The iSignthis Ltd (ASX:ISX) share price closed 3.59% lower yesterday and has fallen another 3.2% to $1.06 in morning trade, after the company released a six-page response yesterday afternoon addressing issues raised by corporate governance firm Ownership Matters.
iSignthis is dual listed on the Australian Securities Exchange and Frankfurt Stock Exchange and provides automated identity verification and payment authentication services.
What issues have been raised?
In a report to clients last week, governance advisory service Ownership Matters raised multiple concerns about the disclosure, ownership and party transactions of iSignthis.
The report headlined that in order to trigger performance rights, iSignthis had exceeded its 'target C' revenue requirements by a margin of only $1,347 excluding interest and grants. The report also suggests that iSignthis was able to meet the revenue hurdle by changing the balance date from 30 June to 31 December.
In addition, concerns were raised about the company's ownership and limited disclosure. The report labelled the ownership of ISX shares by directors as 'opaque' and examined the origins of 'Red 5 Solutions' the second largest shareholder of iSignthis. The Ownership Matters report also suggested that there was limited disclosure in what drove the material revenue increase for iSignthis in the 6 months to June 2018.
Ownership Matters has maintained that publicly available information was used to compile the report to clients.
After hitting an all-time high of $1.76, the iSignthis share price plunged 43% last week following the release of the report.
How has iSignthis responded?
In a statement to the exchange yesterday, iSignthis refuted the report published by Ownership Matters, declaring that it contained "numerous statements which were false, materially misleading and/or misleading or deceptive."
In the announcement iSignthis explained that all revenue performance hurdles were met. In regard to the third revenue milestone (target C), the company reported that the hurdle was exceeded by $512,057 and confirmed that if interest and grants were excluded the margin would be $1,347.
iSignthis also explained that the reporting period was changed from 30 June to 31 December in order to streamline the company's audit and reporting requirements. On the concerns of ownership, iSignthis maintains that full disclosure of the directors' direct and indirect interests have been disclosed to the market.
The company also responded to concerns about limited disclosure as to what drove material revenue increase. iSignthis reiterated that the company had made 22 separate announcements to the exchange about its revenue progress.
