ASX-listed DigitalX Reports Another Blockchain-based Loss For FY20

Australian blockchain firm DigitalX is still convinced there's a place for its distributed ledger technology company on the Australian Securities Exchange (ASX), plodding along with another annual loss to add to its CV.

For the 2020 financial year, DigitalX reported a $4.7 million loss, which was a blow-out of 87% from the loss recorded a year prior. Recording its results to the ASX in US dollars, the Perth-based company said revenue for the year dropped 71% when compared to 2019, coming in at $290,424.

In 2019, Digital X's share price was $0.021; at 30 June 2020, it was $0.014. Operational expenditure was reduced in FY20 by 41% to $2.9 million.

$4.5 million of the company's loss was recorded in the first half of the year, with DigitalX saying following the disappointing six months, it underwent a strategic review that led to "significant cost reductions".

"Post the strategic review, DigitalX focused on advancing the digital asset funds management division and blockchain technology development," it told shareholders on Friday.

DigitalX said it is focused on these two business lines to "provide shareholders with exposure to the fundamental impact of blockchain as both a technological and financial innovation".

"Throughout the year, DigitalX delivered on its strategy to deepen engagement with enterprise organisations through a series of blockchain discovery workshops and project submissions," it said.

"The purpose of the workshops was to collaborate with senior executives to assess problems and challenges within their organisations where blockchain solutions have the potential to provide high business value.

"Pleasingly, the company was able to progress identified applications quickly to a prototype design stage, with an objective of demonstrating the potential impact of these new technologies for businesses and a roadmap for solution productisation for DigitalX."

DigitalX was also engaged by a global accounting firm to deploy a set of smart contracts supporting the development of a blockchain-based accounting and audit system for an oil and gas operation.

The company said it's now assessing further commercialisation opportunities for this product.

In Australia, DigitalX said it helped to provide a "blockchain solution design project" in the gaming industry, alongside a large international consulting firm, for a government agency.

It also continued to submit tender applications during the period for other public sector entities.

The company's xbullion project -- a gold-backed stablecoin on the Ethereum network -- also had its soft launch during the year.

DigitalX told shareholders it also monitored global DLT applications and said it will be focusing on regulatory technology opportunities, currently testing a solution with potential customers responsible for corporate governance at Australian publicly listed companies.

DigitalX found itself listed on the ASX after performing a reverse takeover of investment firm Macro Energy in August 2014. DigitalX only emerged in October 2015 after DigitalBTC -- trading as Digital CC -- underwent a name change and shift in business model.

After rebranding, DigitalX announced its focus would be on its app-based cash remittance product AirPocket, saying at the time that the new name and direction represented a strategic change from a focus on bitcoin as a mechanism in order to store value, to a focus on software development.

DigitalX had raised AU$3.5 million to fund the development and rollout of AirPocket. In its 2020 results, DigitalX said it deregistered Airpocket.

Since 2014, annual results have been bleak.

For the 2014-15 financial year, DigitalX reported a $6.8 million loss and total revenue of $36.6 million. The 12 months to June 2016 things improved a little bit, with the company posting a loss of $3.8 million on revenue of $8 million.

In 2017, the company produced an annual profit, clocking nearly $2.6 million on revenue of just over $8 million. For the year ended 30 June 2018, DigitalX headed back to negative territory, with a $2.5 million loss and $926,667 in revenue.

DigitalX isn't the only blockchain-focused company listed on the ASX.

Some of the companies it is joined by on the exchange include supply chain focused Security Matters; financial transactions company Identitii; Kyckr, which has developed a corporate identity blockchain service; mobile entertainment and digital media company Crowd Mobile who is using blockchain to verify human engagement on social channels; game developer Animoca Brands; Change Financial, which holds a 33% equity interest in IvyKoin, a blockchain based cryptocurrency for business transactions that is currently undergoing a facelift; logistics company Yojee; and Byte power, which last year copped a AU$33,000 fine from ASIC.

There's also the ASX itself, which is building the world's first, actual industrial-scale blockchain use case -- a new post-trade solution to replace its legacy Clearing House Electronic Subregister System (CHESS) platform, which has been running for around 25 years. 

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