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Form 6-K INX Ltd For: Aug 17

August 17, 2022 2:32 PM EDT

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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

FORM 6-K

 

Report of Foreign Private Issuer Pursuant to Rule 13a-16 or 15d-16

Under the Securities Exchange Act of 1934

 

For the Month of August 2022

 

333-233363

(Commission File Number)

 

INX LIMITED

(Exact name of Registrant as specified in its charter)

 

Unit 1.02, 1st Floor

6 Bayside Road

Gibraltar, GX11 1AA

Tel: +350 200 79000

(Address of principal executive offices)

 

Indicate by check mark whether the registrant files or will file annual reports under cover Form 20-F or Form 40-F.

 

Form 20-F ☒     Form 40-F  ☐

 

Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(1): ____

 

Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(7): ____

 

 

 

 

 

 

Exhibit Index

 

Exhibit No.   Description
     
99.1   Unaudited Consolidated Interim Financial Statements for the period ended June 30, 2022
99.2   Management’s Discussion and Analysis of Financial Condition and Results of Operations for the three and six months ended June 30, 2022
99.3   Press Release dated August 15, 2022: The INX Digital Company Reports Second Quarter 2022 Update and Financial Results

  

1

 

 

SIGNATURES

 

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

 

  INX Limited
     
Date: August 17, 2022 By: /s/ Shy Datika
   

Shy Datika

President and CEO

 

 

2

 

 

Exhibit 99.1

 

 

 

THE INX DIGITAL COMPANY INC.

 

(FORMERLY: VALDY INVESTMENT LTD.)

 

CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS

 

AS OF JUNE 30, 2022

 

U.S. DOLLARS IN THOUSANDS

UNAUDITED

 

INDEX

 

  Page
   
Condensed Consolidated Interim Balance Sheets F-2
   
Condensed Consolidated Interim Statements of Comprehensive Income (Loss) F-3
   
Condensed Consolidated Interim Statements of Changes in Equity F-4 – F-5
   
Condensed Consolidated Interim Statements of Cash Flows F-6
   
Notes to Condensed Consolidated Interim Financial Statements F-8 – F-29

 

- - - - - - - - - -

 

F-1

 

 

THE INX DIGITAL COMPANY INC.

CONDENSED CONSOLIDATED INTERIM BALANCE SHEETS

U.S. dollars in thousands (except share and per share data)

 

   June 30,   December 31, 
   2022   2021 
   (Unaudited)   (Audited) 
Assets        
Current assets:        
Cash and cash equivalents  $39,988   $24,581 
Cash and cash equivalents held in Reserve Fund   13,690    21,987 
Short term investments held in Reserve Fund   9,561    - 
Digital assets   1,843    - 
Receivable from related parties   32    15 
Trade receivable   715    834 
Derivative assets   319    - 
Customer funds   1,982    4,270 
Prepaid expenses and other receivables   604    2,368 
Total current assets   68,734    54,055 
           
Non-current assets:          
Property, plant and equipment, net   430    160 
Digital assets   448    1,000 
Long term investments held in Reserve Fund   12,773    14,036 
Investments   400    400 
Intangible assets, net   3,977    4,394 
Goodwill   2,294    2,455 
Loan receivable from related parties   -    1,015 
Rights-of-use-assets, net   1,564    987 
    21,886    24,447 
           
Total Assets  $90,620   $78,502 
           
Liabilities and Equity          
Current liabilities:          
Accounts payable and accrued expenses  $2,549   $2,564 
Accrued bonuses   425    606 
Funds due to customers   1,982    4,270 
Lease liability   499    319 
INX Token liability   85,143    282,642 
INX Token warrant liability   2,963    9,814 
Contingent consideration liability   -    400 
Total current liabilities   93,561    300,615 
           
Non-current liabilities:          
Warrant liability   396    - 
Lease liability   1,123    821 
Total non-current liabilities   1,519    821 
Equity:          
Share capital and share premium   54,789    24,198 
Contribution to equity by controlling shareholder   582    582 
Foreign currency translation reserve   (302)   188 
Accumulated deficit   (59,529)   (247,902)
Total equity   (4,460)   (222,934)
           
Total Liabilities and Equity  $90,620   $78,502 

 

The accompanying notes are an integral part of the condensed consolidated interim financial statements.

 

F-2

 

 

THE INX DIGITAL COMPANY INC.

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

U.S. dollars in thousands (except share and per share data)

 

       Three months ended
June 30,
   Six months Ended
June 30,
 
   Note   2022   2021   2022   2021 
      (Unaudited)   (Unaudited) 
Income:                    
Revenues, transaction fees       $887   $267   $2,448   $267 
                          
Operating expenses (income):                         
Research and development        2,019    232    2,272    1,840 
Sales and marketing        1,819    1,318    4,070    4,227 
General and administrative        6,005    14,037    7,711    19,820 
Fair value adjustment of INX Token warrant liability to employees and service providers        (3,672)   (318)   (7,370)   (318)
                          
Loss from operations        (5,284)   (15,002)   (4,235)   (25,302)
                          
Gain (loss) on INX Tokens issued   7    78,224    (1,460)   196,269    (1,460)
Finance income        4,144    5    3,782    22 
Finance expense        (119)   (132)   (1,485)   (25)
Listing expenses   3    -    -    (5,875)   - 
Income (loss) before tax        76,965    (16,589)   188,456    (26,765)
Tax expenses        (83)   (123)   (83)   (123)
Net income (loss)        76,882    (16,712)   188,373    (26,888)
Amounts that will be or that have been reclassified to profit or loss when specific conditions are met: specific conditions are met:                         
Adjustments arising from translating financial statements from functional currency to presentation currency        406    (6)   490    (6)
                          
Total comprehensive income (loss)       $77,288   $(16,718)  $188,863   $(26,894)
                          
Earnings (loss) per share, basic       $0.38   $(0.10)  $0.93   $(0.17)
Earnings (loss) per share, diluted       $0.36   $(0.10)  $0.88   $(0.17)
Weighted average number of shares outstanding, basic        204,091,805    161,068,541    202,079,674    154,568,436 
Weighted average number of shares outstanding, diluted        215,747,326    161,068,541    214,007,995    154,568,436 

 

The accompanying notes are an integral part of the condensed consolidated interim financial statements.

 

F-3

 

 

THE INX DIGITAL COMPANY INC.

CONDENSED CONSOLIDATED INTERIM STATEMENTS OF CHANGES IN EQUITY

U.S. dollars in thousands (except share and per share data)

 

   Ordinary
shares
   Share
premium
   Contribution
to equity by
controlling
shareholder
   Foreign
currency
translation
reserve
   Accumulated
deficit
   Total
equity
 
                         
Balance as of January 1, 2022   167,331,410   $24,198   $           582   $188   $(247,902)  $(222,934)
Net income   -    -    -    -    188,373    188,373 
Other comprehensive loss   -    -    -    (490)   -    (490)
Issuance of shares for reverse takeover transaction   5,124,740    4,372    -    -    -    4,372 
Issuance of private placement shares, net of issuance costs   31,680,000    25,336    -          -    -    25,336 
Share based compensation to advisors   -    1,834    -    -    -    1,834 
Share based compensation   -    (926)   -    -    -    (926)
Repurchase of shares   (56,500)   (25)   -    -         (25)
Balance as of June 30, 2022 (unaudited)   204,079,650   $54,789   $582   $(302)  $(59,529)  $(4,460)

 

The accompanying notes are an integral part of the condensed consolidated interim financial statements.

 

F-4

 

 

THE INX DIGITAL COMPANY INC.

CONDENSED CONSOLIDATED INTERIM STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY

U.S. dollars in thousands (except share and per share data)

 

   Ordinary
shares
   Share
premium
   Receivable on
account of
shares
   Conversion
option of
convertible
Loans
   Reserve from
transaction
with
controlling
shareholder
   Foreign
currency
translation
   Accumulated
deficit
   Total
equity
 
                                 
Balance as of January 1, 2021   143,038,761   $10,884   $(9)  $              46   $     -   $    -   $(32,667)  $21,746)
Total comprehensive loss   -    -         -        -    -    -    (26,888)   (26,888)
Other comprehensive loss   -    -    -    -    -    (6)   -    (6)
Conversion of CLA   10,029,193    194    -    (46)   -    -    -    148 
Payment of shares receivable   -    -    9    -    -    -    -    9 
Conversion of SAFE   3,980,843    1    -    -    -    -    -    1 
Exercise of SAFE warrant   4,025,371    718    -    -    -    -    -    718 
Equity component of transaction with controlling shareholder   -    -    -    -    582    -    -    582 
Share-based payment   -    7,660    -    -    -    -    -    7,660 
Balance as of June 30, 2021 (unaudited)   161,074,168   $19,457   $-   $-   $582   $(6)  $(59,555)  $(39,522)

 

The accompanying notes are an integral part of the condensed consolidated interim finacial statements.

 

F-5

 

 

THE INX DIGITAL COMPANY INC.

CONDENSED CONSOLIDATED INTERIM STATEMENTS OF CASH FLOWS

U.S. dollars in thousands (except share and per share data)

 

  

Six months ended
June 30,

 
   2022   2021 
   (Unaudited) 
Net cash flows from operating activities:        
Net income (loss) for the period  $188,373   $(26,888)
Adjustments to reconcile net income (loss) to net cash used in operating activities:          
Share-based payment   (926)   7,660 
Reverse takeover transaction   5,875    - 
Net loss on investments held in Reserve Fund   1,163    - 
Depreciation of equipment and right-of-use-assets   256    33 
Amortization of intangibles   126    19 
INX Token based compensation   (6,851)   4,553 
Net gain on warrant liability to advisors & underwriters   (3,859)   - 
Net (gain) loss on INX Tokens   (196,269)   1,461 
Net loss on digital assets   386    95 
Purchase of derivative assets   (319)   - 
Interest on lease liabilities   (50)   1 
Changes in operating assets and liabilities:          
Decrease in account receivables   119    362 
Decrease (increase) in prepaid expenses and receivables from related parties   1,747    (12)
Increase (decrease) in accounts payable and other payables   (147)   1,630 
Decrease in accrued bonuses   (181)   (905)
           
Net cash used in operating activities  $(10,557)  $(11,991)
           
Net cash flows from investing activities:          
           
Purchase of digital assets   (1,677)   (676)
Decrease in Reserve Fund, net   (1,164)   - 
Increase in loan receivable from related parties   (218)   - 
Decrease in funds held by a related party, net   -    (6)
Net cash used in business combination   -    (5,232)
Investment in private placement   -    (150)
Proceeds received from sale of digital assets   -    50,985 
Purchase of equipment   (318)   (116)
           
Net cash used in investing activities  $(3,377)  $44,805 
           
Net cash flows from financing activities:          
Proceeds from issuance of SAFE   -    720 
Proceeds from issuance of INX Tokens   3    31,852 
Proceeds from exercise of INX Tokens   -    11 
Cash from reserve takeover transaction   464    - 
Proceeds from private placements   29,590    - 
Repurchase of common shares   (25)   - 
Repayment of contingent liability   (400)   - 
Repayment of finance lease liabilities   (291)   - 
           
Net cash provided by financing activities  $29,341   $32,583 
Change in cash and cash equivalents   15,407    65,397 
Cash and cash equivalents at beginning of period   24,581    7,581 
Cash and cash equivalents at end of period  $39,988   $72,978 

 

The accompanying notes are an integral part of the condensed consolidated interim financial statements.

 

F-6

 

 

THE INX DIGITAL COMPANY INC.

CONSOLIDATED INTERIM STATEMENTS OF CASH FLOWS

U.S. dollars in thousands (except share and per share data)

 

   Six months ended
June 30,
 
   2022 
   (Unaudited) 
Significant non-cash transactions:    
Right of-use-asset recognize with corresponding lease liability  $827 
Repayment of loan receivable from related parties  $           1,233 

 

The accompanying notes are an integral part of the condensed consolidated interim financial statements.

 

F-7

 

 

THE INX DIGITAL COMPANY INC.

 

NOTES TO CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS

For the Six Months Ended June 30, 2022 and 2021

U.S. dollars in thousands (except share, per share and per token data)

 

NOTE 1: NATURE OF OPERATIONS

 

The INX Digital Company, Inc. (formerly - Valdy Investments Ltd.) (the “Company” or “TINXD”), registered at 550 Burrard Street, Suite 2900, Vancouver, BC V6C 0A3, Canada, was incorporated under the provincial Business Corporations Act (British Columbia) on August 22, 2018.

 

The Company completed its initial public offering (“IPO”) during fiscal year 2019 and was classified as a Capital Pool Company (“CPC”), as defined in Policy 2.4 of the TSX Venture Exchange (the “TSXV Exchange”), until November 16, 2021.

 

The consolidated interim financial statements of the Company as of and for the periods ended June 30, 2022, were authorized for issuance in accordance with a resolution of the board of directors on August 11, 2022.

 

Purchase Transaction

 

The principal business of the Company was to identify and evaluate assets or businesses with a view to potentially acquire them or an interest therein (“Qualifying Transaction”). The purpose of such an acquisition was to satisfy the related conditions of a Qualifying Transaction under the TSXV Exchange rules.

 

On March 31, 2021, the Company entered into a definitive securities exchange agreement (the “Original Securities Exchange Agreement”) with INX Limited (“INX”), a company incorporated under the laws of Gibraltar and the securityholders of INX (the “INX Securityholders”), whereby the Company proposed to acquire all issued and outstanding securities of INX (the “Transaction”). The Original Securities Exchange Agreement was amended by the Company, INX, PI Financial Corp. and Eight Capital entering into an Amendment to the Securities Exchange Agreement dated as of July 23, 2021 (the “Amendment”), and together with the Original Securities Exchange Agreement, (the “Amended Agreement”), among other things, extended the deadline for completion of the Transaction to January 24, 2022, subject to possible earlier termination. Subsequently, the Company, INX, the INX Securityholders, PI Financial Corp. and Eight Capital entered into an Amended and Restated Securities Exchange Agreement dated as of November 3, 2021 (the “Amended and Restated Securities Exchange Agreement”) which replaced and superseded the Amended Agreement.

 

Following entry into the Original Securities Exchange Agreement, the Company engaged with and made submissions to the TSXV Exchange with respect to the previously disclosed proposed Qualifying Transaction with INX. Following discussions with the TSXV Exchange, the Company was not able to complete the proposed Qualifying Transaction on the TSXV Exchange. Accordingly, the Company entered into the Amended and Restated Securities Exchange Agreement and applied to voluntarily delist its common shares from the TSXV Exchange.

 

On December 31, 2021, the Company received conditional approval from the Neo Exchange Inc. (“Neo Exchange”) to list the combined entity (the “Resulting Issuer”) shares. On January 10, 2022, the Company completed the Transaction with INX, whereby INX became a wholly owned subsidiary of the Company. The Transaction resulted in a reverse takeover transaction whereby current shareholders of INX (pre-transaction) became majority shareholders of the Company. The Resulting Issuer continues the business. Also, on January 24, 2022, the Company’s shares started to trade on the NEO Exchange.

 

Nature of Operations

 

The Company, through its subsidiaries, is engaged in the operation and ongoing development of an integrated and regulated solutions for trading blockchain assets, that includes a digital assets trading platform, a security token trading platform, and other services and products related to the trading of blockchain assets. The trading platforms are designed to help customers automate and coordinate front-office trading functions, middle-office risk management and reporting functions, as well as operations and accounting functions. The Company charges a fee at a transaction level. The transaction fee is calculated based on volume and as such varies as a result of the value of the transaction. The transaction fee is collected from customers at the time the transaction is executed.

 

F-8

 

 

THE INX DIGITAL COMPANY INC.

 

NOTES TO CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS

For the Six Months Ended June 30, 2022 and 2021

U.S. dollars in thousands (except share, per share and per token data)

 

NOTE 1: NATURE OF OPERATIONS (Cont.)

 

The Company operates in the following reportable segments:

 

Digital assets segment - offers integrated, regulated solution for trading blockchain assets that includes a digital assets trading platform, a security token trading platform and other services and products related to the trading of digital assets.

 

Brokerage segment - facilitates financial transactions between financial institutions and offers a full range of brokerage services to banks worldwide.

 

As part of the Company’s blockchain ecosystem, INX created the INX Token (the “INX Token”), and on August 20, 2020, the U.S Securities and Exchange Commission (the “SEC”) acknowledged the effectiveness of the F-1 Registration Statement that was filed by INX with the SEC and declared the effectiveness of the initial public offering of INX Tokens (“The INX Token Offering” or “the Offering”) pursuant to which INX offered up to 130 million INX Tokens at a price of $0.90 per INX Token.

 

The INX Token was offered to the public on August 24, 2020, and closed on April 22, 2021, when the Offering was completed.

 

In July 2021, INX listed the INX Token for trading on the trading platform for “digital securities,” i.e., digital assets that constitute securities under applicable law, operated through INX’s subsidiary, INX Securities, LLC (the “INX Securities Trading Platform”).

 

INX reserves an additional 20% of INX Tokens received as payment of transaction fees, as long as the total amount of INX Tokens reserved does not exceed 35 million plus 50% of the number of INX Tokens sold by INX to the public pursuant to the Offering and subsequent offerings of INX Tokens (excluding re-issuances of reacquired INX Tokens), up to a maximum of 100 million INX Tokens. INX does not intend to issue these reserved INX Tokens for general fundraising purposes; these INX Tokens may be issued to fund acquisitions, address regulatory requirements or fund the operations of INX if the Board of Directors of INX determines that INX has net cash balances sufficient to fund less than six months of its operations. INX intend to restrict issuances of the reserved INX Tokens to these or similar extraordinary situations to limit dilution to INX Token holders.

 

Following an amendment to the INX Token rights which was approved by the Board of Directors of the Company on May 17, 2019 (the “Token Rights Amendment”), the holders of INX Tokens (other than INX) are entitled to receive a pro rata distribution of 40% of INX’s net cash flow from operating activities, excluding any cash proceeds from an initial sale by INX of an INX Token (the “Adjusted Operating Cash Flow”). The distribution is based on INX’s cumulative Adjusted Operating Cash Flow, net of cash flows which have already formed a basis for a prior distribution, calculated as of December 31 of each year. The distribution is to be paid to parties (other than INX) holding INX Tokens as of March 31 of the following year on April 30th, commencing with the first distribution to be paid, if at all. As of December 31, 2021, the cumulative adjusted operating cash flow activity was negative, and therefore no distribution was paid on April 30, 2022.

 

Holders of INX Tokens will also be entitled to, at a minimum, a 10% discount on the payment of transaction fees on the INX Digital Trading Platform and INX Securities Trading Platform.

 

Organizational Structure

 

The Company’s significant shareholder is Triple-V (1999) Ltd. (“Triple-V”), which as of June 30, 2022, own 18.37% of the Company’s outstanding Ordinary shares.

 

F-9

 

 

THE INX DIGITAL COMPANY INC.

 

NOTES TO CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS

For the Six Months Ended June 30, 2022 and 2021

U.S. dollars in thousands (except share, per share and per token data)

 

NOTE 1: NATURE OF OPERATIONS (Cont.)

 

The Company operates through eight wholly owned subsidiaries (INX included), four of which were recently acquired and three of which were incorporated by INX:

 

INX, a company incorporated in Gibraltar, is engaged in the operation and development of a digital assets trading platform, a security token trading platform and other services and products related to the fully integrated and regulated solutions for trading of blockchain assets. INX completed a SEC registered initial public offering of the INX Token. The offering of the INX Token was registered under the United States Securities Act of 1933 and, in such registration, the INX Token is deemed to be an “equity security” under relevant SEC rules and regulations.

 

INX Digital, Inc. (“INXD”), a Delaware corporation, is registered in 38 US states plus Washington D.C. and Puerto Rico as a money transmitter to operate a trading platform for digital assets. INXD intends to obtain money transmitter licenses or otherwise become qualified to operate in most US states and territories by the end of 2022. INXD launched a digital assets trading platform on April 29, 2021, which was developed by INX and is operated by INXD. Select digital assets are supported for trading on the INXD platform such as: BTC, ETH, FTM, LTC, USDC, GYEN, AVAX, SAND, MANA, MATIC, LINK, UNI, CRV, ZEC, ZUSD.

 

INX Securities, LLC (Previously named: Openfinance Securities, LLC) (“INXS”), a Pennsylvania limited liability company. INXS is recognized in the US as a registered Broker Dealer and is an SEC-registered Alternative Trading System (“ATS”). INXS was purchased by INX on May 10, 2021 as part of the Asset Purchase Agreement with Openfinance Holdings, Inc. and certain subsidiaries of Openfinance Holdings, Inc., dated January 12, 2021. After closing on the acquisition, the company’s name was changed from Openfinance Securities, LLC to INX Securities, LLC.

 

I.L.S. Brokers Ltd. (“ILSB”), a company incorporated under the laws of the State of Israel, was purchased by INX, pursuant to the share purchase agreement between INX and the shareholders of ILSB, dated June 9, 2021, for the purchase of all of the issued outstanding shares of ILSB. ILSB is a multinational brokerage house, established in 2001, that facilitates financial transactions between banks and offers a full range of brokerage services to several leading banks worldwide. ILSB’s main field of operation is foreign exchange and interest rate derivatives services. ILSB’s activities are regulated by the Israeli Capital Market Authority, Insurance and Savings and registered with the U.S. National Futures Association (“NFA”) (authorized by the U.S. Commodity Futures Trading Commission (“CFTC”)). ILSB holds the following license: Provider of Financial Services in Israel and an introducing broker (IB) license from NFA (CFTC) in the US.

 

Midgard Technologies Ltd. (“Midgard”) is a company incorporated under the laws of the State of Israel. Midgard has served as the research and development arm of INX since November 1, 2020 and was acquired on April 1, 2021.

 

INX Transfer Agent LLC (previously named TokenSoft LLC) (“INX Transfer Agent”), a Delaware limited liability company. INX Transfer Agent is a transfer agent registered with the SEC, acquired by INX pursuant to a purchase agreement dated December 28, 2021 for a nominal consideration.

 

INX Solutions Limited, incorporated by INX in Gibraltar as a private company limited by shares. INX Solutions Limited was a dormant company until end of March 2022. INX Solutions Limited is intended to run INX’s risk management and provides liquidity to the platforms operated by Company, it commenced operations during the second quarter of 2022.

 

The following subsidiaries are currently dormant, in order to focus on specific lines of business:

 

INX Digital Assets UK Limited (Previously named: ILSB UK Limited) (“INX UK”), a company incorporated under the laws of England and Wales. INX UK plans to apply to the Financial Conduct Authority (“FCA”) for an introducing broker license and to be registered as a financial services company. INX acquired all issued and outstanding shares of INX UK on July 13, 2021, from Mr. James Crossley, former board member of INX, in consideration for an inconsequential amount of cash.

 

INX EU Ltd. (“INX EU”), a company incorporated under the laws of Cyprus.

 

INX Services, Inc., a Delaware corporation.

 

F-10

 

 

THE INX DIGITAL COMPANY INC.

 

NOTES TO CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS

For the Six Months Ended June 30, 2022 and 2021

U.S. dollars in thousands (except share, per share and per token data)

 

NOTE 1: NATURE OF OPERATIONS (Cont.)

 

Assessment of going concern

 

The accompanying consolidated financial statements have been prepared assuming that the Company will continue as a going concern. Based on the Company’s existing cash funds and the working capital, and management’s projections of the operating results for the next twelve months, management concluded that the Company has sufficient funds to continue its operations and meet its obligations for a period of at least twelve months from the date the financial statements were authorized for issuance.

 

Covid - 19

 

In early 2020, an outbreak of the novel strain of a coronavirus, which causes a disease named COVID-19, spread worldwide. As a result of the coronavirus pandemic, governments and industries have instituted drastic actions to contain the coronavirus or treat its impact. Such actions, including bans on international and domestic travel, quarantines, and prohibitions on accessing work sites, have caused significant disruptions to global and local economies, and have led to dramatic volatility in the capital markets.

 

The extent to which the coronavirus pandemic impacts the Company’s operations will depend on future developments, which are highly uncertain and cannot be predicted with confidence. Factors that may result in material delays and complications with respect to the Company’s business, financial condition and results of operation include the duration and severity of the outbreak, and the actions that may be required to contain the coronavirus or treat its impact.

 

Technology risk

 

The blockchain technology is a nascent and rapidly changing technology and use of blockchain networks and blockchain assets in the retail and commercial marketplace remains relatively small. The slowing or stopping of the development or acceptance of blockchain networks may adversely affect INX and the Company.

 

The open-source structure of blockchain software means that blockchain networks may be susceptible to malicious cyber-attacks or may contain exploitable flaws, which may result in security breaches and the loss or theft of blockchain assets.

 

Each blockchain network, including the Ethereum network, is dependent upon its users and contributors. Actions taken, or not taken, by the users or contributors of a blockchain network could damage its reputation and the reputation of blockchain networks generally.

 

The regulatory regimes governing blockchain technologies, blockchain assets and the purchase and sale of blockchain assets are uncertain, and new regulations or policies may materially adversely affect the development of blockchain networks and the use of blockchain assets.

 

Failure to keep up with rapid changes in industry-leading technology, products and services, and the risks above should they materialize could negatively impact INX’s and the Company’s results of operations and its financial position.

 

Cyber security attack risk


INX networks operate based on some form of open-source software. An open-source project is not represented, maintained or monitored by an official organization or authority. Because of the nature of open-source software projects, it may be easier for third parties not affiliated with the issuer to introduce weaknesses or bugs into the core infrastructure elements of the blockchain network. This could result in the corruption of the open-source code which may result in the loss or theft of blockchain assets. 

 

Blockchain networks may be the target of malicious attacks seeking to identify and exploit weaknesses in the software. Such events may result in a loss of trust in the security and operation of blockchain networks and a decline in user activity which could have a negative impact on the INX and on the Company.

 

F-11

 

 

THE INX DIGITAL COMPANY INC.

 

NOTES TO CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS

For the Six Months Ended June 30, 2022 and 2021

U.S. dollars in thousands (except share, per share and per token data)

 

NOTE 2: SIGNIFICANT ACCOUNTING POLICIES

 

The following accounting policies have been applied consistently in these consolidated financial statements for the periods presented, unless otherwise stated.

 

a.Basis of presentation of the interim financial statements:

 

These unaudited condensed consolidated interim financial statements have been prepared in accordance with International Accounting Standard (“IAS”) 34 – Interim Financial Reporting as issued by the International Accounting Standards Board (“IASB”). Accordingly, certain disclosures included in audited consolidated financial statements prepared in accordance with International Financial Reporting Standards (“IFRS”) as issued by the IASB have been condensed or omitted.

 

The consolidated financial statements have been prepared on a historical cost basis, except for short-term and long-term investments, INX Tokens, digital assets, derivative assets, contingent consideration liability, INX Token warrant liabilities and warrant liability, which are presented at fair value through profit or loss.

 

b.Consolidated financial statements:

 

The consolidated financial statements comprise the financial statements of the Company and companies that are controlled by the Company (subsidiaries). Control is achieved when the Company is exposed, or has rights, to variable returns from its involvement with the investee and has the ability to affect those returns through its power over the investee. Potential voting rights are considered when assessing whether an entity has control. The consolidation of the financial statements commences on the date on which control is obtained and ends when such control ceases.

 

The financial statements of the Company and of the subsidiaries are prepared as of the same dates and periods. The consolidated financial statements are prepared using uniform accounting policies by all companies in the Group. Significant intra group balances and transactions and gains or losses resulting from intragroup transactions are eliminated in full in the consolidated financial statements.

 

c.Functional and presentation currencies:

 

1.Functional currency and presentation currency:

 

The consolidated financial statements are presented in U.S. dollars.

 

The Company determines the functional currency of each entity:

 

Assets, including fair value adjustments upon acquisition, and liabilities of an investee which is a foreign operation, are translated at the closing rate at each reporting date. Profit or loss items are translated at average exchange rates for all periods presented. The resulting translation differences are recognized in other comprehensive income (loss).

 

Upon the full or partial disposal of a foreign operation resulting in loss of control in the foreign operation, the cumulative gain (loss) from the foreign operation which had been recognized in other comprehensive income is carried to profit or loss. Upon the partial disposal of a foreign operation which results in the retention of control in the subsidiary, the relative portion of the amount recognized in other comprehensive income is reattributed to non-controlling interests.

 

F-12

 

 

THE INX DIGITAL COMPANY INC.

 

NOTES TO CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS

For the Six Months Ended June 30, 2022 and 2021

U.S. dollars in thousands (except share, per share and per token data)

 

NOTE 2: SIGNIFICANT ACCOUNTING POLICIES (Cont.)

 

2.Transactions, assets and liabilities in foreign currency:

 

Transactions denominated in foreign currency are recorded upon initial recognition at the exchange rate at the date of the transaction. After initial recognition, monetary assets and liabilities denominated in foreign currency are translated at each reporting date into the functional currency at the exchange rate at that date. Exchange rate differences, other than those capitalized to qualifying assets or accounted for as hedging transactions in equity, are recognized in profit or loss. Non-monetary assets and liabilities denominated in foreign currency and measured at cost are translated at the exchange rate at the date of the transaction. Non-monetary assets and liabilities denominated in foreign currency and measured at fair value are translated into the functional currency using the exchange rate prevailing at the date when the fair value was determined.

 

3.Index-linked monetary items:

 

Monetary assets and liabilities linked to the changes in the Israeli Consumer Price Index (“Israeli CPI”) are adjusted at the relevant index at each reporting date according to the terms of the agreement.

 

d.Use of estimates and judgements:

 

The preparation of the condensed consolidated interim financial statements in accordance with IFRS requires management to make judgments, estimates and assumptions that affect the application of accounting policies and the reported amounts of assets and liabilities, income and expenses. Actual results may differ from those estimates.

 

Key assumptions made in the interim consolidated financial statements concerning uncertainties at the reporting date that may result in a material adjustment to the carrying amount of the INX Token liability and INX Token warrant liability within the next financial year are discussed in Note 5 and Note 6.

 

e.Cash equivalents:

 

Cash equivalents are considered as highly liquid investments, including unrestricted short-term bank deposits with an original maturity of three months or less from the date of investment or with a maturity of more than three months, but which are redeemable on demand without penalty and which form part of the Company’s cash management.

 

f.Financial instruments:

 

1.Financial assets, including short-term and long-term investments, INX Tokens, digital assets, derivative assets are initially recognized at fair value plus directly attributable transaction costs, except for financial assets measured at fair value through profit or loss in respect of which transaction costs are recorded in profit or loss.

 

The Company classifies and measures debt instruments in the financial statements based on the following criteria:

 

-The Company’s business model for managing financial assets; and

 

-The contractual cash flow terms of the financial asset.

 

Debt instruments are measured at fair value through profit or loss when a financial asset which is a debt instrument does not meet the criteria for measurement at amortized cost or at fair value through other comprehensive income. After initial recognition, the financial asset is measured at fair value and gains or losses from fair value adjustments are recognized in profit or loss.

 

F-13

 

 

THE INX DIGITAL COMPANY INC.

 

NOTES TO CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS

For the Six Months Ended June 30, 2022 and 2021

U.S. dollars in thousands (except share, per share and per token data)

 

NOTE 2: SIGNIFICANT ACCOUNTING POLICIES (Cont.)

 

As part of its risk management activities, the Company enters into derivatives. The derivatives are carried at fair value and any realized and unrealized gains (losses) in derivatives are recognized through profit and loss.

 

2.Loans and receivables are held to collect contractual cash flows and give rise to cash flows representing solely payments of principal and interest. These are measured subsequent to initial recognition at amortized cost.

 

Impairmentof financial assets:

 

The Company evaluates at the end of each reporting period the loss allowance for financial debt instruments which are not measured at fair value through profit or loss.

 

The Company has short-term financial assets such as trade receivables in respect of which the Company applies the simplified approach in IFRS 9 and measures the loss allowance in an amount equal to the lifetime expected credit losses.

 

The Company grants its customers interest-free credit for periods of 30-90 days. As of June 30, 2022, there were no material past-due accounts. Accordingly, the allowance for doubtful accounts is immaterial.

 

3.Financial liabilities:

 

Financial liabilities are initially recognized at fair value. After initial recognition, the accounting treatment of financial liabilities is based on their classification as follows:

 

a)Financial liabilities at amortized cost:

 

After initial recognition, loans and other liabilities are measured based on their terms at amortized cost less directly attributable transaction costs using the effective interest method.

 

b)Financial liabilities at fair value through profit or loss – these include financial liabilities held for trading (including the INX Token warrant liability), contingent consideration liability recognized in a business combination, warrant liability and financial liabilities designated upon initial recognition as at fair value through profit or loss. Changes in the fair value of liabilities held for trading and contingent consideration are recognized in profit or loss in finance expenses. Based on the terms of the INX Token, as described in Note 1, the INX Token is a hybrid financial instrument. The host instrument is a financial liability due to the right of the INX Token holder to at a minimum, a 10% discount on the payment of transaction fees on the INX Digital Trading Platform and INX Securities ATS. The INX Token is considered a puttable instrument which is a financial liability in accordance with IAS 32, Financial Instruments: Presentation. INX’s obligation to make a pro rata distribution annually to the INX Token holders from INX’s Adjusted Operating Cash Flow is an embedded derivative. The Company views INX’s operating cash flows as a financial variable, and therefore, the embedded derivative requires bifurcation pursuant to IFRS 9. The Company elected in accordance with IFRS 9 to designate the entire financial liability (including the embedded derivative) at fair value through profit and loss. Accordingly, the INX Token warrant liability is remeasured to fair value at the end of each reporting period.

 

F-14

 

 

THE INX DIGITAL COMPANY INC.

 

NOTES TO CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS

For the Six Months Ended June 30, 2022 and 2021

U.S. dollars in thousands (except share, per share and per token data)

 

NOTE 2: SIGNIFICANT ACCOUNTING POLICIES (Cont.)

 

The change in the fair value of the INX Token liability that is attributable to changes in credit risk, excluding those changes in credit risk attributable to the embedded derivative, is presented in other comprehensive income. The remaining amount of the change in the fair value of the INX Token liability is presented in profit or loss.

 

When the INX Token is used to pay for services provided by INX, the respective portion of the INX Token liability is derecognized and revenue is recognized. The fair value of INX Tokens issued in consideration for services to be provided to the Company (through its subsidiaries) is recognized as compensation expense as the services are provided.

 

4.Compound financial instruments:

 

Convertible debt which contains both an equity component and a liability component are separated into two components. This separation is performed by first determining the liability component based on the fair value of an equivalent non-convertible liability. The value of the conversion component is determined to be the residual amount. Directly attributable transaction costs are apportioned between the equity component and the liability component based on the allocation of proceeds to the equity and liability components.

 

5.Simple Agreement for Future Equity (“SAFE”)

 

INX has entered into equity funding agreements (SAFEs) pursuant to which funds received by INX from investors have been automatically converted into the same class of share capital of INX that were issued in a qualifying financing, as defined in the SAFEs. The conversion price for SAFEs issued before June 2020 was equal to the lower of, (i) 25% discount on the base (undiscounted) price per share of the qualifying financing, or (ii) a fixed price, as set forth in the SAFEs. For SAFEs issued in June 2020, the conversion price was equal to the lower of, (i) 25% discount on the base (undiscounted) price per share of the qualifying financing, or (ii) a fixed INX valuation divided by the number of INX’s shares outstanding on a fully-diluted basis (as defined in the SAFEs).  

 

INX is not obligated to complete a qualifying financing or to approve the issuance of shares or dilutive securities within the term specified in the SAFE that would result in the issuance of a variable number of the INX’s equity instruments. Accordingly, as the SAFEs are a non-derivative for which the conversion price into the Company’s equity instruments is fixed at the end of its term, the consideration received from investors pursuant to the SAFEs is classified as equity. As of June 30, 2022, all INX SAFE’s have been converted into Ordinary shares.

 

F-15

 

 

THE INX DIGITAL COMPANY INC.

 

NOTES TO CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS

For the Six Months Ended June 30, 2022 and 2021

U.S. dollars in thousands (except share, per share and per token data)

 

NOTE 2: SIGNIFICANT ACCOUNTING POLICIES (Cont.)

 

g.Fair value measurement:

 

Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Fair value measurement is based on the assumption that the transaction will take place in the asset’s or the liability’s principal market, or in the absence of a principal market, in the most advantageous market. The fair value of an asset or a liability is measured using the assumptions that market participants would use when pricing the asset or liability, assuming that market participants act in their economic best interest.

 

Fair value measurement of a non-financial asset takes into account a market participant’s ability to generate economic benefits by using the asset in its highest and best use or by selling it to another market participant that would use the asset in its highest and best use.

 

The Company uses valuation techniques that are appropriate in the circumstances and for which sufficient data are available to measure fair value, maximizing the use of relevant observable inputs and minimizing the use of unobservable inputs.

 

All assets and liabilities measured at fair value or for which fair value is disclosed are categorized into levels within the fair value hierarchy based on the lowest level input that is significant to the entire fair value measurement.

 

The Company classifies the bases used to measure certain assets and liabilities at their fair value. Assets and liabilities carried or measured at fair value have been classified into three levels based upon a fair value hierarchy that reflects the significance of the inputs used in making the measurements.

 

Thelevels are as follows:

 

  Level 1: Quoted prices in active markets for identical assets or liabilities that the entity can access at the measurement date;
     
  Level 2: Significant inputs other than within Level 1 that are observable for the asset or liability, either directly (i.e.: as prices) or indirectly (i.e.: derived from prices);
     
  Level 3: Inputs for the assets or liabilities that are not based on observable market data and require management assumptions or inputs from unobservable markets.

 

For details of the fair value of the INX Token liability - See Note 7. For the fair values of INX Token warrant liability, see Note 8. The fair values of current financial assets and financial liabilities, other than the INX Token and INX Token warrant liability, approximate their carrying amounts due to the short-term maturity of these instruments.

 

F-16

 

 

THE INX DIGITAL COMPANY INC.

 

NOTES TO CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS

For the Six Months Ended June 30, 2022 and 2021

U.S. dollars in thousands (except share, per share and per token data)

 

NOTE 2: SIGNIFICANT ACCOUNTING POLICIES (Cont.)

 

h.Digital assets:

 

Digitalassets are measured on initial recognition at cost.

 

The Company has assessed that it acts in a capacity as a commodity broker trader as defined in IAS 2, Inventories, in characterizing certain of its holdings as inventory, or more specifically, certain holdings of digital assets. Such digital assets held by the Company are principally acquired for the purpose of selling in the near future and generating a profit from fluctuations in price or broker-traders’ margin, therefore, they should be accounted for as inventory, and changes in fair value (less cost to sell) should be recognized in profit or loss.

 

Digital assets not characterized as inventory are classified as indefinite life intangible assets, and are tested for impairment annually or whenever there is an indication that the intangible asset may be impaired. The Company recorded impairment of digital assets for the six months ended June 30, 2022 and 2021 in the amount of $72 and $25, respectively.

 

An impairment loss is recognized if the carrying amount exceeds its fair value less cost of sale.

 

Fair value is measured using quoted prices on active exchanges.

 

The Company holds the following digital assets (as identified by symbols) as of June 30, 2022: BTC, ETH, LTC, USDC, MATIC, AVAX, FTX, ZEC, UNI, CRV.

 

i.Revenue recognition:

 

Revenue from contracts with customers is recognized when the control over the goods or services is transferred to the customer. The transaction price is the amount of the consideration that is expected to be received based on the contract terms, excluding amounts collected on behalf of third parties (such as taxes).

 

In determining the amount of revenue from contracts with customers, the Company evaluates whether it is a principal or an agent in the arrangement. The Company is a principal when the Company controls the promised goods or services before transferring them to the customer. In these circumstances, the Company recognizes revenue for the gross amount of the consideration. When the Company is an agent, it recognizes revenue for the net amount of the consideration, after deducting the amount due to the principal.

 

Revenues from brokerage services are recorded according to the date the service was provided, or the operation was carried out.

 

Revenues from trading income include revenue from transactions fees and trading fees charged to customers utilizing the Company’s trading platforms.

 

F-17

 

 

THE INX DIGITAL COMPANY INC.

 

NOTES TO CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS

For the Six Months Ended June 30, 2022 and 2021

U.S. dollars in thousands (except share, per share and per token data)

 

NOTE 2: SIGNIFICANT ACCOUNTING POLICIES (Cont.)

 

j.Intangible assets

 

Intangible assets acquired in a business combination are measured at fair value at the acquisition date.

 

Intangible assets with a finite useful life are amortized on a straight-line basis over their useful life and reviewed for impairment whenever there is an indication that the asset may be impaired. The amortization period and the amortization method for an intangible asset are reviewed at least at each year end.

 

Intangible assets with indefinite useful lives are not systematically amortized and are tested for impairment annually or whenever there is an indication that the intangible asset may be impaired. The useful life of these assets is reviewed annually to determine whether their indefinite life assessment continues to be supportable. If the events and circumstances do not continue to support the assessment, the change in the useful life assessment from indefinite to finite is accounted for prospectively as a change in accounting estimate and on that date the asset is tested for impairment. Commencing from that date, the asset is amortized systematically over its useful life.

 

The useful life of intangible assets is as follows:

 

 

 

  Licenses  Customer relationships  Trade name 

 

Technology

             
Useful life  Indefinite  Definite 9.58 years  Definite 10.58 years  Definite 8.67 years
Amortization method  Not amortized  Straight-line  Straight-line  Straight-line

 

k.Business combinations and goodwill

 

Business combinations are accounted for by applying the acquisition method. The cost of the acquisition is measured at the fair value of the consideration transferred on the acquisition date with the addition of non-controlling interests in the acquiree. In each business combination, the Company chooses whether to measure the non-controlling interests in the acquiree based on their fair value on the acquisition date or at their proportionate share in the fair value of the acquiree’s net identifiable assets. Direct acquisition costs are recorded in the statement of comprehensive income as incurred. Contingent consideration is recognized at fair value on the acquisition date and classified as a financial asset or liability in accordance with IAS 39. Subsequent changes in the fair value of the contingent consideration are recognized in profit or loss.

 

Goodwill is initially measured at cost which represents the excess of the acquisition consideration and the amount of non-controlling interests over the net identifiable assets acquired and liabilities assumed. If the resulting amount is negative, the acquirer recognizes the resulting gain on the acquisition date.

 

l.Impairment of non-financial assets:

 

The Company evaluates the need to record an impairment of non-financial assets whenever events or changes in circumstances indicate that the carrying amount is not recoverable. If the carrying amount of non-financial assets exceeds their recoverable amount, the assets are reduced to their recoverable amount. The recoverable amount is the higher of fair value less costs of sale and value in use. In measuring value in use, the expected future cash flows are discounted using a pre-tax discount rate that reflects the risks specific to the asset. The recoverable amount of an asset that does not generate independent cash flows is determined for the cash-generating unit to which the asset belongs. Impairment losses are recognized in profit or loss.

 

F-18

 

 

THE INX DIGITAL COMPANY INC.

 

NOTES TO CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS

For the Six Months Ended June 30, 2022 and 2021

U.S. dollars in thousands (except share, per share and per token data)

 

NOTE 2: SIGNIFICANT ACCOUNTING POLICIES (Cont.)

 

An impairment loss of an asset, other than goodwill, is reversed only if there have been changes in the estimates used to determine the asset’s recoverable amount since the last impairment loss was recognized. Reversal of an impairment loss, as above, shall not be increased above the lower of the carrying amount that would have been determined (net of depreciation or amortization) had no impairment loss been recognized for the asset in prior years and its recoverable amount. The reversal of impairment loss of an asset presented at cost is recognized in profit or loss.  

 

The following criteria are applied in assessing impairment of these specific assets:

 

1.Goodwill in respect of subsidiaries:

 

The Company reviews goodwill for impairment once a year, on December 31, or more frequently if events or changes in circumstances indicate that there is an impairment.

 

Goodwill is tested for impairment by assessing the recoverable amount of the cash-generating unit (or group of cash-generating units) to which the goodwill has been allocated. An impairment loss is recognized if the recoverable amount of the cash-generating unit (or group of cash-generating units) to which goodwill has been allocated is less than the carrying amount of the cash-generating unit (or group of cash-generating units). Any impairment loss is allocated first to goodwill. Impairment losses recognized for goodwill cannot be reversed in subsequent periods.

 

2.Intangible assets with an indefinite useful life that have not yet been systematically amortized:

 

The impairment test is performed annually, on December 31, or more frequently if events or changes in circumstances indicate that there is an impairment.

  

m.Customer funds and funds due to customers:

 

Customer funds represent cash and digital assets that are held for the exclusive benefit of customers. The Company restricts the use of the assets underlying the customer funds to meet regulatory requirements and classifies the assets as current based on their purpose and availability to fulfill its direct obligation to customers.

 

n.Leases:

 

The Company accounts for a contract as a lease when the contract terms convey the right to control the use of an identified asset for a period of time in exchange for consideration.

 

The Company as a lessee:

 

For leases in which the Company is the lessee, the Company recognizes on the commencement date of the lease a right-of-use asset and a lease liability, excluding leases whose term is up to 12 months and leases for which the underlying asset is of low value. For these excluded leases, the Company has elected to recognize the lease payments as an expense in profit or loss on a straight-line basis over the lease term.

 

In measuring the lease liability, the Company has elected to apply the practical expedient in the Standard and does not separate the lease components from the non-lease components (such as management and maintenance services, etc.) included in a single contract.

 

On the commencement date, the lease liability includes all unpaid lease payments discounted at the interest rate implicit in the lease, if that rate can be readily determined, or otherwise using the Company’s incremental borrowing rate. After the commencement date, the Company measures the lease liability using the effective interest rate method.

 

F-19

 

 

THE INX DIGITAL COMPANY INC.

 

NOTES TO CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS

For the Six Months Ended June 30, 2022 and 2021

U.S. dollars in thousands (except share, per share and per token data)

 

NOTE 2: SIGNIFICANT ACCOUNTING POLICIES (Cont.)

   

On the commencement date, the right-of-use asset is recognized in an amount equal to the lease liability plus lease payments already made on or before the commencement date and initial direct costs incurred. The right-of-use asset is measured applying the cost model and depreciated over the shorter of its useful life and the lease term (3 years and 9 years).

 

The Company tests for impairment of the right-of-use asset whenever there are indications of impairment pursuant to the provisions of IAS 36.

 

o.Share based payment transactions:

 

Certain of the Company’s employees and other service providers are entitled to remuneration in the form of equity settled share-based payment transactions. The cost of the transactions is measured at the fair value of the equity instruments granted at grant date, using an appropriate valuation model, further details of which are provided in Note 11. The cost of the transactions is recognized in profit or loss together with a corresponding increase in equity or for share-based grants during the period which the performance and/or service conditions are to be satisfied ending on the date on which the relevant employees/service provider become entitled to the award (the “vesting period”). The cumulative expense recognized at the end of each reporting period until the vesting date reflects the extent to which the vesting period has expired and the Company’s best estimate of the number of instruments that will ultimately vest.

 

p.Research and development expenses:

 

Research expenses are recognized in profit or loss when incurred. An intangible asset arising from a development project or from the development phase of an internal project is recognized if the Company can demonstrate all of the following: the technical feasibility of completing the intangible asset so that it will be available for use or sale; the Company’s intention to complete the intangible asset and use or sell it; the Company’s ability to use or sell the intangible asset; how the intangible asset will generate future economic benefits; the availability of adequate technical, financial and other resources to complete the intangible asset; and the Company’s ability to measure reliably the expenditure attributable to the intangible asset during its development. Through June 30, 2022, the Company has not met all the aforementioned criteria and therefore all development costs have been recognized in profit or loss.

 

q.Income taxes:

 

Current income tax assets and liabilities are measured at the amount expected to be recovered from or paid to the taxation authorities. The tax rates used to compute the amount are those that are enacted or substantively enacted at the reporting date. Deferred tax is provided using a liability method on temporary differences between the tax bases of assets and liabilities and their carrying amounts for financial reporting purposes at the reporting date. Deferred tax assets are recognized for deductible temporary differences and the carryforward of any unused tax losses. Deferred tax assets are recognized to the extent it is probable that taxable profit will be available against the deductible temporary differences and that the carryforward of unused tax losses can be utilized. The carrying amount of deferred tax assets is reviewed at each reporting date and adjusted accordingly.

 

r.Property, Plant and equipment:

 

Property, plant and equipment are measured at cost, including directly attributable costs, less accumulated depreciation and accumulated impairment losses.

 

Depreciation is calculated on a straight-line basis over the useful life of the assets at annual rates as follows:

 

   % 
Communication & equipment   15 
Office furniture and equipment   7-10 
Computers and software   33 
Leasehold improvements   see below 

 

F-20

 

 

THE INX DIGITAL COMPANY INC.

 

NOTES TO CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS

For the Six Months Ended June 30, 2022 and 2021

U.S. dollars in thousands (except share, per share and per token data)

 

NOTE 2: SIGNIFICANT ACCOUNTING POLICIES (Cont.)

 

Leasehold improvements are depreciated on a straight-line basis over the shorter of the lease term (including the extension option held by the Company and intended to be exercised) and the useful life of the improvement.

 

The useful life and depreciation method of an asset are reviewed at least each year-end and any changes are accounted for prospectively as a change in accounting estimate.

 

s.Net income (loss) per share:

 

Basic income (loss) per share is computed by dividing the income (net) loss attributable to equity holders of the Company by the weighted average number of Common Shares outstanding during the period. Diluted loss per share is computed by dividing the net income (loss), as above, after adjustment for interest on the convertible loans by the weighted average number of Common Shares outstanding, as above, plus the weighted average number of Common Shares that would be issued on conversion of stock options and warrants.

 

For the six months and three months ended June 30, 2022, the effect of the inclusion of the weighted average number of shares that would have been issued upon the conversion of the Company’s employees stock options, convertible loans, and warrants were dilutive.

 

u.Employee benefit liabilities:

 

TheCompany has several employee benefit plans:

 

1.Short-term employee benefits:

 

   

Short-term employee benefits are benefits that are expected to be settled wholly before twelve months after the end of the annual reporting period in which the employees render the related services. These benefits include salaries, paid annual leave, paid sick leave, recreation and social security contributions and are recognized as expenses as the services are rendered. A liability in respect of a cash bonus or a profit-sharing plan is recognized when the Company has a legal or constructive obligation to make such payment as a result of past service rendered by an employee and a reliable estimate of the amount can be made. 

  

2.Post-employment benefits:

 

The plans are normally financed by contributions to insurance companies and classified as defined contribution plans or as defined benefit plans.

 

The Company has defined contribution plans pursuant to section 14 to the Severance Pay Law under which the Company pays fixed contributions and will have no legal or constructive obligation to pay further contributions if the fund does not hold sufficient amounts to pay all employee benefits relating to employee service in the current and prior periods.

 

Contributions to the defined contribution plan in respect of severance or retirement pay are recognized as an expense when contributed concurrently with performance of the employee’s services.

 

F-21

 

 

THE INX DIGITAL COMPANY INC.

 

NOTES TO CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS

For the Six Months Ended June 30, 2022 and 2021

U.S. dollars in thousands (except share, per share and per token data)

 

NOTE 3: REVERSE TAKEOVER TRANSACTION

 

In connection with the completion of the Transaction (See note 1 – Purchase Transaction), the Company consolidated its issued and outstanding common shares (the “Consolidation”) on the basis of one (1) post-Consolidation Share for every 2.7266667 pre-Consolidation Shares outstanding on a fully-diluted basis such that immediately prior to the Closing, there were 5,124,740 Shares outstanding on a fully-diluted basis, including 1,280,000 shares issues to finders (“post consolidated shares”). The deemed value of the post-consolidated shares was $4,372 based on a per share price of $0.85 which share price is derived from the proceeds allocated to the shares issued in the contemporaneous private placement described below.

 

The Company issued to the shareholders of INX (excluding holders of INX Financing Shares) consideration of an aggregate of 167,331,410 post-Consolidation common shares. The common shares issued to holders of INX Financing Shares were issued on a 1:1 basis, and all other common shares will be issued on the basis of 10.4871348 common shares for each INX Share (the “Conversion Ratio”).

 

As part of the Transaction the Company also completed a private placement of 31,680,000 INX subscription receipts for gross proceeds of $31,283. Each unit consist of one common share and one-half of one common share purchase warrant exercisable for two years at an exercise price of CAD1.88 ($1.49) per share. As the exercise price of the warrants is denominated in CAD while the functional currency of the Company is the U.S. dollar, the warrants are accounted for as a derivative liability. The warrants were valued at $4,255 as of the date of the private placement. As of June 30, 2022, the warrants have been valued at $396 using the Black& Scholes model with the following assumptions:

 

Risk-free rate:   3.10% 
Dividend yield:   Nil 
Volatility factor:   87.13% 
Expected life:   1.53 years 

 

Agents of the private placement collectively received cash commissions of $1,951, of which $259 was allocated to the warrants and recorded as transaction fees in profit or loss.

 

The balance of the gross proceeds from the private placement in the amount of $27,028 was allocated to the common shares. The related cash issuance cost amounted to $1,692, and the net addition to equity amounted to $25,336.

 

The placement agents also received 1,810,740 Agent compensation options exercisable into one common share at an exercise price of CAD1.25 ($0.99). The options have been valued at $515 using the Black& Scholes model with the following assumptions:

 

Risk-free rate:   2.22% 
Dividend yield:   Nil 
Volatility factor:   83.38% 
Expected life:   2 years 

 

Valdy entered into advisory agreements with two advisors, each of which provides for the issuance of 1,000,000 options to purchase common shares (each, an “Advisor Option”) under the Equity Incentive Plan to the applicable Advisor, with 500,000 Advisor Options being exercisable at a price of CAD1.25 ($0.99) per share and 500,000 Advisor Options being exercisable at a price of CAD2.50 ($1.97) per share, and all Advisor Options expiring on the date that is five years from the Closing. The options have been valued at $1,319 using the Black-Scholes model with the flowing assumptions:

 

Risk-free rate:   1.51% 
Dividend yield:   Nil 
Volatility factor:   94.65% 
Expected life:   5 years 

 

In accordance with IFRS 3 “Business Combinations”, since the shareholders of INX. obtained control of the Company, the substance of the Transaction was a reverse takeover. The Transaction did not constitute a business combination since the Company did not meet the definition of a business under IFRS 3, as it was a non-operating company.

 

F-22

 

 

THE INX DIGITAL COMPANY INC.

 

NOTES TO CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS

For the Six Months Ended June 30, 2022 and 2021

U.S. dollars in thousands (except share, per share and per token data)

 

NOTE 3: REVERSE TAKEOVER TRANSACTION (Cont.)

 

As a result, for accounting proposes, the transaction is being accountant for as a reverse takeover asset acquisition with INX Ltd. identified as the acquirer, the net assets of Valdy being treated as the acquired assets and the Valdy share-based payment transaction under IFRS 2, related to the acquisition of the public company listing. Accordingly, the consolidated financial statements are presented as a continuation of INX Ltd. Consideration paid by the acquirer for the net assets of the Company, which was measured at the fair value of the equity issued to the shareholders of the Company, amounted to $4,372 for 5,124,740 shares at CAD 1.08 ($0.85) per share with the excess amount paid above the fair value of the net assets acquired, treated as listing expense in the consolidated statement of comprehensive income.

 

The assets acquired and liabilities assumed at their fair value on the acquisition date are as follows:

 

   Amount 
Deemed issuance of 5,124,740 ordinary shares to shareholders of Valdy (*)  $4,372 
Share based payments to Advisors  $1,834 
    6,206 
Fair value of net assets acquired:     
Cash and Cash equivalents   464 
Accounts payables and accrued expenses   (133)
Net Assets   331 
      
Listing expense  $5,875 

 

NOTE 4: RESERVE FUND

 

In connection with the INX Token Offering, INX committed to reserve 75% of the gross proceeds less payments to underwriters from its initial public offering in excess of $25,000 to be available to cover customer and INX’s losses, if any, that result from cybersecurity breaches or theft, errors in execution of the trading platform or its technology, and counterparty defaults, including instances where counterparties lack sufficient collateral to cover losses. INX refers to this amount as the “Reserve Fund”.

 

On July 13, 2021, the INX’s Board of Directors approved the Investment Policy of the Reserve Fund. Per the approved Policy, the Reserve Fund shall be invested as follows: minimum 25% in cash and bank deposits, up to 20% in US Bonds, up to 20% shall be invested in exchange traded funds and up to 50% in corporate bonds and other instruments with lowest investment grade rating of BBB.

 

As of June 30, 2022, INX has segregated $36,024, which is restricted as the Reserve Fund. The Reserve Fund is comprised of cash and cash equivalents, and corporate bonds held at financial institutions and brokerage firms as follows:

 

      June 30,
2022
   December 31,
2021
 
      USD in thousands 
      (Unaudited)   (Audited) 
a.  Financial assets at fair value through profit or loss:        
   Corporate bonds and loans (principally) – marketable investments (*)   22,334    14,036 
b.  Cash and cash equivalents   13,690    21,987 
       36,024    36,023 

 

(*)Level 1 in the fair value hierarchy

  

NOTE 5: DERIVATIVE ASSETS

 

At June 30, 2022, the Company held $319 in collateral related to open digital assets forwards positions. The derivative assets are used for hedging of digital assets held by the Company. Net gain (loss) recognized from the hedging activity during the six months ended on June 30, 2022 was not significant.

 

F-23

 

 

THE INX DIGITAL COMPANY INC.

 

NOTES TO CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS

For the Six Months Ended June 30, 2022 and 2021

U.S. dollars in thousands (except share, per share and per token data)

 

NOTE 6: INVESTMENTS

 

The Company’s holdings of investments generally are not traded in active markets. Investments are accounted for as financial assets which are initially recognized at fair value and subsequently measured at fair value through unrealized profit or loss. At June 30, 2022 and 2021, the Company holds investments in private companies in the amount of $400, under a share purchase agreement and a simple agreement for future equity, that entitle the Company to receive common stock of the issuing companies at a future date.

 

NOTE 7: INX TOKEN LIABILITY 

 

The number of INX Tokens that INX has distributed as of June 30, 2022 and December 31, 2021, or has an obligation to distribute is as follows:

 

  

June 30,

2022

   December 31, 2021 
   (Unaudited)   (Audited) 
Significant shareholder – Triple-V   9,435,939    9,435,939 
           
Private Placement   10,386,148    10,386,148 
Founding investors   9,078,622    9,078,622 
Issued in the Offering   93,409,410    93,409,410 
Employees and service providers   8,569,539    9,944,263 
           
Total   130,879,658    132,254,382 
           
INX Token liability  $85,143   $282,642 

 

On August 20, 2020 INX’s Form F-1 in connection with the Offering was declared as effective by the SEC.

 

On April 22, 2021, the INX Token Public Offering was completed. During the INX Token Offering, from August 2020 to April 2021, INX raised gross proceeds of $84,068 and sold 93,409,410 INX Tokens (excluding the 1,948,483 INX Tokens that were issued to certain Canadian investors - see below). Additionally, as of December 31, 2021, INX raised $7,622, and sold 10,386,148 INX Tokens through private placements.

 

INX paid $5,782 as issuance costs related to the Offering. In addition, INX has granted options to purchase 6,115,903 INX Token at an exercise price of $0.09 valued at $4,954 with all options to expire July through September 2022.

 

In June 2021, it came to the attention of INX that during the INX Token Offering as it related to Canada, INX did not take certain steps that may be required under applicable Canadian securities laws. As a result, during July 2021 INX canceled 1,948,483 INX Tokens that were sold to Canadian purchasers and refunded the $1,754 to such purchasers, representing the full purchase price of the INX Tokens.

 

During the six months ended on June 30, 2022, the Company granted 171,500 INX Tokens to a service provider and Company officers, and repurchased 1,546,224 tokens from current officers of the Company (Note 9).

  

F-24

 

 

THE INX DIGITAL COMPANY INC.

 

NOTES TO CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS

For the Six Months Ended June 30, 2022 and 2021

U.S. dollars in thousands (except share, per share and per token data)

 

NOTE 7: INX TOKEN LIABILITY (Cont.)

 

The fair values of INX Tokens free of, or subject to lock-up agreements and the discount rates applied as of June 30, 2022, are as follows:

 

   Discount rate   Number of INX
tokens
   Total fair
 value
 
Not subject to lock-up   0%   121,836,676    80,412 
Subject to lock-up through April 2023   20.74%   9,042,982    4,731 
Total        130,879,658    85,143 

 

On July 28, 2021, the INX Token commenced trading on the INX Securities Trading Platform. The fair value per INX Token as of June 30, 2022 and December 31, 2021, for INX Tokens which are not subject to lock-up agreement was $0.66 and $2.2, respectively, based on the closing market price of the INX Token. The level in the fair value hierarchy is level 1.

  

For INX tokens which are subject to lock-up agreement, the Company used the Finnerty model to determine the discount rates applying for such INX tokens during their lock-up agreements. The significant inputs and assumptions are risk free interest, volatility, and the period under the lock up. The level in the fair value hierarchy applied for such tokens is level 2.

 

For the six months ended June 30, 2022, and 2021, the re-measurement to fair value of the INX Token liability in respect of INX Tokens resulted in an unrealized gain of $196,269 and an unrealized loss of $1,461, respectively, which was recorded in profit or loss.

 

The changes in the fair value of the INX Token liability attributable to changes in credit risk, excluding those changes in credit risk attributable to the embedded derivative, are immaterial for all reported periods and therefore no amounts have been included in other comprehensive income in respect of credit risk.

 

On December 14, 2021, INX’s Board of Directors authorized our management to repurchase INX Tokens (the “Repurchased Tokens”) from their holders as the management deems required or desirable for the benefit of INX, provided that the aggregate purchase amount of Repurchased Tokens until December 31, 2022 will not exceed $5,000. Such repurchase shall be subject to the provisions of any applicable law and regulation and to the advice of our legal advisors. As of June 30, 2022, the Company has not repurchased any INX Tokens.

 

NOTE 8: INX TOKEN WARRANT LIABILITY

 

The Company has granted 7,345,194 warrants to directors, employees and service providers to purchase INX Tokens upon completion of the terms set in each warrant.

 

   June 30,
2022
   December 31,
2021
 
Warrants granted to employees and service providers   2,963    9,814 
   $2,963   $9,814 

 

The liability for INX Token warrants is presented at fair value based on the below inputs. The level in the fair value hierarchy is level 3. Token based compensation for the six months ended June 30, 2022 and 2021, amounted to $7,370 and $318 income, respectively.

 

The following table lists the inputs to the Black-Scholes pricing model used for the fair value measurement of INX Tokens warrants:

 

Expected volatility of the token prices (%)   69.78% - 93.96%
Risk-free interest rate (%)   1.28% - 3.01%
Expected life of warrant (years*)   0.25 – 4 
Exercise price   $0.01 - $2.86 

 

(*)INX Token warrant granted with no expiration date were valued as the INX Token fair value.

 

F-25

 

 

THE INX DIGITAL COMPANY INC.

 

NOTES TO CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS

For the Six Months Ended June 30, 2022 and 2021

U.S. dollars in thousands (except share, per share and per token data)

 

NOTE 9: RELATED PARTY TRANSACTIONS

 

On December 31, 2021, INX entered into loan agreements with two officers of the Company in the amounts of $611 and $404, respectively. On March 24, 2022, the Board of Directors of the Company approved an increase of the total loan amount from $1,015 to $ 1,233. The loans were non-recourse and were provided in order to enable the officers to exercise INX Token warrants granted to them in connection with their services to the Company and to cover the income tax liability incurred by the officers with respect to the warrants. On May 2, 2022, the Board approved a repurchase of 1,546,224 INX Tokens by INX from the officers at market price of such Tokens as of April 29, 2022 of $0.80, with proceeds to be used for the repayment of the loans and accrued interest. As of June 30, 2022, the loans were repaid.

 

NOTE 10: EQUITY

 

Composition of share capital:

 

    June 30,  
    2022     2021  
    Authorized     Issued and outstanding     Authorized     Issued and outstanding  
    Number of shares  
                                 
Common shares with no par value     Unlimited       204,120,650       Unlimited       161,074,168  

 

In connection with the Transaction (see Note 1), on January 10, 2022 the Company consolidated its Common shares on a 2.7266667:1 basis (the “Consolidation”). All share amounts and per share data were retroactively adjusted in these financial statements to reflect the Consolidation.

 

On March 4, 2022, our Board of Directors authorized our management to repurchase shares of the Company (the “Repurchased Shares”) from their holders as the management deems required or desirable for the benefit of the Company pursuant to a normal course issuer bid under applicable Canadian law (“NCIB”). All the Repurchased Shares shall be canceled at such time. Repurchase of Repurchased Shares is subject to the following limitations (i) the maximum number of Repurchased Shares to be purchased does not exceed the greater of (A) such number of share constituting 10% of the shares of the Company in the Public Float, or (B) such number of share constituting 5% of the issued and outstanding listed securities of the Company during the 12-month period commencing when the Company receives approval of the NCIB, and (ii) the aggregate purchase amount of the Repurchased Shares in a certain calendar year will not exceed, together with the purchase amount of the Repurchased Tokens purchased in such calendar year (by INX), an amount of $5,000. Such repurchase shall be subject to the provisions of any applicable law and regulation (including without limitation, to the rules of the NEO Exchange and Canadian securities laws) and to the advice of Company’s legal advisors.

 

During the six months ended June 30, 2022, the Company repurchased 56,500 shares at a cost of $25.

 

F-26

 

 

THE INX DIGITAL COMPANY INC.

 

NOTES TO CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS

For the Six Months Ended June 30, 2022 and 2021

U.S. dollars in thousands (except share, per share and per token data)

 

NOTE 11: SHARE-BASED PAYMENT

 

a.Shares reserved for Employees Stock Option Plan:

 

On December 29, 2017, the INX’s Board approved the initial resolution to reserve 4,373,135 Ordinary shares of the Company for the purpose of an Employees Stock Option Plan (“ESOP”) and future grants to employees and consultants as the Board may approve from time to time.

 

INX ’s board of directors adopted the INX Limited Share Ownership and Award Plan (2021) on February 22, 2021, as amended from time to time (the “Share Ownership and Award Plan” or the “Plan”), and INX shareholders approved the Plan on March 18, 2021.

 

The Plan provides for the grant of options to purchase Ordinary Shares and restricted shares of INX to such employees, directors and consultants engaged by INX or any of its affiliates. The Plan further provides for the grant of options and restricted shares to service providers who are not Gibraltar citizens and includes U.S. and Israeli appendices that further specify the terms and conditions of grants of options and restricted shares to such foreign grantees.

 

On June 22, 2022 INX shareholders approved further increase of the Ordinary shares reserved for the purpose of the Plan. Subject to certain capitalization adjustments, the aggregate number of Ordinary Shares that may be issued pursuant to share awards under the Plan may not exceed 37,408,948 Ordinary Shares.

 

b.Share options and warrants granted to employees and service providers:

 

1.Upon the adoption of a Plan by the Company, certain employees received 6,148,198 options exercisable into Ordinary shares of the Company at a price per share equal to the fair value per share at the date of the commitment of the Company to grant the options. The options vest over periods of three to four years. The options are exercisable for a period of 10 years from the date of grant. On February 21, 2021, following to the adoption of the Plan, the Company granted to these employees 6,148,198 options at an exercise price of $0.03-$0.13 per share.

 

2.On March 25, 2021, INX granted to two U.S. employees, effective as of April 1, 2021, options to purchase 4,233,761 Ordinary Shares of INX at an exercise price of $1.06 per share, vesting period over 3 years.

 

3.On March 15, 2022, two officers received 5,036,132 restricted shares of the Company at cashless basis with vesting period of three to five years.

 

4.On March 15, 2022, the Company granted certain employees and a service provider, effective as of March 15, 2022, options to purchase 5,129,334 Common Shares of the Company at a price per share equal to the fair value per share at the date of the commitment at a price of CAD 0.64 ($0.50), with the vesting period of over 4 years.

 

5.On March 24, 2022, the Company granted one employee, effective as of March 24, 2022, options to purchase 509,617 Common Shares of the Company at CAD 0.76 ($0.60), a price per share equal to the fair value per share at the date of the commitment of the Company to grant the options with vesting period of over 4 years.

 

6.On June 30, 2022, the Company granted one employee, effective as of June 30, 2022, options to purchase 786,535 Common Shares of the Company at CAD 0.31 ($0.25), a price per share equal to the fair value per share at the date of the commitment of the Company to grant the options. Options are fully vested at the time of the grant.

 

7.On June 30, 2022, the Company also granted one employee, effective as of June 30, 2022, options to purchase 1,334,322 Common Shares of the Company at CAD 0.31 ($0.25), a price per share equal to the fair value per share at the date of the commitment of the Company to grant the options.  Options shall vest over the period of over 4 years with the first anniversary on May 2, 2023 with all options fully vested on May 2, 2026.

 

F-27

 

 

THE INX DIGITAL COMPANY INC.

 

NOTES TO CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS

For the Six Months Ended June 30, 2022 and 2021

U.S. dollars in thousands (except share, per share and per token data)

 

NOTE 11: SHARE-BASED PAYMENT (Cont.)

 

During the six months ended June 30, 2022, the following transactions relating to stock options were outstanding:

 

   Number of
Stock Options
   Weighted Average
Exercise
Price
 
         
Balance as of January 1,2022   10,381,959    0.48 
Granted   14,795,940    0.71 
Exercised   -    - 
Forfeited   -    - 
Balance as of June 30, 202   25,177,899   $0.52 

 

c.As of June 30, 2022 and December 31, 2021, 9,173,580 and 4,015,293 options, respectively, were exercisable. The Company has recorded income of $926 and expense of $7,660 for the six months ended June 30, 2022 and 2021, respectively.

 

d.The table below summarizes the assumptions that were used to estimate the fair value of the above options granted to employees using the Black- Scholes option pricing model:

 

   June 30,
2022
   December 31,
2021
 
Expected term (years)   10    10 
Expected volatility   94%-94.67%    94%-94.67%
Estimated exercise price   0.037-1,06    0.037 -1.06 
Risk-free interest rate   1.37%-2.395%    1.37%-1.71%
Dividend yield   -    - 

 

e.For certain grant commitments issued during 2021, whose exercise price has not yet been determined, the Company recorded the share-based payment according to the fair market value at the end of each period. Once the options were officially granted by the board of directors and the exercise price has been being determined, the Company has set the share-based payment amount based on the official grant.

 

NOTE 12: OPERATING SEGMENTS AND REPORTING

 

a.General:

 

The operating segments are identified on the basis of information that is reviewed by the chief operating decision maker (“CODM”) to make decisions about resources to be allocated and assess its performance. Accordingly, for management purposes, the Company is organized into operating segments based on the products and services of the business units and has operating segments as follows:

 

1.The digital assets segment - development and operation of an integrated, regulated solution for trading blockchain assets that includes a cryptocurrency trading platform, a security token trading platform and other services and products related to the trading of blockchain assets.

 

2.The brokerage segment - facilitates financial transactions between banks and offers a full range of brokerage services to banks worldwide.

 

F-28

 

 

THE INX DIGITAL COMPANY INC.

 

NOTES TO CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS

For the Six Months Ended June 30, 2022 and 2021

U.S. dollars in thousands (except share, per share and per token data)

 

NOTE 12: OPERATING SEGMENTS AND REPORTING (Cont.)

 

b.Reporting operating segments:

 

   Digital Assets Segment   Brokerage Segment   Total 
   USD in thousands 
Six months ended June 30, 2022 (unaudited):            
             
Revenue            
External customers  $400   $2,048   $2,448 
Inter-segment revenues   -    -    - 
                
Total revenue   400    2,048    2,448 
                
Segment net income (loss)   (2,167)   229    (1,938)
                
Unallocated corporate expenses             (190,394)
                
Profit before taxes on income            $188,456 

  

NOTE 13: SUBSEQUENT EVENTS

 

On July 28, 2022, the Company received approval from The OTCQB Venture Market operated by OTC Markets Group Inc. to commence trading of its common shares under the symbol INXDF, with INX’s shares becoming eligible to be cleared and settled by the Depository Trust Company.

 

- - - - - - - - - -

 

 

 

F-29

 

 

Exhibit 99.2 

 

 

The INX Digital Company, Inc.

 

(Formerly known as Valdy Investments Ltd.)

 

MANAGEMENT’S DISCUSSION AND ANALYSIS

FORM 51-102FI

 

For the three and six months ended June 30, 2022

 

 

 

 

The INX Digital Company, Inc.

(Formerly known as Valdy Investments Ltd.)

 

Introduction

 

The following Management Discussion & Analysis (“MD&A”) is intended to assist in the understanding of the trends and significant changes in the financial condition and results of operations of The INX Digital Company INC. (“TINXD” or the “Company”) for the six-month period ended June 30, 2022.

 

This MD&A has been prepared in compliance with the requirements of Form 51-102F1, in accordance with National Instrument 51-102 - Continuous Disclosure Obligations. This MD&A should be read in conjunction with the unaudited condensed consolidated interim financial statements for the six months ended June 30, 2022 and the audited annual consolidated financial statements of the Company for the fiscal year ended December 31, 2021, together with the notes thereto. Results are reported in United States dollars, unless otherwise noted. The results for the six months ended June 30, 2022, are not necessarily indicative of the results that may be expected for any future period. Information contained herein is presented as of August 15, 2022, unless otherwise indicated.

 

The unaudited condensed consolidated interim financial statements have been prepared in accordance with International Accounting Standard (“IAS”) 34 – Interim Financial Reporting as issued by the International Accounting Standards Board (“IASB”). Accordingly, certain disclosures included in the December 31, 2021 audited consolidated financial statements prepared in accordance with International Financial Reporting Standards (“IFRS”) as issued by the IASB have been condensed or omitted.

 

This MD&A contains forward-looking statements that involve risks, uncertainties and assumptions, including statements regarding anticipated developments in future financial periods and future plans and objectives. There can be no assurance that such information will prove to be accurate, and readers are cautioned not to place undue reliance on such forward-looking statements (see “Forward-Looking Statements”).

 

For the purposes of preparing this MD&A, management, in conjunction with the board of directors, considers the materiality of information. Information is considered material if: (i) such information results in, or would reasonably be expected to result in, a significant change in the market price or value of the Company’s ordinary shares; or (ii) there is a substantial likelihood that a reasonable investor would consider it important in making an investment decision; or (iii) it would significantly alter the total mix of information available to investors. Management, in conjunction with the board of directors, evaluates materiality with reference to all relevant circumstances, including potential market sensitivity.

 

Forward Looking Statements

 

The information set forth in this MD&A contains statements concerning future results, future performance, intentions, objectives, plans and expectations that are, or may be deemed to be, forward-looking statements. These statements concerning possible or assumed future results of operations of the Company are preceded by, followed by or include the words ‘believes,’ ‘expects,’ ‘anticipates,’ ‘estimates,’ ‘intends,’ ‘plans,’ ‘forecasts,’ or similar expressions. Forward-looking statements are not guarantees of future performance. These forward-looking statements are based on current expectations that involve numerous risks and uncertainties, including, but not limited to, those identified in the “Risks and Uncertainties” section above. Assumptions relating to the foregoing involve judgments with respect to, among other things, future economic, competitive and market conditions and future business decisions, all of which are difficult or impossible to predict accurately and many of which underlying the forward-looking statements are reasonable, any of the assumptions could prove inaccurate. These factors should be considered carefully, and readers should not place undue reliance on forward-looking statements. The Company has no intention and undertakes no obligation to update or revise any forward-looking statements, whether written or oral that may be made by or on the Company’s behalf, except as required under securities law.

 

 

 

The INX Digital Company, Inc.

(Formerly known as Valdy Investments Ltd.)

 

Description of Business

 

The INX Digital Company, Inc. (formerly - Valdy Investments Ltd.) (the “Company” or “TINXD”) was incorporated under the provincial Business Corporations Act (British Columbia) on August 22, 2018 and its registered office is at 550 Burrard Street, Suite 2900, Vancouver, BC V6C 0A3, Canada.

 

The Company completed its initial public offering (“IPO”) during fiscal 2019 and was classified as a Capital Pool Company (“CPC”) as defined in Policy 2.4 of the TSX Venture Exchange (the “TSXV Exchange”), until November 16, 2021.

 

Purchase Transaction

 

The principal business of the Company was to identify and evaluate assets or businesses with a view to potentially acquire them or an interest therein (“Qualifying Transaction”). The purpose of such an acquisition was to satisfy the related conditions of a Qualifying Transaction under the TSXV Exchange rules.

 

On March 31, 2021, the Company entered into a definitive securities exchange agreement (the “Original Securities Exchange Agreement”) with INX Limited (“INX”), a company incorporated under the laws of Gibraltar and the securityholders of INX (the “INX Securityholders”), whereby the Company proposed to acquire all issued and outstanding securities of INX (the “Transaction”). The Original Securities Exchange Agreement was amended by the Company, INX, PI Financial Corp. and Eight Capital entering into an Amendment to the Securities Exchange Agreement dated as of July 23, 2021 (the “Amendment”), and together with the Original Securities Exchange Agreement, (the “Amended Agreement”), among other things, extended the deadline for completion of the Transaction to January 24, 2022, subject to possible earlier termination. Subsequently, the Company, INX, the INX Securityholders, PI Financial Corp. and Eight Capital entered into an Amended and Restated Securities Exchange Agreement dated as of November 3, 2021 (the “Amended and Restated Securities Exchange Agreement”) which replaced and superseded the Amended Agreement.

 

Following entry into the Original Securities Exchange Agreement, the Company engaged with and made submissions to the TSXV Exchange with respect to the previously disclosed proposed Qualifying Transaction with INX. Following discussions with the TSXV Exchange, the Company was not able to complete the proposed Qualifying Transaction on the TSXV Exchange. Accordingly, the Company entered into the Amended and Restated Securities Exchange Agreement and applied to voluntarily delist its common shares from the TSXV Exchange.

 

On December 31, 2021, the Company received conditional approval from the Neo Exchange Inc. (“Neo Exchange”) to list the combined entity (the “Resulting Issuer”) shares. On January 10, 2022, the Company completed the Transaction with INX, whereby INX became a wholly owned subsidiary of the Company. The Transaction resulted in a reverse takeover transaction whereby current shareholders of INX (pre-transaction) became majority shareholders of the Company. The Resulting Issuer continues the business. Also, on January 24, 2022, the Company’s shares started to trade on the NEO Exchange.

 

Nature of Operations

 

The Company, through its subsidiaries, is engaged in the operation and ongoing development of an integrated and regulated solutions for trading blockchain assets, that includes a digital assets trading platform, a security token trading platform, and other services and products related to the trading of blockchain assets. The trading platforms are designed to help customers automate and coordinate front-office trading functions, middle-office risk management and reporting functions, as well as operations and accounting functions. The Company charges a fee at a transaction level. The transaction fee is calculated based on volume and as such varies as a result of the value of the transaction. The transaction fee is collected from customers at the time the transaction is executed.

 

INX Token

 

As part of the Company’s blockchain ecosystem, INX created the INX Token (the “INX Token”), and on August 20, 2020, the U.S. Securities and Exchange Commission (“SEC”) acknowledged effectiveness of the F-1 Registration Statement that was filed by INX with the SEC and declared effectiveness of the INX Token Offering (“the Offering”). In such Offering, INX offered up to 130 million INX Tokens at a price of $0.90 per INX Token. The INX Token was offered to the public on August 24, 2020, and the offering was closed on April 22, 2021.

 

INX is the world’s first company to debut and successfully complete an SEC-registered IPO of a blockchain security token (the INX Token). The public offering of the INX Token was registered under the United States Securities Act of 1933 and, in such registration, the INX Token is deemed to be an “equity security” under relevant SEC rules and regulations. 

 

On July 2021, INX listed the INX Token for trading on the INX Securities Trading Platform.

 

 

 

The INX Digital Company, Inc.

(Formerly known as Valdy Investments Ltd.)

 

INX has not allocated for issuance and has no current intention to issue 35 million of the 200 million INX Tokens that have been created. In addition, the Company will reserve an additional 20% of INX Tokens received as payment of transaction fees, as long as the total amount of INX Tokens reserved does not exceed 35 million plus 50% of the number of INX Tokens sold by the Company to the public pursuant to our initial public offering and subsequent offerings of INX Tokens (excluding re-issuances of reacquired INX Tokens), up to a maximum of 100 million INX Tokens. INX does not intend to issue these reserved INX Tokens for general fundraising purposes; however, these INX Tokens may be issued to fund acquisitions, address regulatory requirements or fund the operations of the Company if the Board of Directors determines that the Company has net cash balances sufficient to fund less than six months of the Company’s operations.

 

INX intends to restrict issuances of the reserved INX Tokens to these or similar extraordinary situations to limit the dilution to INX Token holders.

 

Following an amendment to the INX Token rights which was approved by the Board of Directors of the Company on May 17, 2019 (the “Token Rights Amendment”), the Holders of INX Tokens (other than the Company) are entitled to receive a pro rata distribution of 40% of the Company’s net cash flow from operating activities, excluding any cash proceeds from an initial sale by the Company of an INX Token (the “Adjusted Operating Cash Flow”). The distribution is based on the Company’s cumulative Adjusted Operating Cash Flow, net of cash flows which have already formed a basis for a prior distribution, calculated as of December 31 of each year. The distribution is to be paid to parties (other than the Company) holding INX Tokens as of March 31 of the following year. Distributions are to be paid annually on April 30, commencing with the first distribution to be paid, if any. As of December 31, 2021, the cumulative adjusted operating cash flow activity was negative, and therefore no distribution was paid on April 30, 2022.

 

The INX Token may be used in the future, subject to the Company’s discretion, to pay INX Securities Trading Platform transaction fees at a minimum discount of 10% as compared to the use of other currencies. 

 

Organizational Structure

 

The Company’s significant shareholder is Triple-V (1999) Ltd. (“Triple-V”), which as of June 30, 2022, owns 18.37% of the Company’s outstanding Ordinary shares.

 

The Company operates through eight wholly owned subsidiaries (INX included), four of which were recently acquired and three of which were incorporated by INX:

 

INX, a company incorporated in Gibraltar, is engaged in the operation and development of a digital assets trading platform, a security token trading platform and other services and products related to the fully integrated, regulated solution for trading blockchain assets. INX completed a SEC registered initial public offering of the INX Token. The offering of the INX Token was registered under the United States Securities Act of 1933 and, in such registration, the INX Token is deemed to be an “equity security” under relevant SEC rules and regulations.

 

INX Digital, Inc. (“INXD”), a Delaware corporation, is registered in 38 US states plus Washington D.C. and Puerto Rico as a money transmitter to operate a trading platform for cryptocurrencies. INXD intends to obtain money transmitter licenses or otherwise become qualified to operate in most US states and territories by the end of 2022. INXD launched a cryptocurrency trading platform on April 29, 2021, which was developed by INX and is operated by INXD. Select digital assets are supported for trading on the INX Digital platform such as (identified by symbol): BTC, ETH, FTM, LTC, USDC, GYEN, AVAX, SAND, MANA, MATIC, LINK, UNI, CRV, ZEC, ZUSD.

 

INX Securities, LLC (Previously named: Openfinance Securities, LLC) (“INXS”), a Pennsylvania limited liability company. INXS is recognized in the US as a registered Broker Dealer and is an SEC-registered Alternative Trading System (“ATS”). INXS was purchased by INX on May 10, 2021 as part of the OFN Asset Purchase Agreement with Openfinance Holdings, Inc. and certain subsidiaries of Openfinance Holdings, Inc., dated January 12, 2021. After closing on the acquisition, the company’s name was changed from Openfinance Securities, LLC to INX Securities, LLC.

 

I.L.S. Brokers Ltd. (“ILSB”), a company incorporated under the laws of the State of Israel, was purchased by INX, pursuant to the share purchase agreement between INX and the shareholders of ILSB, dated June 9, 2021, for the purchase of all of the issued outstanding shares of ILSB. ILSB is a multinational brokerage house, established in 2001, that facilitates financial transactions between banks and offers a full range of brokerage services to several leading banks worldwide. ILSB’s main field of operation is foreign exchange and interest rate derivatives services. ILSB’s activities are regulated by the Israeli Capital Market Authority, Insurance and Savings and registered with the U.S. National Futures Association (“NFA”) (authorized by the U.S. Commodity Futures Trading Commission (“CFTC”)). ILSB holds the following license: Provider of Financial Services in Israel and an introducing broker (IB) license from NFA (CFTC) in the US.

 

Midgard Technologies Ltd. (“Midgard”) is a company incorporated under the laws of the State of Israel. Midgard has served as the research and development arm of INX since November 1, 2020, and was acquired on April 1, 2021.

 

 

 

The INX Digital Company, Inc.

(Formerly known as Valdy Investments Ltd.)

 

INX Transfer Agent LLC (previously named TokenSoft LLC) (“INX Transfer Agent”) is a Delaware limited liability company. INX Transfer Agent is a transfer agent registered with the SEC, acquired by INX pursuant to a purchase agreement dated December 28, 2021 for nominal consideration.

 

INX Solutions Limited, incorporated by INX in Gibraltar as a private company limited by shares. INX Solutions Limited was a dormant company until end of March 2022. INX Solutions Limited is intended to run INX’s risk management and provides liquidity to the platforms operated by Company, which commenced during the second quarter of 2022.

 

The following INX subsidiaries are currently dormant, in order to focus on specific lines of business:

 

INX Digital Assets UK Limited (Previously named: ILSB UK Limited) (“INX UK”), a company incorporated under the laws of England and Wales. INX UK plans to apply to the Financial Conduct Authority (“FCA”) for an introducing broker license and to be registered as a financial services company. INX acquired all the issued and outstanding shares of INX UK on July 13, 2021, from Mr. James Crossley, former Board member of INX, in consideration for an inconsequential amount of cash.

 

INX EU Ltd. (“INX EU”), a company incorporated under the laws of Cyprus.

 

INX Services, Inc., a Delaware corporation.

 

Changes in Share Capital During the Six Months Ended June 30, 2022

 

In connection with the completion of the Transaction (See note 3 to the consolidated interim financial statements – Reverse Takeover Transaction), the Company consolidated its issued and outstanding common shares (the “Consolidation”) on the basis of one (1) post-Consolidation Share for every 2.7266667 pre-Consolidation Shares outstanding on a fully-diluted basis such that immediately prior to the Closing, 5,124,740 Shares were outstanding on a fully-diluted basis, including 1,280,000 shares issued to finders (“post consolidated shares”). The deemed value of the post-consolidated shares was $4,372,000 based on a per share price of $0.85 which share price is derived from the proceeds allocated to the shares issued in the contemporaneous private placement described below.

 

As part of the Transaction the Company also completed a private placement of 31,680,000 INX subscription receipts for gross proceeds of $31,283,000. Each unit consist of one common share and one-half of one common share purchase warrant exercisable for two years at an exercise price of CAD1.88 ($1.49) per share. The balance of the gross proceeds from the private placement in the amount of $27,028,000 was allocated to the common shares. The related cash issuance cost amounted to $1,692,000 and the net addition to equity amounted to $25,336,000.

 

Subsequently, pursuant to the terms of the Security Exchange Agreement, on January 10, 2022, Valdy acquired all the issued and outstanding securities of the INX from INX Securityholders by way of a securities exchange, as presented below:

 

   Number of Shares   Amount 
INX common shares as of December 31, 2021   15,955,875    24,198,000 
1 for 10.487 consolidation of INX shares   151,375,535    - 
Shares held by existing Valdy shareholders post-consolidation   5,124,740    4,372,000 
Shares in connection with conversion of Subscription Receipts   31,680,000    25,336,000 
    204,136,150    53,906,000 

 

The Company issued to the shareholders of INX (excluding holders of INX Financing Shares) consideration of an aggregate of 167,331,410 post-Consolidation common shares. The common shares issued to holders of INX Financing Shares were issued on a 1:1 basis, and all other common shares will be issued on the basis of 10.4871348 common shares for each INX Share (the “Conversion Ratio”).

 

 

 

The INX Digital Company, Inc.

(Formerly known as Valdy Investments Ltd.)

 

On March 4, 2022, our Board of Directors authorized our management to repurchase shares of the Company (the “Repurchased Shares”) from their holders as the management deems required or desirable for the benefit of the Company pursuant to a normal course issuer bid under applicable Canadian law (“NCIB”). All the Repurchased Shares shall be canceled at such time. Repurchase of Repurchased Shares is subject to the following limitations (i) the maximum number of Repurchased Shares to be purchased does not exceed the greater of (A) such number of share constituting 10% of the shares of the Company in the Public Float, or (B) such number of share constituting 5% of the issued and outstanding listed securities of the Company during the 12-month period commencing when the Company receives approval of the NCIB, and (ii) the aggregate purchase amount of the Repurchased Shares in a certain calendar year will not exceed, together with the purchase amount of the Repurchased Tokens purchased in such calendar year (by INX), an amount of US$ 5 million. Such repurchase shall be subject to the provisions of any applicable law and regulation (including without limitation, to the rules of the NEO Exchange and Canadian securities laws) and to the advice of Company’s legal advisors.

 

During the six months ended June 30, 2022, the Company repurchased 56,500 shares at a cost of $25,000.

 

On July 28, 2022, the Company received approval from The OTCQB Venture Market, based in the United States and operated by OTC Markets Group Inc. to commence trading of its common shares under the symbol INXDF, with INX’s shares becoming eligible to be cleared and settled by the Depository Trust Company.

 

Share Based Payments

 

INX’s board of directors adopted the INX Limited Share Ownership and Award Plan (2021) on February 22, 2021, as amended from time to time (the “Share Ownership and Award Plan” or the “Plan”), and INX shareholders approved the Plan on March 18, 2021.

 

The Plan provides for the grant of options to purchase Ordinary Shares and restricted shares of INX to such employees, directors and consultants engaged by INX or any of its affiliates. The Plan further provides for the grant of options and restricted shares to service providers who are not Gibraltar citizens and includes U.S. and Israeli appendices that further specify the terms and conditions of grants of options and restricted shares to such foreign grantees.

 

On June 22, 2022, INX shareholders approved further increase of the Ordinary shares reserved for the purpose of the Plan. Subject to certain capitalization adjustments, the aggregate number of Ordinary Shares that may be issued pursuant to share awards under the Plan may not exceed 37,408,948 Ordinary Shares.

 

On March 15, 2022, two officers received 5,036,132 restricted shares of the Company at cashless basis with vesting period of three to five years.

 

On March 15, 2022, the Company granted certain employees and a service provider, effective as of March 15, 2022, options to purchase 5,129,334 Common Shares of the Company at a price per share equal to the fair value per share at the date of the commitment at a price of CAD 0.64 ($0.50), with the vesting period of over 4 years.

 

On March 24, 2022, the Company granted one employee, effective as of March 24, 2022, options to purchase 509,617 Common Shares of the Company at CAD 0.76 ($0.60), a price per share equal to the fair value per share at the date of the commitment of the Company to grant the options with vesting period of over 4 years.

 

On June 30, 2022, the Company granted one employee, effective as of June 30, 2022, options to purchase 786,535 Common Shares of the Company at CAD 0.31 ($0.25), a price per share equal to the fair value per share at the date of the commitment of the Company to grant the options. Options are fully vested at the time of the grant.

 

On June 30, 2022, the Company also granted one employee, effective as of June 30, 2022, options to purchase 1,334,322 Common Shares of the Company at CAD 0.31 ($0.25), a price per share equal to the fair value per share at the date of the commitment of the Company to grant the options. Options shall vest over the period of over 4 years with the first anniversary on May 2, 2023 with all options fully vested on May 2, 2026.

 

 

 

The INX Digital Company, Inc.

(Formerly known as Valdy Investments Ltd.)

 

Quarterly Financial and Operational Highlights

 

Financial Highlights

 

Overview of Financial Position

 

The following table presents an overview of the Company’s assets, liabilities and shareholders’ equity as of June 30, 2022, and 2021 (in U.S. Dollars):

 

  

June 30,

2022

  

December  31,

2021

 
Cash and cash equivalents   39,988,000    24,581,000 
Cash and cash equivalents held in Reserve Fund   13,690,000    21,987,000 
Short term investments held in Reserve Fund   9,561,000    - 
Current assets   68,734,000    54,055,000 
Current liability   93,561, 000    300,615,000 
Working capital   (24,827,000)   (246,560,000)
Adjusted working capital (1)   63,279,000    45,896,000 
Shareholder’s deficit   (4,460,000)   (222,934,000)

 

(1)Adjusted Working Capital defined as Working Capital excluding INX Token liability and INX Token Warrant Liability, which represents a non-cash fair value measured liability.

 

Cash and Cash Equivalents

 

As of June 30, 2022, the Company had total of $39,988,000 cash and cash equivalents, an increase of $15,407,000 from December 31, 2021.

 

Total Current Assets

 

Total Current Assets increased to $68,734,000, primarily a result of $16,671,000 increase in cash and cash equivalents and short-term investments held in Reserve fund, which offsets with the decrease in customer funds and other receivables of $2,288,000 and $1,764,000, respectively.

 

Reserve Fund

 

In connection with the INX Token Offering, INX committed to reserve 75% of the gross proceeds less payments to underwriters from its initial public offering in excess of $25,000,000 to be available to cover customer and INX’s losses, if any, that result from cybersecurity breaches or theft, errors in execution of the trading platform or its technology, and counterparty defaults, including instances where counterparties lack sufficient collateral to cover losses. INX refers to this amount as the “Reserve Fund”.

 

On July 13, 2021, the INX’s Board of Directors approved the Investment Policy of the Reserve Fund. Per the approved Policy, the Reserve Fund shall be invested as follows: minimum 25% in cash and bank deposits, up to 20% in US Bonds, up to 20% shall be invested in exchange traded funds and up to 50% in corporate bonds and other instruments with lowest investment grade rating of BBB.

 

As of June 30, 2022, INX has segregated $36,024,000, which is restricted as the Reserve Fund. The Reserve Fund is comprised of cash and cash equivalents, and corporate bonds held at financial institutions and brokerage firms.

 

Assets

 

As of June 30, 2022 and December 31, 2021, assets totaled to $90,620,000 and $78,502,000, respectively. The increase of $12,118,000 was primarily due to an increase in cash and cash equivalents of $15,407,000, an increase of $577,000 in right-of-use-assets, net, as a result of a new office space lease agreement, an increase of $1,843,000 in digital assets and a decrease of $2,288,000 and $1,764,000 in customer funds and other receivables, respectively.

 

Liabilities

 

Financial liabilities at fair value through profit or loss - INX Token liability

 

At June 30, 2022, the Company’s recorded INX Token liability in the amount of $85,143,000. The Company measured the INX Token fair value based on the closing market price of the token as of June 30, 2022 (see further details in Note 7 in the consolidated interim financial statements). Changes in fair value of the liability are recorded in profit or loss in the Company’s consolidated statements of comprehensive income.

 

INX Token Valuation

 

The fair value of each INX Token as of June 30, 2022, and December 31, 2021, was $0.66 and $2.20, respectively.

 

 

 

The INX Digital Company, Inc.

(Formerly known as Valdy Investments Ltd.)

 

Results of Operations Overview

 

The following table presents an overview of the Company’s results of operations for the three and six months ended June 30, 2022, and 2021:

 

(U.S. Dollars in thousands, except share and per share data)

 

  

Three months
ended June 30,

  

Six months
Ended June 30,

 
   2022   2021   2022   2021 
   (Unaudited)   (Unaudited) 
Income:                
Revenues, transaction fees  $887   $267   $2,448   $267 
                     
Operating expenses (income):                    
Research and development   2,019    232    2,272    1,840 
Sales and marketing   1,819    1,318    4,070    4,227 
General and administrative   6,005    14,037    7,711    19,820 
Fair value adjustment of INX Token warrant liability to employees and service providers   (3,672)   (318)   (7,370)   (318)
                     
Loss from operations   (5,284)   (15,002)   (4,235)   (25,302)
                     
Fair value adjustment of INX Token liability   78,224    (1,460)   196,269    (1,460)
Finance income   4,144    5    3,493    22 
Finance expense   (119)   (132)   (1,196)   (25)
Listing expenses   -    -    (5,875)   - 
Income (loss) before tax   76,965    (16,589)   188,456    (26,765)
Tax expenses   (83)   (123)   (83)   (123)

Net Income (loss)

   76,882    (16,712)   188,373    (26,888)
Amounts that will be or that have been reclassified to profit or loss when specific conditions are met:
                    
Adjustments arising from translating financial statements from functional currency to presentation currency   406    (6)   490    (6)
                     
                     
Total Comprehensive Income (loss)  $77,288   $(16,718)  $188,863   $(26,894)
                     
Earnings (Loss) per share, basic  $0.38   $(0.10)  $0.93   $(0.17)
Earnings (Loss) per share, diluted  $0.36   $(0.10)  $0.88   $(0.17)
Weighted average number of shares outstanding, basic   204,091,805    161,068,541    202,079,674    154,568,436 
Weighted average number of shares outstanding, diluted   215,747,326    161,068,541    214,007,995    154,568,436 

 

Operating Results from the Second Quarter of 2022

 

Revenue

 

The Company generated $887,000 in revenue for the three months ended June 30, 2022, compared to $267,000 for the three months ended June 30, 2021. Revenues increased by $445,000 related to brokerage fees earned by ILSB, and $71,000 and $104,000 related to transactional fees earned by INX Securities and INX Digital, respectively.

 

Research and Development Expenses 

 

The Company incurred $2,019,000 in research and development expenses for the three months ended June 30, 2022, compared to $232,000 for the three months ended June 30, 2021. Research and development expenses increased by $1,787,000 for the three months ended June 30, 2022, compared to the three months ended June 30, 2021. This increase was primarily driven by the increase in technology personnel and outsourced technology service providers, amounting to $1,303,000, as well as the increase of $361,000 in share-based compensation expense.

 

 

 

The INX Digital Company, Inc.

(Formerly known as Valdy Investments Ltd.)

 

Sales and Marketing Expenses 

 

The Company incurred $1,819,000 in sales and marketing expenses for the three months ended June 30, 2022, compared to $1,318,000 for the three months ended June 30, 2021. Sales and marketing expenses increased by $501,000 for the three months ended June 30, 2022, compared to the three months ended June 30, 2021. This increase was primarily driven by marketing campaigns of $547,000 and an increase in personnel of $348,000. This increase is offset by the decrease in online marketing expenses of $312,000, and $156,000 in share-based compensation expense.

 

General and Administrative Expenses

 

The Company incurred $6,005,000 in general and administrative expenses for the three months ended June 30, 2022, compared to $14,037,000 for the three months ended June 30, 2021. The decrease of $8,032,000 was primarily driven by decreases related to: $3,978,000 from token-based compensation, $253,000 from share-based compensation, $3,915,000 from IPO costs, $856,000 from legal costs, and $1,557,000 from registration fees. These decreases are offset by increases related to: personnel cost of $1,236,000, other administrative costs of $452,000, professional fees of $385,000, and software and website development expenses of $281,000.

 

Income (loss) from Operations

 

For the three months ended June 30, 2022, and 2021, the Company’s loss from operations was approximately $5,284,000 and $15,002,000, respectively.

 

Gain on INX Tokens Issued

 

Based on the terms of the INX Token, as described in Note 1 of the consolidated financial statements, the INX Token is a hybrid financial instrument, accordingly, the Company elected, in accordance with IFRS 9, to designate the entire financial liability at fair value with changes in fair value of the liability recognized as gain or loss in the Company’s consolidated statements of comprehensive income.

 

The Company recorded gain on INX Tokens issued of $78,224,000 for the three months ended June 30, 2022, compared to loss of $1,460,000 for the three months ended June 30, 2021.

 

Net Income (Loss)

 

The Company’s net income (loss) for the three months ended June 30, 2022, was $76,882,000 compared to net loss of $16,712,000 for the three months ended June 30, 2021. The increase of $93,954,000 mainly relates to the fair value adjustments of INX Token liability, which resulted in an unrealized gain for the period of $78,224,000.

 

Total Comprehensive Income (Loss) per Share

 

The total comprehensive income (loss) per share, basic, for the three months ended June 30, 2022 and 2021 was approximately $0.38 and $(0.10), respectively.

 

The total comprehensive income (loss) per share, diluted, for the three months ended June 30, 2022 and 2021 was approximately $0.36 and $(0.10), respectively.

 

 

 

The INX Digital Company, Inc.

(Formerly known as Valdy Investments Ltd.)

 

Operating Results from the First Half of 2022

 

Revenue

 

The Company generated $2,448,000 in revenue for the six months ended June 30, 2022, compared to $267,000 for the six months ended June 30, 2021. Revenues increased by $1,781,000 related to brokerage fees earned by ILSB and $214,000 and $186,000 related to transactional fees earned by INX Securities and INX Digital, respectively.

 

Research and Development Expenses 

 

The Company incurred $2,272,000 in research and development expenses for the six months ended June 30, 2022, compared to $1,840,000 for the six months ended June 30, 2021. Research and development expenses increased by $432,000 for the six months ended June 30, 2022, compared to the six months ended June 30, 2021. This increase was primarily driven by the increase in technology personnel and outsourced technology service providers of $1,610,000, which was offset by the decrease in share-based compensation expense of $1,231,000.

 

Sales and Marketing Expenses 

 

The Company incurred $4,070,000 in sales and marketing expenses for the six months ended June 30, 2022, compared to $4,227,000 for the six months ended June 30, 2021. Sales and marketing expenses decreased by $157,000 for the six months ended June 30, 2022, compared to the six months ended June 30, 2021. This decrease was primarily driven by the increase in outsourced marketing service providers of $799,000, increased personnel cost of $642,000, and $609,000 related to marketing campaigns. These increases are offset by decreases in share-based compensation expense of $1,481,000, and online marketing expenses of $775,000.

 

General and Administrative Expenses

 

The Company incurred $7,711,000 in general and administrative expenses for the six months ended June 30, 2022, compared to $19,820,000 for the six months ended June 30, 2021. The decrease of $12,109,000 was primarily driven by decreases related to: share-based compensation of $5,872,000, INX Token-based compensation of $4,352,000, IPO costs of $3,924,000, and registration fees of $1,829,000. These decreases are offsets by increases in: personnel cost of $1,892,000, other administrative costs of $781,000, software and website development expenses of $527,000, and professional fees of $512,000.

 

Income (loss) from Operations

 

For the six months ended June 30, 2022, and 2021, the Company’s loss from operations was approximately $4,235,000 and $25,302,000, respectively.

 

Gain on INX Tokens Issued 

 

The Company incurred income of $196,269,000 in fair value adjustments of INX Token liability in profit or loss for the six months ended June 30, 2022, compared to loss of $1,460,000 for the six months ended June 30, 2021.

 

Net Income (Loss)

 

The Company’s net income for the six months ended June 30, 2022, was $188,373,000 compared to net loss of $26,888,000 for the six months ended June 30, 2021. The increase of $215,261,000 mainly relates to the fair value adjustments of INX Token liability, which resulted in an unrealized gain for the period of $196,269,000, decrease in general and administrative expenses of $12,109,000 and the decrease in listing expenses of $5,875,000.

 

Total comprehensive income (loss) per share

 

The total comprehensive income (loss) per share, basic, for the six months ended June 30, 2022 and 2021 was approximately $0.93 and $(0.17), respectively.

 

The total comprehensive income (loss) per share, diluted, for the six months ended June 30, 2022 and 2021 was approximately $0.88 and $(0.17), respectively.

 

10 

 

 

The INX Digital Company, Inc.

(Formerly known as Valdy Investments Ltd.)

 

Operating Cash Flow

 

The Company’s net cash used in operating activities for the six months ended June 30, 2022, was approximately $10,557,000, compared to $11,991,000 for the six months ended June 30, 2021.

 

Adjusted Operating Cash Flow

 

Following an amendment to the INX Token rights which was approved by the Board of Directors of INX on May 17, 2019 (the “Token Rights Amendment”), the Holders of INX Tokens (other than the Company) are entitled to receive a pro rata distribution of 40% of the Company’s net cash flow from operating activities, excluding any cash proceeds from an initial sale by the Company of an INX Token (the “Adjusted Operating Cash Flow”). The distribution is based on the Company’s cumulative Adjusted Operating Cash Flow, net of cash flows which have already formed a basis for a prior distribution, calculated annually as of December 31. The distribution will be paid to parties (other than the Company) holding INX Tokens as of March 31 of the following year. Distributions will be paid on April 30, commencing with the first distribution to be paid, if any. As of June 30, 2022 the cumulative adjusted operating cash flow activity was negative, and therefore no distribution was payable on April 30, 2023.

 

Operational Highlights

 

INXD, registered in 38 US states plus Washington D.C. and Puerto Rico as a money transmitter, continues to expand its product offering by adding select digital assets for trading on the INXD Trading Platform. During the three months ended June 30, 2022, the offering of digital assets available to trade on the trading platform was significantly expanded and now includes (identified by symbol):  BTC, ETH, FTM, LTC, USDC, GYEN, AVAX, SAND, MANA, MATIC, LINK, UNI, CRV, ZEC, ZUSD.

 

During the second quarter of 2022, INXD launched a referral program also shortly after that also launched a native mobile application for trading of digital assets, which is available on both Google Play and iOS app stores.  These two main initiatives together with other successful marketing efforts brought over 73,000 new registered users on the trading platforms.

 

INX Securities (INXS), a SEC registered broker-dealer and an alternative trading system, operates a FINRA regulated trading platform for digital securities offered under applicable securities laws. INXS continues to expand the product offering available on the INXS Trading Platform and, subsequently to June 30, 2022, listed a new digital security token, which, similarly to the previously listed INX Token, is now available for trading on the INXS Securities Trading Platform as a digital security under U.S. securities laws and regulations.  INXS also continues to expand its service offering to customers from more jurisdictions globally and during the second quarter added Chile, Estonia, Luxemburg, Malaysia, Slovakia and South Africa to the approved jurisdictions.

 

Additionally, INXS continues to enter into agreements with private companies globally for the initial primary offering of their equity by issuing digital assets that constitute equity securities under applicable securities laws.  Following the initial offering by these private companies, which are available for investment to INXS customers, digital securities of these issuers are expected to be offered for trading on the regulated INXS Trading Platform in a secondary market.  Subsequently to June 30, 2022, INXS successfully launched a digital security token for investment in the primary offering, which is exclusively available for purchase on the regulated INXS Trading Platform.

 

On June 28, 2022, the Company announced a memorandum of understanding (MOU), a non-binding agreement, with SICPA, a leading provider and a longstanding partner, and advisor to central banks around the world based in Switzerland, with deep expertise in identification and security solutions, strong digital capabilities, as well as extensive knowledge of the use of physical cash that allow for the development of new innovative forgery-proof security features to protect monetary sovereignty.  Utilizing the INX technology and blockchain expertise, the planned joint venture between INX and SICPA aims to allow governments globally to expand their access to payments infrastructure, facilitate cross-border digital remittances, maintain sovereign currency control through rigorous regulation, and introduce privacy and safety measures.  Under the terms of the MOU, the Company will engage in a joint effort with SICPA to establish a blockchain solution for Central Bank Digital Currency (CBDC) and the supporting ecosystem to further bolster monetary sovereignty and growth for countries within the global digital economy.

 

11 

 

 

The INX Digital Company, Inc.

(Formerly known as Valdy Investments Ltd.)

 

Key Management Changes

 

The Board of Directors of the Company approved the executive employment agreement with Ms. Renata Szkoda (“Ms. Szkoda”) as the Chief Financial Officer of the company and its affiliates, instead of Mr. Gadi Levin (“Mr. Levin”) effective as of May 2, 2022. Mr. Levin continues to service the Company and its subsidiaries until a full transition of all responsibilities to Ms. Szkoda.

 

Related Party Transactions

 

Key management personnel are those persons having authority and responsibility for planning, directing and controlling the activities of the Company, directly or indirectly. Key management personnel include the Company’s executive officers and Board of Director members.

 

On December 31, 2021, INX entered into loan agreements with two officers of the Company in the amounts of $611,000 and $404,000, respectively. The loans are non-recourse and were provided in order to enable the officers to exercise INX Token warrants granted to them in connection with their services to the Company and to pay the officers income tax liability in respect of the warrants. On May 2, 2022, the Board approved a repurchase of 1,546,224 INX Tokens by INX from the officers at market price of such Tokens as of April 29, 2022 of $0.80, with proceeds to be used for the repayment of the loans and accrued interest. As of June 30, 2022, the loans were repaid.

 

Liquidity and Capital Resources

 

The financial statements have been prepared on a going concern basis which assumes that the Company will be able realize its assets and discharge its liabilities in the normal course of business for the foreseeable future. Management and the Board of Directors are actively involved in the review, planning and approval of significant expenditures and commitments.

 

Financial Instruments and Risk Management

 

The following is the accounting policy for financial assets under IFRS 9:

 

Overview

 

The Company’s financial instruments consist of cash and accounts payable and accrued liabilities. The fair value of these financial instruments approximates their carrying value due to short term nature.

 

Credit Risk

 

Credit Risk is the risk of potential loss to the Company if the counterparty to a financial instrument fails to meet its contractual obligations.

 

Liquidity Risk

 

Liquidity risk is the risk that the Company will not be able to meet its financial obligations as they fall due. The Company’s approach to managing liquidity risk is to ensure that it will have sufficient liquidity to meet liabilities when due.

 

Capital Management

 

The Company’s capital consists of share capital. The Company sets the amount of capital in relation to risk and manages the capital structure and makes adjustments to it in light of changes to economic conditions and the risk characteristics of the underlying assets.

 

The Company’s objectives when managing capital are:

 

to maintain a flexible capital structure, which optimizes the cost of capital at acceptable risk; and
  
to maintain investor, creditor and market confidence in order to sustain the future development of the business.

 

The Company is not subject to any externally or internally imposed capital requirements at year end, except as discussed below.

 

12 

 

 

The INX Digital Company, Inc.

(Formerly known as Valdy Investments Ltd.)

 

Off-Balance Sheet Arrangements

 

The Company does not have any off-balance sheet arrangements as of June 30, 2022.

 

Critical Judgement and Estimates

 

The details of the Company’s accounting policies are presented in Note 2 of the financial statements ended June 30, 2022. The accounting policies applied in preparation of the financial statements are consistent with those applied and disclosed in the Company’s audited financial statements for the year ended December 31, 2021.

 

Changes in Accounting Policies including Initial Adoption

 

The Company has assessed that it acts in a capacity as a commodity broker trader as defined in IAS 2, Inventories, in characterizing certain of its holdings as inventory, or more specifically, certain holdings of digital assets. Such digital assets held by the Company are principally acquired for the purpose of selling in the near future and generating a profit from fluctuations in price or broker-traders’ margin, therefore, they are accounted for as inventory, and changes in fair value (less cost to sell) should be recognized in profit or loss.

 

Digital assets not characterized as inventory are classified as indefinite life intangible assets, and are tested for impairment annually or whenever there is an indication that the intangible asset may be impaired.

 

Management’s Responsibility for the Financial Statements

 

Information provided in this report, including the financial statements, is the responsibility of management. In the preparation of the statements, estimates are sometimes necessary to make a determination of future value for certain assets or liabilities. Management believes such estimates have been based on careful judgments and have been properly reflected in the accompanying financial statements. Management maintains a system of internal controls to provide reasonable assurances that the Company’s assets are safeguarded and to facilitate the preparation of relevant and timely information.

 

COVID-19

 

In early 2020, an outbreak of the novel strain of a coronavirus, which causes a disease named COVID-19, spread worldwide. As a result of the coronavirus pandemic, governments and industries have instituted drastic actions to contain the coronavirus or treat its impact. Such actions, including bans on international and domestic travel, quarantines, and prohibitions on accessing work sites, have caused significant disruptions to global and local economies, and have led to dramatic volatility in the capital markets.

 

The extent to which the coronavirus pandemic impacts the Company’s operations will depend on future developments, which are highly uncertain and cannot be predicted with confidence. Factors that may result in material delays and complications with respect to the Company’s business, financial condition and results of operation include the duration and severity of the outbreak, and the actions that may be required to contain the coronavirus or treat its impact.

 

Corporate Governance

 

The Company’s Board of Directors follows recommended corporate governance guidelines for public companies to ensure transparency and accountability to shareholders. The Audit Committee of the Company fulfills its role of ensuring the integrity of the reported information through its review of the interim and audited annual financial statements prior to their submission to the Board of Directors for approval. The Audit Committee, comprised of three directors, all of whom are independent, meets with management of the Company on a quarterly basis to review the financial statements, including the MD&A, and to discuss other financial, operating and internal control matters as required.

 

Other Information and Disclaimer No Offer or Solicitation

 

This report shall not constitute a solicitation of a proxy, consent or authorization with respect to any securities or in respect of any of the proposed transactions. This report is for informational purposes only and shall not constitute an offer to sell or the solicitation of an offer to buy any securities or a solicitation of any vote of approval, nor shall there be any sale of securities in any jurisdiction in which such offer, solicitation or sale would be unlawful prior to the registration or qualification under the securities laws of any such jurisdiction.

 

 

13

 

 

Exhibit 99.3

 

The INX Digital Company Reports Second Quarter 2022

 

Update and Financial Results

 

TORONTO, August 15, 2022 /PRNewswire/ -- The INX Digital Company, Inc. (NEO: INXD, OTCQB: INXDF) (the “Company”), the owner of digital asset trading platforms, a broker-dealer, and an inter-dealer broker, announced financial results for its second quarter ended June 30, 2022.

 

Investment gains/losses for any particular period as described are not indicative of quarterly business performance. Earnings of The INX Digital Company, Inc. for the second quarter of 2022 are summarized below.

  

2022 Q2 Financial Highlights:

 

Cash and cash equivalents of $39.9MM.

 

Reserve Fund maintained at $36.0.MM.

 

INX Revenue for Q2 2022 at $887,000 and $2.4MM year to date, primarily from transaction fees.

 

Year to date net cash used in operating activities at $10.6MM.

 

Significant growth of new registrations on INX trading platforms, over 73,000 new users added during Q2 2022 compared to approximately 18,000 in Q1 2022.

 

Expansion of product offering by INX Securities to customers from Chile, Estonia, Luxemburg, Malaysia, Slovakia, and South Africa.

 

INX reports a quarterly net income of $77.3MM. However, this number includes an unrealized gain on the INX Token issued of $78.2MM and a gain on the token warrant liability of $3.7MM, both of which are additive to net income. Additionally, the net income includes $1.6MM of equity-based compensation expense and a one-time cost of $5.9MM associated with the reverse takeover transaction that resulted in the company being listed on the NEO Exchange in Canada (listed on Jan 24th, 2022, NEO: INXD). Adjusted for the abovementioned non-cash and one-time items, the Company’s adjusted net loss for Q2 2022 is $2.9MM. The adjusted net loss is a non-IFRS measure.

 

Notable actions taken by INX during the second quarter of 2022 were strategic and proved impactful

 

 

 

 

The INX Digital Company Reports Second Quarter 2022

 

Update and Financial Results

 

During the second quarter of 2022, INX Digital, the company’s cryptocurrency trading platform, launched a referral program, quickly followed by the launch of a native mobile application for the trading of digital assets. The INX app is available on both Google Play and iOS app stores. These two significant initiatives, combined with other successful marketing efforts, brought over 73,000 new registered users to the INX trading platforms (compared to 17,674 in Q1 2022). To further fulfill its vision of bridging traditional and digital economies, INX continues to create new and innovative alternatives for individuals and businesses, as stated in this report.

 

The company received significant media coverage with the announcement on June 28, 2022, that INX had signed a memorandum of understanding (MOU), a non-binding agreement, with SICPA, the leading provider and longstanding partner and advisor to global central banks. Through its deep expertise in identification and security solutions for physical cash, SICPA, based in Switzerland, develops innovative forgery-proof security features that protect monetary sovereignty. Utilizing INX’s technology and blockchain expertise, the planned joint venture between INX and SICPA aims to enable global governments to expand their access to payment infrastructure, facilitate cross-border digital remittances, maintain sovereign currency control through rigorous regulation, and introduce privacy and safety measures. Under the terms of the MOU, the Company will engage in a joint venture with SICPA to establish a blockchain solution for Central Bank Digital Currency (CBDC) and the supporting ecosystem to further bolster monetary sovereignty and growth for countries within the global digital economy.

 

The company’s mission became even more critical and relevant in light of the growing economic crisis combined with volatility in the crypto markets. INX has consistently committed to adopting all regulatory requirements to create a trustworthy ecosystem. It is fully regulated on both its cryptocurrency and digital securities platforms.

 

In the past few months, traditional market and digital market events have highlighted the importance of both solid regulatory structures overlayed with strong liquidity risk management, the foundation on which the company was established.

 

During the second quarter of 2022, the company added multiple cryptocurrency assets to its cryptocurrency INX Digital trading platform. In addition, a number of engagement letters with new potential global issuers of digital securities were signed, as a growing number of companies on-board the unique solution for primary offerings, token management services, secondary listing, and trading offered by INX Securities.

 

The number of digital security issuers is projected to grow through the end of this year.

 

On the advocacy front, INX became a leading member of the Global Digital Asset & Cryptocurrency Association (“Global DCA”) to further lead the establishment of a tokenized economy and expand its mission of bringing regulated digital asset opportunities to all investors.

 

2

 

 

The INX Digital Company Reports Second Quarter 2022

 

Update and Financial Results

 

In the past quarter, INX accumulated multiple money transmitter licenses, allowing it to offer cryptocurrencies to customers in 40 U.S. states and territories. It currently welcomes residents in every U.S. state for securities trading. Meanwhile, it is growing a pipeline of exclusive issuers to bring to the market as either IPOs or private offerings.

 

INX CEO Shy Datika: “INX has a clear mission to create access to diverse and innovative financial opportunities for all. In the past few months, we’ve seen this mission come to life through the adoption of new services, global partnerships, and collaborations. Furthermore, our unprecedented commitment to a regulated environment for cryptocurrency and digital securities trading has become more relevant than ever. Regulators are paying closer attention to cryptocurrencies, and current market conditions highlight the importance of regulation as a cornerstone. We are gradually establishing more avenues for responsibly accessing cryptocurrencies and digital securities. We will continue to design and strengthen INX’s regulated digital asset trading ecosystem and lead the transition between traditional and digital economies.”

 

About The INX Digital Company, Inc. INX is the holding company for the INX Group, which includes regulated trading platforms for digital securities and cryptocurrencies, combining traditional markets expertise and an innovative fintech approach. The INX Group’s vision is to be the preferred global regulated hub for digital assets on the blockchain. The INX Group’s overall mission is to bring communities together and empower them with financial innovation. Our journey started with our initial public token offering of the INX Token in which we raised US$83 million. The INX Group is shaping the blockchain asset industry through its willingness to work in a regulated environment with oversight from regulators like the SEC and FINRA.

 

In addition to operating two regulated trading platforms for blockchain assets, INX’s interdealer broker, I.L.S. Brokers, plans to offer non-deliverable cryptocurrency forwards to Tier-1 banks in the future. For more information, please visit the INX Group website here.

 

3

 

 

The INX Digital Company Reports Second Quarter 2022

 

Update and Financial Results

 

Cautionary Note Regarding Forward-Looking Information and Other Disclosures

 

This press release contains statements that constitute “forward-looking information” (“forward-looking information”) within the meaning of the applicable Canadian securities legislation. All statements, other than statements of historical fact, are forward-looking information and are based on expectations, estimates and projections as at the date of this news release. Any statement that discusses predictions, expectations, beliefs, plans, projections, objectives, assumptions, future events or performance (often but not always using phrases such as “expects”, or “does not expect”, “is expected”, “anticipates” or “does not anticipate”, “plans”, “budget”, “scheduled”, “forecasts”, “estimates”, “believes” or “intends” or variations of such words and phrases or stating that certain actions, events or results “may” or “could”, “would”, “might” or “will” be taken to occur or be achieved) are not statements of historical fact and may be forward-looking information. In disclosing the forward-looking information contained in this press release, INX has made certain assumptions, including with respect to the expected benefits of the joint venture with SICPA, the continuous development of the INX trading platforms, and the development of the digital asset industry. Although INX believes that the expectations reflected in such forward-looking information are reasonable, it can give no assurance that the expectations of any forward-looking information will prove to be correct. Known and unknown risks, uncertainties, and other factors which may cause the actual results and future events to differ materially from those expressed or implied by such forward-looking information. Such factors include but are not limited to regulatory developments, the state of the digital securities and cryptocurrencies markets, and general economic conditions. Accordingly, readers should not place undue reliance on the forward-looking information contained in this press release. Except as required by law, INX disclaims any intention and assumes no obligation to update or revise any forward-looking information to reflect actual results, whether as a result of new information, future events, changes in assumptions, changes in factors affecting such forward-looking information or otherwise.

 

The NEO Exchange is not responsible for the adequacy or accuracy of this press release.‍

 

This news release does not constitute an offer to sell or a solicitation of an offer to buy any of the securities in the United States. The securities have not been and will not be registered under the U.S. Securities Act or any state securities laws and may not be offered or sold within the United States or to U.S. Persons unless registered under the U.S. Securities Act and applicable state securities laws or an exemption from such registration is available.‍

 

4

 

 

The INX Digital Company Reports Second Quarter 2022

 

Update and Financial Results

 

For further information

 

Contact:

 

The INX Digital Company, Inc.

 

Investor Relations

 

+1 855 657 2314

 

Email: [email protected]

 

Carrie Rubinstein

 

Head of Content and Media

 

Email: [email protected]

 

SOURCE: The INX Digital Company, Inc.

 

 

5

 

 



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