant and SEPA business scheme, for neobanks, banks, credit unions and emoney institutions, and provides a bridge to the Eurosystem's Central Bank of Lithuania's CENTROLink service.
National Australia Bank Limited