iSignthis Ltd (ASX: ISX) is accelerating its lawsuit against ASX Ltd (ASX: ASX), claiming the exchange operator unjustly suspended the company's stock.
At the same time, it has announced it's planning to demerge its European subsidiary, effectively splitting the company in two.
Additionally, iSignthis has posted its half-year results for the 6 months ended 30 June 2021.
The iSignthis share price is $1.07, as it has been since 2019.
According to the company's new statement of claim, the ASX suspended its stock without cause and, in doing so, breached the Corporations Act. iSignthis first brought the claim against the ASX this time last year.
Let's take a look at the latest news from the payment and authentication company.
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Demerger of European assets
iSignthis has announced its intention to demerge its subsidiary, ISX Financial EU Ltd.
Under the plan, iSignthis' shareholders would hold 100% of ISX Financial EU following the split. The subsidiary would then probably seek to list on another exchange, giving shareholders the chance to trade its stock.
Following the demerger, iSignthis will hold a $6 million convertible note in ISX Financial EU, 100% of ISX Financial EU's shares, and around $4.3 million in cash.
Additionally, iSignthis notes its legal claim against the ASX as part of its balance sheet. It commented it has the funds to "pursue its Federal Court litigation against ASX, which it will continue to do with vigour."
The company's Cyprus-based non-executive director Christakis Taoushanis has today become chair of ISX Financial EU.
The demerger is dependant on shareholder approval. iSignthis will put it to a shareholder vote at its annual general meeting, which will likely happen in October.
Half-year results
Here's how iSignthis performed over the first half of 2021:
A quick note: all values are converted from euro at the exchange rate at the time of writing.
- $17.29 million revenue, down 7.58% on that of the prior comparable period
- Loss after tax of $607,841. For the first half of 2020 the company recorded a profit of $738,271.54.
- The company paid $1.94 million in legal costs towards its suits against ASIC and the ASX
- Revenue from customers fell 7.58% to $17.27 million
iSignthis stated the drop in customer revenue was due to its move away from card acquiring and towards instant and batched interbank payments and the creation of a multi-rail ecosystem centred on its flykk service.
New statement of claim
According to iSignthis' new statement of claim, the ASX suspended it from the exchange due to "mere suspicion" and representatives of both ASX and ASIC had had a conversation in which they "spitball(ed)" the best method to suspend the company's stock.
iSignthis was suspended from trading pending an ASIC and ASX investigation into its share price's volatility in October 2019. It is still suspended.
iSignthis is also claiming it was treated differently than 13 other listed companies in similar situations. Additionally, it alledges ASX made false representations about the suspension.
The company has lodged its new statement of claim with the Federal Court of Australia.
It's seeking $464.4 million in damages for the suspension.
The company claims representatives of ASIC and ASX spoke on the phone the morning of its suspension. An ASIC representative is said to have stated they were looking into iSignthis' 2018 revenue but it "did not reveal a 'smoking gun.'"
According to iSignthis, ASX's representative stated they'd considered a suspension but didn't have hard evidence. Some participants of the phone call also allegedly noted the suspension was a "major litigation risk".
iSignthis states that, due to the suspension, it has incurred $159,836 of public and media relations costs, fees of $156,815 from an independent expert's review, and has lost commercial arrangements.
