What the Most Recent INX Report Means for Investors

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The INX Digital Company, Inc., the owner of digital asset trading platforms, a broker-dealer, and an inter-dealer broker, announced that the annual report on Form 20-F of INX Limited. (INXATS: INX), containing audited consolidated financial statements for the year ended December 31, 2021, was filed with the Securities and Exchange Commission on May 2, 2022.

Fiscal Year 2021 Financial Highlights

  • Raised $83.6 million in the first-ever registered security IPO on the blockchain
  • Completed Reverse Take Over (RTO) of Valdy Investments with a further equity raise of $39.6 Million CAD/$29.4 US Million and listed INX’s parent company on Canada’s NEO Exchange
  • Listed the INX Token on the INX Securities ATS.
  • Announced Board approval of $5 million buy-back of tokens and/or shares
  • Acquired interdealer-broker ILS Brokers and broker-dealer/ATS Openfinance
  • Qualified to operate as a money transmitter in thirty-eight (38) US states plus Washington D.C. and Puerto Rico
  • Grew employees from 15 to 87

2021 was a pivotal year for INX, as the company completed the world’s first ever IPO of a registered security on the blockchain. The IPO raised $83.6MM from 7,250 retail and institutional investors across 73 countries. The INX token is now listed on the INX Securities ATS (formerly Openfinance).

INX simultaneously completed a reverse takeover of Valdy Investments in Canada, raising a further $39.6MM CAD from selling equity and resulting in the listing of its equity on Canada’s NEO exchange.

In building out its ‘nose-to-tail’ solution for digital assets, INX purchased ILS Brokers, an NFA regulated interdealer broker with 20 years of history trading with 50+ tier 1 and tier 2 banks, transacting over $95 billion in trade volume per year. The company also completed the purchase of the Openfinance broker/dealer and ATS, renaming them as INX Securities.

The purchases enable INX to aid companies seeking to raise capital from their own communities through the minting and distribution of digital securities, which are then able to be listed on the INX Securities ATS.

On the headline, INX reports a cumulative loss of $215MM. However, this number includes a marked-to-market accounting liability to INX token holders of $161.2MM and token warrant liability of $19.8MM. It also includes one-time significant costs associated with the initial token offering (ended April 2021) and Reverse Take Over Transaction, which listed the Company’s on the NEO Canadian Exchange (listed on Jan 24th 2022 NEO:INXD), of $6.8MM. In addition, the amount includes a $10.9MM of share-based payments.

Therefore, our adjusted net loss, which is calculated by subtracting from our net loss these liabilities and expenses, is $16.3MM.

“2021 was an exciting time for our company as we completed two significant financings and listed two separate publicly traded instruments in two separate jurisdictions. The INX community has grown significantly as both token and equity holders share our vision of the digital future. In 2021 we laid the table for the inevitable migration of assets onto the blockchain and in 2022 we look to execute. With considerable updates to our technology and capabilities, we will begin to fire on all cylinders — attracting new users through our soon to be released app, and introducing them to exciting public and private offerings that will join with us their own significant communities.” reported Shy Datika, CEO.

While much of this innovation is extremely optimistic for the future, the token price action has not reflected such optimism. It is currently trading below its open trading price of $0.90, and volume has been lower than usual for two months. Current market conditions certainly play a role in the lack of upside movement. Still, investors should also be aware that the 40% profit share is unlikely to benefit them for the next several years. INX is in a growth and development phase, and it is clear that profit is not a top priority at this time.

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Written and published by Samuel J. Sachs. Follow me on Twitter.

Everything in this report is for informational purposes. Nothing in this report should be taken as financial advice or as an inducement to purchase or sell any security. Nothing in this market report should be used as legal advice. Always do your own research before making any decisions regarding financial transactions of securities.