iSignthis reveals 4C but shares are suspended in the twilight zone

Will iSignthis return to trade?

a woman

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

This morning self-styled 'paydentity' business iSignthis Ltd (ASX: ISX) reported a positive operating cash flow of $1.07 million on sales of $8.3 million for the quarter ending September 30 2019.

On the surface this is a positive result with revenue up 36% on the prior quarter and a 'target' for calendar year 2019 EBIT around $10.7 million (excluding non-cash items).

The company has also stuck to its guidance that annualised EU+AU paydentity ecosystem gross processing transaction volume (GPTV) sits above $1.9 billion.

As at quarter end it had $12.4 million cash on hand including $3.2 million taken in from the issue of share options. 

It has also estimated cash outflows of $13.84 million for the December quarter, with product and operating costs more than doubling on the prior quarter. The outflow figure is apparently gross in excluding operating cash inflows from sales.

It's not specified whether the huge jump in costs is related to its regulatory shake down. 

It's also fair to assume the company has cleared the release of its quarterly 4C cash flow report and investor presentation with securities regulators ASIC and ASX that are both still investigating the business.

The shares have now been suspended since October 2 as the company responds to regulators over its client base, related party transactions, disclosure, and revenue recognition.

Given the amount of detail the regulators have on iSignthis it seems likely (but unconfirmed) a 'whistleblower' or former insider is fuelling the regulators' concerns. 

Assuming, iSignthis does return to trade I would not suggest buying shares on any number of grounds including valuation. 

Motley Fool contributor Tom Richardson has no position in any of the stocks mentioned.

You can find Tom on Twitter @tommyr345

The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

More on Share Market News

A happy young couple lie on a wooden deck using a skateboard for a pillow.
Share Gainers

These were the best-performing ASX 200 shares in March

These shares made their shareholders smile in March thanks to some very big gains.

Read more »

Businessman using a digital tablet with a graphical chart, symbolising the stock market.
Opinions

2 ASX shares I have been buying in 2024!

I’m a believer in the long-term outlook of these stocks.

Read more »

Stock market chart in green with a rising arrow symbolising a rising share price.
Share Gainers

Here are the top 10 ASX 200 shares today

It was a massive day for the ASX 200, with a new all-time high recorded.

Read more »

A man sits thoughtfully on the couch with a laptop on his lap.
Technology Shares

This ASX tech stock rocketed 60% in March! Can it keep on delivering?

After soaring in March, the ASX tech stock is now up 169% since this time last year.

Read more »

Broker Notes

Brokers name 3 ASX shares to buy now

Here's why brokers are feeling bullish about these three shares this week.

Read more »

A young man clasps his hand to his head with his eyes closed and a pained expression on his face as he clasps a laptop computer in front of him, seemingly learning of bad news or a poor investment.
Share Fallers

Why Burgundy Diamond Mines, Clarity Pharmaceuticals, EML, and Zip are sinking today

These ASX shares are ending the week in the red. But why?

Read more »

A young women pumps her fists in excitement after seeing some good news on her laptop.
Share Gainers

Why Mesoblast, Newmont, Pilbara Minerals, and Platinum shares are jumping

These ASX shares are ending the week strongly. But why?

Read more »

a young boy dressed up in a business suit and tie has a cute grin and holds two fingers up.
Opinions

2 of my top ASX 200 shares to consider buying before April

I would happily exchange dollars for these two shares right now.

Read more »