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iSignthis CEO shrugs off inquiries as cash flows surge
Jonathan Shapiro and Vesna Poljak
Oct 24, 2019 — 5.02pm
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iSignthis chief executive John Karantzis says he and the board are unperturbed by the extensive regulatory inquiry that has led to the company's suspension from trading, as the fintech reported a 40 per cent increase in quarterly cash receipts to $8.3 million.
The update showed that cash receipts had risen from $6.01 million, while operating cash flows increased from $1.35 million to $2 million.
Mr Karantzis, who presented to clients of Goldman Sachs at the broker's Tech Day on Thursday, described the company's outlook as "extremely positive" and said he was dealing with the regulatory inquiry and working to lift the trading suspension.
Many companies in the fintech space were currently subject to regulatory inquiry, he said.
"To date we have answered questions ranging across such diverse subjects as our EU licences, our audited revenue figures and our shareholders to bitcoin, binaries and our old bank," he said.
iSignthis' share price has advanced about 10 times this year, and the business was valued at more than $1 billion this month when it gained entry into the S&P/ASX 300 Index.


However, the stock is suspended from trading after the ASX and the Australian Securities and Investments Commission intervened.
The halt, in place since October 2, came after governance firm Ownership Matters published a report that concluded the company's ownership structure was opaque, and examined the events that led to the issue of performance shares linked to escalating revenue targets.
It has subsequently emerged that Mr Karantzis' brother, Andrew, is a beneficial owner of Red 5 Solutions, the British Virgin Islands company that is the second-largest shareholder.
The Australian Financial Review has since reported that a number of payments into and out of an iSignthis account at failed Danish bank KAB were flagged as suspicious. The transfers, in June and July 2018, coincided with the timing of a final tranche of the total 336 million performance shares being issued to management and remain unexplained.
Mr Karantzis is also defending a legal dispute with early investors over their right to a portion of performance shares.
The company is "actively engaging with the regulators and we are yet to see a question that gives our board or our executive team any cause for concern about our continuous disclosure, our due diligence or our business operations''.
Mr Karantzis said iSignthis was due to respond in detail over the next few days to further queries posed by the ASX, and working to lift the suspension as soon as possible.
"The outlook for the company continues to be extremely positive, with growth prospects in the EU looking favourable well into the future,'' he said.
iSignthis provides authentication, payment and settlement services for mainly online businesses. Its annualised processing transaction volume was $1.9 billion, while merchant service fees averaged 1.25 per cent over the quarter.
"We are very attracted to the economic model of this business, which offers a 'clip the ticket' style revenue model, delivered via scalable software and at very low incremental cost, with the majority of the cost base being fixed in nature," fund manager LHC Capital said in a letter to clients.
The hedge fund, which owns more than 8 per cent of the company, said iSignthis had undergone multiple audits and reviews as part of its integration into the European payments system and acceptance as a principal member of major credit card schemes.