As confidentially submitted to the U.S. Securities and Exchange Commission on November 1, 2018.
This draft registration statement has not been filed publicly with the Securities and Exchange Commission and
all information contained herein remains confidential.

(Address, including zip code, and telephone number, including area code, of registrant’s principal executive offices)

(Name, address, including zip code, and telephone number, including area code, of agent for service)

As soon as practicable after this registration statement is declared effective.

If any of the securities being registered on this Form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933, check the following box. ☒

If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. ☐

If this Form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. ☐

If this Form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. ☐

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933.

If an emerging growth company that prepares its financial statements in accordance with U.S. GAAP, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 7(a)(2)(B) of the Securities Act. ☒

The registrant hereby amends this registration statement on such date or dates as may be necessary to delay its effective date until the registrant shall file a further amendment which specifically states that this registration statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933 or until the registration statement shall become effective on such date as the Commission acting pursuant to said Section 8(a), may determine.

The information in this preliminary prospectus is not complete and may be changed. We may not sell these securities until the Securities and Exchange Commission has declared this registration statement effective. This preliminary prospectus is not an offer to sell these securities and we are not soliciting offers to buy these securities in any state or jurisdiction where such offer or sale is not permitted.

This is our initial public offering. We are offering 130,000,000 INX Tokens, (the “INX Tokens” or “Tokens”). Each INX Token will entitle its holder to an annual pro rata distribution of 20% 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 (“Adjusted Operating Cash Flow”). The annual distribution will be 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 payable on an annual basis commencing on April 30, 2020, and may thereafter be calculated and paid on an annual or a quarterly basis, subject to the board’s discretion. The pro rata distribution of the adjusted net cash flow is not self-executing and requires that our board of directors approve the Company’s financial statements and calculate such distribution in good faith. In addition, the INX Token may be used as a form of payment for transaction fees on the INX Trading platform, and INX Tokens are entitled to, at a minimum, a 10% discount as compared to other forms of payment. INX Tokens may also be used as a portion of the collateral deposited with the INX Trading platform for short positions. See “Description of INX Tokens.”

None of the rights granted to holders of INX Tokens are defined by the INX Token source code, the underlying blockchain, or its network attributes. Holders of INX Tokens have contractual rights determined by the INX Token Purchase Agreement. Pursuant to the terms of the INX Token Purchase Agreement, ownership of the INX Tokens and all rights under the INX Token Purchase Agreement are contingent upon holders of INX Tokens satisfying the Company’s KYC/AML procedures, including any requirements to periodically or otherwise update information provided to the Company. Each holder’s interest in INX Tokens will be evidenced by the INX Token Distributed Ledger.

There is currently no public market for the INX Token and no guarantee can be provided whether such a market will be established. We expect an initial public offering price of $__ per Token. The initial public offering price was arbitrarily determined by our Board of Directors. Payment for INX Tokens will be accepted in U.S. Dollars. After the Company meets the minimum offering requirement (as described below), payment for INX Tokens will also be accepted in Bitcoin (BTC) and Ether (ETH). BTC/USD and ETH/USD exchange rates will be determined by TradeBlock’s XBX and ETX Indices, respectively, as of 12:01 a.m. (GMT) on the date a purchaser has submitted an executed INX Token Purchase Agreement.

We will not complete the sale of any INX Tokens unless we raise gross offering proceeds of $5,000,000 from this offering (in U.S. Dollars) within one year from the date of this prospectus, which we refer to as the minimum offering requirement. See “Plan of Distribution.” Pending satisfaction of this condition, all subscription payments will be placed in an escrow account specifically established for this offering (the “Escrow Account”). If we do not meet the minimum offering requirement prior to the termination of this Offering, we will promptly return all funds in the Escrow Account (in U.S. Dollars) without interest or deduction. If the Company meets the minimum offering requirement, then the Company will conduct a closing of the committed purchases and the funds in the Escrow Account will be made immediately available to fund the Company’s operations. After the initial closing, sales will be conducted on a continuous basis. Any rejected subscription will have its funds returned promptly. We will continue our public offering until its termination, which will be effective upon the earliest to occur of: (i) the sale of all of the 130,000,000 INX Tokens being offered, (ii) 365 days after this registration statement is declared effective, or (iii) such shorter period as may be determined by the Company in its sole discretion.

The foregoing description of the INX Token Purchase Agreement is not a complete description of its terms. For more details about the INX Token Purchase Agreement, you should read the INX Token Purchase Agreement, which is attached as Exhibit 4.1 hereto, and is incorporated herein by reference.

In their report dated November 1, 2018, our independent auditors stated that our financial statements for the period ended December 31, 2017 were prepared assuming that we would continue as a going concern and they expressed substantial doubt about our ability to continue as a going concern.

We are an emerging growth company, as defined in the U.S. Jumpstart Our Business Startups Act of 2012 (the “JOBS Act”) and, as such, have elected to comply with certain reduced public company reporting requirements.

Purchasing INX Tokens involves a high degree of risk. See “Risk Factors” beginning on page 12 of this prospectus.

None of the United States Securities and Exchange Commission, the Gibraltar Financial Services Commission, or any state securities commission or other jurisdiction has approved or disapproved of these securities or passed upon the adequacy or accuracy of this prospectus. Any representation to the contrary is a criminal offense.

We expect to deliver the INX Tokens to the purchasers in this offering commencing on or about __, 2018.

You should rely only on the information contained in this prospectus and any related free-writing prospectus that we authorize to be distributed to you. We have not authorized any person, including any underwriter, to provide you with information different from that contained in this prospectus or any related free-writing prospectus that we authorize to be distributed to you. This prospectus is not an offer to sell, nor is it seeking an offer to buy, the INX Tokens in any state or jurisdiction where such offer or sale is not permitted. The information in this prospectus speaks only as of the date of this prospectus unless the information specifically indicates that another date applies, regardless of the time of delivery of this prospectus or of any sale of the INX Tokens offered hereby. Our business, financial condition, results of operations, and prospects may have changed since that date. We do not take any responsibility for, nor do we provide any assurance as to the reliability of, any information other than the information in this prospectus and any free writing prospectus prepared by us or on our behalf. Neither the delivery of this prospectus nor the sale of INX Tokens means that information contained in this prospectus is correct after the date of this prospectus.

Market data and certain industry data and forecasts used throughout this prospectus were obtained from sources we believe to be reliable, including market research databases, publicly available information, reports of governmental agencies, and industry publications and surveys. We have relied on certain data from third party sources, including internal surveys, industry forecasts, and market research, which we believe to be reliable based on our management’s knowledge of the industry. While we are not aware of any misstatements regarding the industry data presented in this prospectus, our estimates involve risks and uncertainties and are subject to change based on various factors, including those discussed under the heading “Risk Factors” and elsewhere in this prospectus.

Our financial statements are prepared and presented in accordance with International Financial Reporting Standards, or IFRS, as issued by the International Accounting Standards Board, or IASB. Our historical results do not necessarily indicate our expected results for any future periods.

Certain figures included in this prospectus have been subject to rounding adjustments. Accordingly, figures shown as totals in certain tables may not be an arithmetic aggregation of the figures that precede them.

Unless derived from our financial statements or otherwise noted, the terms “dollar,” “U.S. dollar,” “US$,” “USD,” and “$” refer to U.S. dollars, the lawful currency of the United States.

PROSPECTUS SUMMARY

This is only a summary of the prospectus and does not contain or summarize all of the information contained in this prospectus which is material and/or which may be important to you. You should read this entire prospectus, including “Risk Factors,” before making an investment decision about the INX Tokens. Definitions used in this prospectus can be found in the section entitled “Glossary of Defined Terms”. Unless otherwise stated in this prospectus, references to:

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“we,” “us,” “Company,” “our company” or “INX” refer to INX Limited and its wholly owned subsidiaries;

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“INX Services” refer to INX Services, Inc., a Delaware corporation, which we intend to register as a broker-dealer;

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“INX Trading” refer to INX Trading, an order book platform with a matching engine solution for the trading of different types of digital blockchain assets and fiat currencies which we intend to register as an alternative trading system (ATS) operated by INX Services;

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“INX Tokens,” “Tokens” or “our Tokens” refer to INX Tokens, an ERC20 blockchain asset that is programmed using a smart contract that is compatible with the Ethereum blockchain, and the rights of the INX Token holder, which are contractual rights set forth in the INX Token Purchase Agreement, as more fully described at page 75;

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“Trades” refer to changes in ownership of a blockchain asset that is not a transfer of a blockchain asset from one digital wallet to another digital wallet, and therefore is not recorded on a blockchain ledger, but which is recorded on the INX Services private and centralized database;

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“Transaction Fees” refer to fees that are charged by INX Services for the execution of a trade that occurs on the INX Trading platform; provided, however, that “transaction fees” do not include deposit fees, withdrawal fees or other fees that may be charged for the maintenance of the INX Brokerage Accounts;

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“Transfers” refer to transfers of blockchain assets from one digital wallet to another digital wallet as recorded on a blockchain ledger;

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“Transfer Fees” refer to fees that are charged blockchain network participants when a transfer is recorded on the blockchain; and

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“Companies Act” refers to Gibraltar Companies Act 2014.

Overview

We are developing a regulated platform for trading blockchain assets and their derivatives (“INX Trading”) which will be operated by INX Services, Inc. (“INX Services”), our wholly-owned subsidiary. Our vision is to establish a trading platform and token that introduce regulatory transparency to the blockchain asset trading ecosystem. We plan to achieve this by: (1) obtaining appropriate regulatory licenses, including U.S. Broker-Dealer and Alternative Trading System licenses; (2) maintaining the INX Registry, which reflects a real time list of INX Token owners and holdings; (3) requiring compliance with KYC/AML procedures by all INX Token holders; and (4) granting certain rights to INX Token holders, including certain benefits on the INX Trading platform.

Through INX Services, which will be registered as a licensed broker-dealer, and the INX Trading platform, which will be registered as an alternative trading system (“ATS”), the Company intends to facilitate a market for blockchain assets, including security tokens. When fully operational, the INX Trading platform is expected to offer professional traders and other institutional investors, among other things, a trading platform with traditional marketplace practices, supported by a cash reserve. INX Trading will utilize established practices common in other regulated financial services markets, such as customary trading, clearing, and settlement procedures, regulatory compliance, capital and liquidity reserves and operational transparency. We plan to develop INX Trading as a centralized platform that facilitates peer-to-peer professional trading services through a suite of marketplace features and trading products, including the ability to take short positions and trade derivatives such as futures, options, and swaps. The architectural solution for the INX Trading platform is based on a sequential processing and storage, meaning that transactions on the trading platform can be processed only one after the other and not in parallel. INX Trading will enable trading via web portal and application programming interface (“API”) solutions.

In order to facilitate liquidity and support a vibrant trading market on the INX Trading platform, we intend to offer incentives to attract high volume traders and establish strategic partnerships with market makers. As we further develop the INX Trading platform, broker-dealers or other appropriately regulated third parties may route their customers’ trades to INX Trading by INX Trading platform API.

INX Services intends to file applications for registration as a broker-dealer and to operate INX Trading as an ATS. We intend to form another U.S. subsidiary to register with the CFTC as a designated contract market or swap execution facility. Our subsidiary in Gibraltar intends to apply to the Gibraltar Financial Services Commission for licenses under the Financial Services (Markets in Financial Instruments) Act 2018 and the Financial Services (Distributed Ledger Technology Providers) Regulations 2017 for our European-based operations.

As part of the INX decentralized blockchain ecosystem, we have created the INX Token, which is offered pursuant to this prospectus. The INX Token is an ERC20 blockchain asset that is programmed using a smart contract that is compatible with the Ethereum blockchain. Prospective investors who have been duly identified through know-your-customer and anti-money laundering (“KYC/AML”) procedures may purchase, hold and transfer INX Tokens. In order to verify that INX Tokens are transferred between KYC/AML-vetted holders, transfers of INX Tokens will be executed by the INX Token smart contract under conditional permission that the wallet addresses of both the sender and receiver of INX Tokens are listed on a database stored on the data section of the INX Token smart contract (the “Whitelist Database”). If either the sender or receiver wallet address is not listed in the Whitelist Database, the smart contract rejects the transfer and the distributed ledger is not updated. The transferor of INX Tokens will be responsible for payment of the transfer fees on the Ethereum blockchain. For additional information regarding the fees incurred in connection with transfers, see “Description of INX Tokens”.

After INX Trading is operational, holders of INX Tokens may trade the INX Tokens on the INX Trading platform. All transfers of INX Tokens will be recorded on the INX Token Distributed Ledger. All trading transactions performed on the INX Trading Platform (for both INX Tokens and any other tokens listed for trading on the INX trading platform) will be recorded only on the internal centralized servers of INX Services. INX Services shall be responsible for the KYC/AML compliance of its customers and thus for any trade performed on the INX Trading Platform.

After the Offering is completed, new purchasers of INX Tokens can be added to the Whitelist Database by successfully completing KYC/AML procedures conducted by the Company, including INX Services, or by an appropriately regulated third party approved by the Company, such as a broker-dealer.

INX Token holders will be able to use the INX Token to pay INX Services transaction fees, which are entitled to, at a minimum, a 10% discount to other forms of payment. INX Token holders will also be able to use Tokens to post collateral on the INX Trading platform. In addition, holders of INX Tokens will be entitled to receive an annual pro rata distribution of 20% of the Adjusted Operating Cash Flow. The annual distribution will be 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 will be payable on an annual basis commencing on April 30, 2020, and may thereafter be calculated and paid on an annual or a quarterly basis, subject to the board’s discretion. Further, in addition to a cash reserve to be comprised of 80% of the net proceeds from this offering in excess of $18 million, we plan to maintain a capital reserve and liquidity fund (the “Capital Reserve and Liquidity Fund”). The Capital Reserve and Liquidity Fund will consist initially of 35 million INX Tokens created but not previously sold by the Company to the public. In addition, we plan to reserve an additional 20% of the INX Tokens received by INX Services 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 this offering and subsequent offerings of INX Tokens (excluding re-issuances of reacquired INX Tokens), up to a maximum of 100 million INX Tokens. INX Tokens received as payment of transaction fees and not allocated to the Capital Reserve and Liquidity Fund or otherwise reserved by the Company may be sold in future offerings. See “Description of INX Tokens.”

Corporate Information and Structure of INX

We are a Gibraltar private company limited by shares, incorporated on November 27, 2017. Approximately thirty-one percent (31%) of our issued share capital is held by Triple-V (1999) Ltd, an entity wholly owned by Shy Datika, one of our founders, our controlling shareholder and President (see – “Principal Shareholders”). The balance of our issued share capital is held by our employees, lenders, service providers and investors. We plan to have the following wholly-owned subsidiaries:

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INX Services, Inc., a Delaware corporation, which we intend to register as a broker-dealer and an alternative trading system;

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INX DCM, Inc., which we plan to incorporate in Delaware to act as a designated contract market or swap execution facility, under separate governance; and

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INX Solutions Limited., incorporated in Gibraltar as a private company limited by shares, through which we intend to offer the Company’s services and products to the European market. We intend to apply to the Gibraltar Financial Services Commission for licenses under the Financial Services (Markets in Financial Instruments) Act 2018 and the Financial Services (Distributed Ledger Technology Providers) Regulations 2017 for our European-based operations.

INX Limited’s registered office is located at 57/63 Line Wall Road, Gibraltar, GX11 1AA, Gibraltar, and its telephone number is +350 200 79000. After the INX Trading platform becomes fully operational, INX Limited intends to relocate its principal office to the United States.

Industry Overview

Background & Current Market

Blockchain assets, popularly known as “tokens” or “coins,” have experienced rapid growth mixed with dramatic volatility since first introduced in 2009 with the launch of Bitcoin. For example, on December 31, 2017, total market capitalization for all blockchain assets was over $570 billion. In early January 2018, total market capitalization of blockchain assets increased to approximately $835 billion, before beginning a significant decline throughout 2018. As of September 30, 2018, blockchain assets had a total market capitalization of approximately $200 billion.

Blockchain assets historically have not been issued by governments, banks or similar organizations but rather are collectively maintained by a decentralized user base, accessed through software, which also governs the blockchain asset’s creation, movement, and ownership. This lack of a single point of data collection is believed to enhance the security of traditional blockchain networks and blockchain assets. Nonetheless, blockchain assets and blockchain trading platforms remain susceptible to security breaches and cybercrime. For example, in January 2018, about $500 million worth of blockchain assets were stolen from a major Japanese trading platform.

The blockchain market has grown dramatically. As of July 31, 2018, approximately $21 billion in the aggregate had been raised through offerings of blockchain assets, many of which are initial coin offerings (“ICOs”), and over 120 blockchain asset trading platforms provide basic buy and sell services for one or more blockchain assets. As of September 30 2018, 46 trading platforms of blockchain assets average daily trading volumes over $20,000,000 and 15 trading platforms of blockchain assets average daily trading volume over $100,000,000. As of June 30, 2018, top blockchain asset trading platforms, based on USD 24-hour trading volume, include Binance, OKEx, Huobi, Bitfinex, Bithumb, Upbit, HitBTC, ZB.com, DigiFinex and BCEX.

There has been growing institutional interest in operating regulated blockchain asset exchanges and trading platforms and utilizing blockchain assets in bank financing practices. In January 2017, UBS, BNY Mellon, Deutsche Bank, Santander, NEX and blockchain startup Clearmatics announced their own blockchain asset issuances with the intent to incorporate blockchain assets in currency-related transactions, encourage regulation by central banks and create fiat-like asset-collateralized networks on custom blockchain platforms. In December 2017, Bank of America was awarded a patent for an automated digital currency exchange system. On December 18, 2017, the Chicago Board of Exchange began trading in bitcoin futures, and was joined shortly thereafter by CME Group, also offering bitcoin futures. Also in December 2017, Bloomberg added three cryptocurrencies to its terminal service (previously having provided bitcoin data since 2014) the Australian Securities Exchange (ASX) announced it would move forward with a plan to replace its current clearing and settlement process with a blockchain solution. In February 2018, Circle Internet Financial, a financial technology startup which counts Goldman Sachs as a key investor, purchased Poloniex, a digital asset exchange. As of March 2018, the European Central Bank and Bank of Japan are continuing to research blockchain applications for securities settlement systems. In May 2018, it was reported that Goldman Sachs will offer trading in bitcoin futures and non-deliverable forwards to its clients. In June 2018, The Gibraltar Blockchain Exchange, a subsidiary of the Gibraltar Stock Exchange, began operating as a trading platform for digital assets.

The significant growth of the blockchain asset market and the lack of regulated trading in blockchain assets have triggered an increase in governmental scrutiny. On July 25, 2017, the Securities and Exchange Commission (the “SEC”) issued a Report of Investigation pursuant to Section 21(a) of the Securities Exchange Act of 1934 (the “Exchange Act”) that found that sales of tokens by a virtual organization known as The DAO (a “decentralized autonomous organization”) violated the federal securities laws by participating in the unregistered sale of securities. The SEC also has cautioned brokers, dealers and other market participants that (i) allow for payments in virtual currencies, (ii) allow customers to purchase virtual currencies on margin, or (iii) otherwise use virtual currencies to facilitate securities transactions to exercise particular caution, including ensuring that their virtual currency activities do not undermine their know-your-customer and anti-money laundering obligations. In December 2017, the SEC announced two enforcement actions against entities conducting token sales, followed soon after by a public statement by the Commission Chairman regarding cryptocurrencies and initial coin offerings addressed to both investors and market participants. In March 2018, the SEC Divisions of Enforcement and Trading and Markets issued a public statement noting that trading platforms for digital assets are required to comply with the federal securities laws and register with the SEC if the assets being traded are securities. Other recent regulatory action, speeches and enforcement actions have further developed the SEC’s position that the issuance of tokens are often securities offerings.

Finally, the CFTC has stated that virtual currencies, like bitcoin, may be commodities that are within the purview of the CFTC. On August 23, 2018, the United States District Court for the Eastern District of New York ruled in CFTC v. McDonnell, et al., No. 18-cv-361, ECF No. 29 (E.D.N.Y. Mar. 6, 2018), that “virtual currencies can be regulated by CFTC as a commodity” but left the door open for other regulatory bodies to regulate virtual currency concurrently.

However, because of the uncertainty built into a “facts and circumstances” analysis, as well as general regulatory uncertainty worldwide, companies have begun to structure their blockchain assets as securities and conduct sales of their blockchain assets as registered securities offerings. As blockchain assets take on the attributes of securities and market makers expand the breadth of blockchain asset trading products into spot, futures and derivative trading instruments, the need and demand for a regulated blockchain asset trading solution continues to grow.

Identified problems in the current blockchain asset trading platforms and exchange markets include the following:

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Pre-trade and post-trade services are limited. Current blockchain exchanges do not provide investment tools that would allow clients to continually monitor and manage blotter, credit, position, and other technical analysis. The current market of exchanges do not offer analytical capabilities during the pre-trading period and do not provide trade confirmations, reporting and access to pricing data during the post-trading period. This lack of transparency results in lower pricing performance, inefficiencies and ultimately higher trading risks.

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Lack of Trading History. Most blockchain asset trading platforms do not or cannot present the entire history of trades to exchange participants in a manner that would be requested by a regulator. This lack of trading history does not allow regulatory agencies to effectively monitor transactions.

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Lack of Regulatory Compliance. Many blockchain asset trading platforms are not prepared to comply (or are not willing to comply) with regulatory requirements imposed by U.S. federal and state securities law. Blockchain asset trading platforms assume less responsibility for what takes place on their platforms as compared to regulated exchanges. For example, blockchain asset trading platforms are generally unable to verify the legitimate origin of funds in a trade and therefore cannot confirm that the trades are not in violation of anti-money laundering laws. In addition, current blockchain asset trading platforms do not provide traditional trading protections, such as trading collateral capital and liquidity reserves, making professional traders unable or reluctant to conduct derivative trading on these exchanges. The lack of compliant exchanges for the trading of blockchain assets leads to low customer and public confidence in both the exchanges and the blockchain assets traded.

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No Physical Delivery for Short Trades. Physical delivery of underlying assets between parties to a short transaction helps ensure the completion of the transaction, regardless of other activities that are being conducted on the same exchange for other clients. Current blockchain asset marketplaces allow clients to leverage their trades without possessing the assets being traded, known as a “naked” short sale, resulting in potential disruption of trading activity on the exchange or the weakening of the exchange’s financial stability due to the costs incurred by the exchange to cover naked short sales.

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Lack of Technological Capability. The platforms currently utilized for blockchain asset trading generally lack the technological capability to handle the large trading volumes or capture trades for multiple simultaneous trading requests without disruption or significant errors. The technology of many blockchain asset trading platforms was not developed to handle the dramatic growth in demand to engage in blockchain trades and the market has witnessed exchange outages, sometimes for many hours, pricing errors, intermittent periods of limited access to user funds, and other service related complaints.

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Lack of Fee Transparency. There is currently no clear market standard for fees for trading blockchain assets. This is particularly true in the retail market, where many trading platforms do not separately state the transaction fee but instead include any fees as part of the price of the blockchain asset. In this way, many unregulated exchanges do not disclose their fees, creating uncertainty regarding the cost of trading.

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Poor Price Discovery. Blockchain asset trading platforms experience inefficiencies in the form of significant arbitrage due to recurrent operational issues including temporary service outages and other temporary restrictions on access to the trading platform, the ability to withdraw or deposit fiat currencies and cryptocurrencies, or otherwise perform a trade on the platform. This creates significant exposure to arbitrage trading between exchanges. Further, the operator of a blockchain asset trading platform may trade on its own behalf on the trading platform. Doing so provides liquidity to platform participants. However, it also presents potential conflicts of interest, such as front-running customer order flow and engaging in price manipulation. By acting as a trading participant on one’s own platform, trading platforms may artificially inflate or deflate prices, which impairs market pricing discovery.

These weaknesses in current blockchain asset trading platforms reveal a significant opportunity in the blockchain asset industry for exchange providers with operations and services that provide functionality, transparency and collateralized trading platforms similar to those of regulated trading marketplaces.

Our Proposed Solution: A Single Regulated Integrated Platform for Trading Blockchain Assets

We believe that the only comprehensive solution to the issues that we have identified, and to the shortcomings of the current marketplace, is the development of a new marketplace for blockchain assets that is subject to governmental oversight. We are designing our platform to provide the following solutions to the problems identified above, which we believe will make INX Trading an attractive choice for the trading of blockchain assets:

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Robust Pre-Trade and Post-Trade Services. We are designing INX Trading to permit clients to continually monitor and manage blotter, credit, position, and other technical analysis. We also plan to offer investment tools during the pre-trading period and provide trade confirmations, reporting and access to pricing data during the post-trading period.

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Historical Trading Record. Beginning with the first recorded transaction on the INX Trading platform, we plan to apply KYC/AML procedures for all account holders and provide transparency so that clients have the ability to review all activities taken by them. We believe that this accessibility will supplement the transparency of blockchain assets.

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Regulation. We believe that regulatory oversight of INX Trading, which we intend to be a registered ATS, will instill greater confidence in INX Trading compared to unregulated blockchain asset trading platforms. As the ownership of blockchain assets becomes more commonplace and professional traders continue to enter the blockchain market, we believe that clients will expect regulatory safeguards, comparable to the current fiat and share based exchanges, when making blockchain trades. All customers of INX Trading, whether participating in initial offerings or secondary trading, will be required to complete KYC/AML checks in compliance with applicable laws and regulations.

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Cash Reserve; Capital Reserve and Liquidity Fund. We plan to establish a cash reserve comprised of 80% of the net proceeds from this offering in excess of $18 million. In addition, we plan to establish the Capital Reserve and Liquidity Fund, which will consist initially of 35 million INX Tokens created but not previously sold by the Company to the public, we plan to reserve an additional 20% of the INX Tokens received by INX Services 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 this offering and subsequent offerings of INX Tokens (excluding re-issuances of reacquired INX Tokens), up to a maximum of 100 million INX Tokens. We believe that designated cash and INX Token reserves will provide the Company with flexibility in financing extraordinary expenses, such as instances where the INX Services must cover shortfalls in trading transactions. This feature of our business introduces an important, additional layer of comfort for the investors, traders and clients.

	●	Physical Delivery and Short Trading. We believe that INX Trading’s sequential processing and storage architecture, together with the requirement of physical delivery in short and derivatives transactions improves exchange participants’ risk management abilities and will result in increased trade volumes and greater diversity in the financial instruments utilized for blockchain assets. We believe that hedge transactions, accompanied with physical delivery, will therefore be an incentive for trading on the INX Trading platform.

	●	Our Robust Technology. We intend to develop technology for INX Trading to support high volumes of traffic to enable rapid trading activity. Because the INX Trading platform is being custom built to support the growing blockchain asset market, it is being designed to scale along with the continued growth of the market.

	●	Transaction Fee Transparency. We plan to establish transaction fees as a percentage of the value of each trade executed on INX Trading. Such fees will be disclosed to INX Trading customers prior to executing a trade or performing other transactions on the INX Trading platform.

	●	Decentralization. Record-keeping of peer-to-peer transfer transactions is performed in real time using a distributed ledger, with no need for third party or intermediary validation.

	●	Traceability. Full historical transaction data of INX Tokens is recorded on the Ethereum blockchain.

	●	Immutability. Once the smart contract is deployed and data has been written into the blockchain, it is almost impossible to change, ensuring the veracity of the data.

	●	High Availability. Because the Ethereum blockchain is based on thousands of nodes in a peer-to-peer network, and data is replicated and updated on each and every node, the distributed ledger becomes highly available.

	●	Privacy. Personal information of INX Token holders is stored in an encrypted form and only available to the Company.

Our Development Plan

We are designing our trading platform to provide clients with a cross-asset, multi-currency non-biased execution trading solution and to function as broker, execution, and clearing agent. We plan to provide trading of different types of digital blockchain assets, including securities, consumptive tokens and virtual currencies, with the optionality for execution of trades in both traditional fiat currencies and digital assets.

Our goal in the development of the INX Trading platform is to offer professionals in the financial services community a comprehensive, interactive platform that allows for seamless integrated trading, real-time risk management and reporting and administration tools. The INX Trading platform will permit trading of multiple blockchain assets, including trades in spot, futures and derivative forms. We plan to develop the INX Trading platform as a centralized platform that facilitates peer-to-peer professional trading services. This trading platform will help our customers automate and coordinate front-office trading functions, middle-office risk management and reporting functions, and back-office accounting functions.

We are developing our system in modules to allow for a phased roll out of features in accordance with regulatory approvals that we receive and the technological development of the INX Trading platform. See “Business— Phases of Development.”

We have currently developed the INX Token. After the INX Trading platform is operational, prospective investors who have been duly identified through KYC/AML procedures may purchase and trade INX Tokens on the INX Trading platform. INX Token holders will be able to use the INX Token to pay INX Trading platform transaction fees, which are entitled to, at a minimum, a 10% discount to other forms of payment or to post collateral on the INX Trading platform. Holders of INX Tokens will also be entitled to receive a pro rata distribution of 20% of our cumulative Adjusted Operating Cash Flow. The distribution will be payable on an annual basis, calculated as of December 31 of each year, commencing on April 30, 2020, and may thereafter be calculated and paid on an annual or a quarterly basis, subject to the board’s discretion. Further, in addition to a cash reserve to be comprised of 80% of the net proceeds from this offering in excess of $18 million, we plan to maintain a capital reserve and liquidity fund (the “Capital Reserve and Liquidity Fund”). The Capital Reserve and Liquidity Fund will consist initially of 35 million INX Tokens created but not previously sold by the Company to the public. In addition, we plan to reserve an additional 20% of the INX Tokens received by INX Services 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 this offering and subsequent offerings of INX Tokens (excluding re-issuances of reacquired INX Tokens), up to a maximum of 100 million INX Tokens. INX Tokens received as payment of transaction fees and not allocated to the Capital Reserve and Liquidity Fund may be sold in future offerings. See “Description of INX Tokens.”

Our Growth Strategies

We believe that our operational capabilities will strengthen and expand as the INX Trading platform completes each phase of development. This will enable us to launch several growth strategies, including the following:

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Active expansion of institutional blockchain asset trading and large-scale block transactions. The Company plans to promote the INX Trading platform with institutional and other accredited investors such as family offices, hedge funds and others who require a platform that allows blockchain asset derivative trading and large-scale block transactions.

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Monetize market data and connectivity. We plan to serve as a hub for blockchain asset traders, institutional investors, commercial banks and individuals trading blockchain asset derivatives. As we attract more clients, we expect that we will accumulate non-proprietary big-data relating to trading behavior and related market statistics. We plan to use this data for internal use and as a product to be sold to institutional investors and trade analysts.

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Strategic opportunities. We plan to pursue strategic alliances with commercial banks and other licensed and regulated blockchain asset trading platforms for the expansion of our business. In addition, we believe that a part of our future growth strategy will include the acquisition and integration of other blockchain service providers under the INX Trading platform’s regulated processes.

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The INX Token. Use of the INX Token is intended to create a “virtuous cycle.” Holders of INX Tokens will be entitled to a distribution based on our net cash flow from operating activities, excluding any cash proceeds from an initial sale by the Company of an INX Token. Our profit share model makes these INX Token holders beneficiaries of the growth and success of the Company’s operations. This in turn increases the value of the INX Token and its acceptance as a method of payment and as collateral on the INX Trading platform.

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Single integrated platform. We believe that developing the INX Trading platform with the capability to provide customers with a single integrated platform to access an array of services and features will be preferred by participants in the financial services community and will attract high volume traders who need a multifunctional trading platform. We intend to bolster our competitive position by developing a wide breadth of workflow functionalities across the entire transaction lifecycle, including pre-trade, trade and post-trade services.

Competition

We face intense competition in the blockchain asset trading market on a global level. During the end of 2017 and throughout 2018, an ever-growing number of previously unregulated trading platforms have announced intentions to operate as a regulated broker-dealers, or as otherwise regulated entities either under the federal securities laws, U.S. state or local laws or, as applicable, the laws of other jurisdictions (outside the U.S.) such as the EU. The market for trading blockchain assets has generated considerable interest and is continually evolving with new entrants to the market. In addition, established financial institutions have expressed interest in operating regulated blockchain asset exchanges or trading platforms and utilizing blockchain assets in bank financing practices. See “Business— Competition.”

Risk Factors

Our business is subject to numerous risks, as more fully described in the section titled “Risk Factors” immediately following this prospectus summary. You should read and carefully consider these risks and all of the other information in this prospectus, including the financial statements and the related notes included elsewhere in this prospectus, before deciding whether to invest in INX Tokens. In particular, such risks include, but are not limited to, the following:

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We may not be able to develop the INX Trading platform as contemplated or at all, or receive the regulatory approvals necessary to operate our business as currently contemplated.

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Blockchain networks represent a new and rapidly changing industry and there remains relatively limited use of blockchain networks and assets.

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Blockchain technology is an emerging technology that is novel and untested.

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The legal framework of regulations applicable to blockchain technologies, virtual currencies, tokens and token offerings is uncertain and evolving quickly.

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Tax authorities may disagree with our tax positions with regard to the Company, its business and the INX Token and may ask us to revise these positions in a manner that could adversely affect you.

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The prices of blockchain assets are extremely volatile and fluctuations in the price of blockchain assets could materially affect our profits.

	●	Our company has no operating history and our independent auditors have expressed substantial doubt about our ability to continue as a going concern.

	●	There is currently no trading market for our INX Tokens and, if a trading market were to develop, the price of the INX Tokens may be volatile.

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We expect to face intense competition from other companies.

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We may not receive regulatory approval in the various jurisdictions in which we plan to operate our businesses.

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We may not be able to prevent illegal activity from occurring over our platform, which could subject us to disciplinary action, including fines.

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Our securities business and related clearing operations expose us to material default and liquidity risk.

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We rely on third party contractors for the design, development and implementation of our trading platform infrastructure.

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Systems failures or capacity constraints could materially harm our ability to conduct our operations and execute our business strategy.

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We may be a target of cyber-attacks and other cyber security risks.

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Valuation of the INX Token is difficult and the offering price of the INX Tokens has been arbitrarily determined and should not be used by an investor as an indicator of the fair market value of the INX Tokens.

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There can be no assurance that we will be able to distribute any funds to INX Token holders.

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The tax characterization of Tokens is uncertain and you must seek your own tax advice in connection with purchasing Tokens.

Implications of Our Emerging Growth Company and Foreign Private Issuer Status

As a company with less than $1.07 billion in revenue for our year ending December 31, 2017, we qualify as an “emerging growth company” under Section 2(a) of the Securities Act of 1933, as amended, (the “Securities Act”), as modified by the U.S. Jumpstart Our Business Startups Act of 2012 (the “JOBS Act”). As an emerging growth company, we may take advantage of certain exemptions from reporting requirements that generally apply to public companies, including the auditor attestation requirements with respect to internal control over financial reporting under Section 404 of the Sarbanes-Oxley Act of 2002 (the “Sarbanes-Oxley Act”), compliance with new standards adopted by the Public Company Accounting Oversight Board (the “PCAOB”) requiring communication of critical audit matters in the independent public accounting firm report on our annual financial statements, exemption from say-on-pay, say-on-frequency, and say-on-golden parachute voting requirements, and reduced disclosure obligations regarding executive compensation in our periodic reports and proxy statements. We have irrevocably elected not to avail ourselves of the exemption from new or revised accounting standards.

We will remain an emerging growth company until the earliest of: (i) the last day of our fiscal year during which we have total annual gross revenue of at least $1.07 billion; (ii) the last day of our fiscal year following the fifth anniversary of the completion of this offering; (iii) the date on which we have, during the previous three-year period, issued more than $1.0 billion in non-convertible debt; or (iv) the date on which we are deemed to be a “large accelerated filer” under the Securities Exchange Act of 1934, as amended. Once we cease to be an emerging growth company, we will not be entitled to the exemptions provided to emerging growth companies under the JOBS Act.

Upon completion of this offering, we will be subject to the reporting requirements of Section 15(d) of the Exchange Act, that are applicable to “foreign private issuers,” and under those requirements we will file reports with the SEC. The INX Tokens are not currently registered under the Exchange Act, but if, within 120 days after the last day of its fiscal year ended on which the Company has total assets of more than $10,000,000, the number of record holders of the INX Tokens is more than 2,000 persons, or 500 persons who are not accredited investors, the Company will be required to register the INX Tokens under the Exchange Act, in accordance with Section 12(g) of the Exchange Act, and to continue to file such reports. The Company intends to remain subject to the reporting requirements of the Exchange Act either through continued compliance with Section 15(d) of the Exchange Act or by registration of the INX Tokens in accordance with Section 12(g) of the Exchange Act.

As a foreign private issuer we are exempt from certain rules and regulations under the Exchange Act that are applicable to other public companies that are not foreign private issuers. For example, we will not be required to issue quarterly reports, proxy statements that comply with the requirements applicable to U.S. domestic reporting companies, or individual executive compensation information that is as detailed as that required of U.S. domestic reporting companies. We will also have four months after the end of each fiscal year to file our annual report with the SEC and will not be required to file current reports as frequently or promptly as U.S. domestic reporting companies. We may also present financial statements pursuant to International Financial Reporting Standards (“IFRS”), instead of pursuant to U.S. generally accepted accounting principles (“U.S. GAAP” or “GAAP”). Our executive officers, directors, and principal shareholders will be exempt from the requirements to report transactions in our equity securities and from the short-swing profit liability provisions contained in Section 16 of the Exchange Act. As a foreign private issuer, we will also not be subject to the requirements of Regulation FD (Fair Disclosure) promulgated under the Exchange Act.

We may choose to take advantage of any, some, or all of the exemptions available to us as an emerging growth company or as a foreign private issuer. We have taken advantage of reduced reporting requirements in this prospectus.

Accordingly, the information contained in this prospectus may be different from the information you receive from other public companies in which you hold shares. Please see the section of this prospectus titled “Risk Factors—Risks Relating to our Incorporation in Gibraltar” for a description of exemptions that apply to emerging growth companies and foreign private issuers.

THE OFFERING

Security Offered		INX Tokens, an ERC20 compliant token.

Token ticker on INX Trading		INX

Total Tokens offered in this Offering		130,000,000 Tokens

Total Tokens to be outstanding (and not held by INX Limited) immediately after this Offering		[-] Tokens

Minimum Offering Amount		$5,000,000; we will not complete the sale of any INX Tokens unless we raise gross offering proceeds exceeding $5,000,000 (in U.S. Dollars). See “Plan of Distribution.”

Use of Proceeds		We intend to use the first $18 of million net proceeds raised from the sale of INX Tokens in this offering for the continued development and operation of the INX Trading platform (See “Business—Phases of Development”); 80% of the net proceeds from this offering in excess of $18 million will be used to establish and capitalize a cash reserve fund for the INX Trading platform. We intend to use the remaining amount of net proceeds from this offering for general corporate purposes and working capital. See “Use of Proceeds.”
Termination of the Offering		The offering will terminate upon the earliest to occur of: (i) the sale of all of the 130,000,000 Tokens being offered, (ii) 365 days after this registration statement is declared effective by the SEC, or (iii) such shorter period as may be determined by the Company in its sole discretion.

Uses of the INX Token on the INX Trading platform		(1) Payment of transaction fees. When used as payment of transaction fees on the INX Trading platform, the INX Token entitles holders to a ten percent (10%) discount as compared to fees paid using other currencies. The Company, from time to time in its sole discretion, may offer promotional incentives such as a greater discount compared to other forms of payment for transaction fees. In no case however, will the discount right included in the INX Token be less than the ten percent (10%). (2) Deposit as a portion of collateral for short positions.

Distributions on INX Tokens		Each INX Token will entitle its holder to a pro rata distribution of 20% of the Company’s Adjusted Operating Cash Flow. The annual distribution will be 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 will be payable on an annual basis commencing on April 30, 2020, and may thereafter be calculated and paid on an annual or a quarterly basis, subject to the board’s discretion. See “Description of INX Tokens.”

Rights Upon Liquidation		A breach of the INX Token Purchase Agreement will occur (x) if the Company fails to develop and operate a trading platform that permits the trading of Bitcoin, Ether and fiat currencies on the over the counter trading market by December 31, 2021 or permanently discontinues all the activities of the INX Trading platform and there is no successor trading platform having substantially similar or superior trading features that utilizes INX Tokens, and (y) there is an Insolvency Event (as defined in the Token Purchase Agreement). This breach would create a claim in favor of INX Token holders that could be asserted by INX Token holders in the event of a liquidation of the Company. The amount of a Token holder’s claim in such a scenario will likely be based on the damages sustained by the Token holder as a result of the Company’s breach of the Token Purchase Agreement, similar to how the value for any other breach of contract claim is typically determined under applicable law. Ultimately, the claim amount will be determined by the liquidator, a court of competent jurisdiction overseeing the liquidation, or some other authority pursuant to applicable insolvency law. Additionally, the Company has caused current shareholders who hold approximately 78% of its issued share capital, and shall cause its future shareholders, to enter an agreement, pursuant to which such shareholders (i) irrevocably subordinate their rights to receive any distributions and payments from the Company prior to the payment in full by the Company of all distributions owed to INX Token holders, and (ii) irrevocably waive and subordinate their rights, in the event of an Insolvency Event, to any cash held in the Cash Reserve Fund. See “Description of INX Tokens.”

Capital Reserve and Liquidity Fund		The Capital Reserve and Liquidity Fund will consist initially of 35 million INX Tokens created but not previously sold by the Company to the public. In addition, we plan to reserve an additional 20% of the INX Tokens received by INX Services 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 this offering and subsequent offerings of INX Tokens (excluding re-issuances of reacquired INX Tokens), up to a maximum of 100 million INX Tokens.

Tokens Reserved for Additional Issuances		The Company reserved 17,373,438 INX Tokens for sales and issuances to employees, directors, advisors and early investors in the Company. Of this amount, 1,068,000 INX Tokens have been issued and the Company has commitments to issue up to [ ] additional INX Tokens.

Total Tokens; Mining		200,000,000 INX Tokens have been created. There is no mining of INX Tokens and there is no other means of creating new INX Tokens.

SUMMARY FINANCIAL DATA

The following table sets forth a summary of our consolidated statement of comprehensive loss and summary of our consolidated balance sheet data for the periods indicated. This information should be read together with our consolidated financial statements and related notes included elsewhere in this prospectus. The operating results in any period are not necessarily indicative of the results that may be expected for any future period.

Summary Statement of Comprehensive Loss

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

	Six months ended June 30, 2018 (unaudited)			From September 1, (date of inception) through December 31, 2017
Operating expenses:
Research and development		204			56
General and administrative		1,699			530
Loss from operations		1,903			586

Fair value adjustment of INX Token and derivative liabilities		301			50
Finance expenses		8			1

Net loss and total comprehensive loss		2,212			637

Net loss per share, basic and diluted		(0.32	)		(0.13	)

Weighted average number of shares outstanding, basic and diluted		7,011,176			4,917,166

Summary Balance Sheet Data

	June 30, 2018 unaudited		December 31, 2017

Total Assets		2,268		517
Working Capital		1,147		62
Total Liabilities		1,121		455
Total Equity		1,147		62

Investing in INX Tokens involves a high degree of risk. You should carefully consider the risks we describe below, along with all of the other information set forth in this prospectus, including the section entitled “Cautionary Note Regarding Forward-Looking Statements” and our financial statements and the related notes beginning on page F-1, before deciding to purchase INX Tokens. The risks and uncertainties described below are those significant risk factors, currently known and specific to us, that we believe are relevant to an investment in INX Tokens. If any of these risks materialize, our business, results of operations or financial condition could suffer, the price of INX Tokens could decline substantially and you could lose part or all of your investment. Additional risks and uncertainties not currently known to us or that we now deem immaterial may also harm us and adversely affect your investment in INX Tokens.

You may lose all monies that you spend purchasing INX Tokens. If you are uncertain as to our business and operations or you are not prepared to lose all monies that you spend purchasing INX Tokens, we strongly urge you not to purchase any INX Tokens. We recommend you consult legal, financial, tax and other professional advisors or experts for further guidance before participating in the offering of our INX Token as further detailed in this prospectus. Further, we recommend you consult independent legal advice in respect of the legality of your participation in the INX Token sale.

We do not recommend that you purchase INX Tokens unless you have prior experience with cryptographic tokens, blockchain-based software and distributed ledger technology and unless you have received independent professional advice.

We have no operating history and our independent auditors have expressed substantial doubt about our ability to continue as a going concern.

We are a recently formed company established under the laws of Gibraltar with minimal activity and no historical operating results. In their report dated November 1, 2018 our independent auditors stated that our financial statements for the period ended December 31, 2017 were prepared assuming that we would continue as a going concern and they expressed substantial doubt about our ability to continue as a going concern. This doubt is based upon the Company’s current lack of resources to execute its business plan. Since our date of inception in September 2017, the Company has incurred a loss from operations and as of June 30, 2018, the Company has an accumulated deficit of $2,849,000. In addition to the accumulated deficit, we have entered into contractual arrangements committing us to future expenses, including the repayment of loans, as well as significant contingent obligations which are not currently reflected on our balance sheet. See “Management’s Discussion and Analysis of Financial Condition and Results of Operations – Commitments and Contractual Obligations.” We expect that we will incur approximately $9 million of expenses to complete the three phases of development contained in our business plan. “See “Business – Phases of Development.”

This offering is subject to a minimum offering amount of $5,000,000 and we will not commence operations of the INX Trading platform until obtaining funding through this offering. However, we may meet our minimum offering amount, close on committed purchases and have access to investor funds before we obtain the funding that we expect will be required to complete our business plan. There is no guarantee that we will be able to raise any additional capital in the future.

Because we lack an operating history, you have no basis upon which to evaluate our ability to achieve our business objective. Our proposed operations are subject to all business risks associated with a new enterprise. The likelihood of our creation of a viable business must be considered in light of the problems, expenses, difficulties, complications, and delays frequently encountered in connection with the inception of a business operating in a relatively new, highly competitive, and developing industry. Even if we close this offering, there can be no assurance that we will ever generate any operating activity or develop and operate the business as planned. If we are unsuccessful at executing on our business plan, our business, prospects, and results of operations may be materially adversely affected and investors may lose all or a substantial portion of their investment.

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

The development of blockchain networks is a new and rapidly evolving industry that is subject to a high degree of uncertainty. Factors affecting the further development of the blockchain industry include:

Our business model is dependent on continued investment in and development of the blockchain industry and related technologies. If investments in the blockchain industry become less attractive to investors or innovators and developers, or if blockchain networks and assets do not gain public acceptance or are not adopted and used by a substantial number of individuals, companies and other entities, it could have a material adverse impact on our prospects and our operations.

The application of distributed ledger technology is novel and untested and may contain inherent flaws or limitations.

Blockchain is an emerging technology that offers new capabilities which are not fully proven in use. There are limited examples of the application of distributed ledger technology. In most cases, software used by blockchain asset issuing entities will be in an early development stage and still unproven. As with other novel software products, the computer code underpinning the INX Tokens and Ethereum blockchain may contain errors, or function in unexpected ways. Insufficient testing of smart contract code, as well as the use of external code libraries, may cause the software to break or function incorrectly. Any error or unexpected functionality may cause a decline in value of the INX Token and result in substantial losses to purchasers of INX Tokens.

The creation and operation of a digital platform for the public trading of blockchain assets utilizing a distributed ledger will be subject to potential technical, legal and regulatory constraints. There is no warranty that the process for receiving, use and ownership of blockchain assets will be uninterrupted or error-free and there is an inherent risk that the software, network, blockchain assets and related technologies and theories could contain undiscovered technical flaws or weaknesses, the cryptographic security measures that authenticate transactions and the distributed ledger could be compromised, and breakdowns and trading halts could cause the partial or complete inability to use or loss of blockchain assets.

Risks associated with the distributed ledger technology could affect the market for blockchain assets which could have a materially adverse effect on an investment in 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.

Most blockchain 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 Company.

Blockchain networks are dependent on its contributors and developments by users or contributors, or the lack thereof, could damage the reputation of blockchain network, including the Etheruem network.

Developers and other contributors to blockchain network protocols generally maintain or develop those blockchain networks, including the verification of transactions on such networks. Because the networks are decentralized, these contributors are generally not directly compensated for their actions. Therefore, most blockchain networks provide that such contributors receive awards and transfer fees for recording transactions and otherwise maintaining the blockchain network. Such fees are generally paid in the blockchain asset of that network.

If the awards and fees paid for maintenance of a network are not sufficiently high to incentivize miners, miners may respond in a way that reduces confidence in the blockchain network. To the extent that any miners cease to record transactions in solved blocks, transactions that do not include the payment of a transfer fee will not be recorded on the blockchain until a block is solved by a miner who does not require the payment of transfer fees. Any widespread delays in the recording of transactions could result in a loss of confidence in the blockchain network and its assets.

The prices of blockchain assets are extremely volatile. Fluctuations in the price of Bitcoin, Ether and/or other blockchain assets could materially and adversely affect the Company.

The prices of blockchain assets such as Bitcoin and Ether have historically been subject to dramatic fluctuations and are highly volatile, and the market price of other blockchain assets may also be highly volatile. As relatively new products and technologies, blockchain assets have only recently become accepted as a means of payment for goods and services, and such acceptance and use remains limited. Conversely, a significant portion of demand for blockchain assets is generated by speculators and investors seeking to profit from the short- or long-term holding of blockchain assets. A lack of expansion, or a contraction of adoption and use of blockchain assets, may result in increased volatility or a reduction in the price of blockchain assets.

Several additional factors may influence the market price of blockchain assets, including, but not limited to:

A decrease in the price of a single blockchain asset may cause volatility in the entire blockchain industry and may affect other blockchain assets. For example, a security breach that affects investor or user confidence in Ether or Bitcoin may affect the industry as a whole and may also cause the price of other blockchain assets to fluctuate.

The value of blockchain assets and fluctuations in the price of blockchain assets could materially and adversely affect our business and investment in the Company.

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.

Initially, it was unclear how distributed ledger technologies, blockchain assets and the businesses and activities utilizing such technologies and assets would fit into the current web of government regulation. As blockchain networks and blockchain assets have grown in popularity and in market size, international, federal, state and local regulatory agencies have begun to clarify their position regarding the sale, purchase, ownership and trading of blockchain assets.

Regulation of blockchain networks remains in relatively early stages but it is likely to evolve significantly. Such evolution is subject to uncertainty and regulation may vary significantly among jurisdictions. Various legislative and executive bodies in the United States and in other countries have shown that they intend to adopt legislation and continue taking enforcement actions, which may severely impact the development and growth of blockchain networks and the adoption and use of blockchain assets.

New or changing laws and regulations or interpretations of existing laws and regulations, in the United States and elsewhere, may materially and adversely impact the value of blockchain assets, the liquidity and market price of blockchain assets, the ability to access marketplaces or exchanges on which to trade blockchain assets, and the structure, rights and transferability of blockchain assets. Governments may seek to ban transactions in blockchain assets altogether. See “Business—Regulatory Oversight of Blockchain Assets.”

The Company may be prevented from entering, or it may be required to cease operations in, a jurisdiction that makes it illegal or commercially unviable or undesirable to operate in such jurisdiction. Enforcement, or the threat of enforcement, may also drive a critical mass of participants and trading activity away from regulated markets such as the INX Trading platform and toward unregulated exchanges. Although it is impossible to predict the positions that will be taken by certain governments, any regulatory changes affecting blockchain assets could be substantial and materially adverse to the development and growth of our business and investment in the Company.

Our ability to develop the INX Trading platform faces operational, technological and regulatory challenges and we may not be able to develop the INX Trading platform as contemplated or at all.

We may not be able to develop the INX Trading platform as contemplated by our business model or at all. In addition, a number of factors could materially adversely affect our ability to commercialize and generate any revenue from our proposed INX Trading platform.

The development, structuring, launch and maintenance of the INX Trading platform could lead to unanticipated and substantial costs, delays or other operational or financial difficulties. Our proposed platform is complex and its creation requires the integration of multiple technologies and the development of new software. There can be no assurance that we will have the financial and technological resources necessary to complete the development of the INX Trading platform if its development costs more than we have estimated or requires technology and expertise that we do not have and cannot develop. Even if we are able to develop the INX Trading platform as contemplated, we may not be able to develop the platform on a timely basis.

Further, there can be no assurance that our platform will gain the acceptance of customers or other market participants. Because blockchain asset trading is in its early stages, it is difficult to predict the preferences and requirements of blockchain asset traders and our platform design and technology may be incompatible with new or emerging forms of blockchain assets or related technologies. Failure to achieve acceptance would impede our ability to develop and sustain a commercial business.

In addition, there can be no assurance that our platform will qualify for registrations that we are seeking or we plan to seek with the SEC, FINRA, CFTC and various other regulatory bodies both in the U.S. and in other countries. As of the date of this offering, one of our U.S. subsidiaries, INX Services, Inc., has filed a Form BD and Form NMA and is currently in the process of completing Form ATS. The Form ATS will include a description of the processes, rules and procedures that will govern the trading of different types of digital assets, including ’security’ and ‘utility’ tokens and virtual currencies on the INX Trading platform. However, such processes, rules and procedures remain subject to our further development of the INX Trading platform infrastructure. We also plan to incorporate another U.S. subsidiary that will register with the CFTC as a designated contract market or swap execution facility.

We may fail to qualify for registrations under any of these authorities or we may be required to alter our business model as currently contemplated in order to meet the requirements of these regulatory authorities. Either of these results would have a broad impact on us and could have a material adverse effect on our businesses, financial condition, results of operations and prospects and, as a result, investors could lose all or most of their investment.

Because distributions to the INX Token holders are dependent on our cash flow, our failure to develop the INX Trading platform, failure of the INX Trading platform to gain regulatory approvals or failure of the INX Trading platform to gain acceptance would prevent us from paying any distribution to the INX Token holders. Further, any of these failures would prevent INX Token holders from using INX Tokens as payment for transaction fees on the INX Trading platform or as collateral deposited with the INX Trading platform for short positions. Such adverse effects would impact the utility, liquidity, and the trading price of INX Tokens and potentially render INX Tokens worthless.

We expect to face intense competition from other companies and, if we are not able to successfully compete, our business, financial condition and operating results will be materially harmed.

We expect to encounter competition in all aspects of our business, including from entities having substantially greater capital and resources, offering a wide range of products and services and in some cases operating under a different and possibly less stringent regulatory regime.

We will face competition from other securities, futures and securities option exchanges; over-the-counter markets (OTC); clearing organizations; large industry participants; swap execution facilities; alternative trade execution facilities; technology firms, including electronic trading system developers, and others. New entrants may enter the market with alternative methods of providing trade execution and related services, and existing competitors may launch new initiatives.

Many of these competitors have greater financial, marketing, technological and personnel resources than we do. In addition, many of our competitors may offer a wider range of bundled services, have broader name recognition, and have larger customer bases than we do.

Our ability to develop competitive advantages will require continued enhancements to our products, investment in the development of our services, additional marketing activities and enhanced customer support services. There can be no assurance that we will have resources to make sufficient investments in the development of our services, that our competitors will not devote significantly more resources to competing services or that we will otherwise be successful in developing market share. If competitors offer superior services, our market share could be affected and this would adversely impact our business and results of operations.

Failure to keep up with rapid changes in industry-leading technology, products and services could negatively impact our results of operations.

The financial services industry is subject to rapid technological change and evolving industry standards. User demands become greater and more sophisticated as the dissemination of products and information to customers increases. If we are unable to anticipate and respond to the demand for new services, products and technologies, innovate in a timely and cost-effective manner and adapt to technological advancements and changing standards, we may be unable to compete effectively, which could have a material adverse effect on our business. Many of our competitors have significantly greater resources than we do to fund research and development initiatives. Moreover, the development of technology-based services is a complex and time-consuming process. New products and enhancements to existing products can require long development and testing periods. Significant delays in new product releases, failure to meet key deadlines, or significant problems in creating new products could negatively impact our revenues and profits.

We may not receive regulatory approval in the various jurisdictions in which we plan to operate our businesses.

We are seeking or we plan to seek registrations with the SEC, FINRA, CFTC and various other regulatory bodies both in the U.S. and in other countries. As of the date of this offering, one of our U.S. subsidiaries, INX Services, Inc., has filed a Form BD and Form NMA and is currently in the process of completing Form ATS. The Form ATS will include a description of the processes, rules and procedures that will govern the trading of different types of digital assets, including ’security’ and ‘utility’ tokens and virtual currencies on the INX Trading platform. However, such processes, rules and procedures remain subject to our further development of the INX Trading platform infrastructure and our application with FINRA. We also plan to incorporate another U.S. subsidiary that will register with the CFTC as a designated contract market or swap execution facility with the CFTC. To the extent that the instruments underlying the swaps or futures are securities, we will also need to comply with the applicable federal securities rules and regulations.

If we fail to qualify for registrations under any of these authorities, we may be unable to execute our business plan as a provider of financial services. This would have a broad impact on us and could have a material adverse effect on our businesses, financial condition, results of operations and prospects and, as a result, investors could lose all or most of their investment. In addition, any such action could also cause us significant reputational harm, which, in turn, could seriously harm the Company.

Firms in the financial services industry have experienced increased scrutiny in recent years. Such regulatory or other actions may lead to penalties, fines, disbarment and other sanctions which could place restrictions or limitations on our operations and otherwise have a material adverse effect on our businesses.

The securities markets and the brokerage industry in which we operate are subject to extensive, evolving regulation that imposes significant costs and competitive burdens that could materially impact our business.

Most aspects of our broker-dealer operations will be highly regulated, including regulated oversight over sales and reporting practices, operational compliance, capital requirements and licensing of employees. Accordingly, we face the risk of significant intervention by regulatory authorities such as the SEC and FINRA in the U.S. and their equivalents in other countries.

Compliance with regulations may require us and our customers to dedicate significant financial and operational resources that could result in some participants leaving our markets or decreasing their trading activity, which would negatively affect our profitability. We expect to continue to incur significant costs to comply with the extensive regulations that apply to our business.

See “Business—Regulation of Our Market” for a description of potential regulation of our business.

As we expand our business, we may be exposed to increased and different types of regulatory requirements. We may become subject to new regulations or changes in the interpretation or enforcement of existing regulations, which may adversely affect our business. Also, regulatory changes that impact how our customers conduct their business may impact our business and results of operations. The U.S. federal government and other governments outside of the United States may implement new or revised regulatory requirements for the financial services industry. Any changes to the regulatory rules could cause us to expend more significant compliance, business and technology resources, incur additional operational costs and create additional regulatory exposure.

If we fail to comply with applicable laws, rules or regulations, we may be subject to censure, fines, cease-and-desist orders, suspension of our business, removal of personnel or other sanctions, including revocation of our broker-dealer registrations, our designations as a contract market and derivatives clearing organization.

The extent to which blockchain assets are used to fund criminal or terrorist enterprises or launder the proceeds of illegal activities could materially impact our business.

The potential, or perceived potential, for anonymity in transfers of bitcoin and similar blockchain assets, as well as the decentralized nature of blockchain networks, has led some terrorist groups and other criminals to solicit bitcoins and other blockchain assets for capital raising purposes. As blockchain assets have grown in both popularity and market size, the U.S. Congress and a number of U.S. federal and state agencies have been examining the operations of blockchain assets, their users and exchanges, concerning the use of blockchain assets for the purpose of laundering the proceeds of illegal activities or funding criminal or terrorist enterprises.

In addition to the current market, new blockchain networks or similar technologies may be developed to provide more anonymity and less traceability. There is also the potential that other blockchain asset trading platforms may court such illicit activity by not adhering to know-your-customer and anti-money laundering practices.

We may not be able to prevent illegal activity from occurring over our platform. The use of blockchain assets for illegal purposes, or the perception of such use, over our platform or on other trading platforms could result in significant legal and financial exposure, damage to our reputation, damage to the reputation of blockchain assets and a loss of confidence in the services provided by our platform and the blockchain asset community as a whole. This could result in regulatory penalties which could have an adverse effect on our business.

We may not have sufficient cash flow from operating activities, cash on hand and the ability to obtain borrowing capacity to finance required capital expenditures, fund strategic initiatives and meet our other cash needs. These obligations require a significant amount of cash, and we may need additional funds, which may not be readily available.

The viability of our business will be dependent on the availability of adequate capital to develop and maintain our business and meet our regulatory capital requirements. We will need to continue to invest in our operations for the foreseeable future to carry out our business plan. If the INX Trading platform does not attract clients and does not achieve the expected operating results, we will need to seek additional financing or revise our business plan. Our ability to borrow additional funds may be impacted by financial lending institutions’ ability or willingness to lend to us on commercially acceptable terms.

Low levels of operating cash flow together with limited access to capital or credit in the future could have an impact on our ability to meet our regulatory capital requirements, invest in our software and infrastructure, engage in strategic initiatives, make acquisitions or strategic investments in other companies, react to changing economic and business conditions, repay our outstanding debt, or make dividend payments. Such outcomes could have an adverse effect on our business, financial condition and operating results.

Our business model depends, in part, on our ability to resell INX Tokens received as payment for transaction fees by INX Services. Resales by the Company of such Tokens require compliance with the registration requirements of the Securities Act. If we are unable to register such Tokens, there may not be a sustainable market in INX Tokens and we may be unable to execute our business plan.

We anticipate that users of the INX Trading platform will be incentivized to use INX Tokens as payment for transaction fees or as collateral on the platform. Because only a finite amount of INX Tokens exist, Tokens received as payment will reduce the availability of INX Tokens unless the Company resells Tokens pursuant to a future primary offering. We intend to file one or more registration statements to register for re-issuance INX Tokens which INX Services receives as payment for transaction fees on INX Trading, however the Company may not be eligible to do so, may experience delays in preparing these registration statements or having these registration statements declared effective, or may not succeed in selling additional INX Tokens, either in registered offerings or offerings that are exempt from registration. If the Company is unable to re-issue INX Tokens received as payment for transaction fees, holders of INX Tokens may have reduced liquidity and the operations of INX Services and INX Trading, and our business in general, may be adversely affected.

Our securities business and related clearing operations expose us to material default and liquidity risk.

We plan to self-clear blockchain asset transactions. Our clearing broker operations will expose us to counterparties with differing risk profiles. We plan to guarantee transactions submitted by our clearing broker with counterparties in the financial industry, including brokers and dealers, commercial banks, investment banks, mutual and hedge funds, and other institutional customers.

We may be required to finance our clients’ unsettled positions and we could be held responsible for the defaults of our clients. Default by our clients may also give rise to our incurring penalties imposed by execution venues, regulatory authorities and clearing and settlement organizations.

Regulatory agencies have recently required clearing and settlement organizations to increase the level of margin deposit requirements and they may continue to do so in the future. Growth in trading activity may lead to higher regulatory capital requirements. We cannot assure you that these capital requirements will be sufficient to protect market participants from a default or that we will not be adversely affected in the event of a significant default.

Broker-dealers are also subject to regulatory capital requirements promulgated by the applicable regulatory and exchange authorities of the countries in which they operate. The failure to maintain required regulatory capital may lead to suspension or revocation of a broker-dealer registration and suspension or expulsion by a regulatory body. If existing cash together with cash from operations are not sufficient, we may need to reject orders from clients and we may ultimately breach regulatory capital requirements.

Furthermore, if our broker-dealer subsidiaries are subject to new or modified regulatory capital rules or requirements, or fines, penalties or sanctions due to increased or more stringent enforcement, it could materially limit or reduce the liquidity we may need to expand or even maintain our then-present levels of business, which could have a material adverse effect on our business, results of operations and financial condition.

We may be unable to raise sufficient funds to establish a cash reserve fund that meets regulatory requirements. Further, our commitment to maintain a cash reserve fund and other regulatory requirements may limit our profits and our ability to make distributions to Token holders.

Our plan is to establish a cash reserve fund to facilitate coverage of our clearing house and settlement operations. We intend that 80% of the net proceeds from this offering in excess of $18 million will be used to establish and capitalize a cash reserve fund for the INX Trading platform. However, we do not currently have any cash reserves. In addition, we intend to use the first $18 million of net proceeds raised from this offering for the continued development and operation of the INX Trading platform. This offering is subject to a minimum offering amount of $5,000,000 and we may close on committed purchases and gain access to committed funds at any time after we meet our minimum offering amount. Therefore, we cannot guarantee that we will have any material amount of cash reserves after the completion of this offering.

Any deficiencies in our cash reserve fund may require us to make additional payments into the cash reserve fund. Amounts reserved or released from the fund will be used to cover losses and cannot be used to develop the Company and its business. In addition, our ability to withdraw capital from the cash reserve fund may be subject to regulatory restrictions. We may become subject to capital requirements in the United States or other foreign jurisdictions in which we may enter.

This may impact profits and cash flows of the Company and reduce the total amount that is returned to Token holders. Such regulations may require us to accumulate capital reserves in our subsidiaries which could limit our ability to develop our business processes or to disburse funds to our INX Token holders. If we fail to maintain the required levels of capital, we may be required to suspend our broker-dealer operations during the period that we are not in compliance with capital requirements.

If our capital reserves, including the cash reserve fund, are insufficient to meet internal or regulatory requirements, or if they are insufficient to cover our future liabilities, we may be required to raise additional capital. Any one or all of these outcomes may have a material effect on our business.

We may experience systems failures or capacity constraints that could materially harm our ability to conduct our operations and execute our business strategy.

We will be heavily dependent on the capacity, reliability and security of the computer and communications systems and software supporting our operations. We plan to receive and/or process a large portion of our trade orders through electronic means, such as through public and private communications networks. Our systems, or those of our third party providers, may fail or be shut down or, due to capacity constraints, may operate slowly, causing one or more of the following to occur:

If any of our systems do not operate properly, are compromised or are disabled, including as a result of system failure, employee or customer error or misuse of our systems, we could suffer financial loss, liability to customers, regulatory intervention or reputational damage that could affect demand by current and potential users of our market.

Our status as a CFTC registrant will generally require that our trade execution and communications systems be able to handle anticipated present and future peak contract volume. Heavy use of our computer systems during peak trading times or at times of unusual market volatility could cause our systems to operate slowly or even to fail for periods of time. We cannot assure you that our estimates of future contract volume and order messaging traffic will be accurate or that our systems will always be able to accommodate actual contract volume and order messaging traffic without failure or degradation of performance. Increased contract volume and order messaging traffic may result in connectivity problems or erroneous reports that may affect users of the platform. System failure or degradation could lead our customers to file formal complaints with industry regulatory organizations, to file lawsuits against us or to cease doing business with us, or could lead the CFTC or other regulators to initiate inquiries or proceedings for failure to comply with applicable laws and regulations.

We will need to continue to upgrade, expand and increase the capacity of our systems as our business grows and as we execute our business strategy. Although many of our systems are designed to accommodate additional volume and products and services without redesign or replacement, we will need to continue to make significant investments in additional hardware and software to accommodate the increases in volume of transactions and order transaction traffic and to provide processing services to third parties. If we cannot increase the capacity and capabilities of our systems to accommodate an increasing volume of transactions and to execute our business strategy, our ability to maintain or expand our businesses would be adversely affected.

We regard the secure transmission of confidential information and the ability to continuously transact and clear on our electronic trading platforms as critical elements of our operations. Our technology, our people and those of our third party service providers and our customers may be vulnerable to targeted attacks, unauthorized access, fraud, computer viruses, denial of service attacks, terrorism, firewall or encryption failures and other security problems. Attackers may seek to steal information about our technology, financial data or user information or take other actions that would be damaging to the Company and/or holders of INX Tokens.

In addition, as the regulatory environment related to information security, data collection and use, and privacy becomes increasingly rigorous, with new and constantly changing requirements applicable to our business, compliance with those requirements could also result in additional costs.

The INX Token Distributed Ledger is publicly available and contains encrypted personal information. The misuse or theft of this information may give rise to breaches of privacy laws, fines and sanctions.

For many blockchain assets, distributed ledgers are used to record transfers of ownership of the asset. Information regarding ownership is most commonly represented by ledger balances and an owner’s public wallet address. Such information includes the complete trading history from the inception of the respective blockchain asset and such information regarding ownership of the assets, including the public wallet address, is generally available to the public. For many blockchain assets, personal identifying information that is used to associate a public wallet address with its owner is typically maintained in a separate database that is not exposed to the public.

The INX Token smart contract contains a feature for enhancing regulatory compliance whereby encrypted personal information is stored within the token smart contract (rather than a private, centralized database). The Company will hold a private key which will enable decryption of such personal information.

There are a number of data protection, security, privacy and other government- and industry-specific requirements that are implicated by utilizing a distributed ledger. If blockchain networks are unable to satisfy data protection, security, privacy, and other government-and industry-specific requirements, their growth could be harmed.

Further, should access to the key which enables decryption of personal information become comprised, personally identifiable information of INX Token holders may be revealed. Security breaches with respect to the holders’ personal identity information database could result in theft of the information necessary to link personal identity with public keys, and thus the stolen information could be used to determine the affected holder’s complete trading history. Concerns over these issues may limit adoption of this novel trading system by a range of potential investors, reducing liquidity of blockchain assets.

Security attacks against the Company could result in, a loss of the Company’s blockchain assets, theft of personal information of our customers or damage to our reputation and our brand, each of which could adversely affect an investment in the Company. We could be required to incur significant expense to protect our systems and/or investigate any alleged attack.

Security breaches, computer malware and computer hacking attacks have been a prevalent concern since the launch of blockchain networks. Our security system and operational infrastructure may be breached due to the actions of outside parties, error or malfeasance of an employee of ours, or otherwise. Techniques used to obtain unauthorized access, disable or degrade service, or sabotage systems change frequently and may be designed to remain dormant until a predetermined event. Outside parties may also attempt to fraudulently induce employees of ours to disclose sensitive information in order to gain access to our infrastructure. Furthermore, we believe that, as our assets grow, the Company may become a more appealing target for security threats such as hackers and malware.

Our security measures may prove insufficient depending upon the attack or threat posed. We may be unable to anticipate these techniques or implement adequate preventative measures. As a result, an unauthorized party may obtain access to our private keys, company and customer data or blockchain assets.

Any such breach or unauthorized access could result in significant legal and financial exposure, damage to our reputation, and a loss of confidence in the services we provide that could potentially have an adverse effect on our business, while resulting in regulatory penalties or the imposition of burdensome obligations by regulators. In the event of a security breach, we may be forced to cease operations, or suffer a reduction in assets, the occurrence of each of which could adversely affect an investment in the Company.

The loss of key personnel, particularly Mr. Shy Datika, our President, could have a material adverse effect on us.

Our success depends solely on the continued services of key personnel, particularly Mr. Shy Datika, one of our founders, our controlling shareholder and President, who has extensive market knowledge and long-standing industry relationships. In particular, our reputation among and our relationships with key blockchain industry leaders are the direct result of a significant investment of time and effort by Mr. Datika to build credibility in a highly specialized industry. The loss of services of Mr. Shy Datika could diminish our business and growth opportunities and our relationships with key leaders in the blockchain industry and could have a material adverse effect on us.

Our business will be adversely affected if we are unable to attract and retain talented employees, including sales, technology, operations and development professionals.

Our business operations will require highly specialized knowledge of the financial industry and of technological innovation as it applies to the financial industry. If we are unable to hire or retain the services of talented employees, including executive officers, other key management and sales, technology, operations and development professionals, we would be at a competitive disadvantage. In addition, recruitment and retention of qualified staff could result in substantial additional costs. The loss of the services of one or more of our executive officers or other key professionals or our inability to attract, retain and motivate qualified personnel, could have a material adverse effect on our ability to operate our business.

We have not identified all the persons that we will need to hire to provide services and functions critical to the development of the business and no assurance can be given that we will be able to hire the necessary persons on acceptable terms, if at all.

Our business is in its developmental stage and we have not identified all the persons that we will need to hire to provide services and functions critical to the development of the business. If we are unable to hire persons with the necessary expertise on terms acceptable to us then we will not be able to develop the INX Trading platform as contemplated. Further, even if we are able to hire such service providers, they might be unable to meet our specifications and requirements, which could have a material adverse effect on our ability to develop and launch our business plan.

As a financial services provider, we will be subject to significant litigation risk and potential commodity and securities law liability.

Many aspects of our business involve substantial litigation risks. We could be exposed to substantial liability under federal and state laws and court decisions, as well as rules and regulations promulgated and/or direct actions brought by the SEC and, following the commencement of derivative transactions, the CFTC, and other U.S. regulatory agencies.

These risks include, among others, potential liability from disputes over terms of a trade, the claim that a system failure or delay caused monetary losses to a customer, that we entered into an unauthorized transaction, that we provided materially false or misleading statements in connection with a transaction or that we failed to effectively fulfill our regulatory oversight responsibilities. We may be deemed an underwriter under the Securities Act with regard to our role and involvement with respect to any initial offerings of securities on the INX Trading platform, and our failure to comply with applicable federal securities laws may expose us to legal liability. We may be subject to disputes regarding the quality of trade execution, the settlement of trades or other matters relating to our services. We may become subject to these claims as a result of failures or malfunctions of our systems and services we provide.

We could incur significant legal expenses defending claims, even those without merit. In addition, an adverse resolution of any future lawsuit or claim against us could have a material adverse effect on our business and our reputation. To the extent we are found to have failed to fulfill our regulatory obligations, we could lose our authorizations or licenses or become subject to conditions that could make future operations more costly and impairing our profitability.

Our compliance and risk management programs might not be effective and may result in outcomes that could adversely affect our reputation, financial condition and operating results.

Our ability to comply with applicable laws and rules is largely dependent on our establishment and maintenance of compliance, review and reporting systems, as well as our ability to attract and retain qualified compliance and other risk management personnel. We face the risk of significant intervention by regulatory authorities, including extensive examination and surveillance activity.

We cannot assure you that our compliance policies and procedures will always be effective or that we will always be successful in monitoring or evaluating our risks. In the case of alleged non-compliance with applicable laws or regulations, we could be subject to investigations and judicial or administrative proceedings that may result in substantial penalties or civil lawsuits, including by customers, for damages, which could be significant. Any of these outcomes may adversely affect our reputation, financial condition and operating results.

Operational risks, such as misconduct and errors of our employees or entities with which we do business, are difficult to detect and deter and could cause us reputational and financial harm.

Our employees and agents could engage in misconduct which may include conducting in and concealing unauthorized activities, improper use or unauthorized disclosure of confidential information. We are at risk that our employees may engage in insider trading of the digital assets listed on the INX Trading platform which may lead to corporate actions, such as a suspension of trading, and legal actions that could have an adverse effect on the Company.

Further, our employees could make errors in recording or executing transactions for customers which would cause us to enter into transactions that customers may disavow and refuse to settle.

It is not always possible to deter misconduct by our employees, and the precautions we take to prevent and detect this activity may not be effective in all cases. Our ability to detect and prevent errors or misconduct by entities with which we do business may be even more limited. Such misconduct could subject us to financial losses or regulatory sanctions and materially harm our reputation, financial condition and operating results.

Our operations of businesses outside of the United States and our acceptance of currencies other than the U.S. Dollar will subject us to currency risk.

Once we commercialize our INX Trading platform, we intend to expand globally and portions of our revenues and expenses will be denominated in currencies other than the U.S. dollar. In addition, the Company and its subsidiaries will accept various currencies as payment for the purchase of the INX Tokens or fees for services. Because our financial statements are presented in U.S. dollars, we must translate non-U.S. dollar denominated revenues, income and expenses, as well as assets and liabilities, into U.S. dollars at exchange rates in effect during or at the end of each reporting period. These fluctuations may materially impact the translation of our non-U.S. results of operations and financial condition.

Increases or decreases in the value of the U.S. dollar against these other currencies may affect our operating results and the value of assets and liabilities denominated in foreign currencies.

We will accept certain cryptocurrencies as payment for the purchase of INX Tokens and fees for services. Our holding of these cryptocurrencies will subject us to risks due to fluctuations in the value of these cryptocurrencies.

Cryptocurrencies received as payment for the purchase of INX Tokens and fees for services will be held by INX Services until sold. Proceeds from the sale of such cryptocurrencies will be dependent on the U.S. dollar trading value for the respective cryptocurrency based on the relevant market or markets for that cryptocurrency. Decreases in the trading value of a cryptocurrency while it is held by INX Services will result in a decrease in the operating results of the Company.

We will need to implement strict finance and accounting systems, procedures and controls to operate our business.

We will be required to comply with a variety of reporting, accounting and other rules and regulations. Compliance with these requirements will be expensive. We will need to implement strict finance and accounting systems, procedures and controls to satisfy our reporting requirements and these requirements may increase our costs and require additional management time and resources. However, as an “emerging growth company” as defined in the JOBS Act we may not be required to, among other things, provide an auditor’s attestation report on our system of internal controls over financial reporting pursuant to Section 404 of the Sarbanes-Oxley Act or comply with any requirement that may be adopted by the PCAOB regarding mandatory audit firm rotation or a supplement to the auditor’s report providing additional information about the audit and the financial statements (auditor discussion and analysis). Prior to the closing of this offering, we have not completed an assessment, nor have our auditors tested, our systems of internal controls. For as long as we are an “emerging growth company” under the JOBS Act, our independent registered public accounting firm will not be required to attest to the effectiveness of our internal controls over financial reporting pursuant to Section 404. If our internal controls have undetected weaknesses or our internal control over financial reporting is determined to be ineffective, such failure could cause investors to lose confidence in our reported financial information, negatively affect the market price of the INX Token and adversely impact our business and financial condition. See “Management’s Discussion and Analysis of Financial Condition and Results of Operations – Controls and Procedures.”

Developing and maintaining our reputation is critical to attracting and retaining customers and investors and for maintaining our relationships with our regulators. Our success depends on our ability to complete development of, successfully implement and maintain the electronic trading systems that have the functionality, performance, reliability and speed required by our customers. We must swiftly and effectively construct the INX Trading platform to remain competitive.

Negative publicity regarding our Company, INX Tokens, our key personnel or blockchain assets generally, whether based upon fact, allegation or perception and whether justified or not, could give rise to reputational risk which could significantly harm our business prospects.

We, as well as many of our potential customers, depend on third party suppliers and service providers for a number of services that are important. An interruption or cessation of an important supply or service by any third party could have a material adverse effect on our business, including revenues derived from our customers’ trading activity.

We will depend on a number of suppliers, such as banking, clearing and settlement organizations, on-line service providers, data processors, and software and hardware vendors, for elements of our trading, clearing and other systems, as well as communications and networking equipment, computer hardware and software and related support and maintenance. We also depend on third parties to provide Internet, telecommunication and fiber optic network connectivity to our data centers. Many of our customers rely on third parties, such as independent software vendors, to provide them with front-end systems to access our platform and other back office systems for their trade processing and risk management needs.

We cannot guarantee that these service providers will make the necessary monetary and time investments to provide services for our INX Trading platform and changes to our interfaces and functionality that occur as we develop our business. To the extent any of our service providers or the organizations that provide services to our customers in connection with their trading activities cease to provide these services in an efficient, cost-effective manner or fail to adequately expand their services to meet our needs and the needs of our customers, we could experience decreased contract volume, lower revenues and higher costs which could adversely affect an investment in the Company.

Our revenues and profits will be substantially dependent on the contract volume in our markets. Our revenues and profits would be adversely affected if we are unable to develop and continually increase our contract volume once the INX Trading platform becomes operational.

The success of our business depends, in part, on our ability to develop then continually increase our contract volume; develop and expand our product offerings or execution facilities; and attract new customers. Our success also depends on our ability to offer competitive prices and services in an increasingly price-sensitive business.

We cannot provide assurances that we will be able to develop and expand product lines, that we will be able to attract and retain customers or that we will be able to modify our pricing structure to compete effectively.

Our contract volume will also be directly affected by domestic and international factors that are beyond our control, including:

Any one or more of these factors may contribute to reduced activity in our markets. Furthermore, declines in contract volume may negatively impact market liquidity, which could lead to further loss of contract volume. Material decreases in contract volume would have a material adverse effect on our financial condition and operating results.

The revaluation of the INX Token liability to fair value for each reporting period may have a negative effect on our equity and our comprehensive income.

As more fully described in the notes to our financial statements, the INX Token liability is remeasured at each reporting period to fair value with changes in fair value recorded in profit or loss. Because there is no trading market for the INX Tokens, the fair value of each INX Token is currently determined by our management and the board of directors based on a valuation, derived from a draft third party share and token purchase agreement.

If a trading market were to develop for INX Tokens, the fair market value of the INX Tokens, represented by their market price, will be subject to fluctuations due to a number of factors, including fluctuations in the Company’s results of operations and macro-economic factors. Accordingly, the financial liability measured at fair market value will also fluctuate.

The remeasurement of the INX Token liability to fair value in each reporting period may have a negative effect on our equity and our comprehensive income.

As blockchain assets and blockchain technologies become more widely available, we expect the services and products associated with them to evolve. As a result, to stay current with the industry, our business model may need to evolve as well. From time to time we may modify aspects of our business model relating to our product mix and service offerings. We cannot offer any assurance that these or any other modifications will be successful or will not result in harm to the business. We may not be able to manage growth effectively, which could damage our reputation, limit our growth and negatively affect our operating results.

We may have difficulty executing our growth strategy and maintaining our growth effectively.

Our growth requires additional investment in personnel, facilities, information technology infrastructure and financial and management systems and controls and may place a significant strain on our management and resources. Our growth strategy also may subject us to increased legal, compliance and regulatory obligations.

There is no guarantee that our efforts will be successful. We may not be able to implement important strategic initiatives in accordance with our expectations, including that the strategic initiatives could result in additional unanticipated costs, which may result in an adverse impact on our business and financial results. Unless our growth results in an increase in our revenues that is proportionate to the increase in our costs associated with our growth, our future profitability could be adversely affected.

We intend to explore acquisitions, other investments and strategic alliances. We may not be successful in identifying opportunities or in integrating the acquired businesses. Any such transaction may not produce the results we anticipate, which could adversely affect our business and the price of INX Tokens.

We intend to explore and pursue acquisitions, strategic partnerships, joint ventures and other alliances to strengthen our business and grow our company.

The market for acquisitions and strategic opportunities is highly competitive, especially in light of recent merger and acquisition activity in our industry. In addition, these transactions entail numerous operational and financial risks, including but not limited to difficulties in valuing acquired businesses, combining personnel and firm cultures, integrating acquired products, services and operations, achieving anticipated synergies that were inherent in our valuation assumptions, exposure to unknown material liabilities, the potential loss of key vendors, clients or employees of acquired companies, incurrence of substantial debt or dilutive issuance of equity securities to pay for acquisitions, higher-than expected acquisition or integration costs, write-downs of assets or impairment charges, increased amortization expenses and decreased earnings, revenue or cash flow from dispositions.

We may be unable to identify strategic opportunities or we may be unable to negotiate or finance future transactions on terms favorable to us. To the extent we enter into joint ventures and alliances, we may experience difficulties in the development and expansion of the business of any newly formed ventures, in the exercise of influence over the activities of any ventures in which we do not have a controlling interest, as well as encounter potential conflicts with our joint venture or alliance partners.

We may not realize the anticipated growth and other benefits from our growth initiatives and investments, which may have an adverse impact on our financial condition and operating results.

The Company may in the future be dependent in part on the data center facilities of third parties.

The Company’s future infrastructure network may be established in whole or in part through servers which it owns and/or houses at the location facilities of third parties, and/or servers that it rents at data center facilities of third parties. If the Company is unable to secure or renew its data facility leases on commercially reasonable terms or at all, the Company may be required to transfer its servers to a new data center facility, and may incur significant costs and possible service interruption in connection with the relocation. These facilities are also vulnerable to damage or interruption from, among others, natural disasters, arson, terrorist attacks, power losses, and telecommunication failures. Additionally, the third party providers of such facilities may suffer a breach of security as a result of third party action, employee error, malfeasance or otherwise, and a third party may obtain unauthorized access to the data in such servers. The Company and the providers of such facilities may be unable to anticipate these techniques or to implement adequate preventive measures.

General global market and economic conditions may have an adverse impact on the Company’s operating performance, results of operations and/or cash flow.

The Company may be affected by general global economic and market conditions. Challenging economic conditions worldwide have from time to time, contributed, and may continue to contribute, to slowdowns in the information technology industry at large. Weakness in the economy could have a negative effect on the Company’s business, operations and financial condition, including decreases in revenue and operating cash flow, and inability to attract future equity and/or debt financing on commercially reasonable terms. Additionally, in a down-cycle economic environment, the Company may experience the negative effects of a slowdown in trading and usage of the Company’s business platform that is yet to be developed and may delay or cancel the development, structuring, licensing and/or launch of the anticipated Token functionality. Suppliers on which the Company relies for servers, bandwidth, location and other services could also be negatively impacted by economic conditions that, in turn, could have a negative impact on the Company’s operations or expenses. There can be no assurance, therefore, that current economic conditions or worsening economic conditions or a prolonged or recurring recession will not have a significant, adverse impact on the Company’s business, financial condition and results of operations, and hence, the Company’s business platform that is yet to be developed and/or the ability to develop, structure, license and/or launch any Token functionality. Any such circumstances would then correspondingly negatively impact the functionality, liquidity, and/or trading price of INX Tokens.

We have no operating history and therefore valuation of the INX Token is difficult.

We were incorporated under the laws of Gibraltar on November 27, 2017 and our operations to date have consisted of planning and developing the INX Token and INX Trading platform, establishing relationships with potential service providers and preparing necessary documents and filings in order to implement the INX Token and INX Trading platform as currently conceived. Accordingly, we have no operating history upon which an evaluation of our prospects and future performance can be made.

We believe that the value of the INX Token will be influenced by the supply of the INX Token, the market’s perception of the INX Token’s value and the liquidity for Tokens on a secondary market. The original purchase price of the INX Token in this offering may not be indicative of the market price of INX Tokens after they have been made available for trading on a market. There is also no assurance that the market price of INX Tokens will not decline below the original purchase price of this offering.

If our INX Token does not gain public acceptance or is not adopted, used or traded by a substantial number of individuals, companies and other entities, it could have a material adverse impact on the value of the INX Token.

There is currently no trading market for our INX Tokens and we cannot ensure that a liquid market will occur or be sustainable.

Prior to the Token Offering, there has been no public market for INX Tokens. There can be no assurance that there will be an active market for INX Tokens either now or in the future. There is no plan to have our INX Token trade on a national securities exchange. In the event that the Company ever decides to seek the approval for availability of INX Tokens for trading on a national exchange, there is no assurance that such approval will be obtained or, if approval is obtained, that an active or liquid trading market will develop. Many brokerage firms or clearing firms may not be willing to effect transactions in INX Tokens or accept INX Tokens for deposit in an account. Even if an investor finds a broker willing to effect a transaction in INX Tokens, the combination of brokerage commissions, transfer fees, taxes, if any, and any other selling costs may exceed the selling price.

We may, in the future, take certain steps, including utilizing investor awareness campaigns, press releases, road shows and conferences to increase awareness of our business. We may need to compensate consultants with cash and/or Tokens. There can be no assurance that there will be any awareness generated or the results of any efforts will result in any impact on our trading volume.

The offering price of the INX Tokens has been arbitrarily determined and such price should not be used by an investor as an indicator of the fair market value of the INX Tokens.

The offering price for the INX Tokens offered hereby has been arbitrarily determined by the Company’s board of directors and does not necessarily bear any direct relationship to the assets, operations, book or other established criteria of value of the Company. Accordingly, the actual value of INX Tokens may be significantly less than the offering price. The value of INX Tokens purchased at the offering price may decline in value or have significantly less value when you attempt to sell the INX Tokens.

The INX Token Purchase Agreement provides that federal and state courts located in New Castle County, Delaware will be the sole and exclusive forum for substantially all disputes between us and investors in this offering, which could limit our investors’ ability to obtain a favorable judicial forum for disputes with us.

The INX Token Purchase Agreement provides that federal and state courts located in New Castle County, Delaware are the sole and exclusive forum for any action, proceeding or investigation in any legal proceeding arising out of or relating to this offering and matters related to the INX Token Purchase Agreement. The choice of forum provision may limit an investor’s ability to bring a claim in a judicial forum that it finds favorable for disputes with us which may discourage such lawsuits against us or investors’ ability to obtain a favorable judicial forum for disputes.

There is currently no trading market for the INX Token. Even if such a trading market were to develop, on the INX Trading platform or elsewhere, the trading price of our INX Tokens may be volatile. The INX Token is not issued by any central bank or national, supra-national or quasi-national organization, nor is it backed by any hard assets or other credit. Consequently, investors may not be able to liquidate their investment at a price that reflects the value of the business.

The trading price of INX Tokens could be significantly affected by any number of factors including volatility in the broader market for blockchain assets, changes in analyst earnings estimates, fluctuations in our results of operations, shifting investor perceptions, dilution (in both monetary and percentage amounts) from future sales or issuances of INX Tokens by the Company, large purchases or sales by a significant INX Token holder, the announcement of new products or the occurrence of any of the events described within this “Risk Factors” section. Any of these factors could adversely affect the trading price of INX Tokens.

Our business model depends, in part, on our ability to resell INX Tokens received as payment for transaction fees by INX Services. If we conduct resales of INX Tokens, existing holders will suffer dilution.

Under the INX Token Purchase Agreement, holders of INX Tokens will be entitled to receive a pro rata cash distribution equal to 20% of our cumulative Adjusted Operating Cash Flow. This means that the portion of any cash distribution allocated to each INX Token is in part determined by the number of outstanding INX Tokens that are not owned by the Company or any subsidiary of the Company.

We anticipate that users of the INX Trading platform will be incentivized to use INX Tokens as payment for transaction fees or as collateral on the platform. INX Tokens received as payment for transaction fees will reduce the number of outstanding INX Tokens. However, we intend to file one or more registration statements to register these INX Tokens for re-issuance.

Large swings in the use of INX Tokens as payment for transaction fees or future issuances of INX Tokens equity or convertible debt securities, you could suffer significant dilution, and any new equity securities we issue could have rights, preferences and privileges superior to those of our then-existing capital stock. Any debt financing secured by us in the future could involve restrictive covenants relating to our capital raising activities and other financial and operational matters, which may make it more difficult for us to obtain additional capital and to pursue business opportunities. If we cannot raise additional funds when we need them, our business and prospects could fail or be materially and adversely affected.

There can be no assurance that we will be able to pay any cash distributions to the holders of Tokens.

Under the INX Token Purchase Agreement, holders of INX Tokens will be entitled to receive a pro rata cash distribution equal to 20% of our cumulative Adjusted Operating Cash Flow. We may not have sufficient operating results to make any cash distributions, which could adversely affect the value of INX Tokens. We do not expect that there will be sufficient net cash flow from operating activities for any distributions to be made to INX Token holders until our business becomes commercially accepted. We also may not be able to readily convert our INX Tokens received for services performed and it may restrict our ability to distribute cash. In addition, we may elect to operate our business and pursue business strategies, such as acquisitions and the development of other products, which could adversely affect our ability to generate net cash flow.

Further, each INX Token holder’s right to the pro rata portion of the distribution for any given year is subject to reduction in an amount equal to the banking fees and/or transactions fees required to be paid with respect to the transfer of funds or Ether to such holder. Thus, with respect to any year during which the amount to be distributed to an individual INX Token holder is less than the amount of fees relating to such transfer, no distribution will be made to that individual INX Token holder

As a result, the ability of any holder to receive any cash distributions from us is not guaranteed.

The Company may incur debt that ranks equally with, or senior to, the rights of the INX Token holders.

Pursuant to the INX Token Purchase Agreement, the Company covenants that it will establish, by December 31, 2021, and to thereafter maintain and operate a trading platform that permits the trading of bitcoin, ether and fiat currencies on the over the counter trading market, as contemplated by this Prospectus. If the operations of the INX Trading are permanently discontinued and the Company is liquidated, an INX Token holder, as identified by the INX Registry (excluding the Company or INX Services with regard to any INX Tokens that are not beneficially owned by a third party), may have a claim against the Company for a breach of contract. The amount of a Token holder’s claim in such a scenario will likely be based on the damages sustained by the Token holder as a result of the Company’s breach of the Token Purchase Agreement, similar to how the value for any other breach of contract claim is typically determined under applicable law. Ultimately, the claim amount will be determined by the liquidator, a court of competent jurisdiction overseeing the liquidation, or some other authority pursuant to applicable insolvency law.

The Company intends that the INX Token holders’ claim for breach of contract will be senior to the claims of holders of the Company’s shares. Current shareholders who hold approximately 78% of the Company’s issued share capital have approved this preferential right and have waived their right, in the event of a liquidation, to any cash held in the Cash Reserve Fund in the event of a breach of this covenant. The Company shall cause its future shareholders to similarly subordinate and waive their rights.

However, in the event of insolvency, liquidation, dissolution, reorganization or bankruptcy of the Company, a court or magistrate may determine that INX Token holders are not entitled to any payment from the Company’s assets or that the INX Token holders’ claims are not senior in right to claims or interests of the Company’s shareholders.

In addition, the Company may incur debt that ranks equally with, or senior to, the rights of INX Token holders. In the event of insolvency, liquidation, dissolution, reorganization or bankruptcy of the Company, holders of debt instruments ranking senior to INX Tokens may be entitled to receive payment in full before INX Token holders receive any distribution. After repaying such senior creditors, the Company may not have sufficient assets, if any, remaining for payment of any obligations that it owes to INX Token holders. Further, if it is determined that the Company’s obligations to INX Token holders rank equally with other debt, INX Token holders may share on an equal basis with other creditors. However, the Company may not have sufficient assets, if any, remaining for payment of obligations owed to INX Token holders.

The tax characterization of INX Tokens is uncertain. You must seek your own tax advice in connection with purchasing INX Tokens, which may result in adverse tax consequences to you, including withholding taxes, income taxes and tax reporting requirements.

The treatment of INX Tokens for U.S. federal income tax purposes is uncertain. Due to the new and evolving nature of digital currencies, tokens and blockchain assets, and a general absence of clearly controlling authority with respect to these assets, many significant aspects of the U.S. federal income tax treatment of digital currencies are uncertain. It is unclear what guidance on the treatment of tokens and blockchain for U.S. federal income tax purposes may be issued in the future. Future developments regarding the treatment of tokens or blockchain assets for U.S. federal income tax purposes could adversely affect an investment in INX Tokens.

The Company does not intend to request a ruling from the Internal Revenue Service (“IRS”) on these issues. The IRS has ruled on the tax treatment of bitcoin and other virtual currencies. In Notice 2014-21 (the “Notice”) the Service held that digital “currencies” are treated like property and that each transaction using these currencies is a separate taxable event. The IRS stated in the Notice that, for U.S. federal income tax purposes, (i) digital currency is “property” that is not currency and (ii) digital currency may be held as a capital asset. There can be no assurance that the IRS will not alter its position with respect to digital currency in the future or that a court would uphold the treatment set forth in the Notice.

The Notice does not address other significant aspects of the U.S. federal income tax treatment of tokens or blockchain assets, including: the tax characterization of tokens which possess other non-currency-like rights or powers (so called “utility” tokens) or tokens which provide a share of profits to holders. Moreover, there is no authority on the circumstances in which profit-sharing tokens such as INX Tokens may be treated as equity or stock in the Company for U.S. federal income tax (or other tax) purposes. If INX Tokens were characterized as equity interests in the Company for U.S. federal income purposes, U.S. holders of INX Tokens would be subject additional tax consequences and related reporting considerations applicable to holders of stock in a foreign company, including the possible application of rules relating to passive foreign investment companies (or “PFICs”) and controlled foreign corporations (“CFCs”).

The tax characterization of Tokens is uncertain. You must seek your own tax advice in connection with purchasing Tokens, which may result in adverse tax consequences to you, including withholding taxes, income taxes and tax reporting requirements. Prospective investors are urged to consult their tax advisers regarding the uncertainty regarding the tax consequences of an investment in INX Tokens and in blockchain assets in general.

The INX Tokens could lose all of their value upon any consolidation or merger of the Company with or into another entity, or sale of all or substantially all of the Company’s assets to another entity, our successor entity does not assumed our obligations with respect to the INX Tokens.

In the event of any consolidation or merger of the Company with or into another entity, or sale of all or substantially all of the Company’s assets to another entity, the Company will use all reasonable efforts to ensure that the successor entity to the consolidation, merger, or sale will assume the Company’s obligations with respect to the INX Tokens, however there can be no assurances the Company will be successful in doing so. If your obligations are not assumed by the successor of our Company in a consolidation or merger of the Company with or into another entity, or sale of all or substantially all of the Company’s assets to another entity, you will have to no rights to any distributions from the Company and no entity would be responsible for maintaining and enforcing the smart contact relating to the Tokens, which could cause you to lose your entire investment and not be able to transfer your Tokens.

INX Token holders will not be afforded an opportunity to vote in the election of directors and significant corporate transactions, such as a merger or other sale of our company or its assets, and may not realize any benefit from such transactions.

Although the INX Token is an equity security, as such term is defined in Section 3(a)(11) of the Exchange Act, the rights that attach to an INX Token are materially different than the rights that are typically associated with equity securities such as common shares. As holders of a non-voting security, INX Token holders have no influence over our corporate governance policies and affairs, and INX Token holders will not be afforded an opportunity to vote on any matters affecting the Company, including the election of directors, related party transactions or significant corporate transactions such as a merger, or sale of the Company or its assets. Token holders are not afforded the same protections generally as shareholders of other publicly traded companies. Further, Token holders may not benefit from a sale of the Company or its assets in the same way that our shareholders will benefit, if at all. Your only opportunity to affect an investment decision regarding the Company may be limited to selling your INX Tokens or using your INX Tokens to pay for fees on the INX Trading platform.

The interests of our shareholders may conflict with the interests of INX Token holders.

Our directors are nominated and elected by a majority of our shareholders and their interests in our business may differ from the interests of Token holders. Our directors will have no fiduciary obligations to act in the interests of Token holders. Mr. Shy Datika, one of our founders, our controlling shareholder and President, controls approximately 31% of the voting power of our share capital and as such, Mr. Datika and the other shareholders of our Company have significant influence over management and affairs and all other matters of the Company, including significant corporate transactions, such as a merger or other sale of our Company or its assets.

The INX Tokens are not currently registered under the Exchange Act and therefore the Company’s reporting obligations under the Exchange Act may be suspended automatically if the INX Tokens have fewer than 300 holders of record on the first day of our fiscal year.

The INX Token is an equity security as such term is defined in Section 3(a)(11) of the Exchange Act; however, the INX Tokens are not currently registered under the Exchange Act. After consummation of this Offering, the Company will be required to file annual and other periodic reports pursuant to Section 15(d) of the Exchange Act, as required by a foreign private issuer, until the end of the fiscal year during which the registration statement of which this prospectus is a part has been declared effective. However, the Company’s obligation to file such reports will be automatically suspended unless after the last day of such fiscal year, the Company has total assets of more than $10,000,000 and record holders of the INX Tokens numbering more than 2,000 persons, or 500 persons who are not accredited investors, in accordance with Section 12(g) of the Exchange Act, in which case the Company will be required to register the INX Tokens under the Exchange Act and to continue to file such reports.

The Company intends to remain subject to the reporting requirements of the Exchange Act either through continued compliance with Section 15(d) of the Exchange Act or by registration of the INX Tokens in accordance with Section 12(g) of the Exchange Act. However, if the Company does not continue to be subject to, or voluntarily comply with, the periodic reporting and other obligations of the Exchange Act, you may not be able to access regular publicly available reports about us and you will not be entitled to the same type of disclosure in relation to critical corporate events as if we were subject to the Exchange Act.

There must be a current state blue sky registration or exemption from such registration for you to purchase or sell the INX Tokens.

We cannot guarantee that we will be able to effect any required blue sky registration or qualification. You will have the ability to purchase and sell INX Tokens only if these securities have been qualified for sale under the laws of the state where you reside, or if they fall within an exemption from registration. We will not knowingly sell INX Tokens purchasers in jurisdictions in which such sales are not registered or otherwise qualified for issuance or exempt from registration. However, there is a risk that purchasers may buy the INX Tokens in the after-market or may move to jurisdictions in which our INX Tokens are not registered, qualified or exempt.

The INX Token Purchase Agreement includes exclusive venue and jurisdiction provisions and a waiver of the right to a jury trial. By purchasing INX Tokens, an investor is irrevocably consenting to these provisions regarding claims, suits, actions or proceedings, submitting to the exclusive jurisdiction of Delaware courts and waiving a right to a jury trial. The INX Token Purchase Agreement also provides that the Company will not be responsible for any losses except those arising from the Company’s gross negligence, fraud or willful misconduct.

The INX Token Purchase Agreement is governed by Delaware law and includes exclusive venue and jurisdiction provisions designating Delaware courts as the exclusive venue for most claims, suits, actions and proceedings involving us or our officers, directors and employees. The INX Token Purchase Agreement also includes an irrevocable waiver of the right to trial by jury in all such claims, suits, actions and proceedings. By purchasing an INX Token, an investor is irrevocably consenting to these limitations and provisions regarding claims, suits, actions or proceedings and submitting to the exclusive jurisdiction of Delaware courts. If a dispute were to arise between an investor and us or our officers, directors or employees, the investor may be required to pursue its legal remedies in Delaware which may be an inconvenient or distant location and which is considered to be a more corporate friendly environment. These provisions may have the effect of discouraging lawsuits against us and our directors and officers.

The INX Token Purchase Agreement also includes a provision limiting our liability, to the maximum extent permitted by applicable law, for any losses the investor may incur, except for such losses that arise from our gross negligence, fraud or willful misconduct. By purchasing an INX Token, an investor is agreeing to this limitation of liability which could reduce its ability to recover damages from us if we act in a manner that causes investors to incur losses.

It may be illegal now, or in the future, to acquire, own, hold, sell or use INX Tokens in one or more countries, and ownership of, holding or trading in our Company’s securities may also be considered illegal and subject to sanction.

Although currently blockchain assets are not regulated or are lightly regulated in most countries, including the United States, one or more countries such as China and Russia may take regulatory actions in the future that severely restricts the right to acquire, own, hold, sell or use blockchain assets or to exchange blockchain assets for fiat currency. Such an action may also result in the restriction of ownership, holding or trading in our securities. Such restrictions may adversely affect an investment in the Company.

System limitations, failures, or security breaches could harm our business and may directly impact INX Token holders and other INX Trading platform users.

Our business depends on the integrity and performance of our computer and communications systems. If our systems cannot expand to cope with increased demand or otherwise fail to perform, we could experience unanticipated disruptions in service or slower response times. These consequences could result in trading outages, lower trading volumes, financial losses, decreased customer service and satisfaction and regulatory sanctions.

Our systems and operations also are vulnerable to damage or interruption from human error, natural disasters, power loss, cyber-attacks, sabotage or terrorism, computer viruses, unauthorized access, intentional acts of vandalism and similar events. Persons who circumvent security measures could wrongfully access and use our information or our customers’ information or cause interruptions or malfunctions in our operations. Although we intend to implement and maintain security measures designed to protect the integrity of our systems, including INX Trading platform user accounts, such security measures may prove inadequate. Any breach in security or system failure that allows unauthorized access, causes an interruption in service or decreases the responsiveness of our systems may result in theft and could impair our reputation, damage our brand name and negatively impact our business, financial condition and operating results.

We rely on third party contractors for the design, development and implementation of the INX Trading platform.

We rely on third party contractors for key elements of our technology infrastructure. The design, development, implementation, modification and customization of the INX Trading platform have been conducted on a work for hire basis under our contract with Y. Singer Technologies Ltd. (commercially known as Committed) (“Committed”) See “Business—Material Agreements—Committed.”

Such infrastructure and related technology under development may not be sufficient to meet the needs of our business. Further, these technologies may have material defects that may be vulnerable to damage or interruption or may compromise the confidentiality or integrity of the transmitted data. Any imposition of liability, particularly liability that is not covered by insurance or is in excess of insurance coverage, could harm our reputation, business and operating results. We might be required to expend significant capital and other resources to develop and maintain the INX Trading platform infrastructure. This, in turn could divert funds available for corporate growth, expansion or future acquisitions. It could also reduce the amount of cash paid to Token holders.

We may be unable to protect our proprietary technology and to obtain trademark protection for our marks.

Our success depends to a significant degree upon the protection of our software and other proprietary intellectual property rights. We may be unable to bring enforcement actions under the laws of the US or other countries to protect our intellectual property rights, which could have a material adverse effect on our business. Further, we may not be able to secure protection for our service marks or trademarks in the United States or elsewhere as we expand internationally. Our competitors might adopt service marks or trademarks similar to our marks, or might try to prevent us from using our marks. Any claim by another party against us or customer confusion related to our trademarks, or our failure to obtain trademark registration, could have a material adverse effect on our business.

We may not be able to enforce protection of our intellectual property rights under the laws of other countries.

We do business internationally and consequently we are subject to risks of doing business internationally, including uncertainty regarding liability for the listings and other content provided by our users, and differing intellectual property laws, which may provide insufficient protection for our intellectual property. Any such difficulties could have a material adverse effect on our business.

We are a “foreign private issuer” and we cannot be certain if the reduced reporting requirements applicable to foreign private issuers will make owning INX Tokens less attractive to investors.

As a foreign private issuer, we are not subject to the same requirements that are imposed upon U.S. domestic issuers by the SEC. Under the Securities Exchange Act of 1934, or the Exchange Act, we will be subject to reporting obligations that, in certain respects, are less detailed and less frequent than those of U.S. domestic reporting companies. For example, we will not be required to issue proxy statements that comply with the requirements applicable to U.S. domestic reporting companies. We will also have four months after the end of each fiscal year to file our annual reports with the SEC and will not be required to file current reports as frequently or promptly as U.S. domestic reporting companies. Furthermore, our officers, directors, and principal shareholders will be exempt from the requirements to report transactions in our equity securities and from the short-swing profit liability provisions contained in Section 16 of the Exchange Act. These exemptions and leniencies, along with other corporate governance exemptions resulting from our ability to rely on home country rules, will reduce the frequency and scope of information and protections to which you may otherwise have been eligible in relation to a U.S. domestic reporting companies.

We would lose our foreign private issuer status if more than fifty percent of our outstanding voting securities are directly or indirectly owned of record by residents of the United States and any of the following three circumstances applies: (i) the majority of our executive officers or directors are U.S. citizens or residents; (ii) more than 50% of our assets are located in the U.S.; or (iii) our business is administered principally in the U.S. There is no public market for our voting securities, and we currently have no plans to issue our voting securities to residents of the United States, however given the level of our intended business contacts with the United States, we may lose our status as a foreign private issuer should more than fifty percent of our voting securities be held of record by residents of the United States. Although we have elected to comply with certain U.S. regulatory provisions, our loss of foreign private issuer status would make such provisions mandatory. The regulatory and compliance costs to us under U.S. securities laws as a U.S. domestic reporting company may be significantly higher. If we are not a foreign private issuer, we will be required to file periodic reports and registration statements on U.S. domestic reporting company forms with the SEC, which are more detailed and extensive than the forms available to a foreign private issuer. We may also be required to modify certain of our policies to comply with accepted governance practices associated with U.S. domestic reporting companies. Such conversion and modifications will involve additional costs. In addition, we may lose our ability to rely upon exemptions from certain corporate governance requirements on U.S. stock exchanges that are available to foreign private issuers.

It may be difficult to enforce a U.S. judgment against us, our officers and directors, and the experts named in this prospectus, or to assert U.S. securities laws claims or serve process on our officers and directors and these experts.

We were incorporated in Gibraltar, and substantially all of our operations are currently located in the state of Israel. All of our assets are located outside the United States. Therefore, it may be difficult to enforce a U.S. court judgment based upon the civil liability provisions of the U.S. federal securities laws against us or any of these persons in a U.S. or Gibraltar court, or to affect service of process upon these persons in the United States.

Additionally, it may be difficult for an investor, or any other person or entity, to assert U.S. securities law claims in original actions instituted in Gibraltar. This is for two principal reasons: 1) because the Gibraltar courts may regard the U.S. law in question to be a penal, revenue or public law and therefore, under Gibraltar law, not capable of direct or indirect enforcement in the Gibraltar courts, or 2) because the Gibraltar court may stay the claim on the grounds that Gibraltar is not an appropriate forum (“forum non conveniens”). If U.S. law is found to be applicable to a claim which the Gibraltar court can and is prepared to hear, the content of applicable U.S. law must be proved as a fact by expert witnesses, which can be a time-consuming and costly process. If proceedings were to be brought in Gibraltar, all procedural matters would be governed by Gibraltar law. There is little case law addressing the matters described above that would be binding case law in a Gibraltar court. For additional information, see “Enforceability of Civil Liabilities.”

Potential political, economic, and military instability in the State of Israel, where some of our senior management and our research and development facilities are located, may adversely impact our results of operations.

Our offices and operations are currently located in the State of Israel. In addition, certain of our employees, officers, and directors are residents of Israel. Accordingly, political, economic, and military conditions in Israel directly affect our business. Since the State of Israel was established in 1948, a number of armed conflicts have occurred between Israel and its neighboring countries. Any hostilities involving Israel or the interruption or curtailment of trade between Israel and its present trading partners, or a significant downturn in the economic or financial condition of Israel, could adversely impact our operations.

Our operations may be disrupted by the obligations of personnel to perform military service.

Certain of our employees, officers and directors are based in Israel. Some of our employees and consultants may be called upon to perform up to 36 days (and in some cases more) of annual military reserve duty until they reach the age of 40 (and in some cases, up to 45 or older) and, in emergency circumstances, could be called to immediate and unlimited active duty. In the event of severe unrest or other conflict, individuals could be required to serve in the military for extended periods of time. Our operations could be disrupted by the absence of a significant number of our employees related to military service or the absence for extended periods of one or more of our key employees for military service. Such disruption could materially adversely affect our business and results of operations.

The Company may be deemed an Israeli tax resident for tax purposes and may incur additional tax liabilities in Israel.

Under Israeli tax law, a company not incorporated in Israel will be considered an Israeli resident for tax purposes if its business and management are controlled from Israel. There is no definition of “control and management” in the Israeli tax code, however the Israeli tax authority (“ITO”) issued a Circular in 2002 which listed factors to be taken into account. These included factors such as details of shareholders and directors; protocols of board meetings; agreements with service providers; details of bank accounts, signatory rights; bookkeeping and accounts; and employees. The ITO has recently published a new draft Circular, in light of recent court decisions, which revisits the issue of control and management. The draft Circular states that it is not sufficient to rely solely on a formal (technical) analysis of the facts, but rather a full substantive analysis of all the facts and circumstances must be undertaken.

In the current technological era, the appointment of directors and physical location of board meetings are less important, rather the emphasis is on the substantive analysis of who actually makes strategic policy and day to day decisions, and from where. The draft Circular provides a list of tests (in addition to the factors listed in the 2002 Circular) which should be examined, for example: who actually controls the company, who are the managers of the company, and who takes the decisions in the company how the directors and managers were chosen and whether they have relevant experience in the company’s field of activity.

If the Company is determined to be an Israeli tax resident for tax purposes, the Company may incur additional tax liabilities in Israel.

The Company may be characterized as a CFC for Israeli tax purposes and Israeli holders of the Company’s ordinary shares and INX Tokens may be subject additional tax consequences and related reporting considerations.

Israeli tax law includes an anti-tax-deferral regime. Under this regime, an Israeli resident who is a ‘controlling shareholder’ (i.e., holding 10% of the means of control in the company) is viewed as having received as a dividend consisting of undistributed profits of a foreign company, if the foreign company meets the following conditions:

A foreign company meeting these conditions is referred to as a CFC. Effectively, the undistributed passive profits of a CFC are deemed a dividend received by the ‘controlling shareholder’ and thus subject to Israeli tax. The deemed dividend tax rate is 24% for corporations and 30% for individuals (excluding additional 3% surtax if applicable).

The quantification of undistributed profits (as defined under the Israeli CFC regime) of a company resident of a non-treaty country will be calculated in accordance with Israeli tax law. If the Company were characterized as a CFC for Israeli tax purposes, Israeli holders of the Company’s ordinary shares and INX Tokens may be subject additional tax consequences and related reporting considerations.

Some of the statements made under “Prospectus Summary,” “Risk Factors,” “Use of Proceeds,” “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” “Business,” and elsewhere in this prospectus constitute forward-looking statements. In some cases, you can identify forward-looking statements by terminology such as “may,” “will,” “should,” “expects,” “plans,” “project,” “anticipates,” “believes,” “estimates,” “predicts,” “potential,” “intends,” or “continue,” or the negative of these terms or other comparable terminology.

These forward-looking statements may include, but are not limited to, statements relating to our objectives, plans, and strategies; statements that contain projections of results of operations or of financial condition; statements relating to the research, development, and use of our products; and all statements (other than statements of historical facts) that address activities, events, or developments that we intend, expect, project, believe, or anticipate will or may occur in the future.

Forward-looking statements are not guarantees of future performance and are subject to risks and uncertainties. We have based these forward-looking statements on assumptions and assessments made by our management in light of their experience and their perception of historical trends, current conditions, expected future developments, and other factors they believe to be appropriate.

Important factors that could cause actual results, developments, and business decisions to differ materially from those anticipated in these forward-looking statements include, among other things:

These statements are only current predictions and are subject to known and unknown risks, uncertainties, and other factors that may cause our or our industry’s actual results, levels of activity, performance, or achievements to be materially different from those anticipated by the forward-looking statements. We discuss many of these risks in this prospectus in greater detail under the heading “Risk Factors” and elsewhere in this prospectus. You should not rely upon forward-looking statements as predictions of future events.

Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee future results, levels of activity, performance, or achievements. Except as required by law, we are under no duty to update or revise any of the forward-looking statements, whether as a result of new information, future events or otherwise, after the date of this prospectus.

We estimate that the net proceeds to us from our issuance and sale of 130,000,000 Tokens in this offering will range from, at a minimum $5,000,000 to, at a maximum, $130,000,000, based on an assumed initial public offering price of $1.00 per Token after deducting estimated offering expenses payable by us of approximately $__.

The Company plans to use net proceeds from this offering approximately as follows:

Research & Development: We intend to use between $1.65 million and $10 million for research and development of products, services, and technologies to be implemented on our platform. This may include further research and development of scaling improvements to the matching engine, customizations to the exchange platform and user experience, data analytics, and additional investments in our technological capabilities. Research & Development expenses are projected to increase by $550,000 if the Company raises $9 million or more in the offering. The $550,000 increase is comprised of additional direct staffing in the Research & Development department. Research & Development expenses are projected to rise another $7.8 million if $18 million or more is raised in the offering. The $7.8 million is comprised of a major expansion in the Research & Development department, bringing total department headcount to 35 to 40 full-time employees. This includes additional direct staffing of DevOps and database engineers, front-end and back-end developers, mobile developers, product managers, analysts, and quality assurance personnel.

Sales & Marketing: We intend to use between $1.1 million and $4.0 million for sales and marketing initiatives and activities, including promotional activities to attract users, direct marketing expenses, marketing representation, conference sponsorship, marketing materials, and related staffing. Sales & Marketing expenses are projected to increase by $2.2 million if the Company raises $9 million or more in the offering. The $2.2 million increase is comprised of (i) $1 million of direct marketing expenses to expand operations into the EU market, (ii) $500,000 of setup expenses for EU-based marketing representation and staffing including overhead, and (iii) $700,000 in marketing expenses related to conference sponsorship and marketing materials. The Company has further revised the Sales & Marketing expense projections if $18 million or more is raised in the offering. Sales & Marketing expenses are now projected to increase an additional $700,000 to $4 million if the Company raises $18 million or more. The $700,000 is comprised of setup expenses for Asia-based marketing representation and staffing including overhead.

Regulatory & Legal: We intend to use between $1.25 million and $2.25 million on regulatory and legal expenses, including legal counsel fees and expenses, filing and licensing fees, consultancy fees, and related legal and regulatory support. Regulatory and Legal expenses are projected to increase by $500,000 if the Company raises $9 million or more in the offering. The $500,000 increase is comprised of regulatory filing fees, regulatory consultancy fees, and related legal support for expanding operations into the EU market. Regulatory and Legal expenses increase a further $500,000 if the Company raises $18 million or more in the offering. This $500,000 increase is comprised of regulatory filing fees, regulatory consultancy fees, and related legal support for expanding operations into the Asia market.

Admin & Payroll: We intend to use between $750,000 and $1.5 million on administrative and payroll expenses, including for general working capital and corporate needs.

Minimum Net Capital Requirement of Broker-Dealer. We intend to use $250,000 for the minimum net capital requirements of INX Services once it is registered as a broker-dealer, as required by Rule 15c3-1 under the Exchange Act.

Cash Reserve: The Company intends to use approximately $18 million from the initial net proceeds from this offering for the operation of the INX Trading platform, including continued development of the INX Trading platform, marketing and improvement of security measures (See “Business—Phases of Development”). We currently plan that at least 80% of the net proceeds from this offering in excess of $18 million will be used to establish and capitalize a cash reserve fund for the INX Trading platform, which is intended to be used to cover shortfalls in trades on the INX Trading platform. Any such shortfalls, losses, default on payment and/or claim may be covered by our Cash Reserve Fund, Capital Reserve and Liquidity Fund, any other assets of the Company and/or a combination thereof. See “Business— Our Proposed Solution: A Single Regulated Integrated Platform for Trading Blockchain Assets.”

These expected uses of net proceeds from this offering represent our intentions based upon our current plans and business conditions which could change in the future as our plans and business conditions evolve. The amounts and timing of our actual expenditures may vary significantly and will depend upon numerous factors, including the progress of our development and commercialization efforts. Accordingly, our management will have significant flexibility and broad discretion in applying the net proceeds of this offering.

The following table sets forth our cash and cash equivalents and capitalization as of June 30, 2018 (unless stated otherwise):

The as adjusted column below is illustrative only. Our cash and cash equivalents and capitalization following the closing of this offering will be adjusted based on the actual initial public offering price, the number of Tokens sold, and other terms of this offering determined at the pricing of this offering. You should read the following table in conjunction with the sections titled “Selected Financial Data,” “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” “Description of INX Tokens,” and our financial statements and related notes included elsewhere in this prospectus.

A $ increase (decrease) in the assumed initial public offering price of $ per Token would increase (decrease) the as adjusted amount of each of cash and cash equivalents, total equity (deficit), and total capitalization by approximately $ , assuming that the number of Tokens offered by us, as set forth on the cover page of this prospectus, remains the same and after deducting estimated offering expenses payable by us. Similarly, an increase (decrease) of $ in the number of Tokens we are offering would increase (decrease) the as adjusted amount of cash and cash equivalents, total equity (deficit), and total capitalization by approximately $ assuming the assumed initial public offering price of $ per Token after deducting estimated offering expenses payable by us as if the sale of Tokens had occurred on June 30, 2018. The as adjusted information discussed above is illustrative only and will be adjusted based on the actual public offering price and other terms of this offering determined at pricing.

If you invest in our Tokens, your interest in the Tokens will be diluted to the extent of the difference between the offering price per Token and the pro forma net tangible book value per Token after the offering. Dilution results from the fact that the per Token offering price is substantially in excess of the book value per Token attributable to the existing holders of our presently outstanding INX Tokens. Our net tangible book value attributable to holders of INX Tokens at [XXX] was $[ ] or approximately $[ ] per INX Token. Net tangible book value per INX Token as of [XXX] represents [XXX].

The following table sets forth the estimated net tangible book value per INX Token after the offering and the dilution to persons purchasing INX Tokens based on the foregoing offering assumptions.

The following table summarizes, on a pro forma as adjusted basis as of _______, 2018, the differences between existing INX Token holders and the investors purchasing under this offering with respect to the number of INX Tokens purchased from us (assuming that all of the INX Tokens offering in this offering are purchased), the total consideration paid and the average price per INX Token paid before deducting the estimated offering expenses.

In addition, the following table summarizes, on a pro forma as adjusted basis as of _______, 2018, the differences between existing INX Token holders and the investors purchasing under this offering with respect to the number of INX Tokens purchased from us (assuming only the Minimum Offering Requirement for the Closing of the INX Tokens offering in this offering are purchased at an assumed 1.00 USD per INX Token), the total consideration paid and the average price per INX Token paid before deducting the estimated offering expenses.

You should read the following selected financial data in conjunction with “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and the financial statements, related notes and other financial information included elsewhere in this prospectus.

The following table sets forth a summary of our consolidated statement of comprehensive loss and summary of our consolidated balance sheet data for the periods indicated. The financial data for the period from September 1, (date of inception) through December 31, 2017 and the selected consolidated balance sheet data as of December 31, 2017, have been derived from our audited consolidated financial statements included elsewhere in this prospectus. The selected consolidated statement of comprehensive loss for the six months ended June 30, 2018, and the consolidated balance sheet data as of June 30, 2018, have been derived from our unaudited consolidated financial statements included elsewhere in this prospectus. The unaudited consolidated financial statements have been prepared on a basis consistent with our audited consolidated financial statements. In the opinion of management, the unaudited financial data reflect all adjustments, consisting only of normal and recurring adjustments, necessary for a fair presentation of the results for those periods. Results for interim periods are not necessarily indicative of results that may be expected for a full fiscal year. Historical results are not necessarily indicative of the results expected in the future.

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

You should read the following discussion and analysis of our financial condition and results of operations together with the section titled “Selected Financial Data” and our financial statements and related notes included elsewhere in this prospectus. This discussion and other parts of this prospectus contain forward-looking statements that involve risk and uncertainties, such as statements of our plans, objectives, expectations, and intentions. Our actual results could differ materially from those discussed in these forward-looking statements. Factors that could cause or contribute to such differences include, but are not limited to, those discussed in the section titled “Risk Factors.”

We are developing the INX Trading platform, an integrated, regulated platform for trading multiple blockchain assets, including virtual currencies, security tokens, utility tokens, and their derivatives. Our goal is to introduce established practices from regulated financial services markets to the trading of blockchain assets.

Initially, we plan to generate revenues primarily from fees received by us in connection with activities on the INX Trading platform and services provided by INX Services.

We were incorporated on November 27, 2017 and since our date of inception (September 1, 2017) our operations have consisted solely of planning and development of the INX Token and the proposed INX Trading platform. We have not generated any revenues from operations since our inception.

We will not generate any operating revenues until the INX Trading platform becomes operational. We will generate non-operating income in the form of interest income on cash and cash equivalents and other investments upon completion of this offering. There has been no significant change in our financial position and no material adverse change has occurred since the date of our audited financial statements.

After this offering, we expect to incur increased expenses as a result of being a public company (for legal, financial reporting, and compliance). We expect our expenses to increase substantially after the closing of this offering.

Results of Operations for the period from September 1, 2017 (inception) through December 31, 2017

Operating expenses for the reported period were $586,000. Substantially all costs incurred to date were in connection with our formation, legal services and support for the contemplated offering.

Our loss for the period from September 1, 2017 (inception) through December 31, 2017 was approximately $637,000.

Operating expenses in the six months ended June 30, 2018 were $1,903,000, and they consist of research and development, and general and administrative expenses. Research and development expenses, which amounted to $204,000, include the cost of development of our trading platform. General and administrative expenses, which amounted to $1,699,000, include costs associated with the registration of our platform, as well as legal and other services related to the offering.

In accordance with IFRS, in preparing our financial statements, we must make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities as of the date of the financial statements and the reported amounts of net revenues and expenses during the reported period. We develop and periodically change these estimates and assumptions based on historical experience and on various other factors that we believe are reasonable under the circumstances. Actual results may differ from these estimates.

The critical accounting policies requiring estimates, assumptions and judgments that we believe have the most significant impact on our financial statements are described below.

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

Consideration received by the Company for the purchase of INX Tokens is accounted for as a financial liability in respect of the Company’s obligation to distribute annually to the INX Token holders 20% of the Company’s Adjusted Operating Cash Flow. The holder of the INX Token also is entitled to use the INX Token upon the holder’s demand as payment for services provided by the Company to the holder of the INX Token.

As the amounts distributable to holders of the INX Tokens are indexed to the Company’s adjusted cash flows from operations, the financial liability contains an embedded derivative. The Company views its operating cash flows as a financial variable, and therefore, the embedded derivative requires bifurcation pursuant to IAS 39. The Company has elected in accordance with IAS39 to designate the entire financial liability (including the embedded derivative) at fair value through profit and loss.

Accordingly, the INX Token liability is remeasured to fair value at the end of each reporting period. The changes in fair value are recognized in profit or loss. IFRS 9, Financial Instruments, replaces IAS 39 for annual periods beginning on January 1, 2018 and accordingly starting January 1, 2018, the Company applied IFRS 9 retrospectively, without adjusting the comparative information, which continues to be reported under IAS 39. According to IFRS 9, changes in the fair value of a financial liability designated as at fair value through profit or loss which are attributable to the change in credit risk of that liability are presented in other comprehensive income. All other changes in fair value of that liability are presented in profit or loss. The change 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.

When the INX Token is used to pay for services provided by the Company, 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 is recognized as compensation expense as the services are provided.

To date, we have generated no cash from operations. We have financed our operations through debt issuances and equity investments made by our shareholders. See “Certain Relationships and Related Party Transactions.” We expect to require additional cash to fund our ongoing operational needs, particularly our development and marketing expenses and employee salaries.

Our future expenditures and capital requirements will depend on numerous factors, including: the success of this offering, the progress of our development efforts and the rate at which we can get the INX Trading Platform up and running. We are dependent upon funds raised from this offering to satisfy our working capital requirements. Our business does not presently generate any cash.

We believe that if we raise the maximum amount in this Offering, we will have sufficient capital to finance our operations for at least 24 months; however, if we do not sell the maximum amount or if our operating and development costs are higher than expected, we may need to obtain additional financing prior to that time. Pending these uses, we intend to invest the net proceeds in low-risk, high-quality, investment-grade instruments, certificates of deposit, or direct or guaranteed obligations of the U.S. government or other governments, or hold as cash.

The audited financial statements, included in this prospectus, have been prepared assuming that the Company will continue as a going concern. For the period ended from inception (September 1, 2017) until June 30, 2018, we have incurred a loss from operations and have an accumulated deficit of $2,849,000. We have not yet generated cash from operations and we require financing resources to support the ongoing operations, particularly development, marketing and operational costs. Our future expenditures and capital requirements will depend on numerous factors, including: the success of this offering, the progress of the platform’s development efforts and timely launch of the operations of the INX Trading platform.

We are dependent upon the funds expected from this offering to satisfy our working capital requirements in the coming 12 months. If the proceeds from this offering will be less than the required working capital, or if development and other operation costs will be higher than expected, we may need to obtain additional funding to support our operation in the coming 12 months. Furthermore, we believe that regardless of the funds from this offering, we may need additional funding to finance our operations beyond the coming 12 months, until positive cash flows from operations is achieved.

We are not currently required to maintain an effective system of internal controls as defined by Section 404 of the Sarbanes-Oxley Act and prior to the closing of this Offering, we have not completed an assessment, nor have our auditors tested, our systems of internal controls. We will be required to comply with the internal control requirements of the Sarbanes-Oxley Act for the fiscal year ending December 31, 2019. Only in the event that we are deemed to be a large accelerated filer or an accelerated filer would we be required to comply with the independent registered public accounting firm attestation requirement. Further, for as long as we remain an emerging growth company as defined in the JOBS Act, we intend to take advantage of certain exemptions from various reporting requirements that are applicable to other public companies that are not emerging growth companies including, but not limited to, not being required to comply with the independent registered public accounting firm attestation requirement.

Prior to the closing of this offering, we have not completed an assessment, nor have our auditors tested our systems, of internal controls. We may have internal controls that need improvement in areas such as:

Because it will take time, management involvement and perhaps outside resources to determine what internal control improvements are necessary for us to meet regulatory requirements and market expectations for our operation of a blockchain asset exchange business, we may incur significant expenses in meeting our public reporting responsibilities, particularly in the areas of designing, enhancing, or remediating internal and disclosure controls. Doing so effectively may also take longer than we expect, thus increasing our exposure to financial fraud or erroneous financial reporting.

The following summarizes our significant contractual obligations as of June 30, 2018 (U.S. Dollars in thousands):

As of June 30, 2018, we have a contingent cash payment of $500,000 payable to A-Labs upon the completion of the Offering in which the Company has raised from U.S. persons not less than $10 million. A-Labs will also receive an additional contingent cash payment. The contingent payable was not recorded in the balance sheet due to the uncertainty of the payment. In addition, we have contingent payment obligations to A-Labs of amounts ranging from $3 million to $ [__] million based on a percentage of the proceeds from this offering. These contingent payments were not recorded on the balance sheet due to the uncertainty of the payments.

Through June 30, 2018, the Company had signed management agreements with key management personnel, according to which the personnel received no cash compensation for services provided to the Company until the Company raises a certain minimum amount in an initial public offering of INX Tokens. Upon achieving the minimum amount, the management personnel will receive a yet to be determined compensation amount.

Pursuant to the management agreements, as amended, six months following the date a registration statement in connection with the above described initial public offering is declared effective by the SEC, the management personnel are entitled to receive a one-time cash bonus in an aggregate amount of $724,000.

In addition, certain individuals are entitled to receive a one-time bonus in aggregate amount of $200,000 six months following the date the registration statement in connection with this Offering is declared effective by the SEC. See also Note 8 to the financial statements for details regarding one-time bonus commitments.

As of June 30, 2018, we did not have any off-balance sheet arrangements as defined in Item 303(a)(4) (ii) of Regulation S-K.

We have not been exposed to material risks due to changes in foreign exchange rates, and we have not used any derivative financial instruments to manage our foreign exchange risk exposure.

We have not been exposed to material risks due to changes in market interest rates, and we have not used any derivative financial instruments to manage our interest risk exposure.

After completion of this offering, we may invest the net proceeds we receive from the offering in interest-earning instruments. Investments in both fixed rate and floating rate interest earning instruments carry a degree of interest rate risk. Fixed rate securities may have their fair market value adversely impacted due to a rise in interest rates, while floating rate securities may produce less income than expected if interest rates fall.

We are exposed to credit risk from our financing activities, including deposits with banks and financial institutions and other financial instruments. As a result, we are subject concentrations of credit risk. As of June 30, 2018, substantially all of our cash and cash equivalents were held at major financial institutions. We believe that these financial institutions are of high credit quality and continually monitor the credit worthiness of these financial institutions.

With less than $1.07 billion in revenues during our last fiscal year, we qualify as an emerging growth company under the JOBS Act. An emerging growth company may take advantage of specified provisions in the JOBS Act that provide exemptions or reductions of its regulatory burdens related to reporting and other requirements that are otherwise applicable generally to public companies. These provisions include an exemption from the auditor attestation requirement in the assessment of our internal control over financial reporting pursuant to the Sarbanes-Oxley Act. In addition, under the JOBS Act, emerging growth companies can delay adopting new or revised accounting standards issued subsequent to the enactment of the JOBS Act until such time as those standards apply to private companies. We have irrevocably elected not to avail ourselves of this exemption from new or revised accounting standards. We would cease to be an emerging growth company if we have more than $1.07 billion in annual revenue, we are deemed to be a large accelerated filer, or we issue more than $1.0 billion of non-convertible debt over a three-year period.

We are developing INX Trading, which will be operated by INX Services, our wholly-owned subsidiary. Our vision is to establish a trading platform and token that introduce regulatory transparency to the blockchain asset trading ecosystem. We plan to achieve this by: (1) obtaining appropriate regulatory licenses, including U.S. Broker-Dealer and Alternative Trading System licenses; (2) maintaining the INX Registry, which reflects a real time list of INX Token owners and holdings; (3) requiring compliance with KYC/AML procedures by all INX Token holders; and (4) granting certain rights to INX Token holders, including certain benefits on the INX Trading platform.

Through INX Services, which will be registered as a licensed broker-dealer, and the INX Trading platform, which will be registered as an ATS, the Company intends to facilitate a market for blockchain assets, including security tokens. When fully operational, the INX Trading platform is expected to offer professional traders and other institutional investors, among other things, a trading platform with traditional marketplace practices, supported by a cash reserve. INX Trading will utilize established practices common in other regulated financial services markets, such as customary trading, clearing, and settlement procedures, regulatory compliance, capital and liquidity reserves and operational transparency. We plan to develop INX Trading as a centralized platform that facilitates peer-to-peer professional trading services through a suite of marketplace features and trading products, including the ability to take short positions and trade derivatives such as futures, options, and swaps. The architectural solution for the INX Trading platform is based on a sequential processing and storage, meaning that transactions on the trading platform can be processed only one after the other and not in parallel. INX Trading will enable trading via web portal and API solutions.

We intend to form another U.S. subsidiary to register as a designated contract market or swap execution facility with the CFTC. Our subsidiary in Gibraltar intends to apply to the Gibraltar Financial Services Commission for licenses under the Financial Services (Markets in Financial Instruments) Act 2018 and the Financial Services (Distributed Ledger Technology Providers) Regulations 2017 for its European-based operations.

As part of the INX decentralized blockchain ecosystem, we have created the INX Token, which is offered pursuant to this prospectus. The INX Token is an ERC20 blockchain asset that is programmed using a smart contract that is compatible with the Ethereum blockchain. Prospective investors who have been duly identified through KYC/AML procedures may purchase, hold and transfer INX Tokens. In order to verify that INX Tokens are transferred between KYC/AML-vetted holders, transfers of INX Tokens will be executed by the INX Token smart contract under conditional permission that the wallet addresses of both the sender and receiver of INX Tokens are listed on the Whitelist Database. If either the sender or receiver wallet address is not listed in the Whitelist Database, the smart contract rejects the transfer and the distributed ledger is not updated. The transferor of INX Tokens will be responsible for payment of the transfer fees on the Ethereum blockchain. For additional information regarding the fees incurred in connection with transfers, see “Description of INX Tokens”.

After INX Trading is operational, holders of INX Tokens may trade the INX Tokens on the INX Trading platform. INX Token holders will be able to use the INX Token to pay INX Services transaction fees, which are entitled to, at a minimum, a 10% discount to other forms of payment. INX Token holders will also be able to use Tokens to post collateral on the INX Trading platform. In addition, holders of INX Tokens will be entitled to receive a pro rata distribution of 20% of the Company’s Adjusted Operating Cash Flow. The annual distribution will be 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 will be payable on an annual basis commencing on April 30, 2020, and may thereafter be calculated and paid on an annual or a quarterly basis, subject to the board’s discretion. Further, in addition to a cash reserve to be comprised of 80% of the net proceeds from this offering in excess of $18 million, we plan to maintain the Capital Reserve and Liquidity Fund, which will consist initially of 35 million INX Tokens created but not previously sold by the Company to the public. In addition, we plan to reserve an additional 20% of the INX Tokens received by INX Services 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 this offering and subsequent offerings of INX Tokens (excluding re-issuances of reacquired INX Tokens), up to a maximum of 100 million INX Tokens. INX Tokens received as payment of transaction fees and not allocated to the Capital Reserve and Liquidity Fund may be sold in future offerings. See “Description of INX Tokens.”

INX Limited’s registered office is located at 57/63 Line Wall Road, Gibraltar, GX11 1AA, Gibraltar, and its telephone number is +350 200 79000.

Blockchain assets, popularly known as “tokens” or “coins,” have experienced rapid growth mixed with dramatic volatility since first introduced in 2009 with the launch of Bitcoin. For example, on December 31, 2017, total market capitalization for all blockchain assets was over $570 billion. In early January 2018, total market capitalization of blockchain assets increased to approximately $835 billion before declining by more than $100 billion in 24 hours on January 8, 2018. As of September 30, 2018, blockchain assets had a total market capitalization of approximately $200 billion.

Blockchain assets historically have not been issued by governments, banks or similar organizations but rather are typically maintained collectively by a decentralized user base, accessed through software, which also governs the blockchain asset’s creation, movement, and ownership. This lack of a single point of data collection is believed to enhance the security of traditional blockchain networks and blockchain assets. Nonetheless, blockchain assets and blockchain trading platforms remain susceptible to security breaches and cybercrime. For example, in January 2018, about $500 million worth of blockchain assets were stolen from a major Japanese trading platform.

Blockchain assets are based on blockchain technology, which is a digital public record or ledger. Copies of this ledger are stored in a decentralized manner on computers across a peer-to-peer network in traditional blockchain networks. Transaction data is permanently recorded in files called “blocks,” which reflect transactions that have been recorded and authenticated by “miners” on the network. The blockchain technology software source code includes protocols that govern the creation of bitcoin and the cryptographic system that secures and verifies blockchain transactions. The blockchain allows each user of the system to maintain its own copy of the ledger with all copies of the ledger synchronized through a consensus algorithm. Transactions involving blockchain assets are sent to and from digital wallets, and are digitally signed for security. Each network participant knows about a transaction, and the history of a transaction can be traced back to the point where the blockchain assets were produced. To send bitcoin, for example, both a bitcoin address and a private key are required. A bitcoin address is a randomly generated sequence of letters and numbers. The private key is another sequence of letters and numbers, but unlike the bitcoin address, this is kept secret and not shared with anyone. Transfer transactions contain the source transactions of the sender’s bitcoins, the amount of bitcoins to transferred, the bitcoin address (wallet) to receive the bitcoins, and the private key, which functions as the sender’s digital signature. Transactions can take place (a) as a direct trade with another person, with an intermediary facilitating the connection, (b) through an online exchange, with the exchange as counterparty rather than an individual, or (c) on peer-to-peer trading marketplaces.

Since these blockchain assets exist conceptually, as computer code, almost anything can be “tokenized” as a blockchain asset. In general, blockchain assets may be used in two broad contexts: protocol layers and app layers. A “protocol” is the software that governs rules, operations, and communication of a blockchain network. As the set of rules for achieving consensus, protocols create financial incentives that drive a network of rational economic agents to coordinate their behavior towards the completion of a process. A native token or protocol token is used as the incentive to drive that behavior, and the protocol token is required to write to the blockchain. Below are examples of well-known protocol layers, both to provide context for what a protocol layer is, and to illustrate the variety of ways in which a blockchain protocol may be implemented:

Some blockchain assets can be used to pay for a service, such as using CVC on the Ethereum network to pay for identity verification services, while other utility tokens may also provide rights to access, use or license a blockchain system. The value of blockchain assets is determined, in part, by the supply of, and demand for, the blockchain assets in the global exchange markets, market expectations for the adoption of blockchain assets by individuals, the number of merchants that accept blockchain assets as a form of payment and the volume of private end-user-to-end-user transactions.

Variations on traditional blockchain technology have been developed as financial institutions have entered the blockchain industry. With “permissioned” blockchains, a limited number of pre-selected user nodes monitor the ownership and trading of the tokens so that only entities with specific access are allowed to validate transactions (or add “blocks” to the chain). These blockchains may limit access to the trading, ownership history of a token and ownership of tokens. With a fully centralized blockchain, only one organization monitors the trading, ownership history of a token and ownership of tokens. Read permissions may be public or restricted as determined by the organization.

The blockchain market has grown dramatically. As of July 31, 2018, approximately $21 billion in the aggregate had been raised through offerings of blockchain assets, many of which are initial coin offerings (“ICOs”), and over 120 blockchain asset trading platforms provide basic buy and sell services for one or more blockchain assets. As of September 30 2018, 53 trading platforms of blockchain assets average daily trading volumes over $20,000,000 and 21 trading platforms of blockchain assets average daily trading volume over $100,000,000. As of June 30, 2018, top blockchain asset trading platforms, based on USD 24-hour trading volume, include Binance, OKEx, Huobi, Bitfinex, Bithumb, Upbit, HitBTC, ZB.com, DigiFinex and BCEX.

There has been growing institutional interest in operating regulated blockchain asset exchanges and trading platforms and utilizing blockchain assets in bank financing practices. In January 2017, UBS, BNY Mellon, Deutsche Bank, Santander, NEX and blockchain startup Clearmatics announced their own blockchain asset issuances with the intent to incorporate blockchain assets in currency-related transactions, encourage regulation by central banks and create fiat-like asset-collateralized networks on custom blockchain platforms. In December 2017, Bank of America was awarded a patent for an automated digital currency exchange system. On December 18, 2017, the Chicago Board of Exchange began trading in bitcoin futures, and was joined shortly thereafter by CME Group, also offering bitcoin futures. Also in December 2017, Bloomberg added three cryptocurrencies to its terminal service (previously having provided bitcoin data since 2014) and the Australian Securities Exchange (ASX) announced it would move forward with a plan to replace its current clearing and settlement process with a blockchain solution. In February 2018, Circle Internet Financial, a financial technology startup which counts Goldman Sachs as a key investor, purchased Poloniex, a digital asset exchange. As of March 2018, the European Central Bank and Bank of Japan are continuing to research blockchain applications for securities settlement systems. In May 2018, it was reported that Goldman Sachs will offer trading in bitcoin futures and non-deliverable forwards to its clients. In June 2018, The Gibraltar Blockchain Exchange, a subsidiary of the Gibraltar Stock Exchange, began operating as a trading platform for digital assets.

The significant growth of the blockchain asset market and the lack of regulated trading in blockchain assets have triggered an increase in governmental scrutiny. On July 25, 2017, the SEC issued a Report of Investigation pursuant to Section 21(a) of the Exchange Act that found that sales of tokens by a virtual organization known as The DAO (a “decentralized autonomous organization”) violated the federal securities laws by participating in the unregistered sale of securities. The SEC also has cautioned brokers, dealers and other market participants that (i) allow for payments in virtual currencies, (ii) allow customers to purchase virtual currencies on margin, or (iii) otherwise use virtual currencies to facilitate securities transactions to exercise particular caution, including ensuring that their virtual currency activities do not undermine their know-your-customer and anti-money laundering obligations. In December 2017, the SEC announced two enforcement actions against entities conducting token sales, followed soon after by a public statement by the Commission Chairman regarding cryptocurrencies and initial coin offerings addressed to both investors and market participants. In March 2018, the SEC Divisions of Enforcement and Trading and Markets issued a public statement noting that trading platforms for digital assets are required to comply with the federal securities laws and register with the SEC if the assets being traded are securities.

Since March 2018, the SEC and other U.S. regulatory agencies have taken enforcement actions against certain market participants and issued statement further clarifying its position that the issuance of tokens are often securities offerings. However, there is continued regulatory uncertainty in the blockchain asset market.

Because of the uncertainty built in to a “facts and circumstances” analysis, as well as general regulatory uncertainty worldwide, companies have begun to structure their blockchain assets as securities and conduct sales of their blockchain assets as registered securities offerings. As blockchain assets take on the attributes of securities and market makers expand the breadth of blockchain asset trading products into spot, futures and derivative trading instruments, the need and demand for a regulated blockchain asset trading solution continues to grow.

Identified problems in the current blockchain asset platform or exchange market include the following:

Our Proposed Solution: A Single Regulated Integrated Platform for Trading Blockchain Assets

We believe that the only comprehensive solution to the issues that we have identified, and to the shortcomings of the current marketplace, is the development of a new, blockchain based marketplace that is subject to governmental oversight. We are designing our platform to provide the following solutions to the problems identified above, which we believe will make the INX Trading platform an attractive choice for blockchain trading:

After the INX Trading platform is operational, prospective investors who have been duly identified through KYC/AML procedures may purchase and trade INX Tokens on the INX Trading platform. INX Token holders will be able to use the INX Token to pay INX Trading platform transaction fees, which are entitled to, at a minimum, a 10% discount to other forms of payment or to post collateral on the INX Trading platform. Holders of INX Tokens will also be entitled to receive a pro rata distribution of 20% of our cumulative Adjusted Operating Cash Flow, calculated as of December 31 of each year. The distribution will be payable on an annual basis commencing on April 30, 2020, and may thereafter be calculated and paid on an annual or a quarterly basis, subject to the board’s discretion. Further, in addition to a cash reserve to be comprised of 80% of the net proceeds from this offering in excess of $18 million, we plan to maintain a capital reserve and liquidity fund (the “Capital Reserve and Liquidity Fund”). The Capital Reserve and Liquidity Fund will consist initially of 35 million INX Tokens created but not previously sold by the Company to the public. In addition, we plan to reserve an additional 20% of the INX Tokens received by INX Services 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 this offering and subsequent offerings of INX Tokens (excluding re-issuances of reacquired INX Tokens), up to a maximum of 100 million INX Tokens. INX Tokens received as payment of transaction fees and not allocated to the Capital Reserve and Liquidity Fund may be sold in future offerings. See “Description of INX Tokens.”

We expect the development of the INX Trading platform to occur in the following phases.

Phase 1A. During this phase, we intend to create a secure platform to permit ongoing trading in Bitcoin, Ether and fiat currencies in over the counter trading. We expect to introduce such services following our subsidiary’s registration as a broker-dealer with FINRA.

Phase 1B. During this phase, we intend to complete the development of our secure trading/matching engine which will have high frequency transaction capability and support a wide range of standard order types such as limit, stop, “fill or kill,” “all or nothing,” and “if done”. We also plan on developing API interface for broker-dealers, traders, and market makers. In this phase, we also plan to implement technology for our clearing operations which will support large scale, automated transactions. We expect to provide these services following registration as an alternative trading system with FINRA and the SEC.

Phase 1C. During this phase, we plan to introduce short and borrow transactions using physical delivery of blockchain assets. Customers will be able to borrow certain blockchain assets from fellow peers according to collateral requirements. This will allow customers to enter short orders on the platform with the INX Trading platform managing the position compared to the deposited collateral.

Development of the INX Trading platform is progressing and the Company is currently in the process of testing the trading capabilities of the platform. INX Services has submitted its Form BD and Form NMA to FINRA. We intend to submit the Form ATS to the SEC by the end of 2018. We expect to complete Phase 1 in the first half of 2019.

Phase 2. During this phase, we plan to allow additional blockchain assets to trade on the INX Trading platform.

Phase 3. During this phase, we plan to register our subsidiary, INX DCM, Inc., with the CFTC as a designated contract market in respect of futures and options, or as a swap execution facility, in respect of swaps. Following the successful registration, we plan to have our subsidiary facilitate trading of derivatives (including futures, options, and swaps).

We expect to complete Phase 3 in the second half of 2019, and to introduce these services following receipt of CFTC DCM/SEF approvals. We expect that we will incur approximately $9 million of expenses to complete these three phases of development.

The Company anticipates that the net proceeds to the Company of a fully subscribed offering, after total offering expenses, will exceed $18 million. Because the Offering is being made subject to a minimum offering amount of $5,000,000, the Company may close on committed purchases without obtaining funds for all purposes set forth below. In the event that the Company raises only the minimum of $5,000,000 in the Offering, the Company will be able to finalize Phases 1A & 1B as described above. The Company plans to use net proceeds from this offering approximately as follows:

We believe that as the INX Trading platform completes each phase of development, which we expect will increase the number of high-volume blockchain assets included on the INX Trading platform, our business operations will grow and enable us to launch several growth strategies, including the following:

The following chart below shows the advantages of the full service platform to be provided by INX following completion of Phase 3 compared to the platforms deployed by the largest exchanges known as of the date hereof. Descriptions of these features and products are below.

We face intense competition in the blockchain asset trading market on a global level. As of June 30, 2018, top blockchain asset trading platforms, based on USD 24-hour volume, include BitMEX, Binance, CoinEx, OKEx, CoinBene, Huobi, ZB.com, Bithumb, Upbit and Bitfinex.

During the end of 2017 and throughout 2018, an ever-growing number of previously unregulated trading platforms have announced intentions to operate as a regulated broker-dealers, or as otherwise regulated entities either under the federal securities laws, U.S. state or local laws or, as applicable, the laws of other jurisdictions (outside the U.S.) such as the EU. The market for trading blockchain assets has generated considerable interest and is continually evolving with new entrants to the market. In addition, established financial institutions have expressed interest in operating regulated blockchain asset exchanges or trading platforms and utilizing blockchain assets in bank financing practices.

For example, in September 2017, t0.com, Inc. announced plans to launch an alternative trading system that will enable the trading of blockchain assets that are securities, in compliance with SEC and FINRA regulations and reportedly raised over $100 million from accredited investors in the first day of its ICO. LedgerX LLC is an institutional trading and clearing platform that has received approval from the CFTC to trade and clear swaps and options on digital currencies, and is registered as swap execution facility and derivatives clearing organization. In March 2018, the SEC indicated that investors looking to trade crypto-tokens should use an SEC registered platform, like a national security exchange, an ATS, or a licensed broker-dealer. In addition, in June 2018 the Gibraltar Stock Exchange announced that its subsidiary seeks to become a regulated and licensed crypto blockchain exchange. Coinbase and Uphold, two blockchain asset trading platforms, have each announced plans to SEC approval to operate trading platforms for trading blockchain assets that are securities.

In addition, there has been growing institutional interest in operating regulated blockchain asset exchanges and utilizing blockchain assets in bank financing practices. In January 2017, UBS, BNY Mellon, Deutsche Bank, Santander, NEX and blockchain startup Clearmatics announced their own blockchain asset issuances with the intent to incorporate blockchain assets in currency-related transactions, encourage regulation by central banks and create fiat-like asset-collateralized networks on custom blockchain platforms that apply “permissioned” and centralized blockchain technology. In December 2017, Bank of America was awarded a patent for an automated digital currency exchange system. Also in December 2017, the Chicago Board of Exchange began trading in bitcoin futures, and was joined shortly thereafter by CME Group, also offering bitcoin futures.

The market for trading blockchain assets is developing and we anticipate new entrants to the market and competition to intensify in the future. Our future competitors may have greater resources than us and there can be no assurance that we will have the financial and operational resources necessary to carry out our business plan and successfully compete with our competitors.

On September 1, 2017, two shareholders of the Company: Triple-V (1999) Ltd, a limited liability company registered under the laws of the state of Israel, controlled and wholly owned by Mr. Shy Datika, one of our founders, our controlling shareholder and President; and A-Labs Finance and Advisory Ltd., a private company incorporated under the laws of the state of Israel, controlled by Mr. Doron Cohen, entered into a Founders’ Agreement which set forth the initial terms for the inception and incorporation of the Company for developing a marketplace for virtual currencies. The Founders’ Agreement was later amended by the Addendum to Founders’ Agreement dated December 28, 2017 and Addendum 2 to Founders’ Agreement dated December 31, 2017 (as amended, the “Founders’ Agreement”).

Share Capital of the Company. Pursuant to the Founders’ Agreement, Triple-V was to have been allocated 3,666,666 ordinary shares of the Company, A-Labs was to have been allocated 1,120,000 ordinary shares of the Company, and 417,000 ordinary shares of the Company were to have been reserved for issuance upon the conversion of employee options.

Rights to Appoint Members of the Board of Directors. The Founders’ Agreement provides that the board of directors of the Company shall include no less than one board member and no more than seven board members, unless otherwise determined by the shareholders. The Founders’ Agreement further entitles Triple-V to appoint, remove or replace six board members and to appoint the Chief Executive Officer of the Company, subject to board approval. The Founders’ Agreement grants A-Labs the right to appoint, remove or replace one board member. Effective December 31, 2017, the Founders’ Agreement was amended to provide that, upon the effectiveness of the registration statement of which this prospectus is a part, members of the board of directors of the Company will be elected by the vote of the holders of a majority of the shares equity of the Company.

Non-Compete and Non-Solicitation. Pursuant to the Founders’ Agreement the parties agree to non-compete and non-solicit restrictions under which they may not compete or assist others to compete with the Company in any engagement or activity related to the development of a marketplace for virtual currencies and further they may not solicit or attempt to solicit any employee or service provider of the Company or any person to whom the Company provided services for products that would compete with the Company. The non-compete and non-solicit restrictions expire for each party one year after such party ceases to be a shareholder of the Company.

Termination. The Founders’ Agreement shall terminate upon the earlier of (i) the merger or consolidation of the Company with another corporation, (ii) the initial underwritten public offering by the Company of its ordinary shares pursuant to an effective registration under the Securities Act or any equivalent law of another jurisdiction, or (iii) the written agreement of Triple-V and A-Labs.

The foregoing description of the Founders’ Agreement summarizes the material terms of the Founders’ Agreement, as amended, but is not a complete description. For more details about the Founders’ Agreement, you should reference to the full text of the Founders’ Agreement, which is attached as Exhibits 10.1, 10.2 and 10.3 hereto, and is incorporated herein by reference.

On June 25, 2018, the Company entered into an amended and restated Consultancy Agreement with Triple-V (1999) Ltd. (the “Triple-V Consultancy Agreement”) pursuant to which Triple-V (1999) Ltd. will provide consultancy services and will have such duties, authorities and responsibilities as shall be determined by our board of directors) through the personal services of Mr. Shy Datika.

Term. Pursuant to the Triple-V Consultancy Agreement, Triple-V’s engagement with the Company commenced as of October 1, 2017, and will continue until such time as either Triple-V or the Company terminates its engagement pursuant to the terms of the Triple-V Consultancy Agreement, including by 30 days written notice.

Compensation. Pursuant to the Triple-V Consultancy Agreement, as of May 1, 2018, Triple-V will receive a monthly fee in the amount of $12,000 and a one-time bonus of $250,000 six months following the date the registration statement in connection with this Offering is declared effective by the SEC. In addition, the Company will reimburse Triple-V for out of pocket expenses reasonably required in the performance of the services under the Triple-V Consultancy Agreement. The Triple-V Consultancy Agreement does not provide for benefits upon the termination of the services, other than payment of fees and other obligations owed during the required notice period.

Terms of Proprietary Rights, Confidentiality and Non-Competition. The Triple-V Consultancy Agreement contains terms to protect the proprietary rights of the Company in the Company’s technology, intellectual property and inventions to which Triple-V is exposed during the course of the engagement. Triple-V is also subject to terms of confidentiality. Notwithstanding the foregoing, nothing in the Triple-V Consultancy Agreement prevents Triple-V from further engagements in activities related to virtual coins outside the scope of the technology and confidential information owned by the Company.

The foregoing description of the Triple-V Consultancy Agreement summarizes the material terms of the Triple-V Consultancy Agreement, as amended, but is not a complete description. For more details about the Triple-V Consultancy Agreement, you should reference to the full text of the Triple-V Consultancy Agreement, which is attached as Exhibit 10.4 hereto, and is incorporated herein by reference.

On December 26, 2017, in connection with the appointment of Mr. Oran Mordechai as the Company’s Chief Financial Officer, the Company entered into a Financial Services Agreement with Insight Finance Ltd. (supplemented on February 14, 2018) (the “Insight Service Agreement”) pursuant to which Insight Finance Ltd. will provide certain bookkeeping and accounting services to the Company, including that Mr. Oran Mordechai shall serve as the Company’s Chief Financial Officer.

Term. Pursuant to the Insight Service Agreement, Insight’s engagement with the Company will continue until terminated according to its terms. The Company may terminate the Insight Management Agreement upon notice to Insight.

Compensation. Pursuant to the Insight Service Agreement, Insight will receive a quarterly fee for bookkeeping and accounting services and will be compensated at an hourly rate for other services, or as shall be agreed in advance. In addition to and separate from such fees, the Company will reimburse Insight for certain out of pocket expenses reasonably required in the performance of the services under the Insight Service Agreement. The Insight Service Agreement does not provide for benefits upon the termination of the services, other than payment of fees and other obligations owed.

Limitation of Liability. Insight’s liability in connection with the Insight Service Agreement, is limited to the total annual fees actually paid to Insight under the Insight Service Agreement (the “Limit of Liability”). The Company shall indemnify and compensate Insight for all costs incurred by Insight arising out of, resulting from or in any way connected to the performance of its obligations under the Insight Service Agreement that exceed the Limit of Liability.

Terms of Proprietary Rights, Confidentiality and Non-Solicitation. Insight is subject to terms of confidentiality to protect the proprietary rights of the Company in the Company’s technology, intellectual property and inventions to which Insight is exposed during the course of the engagement. The Company also agreed that it will not hire, recruit or solicit any employee of Insight without Insight’s written consent.

The foregoing description of the Insight Service Agreement summarizes the material terms of the Insight Service Agreement, as amended, but is not a complete description. For more details about the Insight Service Agreement, you should reference to the full text of the Insight Service Agreement, which is attached as Exhibit 10.5 hereto, and is incorporated herein by reference.

On December 28, 2017, the Company entered into Second Amended and Restated Engagement Agreement with A-Labs effective as of September 26, 2017 pursuant to which A-Labs agreed to provide the Company with certain services, including the development, planning, management, execution, and branding with relation to the initial public offering of the INX Tokens on behalf of the Company. The Engagement Agreement was further amended on January 31, 2018 (as amended, the “A-Labs Engagement Agreement”).

Term. A-Labs’s engagement with the Company will continue until terminated in accordance with the terms of the A-Labs Engagement Agreement. The A-Labs Engagement Agreement will terminate: (i) upon the completion of this offering and the payment to A-Labs of all fees payable thereunder, (ii) if the Company does not provide a notice to A-Labs confirming the release of INX Tokens to their buyers and acceptance of INX Token payments by the end of the Offering Period, as defined under the A-Labs Agreement, (iii) if the sale of Tokens or any other activity contemplated under the A-Labs Agreement is banned or otherwise declared illegal by any applicable law or regulation, or (iv) upon 30 days prior written notice by either party.

Compensation. Pursuant to the A-Labs Engagement Agreement, A-Labs is entitled to receive (i) a non-refundable, one-time cash payment of $500,000; (ii) a grant of 4,550,000 INX Tokens, subject to a repurchase option by the Company, under which the Company is entitled to repurchase INX Tokens for $0.01 per Token; (iii) a cash payment of $500,000 payable upon the completion of an offering under which the Company has raised from U.S. persons not less than $10,000,000; and (iv) a contingent cash payment for the sale of INX Tokens to non-US Persons only equal to: 10% of the first $30 million (up to $3 million) in ICO Proceeds (is defined in the A-Labs Engagement Agreement as the net proceeds paid by purchasers in this offering and by early investors in the Tokens but not including the first $10 million of net proceeds); 5% of the next $70 million (up to $3.5 million) in ICO Proceeds; 6% of the next $100 million (up to $6 million) in ICO Proceeds; and 7.5% of ICO Proceeds in excess of $200 million. Subsequent to entry into the A-Labs Engagement Agreement, the Company unilaterally waived its rights to exercise the repurchase option. A-Labs is not entitled to any sales royalties, commissions or other consideration in connection with the contemplated offering to US Persons other than the fixed fees set forth in the A-Labs Agreement.

Services. Pursuant to the A-Labs Engagement Agreement A-Labs shall provide the Company with the following services: creation of the INX Tokens and of the ICO and Token brands, assistance with the management of the ICO process, including the appointment of an A-Labs project manager dedicated to the process and provision of security and cyber protection services. A-Labs shall provide the Company with end-to-end payments collection setup compliant with all applicable laws, regulations and standards, shall be responsible for all KYC/AML compliance with respect to the ICO and shall provide the Company with wallet applications to be downloaded by Token buyers from the Company’s ICO portal.

Services in the United States. With respect to operations in the United States or in connection with any U.S. person, A-Labs shall provide advisory services only. Such advisory services shall include advice on the offering and token brands, story and style guide, and consultancy with respect to the drafting of the whitepaper (which was not issued).

A-Labs represents that it shall not, directly or indirectly, by itself, by a related party or by any person acting on its behalf, perform, assist, promote, or otherwise be involved in any activity related to solicitation or advertising to the U.S. market nor in direct sale efforts or distribution of INX Tokens in the U.S. or to U.S. persons.

Terms of Proprietary Rights, Confidentiality and Non-Competition. Pursuant to the A-Labs Engagement Agreement, the Company shall be the sole and exclusive owner of all intellectual property created by A-Labs as part of or otherwise in connection with the A-Labs Engagement Agreement, including all developments, systems and components created and/or used by it as part of or during the provision of the thereunder. Notwithstanding the foregoing, A-labs shall have and retain all right, title and interest in and to all (i) existing intellectual property rights owned, obtained and/or developed by them prior to the effective date of the A-Labs Engagement Agreement; and (ii) intellectual property rights created by them during the performance of the Services thereunder and which are general capabilities not related to the services provided to the Company under the A-Labs Engagement Agreement. A-Labs and the Company are subject to terms of confidentiality. A-Labs shall have no limitations to offer and provide to third parties, services similar to the services provided to the Company under the A-Labs Engagement Agreement.

The foregoing description of the A-Labs Engagement Agreement summarizes the material terms of the A-Labs Engagement Agreement, as amended, but is not a complete description. For more details about the A-Labs Engagement Agreement, you should reference to the full text of the A-Labs Engagement Agreement, as amended, which is attached as Exhibits 10.6 and 10.7 hereto, and is incorporated herein by reference.

On May 9, 2018, the Company entered into an amended and restated Exchange Software Agreement, as amended on June 27, 2018 (effective as of October 1, 2017) with Y. Singer Technologies Ltd (commercially known as Committed), an Israeli company (the “Software Services Agreement”), pursuant to which Committed shall provide the Company with services, including the design, development, implementation, modification and customization of the INX Trading platform software, and related support services.

Term. Committed’s engagement with the Company will continue until the completion of the services thereunder by Committed to the full satisfaction of the Company. The Software Services Agreement may also be terminated for convenience by the Company upon 30 days’ prior written notice to Committed. The Agreement may also terminate upon material breach or insolvency by either party or if the Company is unable to raise $5,000,000 by September 30, 2018.

Compensation. Pursuant to the Software Services Agreement, Committed is entitled to a cash payment of approximately $500,000 for its services. Committed also received a warrant to purchase 68,173 ordinary shares of the Company (subject to adjustment in the event of any share dividend, share split, issuance of bonus shares, combination or similar recapitalization affecting such shares), at an exercise price of GBP 0.001 per share exercisable for a period of 48 months form the date the warrants were granted.

Support Services. In addition to the initial design, development, implementation, modification and customization of the INX Trading platform software, Committed will provide support services to the INX Trading platform for the three (3) month period beginning on the date of delivery and installation of the exchange software on Company’s server. Committed shall provide Company with maintenance and support services in accordance with the service level agreement entered into under the Committed Agreement, including 24/7 software support. After the initial three-month support period, the Company may elect to renew Committed support services for additional three-month periods, at an annual rate equal to 25% of the agreed original price.

Terms of Proprietary Rights and Confidentiality. Committed is subject to terms of confidentiality to protect the proprietary rights of the Company in the Company’s technology, intellectual property and inventions. The Company shall be the sole and exclusive owner of all intellectual property created by Committed during the performance of its services under the Software Services Agreement. Committed will assign and convey to Company all rights and title to all intellectual property, including all Moral Rights therein, together with the source code, and any and all related patents, copyrights, trademarks, trade names, and/or other intellectual property rights and applications thereof.

The foregoing description of the Software Services Agreement summarizes the material terms of the Software Services Agreement, as amended, but is not a complete description. For more details about the Software Services Agreement, as amended, you should reference to the full text of the Software Services Agreement, which is attached as Exhibit 10.8 hereto, and is incorporated herein by reference.

Committed is an experienced software development company with over 10 years of experience providing technological, architecture and design consultation and research and development services with regard to fin-tech, medical, and digital technology industries. Committed has developed and deployed several blockchain based products and services including ERC20 token smart contracts, digital wallets, and decentralized applications (“DApps”), as well as matching engines used in the financial industry.

On April 23, 2018 the Company and INX Services, Inc. entered into a services agreement (effective as of April 1, 2018) with Fidelis LLC (“Fidelis”), as amended by the Amended and Restated Executive Services Agreement dated June 25, 2018 (the “Fidelis Services Agreement”), pursuant to which Mr. Matt Rozzi shall provide operations and compliance consultancy services to the Company and INX Services. It is intended that Mr. Rozzi will enter into an engagement agreement with INX Services, Inc. to serve as its Chief Operating Officer and Chief Compliance Officer (the “Employment Agreement”) six months following the date the registration statement in connection with this offering is declared effective by the SEC.

Term. The Fidelis Services Agreement will continue until six months following the date the registration statement in connection with this offering is declared effective by the SEC, after which the Fidelity Services Agreement would terminate and Mr. Rozzi would enter into an employment agreement with INX Services, Inc., the terms of which are as described below. Both parties may agree on renewal of the Fidelis Services Agreement at any time prior to its termination, and each party may terminate the Fidelis Services Agreement upon 60 days written notice to the other party.

Compensation. Mr. Rozzi will receive a monthly fee of $12,500 (for no less than 80 hours of services per month). In addition, upon the registration of INX Services as a broker-dealer with FINRA, Mr. Rozzi shall be granted a one-time bonus of $60,000. In addition to and separate from such payments, the Company will reimburse Mr. Rozzi for certain out of pocket expenses reasonably required in the performance of the services under the Fidelis Services Agreement. The Fidelis Services Agreement does not provide for any other benefits upon the termination of the services.

Terms of Proprietary Rights, Confidentiality. The Fidelis Services Agreement contains terms to protect the proprietary rights and confidentiality of the Company to technology, intellectual property and inventions to which Mr. Rozzi is exposed during the course of the engagement.

The terms of the Employment Agreement to be entered into are intended to be as follows:

Term. Mr. Rozzi and INX Services intend to enter into the Employment Agreement six months following the date the registration statement in connection with this offering is declared effective by the SEC. The Employment Agreement will continue for no less than one year following its effective date, unless terminated for cause.

Compensation. Mr. Rozzi will receive a monthly salary in the amount of $25,000 and benefits appropriate to an executive level employee (including a retirement plan). Mr. Rozzi shall also receive additional bonus payments up to $90,000 upon to the achievement of certain performance targets and objectives as determined by the board of directors of INX Services. Six months following the date the registration statement in connection with this offering is declared effective by the SEC, Mr. Rozzi will receive an option to purchase 350,000 INX Tokens in consideration for $3,500. Upon the adoption of a share ownership plan and option plan by the Company, the Company will grant Mr. Rozzi, equity compensation as follows: (a) an option to purchase a number of option shares constituting 0.5% of the share capital of the Company (on a fully diluted basis and subject to future dilutions) at a price per share equal to the FMV of the Company’s shares. One quarter of the option shall vest upon each anniversary of the effective date of the Employment Agreement, such that the option shall be fully vested upon the fourth anniversary of the effective date of the Employment Agreement, subject to Mr. Rozzi’s continuous engagement with INX Services.

The foregoing description of the Fidelis Services Agreement summarizes the material terms of the Fidelis Services Agreement, as amended, but is not a complete description. For more details about the Fidelis Services Agreement, you should reference to the full text of the Fidelis Services Agreement, which is attached as Exhibit 10.9 hereto, and is incorporated herein by reference.

In connection with the appointment of Ms. Naor as the Company’s VP, Product, as of May 1, 2018, Ms. Naor provides services to the Company pursuant to a services agreement entered into between the Company and Shiran Communications Ltd. (“Shiran”), an Israeli company, as amended on July 29, 2018 (the “Shiran Services Agreement”). Prior to that, Ms. Naor provided services to the Company pursuant to a services agreement entered into between the Company and Ms. Naor dated November 1, 2017 as amended by the Amended and Restated Consultancy Agreement with Ms. Naor dated June 25, 2018 and terminated on 29 July 2018 (the “Naor Consultancy Agreement”), which contained terms and conditions materially similar to the terms of the current Shiran Services Agreement, as further detailed below.

Term. The Shiran Services Agreement is effective as of May 1, 2018 and shall terminate on December 31, 2018.

Compensation. In consideration for the services rendered by Shiran, Shiran shall be entitled to a fee in the amount of $94,000, to be paid in 8 equal monthly installments commencing as of May 1, 2018. Such fee constitutes full reimbursement for the project detailed in the Shiran Services Agreement. On July 29, 2018, the Shiran Services Agreement was amended such that a one-time bonus payment in the amount $114,000 will be paid to Shiran subject to and following lapse of 6 months after the declaration of the SEC of the effectiveness of the offering contemplated hereunder.

Terms of Proprietary Rights, Confidentiality and Non-Competition. The Shiran Services Agreement contains terms to protect the proprietary rights of the Company to technology, intellectual property and inventions to which Ms. Naor is exposed during the course of the engagement.

The foregoing description of the Naor Consultancy Agreement and the Shiran Services Agreement summarizes the material terms of the Naor Consultancy Agreement and the Shiran Services Agreement, as amended, but is not a complete description. For more details about the Naor Consultancy Agreement and the Shiran Services Agreement, you should reference to the full text of the Naor Consultancy Agreement and the Shiran Services Agreement, which is attached as Exhibit 10.10 and Exhibit 10.11, respectively, hereto, and is incorporated herein by reference.

On November 27, 2017, in connection with the appointment of Mr. Azeroual as the Company’s Vice President, Blockchain Asset Strategy, the Company entered into a Management Agreement with Mr. Azeroual, as amended by the Amended and Restated Consultancy Agreement with Mr. Azeroual dated June 25, 2018 (the “Azeroual Consultancy Agreement”).

Term. Pursuant to the Azeroual Consultancy Agreement, Mr. Azeroual’s engagement with the Company will continue until such time as either Mr. Azeroual or the Company terminates her engagement pursuant to the terms of the Azeroual Consultancy Agreement, including by 30 days written notice.

Compensation. Pursuant to the Azeroual Consultancy Agreement, Mr. Azeroual will receive a monthly fee for his services in the amount of $7,000, commencing as of May 1, 2018. Six months following the date the registration statement in connection with this offering is declared effective by the SEC, Mr. Azeroual will receive: a one-time bonus in the amount of $150,000; a to-be-determined monthly fee as compensation for his services; and an annual bonus payment contingent upon achievement of milestones and targets predetermined by the Company. In addition, the Company will reimburse Mr. Azeroual for out of pocket expenses reasonably required in the performance of the services under the Azeroual Consultancy Agreement. The Azeroual Consultancy Agreement does not provide for benefits upon the termination of the services, other than payment of fees and other obligations owed during the required notice period.

Terms of Proprietary Rights, Confidentiality and Non-Competition. The Azeroual Consultancy Agreement contains terms to protect the proprietary rights of the Company to technology, intellectual property and inventions to which Mr. Azeroual is exposed during the course of the engagement. Mr. Azeroual is also subject to terms of confidentiality. Notwithstanding the foregoing, nothing in the Azeroual Consultancy Agreement prevents Mr. Azeroual from further engagements in activities related to virtual coins outside the scope of the technology and confidential information owned by the Company.

The foregoing description of the Azeroual Consultancy Agreement summarizes the material terms of the Azeroual Consultancy Agreement, as amended, but is not a complete description. For more details about the Azeroual Consultancy Agreement, you should reference to the full text of the Azeroual Consultancy Agreement, which is attached as Exhibit 10.12 hereto, and is incorporated herein by reference.

On June 25, 2018, Mr. Silbert and INX Services, Inc. entered into an Amended and Restated Executive Employment Agreement (effective March 1, 2018) (the “Silbert Employment Agreement”), pursuant to which Mr. Silbert will provide services to INX Services, Inc. and the Company, including that Mr. Silbert shall serve as a member of the Board of Directors of the Company and Executive Managing Director of U.S. Operations of INX Services, Inc.

Term. Pursuant to the Silbert Employment Agreement, Mr. Silbert’s engagement with the Company will continue until such time as either Mr. Silbert or the Company terminates the engagement pursuant to the terms of the Silbert Employment Agreement, including by 30 days written notice or immediately for cause.

Compensation. Pursuant to the Silbert Employment Agreement, Mr. Silbert will receive a base salary of $132,000. Six months following the date the registration statement in connection with this offering is declared effective by the SEC, Mr. Silbert’s base salary shall increase to a monthly rate of $20,000 and Mr. Silbert shall be eligible to earn an annual performance based bonus in the amount of $150,000 upon the achievement of certain performance based targets which shall be established by the Board of Directors of INX Services. In addition, six months following the effectiveness of the registration statement in connection with this offering, Mr. Silbert shall be granted an option to purchase 500,000 INX Tokens at a price of $0.01 per Token. Upon and subject to the adoption of a Share Ownership and Option Plan by the Company, Mr. Silbert shall receive an option to purchase Ordinary Shares of the Company constituting 3% of the share capital of the Company on a fully diluted basis, at a price per share equal to the fair market value per share. 25% of the option shares will vest upon each anniversary of Mr. Silbert’s employment with INX Services, such that the options will be fully vested and exercisable upon the 4^th anniversary of such employment. Unvested options shall be subject to accelerated vesting upon change of control of the Company. In addition, the INX Services will reimburse Mr. Silbert for out of pocket expenses reasonable required in the performance of services under the Silbert Employment Agreement. If the Silbert Employment Agreement is terminated without cause or good reason, as such terms are defined in the Silbert Employment Agreement, INX Services shall continue to pay Mr. Silbert a base salary for twelve months following the termination date.

Terms of Proprietary Rights, Confidentiality and Non-Competition. In connection with entering into the Silbert Employment Agreement, the Company and Mr. Silbert entered into an Employee Invention Assignment and Confidentiality Agreement which contains terms to protect the proprietary rights of the Company to technology, intellectual property and inventions to which Mr. Silbert is exposed during the course of the engagement. Mr. Silbert is also subject to terms of confidentiality.

The foregoing description of the Silbert Employment Agreement summarizes the material terms of the Silbert Employment Agreement, as amended, but is not a complete description. For more details about the Silbert Employment Agreement, you should reference to the full text of the Silbert Employment Agreement, which is attached as Exhibit 10.13 hereto, and is incorporated herein by reference.

On March 8, 2018, in connection with the appointment of Mr. James Crossley as a member of the Company’s Board of Directors, the Company entered into a Services Agreement with Bentley Limited, as amended effective as of August 1, 2018 (the “Bentley Services Agreement”) pursuant to which Bentley Limited will provide services to the Company including that James Crossley shall serve as a board member of the Company.

Term. Pursuant to the Bentley Services Agreement, Bentley Limited’s engagement with the Company will continue until such time as either Bentley Limited or the Company terminates its engagement pursuant to the terms of the Bentley Services Agreement, including by 30 days written notice.

Compensation. Pursuant to the Bentley Services Agreement, Bentley will receive a monthly consulting fee of GBP 1,600 + VAT per month. In addition, Bentley will receive the option to purchase 10,000 INX Tokens per month at the price of $0.01 per Token, subject to a maximum of 100,000 INX Tokens. Such option to purchase INX Tokens shall lapse on the first of the month in which the Company raises $10,000,000 in a public offering of INX Tokens. In addition, the Company will reimburse Bentley Limited for out of pocket expenses reasonably required in the performance of the services under the Bentley Services Agreement. The Bentley Services Agreement does not provide for benefits upon the termination of the services.

Terms of Proprietary Rights, Confidentiality and Non-Competition. The Bentley Services Agreement contains terms to protect the proprietary rights of the Company to technology, intellectual property and inventions to which Bentley (and/or Mr. Crossley) is exposed during the course of the engagement. Bentley Limited is also subject to terms of confidentiality.

The foregoing description of the Bentley Services Agreement summarizes the material terms of the Bentley Services Agreement, as amended, but is not a complete description. For more details about the Bentley Services Agreement, you should reference to the full text of the Bentley Services Agreement, which is attached as Exhibit 10.14 hereto, and is incorporated herein by reference.

On March 21, 2018, the Company entered into an engagement agreement in connection with the appointment of Mr. Weild as a member of the Board of Directors of INX Limited (effective as of April 15, 2018). Such agreement was amended on June 25, 2018 by the Amended and Restated letter of invitation to serve as a member of the Board of Directors the Company (the “Weild Engagement Letter”).

Term. Pursuant to the Weild Engagement Letter, Mr. Weild’s engagement with the Company will continue until such time as either Mr. Weild or the Company terminates the engagement by written notice with immediate effect.

Compensation. Mr. Weild will receive a monthly fee of $1,500 for the term of the engagement. Six months following the date the registration statement in connection with this offering is declared effective by the SEC, Mr. Weild shall be entitled to purchase 3,500 INX Tokens per month in consideration for $0.01 per Token on a monthly basis during his tenure as director, as well as an option to purchase 350,000 INX Tokens at a price of $0.01 per Token. In addition to and separate from such fees, the Company will reimburse Mr. Weild for certain out of pocket expenses reasonably required in the performance of the services under the Weild Engagement Letter.

Terms of Proprietary Rights and Confidentiality. The Weild Engagement Letter contains terms to protect the proprietary rights of the Company to technology, intellectual property and inventions to which Mr. Weild is exposed during the course of the engagement. Mr. Weild is also subject to terms of confidentiality.

The foregoing description of the Weild Engagement Letter summarizes the material terms of the Weild Engagement Letter, as amended, but is not a complete description. For more details about the Weild Engagement Letter, you should reference to the full text of the Weild Engagement Letter, which is attached as Exhibit 10.15 hereto, and is incorporated herein by reference.

On July 10, 2018, the Company under a letter of invitation the Company engaged Mr. Thadaney as a member of the Board of Directors of INX Limited (effective as of September 28, 2018) (the “Thadaney Engagement Letter”).

Term. Pursuant to the Thadaney Engagement Letter, Mr. Thadaney’s engagement with the Company will continue until such time as either Mr. Thadaney or the Company terminates the engagement by written notice with immediate effect.

Compensation. Mr. Thadaney will receive a monthly fee of $1,500 for the term of the engagement. Six months following the date the registration statement in connection with this offering is declared effective by the SEC, Mr. Thadaney shall be entitled to purchase 3,500 INX Tokens per month in consideration for $0.01 per Token on a monthly basis during his tenure as director, as well as an option to purchase 350,000 INX Tokens at a price of $0.01 per Token. In addition to and separate from such fees, the Company will reimburse Mr. Thadaney for certain out of pocket expenses reasonably required in the performance of the services under the Thadaney Engagement Letter.

Terms of Proprietary Rights and Confidentiality. The Thadaney Engagement Letter contains terms to protect the proprietary rights of the Company to technology, intellectual property and inventions to which Mr. Thadaney is exposed during the course of the engagement. Mr. Thadaney is also subject to terms of confidentiality.

The foregoing description of the Thadaney Engagement Letter summarizes the material terms of the Thadaney Engagement Letter, but is not a complete description. For more details about the Thadaney Engagement Letter, you should reference to the full text of the Thadaney Engagement Letter, which is attached as Exhibit 10.19 hereto, and is incorporated herein by reference.

On August 20, 2018, the Company under a letter of invitation the Company engaged Mr. Ashar as a member of the Board of Directors of INX Limited (effective as of September 1, 2018) (the “Ashar Engagement Letter”).

Term. Pursuant to the Ashar Engagement Letter, Mr. Ashar’s engagement with the Company will continue until such time as either Mr. Ashar or the Company terminates the engagement by written notice with immediate effect.

Compensation. Mr. Ashar will receive a monthly fee of $1,500 for the term of the engagement. Six months following the date the registration statement in connection with this offering is declared effective by the SEC, Mr. Ashar shall be entitled to purchase 3,500 INX Tokens per month in consideration for $0.01 per Token on a monthly basis during his tenure as director, as well as an option to purchase 350,000 INX Tokens at a price of $0.01 per Token. In addition to and separate from such fees, the Company will reimburse Mr. Ashar for certain out of pocket expenses reasonably required in the performance of the services under the Ashar Engagement Letter.

Terms of Proprietary Rights and Confidentiality. The Ashar Engagement Letter contains terms to protect the proprietary rights of the Company to technology, intellectual property and inventions to which Mr. Ashar is exposed during the course of the engagement. Mr. Ashar is also subject to terms of confidentiality.

The foregoing description of the Ashar Engagement Letter summarizes the material terms of the Ashar Engagement Letter, but is not a complete description. For more details about the Ashar Engagement Letter, you should reference to the full text of the Ashar Engagement Letter, which is attached as Exhibit 10.20 hereto, and is incorporated herein by reference.

On September 21, 2018, the Company under a letter of invitation the Company engaged Mr. Lewis as a member of the Board of Directors of INX Limited (effective as of September 28, 2018) (the “Lewis Engagement Letter”).

Term. Pursuant to the Lewis Engagement Letter, Mr. Lewis’ engagement with the Company will continue until such time as either Mr. Lewis or the Company terminates the engagement by written notice with immediate effect.

Compensation. Mr. Lewis will receive a monthly fee of $1,500 for the term of the engagement. Six months following the date the registration statement in connection with this offering is declared effective by the SEC, Mr. Lewis shall be entitled to purchase 3,500 INX Tokens per month in consideration for $0.01 per Token on a monthly basis during his tenure as director, as well as an option to purchase 350,000 INX Tokens at a price of $0.01 per Token. In addition to and separate from such fees, the Company will reimburse Mr. Lewis for certain out of pocket expenses reasonably required in the performance of the services under the Lewis Engagement Letter.

Terms of Proprietary Rights and Confidentiality. The Lewis Engagement Letter contains terms to protect the proprietary rights of the Company to technology, intellectual property and inventions to which Mr. Lewis is exposed during the course of the engagement. Mr. Lewis is also subject to terms of confidentiality.

The foregoing description of the Lewis Engagement Letter summarizes the material terms of the Lewis Engagement Letter, but is not a complete description. For more details about the Lewis Engagement Letter, you should reference to the full text of the Lewis Engagement Letter, which is attached as Exhibit 10.21 hereto, and is incorporated herein by reference

On November 27, 2017, the Company entered into a Loan Agreement with Ms. Naor (the “Naor Loan Agreement”) pursuant to which the Company borrowed $40,635 from Ms. Naor. The term of the loan is five years, and the outstanding balance shall become due and payable on the five-year anniversary of the Naor Loan Agreement or upon the sooner of an IPO or a Deemed Liquidation Event (as such terms are defined in the Company’s Articles of Association). The interest rate on the principal of the loan is an annual rate of 2% compounded annually (subject to adjustment from time to time by the applicable Income Tax Ordinance).

Pursuant to the Naor Loan Agreement, Ms. Naor is entitled, at any time and at her sole discretion, to convert outstanding principal and interest amounts of the loan agreement into 333,333 ordinary shares of the Company. Under the terms of the Naor Loan Agreement, Ms. Naor also purchased 937,499 INX Tokens issued by the Company at a price of $0.01 per INX Token.

The foregoing description of the Naor Loan Agreement summarizes the material terms of the Naor Loan Agreement but is not a complete description. For more details about the Naor Loan Agreement, you should reference to the full text of the Naor Loan Agreement, which is attached as Exhibit 10.16 hereto, and is incorporated herein by reference.

On November 27, 2017, the Company entered into a Loan Agreement with Ms. Ayelet Horn (the “Horn Loan Agreement”) pursuant to which the Company borrowed $37,984 from Ms. Horn. The term of the loan is five years, and the outstanding balance shall become due and payable on the five-year anniversary of the Horn Loan Agreement or upon the sooner of an IPO or a Deemed Liquidation Event (as such terms are defined in the Company’s Articles of Association). The interest rate on the principal of the loan is an annual rate of 2% compounded annually (subject to adjustment from time to time by the applicable Income Tax Ordinance).

Pursuant to the Horn Loan Agreement, Ms. Horn is entitled, at any time and at her sole discretion, to convert outstanding principal and interest amounts of the loan agreement into 311,500 ordinary shares of the Company. Under the terms of the Horn Loan Agreement, Ms. Horn also purchased 876,562 INX Tokens issued by the Company at a price of $0.01 per INX Token.

Ms. Ayelet Horn is the wife of Mr. Yuval Horn, a senior partner at Horn & Co. Law Offices, Tel Aviv, Israel, which firm is serving as legal counsel for this offering for matters relating to Israeli law.

The foregoing description of the Horn Loan Agreement summarizes the material terms of the Horn Loan Agreement but is not a complete description. For more details about the Horn Loan Agreement, you should reference to the full text of the Horn Loan Agreement, which is attached as Exhibit 10.17 hereto, and is incorporated herein by reference.

On November 27, 2017, the Company entered into a Loan Agreement with Mr. Yaniv Segev (the “Segev Loan Agreement”) pursuant to which the Company borrowed $37,984 from Mr. Segev. The term of the loan is five years, and the outstanding balance shall become due and payable on the five-year anniversary of the Segev Loan Agreement or upon the sooner of an IPO or a Deemed Liquidation Event (as such terms are defined in the Company’s Articles of Association). The interest rate on the principal of the loan is an annual rate of 2% compounded annually (subject to adjustment from time to time by the applicable Income Tax Ordinance).

Pursuant to the Segev Loan Agreement, Mr. Segev is entitled, at any time and at his sole discretion, to convert outstanding principal and interest amounts of the loan agreement into 311,500 ordinary shares of the Company. Under the terms of the Segev Loan Agreement, Mr. Segev also purchased 876,562 INX Tokens issued by the Company at a price of $0.01 per INX Token.

The foregoing description of the Segev Loan Agreement summarizes the material terms of the Segev Loan Agreement but is not a complete description. For more details about the Segev Loan Agreement, you should reference to the full text of the Segev Loan Agreement, which is attached as Exhibit 10.18 hereto, and is incorporated herein by reference.

Each of the individuals who provide services to us does so through a management, services, consulting or similar agreement.

By the end of our three phases of development, we intend to employ approximately 30 to 40 key employees in positions of management, compliance, marketing and development.

The Company currently does not own or hold any tangible fixed assets, including real property, plant or equipment, whether by leasehold or otherwise.

INX Services, one of our subsidiaries, intends to file applications for registration as a broker-dealer and as an alternative trading system with FINRA and the SEC. We intend to form another U.S. subsidiary to register as a designated contract market or swap execution facility with the CFTC. Our subsidiary in Gibraltar intends to apply to the Gibraltar Financial Services Commission for licenses under the Financial Services (Markets in Financial Instruments) Act 2018 and the Financial Services (Distributed Ledger Technology Providers) Regulations 2017 for its European-based operations. INX Services also is in compliance with the Gibraltar Proceeds of Crime Act 2015, which implements EU legislation in this field, and which was amended to extend specifically to digital tokenized assets.

The financial services industry is subject to extensive regulation under both federal and state laws. Registration as a broker-dealer, an alternative trading system and a designated contract market or swap execution facility will subject our subsidiaries to laws and regulations covering all aspects of financial services, including sales methods, trade practices, use and safekeeping of clients’ funds and securities, minimum capital requirements, record keeping securities lending and financing of securities purchases and conduct of directors, officers and employees. The regulations promulgated and enforced by regulators are designed to ensure the integrity of the financial markets and to protect customers and other third parties who engage in the financial markets.

In the United States, the SEC is the federal agency responsible for the administration of the federal securities laws, with certain standard setting and monitoring responsibilities delegated to self-regulatory organizations (“SROs”). Of these SROs, the regulation of broker-dealers is principally the function of FINRA and every firm and broker that sells securities to the public in the United States must be licensed and registered by FINRA. National securities exchanges, such as the New York Stock Exchange, also regulate and monitor broker-dealer activity. In addition to federal and SRO oversight, securities firms are also subject to regulation by state securities administrators in those states in which they conduct business.

Broker-dealers, like other securities market participants, must comply with the general “antifraud” provisions of the federal securities laws. The “antifraud” provisions prohibit misstatements or misleading omissions of material facts, and fraudulent or manipulative acts and practices, in connection with the purchase or sale of securities, and broker-dealers must conduct their activities to avoid these kinds of practices.

Broker-dealers must also comply with many requirements that are designed to maintain high industry standards. Broker-dealers owe their customers a duty: a) of fair dealing, b) to recommend only those specific investments or overall investment strategies that are suitable, c) to seek to obtain the most favorable terms available under the circumstances for its orders (best execution), d) to provide at or before the completion of transaction certain information (including the identifying the securities involved in the transaction and compensation related to the transaction), and e) to provide notice about purchasing securities on credit, among other disclosure requirements.

Broker-dealers are also subject to broad obligations under the Bank Secrecy Act to guard against money laundering and terrorist financing which include requirements to file reports or retain records relating to suspicious transactions, customer identity, large cash transactions, cross-border currency movement, foreign bank accounts and wire transfers, among other things.

Every U.S.-registered broker-dealer is also subject to the Uniform Net Capital Requirements. The Uniform Net Capital Requirements are designed to ensure financial soundness and liquidity by prohibiting a broker or dealer from engaging in business at a time when it does not satisfy minimum net capital requirements.

In the United States, net capital is essentially defined as net worth (assets minus liabilities), plus qualifying subordinated borrowings and less certain mandatory deductions that result from excluding assets that are not readily convertible into cash and from conservatively valuing certain other assets, such as a firm’s positions in securities. Among these deductions are adjustments, which are referred to as “haircuts,” in the market value of securities positions to reflect the market risk of such positions prior to their liquidation or disposition. The Uniform Net Capital Requirements also impose a minimum ratio of equity to subordinated debt which may be included in net capital.

Regulations have been adopted by the SEC that prohibit the withdrawal of equity capital of a broker-dealer, restrict the ability of a broker-dealer to distribute or engage in any transaction with a parent company or an affiliate that results in a reduction of equity capital or to provide an unsecured loan or advance against equity capital for the direct or indirect benefit of certain persons related to the broker-dealer (including partners and affiliates) if the broker-dealer’s net capital is, or would be as a result of such withdrawal, distribution, loan or advance, below specified thresholds of excess net capital. In addition, the SEC’s regulations require certain notifications to be provided in advance of such withdrawals, distributions, reductions, loans and advances that exceed in the aggregate 30% of excess net capital within any 30 day period, and the SEC has the authority to restrict, for up to 20 business days, such withdrawal, distribution or reduction of capital if the SEC concludes that it may be detrimental to the financial integrity of the broker-dealer or may expose its customers or creditors to loss. Notice is required following any such withdrawal, distribution, reduction, loan or advance that exceeds in the aggregate 20% of excess net capital within any 30 day period. The SEC’s regulations limiting withdrawals of excess net capital do not preclude the payment to employees of “reasonable compensation.”

Compliance with the Uniform Net Capital Requirements may limit the extent and nature of our operations requiring the use of our registered broker-dealer subsidiaries’ capital, and could also restrict or preclude our ability to withdraw capital from our broker-dealer subsidiaries.

Regulation ATS permits a U.S. ATS to match orders submitted by buyers and sellers without having to register as a national securities exchange. An ATS, although functionally an exchange, is regulated as a broker-dealer. In order to acquire the status of an ATS, a firm must first be registered as a broker-dealer, and then file an initial operation report with respect to the trading system on Form ATS. The Form ATS must provide detailed information regarding the types of subscribers it expects to admit to the system, the securities it expects to trade, the manner in which the system operates, including how orders are entered and transactions executed, reported, cleared and settled, as well as all relevant infrastructure and procedures concerning system access, capacity, supervision, security, contingency planning and subscriber compliance.

The initial operation report must be accurate and kept current. The Commission does not issue approval orders for Form ATS filings; however, the Form ATS is not considered filed unless it complies with all applicable requirements under Regulation ATS. Regulation ATS contains provisions concerning the system’s operations, including: fair access to the trading system; fees charged; the display of orders and the ability to execute orders; system capacity, integrity and security; record keeping and reporting; and procedures to ensure the confidential treatment of trading information.

An ATS must also comply with any applicable SRO rules and with state laws relating to alternative trading systems and relating to the offer or sale of securities or the registration or regulation of persons or entities effecting securities transactions.

The CFTC is the federal agency primarily responsible for the administration of federal commodities laws, including the adoption of rules applicable to Futures Commissions Merchants, Designated Contract Markets and Swap Execution Facilities. The operations of U.S. futures exchanges, clearing houses, swap data repository and swap execution facilities are subject to extensive regulation by the CFTC. The CFTC carries out the regulation of the futures and swaps markets and clearing houses in accordance with the provisions of the Commodity Exchange Act as amended by, among others, the Commodity Futures Modernization Act and Dodd-Frank.

The following is a summary of recent demonstrations of regulatory action taken with regard to blockchain assets. We believe that these actions will impact the Company; however, regulation of the blockchain industry is evolving rapidly. The regulatory landscape may differ from country to county, but we expect for the foreseeable future that regulators will maintain an increased focus on blockchain assets. In addition, the SEC, FINRA, and courts have continued, and likely will continue, to promulgate statements, enforcement actions and rulings, as applicable, interpreting the characterization of blockchain assets, the issuance of blockchain assets and regulating behavior in the market. It is likely that there will be many additional developments between the date of this statement and the issue of the INX Tokens.

Regulation of blockchain assets by U.S. federal and state governments, foreign governments and self-regulatory organizations remains in its early stages. As blockchain assets have grown in popularity and in market size, the Federal Reserve Board, U.S. Congress and certain U.S. agencies such as the SEC, the CFTC, FinCEN and the Federal Bureau of Investigation, have begun to examine the nature of blockchain assets and the markets on which they are traded.

The SEC has taken various actions against persons or entities misusing blockhcain assets, including virtual currencies, in connection with fraudulent schemes, inaccurate and inadequate publicly disseminated information, and the offering of unregistered securities. In addition, on July 25, 2017, the SEC issued Release No. 81207 (“the DAO Report”), in which it analyzed a certain issuance of tokens, and indicated that “whether or not a particular transaction involves the offer and sale of a security – regardless of the terminology used – will depend on the facts and circumstances, including the economic realities of the transaction”. The SEC clarified that the registration requirements “apply to those who offer and sell securities in the United States, regardless whether the issuing entity is a traditional company or a decentralized autonomous organization, regardless whether those securities are …distributed in certificated form or through distributed ledger technology…”. On December 4, 2017, and December 11, 2017, the SEC announced enforcement actions relating to the PlexCoin and Munchee token launches, respectively. Also on, December 11, 2017, SEC Chairman Jay Clayton published a public statement entitled “Cryptocurrencies and Initial Coin Offerings.” The SEC has made a concerted effort to monitor the ICO market and address—through the DAO Report and the more recent SEC guidance—transactions and behaviors it believes are both inconsistent with and in violation of U.S. securities laws. In early 2018, media reports indicated that the SEC has subpoenaed around 80 cryptocurrency firms as part of a targeted probe. On March 7, 2018 the Divisions of Enforcement and Trading and Markets issued a public statement stating that many digital assets are likely to be securities under the federal securities laws, and urged investors to use platforms for trading such assets that are registered with the SEC, such as a national securities exchange, ATS, or broker-dealer. Since March 2018, the SEC has continued to bring enforcement actions and make public statements which further supports its view that blockhcain assets should be treated as securities in almost all cases.

The CFTC has asserted the belief that bitcoin meets the definition of a commodity and that the CFTC has regulatory authority over futures and other derivatives based on blockchain assets, subject to facts and circumstances. On September 17, 2015, the CFTC instituted and settled an action against Coinflip, a bitcoin derivatives trading platform. The Coinflip order found that the respondents (i) conducted activity related to commodity options transactions without complying with the provisions of the CEA and CFTC regulations, and (ii) operated a facility for the trading of swaps without registering the facility as a SEF or DCM. The Coinflip order was significant as it is the first time the CFTC determined that “virtual currencies” are properly defined as commodities under the CEA. Based on this determination, the CFTC applied CEA provisions and CFTC regulations that apply to transactions in commodity options and swaps to the conduct of the bitcoin derivatives trading platform. Significantly, the CFTC appears to have taken the position that virtual currencies are not encompassed by the definition of currency under the Commodity Exchange Act and CFTC regulations. The CFTC defined “virtual currencies” as “a digital representation of value that functions as a medium of exchange, a unit of account, and/or a store of value, but does not have legal tender status in any jurisdiction. Bitcoin and other virtual currencies are distinct from ‘real’ currencies, which are the coin and paper money of the United States or another country that are designated as legal tender, circulate, and are customarily used and accepted as a medium of exchange in the country of issuance.” The CFTC affirmed its approach to the regulation of blockchain assets and virtual currency-related enterprises on June 2, 2016, when the CFTC settled charges against Bitfinex, a Bitcoin Exchange based in Hong Kong. In its Order, the CFTC found that Bitfinex engaged in “illegal, off-exchange commodity transactions and failed to register as a futures commission merchant” when it facilitated borrowing transactions among its users to permit the trading of bitcoin on a “leveraged, margined or financed basis” without first registering with the CFTC. On August 23, 2018, the United States District Court for the Eastern District of New York ruled that “virtual currencies can be regulated by CFTC as a commodity” but left the door open for other regulatory bodies to regulate virtual currency concurrently. The CFTC, together with the SEC, regulate derivatives based on their characteristics as swaps or as security-based swaps.

We will need to comply with the applicable federal securities rules and regulations, to the extent that the instruments underlying the swaps or futures are securities.

Local state regulators may also regulate or seek to regulate blockchain assets. In July 2014, the New York State Department of Financial Services (the “NYSDFS”) proposed the first state regulatory framework for licensing participants in “virtual currency business activity.” The regulations, known as the “BitLicense,” are intended to focus on consumer protection and, after the closure of an initial comment period that yielded 3,746 formal public comments and a re-proposal, the NYSDFS issued its final BitLicense regulatory framework in June 2015. The BitLicense regulates the conduct of businesses that are involved in “virtual currencies” in New York or with New York customers and prohibits any person or entity involved in such activity to conduct activities without a license. Not all regulations of blockchain assets are restrictive. For example, on June 28, 2014, California repealed a provision of its Corporations Code that prohibited corporations from using alternative forms of currency or value. The bill indirectly authorizes the use of bitcoin as an alternative form of money in the state.

Since late 2017, many states governments have introduced or adopted legislation relating to the regulatory treatment of blockchain assets. The trend is expected to continue as state corporate law, securities law and money transmitters law is expected to further develop to address the unique characteristics of blockchain assets. These state level regulations will affect market participants in various jurisdictions with regard to the trading and ownership of blockchain assets.

The IRS has released guidance treating bitcoin as property that is not currency for U.S. federal income tax purposes. Taxing authorities of a number of U.S. states have also issued their own guidance regarding the tax treatment of bitcoin for state income or sales tax purposes. The treatment of blockchain assets may be the subject of contemplated tax reform.

On November 13, 2017, the European Securities Authority (ESMA) issued two statements, the first statement is intended to warn investors of the risks inherent in the ICOs, and the second statement sought to alert the companies involved in the ICO process to comply with EU and State regulatory obligations regarding the need for ICOs.

Blockchain assets also face an uncertain regulatory landscape in many foreign jurisdictions. On September 4, 2017, the People’s Bank of China labeled blockchain asset sales as “illegal and disruptive to economic and financial stability.” Previously, China had issued a notice that classified bitcoin as legal and “virtual commodities;” however, the same notice restricted the banking and payment industries from using bitcoin, creating uncertainty and limiting the ability of Bitcoin Exchanges to operate in the then-second largest bitcoin market. South Korea’s Financial Services Commission likewise prohibited all forms of tokens on September 29, 2017. Japan has enacted a law regulating virtual currencies which has brought Bitcoin exchanges under know-your-customer and anti-money laundering rules, and resulted in the categorization of Bitcoin as a kind of prepaid payment instrument. The law puts in place capital requirements for exchanges as well as cybersecurity and operational stipulations. In addition, those exchanges are also required to conduct employee training programs and submit to annual audits. To date, the Japanese Financial Services Agency (FSA) has granted licenses to 15 different cryptocurrencies or tokens trading platforms. In November 2017, the Monetary Authority of Singapore (“MAS”) issued a statement that tokens sold through the blockchain funding model may be considered securities under certain circumstances under Singapore law, and provided case studies as examples of tokens that do and do not constitute securities. Previously, the MAS had stated that other laws may apply to token sales, such as money laundering and terrorism financing laws.

Other jurisdictions are still researching the subject. In September 2017, the Swiss Financial Market Supervisory Authority (“FINMA”) issued guidance that it was investigating ICOs and that whenever FINMA is notified about ICO procedures that breach regulatory law or which seek to circumvent financial market law it initiates enforcement proceedings. In December 2017, the UK Financial Conduct Authority (“FCA”) issued a statement on distributed ledger technology which said, in part, that the FCA will gather further evidence and conduct a deeper examination of the ICO market and that its findings will help to determine whether or not there is need for further regulatory action. In June 2018, an amendment to the Tel Aviv Stock Exchange Ltd. (“TASE”) regulations entered into effect, under which shares of companies operating in the field of cryptographic currencies will be excluded and / or not included in the TASE indices, if such a company is engaged in the holding, investing or mining of distributed cryptographic currencies, and the TASE Indices Committee decides that this activity is material or expected to be material to the company’s business. The Israel Securities Authority (ISA) has previously indicated that to date, there is uncertainty as to the format and extent of the regulation that will apply to the various activities in cryptographic currencies - especially those of decentralized currencies without any centralized entity, such as Bitcoin, in terms of taxation, prevention of money laundering and terrorism, cyber security and investor protection. In addition, the ISA has appointed a special committee authorized to examine the regulation of issuances of cryptographic currencies to the public with the aim of formulating a list of recommendations that will provide an initial regulatory response in the opinion of the ISA to this field.

Interim draft recommendations of this committee aimed for public comments and additional public hearings were introduced to the public and published during March 2018, and included among others the following recommendations:

(1) The question of whether a cryptocurrency will be considered a security will be decided according to the totality of the circumstances and characteristics of each case on its merits against the background of the purposes of the Israeli law;

(2) Cryptographic currencies that grant rights similar to those of traditional securities such as shares, bonds or participation units will be considered securities. This category includes, for example, tokens who grant rights to participate in revenue or profits generated from an enterprise; tokens granting rights to receive payments, fixed or variable, whether by way of the allocation of additional currencies or by way of redemption of currencies; or tokens granting ownership rights or membership in an enterprise whose purpose is to generate an economic yield;

(3) blockchain assets intended to be used as a method of payment, clearing or exchange only, other than in a specific enterprise, which do not confer additional rights and are not controlled by a central entity, shall not typically be considered a security;

(4) blockchain assets that embody a right to a product or service and are purchased for consumption and use only shall not typically be considered securities; and

(5) a public offering of a cryptographic currency falling to the definition of a security is subject to the requirement to publish a prospectus.

On August 24, 2017, the Canadian Securities Administrators (“CSA”) published a staff position on the proposal (Offering) of cryptographic tokens to the public. The staff position indicated that there is an increasing trend in the offers of cryptographic tokens to the public, including the offerings of cryptographic tokens which are characterized as securities or derivatives, and therefore in these cases the Canadian securities and derivatives laws shall apply to the ICOs. In addition to the ICO definition, the publication includes reference to registration and disclosure requirements, the various trading platforms relevant to ICO, and how they are marketed, to the investment funds that offer cryptographic currencies and the regulatory Sandbox. Regarding the question of whether cryptographic tokens are securities, the CSA position states that, many of the ICOs that were examined found to be that the tokens issued in this proceeding are securities, including in light of the fact that they were considered as “investment contract.”

The Government of Gibraltar has enacted the Financial Services (Distributed Ledger Technology Providers) Regulations 2017 (the “DLT Regulations”) which came into effect on January 1, 2018. The primary purpose of the DLT Regulations is to create a safe environment for DLT-related businesses to operate and innovate, while simultaneously protecting consumers and safeguarding Gibraltar’s reputation as a trusted and stable global business hub. Companies which use blockchain technology to store or transmit value belonging to others by way of business are caught by the DLT Regulations and require a license in Gibraltar. The activity of undertaking a token sale does not automatically fall within the scope of the DLT Regulations but may depend on the manner in which the sale of tokens in structured and the characteristics of the token. The Gibraltar Financial Services Commission (the “FSC”) however has announced plans to create a complementary regulatory framework that covers the promotion and sale of tokens, aligned with the DLT Regulations (the “Complementary Framework”). It is not clear when the Complementary Framework will be created and implemented and what requirements it will impose on persons or entities wishing to undertake token sale activity or any promotional activity in connection therewith in or from within Gibraltar.

Our business strategy and activity and on-going day-to-day management is carried out through our officers, who are engaged through management, services, consulting or similar agreements.

The following table sets forth certain information relating to our executive officers, including their ages as of the date of this prospectus. Unless otherwise stated, the address for our senior management is at the Company’s registered office currently located at 57/63 Line Wall Road, Gibraltar, GX11 1AA, Gibraltar.

Mr. Shy Datika is one of our founders, and is our President. Mr. Datika has more than 25 years of experience in the banking and finance industry. As founder and former Chief Executive Officer of ILS Brokers, a multinational brokerage house based in Tel-Aviv, Israel, Mr. Datika has a significant role in the adoption of electronic trading in the global OTC foreign exchange (OTC Forex) market as well as in the brokerage activity and online trading business. During the last 20 years, Mr. Datika has been extensively involved in financial technology (“fin-tech”) as an investor, director or manager of several companies, including as CEO of ForexManage Ltd., a software company providing professional technology platform solutions for institutional risk management and trading activities in the forex and interest rate derivatives markets for the banking industry, anyoption, Ouroboros Ltd (CySec licenced CIF) and as an independent (external) director and the Chairman of the Investment Committee and member of the Audit Committee of Altshuler Shaham provident funds and Pension Ltd. Prior to that, he was a senior dealer in Bank Hapoalim heading the G7 spot desk. Mr. Datika possesses broad knowledge in the areas of fin-tech and trading and has an extensive track record in building sustainable businesses in the financial market. Mr. Datika serves as a director on the board of numerous private companies.

Mr. Oran Mordechai is our Chief Financial Officer. Prior to joining us, Mr. Mordechai worked at Ernst & Young Israel for 13 years in several positions. Mr. Mordechai’s last role was as senior manager in the high-tech practice, leading and managing diverse client accounts, including start-ups through exits, domestic, multinational and publicly traded companies. Mr. Mordechai’s business experience includes corporate finance, international corporate tax, mergers and acquisitions and initial public offerings. Mr. Mordechai holds a BA in Economics, Management and Accounting from the College of Management and a MBA of Business Administration Finance and Financial Management Services from Tel-Aviv University and is a Certified Public Accountant. Mr. Mordechai is also the founder of Insight Finance, through which he provides financial services to his clients, including us.

Ms. Maia Naor is our VP Product. Ms. Naor has ten years of fin-tech experience working for companies across Europe and Israel. From 2010 until July 2017, Ms. Naor served as Vice President – Product in Anyoption Ltd., a leading European regulated trading group where she oversaw the planning, implementation and launch of several financial services and computer-internet-based and cellular-based trading applications. Ms. Naor also gained experience in building and training teams of data scientists that supported the growth and optimization of the trading products. Ms. Naor is a graduate of the Tel Aviv University School of Economics and the Tel Aviv University School of Mathematical Sciences, with honors.

Mr. Jonathan Azeroual is our Vice President, Blockchain Asset Strategy. Mr. Azeroual has over 9 years of broad financial experience working for banks, hedge funds, brokerage firms in various analytical, operational or executive positions in Paris’, New York’s, and London’s financial markets. Since July 2015, he has been the co-founder and Chief Executive Officer of Bsave Ltd., a UK company which operates a Bitcoin savings platform. He also currently works for Redwood Digital Fund as a member of their Trading & Investment Services team. From June 2016 to February 2017, he was a member of the Trading & Investment Services group at Hadas Capital. Between October 2014 and October 2015 he was an algorithmic trader for Colley Cooper Capital. Prior to that, starting in 2012 until October 2014, he served as an institutional sales trader for Sunrise Brokers. He graduated with honors and holds a postgraduate degree in Financial and Statistical Engineering from Paris-Dauphine University and holds ESCP Europe Advanced Master in Finance.

Mr. Alan Silbert is a director of the Company and Executive Managing Director of INX Services, Inc. Mr. Silbert is responsible for launching INX Services operations in North America, including facilitating the build-out of the director and advisor team, raising capital, growing operations and infrastructure for North American operations and leading the registration processes for broker-dealer and alternative trading system licenses. Since 2015, he has been Senior Vice President at Capital One Commercial Banking, serving on the Asset Based Lending and Life Science Finance/Venture Debt teams. Prior to that, he was Vice President – Life Science Finance at GE Capital. From February 2013 until October 2017, he served as founder and Chief Executive Officer of BitPremier LLC, a bitcoin luxury marketplace. Mr. Silbert received his BS in Business Administration with a concentration in Finance from Towson University.

Mr. Matt Rozzi is Chief Compliance Officer & Chief Operating Officer of INX Services. Mr. Rozzi has over 20 years of experience in the financial services industry. He has expertise in management, operations, and compliance, which encompasses traditional brokerage, RIA, insurance, and banking. During his career, Mr. Rozzi has gained experience across firms ranging from start-ups to large institutions. Most recently, Mr. Rozzi served as President of IDB Capital Corp, a wholly owned subsidiary of Israel Discount Bank of New York, which caters to both international and domestic private banking clients. In this role he was the architect of a successful strategy to migrate $3 Billion of brokerage and investment management assets onto the SEI Global Wealth Platform. Prior to that, Mr. Rozzi was President & Chief Compliance Officer of UMTB Securities Inc, a wholly owned subsidiary of Mizrahi Tefahot Bank. He also served as Chief Operating Officer for Signature Securities Group Corp., Chief Operating Officer at HSBC Brokerage USA, and Associate Managing Director and Registered Principal of Republic Financial Services & Republic National Bank. Mr. Rozzi received his BS in Business Administration and Finance from Fordham University. He holds the Series 7, 63, 24, 53, 4, 65, as well as the NYS Life, Accident & Health insurance licenses.

The following table sets forth certain information relating to our directors, including their ages as of the date of this prospectus. Unless otherwise stated, the address for our directors is at the Company’s registered office currently located at 57/63 Line Wall Road, Gibraltar, GX11 1AA, Gibraltar. See “Election of Directors; Independent Board Members” regarding the independence standards that we apply to our directors.

* Under Gibraltar law, directors are appointed indefinitely unless their appointment specifies a defined period. Our directors were not appointed with specified defined period of term.

Mr. James Crossley is a director of the Company and heads the Company’s European business and corporate development efforts. Since October 2015 James has also been a Director of the Flo Live group, a provider of global cloud-based Internet-of-Things ecosystems. From March 2016 to May 2017, he acted as Director and CFO of Flocash Limited, a technology based international money transfer gateway. From February 2013 to December 2016 he worked with Extech, Ascarii and Intalec, marketing ERP Solutions including SAP Business One Cloud and Infor. Prior to February 2013, he had been Director of Corporate Development for Titan GS Europe, a global SAP Partner, having previously sold his own successful SAP Partnership to Titan in February 2009. Before moving into technology James spent 25 years at C Level in the advertising industry including CFO, CEO and Group CFO roles for regional and global ad agencies. Mr. Crossley remains on the board of the Flo Live group as well as continuing to assist start-up companies, helping with corporate governance, compliance, AML and administrative matters.

Mr. David Weild is an independent director of the Company. Mr. Weild is founder, chairman and CEO of Weild & Co., Inc., parent company of the investment banking firm Weild Capital, LLC. Prior to Weild & Co., Mr. Weild was vice chairman of NASDAQ, president of PrudentialFinancial.com and head of corporate finance and equity capital markets at Prudential Securities, Inc. Mr. Weild holds an M.B.A. from the Stern School of Business and a B.A. from Wesleyan University. Mr. Weild is currently on the boards of BioSig Technologies, Inc. and PAVmed Inc. From September 2010 to June 2011, Mr. Weild served on the board of Helium.com, until it was acquired by R.R. Donnelly & Sons Co. Since 2003, Mr. Weild was a director and then chairman of the board of the 9-11 charity Tuesday’s Children. He became chairman emeritus in late 2016 and still serves on the board. Mr. Weild brings extensive financial, economic, stock exchange, capital markets, and small company expertise to the Company gained throughout his career on Wall Street. He is a recognized expert in capital markets and has spoken at the White House, Congress, the SEC, OECD and the G-20 on how market structure can be bettered to improve capital formation and economic growth.

Mr. Nicholas (Nick) Thadaney is an independent director of the Company. Mr. Thadaney was President and Chief Executive Officer, Global Equity Capital Markets, and a member of the senior management team of TMX Group until February 2018. In his roles with TMX Group, Mr. Thadaney was responsible for all equity listing and trading activity across the company’s equities markets and alternative trading systems, including Toronto Stock Exchange, TSX Venture Exchange, Alpha, TMX Select, TSX Private Markets and TSX Trust. Prior to joining TMX Group in 2015, Mr. Thadaney was Chief Executive Officer of ITG Canada Corp. since 2005, with responsibility for managing all aspects of the business, as well as a Member of ITG’s Global Executive Committee. Previously, he was Director of Sales and Trading of ITG Canada’s Institutional Equities business from 2000 to 2005. Before his tenure at ITG, Mr. Thadaney was Vice-President, Business Development (Equities) at C.T. Securities Inc., which was later acquired by T.D. Securities Inc. in 1999. He has also been a member of several industry associations, boards and registered charities, including: Asset Management Industry Hold’em for Life Charity, Mount Sinai, Co-Chair; Bermuda Stock Exchange; Canadian Council of the Americas; CanDeal; IIROC; Toronto Financial Service Alliance; Investment Industry Association of Canada; Junior Achievement Canada; Young Presidents Association (Ontario Chapter); and the World Federation of Exchanges SME Advisory Board.

Mr. Haim Ashar is an independent director of the Company. Mr. Ashar is an independent business consultant providing integrated business development for startups and mid-size companies. He represents multiple companies in Europe across several sectors, helping them to build market-driven products and technology. From June 2017 to June 2018, Mr. Ashar served as Interim Manager – Change Management at We call4U UG, Berlin with responsibilities for marketing, brand, public relations and partnerships. From April 2014 to March 2017, Mr. Ashar served as Head of Business Development at Wayra Germany, Telefonica’s startup accelerator, with responsibilities for venture relations, brand development, scouting and outsourcing innovation for corporate business units. From May 2010 to December 2013, Mr. Ashar served as Operational CEO at ecosiv GmbH, a manufacturer of innovative radiant heating applications. Mr. Ashar earned his BSCE from Tel Aviv University in Israel.

Mr. Thomas K. Lewis, Jr. is an independent director of the Company. Mr. Lewis is currently the Founder of Noble 4 Advisors, LLC, a company he founded in September 2012 that develops and provides methodologies, technologies and guidance that assist boards, CEOs, investors and senior executives in defining and implementing plans to improve operating performance. Mr. Lewis has served as CEO of four companies, including The Green Exchange, a federally regulated futures and options exchange in New York and London, from September 2009 to July 2012; Automated Power Exchange Inc. (APX), a venture-backed wholesale power markets and renewable energy services provider, from August 2003 to October 2007; Ameritrade, an online retail broker, from February 1999 to August 2000; and Campus Pipeline, an educational software company, from DATE to DATE. Prior to that, Mr. Lewis served in technology leadership positions with American Express, Credit Suisse First Boston, USF&G Insurance and Marriott Corporation. Mr. Lewis has served on the boards of The New York Ledger Exchange, aka LedgerX (2014 to 2017), Green Exchange Holdings, LLC (2009 to 2012), Evolution Markets, Inc. (2007 to 2009), Automated Power Exchange Inc. (2003 to 2007) and Neovest Holdings, Inc. (2001 to 2004). Mr. Lewis holds an honorary doctorate, a master’s degree in computer and information science, and a bachelor’s degree, magna cum laude, in business administration from the University of New Haven in Connecticut, where he was honored as a distinguished alumnus. He served as chairman of the Board of Trustees of the Henry Lee Institute of Forensic Science, and served for twelve years as a member of the Board of Trustees of the University of New Haven. He has also served as a member of the Advisory Board of the Johns Hopkins Carey Business School at Johns Hopkins University. Mr. Lewis served as Executive in Residence and Assistant Professor at Johns Hopkins University, Carey Business School. Mr. Lewis also served as the head of technology for the Executive Office of the President of the United States during the Ronald Reagan Administration.

Mr. Rafael Rafaeli is a director of the Company. Mr. Rafaeli is Partner and CEO of the Rafaeli Group, an international companies group engaging in large scale real estate projects in the Far East, Europe and Israel. From 2002 to 2008, Mr. Rafaeli acted as the CEO of Maxbet International, an international gaming cooperation founded by Mr. Rafaeli.

Mr. Rafaeli is the son of Mr. Yitshak Rafaeli, a shareholder of the Company who holds more than 15% of the issued and outstanding share capital of the Company. Mr. Rafaeli was appointed as a director of the Company upon the nomination of Mr. Yitshak Rafaeli, pursuant to the terms of our Articles of Association. See “Management— Board Composition; Powers, Duties and Responsibilities — Election of Directors; Independent Board Members.”

Under the Companies Act, a Gibraltar private company must have at least one director. Appointments of directors are performed by means of a vote at the general meeting of shareholders, or by a resolution of the board if permitted by the memorandum or articles so provide. Our Articles of Association provide that, any person who is willing to act as a director, and is permitted by law to do so, may be appointed to be a director (a) by ordinary resolution of the shareholders (members) (within the meaning given in section 200 of the Companies Act), or (b) by a decision of our Board of Directors.

Our Articles of Association also provide that, prior to the effectiveness of the registration statement of which this prospectus is a part, six (6) of the Company’s directors shall be nominated and removed by each holder of fifteen percent (15%) of the issued and outstanding share capital of the Company; and one director shall be a market expert to be nominated and removed by Shy Datika. This right shall lapse upon the effectiveness of the registration statement of which this prospectus is a part.

There is no definition under Gibraltar law to the term “Independent Director”. We currently have six directors, four of whom are independent as such term is defined by the North American Securities Administrators Association (NASAA) Statement of Policy Regarding Corporate Securities Definitions and the UK Corporate Governance Code. We intend to maintain a Board consisting of a majority of independent directors, who are unaffiliated, directly or indirectly, with any of our controlling shareholders or ultimate beneficial owners. See also – “Description of Our Memorandum and Articles of Association” below.

Our Articles of Association provide that if the numbers of director votes for and against a proposal are equal, the chairman of the meeting has a casting vote.

The shareholding qualification for directors may be fixed by the Company in general meeting, and unless and until so fixed no qualification shall be required.

Subject to the Articles, the directors are responsible for the management of the company’s business, for which purpose they may exercise all the powers of the company. Subject to the Articles, the directors may delegate any of the powers which are conferred on them under the Articles: (i) to such person or committee; (ii) by such means (including by power of attorney) to such an extent; (iii) in relation to such matters or territories; and (iv) on such terms and conditions; as they think fit. Committees to which the directors delegate any of their powers must follow procedures which are based (as far as they are applicable) on those provisions of the articles which govern the taking of decisions by directors. The directors may make rules of procedure for all or any committees, which prevail over rules derived from the articles if they are not consistent with them.

Directors may undertake any services for the Company as determined by the Board of Directors. Directors are entitled to such remuneration as determined by the Board of Directors: (a) for their services to the Company as directors, and (b) for any other services undertaken for the company. Subject to the Company’s articles of association, a director’s remuneration may take any form, and include any arrangements in connection with the payment of a pension, allowance or gratuity, or any death, sickness or disability benefits, to or in respect of that director. Unless otherwise determined by the Board of Directors, their remuneration accrues from day to day and directors are not accountable to the Company for any remuneration that they receive as directors or as officers or employees of the Company’s subsidiaries or of any other body corporate in which the Company is interested. The company may pay any reasonable expenses which the directors properly incur in connection with their attendance at: (a) meetings of directors or committees of directors, (b) general meetings, or (c) separate meetings of the holders of any class of shares or of debentures of the company, or otherwise in connection with the exercise of their powers and the discharge of their responsibilities in relation to the Company.

Under Gibraltar law, the Company is governed in accordance with its memorandum and articles of association, the provisions of the Companies Act and other Gibraltar statutory and common law principles. The Board is committed to the principles of corporate governance which it considers to be central to the effective management of the business and to maintaining the confidence of investors.

See the section captioned “Description of Memorandum and Articles of Association” for summaries of certain corporate governance provisions and rights of shareholders of the Company.

Differences between the Gibraltar Companies Act and laws impacting Delaware companies

The Sarbanes-Oxley Act, as well as related rules subsequently implemented by the SEC, requires foreign private issuers, such as us, to comply with various corporate governance practices. Under those rules, we may elect to follow certain corporate governance practices permitted under the Companies Act, in lieu of compliance with corresponding corporate governance requirements otherwise imposed by the SEC regulations for U.S. domestic issuers.

The Companies Act and the laws of Gibraltar affecting Gibraltar companies like us and our shareholders differ from laws applicable to U.S. corporations and their shareholders. Set forth below is a summary of the significant differences between the provisions of the laws of Gibraltar applicable to us and, for illustrative purposes only, the Delaware General Corporation Law (the “DGCL”), which governs companies incorporated in the state of Delaware. The summary is not intended to be a complete discussion nor a comprehensive all included description of the respective rights and it is qualified in its entirety by reference to Delaware law and the Companies Act, and as may be relevant, to our Memorandum and our Articles of Association.

Number of Directors. Under the Companies Act, every Gibraltar private limited company shall have at least one director and the number shall be fixed in the company’s memorandum and articles of association. Under Delaware law, a corporation must have at least one director and the number of directors shall be fixed by or in the manner provided in the bylaws.

Removal of Directors. Under the Gibraltar law, directors may be removed from office, with or without cause, in accordance with the provisions of their memorandum and articles of association. Gibraltar law allows shareholders with sufficient majority to exercise a vote to remove directors. In addition, under our Articles of Association, a person ceases to be a director as soon as: (a) that person ceases to be a director by virtue of any provision of the Companies Act or the Gibraltar Insolvency Act 2011 or is prohibited from being a director by law; (b) a bankruptcy order is made against that person; (c) a composition is made with that person’s creditors generally in satisfaction of that person’s debts; (d) a registered medical practitioner who is treating that person gives a written opinion to the company stating that that person has become physically or mentally incapable of acting as a director and may remain so for more than three months; (e) notification is received by the company from the director that the director is resigning from office, and such resignation has taken effect in accordance with its terms. Under Delaware law, unless otherwise provided in the certificate of incorporation, directors may be removed from office, with or without cause, by a majority stockholder vote, though in the case of a corporation whose board is classified, stockholders may effect such removal only for cause.

Vacancies on the Board of Directors. Under the Companies Act, appointments of directors (other than nomination of directors via the general meeting of shareholders) may also be made by a resolution of the board if allowed by the articles of association of the Gibraltar company. Our Articles of Association provide that, any person who is willing to act as a director, and is permitted by law to do so, may be appointed to be a director (a) by ordinary resolution of the shareholders (members) of the Gibraltar company (within the meaning given in section 200 of the Companies Act), or (b) by a decision of our Board of Directors. Under Delaware law, vacancies on a corporation’s board of directors, including those caused by an increase in the number of directors, may be filled by a majority of the remaining directors.

Shareholder/Stockholder Meetings. Under the Companies Act, annual general meetings of shareholders and extraordinary general meetings of shareholders (within the meaning given in sections 193 and 195 of the Companies Act) shall be held at such place, on such date and at such time as may be designated from time to time by the board of directors or as provided in the articles of association of the Gibraltar company, and extraordinary general meetings of the shareholders may be called by the board of directors or by such person or persons as may be authorized under the Companies Act or by the articles of association. With respect to notices of general meetings, subject to the provisions of the Companies Act relating to special resolutions, seven days’ notice at the least (exclusive of the day on which the notice is served or deemed to be served, but inclusive of the day for which notice is given) specifying the place, the day and the hour of meeting and, in case of special business, the general nature of that business shall be given in manner hereinafter mentioned, or in such other manner (if any) as may be prescribed by the company in general meeting, to such persons as are, under the articles of association of the company, entitled to receive such notices from the company; but with the consent of all the members entitled to receive notice of some particular meeting, that meeting may be convened by such shorter notice and in such manner as those members may think fit. Meetings to resolve matters requiring a special resolution necessitate a 21 day notice period.

A Gibraltar company can decide its own way of communicating with its shareholders, including publication of notice of meetings on a website of a company (in accordance with the provision of the Companies Act). Ordinary resolutions (within the meaning given in section 200 of the Companies Act) at the general meetings are passed by a simple majority. Extraordinary and special resolutions (within the meaning given in section 201 of the Companies Act) are passed by seventy-five percent (75%) majority. Under Delaware law, (i) the annual meeting of stockholders shall be held at such place, on such date and at such time as may be designated from time to time by the board of directors or as provided in the certificate of incorporation or by the bylaw, and (ii) special meetings of the stockholders may be called by the board of directors or by such person or persons as may be authorized by the certificate of incorporation or by the bylaws.

Shareholder action by written consent. Under the Companies Act, it is not necessary in the case of a Gibraltar private company to hold a general meeting in order to pass an ordinary, an extraordinary, or a special resolution. Subject to provisions in the articles of the company, such resolutions may be passed in writing by unanimous approval. Our Memorandum and Articles of Association currently provide such provisions. Under the DGCL, a corporation may eliminate the right of shareholders to act by written consent by amendment to its certificate of incorporation.

Preemptive Rights. Under Gibraltar law, rights of pre-emption can be worked into the articles of association of the company. However, in the absence of such explicit rights, shareholders are not automatically entitled to benefit from preemptive rights. Our Articles do, however, have specific provisions creating rights of pre-emption. Under Delaware law, unless otherwise provided in a corporation’s certificate of incorporation, a stockholder does not, by operation of law, possess preemptive rights to subscribe to additional issuances of the corporation’s stock.

Pursuant to s. 224 of the Companies Act, in a limited company the liability of the directors or managers, or of the managing director, if so provided by the memorandum, may be unlimited, while s.225 of the Companies Act states that a limited company, if so authorized by its articles, may by special resolution, alter its memorandum so as to render unlimited the liability of its directors or managers, or of any managing director. Upon the passing of any such special resolution the provisions of the special resolution shall be as valid as if they had been original contained in the memorandum. However, s. 231 (1) states that subject to its provisions, any provision, whether contained in the articles of a company or in any contract with a company or otherwise, for exempting any director, manager or officer of the company from, or indemnifying him against, any liability which by virtue of any rule of law would otherwise attach to him in respect of any negligence, default, breach of duty or breach of trust of which he may be guilty in relation to the company, shall be void. S. 231 (2) further states that nothing shall preclude:

A company from indemnifying any director, manager or officer of the company against any such liability incurred by him in defending any proceedings, whether civil or criminal, in which judgment is given in his favor or in which he is acquitted or in connection with any application under s. 477 in which relief is granted to him by the court.

Under Delaware law, a corporation’s certificate of incorporation may include a provision eliminating or limiting the personal liability of a director to the corporation and its stockholders for damages arising from a breach of fiduciary duty as a director. However, no provision can limit the liability of a director for:

Standard of Conduct for Directors. Under Gibraltar law, directors are subject to various common law duties. Director’s duties are not codified in Gibraltar and are not set in statute but derive from common law principles and case law. These significant duties and responsibilities include the following:

Delaware law does not contain specific provisions setting forth the standard of conduct of a director. The scope of the fiduciary duties of directors is generally determined by the courts of the State of Delaware. In general, directors have a duty to act without self-interest, on a well-informed basis and in a manner they reasonably believe to be in the best interest of the stockholders.

Voting Rights. Under Gibraltar law, the basic presumption is that each shareholder is entitled to one vote for each share held. However, the rights and entitlements attaching to shares of a Gibraltar company are set out in a company’s memorandum and articles of association which can be modified to denote the rights and entitlements attaching to each type of share in the company. Certain shares may be granted additional voting rights while others may only be entitled to financial remuneration and not voting rights. Delaware law provides that, unless otherwise provided in the certificate of incorporation, each stockholder of capital stock is entitled to one vote for each share of capital stock held by such stockholder, and blockchain assets are not considered capital stock unless expressly identified in the certificate of incorporation of the company.

Distribution of periodic reports to shareholders; proxy solicitation. Under the Companies Act, each company decides its own way of communicating with its shareholders, however shareholders have a right to request certain information from the company.

Quorum. Under the Companies Act, a company is entitled to determine in its memorandum of association and in its articles of association, the number of shareholders and percentage of holdings required for a quorum at a shareholders meeting. Our Articles and our memorandum of association, or the Memorandum, provides that two members present in person or by proxy shall constitute a quorum unless there shall at any time be one member in which event such member alone shall have the authority to transact the business of a general meeting. An ordinary resolution of the members (or of a class of members) can be passed by members representing a simple majority (i.e. more than 50%) of the total voting rights of the members or, as the case may be, of the class of members. An extraordinary or special resolution of the members requires a majority of not less than 75% of those members at a general meeting of which notice specifying the terms of the resolution and the intention to propose the resolution as such a resolution has been given.

Nomination of our directors. Our directors are elected by an annual meeting of our shareholders to hold office until the next annual meeting following one year from his or her election. The nominations of directors, which are presented to our shareholders by our Board, are generally made by the Board itself, in accordance with the provisions of our Articles of Association and the Companies Act. Nominations need not be made by a nominating committee of our Board consisting solely of independent directors.

Compensation of officers. Under the Companies Act and our Memorandum and Articles of Association, compensation of our officers requires approval by, our Board and, at times, our shareholders. The Board will seek recommendations and approval from the Audit Committee.

Independent directors. A majority of the directors serving on our Board are to be “independent”. We define independence using both the North American Securities Administrators Association (NASAA) Statement of Policy Regarding Corporate Securities Definitions and the UK Corporate Governance Code.

Gibraltar law does not require, nor do our independent directors conduct, regularly scheduled meetings at which only they are present.

Shareholder approval. We will seek shareholder approval for all corporate actions requiring such approval under the requirements of the Companies Act. The Companies Act sets our various matters requiring shareholder approval. Notable examples of this include any amendments to the company’s Memorandum and Articles of Association, any increase or reclassification of share capital and the issuance of dividends.

In particular, shareholder approval shall be generally required for: (i) an acquisition of shares/assets of another company that involves the issuance of 20% or more of the acquirer’s shares or voting rights or if a director, officer or 5% shareholder has greater than a 5% interest in the target company or the consideration to be received; (ii) the issuance of shares leading to a change of control; (iii) adoption/amendment of equity compensation arrangements; and (iv) issuances of 20% or more of the shares or voting rights (including securities convertible into, or exercisable for, equity) of a listed company via a private placement (and/or via sales by directors/officers/5% shareholders) if such equity is issued (or sold) at below the greater of the book or market value of shares.

Generally, under Delaware law, unless the certificate of incorporation provides for the vote of a larger portion of the stock, completion of a merger, consolidation, sale, lease or exchange of all or substantially all of a corporation’s assets or dissolution requires:

Mergers and similar arrangements. Under the Gibraltar law, there are various mechanisms to give effect to a merger or takeover. However, the most common way is pursuant to the provisions of the Companies Act by way of scheme of arrangement. The procedure for a scheme of arrangement is set out at Part VIII of the Companies Act.

In very general terms, a scheme of arrangement is a compromise or arrangement between a company and its members. Under a scheme to effect a merger, the shares in one Gibraltar company (target) would be exchanged by its shareholders for consideration shares and/or cash by another Gibraltar company.

Under Delaware law each corporation’s board of directors must approve a merger agreement. The merger agreement must state, among other terms, the terms of the merger and method of carrying out the merger. This agreement must then be approved by the majority vote of the outstanding stock entitled to vote at an annual or special meeting of each corporation, and no class vote is required unless provided in the certificate of incorporation. Delaware permits an agreement of merger to contain a provision allowing the agreement to be terminated by the board of directors of either corporation, notwithstanding approval of the agreement by the stockholders of all or any of the corporations (1) at any time prior to the filing of the agreement with the Secretary of State or (2) after filing if the agreement contains a post-filing effective time and an appropriate filing is made with the Secretary of State to terminate the agreement before the effective time. In lieu of filing an agreement of merger, the surviving corporation may file a certificate of merger, executed in accordance with Section 103 of the DGCL. The surviving corporation is also permitted to amend and restate its certification of incorporation in its entirety. The agreement of merger may also provide that it may be amended by the board of directors of either corporation prior to the time that the agreement filed with the Secretary of State becomes effective, even after approval by stockholders, so long as any amendment made after such approval does not adversely affect the rights of the stockholders of either corporation and does not change any term in the certificate of incorporation of the surviving corporation. If the agreement is amended after filing but before becoming effective, an appropriate amendment must be filed with the Secretary of State. If the surviving corporation is not a Delaware corporation, it must consent to service of process for enforcement of any obligation of the corporation arising as a result of the merger; such obligations include any suit by a stockholder of the disappearing Delaware corporation to enforce appraisal rights under Delaware law.

If a proposed merger or consolidation for which appraisal rights are provided is to be submitted for approval at a shareholder meeting, the subject company must give notice of the availability of appraisal rights to its shareholders at least 20 days prior to the meeting.

A dissenting shareholder who desires to exercise appraisal rights must (a) not vote in favor of the merger or consolidation; and (b) continuously hold the shares of record from the date of making the demand through the effective date of the applicable merger or consolidation. Further, the dissenting shareholder must deliver a written demand for appraisal to the company before the vote is taken. The Delaware Court of Chancery will determine the fair value of the shares exclusive of any element of value arising from the accomplishment or expectation of the merger, together with interest, if any, to be paid upon the amount determined to be the fair value. In determining such fair value, the court will take into account “all relevant factors.” Unless the Delaware Court of Chancery in its discretion determines otherwise, interest from the effective date of the merger through the date of payment of the judgment will be compounded annually and accrue at 5% over the Federal Reserve discount rate.

Approval of Related Party Transactions. All related party transactions must be disclosed to the Company for approval.

Transactions with interested shareholders. Delaware law contains a business combination statute applicable to Delaware public corporations whereby, unless the corporation has specifically elected not to be governed by such statute by amendment to its certificate of incorporation, it is prohibited from engaging in certain business combinations with an “interested shareholder” for three years following the date that such person becomes an interested shareholder. An interested shareholder generally is a person or group who or which owns or owned 15% or more of the target’s outstanding voting shares within the past three years. This has the effect of limiting the ability of a potential acquirer to make a two-tiered bid for the target in which all shareholders would not be treated equally. The statute does not apply if, among other things, prior to the date on which such shareholder becomes an interested shareholder, the board of directors approves either the business combination or the transaction which resulted in the person becoming an interested shareholder. This encourages any potential acquirer of a Delaware public corporation to negotiate the terms of any acquisition transaction with the target’s board of directors.

The Companies Act has no direct comparison, but it is worth noting that certain common law provisions relating, for example, to conflicts of interest and similar considerations, may depending on the facts, apply under Gibraltar law.

Gibraltar companies are not required to establish any sub committees of the Board. Nevertheless, they have the power to create such subcommittees and delegate responsibilities and oversight accordingly. Committees to which the directors delegate any of their powers must follow procedures which are based as far as they are applicable on those provisions of the articles which govern the taking of decisions by directors. The directors may make rules of procedure for all or any committees, which prevail over rules derived from the articles if they are not consistent with them.

Our Board intends to establish two committees: (1) an audit committee, and (2) a compensation committee, the members of each of which will be appointed prior to the consummation of this offering.

Our Board intends to adopt terms of reference for an audit committee, as customary for public companies. The audit committee will be comprised of three members of the Board. The audit committee will have primary responsibility for monitoring the quality of internal controls and ensuring that the financial performance of the Company is properly measured and reported on. It will receive and review reports from our management and auditors relating to the interim and annual accounts and the accounting and internal control systems in use throughout the Company. The audit committee will meet not less than once in each financial year and at such other times as circumstances require.

Our Board of Directors intends to adopt an audit committee charter to be effective upon the consummation of this offering, which sets forth the responsibilities of the audit committee consistent with SEC rules and regulations governing audit committee members, including the following:

Although not required under Gibraltar law, the members of our audit committee will each be independent in accordance with the independence standard that is applied to non-investment company issuers under Rule 10A-3 of the Exchange Act. All members of our audit committee will be financially literate.

Although not required under Gibraltar law, our Board has also adopted terms of reference for a compensation committee and SEC rules and regulations. The members of our compensation committee will each be independent in accordance with the independence standard under Rule 10C-1 of the Exchange Act. The compensation committee will review the performance of management and make recommendations to our Board on matters relating to their remuneration and terms of employment.

It is not required under Gibraltar law to establish a nomination committee for a Gibraltar company. We do not have a nominating committee, as our Board does not consider it appropriate to establish such a committee at this stage of the development of our business.

Risk assessment and oversight are an integral part of our governance and management processes and business strategy. Our Board encourages management to promote a culture that incorporates risk management into our corporate strategy and day-to-day business operations, to discusses strategic and operational risks at regular management meetings, and to conduct specific strategic planning and review sessions during the year that include a focused discussion and analysis of the risks facing us. Throughout the year, senior management will review these risks with the Board at regular board meetings as part of management presentations that focus on particular business functions, operations or strategies, and present the steps taken by management to mitigate or eliminate such risks.

Subject to the provisions of the Companies Act, the secretary shall be appointed by the directors for such term, at such remuneration and upon such conditions as they may think fit; and any secretary so appointed may be removed by them.

There are no family relationships between any members of our executive management and our directors.

Under Gibraltar law, related party transactions need to be disclosed to the board as such before the transaction. Details on the transaction will appear as related party transactions in the notes of the accounts of the Company.

Under the Companies Act, we may approve an action by an office holder from which the office holder would otherwise have to refrain, as described above, if:

As set out above, under Gibraltar law directors of the company have various common law and fiduciary duties to the company. These duties are not codified in the Companies Act but are wide ranging and include a duty to not to allow their interests to conflict with those of the company. They are therefore required to promptly disclose any direct or indirect personal interest that he or she may have and all related material information known to him or her relating to any existing or proposed transaction by the company.

All arrangements as to compensation and indemnification or insurance of office holders require approval of the compensation committee and Board of Directors, and compensation of office holders who are directors must be also approved, subject to certain exceptions, by the shareholders, in that order. If shareholders of a company do not approve the compensation terms of office holders, other than directors, the compensation committee and Board of Directors may override the shareholders’ decision, subject to certain conditions.

The general common law position that a company can indemnify its directors has been circumscribed in Gibraltar by statutory enactment. Section 231 of the Companies Act imposes certain limits on the extent and scope of indemnification relieving directors of indemnification under Gibraltar law. Section 231(1) prohibits indemnification for liability arising from their own negligence, default, breach of duty or breach of trust. A provision in the articles of a company or a specific contract seeking to provide such indemnification is void. However, it follows that apart from such restrictions, directors can in certain circumstances be indemnified (i.e. for matters not expressly prohibited).

Insofar as indemnification for liabilities arising under the Securities Act of 1933 may be permitted to directors, officers or persons controlling the registrant pursuant to the foregoing provisions, the registrant has been informed that in the opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in the Act and is therefore unenforceable.

Under our Articles, the directors may decide to purchase and maintain insurance, at the expense of the company, for the benefit of any relevant director in respect of any relevant loss. In this paragraph: (a) a “relevant director” means any director or former director of the company or an associated company, (b) a “relevant loss” means any loss or liability which has been or may be incurred by a relevant director in connection with that director’s duties or powers in relation to the company, any associated company or any pension fund or employees’ share scheme of the company or associated company, and (c) companies are associated if one is a subsidiary of the other or both are subsidiaries of the same body corporate.

We intend to adopt a Code of Business Conduct and Ethics applicable to all of our directors and employees, including our chief executive officer, chief financial officer, controller or principal accounting officer, and other persons performing similar functions, which is a “code of ethics” as defined in Item 16B of Form 20-F promulgated by the Securities and Exchange Commission. Upon the effectiveness of the registration statement of which this prospectus forms a part, the full text of the Code of Business Conduct and Ethics will be posted on our website at www.inx.exchange. Information contained on, or that can be accessed through, our website does not constitute a part of this prospectus and is not incorporated by reference herein. If we make any amendment to the Code of Business Conduct and Ethics or grant any waivers, including any implicit waiver, from a provision of the code of ethics, we will disclose the nature of such amendment or waiver on our website to the extent required by the rules and regulations of the Securities and Exchange Commission. Under Item 16B of the SEC’s Form 20-F, if a waiver or amendment of the Code of Business Conduct and Ethics applies to our principal executive officer, principal financial officer, principal accounting officer, or controller and relates to standards promoting any of the values described in Item 16B(b) of such Form 20-F, we will disclose such waiver or amendment on our website in accordance with the requirements of Instruction 4 to such Item 16B.

Neither our senior management nor our directors received compensation for the year ended December 31, 2017. Our senior management and our directors received $262,000 in compensation for the six months ended June 30, 2018.

Each of our executive officers and senior management have entered into a written management, services, consulting or similar agreement with our Company pursuant to which they will not receive any salary or other fees for services rendered to the Company until the Company raises a specified amount through this offering.

For additional information, see “Business – Material Agreements – Material Service Agreements” and “Business – Material Agreements – Management Agreements with Executive Officers and Senior Management.”

On December 29, 2017, the Company’s board of directors approved a resolution to reserve 417,000 ordinary shares of the Company for the purpose of an Employees Stock Option Plan and future grants to employees and consultants as the board of directors may approve from time to time. As of June 30, 2018, no plan has been adopted and no grants have been made.

The following is a description of the material terms of those transactions with related parties to which we are party to date.

Under a Services Agreement, dated March 8, 2018 between Bentley Limited and the Company, Bentley will receive the option to purchase 10,000 INX Tokens per month at the price of $0.01 per Token, subject to a maximum of 100,000 INX Tokens. Such option to purchase INX Tokens shall lapse on the first of the month in which the Company raises $10,000,000 in a public offering of INX Tokens.

Bentley Limited has entered into a written services agreement with our Company, pursuant to which Mr. Crossley provides services to the Company as a member of the Board of Directors. See “Business – Material Agreements – Management Agreements with Executive Officers and Senior Management”

Under the Weild Engagement Letter, Mr. Weild will receive a monthly issuance of 3,500 INX Tokens per month in consideration for $0.01 per Token, as well as an option to purchase 350,000 INX Tokens at a price of $0.01 per Token.

Mr. Weild has entered into a written services agreement with our Company, pursuant to which Mr. Weild provides services to the Company as a member of the Board of Directors. See “Business – Material Agreements – Management Agreements with Executive Officers and Senior Management”

Under the Silbert Employment Agreement, six months following the effectiveness of the registration statement in connection with this offering, Mr. Silbert shall be granted an option to purchase 500,000 INX Tokens at a price of $0.01 per Token.

Under the Silbert Employment Agreement, upon and subject to the adoption of a Share Ownership and Option Plan by the Company, Mr. Silbert shall receive an option to purchase Ordinary Shares of the Company constituting 3% of the share capital of the Company on a fully diluted basis, at a price per share equal to the fair market value per share. 25% of the option shares will vest upon each anniversary of Mr. Silbert’s employment with INX Services, such that the options will be fully vested and exercisable upon the 4th anniversary of such employment.

Mr. Silbert has entered into a written employment agreement with INX Services, Inc. the Company’s wholly owned subsidiary, pursuant to which he provides services to as a member of the Board of Directors of the Company as the Executive Managing Director of U.S. Operations for INX Services, Inc. See “Business – Material Agreements – Management Agreements with Executive Officers and Senior Management”

Under a Share Purchase Agreement, dated September 26, 2017, between the Company and Triple-V (1999) Ltd., a company wholly owned by Mr. Shy Datika, one of our founders, our controlling shareholder and President, the Company issued to Triple-V (1999) Ltd. 3,356,666 ordinary shares of the Company, par value of GBP 0.001 (each an “Ordinary Share”), in consideration of $446,875. See “Principal Shareholders”.

Under the Share Purchase Agreement, the Company also issued to Triple-V 9,435,939 INX Tokens at a price of $0.01 per INX Token.

Triple-V (1999) Ltd. has entered into a written services agreement with our Company, pursuant to which Mr. Datika provides services to the Company as shall be determined by our Board of Directors. See “Business – Material Agreements – Material Service Agreements.”

Insight Finance Ltd. has entered into a written services agreement with our Company, pursuant to which Mr. Mordechai provides services to the Company as its Chief Financial Officer. See “Business – Material Agreements – Material Service Agreements.”

Under a Loan Agreement, dated November 27, 2017, between the Company and Ms. Naor, our VP Product, the Company borrowed $40,635 from Ms. Naor. The term of the loan is five years, and the outstanding balance shall become due and payable on the five-year anniversary of the Naor Loan Agreement or upon the sooner of an IPO or a Deemed Liquidation Event (as such terms are defined in the Company’s Articles of Association). The interest rate on the principal of the loan is an annual rate of 2% compounded annually (subject to adjustment from time to time by the applicable Income Tax Ordinance).

Pursuant to the Loan Agreement, Ms. Naor is entitled, at any time and at her sole discretion, to convert outstanding principal and interest amounts of the loan agreement into 333,333 Ordinary Shares.

Under the terms of the Loan Agreement, Ms. Naor purchased 937,499 INX Tokens issued by the Company at a price of $0.01 per INX Token.

The Company has entered into a services agreement with Shiran, an Israeli private company, pursuant to which Ms. Naor shall provide services to the Company as VP Product. Ms. Naor’s services to the Company are rendered solely through Shiran. Prior to that, Ms. Naor provided services to the Company pursuant to a services agreement directly with Ms. Maor. See “Business – Material Agreements – Management Agreements with Executive Officers and Senior Management”

Under a Share Purchase Agreement, dated September 27, 2017, between the Company and Mr. Jonathan Azeroual, our Vice President, Blockchain Asset Strategy, the Company issued to Mr. Azeroual 377,500 Ordinary Shares in consideration of GBP 377.50. See “Principal Shareholders”.

Under the Share Purchase Agreement the Company also issued 750,000 INX Tokens to Mr. Azeroual at a price of $0.01 per Token.

Mr. Azeroual has entered into a written services agreement with our Company, pursuant to which he provides services to the Company as its Vice President, Blockchain Asset Strategy. See “Business – Material Agreements – Management Agreements with Executive Officers and Senior Management”

Under the Rozzi Employment Agreement, six months following the effectiveness of the registration statement in connection with this offering, Mr. Rozzi shall be granted an option to purchase 350,000 INX Tokens at a price of $0.01 per Token.

Under the Silbert Employment Agreement, upon and subject to the adoption of a Share Ownership and Option Plan by the Company, Mr. Silbert shall receive an option to purchase Ordinary Shares of the Company the Company constituting 0.5% of the share capital of the Company (on a fully diluted basis and subject to future dilutions) at a price per share equal to the fair market value of the Company’s shares. One quarter of the option shall vest upon each anniversary of the effective date of the Employment Agreement, such that the option shall be fully vested upon the fourth anniversary of the effective date of the Employment Agreement, subject to Mr. Rozzi’s continuous engagement with INX Services.

Fidelis has entered into a written services agreement with INX Services, pursuant to which Mr. Rozzi provides operations and compliance consultancy services to the Company and INX Services. It is intended that Mr. Rozzi will enter into an engagement agreement with INX Services to serve as its Chief Operating Officer and Chief Compliance Officer six months following the date the registration statement in connection with this offering is declared effective by the SEC. See “Business – Material Agreements – Management Agreements with Executive Officers and Senior Management”

Under the Founders’ Agreement, dated September 26, 2017, between A-Labs Finance and Advisory Ltd., a private company incorporated under the laws of the state of Israel, which is controlled by Mr. Doron Cohen, and Triple-V (1999) Ltd., which agreement has been ratified by our Company, A-Labs entitled to an allocation of 1,120,000 Ordinary Shares. In addition, pursuant to the Founders’ Agreement, A-Labs is entitled to appoint, remove or replace one board member of the Company. See “Business – Material Agreements – Founders’ Agreement.”

The Company and A-Labs Finance and Advisory Ltd., a limited liability company registered under the laws of the state of Israel, entered into the A-Labs Engagement Agreement. See “Business – Material Agreements – Material Service Agreements” for a summary of the A-Labs Engagement Agreement.

Under a Loan Agreement, dated November 27, 2017, between the Company and Ms. Ayelet Horn, the Company borrowed $37,984 from Ms. Horn. The term of the loan is five years, and the outstanding balance shall become due and payable on the five-year anniversary or upon the sooner of an IPO or a Deemed Liquidation Event (as such terms are defined in the Company’s Articles of Association). The interest rate on the principal of the loan is an annual rate of 2% compounded annually (subject to adjustment from time to time by the applicable Income Tax Ordinance).

Pursuant to the Loan Agreement, Ms. Horn is entitled, at any time and at her sole discretion, to convert outstanding principal and interest amounts of the loan agreement into 311,500 Ordinary Shares.

Under the terms of the Loan Agreement, Ms. Horn purchased 876,562 INX Tokens issued by the Company at a price of $0.01 per INX Token.

Prior to the Offering, 18,694,562 INX Tokens have been issued (the “Original Token Issuance”). In addition the Company has committed to issue up to [_____] INX Tokens (excluding grants of INX Tokens as a monthly remuneration to certain directors) to directors, executive officers, employees and an unfixed amount of INX Tokens to lenders, service providers and investors. See “Principal Shareholders”. These INX Tokens issued during the Original Token Issuance will not be registered as part of this offering. At such time as we become eligible to register our securities on a Form F-3 registration statement, we anticipate filing and seeking the effectiveness of one or more registration statements registering for re-sale the INX Tokens issued as part of the Original Token Issuance. We also intend to file a registration statement on Form S-8 under the Securities Act to register INX Tokens reserved for future sales and issuances to applicable employees and advisors of the Company upon terms to be determined and approved by the Company’s Board of Directors.

The following table sets forth information with respect to the beneficial ownership of our shares as of October 28, 2018 by:

Our major shareholders do not have voting rights that are different from our shareholders in general.

As of October 28, 2018, 10,987,747 of our ordinary shares are outstanding. Beneficial ownership is determined in accordance with the rules of the Securities and Exchange Commission. These rules generally attribute beneficial ownership of securities to persons who possess sole or shared voting or investment power with respect to those securities, and include shares subject to options and warrants that are exercisable within 60 days from the date of this registration statement. Such shares are also deemed outstanding for purposes of computing the percentage ownership of the person holding the option, but not the percentage ownership of any other person. As of October 28, 2018, 14.50% of our outstanding ordinary shares are held of record by U.S. Persons.

Unless otherwise indicated below, to our knowledge, all persons named in the table have sole voting and investment power with respect to their shares, except to the extent that authority is shared by spouses under community property laws. None of our shareholders has informed us that he, she, or it is affiliated with a registered broker-dealer or is in the business of underwriting securities. None of our shareholders has different voting rights from other shareholders.

(5)	Mr. Benish holds 725,043 ordinary shares of the Company. The address of Mr. Benish is Ogrit 13, Tel-Aviv, Israel.

(6)	The address of Senior Management and Directors is INX Limited’s registered office at 57/63 Line Wall Road, Gibraltar, GX11 1AA, Gibraltar.

(7)	Mr. Datika, one of our founders, our controlling shareholder and President, holds 3,356,666 ordinary shares of the Company through Triple-V (1999) Ltd., a private company incorporated under the laws of Israel, of which Mr. Datika is the sole shareholder.

(8)	Ms. Naor, our VP Product, is entitled, under a convertible loan agreement to convert the loan, at her discretion, to 333,333 ordinary shares of the Company. See “Certain Relationships and Related Party Transactions— Agreements with Directors and Senior Management.”

(9)	Mr. Rozzi, Chief Compliance Officer of the Company & Chief Operating Officer of INX Services, Inc., shall receive, upon and subject to the adoption of a Share Ownership and Option Plan by the Company, an option to purchase 48,122 Ordinary Shares of the Company at a price per share equal to the fair market value per share at the grant date. This option shall vest ratably over a period of four years. See “Business – Material Agreements – Management Agreements with Executive Officers and Senior Management.”

(10)	Mr. Silbert, a director of the Company and Executive Managing Director of INX Services, Inc., shall receive, upon and subject to the adoption of a Share Ownership and Option Plan by the Company, an option to purchase 287,290 Ordinary Shares of the Company, at a price per share equal to the fair market value per share at the grant date. See “Business – Material Agreements – Management Agreements with Executive Officers and Senior Management.”

In addition, the following table sets forth information with respect to the outstanding beneficial ownership of INX Tokens as of October 28, 2018 by:

The following description of our Memorandum and Articles of Association are summaries and do not purport to be complete.

On November 27, 2017, the Company was incorporated as a private company limited by shares under the Gibraltar Companies Act. The Company was incorporated under the name “INX Holdings Ltd.” On December 17, 2017 the Company changed its name to its current name, INX Limited. The Company is governed by its Memorandum and Articles of Association and the principal legislation under which it operates is the Gibraltar Companies Act

Our authorized nominal share capital is GBP 100,000.00 divided into 100,000,000 Ordinary Shares of GBP 0.001 each. Our issued nominal share capital is currently GBP 5,199.999 divided into 5,199,999 ordinary shares of GBP 0.001 each. See “Certain Relationships and Related Party Transactions—Issuances of Securities over the Past Three Years.”

Our purpose includes engaging in any and/or every lawful purpose. Our Gibraltar company number is 116544. Our registered office in Gibraltar is at currently located at 57/63 Line Wall Road, Gibraltar, GX11 1AA, Gibraltar. Our registered agent in Gibraltar is Hassans International Law Firm at 57/63 Line Wall Road Gibraltar GX11 1AA.

Notwithstanding the offering of INX Tokens under this prospectus, the company is (and remains) a “private company” within the meaning of the Act, and accordingly the following provisions shall have effect: (a) The company shall not offer any of its shares or debentures to the public for subscription; and (b) The right to transfer shares in the company shall be restricted in the manner hereinafter provided.

The liability of the members is limited to the amount, if any, unpaid on the shares held.

The Company may declare a dividend to be paid to the holders of our ordinary shares in proportion to their respective shareholdings. Under the Companies Act and our Articles, dividend distributions are recommended by the Board and approved by an ordinary resolution of the shareholders of a Company. The amount of such dividend may not exceed the amount recommended by the directors. Dividends may not be paid otherwise than out of the Company’s distributable reserves.

In the event of our liquidation, after satisfaction of liabilities to creditors, our assets will be distributed to the holders of our ordinary shares in proportion to their shareholdings. This right, as well as the right to receive dividends, may be affected by the grant of preferential dividend or distribution rights to the holders of a class of shares with preferential rights that may be authorized in the future.

With respect to non-exculpation of a director from liability arising out of a prohibited dividend or distribution to shareholders see “Management—Approval of Related Party Transactions—Exculpation, Insurance and Indemnification of Directors and Officers.”

There are currently no currency control restrictions on remittances of dividends on our ordinary shares, proceeds from the sale of the shares or interest or other payments to non-residents of Gibraltar.

The Company will call annual general meetings pursuant to the provisions of its articles in accordance with the Companies Act. The Company’s Board may call extraordinary general meetings whenever they see fit in accordance with the provisions of the Companies Act and the articles of association. A meeting of the Company, other than a meeting for the passing of a special resolution, may be called by 7 days’ prior written notice. A meeting of the Company for the passing of a special resolution may be called by giving at least 21 days’ prior written notice and specifying in the notice the resolution that will be proposed as a special resolution.

Subject to the provisions of the Companies Act and the regulations promulgated thereunder, shareholders entitled to participate and vote at general meetings are the shareholders of record on a date to be decided by the board of directors, which may be between four and forty days prior to the date of the meeting.

Two members present in person or by proxy shall be a quorum unless there shall at any time be one member in which event such member alone shall have the authority to transact the business of a general meeting and shall do so by written resolution.

Shareholder decisions may also be taken via written consent in lieu of a meeting if such resolution is signed by all members of the company who would be entitled to vote if that resolution were submitted to a general meeting.

All ordinary shares issued and outstanding have identical voting and other rights in all respects.

See “Management— Board Composition; Powers, Duties and Responsibilities — Election of Directors; Independent Board Members.”

An ordinary resolution of the members (or of a class of members) of the Company means a resolution that is passed by members representing a simple majority (more than 50%) of the total voting rights of the members or, as the case may be, of the class of members. An extraordinary resolution of the members means a resolution that is passed by members representing a majority of not less than 75% of those members at a general meeting of which notice specifying the terms of the resolution and the intention to propose the resolution as an extraordinary resolution has been given.

See “Certain Relationships and Related Party Transactions—Resale Registration.”

We were incorporated in Gibraltar and our business is managed and controlled outside the United States and outside Gibraltar. The Company is governed by Gibraltar legislation which regulates the takeover of Gibraltar registered companies. The Companies (Cross-Border Mergers) Regulations 2010, or the Regulations, transpose Directive 2005/56/EC of the European Parliament and of the Council of 26 October 2005 on cross border mergers of limited liability companies into the law of Gibraltar. This EC Directive has been incorporated into the laws of other EC member states, including in the United Kingdom by the Companies (Cross-Border Mergers) Regulations 2007. The Regulations in force in Gibraltar, or the Regulations, in effect, mirror those in place in the United Kingdom. These Regulations are designed to facilitate cross-border mergers of limited liability companies and to allow for cross-border merger of national limited liability company with a limited liability company of another Member State. Under the Regulations, a Gibraltar merging company has to make an application to the court to obtain a pre-merger certificate prior to any merger taking place (“Pre-Merger Certificate”). In order to obtain such a certificate, the Gibraltar company must provide the court, inter alia, with the following:

The courts of Gibraltar may make an order approving the completion of a cross-border merger on the joint application of all the merging companies if:

The Companies (Cross-Border Mergers) Regulations 2010 only apply to mergers between companies in different member states. More commonly, takeovers of a Gibraltar registered company can also take place via a scheme of arrangement pursuant to the Companies Act.

The takeover of a Gibraltar registered company can take place via a scheme of arrangement under the Companies Act. The relevant sections of the Companies Act provide, inter alia, that an application must be made to court in order to convene a meeting of members of the Company where such an arrangement can be proposed between a company and its members. Draft terms of the merger as well as other reports and accounting statements would need to be prepared, filed with the Companies Registrar and published prior to such a meeting being convened. At such meeting, at least 75% of the members present in person or by proxy must approve the arrangement in order for a court to thereafter be able to sanction the same. If sanctioned, the court will also order the transfer of undertaking, property and/or liabilities of the transferor company in accordance with the terms of the scheme.

In addition to the above, another mechanism exists under s.208 of the Gibraltar Companies Act 1930 and s.352(A) of the Companies Act (commonly referred to as the “Squeeze Out provisions”) which provides for the situation where a bidder proposes a scheme or contract to take over the shares of a Gibraltar registered company and certain shareholders do not consent to the proposal. If within four months from making such a proposal more than 90% of shareholders of a target company agree to the terms of such a scheme or contract, then the bidding company may within two months after the expiration of said four months give notice to the dissenting members of the target company that it will acquire the shares and certain shareholders do not consent to the proposal on the same terms of the scheme or contract. A Gibraltar scheme of arrangement, therefore, eliminates the risk that a minority of less than 10% of the target company’s shareholders may resist the transfer of their shares to the bidder. It should be noted, however, that such a scheme can be subject to the sanction of the court as any dissenting members may apply to court for an order seeking relief from such a scheme or contract.

The Financial Services (Takeover Bids) Act 2006 (the “FSTBA”) partially transposes Directive 2004/25/EC of the European Parliament on takeover bids. The FSTBA provides for a competent authority in Gibraltar to be responsible for supervising takeover bids. As presently enacted, however, section 4(2) of the FSTBA only provides for shared jurisdiction in supervising takeover bids (between the Gibraltar competent authority and the competent authority of the regulated market) in circumstances where companies have their registered offices elsewhere in EEA States outside Gibraltar and where the shares in such company are admitted to trading on a regulated market in Gibraltar. However, Gibraltar does not, as yet, have a regulated market. While Gibraltar has appointed a competent Gibraltar authority, it has not yet established the necessary Gibraltar rules (similar to the City Code) which would apply in the circumstances. Accordingly, there is no provision for shared jurisdiction in respect of companies which have their registered office in Gibraltar and whose shares are admitted to trading on a regulated market in one or more EEA States. The position of a Gibraltar company having its shares listed on a recognized stock exchange in an EEA State for the purposes of the Directive 2004/25/EC would not therefore be covered by Gibraltar legislative provisions. The Government of Gibraltar has previously confirmed that Article 4(2)(b) of the Directive 2004/25/EC will be fully transposed in due course but they have not provided timeframe for doing so. Moreover, the UK’s City Code on Takeovers and Mergers makes no reference to Gibraltar whatsoever and does not contain the equivalent of section 23 of the Financial Services (Takeover Bids) Act 2006 (which specifically provides for the arrangements between the United Kingdom and Gibraltar).

Pursuant to the Companies Act and the Articles, the Board may exercise all powers and take all actions that are not required under law or under the Articles to be exercised or taken by the Company’s shareholders, including the power to borrow money for company purposes.

The Company’s Articles enable it to increase or reduce share capital. Any such changes are subject to applicable laws and legal process. Transactions that have the effect of reducing capital require sanction from the court.

We would be required to make an application to the Registrar of the Court for an order to reduce the amount standing to the credit of the share premium account or to reduce the share capital of the company. The process normally takes between 2-3 months as from the date that the applications are filed. The following relevant steps must to be followed:

(i) The directors of the company hold a meeting to pass resolutions to (i) convene an EGM of the shareholders in connection with a reduction of the amount standing to the credit of the share premium account (the “Reduction”) and, ii) resolve to do all things necessary to effect the Reduction once approved by the Shareholder by way of special resolution;

(ii) Shareholder’s special resolutions are passed by the Shareholder approving the Reduction;

(iii) A petition is made to the Registrar of the Court for an order confirming the Reduction;

(iv) The Registrar of the Court settles a list of creditors of the company entitled to object to the Reduction having ascertained the creditors’ names and the nature and extent of their claims against the company – please note that every creditor of the company is entitled to object to the Reduction;

(v) The Registrar of the Court shall make the necessary publications of the petition giving creditors of the company the right to object to the Reduction;

(vi) The Registrar of the Court makes the order confirming the Reduction on such terms and conditions as he thinks fit (the “Order”) – The Registrar of the Court may require that the words “and reduced” be added to the name of the company for a specified period;

(vii) The Order and a minute approved by the Registrar of the Court are to be delivered to the Companies Registrar for registration – the Reduction takes effect on registration of such documents by the Companies Registrar.

Information from the INX Token Distributed Ledger can be viewed using an Ethereum network block explorer, such as Etherscan. The smart contract for the INX Token will be publicly viewable upon the filing of this prospectus with the SEC.

Material features of the INX Token included in the source code are the following:

The 200,000,000 limit on the number of INX Tokens is an inherent limit built into the code of the INX Token. Notwithstanding the technical limits of the INX Token, the Company intends to limit the purchase, sale and transfer of fractional divisions of INX Tokens to five decimal places (0.00001).

Other rights of INX Token holders and uses of the INX Tokens on the INX Trading platform are not defined by attributes of the INX Token source code, but are either contractual rights determined by the INX Token Purchase Agreement (as defined below) as agreed to by the Company and purchasers of the INX Tokens or they are terms and conditions as determined by the INX Trading platform in its sole discretion.

INX Limited plans to engage a third party service provider to conduct an audit of the INX Token before the Offering. We intend to have an audit on the various components of the INX Token performed at least annually. We do not currently intend to make the results of such audits publicly available, unless doing so is required under applicable reporting standards or as required by applicable law.

All holders (including purchasers) of INX Tokens must be vetted via a regulatory compliant KYC/AML process. Any transfer of INX Tokens or trade of INX Tokens on the INX Trading platform can only occur between two parties that have each satisfied the Company’s KYC/AML process. Individuals or entities which satisfactorily complete the KYC/AML process may have their Ethereum wallet address added to the Whitelist Database, allowing them to receive and send INX Tokens.

For investors purchasing INX Tokens in the Offering, the onboarding process for creating a Purchasing Account will include KYC/AML procedures and other credential requirements. See “Plan of Distribution— Onboarding and Requests to Purchase INX Tokens.” After the Offering is completed, new purchasers of INX Tokens can be added to the Whitelist Database by successfully completing KYC/AML procedures conducted by the Company, including INX Services, or by an appropriately regulated third party approved by the Company, such as a broker-dealer.

If customers of INX Services or other broker-dealers wish to withdraw the INX Tokens from an INX Brokerage Account or a similar third party account, they may request to have the wallet address of their private Ethereum wallet added to the Whitelist Database. Once that wallet address has been recorded on the Whitelist Database, INX Tokens may then be withdrawn to the private wallet.

The INX Token is held and transferred over the Ethereum blockchain. INX Tokens may be held in personal wallets, broker-dealer accounts or through other appropriately regulated third parties.

INX Token holdings and transfers of INX Tokens between wallets are recorded on the INX Token Distributed Ledger. The INX Token Distributed Ledger is a record of the public addresses of all Ethereum wallets that hold INX Tokens and the balance of INX Tokens in each wallet address. The secondary purchase or sale of INX Tokens may be facilitated by broker-dealers, such as INX Services, holding the INX Tokens in “street name” or it may occur on a peer-to-peer basis between individual Ethereum wallets.

The INX Token allows for decentralized, peer-to-peer transfers. The holder of an INX Token may use the wallet’s private key to transfer the INX Token to the public address of another Ethereum wallet. The INX Token Distributed Ledger is updated after each transfer of INX Tokens. The transferor of INX Tokens will be responsible for payment of the transfer fees on the Ethereum blockchain. Ethereum transfer fees are dynamic and determined by the transferor according to his or her desired speed of transfer. For example, in 2018, Ethereum average daily transfer fees varied between $0.15 and $5.528.

Transfers of INX Tokens will be executed by the INX Token smart contract under conditional permission that the wallet addresses of both the sender and receiver of INX Tokens are listed on the Whitelist Database. In other words, the INX Token smart contract will verify that both the sender and the receiver wallet addresses are included in the Whitelist Database prior to approving or rejecting the transfer. If either the sender or receiver wallet address is not listed in the Whitelist Database, the smart contract rejects the transfer and the distributed ledger is not updated.

Further, trades between customers at a single broker-dealer which, as such, do not require transfers of INX Tokens are not recorded on the INX Token Distributed Ledger. If a customer desires to withdraw its INX Tokens from a broker-dealer into an individual wallet, it may make a request to withdraw the token and the transfer from the broker-dealer wallet to the customer’s wallet will be recorded on the INX Token Distributed Ledger.

The registration of all transfers on the INX Token Distributed Ledger, coupled with the encrypted personal information and whitelisted wallets included in the Whitelist Database, creates a complete, register of all transactions and current holdings’ balances in the INX Token. We refer to this as the “INX Registry.” Transfers on other trading platforms will only be permitted if we expressly approve in writing the trading of Tokens on such platforms and our approval will be provided only if we deem that such transfers can be adequately and promptly recorded on the INX Registry.

The Company will have the ability to provide information stored on the INX Registry to regulatory and governmental authorities as may be required by law by providing a private key which will enable to decrypt the personal information recorded on the Whitelist Database.

INX Token holders are not entitled to any dividend and/or other distribution rights, other than as described below.

Commencing in calendar year 2020, subject to the conditions described herein, each INX Token held by parties other than the Company, shall entitle its holder to receive a pro rata portion, based on the number of INX Tokens held by parties other than the Company as of March 31 of each such year, of an aggregate amount which equals 20% of our Adjusted Operating Cash Flow. The distribution will be made on April 30 of each calendar year, commencing on April 30, 2020, and will be 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.

“Adjusted Operating Cash Flow” of our Company, will be calculated based on the cash flow from operating activities reflected in the consolidated statement of cash flow of our Company that is included in the audited consolidated financial statements of our Company and its subsidiaries as of December 31 of the year preceding the year of distribution. For purposes of the calculation of the Adjusted Operating Cash Flow, cash flow from the sale and purchase of blockchain assets, including cash flow from the sale and purchase of the INX Token (excluding cash proceeds from an Initial Sale) and cash flow for interest paid and interest received, will be included in the calculation of Adjusted Operating Cash Flow regardless of their classification in the consolidated statement of cash flow of our Company. An “Initial Sale” refers to the first sale and transfer of the respective INX Token by the Company to an initial purchaser. As of June 30, 2018, cumulative Adjusted Operating Cash Flow was a negative cash flow of $1,848,000.

To the extent that bank account information has been provided to the Company, an INX Token holder’s pro rata portion of the Adjusted Operating Cash Flow will be paid in U.S. Dollars to an INX Token holder’s bank account. If the INX Token holder has not provided a bank account to the Company or an INX Token holder so elects, the INX Token holder will receive the pro rata portion of the Adjusted Operating Cash Flow in Ether that will be transferred to the INX Token holders’ wallet recorded on the INX Token Distributed Ledger. ETH/USD exchange rates will be determined by TradeBlock’s ETX Index (or such similar index if TradeBlock’s ETX Index ceases to exist) as of 12:01 a.m. (GMT) on the date the distribution is paid. The transfer fee associated with payment in Ether will be deducted from the amount of the distribution paid. If INX Tokens are held by a broker-dealer or are otherwise held in “street name,” the pro rata portion of the Adjusted Operating Cash Flow will be paid to the holder of the INX Token, as recorded in the INX Token Distributed Ledger, and not the beneficial owner.

Each INX Token holder’s right to the pro rata portion of the Adjusted Operating Cash Flow for any given year is subject to reduction in an amount equal to the banking fees and/or transfer fees required to be paid with respect to the transfer of funds or Ether to such holder. Thus, with respect to any year during which the amount to be distributed to an individual INX Token holder is less than the amount of such fees relating to such transfer, no distribution will be made to that individual INX Token holder.

We may decide in the future to pay distributions on a quarterly basis, based on the Company’s cumulative Adjusted Operating Cash Flow as of the end of each quarter. In such event, the distributions will be paid to parties holding INX Tokens as of the last day of the following quarter with payments made one month thereafter. Notice with respect to our transition to quarterly payments will be provided at least three (3) months prior to the first payment.

We will publish the number of INX Tokens not held by the Company on our web site and in our financial statements.

A breach of the INX Token Purchase Agreement will occur if (x) the Company fails to develop and operate a trading platform that permits the trading of bitcoin, ether and fiat currencies on the over the counter trading market by December 31, 2021 or permanently discontinues all the activities of the INX Trading platform and there is no successor trading platform having substantially similar or superior trading features that utilizes INX Tokens, (y) followed by an Insolvency Event (as defined in the Token Purchase Agreement), which breach could create a claim in favor of INX Token holders. That could be asserted by INX Token holders in the event of a liquidation of the Company. The amount of a Token holder’s claim in such a scenario will likely be based on the damages sustained by the Token holder as a result of the Company’s breach of the Token Purchase Agreement, similar to how the value for any other breach of contract claim is typically determined under applicable law. Ultimately, the claim amount will be determined by the liquidator, a court of competent jurisdiction overseeing the liquidation, or some other authority pursuant to applicable insolvency law.

Additionally, the Company has caused current shareholders who hold approximately 78% of its issued share capital, and shall cause its future shareholders, to enter an agreement, pursuant to which such shareholders (i) irrevocably subordinate their rights to receive any distributions and payments from the Company prior to the payment in full by the Company of all distributions owed to INX Token holders, and (ii) irrevocably waive and subordinate their rights, in the event of an Insolvency Event, to any cash held in the Cash Reserve Fund.

The INX Token may be used or exercised as a form of payment for transaction fees on the INX Trading platform. In addition, the INX Token may also be used or exercised as a portion of the collateral deposited with the INX Trading platform for short positions.

The Company intends to set transaction fees as a percentage of the value of each trade executed on INX Trading. INX Services will accept payment for such fees in multiple forms, including in the payment of INX Tokens at an applicable exchange rate.

When used as payment of transaction fees on the INX Trading platform, the INX Token entitles owners to, at a minimum, a ten percent (10%) discount as compared to fees paid using other currencies. The discount will be applied to the transaction fee, which will be expressed as a percentage of the value of the executed trade. Thus, if the transaction fee is $1.00, an INX Trading platform customer may pay this fee using an amount of INX Tokens that have a value of 90 cents.

When used as payment for transaction fees, INX Tokens will be given the value that is determined by the execution price used for the most recent trade of the INX Token on the INX Trading platform. If a market for INX Tokens does not develop and there is no trading volume in INX Tokens on the INX Trading platform on which to base a last price, then the Company will use the initial offering price in this Offering to determine the value of INX Tokens to be used as payment of transaction fees and/or posting of collateral until such time as a market develops.

From time to time, the Company or INX Services may offer discounts for the use of INX Tokens as payment for INX Services transaction fees that exceed ten percent (10%). Such discounts are promotional incentives that are governed by the terms and conditions for use of the INX Trading platform and are not rights granted to the holders of INX Tokens through the INX Token Purchase Agreement or otherwise. The value and percentage of any such discount shall be subject to change at the sole discretion of the INX Trading platform, with reasonable notice to INX Token holders and participants on the INX Trading platform. In no case however, will the discount right included in the INX Token be less than ten percent (10%).

The Company intends that INX Services will also charge fees for certain services and transactions, including withdrawal fees, maintenance fees, deposit fees and account closing fees. INX Services may decide to not accept INX Tokens for these fees and, if INX Tokens are accepted, the INX Token holders will not be entitled to the ten percent (10%) discount described above.

No voting rights are attached to the INX Tokens. Each INX Token holder will have no right to vote, or otherwise participate in our general meeting of our shareholders. An INX Token holder will possess none of the rights that a common shareholder would be ordinarily be entitled to as holder of common shares of the Company.

In addition, INX Token holders will not participate in, or benefit from significant corporate transactions in which the company is a party, such as mergers, a sale of the Company, or sale of the Company’s assets.

The INX Token Purchase Agreement, to which all initial purchasers of INX Tokens in the Offering will become a party, sets forth the rights of each INX Token holder with regard to the INX Tokens held by such holder (the “INX Token Purchase Agreement”).

In addition to rights and remedies available to all purchasers of INX Tokens in this offering under applicable securities laws, each purchaser can enforce its rights under the INX Token Purchase Agreement by bringing a claim of breach of contract against the Company. The ability to pursue a claim for breach of contract is available to purchasers in this offering, and to subsequent purchasers of INX Tokens, as a means to enforce the following covenants available to them under the INX Token Purchase Agreement: (i) pro rata participation in distributions of our Adjusted Operating Cash Flow; (ii) timely delivery of such distributions; (iii) use of the INX Token as a form of payment for transaction fees on the INX Trading platform; and (iv) use of the INX Token as a portion of the collateral deposited with the INX Trading platform for short positions. It is the Company’s intention that the INX Token holders’ claim for breach of contract will be senior to the rights of the holders of the ordinary shares of the Company in liquidation. The Company intends to disclaim liability other than liability arising from the Company’s gross negligence, fraud or willful misconduct.

Secondary market purchasers of INX Tokens are included in the INX Token Purchase Agreement as third party beneficiaries to the rights of the INX Tokens set forth on Exhibit B to the INX Token Purchase Agreement; as third party beneficiaries, they have a right to enforce the rights of the INX Tokens as set forth on Exhibit B to the INX Token Purchase Agreement.

The rights of holders of INX Tokens will be set forth as an exhibit to the registration statement (which will be available on the Commission’s website) and will be available on the Company’s website; the Company’s website will also state that a secondary purchaser may request a copy of the rights of the INX Tokens from the Company. In this way, secondary purchasers of INX Tokens will be able to access information regarding the securities acquired by them in a manner similar to purchasers of other registered securities.

The foregoing description of the INX Token Purchase Agreement summarizes the material terms of the INX Token Purchase Agreement and the rights accruing to holders of INX Tokens but it is not a complete description. For more details about the INX Token Purchase Agreement, you should reference to the full text of the INX Token Purchase Agreement, which is attached as Exhibit 4.1 hereto, and is incorporated herein by reference.

Upon closing of this offering, we will have outstanding 148,694,562 Tokens. All INX Tokens issued in this offering will be freely transferable without restriction or further registration under the Securities Act unless purchased by our “affiliates,” as that term is defined in Rule 144. INX Tokens purchased by our affiliates may not be resold except pursuant to an effective registration statement or an exemption from registration, including the safe harbor under Rule 144 described below.

All INX Tokens held by Token holders prior to the effectiveness of the registration statement of which this prospectus is a part will remain restricted from sale in the public market and may only be transferred after a registration of such holder’s INX Tokens or pursuant to a transfer that is exempt from the registration requirements.

Prior to the Offering, 18,694,562 INX Tokens have been issued as part of the Original Token Issuance. In addition the Company has committed to issue up to [ ] INX Tokens (excluding grants of INX Tokens as a monthly remuneration to certain directors) to directors, executive officers, employees and an unfixed amount of INX Tokens to lenders, service providers and investors. The Original Token Issuance was conducted pursuant to exemptions from registration under the Securities Act, in accordance with Regulation S and Rule 506(b) of Regulation D, each rule promulgated under the Securities Act. All of the purchasers of the INX Tokens were non-U.S. Persons, as such term is used in Regulation S, or U.S. Persons who are “accredited investors” as such term is defined in Regulation D. With respect to the sales made to non-U.S. Persons (i) such sales were made in Offshore transactions (as such term is defined in Rule 902), (ii) no Directed Selling Efforts (as such term is defined in Rule 902) were made, and (iii) the conditions set forth in Rule 903(b)(1)(i) was satisfied. The balance of currently outstanding INX Tokens issued to U.S. Persons were issued pursuant to Rule 506(b) to accredited investors.

At such time as we become eligible to register our securities on a Form F-3 registration statement, we anticipate filing and seeking the effectiveness of one or more registration statements registering for re-sale the INX Tokens issued as part of the Original Token Issuance, as well as the issuance by the Company from time to time of (i) Tokens created but not previously issued, and (ii) INX Tokens which may be received by INX Services as payment for transaction fees or other fees. Prior to the Company becoming eligible to register our securities on a Form F-3 registration statement, the Company will need to either register additional offerings of INX Tokens on a Form F-1 Registration Statement or rely on exemptions from registration, including Regulation D and Regulation S, to make these additional token issuances.

The following are summaries of safe harbors pursuant to which a transfer of the INX Tokens may be exempt from federal registration requirements:

We intend to file a registration statement on Form S-8 under the Securities Act to register INX Tokens reserved for future sales and issuances to applicable employees and advisors of the Company upon terms to be determined and approved by the Company’s Board of Directors. This Form S-8 registration statement is expected to become effective immediately upon filing, and INX Tokens covered by that registration statement will then be eligible for issuance to such holders, and resale by such holders in the public markets, subject to:

In general, under Rule 144 of the Securities Act (as in effect on the date of this prospectus), beginning 90 days after the date of this prospectus, an “affiliate” who has beneficially owned our shares for a period of at least six months is entitled to sell upon expiration or waiver of the lock-up agreements described below within any three-month period a number of shares that does not exceed the greater of either 1% of the then outstanding Tokens immediately after this offering, or the average weekly trading volume of INX Tokens during the four calendar weeks preceding the filing with the SEC of a notice on Form 144 with respect to such sale. Such sales under Rule 144 of the Securities Act are also subject to prescribed requirements relating to the manner of sale, notice, and availability of current public information about us.

In general, under Rule 701 of the Securities Act as in effect on the date of this prospectus, each of our employees, consultants or advisors who acquires INX Tokens from us in connection with a compensatory share plan or other written agreement executed prior to the closing of this offering is eligible to resell such Tokens in reliance on Rule 144, but without compliance with some of the restrictions, including the holding period, contained in Rule 144. However, Tokens acquired by employees, consultants and advisors remain subject to lock-up arrangements described below and would only become eligible for sale when the lock-up period expires or is waived.

Regulation S provides generally that securities owned by any person may be sold without registration in the United States, provided that such sales are made in offshore transactions and no directed selling efforts are made in the United States (as these terms are defined in Regulation S), subject to certain other conditions.

INX Tokens will be used by the Company to establish the Capital Reserve and Liquidity Fund. Once we are eligible to sell or resell additional INX Tokens, the Capital Reserve and Liquidity Fund will provide flexibility for financing extraordinary expenses, such as instances where the INX Services must cover shortfalls in trading transactions. This feature of our business introduces an important, additional layer of comfort for the investors, traders and clients.

The Capital Reserve and Liquidity Fund will consist initially of 35 million INX Tokens created but not previously sold by the Company to the public. In addition, we plan to reserve an additional 20% of the INX Tokens received by INX Services 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 this offering and subsequent offerings of INX Tokens (excluding re-issuances of reacquired INX Tokens), up to a maximum of 100 million INX Tokens.

The remaining INX Tokens received by the Company as payment for transaction fees will be held by the Company, and may be resold by the Company in subsequent offerings for financing and other purposes, in compliance with applicable securities laws.

Set forth below is a discussion, in summary form, of certain United States federal income tax consequences relating to the acquisition, ownership and disposition of Tokens. This summary does not attempt to present all aspects of the United States federal income tax laws or any state, local or foreign laws that may affect an interest in Tokens. Financial institutions, insurance companies, tax-exempt entities, purchasers subject to the alternative minimum tax and other purchasers of special status must consult with their own professional tax advisors regarding a prospective investment in INX Tokens. This summary is by nature general in nature and should not be construed as tax advice to any prospective purchaser. No ruling has been or will be requested from the IRS and no assurance can be given that the IRS will agree with the tax consequences described in this summary. The following discussion assumes that each prospective Purchaser will acquire Tokens as a capital asset (generally, property held for investment). This description is based on the U.S. Internal Revenue Code of 1986, as amended, (the “Code”), existing, proposed and temporary U.S. Treasury Regulations and judicial and administrative interpretations thereof, in each case as available on the date hereof. All of the foregoing is subject to change, which change could apply retroactively and could affect the tax consequences described below. The following discussion is limited to prospective purchasers who are “United States Persons” within the meaning of the Code. Each prospective purchaser should consult with its own tax adviser in order to fully understand the United States federal, state, local and foreign income tax consequences of purchasing an interest in Tokens. No formal or legal tax advice is hereby given to any prospective purchaser, and no prospective purchaser may rely on the Company’s statements regarding the anticipated tax consequences of participating in this Offering or purchasing, holding and disposing of Tokens.

Transactions involving Tokens are relatively new and it is more than likely that the IRS will issue guidance, possibly with retroactive effect, impacting the taxation of participating in this offering and the purchase, ownership and disposition of Tokens. Such future tax guidance from the IRS (or guidance resulting from future judicial decisions) could negatively impact purchasers of Tokens.

There are no regulations, published rulings or judicial decisions involving the characterization for US federal income tax purposes of instruments with substantially the same terms as the INX Tokens. It is also unclear what guidance on the characterization and treatment of tokens for U.S. federal income tax purposes may be issued in the future. Thus, the characterization and treatment of INX Tokens for U.S. federal income tax purposes is uncertain.

The IRS has ruled on the tax treatment of virtual currencies. In Notice 2014-21, the IRS held that digital currencies (i) are “property” that is not currency for US federal income tax purposes and (ii) may be held as a capital asset. The Notice does not address other aspects of the U.S. federal income tax treatment of tokens, including the tax characterization of tokens which possess non-currency rights or powers (so called “utility” tokens) or tokens which provide a share of profits to holders.

Moreover, there is no authority on the circumstances in which profit-sharing tokens such as INX Tokens may be treated as equity in the Company for U.S. federal income tax purposes. It should be expected, however, that the IRS or a court would determine the characterization on tokens based on a consideration and weighing of the characteristics of these instruments. Based on the characteristics of the INX Tokens, the Company intends to treat the INX Tokens as property that is not an equity interest in the Company for US federal income tax purposes. This treatment is supported by the following characteristics:(i) distribution rights on the INX Tokens are (a) based on annual net cash flow from operating activities rather than earnings and profits of the Company and (b) entitlements pursuant to the terms of the INX Tokens without any action to declare a payment (distribution) required by Company’s board of directors, (ii) no participation rights in residual property of the Company on liquidation along with common equity and no specified liquidation preference typical with preferred equity and (iii) no voting rights.

Other characterizations of the INX Tokens are possible, including the possibility characterization as equity of the Company. If INX Tokens were characterized as equity interests in the Company for U.S. federal income purposes, U.S. holders of INX Tokens would be subject additional tax consequences and related reporting considerations applicable to holders of stock in a foreign company, including the possible application of rules relating to PFICs and CFCs. The summary below assumes that INX Tokens will not constitute an equity interest in the Company for U.S. federal income tax purposes.

Potential purchasers are strongly advised to consult their own tax advisors as to the US federal income tax characterization of the INX Tokens and the consequences to them of the various alternative characterizations.

Treatment of Token Sales. The issuance of Tokens to a purchaser will be treated as a taxable sale of property by the Company to the purchaser. A purchaser should not be taxed upon the acquisition of Tokens. A purchaser should generally have a tax basis for U.S. federal income tax purposes in INX Tokens it acquires from the Company equal to the value of the purchase price paid by such purchaser for INX Tokens. The purchaser’s holding period in INX Tokens should begin on the day INX Tokens are issued to the purchaser.

Disposition of Tokens. A Token holder who sells, exchanges, or otherwise disposes of Tokens for cash or other property (including pursuant to an exchange of such Tokens for other convertible virtual currency) should, pursuant to Internal Revenue Service Notice 2014-21, recognize capital gain or loss in an amount equal to the difference between the fair market value of the property received in exchange for such Tokens and the purchaser’s adjusted tax basis in INX Tokens. This capital gain may be long term if the purchaser has held his Tokens for more than one year prior to disposition. Preferential tax rates for long term capital gain will generally apply to non-corporate U.S. Holders. Any gain or loss realized by a U.S. Holder on the sale, exchange, or other disposition of Tokens should generally be treated as from sources within the United States for U.S. foreign tax credit purposes. The deductibility of capital losses for U.S. federal income tax purposes is subject to limitations.

Treatment of Profit-Share Distributions. U.S. Holders of Tokens are required to include in gross income the amount of any distribution paid with respect to their Tokens. The source of distributions paid in respect of INX Tokens for U.S. foreign tax credit purposes is not clear.

EACH PURCHASER SHOULD SEEK, AND MUST DEPEND UPON, THE ADVICE OF HIS OR HER TAX ADVISOR WITH RESPECT TO THEIR PURCHASE OWNERSHIP AND DISPOSITION OF TOKENS, AND EACH PURCHASER IS RESPONSIBLE FOR THE FEES OF SUCH ADVISOR. NOTHING IN THIS PROSPECTUS IS OR SHOULD BE CONSTRUED AS LEGAL OR TAX ADVICE TO A PURCHASER. PURCHASERS SHOULD BE AWARE THAT THE INTERNAL REVENUE SERVICE MAY NOT AGREE WITH ALL TAX POSITIONS TAKEN BY THE COMPANY AND THAT CHANGES TO THE INTERNAL REVENUE CODE OR THE REGULATIONS OR RULINGS THEREUNDER OR COURT DECISIONS AFTER THE DATE OF THIS MEMORANDUM MAY CHANGE THE ANTICIPATED TAX TREATMENT TO A PURCHASER. THE COMPANY WILL NOT OBTAIN ANY RULING FROM THE INTERNAL REVENUE SERVICE WITH REGARD TO THE TAX CONSEQUENCES OF PURCHASES OF TOKENS.

THE TAX TREATMENT OF INX TOKENS IS UNCERTAIN AND THERE MAY BE ADVERSE TAX CONSEQUENCES FOR PURCHASERS UPON CERTAIN FUTURE EVENTS. A PURCHASE OF TOKENS MAY RESULT IN ADVERSE TAX CONSEQUENCES TO PURCHASERS, INCLUDING WITHHOLDING TAXES, INCOME TAXES AND TAX REPORTING REQUIREMENTS. EACH PURCHASER SHOULD CONSULT WITH AND MUST RELY UPON THE ADVICE OF ITS OWN PROFESSIONAL TAX ADVISORS WITH RESPECT TO THE UNITED STATES TAX TREATMENT OF TOKENS.

INX Tokens offered by this prospectus may be sold from time to time by our officers and directors directly to one or more purchasers. Our officers and directors will not receive any direct compensation for sales of INX Tokens. The Company reserves the right to reject, in whole or in part, any subscriptions for Tokens made in this offering, in our discretion.

For purposes of the Offering, the Company will make available a web-based portal where potential investors may apply for an online account to be used for the purchase of INX Tokens in this Offering (a “Purchasing Account”). The purchaser must elect that its INX Tokens be (i) transferred from the Purchasing Account to an Ethereum wallet designated by the purchaser (which may be a private wallet of the purchaser or a wallet held by a broker-dealer or similar intermediary which is included in the Whitelist Database, and which will hold INX Tokens on the purchaser’s behalf), or (ii) upon the launch of the INX Trading platform, migrated from the Purchasing Account to an INX Brokerage Account to be established by the purchaser. Based upon the purchaser’s election the INX Tokens will be transferred from the purchaser’s Purchasing Account to the wallet so designated by the purchaser, which will be credited with the deposit.

The onboarding process for creating a Purchasing Account will be conducted in the same manner and use the same KYC/AML procedures and other credential requirements applicable when onboarding customers to an online brokerage account. We anticipate that the process for onboarding and creating a Purchasing Account will take up to 30 days. An investor’s request to create a Purchasing Account and purchase INX Tokens will be rejected if the investor does not comply with the Company’s KYC/ AML procedures.

Upon completion of the KYC/ AML procedures, Company approval of the customer and creation of a Purchasing Account, a potential investor may place an order for a certain quantity of INX Tokens by executing the INX Token Purchase Agreement and submitting an executed agreement. Prior to executing an INX Token Purchase Agreement, a purchaser will receive a confirmation summary of the terms of purchase, which shall include (i) the number of INX Tokens the purchaser intends to purchase; (ii) the aggregate price of INX Tokens purchased by the purchaser expressed in U.S. Dollars; (iii) the applicable exchange rate; and (iv) the aggregate price of INX Tokens purchased by the purchaser expressed in BTC and ETH. After completion of the purchase, the purchaser will also receive an executed copy of the INX Token Purchase Agreement, which will contain the same information.

The Company reserves the right to reject, in whole or in part, any subscriptions for INX Tokens made in this offering, in our discretion. Any rejected subscription will have its funds returned promptly to the purchaser. The offering will also comply with Rule 10b-9 under the Exchange Act.

The INX Token Purchase Agreement sets forth the rights of each INX Token holder with regard to the INX Tokens held by such holder.

The Company will not sell and will not transfer any INX Tokens until the proceeds from committed purchases of INX Tokens exceed $5,000,000, which the Company has set as a minimum offering requirement for this Offering. Pending satisfaction of the minimum offering requirement, all subscription payments will be held in the Escrow Account. If the Company does not meet the minimum offering requirement prior to the termination of this Offering, we will promptly return all funds in the Escrow Account (in U.S. Dollars) to each purchaser entitled thereto without interest or deduction.

Prior to reaching the minimum offering requirement, the Company will accept payment for INX Tokens in U.S. Dollars only. In other words, the Company will not accept Bitcoin (BTC) or Ether (ETH) as payment for INX Tokens until after the Company meets the minimum offering requirement and conducts a closing of committed purchases.

The purchase of INX Tokens in the Offering by our directors, officers, advisors and any of our affiliates, including any broker-dealers we may engage, will not count towards satisfying the minimum offering requirement. There is no limit on the amount of INX Tokens that may be purchased by such persons; any such purchases will be for investment purposes and not with a view towards distribution.

If the Company meets the minimum offering requirement, then the Company will conduct a closing of the committed purchases. The Company will credit each investor’s Purchasing Account with the quantity of INX Tokens as indicated in such investor’s INX Token Purchase Agreement. Funds in the Escrow Account will be transferred to the Company’s operating account to fund the Company’s operations. After the initial closing, sales will be made continuously throughout the remaining period of this Offering. Funds from such purchases will be made immediately available to fund the Company’s operations.

The Company currently intends to serve as its own Transfer Agent, and if required, to register as a registered Transfer Agent under applicable securities laws. However, the Company may in the future determine to retain a third- party registered Transfer Agent to serve as the Company’s Transfer Agent.

After the Company meets the minimum offering requirement and conducts an initial closing of committed purchases, payment for INX Tokens will be accepted in U.S. Dollars, Bitcoin (BTC) and Ether (ETH). The INX Tokens are offered and sold at a fixed price in U.S. Dollars (USD). Thus, the purchase price for INX Tokens as expressed in BTC or ETH will vary as determined by the applicable exchange rate at the time of each sale.

BTC/USD and ETH/USD exchange rates will be determined by TradeBlock’s XBX and ETX Indices, respectively (or such similar indices if TradeBlock’s Indices cease to exist), as of 12:01 a.m. (GMT) on the date a purchaser has submitted an executed INX Token Purchase Agreement. The applicable exchange rate will be provided to INX Token purchasers (i) prior to executing an INX Token Purchase Agreement and (ii) after payment of the purchase price is received. See “Plan of Distribution— Onboarding and Requests to Purchase INX Tokens.”

We expect to commence the sale of INX Tokens within two days following the date on which this registration statement becomes effective. If we meet the minimum offering requirement we will continue our public offering that will terminate upon the earliest to occur of: (i) the sale of all of the 130,000,000 INX Tokens being offered, (ii) 365 days after this registration statement is declared effective, or (iii) such shorter period as may be determined by the Company in its sole discretion.

We have entered into an the A-Labs Engagement Agreement pursuant to which A-Labs will promote this offering to non-U.S. persons only. Pursuant to the A-Labs Engagement Agreement, A-Labs will receive (i) a non-refundable, one time cash payment of $500,000; (ii) a grant of 4,550,000 INX Tokens, subject to a repurchase option by the Company, under which the Company is entitled to repurchase INX Tokens for $0.01 per Token; (iii) a cash payment of $500,000 payable upon the completion of an offering under which the Company has raised from U.S. persons not less than $10,000,000; and (iv) a contingent cash payment for the sale of INX Tokens to non-US Persons only equal to: 10% of the first $30 million (up to $3 million) in ICO Proceeds (which is defined in the A-Labs Engagement Agreement as the net proceeds paid by purchasers in this offering and by early investors in the Tokens but not including the first $10 million of net proceeds); 5% of the next $70 million (up to $3.5 million) in ICO Proceeds; 6% of the next $100 million (up to $6 million) in ICO Proceeds; and 7.5% of ICO Proceeds in excess of $200 million.

In addition, we reserve the right to engage broker-dealers registered under Section 15 of the Exchange Act who are FINRA members to participate in the offer and sale of our INX Tokens and to pay to such broker-dealers cash commissions of up to 7% of the gross proceeds from the sales of Tokens placed them.

Holders of INX Tokens purchased in the Original Token Issuance will enter into and will be subject to lock-up agreements that restrict their ability to sell or transfer their Tokens. The lock-up agreements entered into between the Company and the participants in the Original Token Issuance provide for a restricted period of six months following the effective date of this prospectus. See “Certain Relationships and Related Party Transactions—Issuances of Securities over the Past Three Years.”

In addition, at such time as we become eligible to register our securities on a Form F-3 registration statement, we anticipate filing and seeking the effectiveness of one or more registration statements registering for re-sale the INX Tokens issued as part of the Original Token Issuance, as well as the issuance by the Company from time to time of (i) INX Tokens created but not sold in this Offering, and (ii) INX Tokens which may be received by the Company as payment for transaction fees or other fees. See “Certain Relationships and Related Party Transactions—Resale Registration.” Prior to the Company becoming eligible to register our securities on a Form F-3 registration statement, the Company will need to either register additional offerings of INX Tokens on a Form F-1 Registration Statement or rely on exemptions from registration, including Regulation D and Regulation S, to make these token issuances.

INX Tokens used on the INX Trading platform as payment for transaction fees or other fees and INX Tokens not previously issued by the Company will be held by the Company until they can be resold back to the public in additional offerings under an appropriate registered offering or pursuant to a transfer that is exempt from the registration requirements.

We will pay the registration expenses, other than applicable underwriting discounts and commissions, of INX Tokens registered on a registration statement on Form F-1 or Form F-3, as appropriate.

The INX Token is an equity security as such term is defined in Section 3(a)(11) of the Exchange Act; however, the INX Tokens are not currently registered under the Exchange Act. Upon completion of this offering, we will be subject to the reporting requirements of Section 15(d) of the Exchange Act, as amended, that are applicable to “foreign private issuers,” and under those requirements we will file reports with the SEC. If, within 120 days after the last day of its fiscal year ended on which the Company has total assets of more than $10,000,000, the number of record holders of the INX Tokens is more than 2,000 persons, or 500 persons who are not accredited investors, the Company will be required to register the INX Tokens under the Exchange Act, in accordance with Section 12(g) of the Exchange Act, and to continue to file such reports. The Company intends to remain subject to the reporting requirements of the Exchange Act either through continued compliance with Section 15(d) of the Exchange Act or by registration of the INX Tokens in accordance with Section 12(g) of the Exchange Act.

We intend to submit filings to qualify this offering and sales to retail investors in various states as may be required under applicable State Blue Sky laws. We intend to submit filings to qualify INX Tokens for secondary trading in such states as determined by our management.

If we fail to comply with state securities laws where our securities are sold, we may be subject to fines and other regulatory actions against us. We intend to take the steps necessary to help insure that offers and sales in this offering are in compliance with State Blue Sky laws, provided, however, there can be no assurance that we will be able to achieve such compliance in all instances, or avoid fines or other regulatory actions if we are not in compliance.

Other than in the United States, no action has been taken by us that would permit a public offering of the securities offered by this prospectus in any jurisdiction where action for that purpose is required. The securities offered by this prospectus may not be offered or sold, directly or indirectly, nor may this prospectus or any other offering material or advertisements in connection with the offer and sale of any such securities be distributed or published in any jurisdiction, except under circumstances that will result in compliance with the applicable rules and regulations of that jurisdiction. Persons into whose possession this prospectus comes are advised to inform themselves about and to observe any restrictions relating to the offering and the distribution of this prospectus. This prospectus does not constitute an offer to sell or a solicitation of an offer to buy any securities offered by this prospectus in any jurisdiction in which such an offer or a solicitation is unlawful.

This prospectus is not a disclosure document under Chapter 6D of the Australian Corporations Act, has not been lodged with the Australian Securities and Investments Commission and does not purport to include the information required of a disclosure document under Chapter 6D of the Australian Corporations Act. Accordingly, (i) the offer of the securities under this prospectus is only made to persons to whom it is lawful to offer the securities without disclosure under Chapter 6D of the Australian Corporations Act under one or more exemptions set out in section 708 of the Australian Corporations Act, (ii) this prospectus is made available in Australia only to those persons as set forth in clause (i) above, and (iii) the offeree must be sent a notice stating in substance that by accepting this offer, the offeree represents that the offeree is such a person as set forth in clause (i) above, and, unless permitted under the Australian Corporations Act, agrees not to sell or offer for sale within Australia any of the securities sold to the offeree within 24 months after its transfer for the offeree under this prospectus.

The information in this document does not constitute a public offer of the securities, whether by way of sale or subscription, in the People’s Republic of China (excluding, for purposes of this paragraph, Hong Kong Special Administrative Region, Macau Special Administrative Region, and Taiwan). The securities may not be offered or sold directly or indirectly in the People’s Republic of China to legal or natural persons other than directly to “qualified domestic institutional investors.”

The information in this document has been prepared on the basis that all offers of securities will be made pursuant to an exemption under the Directive 2003/71/EC (“Prospectus Directive”), as implemented in Member States of the European Economic Area (each, a “Relevant Member State”), from the requirement to produce a prospectus for offers of securities.

An offer to the public of securities has not been made, and may not be made, in a Relevant Member State except pursuant to one of the following exemptions under the Prospectus Directive as implemented in that Relevant Member State:

(a) to legal entities that are authorized or regulated to operate in the financial markets or, if not so authorized or regulated, whose corporate purpose is solely to invest in securities;

(b) to any legal entity that has two or more of: (i) an average of at least 250 employees during its last fiscal year; (ii) a total balance sheet of more than €43,000,000 (as shown on its last annual unconsolidated or consolidated financial statements); and (iii) an annual net turnover of more than €50,000,000 (as shown on its last annual unconsolidated or consolidated financial statements);

(c) to fewer than 100 natural or legal persons (other than qualified investors within the meaning of Article 2(1)(e) of the Prospectus Directive) subject to obtaining the prior consent of the Company or any underwriter for any such offer; or

(d) in any other circumstances falling within Article 3(2) of the Prospectus Directive, provided that no such offer of securities shall result in a requirement for the publication by the Company of a prospectus pursuant to Article 3 of the Prospectus Directive.

This document is not being distributed in the context of a public offering of financial securities (offre au public de titres financiers) in France within the meaning of Article L.411-1 of the French Monetary and Financial Code (Code monétaire et financier) and Articles 211-1 et seq. of the General Regulation of the French Autorité des marchés financiers (“AMF”). The securities have not been offered or sold and will not be offered or sold, directly or indirectly, to the public in France.

This document and any other offering material relating to the securities have not been, and will not be, submitted to the AMF for approval in France and, accordingly, may not be distributed or caused to be distributed, directly or indirectly, to the public in France.

Such offers, sales, and distributions have been and shall only be made in France to (i) qualified investors (investisseurs qualifiés) acting for their own account, as defined in and in accordance with Articles L.411-2-II-2° and D.411-1 to D.411-3, D.744-1, D.754-1, and D.764-1 of the French Monetary and Financial Code and any implementing regulation and/or (ii) a restricted number of non-qualified investors (cercle restreint d’investisseurs) acting for their own account, as defined in and in accordance with Articles L.411-2-II-2° and D.411-4, D.744-1, D.754-1, and D.764-1 of the French Monetary and Financial Code and any implementing regulation.

Pursuant to Article 211-3 of the General Regulation of the AMF, investors in France are informed that the securities cannot be distributed (directly or indirectly) to the public by the investors otherwise than in accordance with Articles L.411-1, L.411-2, L.412-1, and L.621-8 to L.621-8-3 of the French Monetary and Financial Code.

The information in this document does not constitute a prospectus under any Irish laws or regulations and this document has not been filed with or approved by any Irish regulatory authority as the information has not been prepared in the context of a public offering of securities in Ireland within the meaning of the Irish Prospectus (Directive 2003/71/EC) Regulations 2005 (the “Prospectus Regulations”). The securities have not been offered or sold, and will not be offered, sold, or delivered directly or indirectly in Ireland by way of a public offering, except to (i) qualified investors as defined in Regulation 2(l) of the Prospectus Regulations and (ii) fewer than 100 natural or legal persons who are not qualified investors.

This document does not constitute a public offering or selling or a solicitation of an offer to sell any kind of securities under the Israeli Securities Law. This document does not constitute a prospectus under the Israeli Securities Law and has not been filed with or approved by the Israel Securities Authority. Any public offering in Israel requires a pre-approved permit by the Israel Securities Authority or an exemption thereof. In Israel, this prospectus may be distributed only to, and may be directed only at the types of, investors listed in the first addendum to the Israeli Securities Law (“the Addendum”), consisting primarily of funds for joint investment in trust funds; provident funds; insurance companies; banks, portfolio managers and members of the Tel Aviv Stock Exchange, Ltd., each purchasing for their own account or for clients which are types of investors listed in the Addendum; investment advisors and underwriters, each purchasing for their own account; venture capital funds; entities with equity in excess of NIS 50.0 million; and “qualified individuals,” each as defined in the Addendum (as it may be amended from time to time), collectively referred to as qualified investors. Qualified investors shall be required to submit written confirmation that they fall within the scope of the Addendum.

The offering of the securities in the Republic of Italy has not been authorized by the Italian Securities and Exchange Commission (Commissione Nazionale per le Società e la Borsa or “CONSOB”), pursuant to the Italian securities legislation and, accordingly, no offering material relating to the securities may be distributed in Italy and such securities may not be offered or sold in Italy in a public offer within the meaning of Article 1.1(t) of Legislative Decree No. 58 of 24 February 1998 (“Decree No. 58”), other than:

Any offer, sale or delivery of the securities or distribution of any offer document relating to the securities in Italy (excluding placements where a Qualified Investor solicits an offer from the issuer) under the paragraphs above must be:

Any subsequent distribution of the securities in Italy must be made in compliance with the public offer and prospectus requirement rules provided under Decree No. 58 and the Regulation No. 11971 as amended, unless an exception from those rules applies. Failure to comply with such rules may result in the sale of such securities being declared null and void and in the liability of the entity transferring the securities for any damages suffered by the investors.

The securities have not been and will not be registered under Article 4, paragraph 1 of the Financial Instruments and Exchange Law of Japan (Law No. 25 of 1948), as amended (the “FIEL”) pursuant to an exemption from the registration requirements applicable to a private placement of securities to Qualified Institutional Investors (as defined in and in accordance with Article 2, paragraph 3 of the FIEL and the regulations promulgated thereunder). Accordingly, the securities may not be offered or sold, directly or indirectly, in Japan or to, or for the benefit of, any resident of Japan other than Qualified Institutional Investors. Any Qualified Institutional Investor who acquires securities may not resell them to any person in Japan that is not a Qualified Institutional Investor, and acquisition by any such person of securities is conditional upon the execution of an agreement to that effect.

This document is not being distributed in the context of a public offer of financial securities (oferta pública de valores mobiliários) in Portugal, within the meaning of Article 109 of the Portuguese Securities Code (Código dos Valores Mobiliários). The securities have not been offered or sold and will not be offered or sold, directly or indirectly, to the public in Portugal. This document and any other offering material relating to the securities have not been, and will not be, submitted to the Portuguese Securities Market Commission (Comissã do Mercado de Valores Mobiliários) for approval in Portugal and, accordingly, may not be distributed or caused to distributed, directly or indirectly, to the public in Portugal, other than under circumstances that are deemed not to qualify as a public offer under the Portuguese Securities Code. Such offers, sales and distributions of securities in Portugal are limited to persons who are “qualified investors” (as defined in the Portuguese Securities Code). Only such investors may receive this document and they may not distribute it or the information contained in it to any other person.

This document has not been, and will not be, registered with or approved by Finansinspektionen (the Swedish Financial Supervisory Authority). Accordingly, this document may not be made available, nor may the securities be offered for sale in Sweden, other than under circumstances that are deemed not to require a prospectus under the Swedish Financial Instruments Trading Act (1991:980) (Sw. lag (1991:980) om handel med finansiella instrument). Any offering of securities in Sweden is limited to persons who are “qualified investors” (as defined in the Financial Instruments Trading Act). Only such investors may receive this document and they may not distribute it or the information contained in it to any other person.

The securities may not be publicly offered in Switzerland and will not be listed on the SIX Swiss Exchange (“SIX”) or on any other stock exchange or regulated trading facility in Switzerland. This document has been prepared without regard to the disclosure standards for issuance prospectuses under art. 652a or art. 1156 of the Swiss Code of Obligations or the disclosure standards for listing prospectuses under art. 27 ff. of the SIX Listing Rules or the listing rules of any other stock exchange or regulated trading facility in Switzerland. Neither this document nor any other offering material relating to the securities may be publicly distributed or otherwise made publicly available in Switzerland.

Neither this document nor any other offering material relating to the securities have been or will be filed with or approved by any Swiss regulatory authority. In particular, this document will not be filed with, and the offer of securities will not be supervised by, the Swiss Financial Market Supervisory Authority.

This document is personal to the recipient only and not for general circulation in Switzerland.

Neither the information in this document nor any other document relating to the offer has been delivered for approval to the Financial Services Authority in the United Kingdom and no prospectus (within the meaning of section 85 of the Financial Services and Markets Act 2000, as amended (“FSMA”)) has been published or is intended to be published in respect of the securities. This document is issued on a confidential basis to “qualified investors” (within the meaning of section 86(7) of FSMA) in the United Kingdom, and the securities may not be offered or sold in the United Kingdom by means of this document, any accompanying letter or any other document, except in circumstances which do not require the publication of a prospectus pursuant to section 86(1) FSMA.

This document should not be distributed, published, or reproduced, in whole or in part, nor may its contents be disclosed by recipients to any other person in the United Kingdom.

Any invitation or inducement to engage in investment activity (within the meaning of section 21 of FSMA) received in connection with the issue or sale of the securities has only been communicated or caused to be communicated and will only be communicated or caused to be communicated in the United Kingdom in circumstances in which section 21(1) of FSMA does not apply.

In the United Kingdom, this document is being distributed only to, and is directed at, persons (i) who have professional experience in matters relating to investments falling within Article 19(5) (investment professionals) of the Financial Services and Markets Act 2000 (Financial Promotions) Order 2005 (“FPO”), (ii) who fall within the categories of persons referred to in Article 49 (2)(a) to (d) (high net worth companies, unincorporated associations, etc.) of the FPO, or (iii) to whom it may otherwise be lawfully communicated (together “relevant persons”). The investments to which this document relates are available only to, and any invitation, offer, or agreement to purchase will be engaged in only with, relevant persons. Any person who is not a relevant person should not act or rely on this document or any of its contents.

We estimate that the total expenses of this offering payable by us, excluding the underwriting discounts and commissions, will be approximately $__, as follows:

Legal matters relating to the laws of the United States, will be passed upon for us by McDermott Will & Emery LLP, New York, New York; legal matters relating to Israeli and Gibraltar law will be passed upon for us by Horn & Co. Law Offices, Tel Aviv, Israel, and Hassans International Law Firm, Gibraltar, respectively. Both McDermott Will & Emery LLP and Hassans International Law Firm have provided legal opinions for purposes of Rule 509(b) of Regulation S-K of the Securities Act.

We are incorporated under the laws of Gibraltar. Service of process upon us and upon our directors and officers and the experts named in this registration statement, a substantial majority of whom reside outside of the United States, may be difficult to obtain within the United States. Furthermore, because substantially all of our assets and a substantial majority of our directors and officers are located outside of the United States, any judgment obtained in the United States against us or any of our directors and officers may not be collectible within the United States.

We have been informed by our legal counsel, Hassans International Law Firm, that it may be difficult to assert U.S. securities law claims in original actions instituted in Gibraltar. Firstly, because the Gibraltar court will not have jurisdiction if it considers that the U.S. law being asserted is a penal, public or revenue law. Secondly, because even if the court were to have jurisdiction, it may decline to exercise that jurisdiction on the grounds of forum non conveniens (see above).

In addition, even if a Gibraltar court agrees to hear a claim, it may determine that Gibraltar law (or any other law or jurisdiction) and not U.S. law is applicable to the claim.

If U.S. law is found to be applicable, the content of applicable U.S. law must be proved as a fact by expert witnesses, which can be a time-consuming and costly process. If proceedings were to be brought in Gibraltar, all procedural matters would be governed by Gibraltar law.

A judgment creditor seeking to enforce a US judgment in Gibraltar cannot do so by direct execution of the judgment or pursuant to any registration process. The judgment creditor must therefore bring an action on the foreign judgment at common law and could apply for summary judgment under CPR Part 24 on the ground that the Defendant has no real prospect of successfully defending the claim. If such an application were to succeed, the Defendant would not be allowed to defend the claim at all.

However in order for this to be done, the US judgment would have to be for a debt or definite sum of money (not being a sum payable in respect of taxes or other charges of a like nature or in respect of a fine or other penalty – i.e. not based on a penal, revenue or public law) and must be final and conclusive.

Furthermore, the Gibraltar court must have been satisfied that the US court had jurisdiction over the Defendant according to the Gibraltar rules of private international law (e.g. that the Defendant was present when proceedings were instituted or has submitted to the jurisdiction of the US court – it is not sufficient, for example, that the Defendant possesses property in the US).

The Gibraltar court will also refuse to enforce the US judgment if, inter alia, it would be contrary to Gibraltar public policy; or if the proceedings in the US breached natural justice (e.g. by the Defendant not being properly serviced with process or notice of a hearing); or if the judgment was obtained by fraud.

The Gibraltar court has the power to give judgment for a sum of money expressed in a foreign currency. The judgment will be for payment of the amount of the foreign currency or its sterling equivalent at the time of payment.

The court has the power to award interest on debts or damages for such rate and for such period as it thinks fit. Once judgment is entered in Gibraltar, the judgment debt will carry interest from the date of judgment until the date it is it is satisfied at the rate prescribed in the High Court of England and Wales (currently 8%).

The financial statements as of December 31, 2017 and for the period of inception (September 1, 2017) to December 31, 2017 included in this registration statement have been audited by Kost Forer Gabbay & Kasierer, a member of Ernst & Young Global, an independent registered public accounting firm, as set forth in their report thereon appearing elsewhere herein and are included in reliance upon such report given on the authority of such firm as experts in accounting and auditing. The offices of Kost Forer Gabbay & Kasierer are located at 144 Menachem Begin Street, 6492102 Tel-Aviv, Israel.

We have filed with the SEC a registration statement on Form F-1 under the Securities Act relating to this offering of the INX Tokens. This prospectus does not contain all of the information contained in the registration statement. The rules and regulations of the SEC allow us to omit certain information from this prospectus that is included in the registration statement. Statements made in this prospectus concerning the contents of any contract, agreement, or other document are summaries of all material information about the documents summarized, but are not complete descriptions of all terms of these documents. If we filed any of these documents as an exhibit to the registration statement, you may read the document itself for a complete description of its terms.

You may read and copy the registration statement, including the related exhibits and schedules, and any document we file with the SEC without charge at the SEC’s public reference room at 100 F Street, N.E., Room 1580, Washington, DC 20549. You may also obtain copies of the documents at prescribed rates by writing to the Public Reference Section of the SEC at 100 F Street, N.E., Room 1580, Washington, DC 20549. Please call the SEC at 1-800-SEC-0330 for further information on the public reference room. The SEC also maintains an Internet website that contains reports and other information regarding issuers that file electronically with the SEC. Our filings with the SEC are also available to the public through the SEC’s website at http://www.sec.gov.

Upon completion of this offering, we will be subject to the information reporting requirements of the Exchange Act that are applicable to foreign private issuers, and under those requirements we will be filing reports with the SEC. Those other reports or other information may be inspected without charge at the locations described above. As a foreign private issuer, we are exempt from the rules under the Exchange Act related to the furnishing and content of proxy statements, and our officers, directors, and principal shareholders are exempt from the reporting and short-swing profit recovery provisions contained in Section 16 of the Exchange Act. In addition, we are not required under the Exchange Act to file annual, quarterly, and current reports and financial statements with the SEC as frequently or as promptly as United States companies whose securities are registered under the Exchange Act. However, during any fiscal year that we are subject to the reporting requirements of the Exchange Act, we will file with the SEC, within 120 days after the end of each fiscal year, or such applicable time as required by the SEC, an annual report on Form 20-F containing financial statements audited by an independent registered public accounting firm.

We maintain a corporate website at www.inx.exchange. Information contained on, or that can be accessed through, our website does not constitute a part of this prospectus. We have included our website address in this prospectus solely as an inactive textual reference. We will post on our website any materials required to be posted on such website under corporate or securities regulations, including posting any XBRL interactive financial data required to be filed with the SEC or any other regulatory authority, and any notices of general meetings of our shareholders.

In this prospectus, each of the following quoted terms has the meanings set forth after such term:

“All or nothing” (a/k/a All-or-none (AON)) — A direction given to a broker to buy or sell a security or commodity specifying that the specified order must be executed in its entirety or not at all.

“API” — Application program interface, a set of routines, protocols and tools for building software applications.

“Application” – A software program that runs on a computer and is utilized for a specific purpose (or application).

“Bitcoin” — A type of a blockchain asset based on an open source, math-based protocol existing on the decentralized Bitcoin Network.

“Blockchain” — A shared ledger on a network which is a continuously growing list of records (called “blocks”) which are linked and secured using cryptography.

“Blockchain Asset” — Collectively, all blockchain assets based upon a computer-generated math-based and/or cryptographic protocol that may, among other things, be used to pay for goods and services, entitle the owner to certain rights, or represent other types of assets.

“Blockchain Network” — An online, end-user-to-end-user network hosting the public transaction ledger, known as the blockchain, and the source code comprising the basis for the math-based protocols and cryptographic security governing a Blockchain Network.

“Coin” — See Blockchain Asset. Blockchain assets, coins, and tokens are often used interchangeably. In some contexts, coins may be used to refer to virtual currencies, a category of blockchain assets.

“Consensus algorithm” — A process used to achieve agreement on a single data value among distributed processes or systems. Within blockchain applications, a consensus algorithm is used to ensure that the next block in a blockchain is the one and only version of the truth, and it keeps powerful adversaries from derailing the system and successfully forking the chain. Proof-of-work is the most widely known example of a consensus algorithm.

“Consumptive token” – A blockchain asset which has a consumptive purpose (e.g., as digital consumer goods or services) and is not an investment.

“Digital Signature” — A digital code generated by public key encryption that is attached to an electronically transmitted document to verify its contents and the sender’s identity.

“Digital Wallet” — A file that houses private keys and usually contains a software client which allows access to view and create transactions on a specific blockchain network that the wallet is designed for.

“Distributed Ledger” — A database that is consensually shared and synchronized across a network

“End user” – The person a software application is designed to be used by for its intended purpose.

“ERC20” — A common standard, or set of specifications, for developing blockchain tokens to ensure compatibility with the Ethereum blockchain.

“Ether”— A type of a blockchain asset based on an open-source protocol existing on the Ethereum Network.

“Ethereum” — An open-source, public, blockchain-based distributed computing platform featuring smart contract functionality.

“Fiat Currency” — Currency that a government has declared to be legal tender, but is not backed by a physical commodity. The value of fiat money is derived from the relationship between supply and demand rather than the value of the material that the money is made of.

“Fill or kill” (FOK) — A direction given to a broker to buy or sell a security or commodity in one order to be immediately filled in its entirety. If this is not possible, the order is cancelled.

“ICOs” — Initial Coin Offerings, which are offerings of blockchain assets.

“If done” — A contingent trade order, also known as a slave order, which becomes active only if the primary order is executed first.

“Limit order” — A direction given to a broker to buy or sell a security or commodity at a specified price or better:

“Mining” — is the act of validating blockchain transactions, and is completed by “miners”. The necessity of validation warrants an incentive for the miners, usually in the form of blockchain assets.

“Node” — A device on a blockchain network which supports the network by maintaining a copy of the ledger, and in in certain cases, processing transactions (“mining”).

“Open-source software” — Open source software is software with source code that anyone can inspect, modify, and enhance.

“Peer-to-peer network” — A distributed application architecture that partitions tasks or workloads between peers. Peers are equally privileged, equipotent participants in the application.

“Proof-of-stake” — A consensus distribution algorithm that rewards earnings based on the number of blockchain assets owned. The more you of a blockchain asset that is owned, the more gained by mining with this protocol.

“Proof-of-work” — A consensus distribution algorithm that requires an active role in mining data blocks. The more computational power provided, the more blockchain assets are rewarded.

“Protocol” — The common set of rules and instructions contained in a particular piece of software which allows computers to communicate with each other.

“Public/Private key” — Used in asymmetrical cryptography, a cryptographic system that uses pairs of keys: public keys which may be disseminated widely and used by anyone to encrypt messages intended for a particular recipient, and private keys which are known only to the recipient.

“Smart Contracts” — Self-executing rules in a programmable computer language on the blockchain that are enforced by the participants of the network.

“Source code” — Any collection of computer instructions, possibly with comments, written using a human-readable programming language, usually as plain text, assembled into an executable computer program.

“Token” — See Blockchain Asset. Blockchain assets, coins, and tokens are often used interchangeably. In some contexts, tokens may be used to refer blockchain assets with greater functionality than a medium of exchange or store of value.

“Tokenization” — Tokenization is the process of converting rights to any type of asset into a digital token on a blockchain.

“Virtual currency” — Also known as digital currency or cryptocurrency, a subset of blockchain assets which is a digital representation of value that functions as a medium of exchange, a unit of account, and/or a store of value.

We have audited the accompanying balance sheet of INX Limited (“the Company”) as of December 31, 2017, the related statements of comprehensive loss, changes in equity and cash flows for the period from date of inception (September 1, 2017) to December 31, 2017, and the related notes (collectively referred to as the “financial statements”). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2017, and the results of its operations and its cash flows for the period from date of inception (September 1, 2017) to December 31, 2017, in conformity with International Financial Reporting Standards, as issued by the International Accounting Standard Board.

The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 1c to the financial statements, since date of inception in September 2017, the Company has incurred a loss from operations and as of December 31, 2017, the Company has an accumulated deficit of $637 thousand. The Company has stated that due to these and other factors described in Note 1c substantial doubt exists about the Company’s ability to continue as a going concern. Management’s evaluation of the events and conditions and management’s plans regarding these matters are also described in Note 1c. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.

These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s financial statements based on our audit. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audit, we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion.

Our audit included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audit also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audit provides a reasonable basis for our opinion.

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

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

INX Limited (the “Company”) was incorporated for the purpose of the development and operation of an integrated, regulated platform for trading blockchain assets and their derivatives (“INX Trading”). When fully operational, the INX Trading platform is expected to offer professional traders and other institutional investors, among other things, a trading platform with traditional marketplace practices, supported by a cash reserve. The Company plans to develop the INX Trading platform as a centralized platform that facilitates peer-to-peer professional trading services through a suite of marketplace features and trading products, including the ability to take short positions and trade derivatives such as futures, options, and swaps.

The INX Trading platform will utilize established practices common in other regulated financial services markets, such as customary trading, clearing, and settlement procedures, regulatory compliance, capital and liquidity reserves and operational transparency. As part of the INX decentralized blockchain ecosystem, the Company created the INX Token (the “INX Token”). Of the 200 million INX Tokens that have been created, 130 million INX Tokens will be offered to the public (the “Offering”). After the INX Trading platform is operational, the INX Token can be used to pay INX Trading platform transaction fees at a minimum discount of 10% as compared to the use of other currencies and used as a portion of the collateral deposited for short positions. The Company will sell a portion of INX Tokens it receives as payment of transaction fees in future offerings. Further, the Company will maintain a capital reserve and liquidity fund that will initially be comprised of 35 million INX Tokens not previously sold by the Company to the public (“Capital reserve and liquidity fund”). Additional Tokens will be contributed to the capital reserve and liquidity fund as INX Tokens are received by the Company in payment of INX Trading platform transaction fees, up to an aggregate of 100 million INX Tokens. In addition, 17,373,438 INX Tokens are reserved for issuance to employees, directors, advisors and early investors (of which 7,373,438 Tokens were reserved as of December 31, 2017 and an additional 10 million were reserved through June 2018). Holders of INX Tokens (other than the Company) will also be entitled to receive a pro rata distribution of 20% 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 will be 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 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 at all, on April 30, 2020, based on the Company’s cumulative Adjusted Operating Cash Flow calculated as of December 31, 2019.

The Company was incorporated in Gibraltar on November 27, 2017. Its registered office is located at 57/63 Line Wall Road, Gibraltar. After the INX Trading platform becomes fully operational, the Company intends to relocate its principal office to New York, NY.

The Company’s founding shareholders are Triple-V (1999) Ltd. (“Triple-V”) , and A-Labs Finance and Advisory Ltd. (“A-Labs”), which as of June 30, 2018 own 37.1% and 12.4%, respectively, of the Company’s outstanding ordinary shares.

The consolidated financial statements also reflect that transactions of Triple-V made on behalf of the Company from the date of inception of activities (September 1, 2017).

The Company has incorporated in Delaware a wholly-owned subsidiary, INX Services, Inc., which commenced operation in March 2018. INX Services, Inc. is intended to be registered as a licensed broker-dealer.

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

The accompanying consolidated financial statements have been prepared assuming that the Company will continue as a going concern. Since inception of activities in September 1, 2017, the Company has incurred a loss from operations and as of June 30, 2018, the Company has an accumulated deficit of $2,849. The Company has not yet generated cash from operations and it requires financing resources to support the ongoing operations, particularly development, marketing and operational costs. The Company’s future expenditures and capital requirements will depend on numerous factors, including: the success of the Offering, the progress of the platform’s development efforts and timely launch of the operations of the INX Trading platform.

The Company is dependent upon the funds expected from the Offering to satisfy its working capital requirements in the coming 12 months. If the proceeds from the Offering will be less than the required working capital, or if development and other operating costs will be higher than expected, the Company may need to obtain additional funding to support its operation in the coming 12 months. Furthermore, the Company’s management believes that regardless of the funds from the Offering, it may need additional funding to finance its operations beyond the coming 12 months, until positive cash flows from operations is achieved.

The above factors raise substantial doubt about the Company’s ability to continue as a going concern. The consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty.

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

These consolidated financial statements have been prepared in accordance with International Financial Reporting Standards (“IFRS”), as issued by the International Accounting Standard Board (“IASB”).

These consolidated financial information have been prepared on a cost basis, except for the INX Token and derivative liabilities which are presented at fair value through profit or loss.

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

The consolidated balance sheet at June 30, 2018, and the consolidated statements of comprehensive income and cash flows for the six months ended June 30, 2018 (“the interim consolidated financial information”) are unaudited. The unaudited interim consolidated financial information, in management’s opinion, reflects all adjustments (consisting of only normal recurring adjustments) necessary for a fair presentation. The financial data and the other information related to the six-month period ended June 30, 2018 are not necessarily indicative of the results to be expected for the fiscal year ending December 31, 2018 or any other interim period or for any other future year.

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 intragroup balances and transactions and gains or losses resulting from intragroup transactions are eliminated in full in the consolidated financial statements.

The consolidated financial statements are presented in U.S. dollars, which is also the functional currency of all the entities in the Group, as substantially all of the Group’s expenditures and financing are denominated in U.S. dollars and the U.S. dollar presently best reflects the economic environment in which the Group is expecting to operate.

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 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.

(i) Until December 31, 2017, the Company applied IAS 39, Financial Instruments: Recognition and Measurement, in respect of its financial assets and liabilities, as follows.

Financial liabilities are initially recognized at fair value. Loans and other liabilities measured at amortized cost are presented less direct transaction costs.

After initial recognition, the accounting treatment of financial liabilities is based on their classification as follows:

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.

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

As the amounts distributable to holders of the INX Tokens are indexed to the Company’s adjusted cash flows from operations, the financial liability contains an embedded derivative. The Company views the Company’s operating cash flows as a financial variable, and therefore, the embedded derivative requires bifurcation pursuant to IAS 39. The Company has elected in accordance with IAS39 to designate the entire financial liability (including the embedded derivative) at fair value through profit and loss.

Accordingly, the INX Token liability is remeasured to fair value at the end of each reporting period. The changes in fair value are recognized in profit or loss.

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.

(ii) IFRS 9, Financial Instruments, replaces IAS 39 for annual periods beginning on January 1, 2018, bringing together all three aspects of the accounting for financial instruments: classification and measurement, impairment; and hedge accounting.

Starting January 1, 2018, the Company applied IFRS 9 retrospectively, without adjusting the comparative information, which continues to be reported under IAS 39.

According to IFRS 9, all financial assets of the Group are measured at fair value upon initial recognition. In subsequent periods, these financial assets, which comprise receivables are measured at amortized cost as they are held to collect contractual cash flows and give rise to cash flows representing solely payments of principal and interest.

Financial liabilities at fair value through profit or loss include financial liabilities held for trading and financial liabilities designated upon initial recognition as at fair value through profit or loss. Gains or losses on financial liabilities held for trading, which include derivative financial instruments, are recognized in profit or loss.

According to IFRS 9, changes in the fair value of a financial liability designated as at fair value through profit or loss which are attributable to the change in credit risk of that liability are presented in other comprehensive income. All other changes in fair value of that liability are presented in profit or loss.

The adoption of IFRS 9 had no impact on retained earnings or other components of equity as of January 1, 2018.

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.

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

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.

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 3. The fair values of current financial assets and financial liabilities, other than the INX Token liability, approximate their carrying amounts due to the short-term maturity of these instruments.

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 6. 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.

Research and development 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.

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

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 that it is probable taxable profit will be available against which the deductible temporary differences and the carryforward of unused tax losses can be utilized. The carrying amount of deferred tax assets is reviewed at each reporting date and is reduced to the extent that it is no longer probable that sufficient taxable profit will be available for all or part of the deferred tax asset to be utilized.

As of June 30, 2018, the Company has a carryforward operating loss that approximates the accumulated deficit of the Company in the amount of $2,849. No deferred tax asset has been recorded in respect of the carryforward tax loss due to the uncertainty of its realization.

Basic loss per share is computed by dividing the net loss attributable to equity holders of the Company by the weighted average number of Ordinary shares outstanding during the period. Diluted loss per share is computed by dividing the net loss, as above, after adjustment for interest on the convertible loans by the weighted average number of Ordinary shares outstanding, as above, plus the weighted average number of Ordinary shares that would be issued on conversion of the convertible loans.

For the periods ended June 30, 2018 and December 31, 2017, the effect of the inclusion of the weighted average number of shares of 2,514,734 ordinary shares and 644,833 ordinary shares, respectively, that would have been issued upon the conversion of the Company’s convertible loans, and warrants were anti-dilutive.

The preparation of the consolidated financial statements requires management to make estimates and assumptions that have an effect on the reported amounts of assets, liabilities, revenues and expenses. Changes in accounting estimates are reported in the period of the change in estimate.

The key assumptions made in the 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 within the next financial year are discussed in Note 3.

The new Standard replaces IAS 18, “Revenue”, IAS 11, “Construction Contracts”, IFRIC 13, “Customer Loyalty Programs”, IFRIC 15, “Agreements for the Construction of Real Estate”, IFRIC 18, “Transfers of Assets from Customers” and SIC-31, “Revenue - Barter Transactions Involving Advertising Services”. The new Standard introduces a five-step model that will apply to revenue earned from contracts with customers.

The Group applied the new Standard beginning on January 1, 2018. As the Group has not yet recorded any revenues, the adoption of the Standard did not have any effect on the Company’s financial statements.

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

The number of INX Tokens that the Company has an obligation to issue as of June 30, 2018 and December 31, 2017 is as follows:

The fair value of each INX Token as of June 30, 2018, and as of December 31, 2017 was $0.0203 and $0.0044, respectively. The fair values were determined by management and the board of directors based on valuations derived from the following (i) as of June 30, 2018 - from a third party share purchase agreement in April – May 2018 and (ii) as of December 31, 2017 – from a third party draft share and token purchase agreement. Key assumptions include an underlying comparison of the shareholder’s and INX Token holder’s participation rights in the Company’s earning distribution. The level in the fair value hierarchy is level 2.

There is currently no trading market for the INX Token. If such a trading market were to develop, the fair value of the INX Token liability will be subject to fluctuations due to changes in market prices (market risk). The market price of the INX Token may be volatile due to a number of factors, including fluctuations in the Company’s results of operations and macro-economic factors.

In the six months ended June 30, 2018, and in the period from date of inception through December 31, 2017, the re-measurement to fair value of the INX Token liability in respect of INX Tokens resulted in an expense of $297 and $50 (unrealized loss), respectively, which were recorded in profit or loss.

The change 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.

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

The Company entered into convertible loan agreements dated November 27, 2017 (“Convertible Loans”) with three individuals, of which one is an officer of the Company (the “Lenders”), for an aggregate amount of $144. The loans are convertible at any time and at each Lender’s sole discretion, into an aggregate total of 956,333 ordinary shares of the Company, or repaid at the earlier of (i) the lapse of five years; (ii) an initial public offering of the Company’s shares or a security token or (iii) upon a Deemed Liquidation Event as defined in the Company’s Articles of Association. The loans bear 2% interest compounded annually. In addition, the Lenders were granted the right to purchase a total of 2,690,623 INX Tokens.

During the six months period ended June 30, 2018, and during the period from inception to December 31, 2017, the Company received $47 and $97, respectively, in consideration for the convertible loans and INX Tokens, of which $1 and $4, respectively were attributed to the fair value of the INX Tokens. The fair value of the loans received during the periods ended June 30, 2018 and December 31, 2017, amounted to $31 and $62, respectively, resulting in an effective interest rate of 60% and the balances of $15 and $31, respectively, were attributed to the conversion option, which was recorded in equity. Interest and amortization of discount on the convertible loans for the periods ending June 30, 2018 and December 31, 2017, amounted to $6 and $1, respectively.

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

In the period from inception (September 2017) through June 30, 2018, ordinary shares of the Company were issued and outstanding as follows:

As of December 31, 2017, there were 282,833 ordinary shares issued and held by a Trustee on behalf of the Company. These shares were deemed to be not outstanding. As part of the equity investment in January and February 2018, the Company issued the said shares to one of the New Investors.

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

Ordinary shares confer upon their holders rights to receive dividends in cash and in Company’s shares, rights to nominate the Company’s directors and rights to participate in distribution of dividends upon liquidation in proportion to their holdings. The Company has caused current shareholders who hold approximately 78% of its issued share capital, and shall cause its future shareholders, to enter an agreement, pursuant to which such shareholders (i) irrevocably subordinate their rights to receive any distributions and payments from the Company prior to the payment in full by the Company of all distributions owed to INX Token holders, and (ii) irrevocably waive and subordinate their rights, in the event of an insolvency event, as defined in the INX Token Purchase Agreement, to any cash held in the cash reserve fund. All ordinary shares issued and outstanding have identical rights, including identical voting rights, in all respects.

On December 29, 2017, the Company’s board of directors approved a resolution to reserve 417,000 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 of directors may approve from time to time. As of June 30, 2018, no Stock Option Plan has been adopted.

During 2017, the Company issued ordinary shares to certain employees and service providers in consideration for services to be provided to the Company (see Note 6a).

The fair value of the ordinary share was determined at $0.156 per share as of the date of grant. The fair value of the ordinary shares was derived from the total consideration paid by the Company’s founding shareholder for INX Tokens and Ordinary shares issued to him upon the establishment of the Company. Key assumptions include an underlying comparison of the shareholder’s and INX Token holder’s participation rights in the Company’s earning distribution.

The expenses recognized in the consolidated financial statements for employees and services providers are shown in the following table:

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

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 :

Under an engagement agreement dated September 26, 2017, as amended in December 2017 and January 31, 2018 (the “A-Labs Agreement”), A-Labs, a shareholder of the Company, shall provide services to the Company which include, among others, development, planning, management, execution, branding and marketing outside of the US with relation to the Offering of the INX Tokens on behalf of the Company. In consideration for these services, A-Labs received a non-refundable, cash payment of $500 and will receive a contingent cash payment of $500 payable upon the completion of an offering in which the Company has raised from US Persons not less than $10,000. A-Labs also will receive an additional contingent cash payment for the marketing and sale of INX Tokens to non-US Persons only. Such consideration shall be equal to: 10% of the first $30,000 (up to $3,000) in ICO Proceeds (as defined in the A-Labs Engagement Agreement); 5% of the next $70,000 (up to $3,500) in ICO Proceeds; 6% of the next $100,000 (up to $6,000) in ICO Proceeds; and 7.5% of ICO Proceeds in excess of $200,000.

A-Labs also received a grant of 4,550,000 INX Tokens at a fair value of $6, subject to a repurchase option by the Company, under which the Company is entitled to repurchase INX Tokens for $0.01 per Token. In addition, pursuant to an agreement signed contemporaneously with the A-Labs Agreement, the Company issued 1,120,000 ordinary shares to A-Labs. The fair value of the ordinary shares issued amounting to $136 ($175 less the payment of $39 required for those shares), is deemed additional consideration for the services to be provided by A-Labs.

In September 2017, the total consideration in the A-Labs Agreement amounted to $681. This amount is comprised of cash of $500, INX Tokens with a fair value of $6 and ordinary shares with a fair value of $175. A-Labs contributed $45 ($6 for the INX Tokens and $39 for the ordinary shares), such that the consideration in excess of the amount contributed amounted to $636. As the A-Labs Agreement required A-Labs to provide these services in the future, upon initial recognition this amount of $636 was recorded as prepaid expenses.

The fair value of the INX Tokens and of the ordinary shares was derived from the total consideration paid by the Company’s founding shareholder for INX Tokens and ordinary shares issued to him upon the establishment of the Company. Key assumptions include an underlying comparison of the shareholder’s and INX Token holder’s participation rights in the Adjusted Operating Cash Flow.

For the period from the date of the A-Labs Agreement in September 2017 through December 31, 2017 and for the six months period ended June 30, 2018, the Company recognized compensation expense of $119 and $199, respectively, which reduced the balance of prepaid expenses to $517 and $318, respectively. The compensation expense recognized was based on the extent of the services performed until the respective dates.

As of December 31, 2017, and June 30, 2018, an accrual for the contingent cash payment of $500 and the additional contingent cash payments which are dependent on completion of the Offering as described above, was not recorded in the balance sheet due to the uncertainty of the payments.

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

Under the Software Services Agreement, effective as of October 1, 2017, and as amended on May 9, 2018, June 27, 2018 and August 6, 2018 (the “Y. Singer Agreement”), between the Company and Y. Singer, Y. Singer shall provide services to the Company in respect of the design, development, implementation, modification and customization of the INX Trading platform software. In addition, Y. Singer will provide maintenance and support services for a three month period to the INX Trading platform with a renewal option. In consideration for these services, Y. Singer is entitled to approximately $500. In consideration for past services, Y. Singer was also granted in May 2018 a warrant to purchase 68,173 ordinary shares of the Company at an exercise price equal to the par value per share of GBP 0.001 exercisable for a period of 48 months from the date the warrants were granted. Upon issuance of these warrants, the Company recorded compensation expense of $71 in the six months period ended June 30, 2018 based upon the fair value of the ordinary shares at that date.

Certain individuals are entitled to receive a one-time bonus in the aggregate amount of $200 six months following the date the registration statement is declared effective by the SEC in connection with an initial public offering of INX Tokens in which a certain minimum amount is raised.

In connection with the appointment of Mr. Silbert as the Executive Managing Director of INX Services, Inc., Mr. Silbert entered into an Executive Employment Agreement with INX Services, Inc. dated March 7, 2018, and subsequently amended on June 25, 2018, (the “Silbert Employment Agreement”), pursuant to which Mr. Silbert will provide services to INX Services, Inc. and the Company, including that Mr. Silbert shall serve as a member of the Board of Directors of the Company and Executive Managing Director of U.S. Operations of INX Services, Inc. Pursuant to the Silbert Employment Agreement, Mr. Silbert will receive an annual base salary of $132.

Six months following the date the registration statement in connection with an initial public offering of INX Tokens is declared effective by the SEC, Mr. Silbert shall be eligible to earn an annual performance-based bonus in the amount of $150 upon the achievement of certain performance-based targets which shall be established by the Board of Directors and shall also be granted an option to purchase 500,000 INX Tokens at a price of $0.01 per Token, which option must be exercised within ninety days of the grant. Six months following the date the registration statement in connection with an initial offering of INX Tokens is declared effective by the SEC, Mr. Silbert’s base salary shall increase to a monthly rate of $20.

In addition, upon and subject to the adoption of a Share Ownership and Option Plan by the Company, Mr. Silbert shall receive an option to purchase 287,290 ordinary shares of the Company constituting 3% of the share capital of the Company on a fully diluted basis at the date of the Silbert Employment Agreement, at a price per share equal to the fair value per share at the grant date, which will be the date of the adoption of a Share Ownership and Option Plan. 25% of the option shares will vest upon each anniversary of Mr. Silbert’s employment with INX Services. See Note 7c for further details.

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

In connection with the appointment of Mr. James Crossley as a member of the Company’s Board of Directors, the Company entered into a Services Agreement with Bentley Limited (the “Bentley Services Agreement”), effective as of February 1, 2018, pursuant to which Bentley Limited will provide services to the Company including that James Crossley shall serve as a board member of the Company. Pursuant to the Bentley Services Agreement, Bentley will receive a monthly consulting fee of GBP 1,600. In addition, Bentley will receive the option to purchase 10,000 INX Tokens per month at the price of $0.01 per Token, subject to a maximum of 100,000 INX Tokens. As of June 30, 2018, Bentley is entitled to receive 50,000 INX Tokens. In addition, commencing as of January, 2018, Bentley receives a fee of GBP 1,000 + VAT per month in consideration for administrative services.

On April 23, 2018 the Company and INX Services, Inc. entered into a services agreement with Fidelis LLC, effective as of April 1, 2018 and as amended on June 25, 2018, pursuant to which Mr. Matt Rozzi shall serve as the Chief Operating Officer and Chief Compliance Officer of INX Services, Inc. Mr. Rozzi will receive a monthly fee of $12.5. In addition, upon the registration of INX Services as a broker-dealer with FINRA, Mr. Rozzi shall be granted a one-time cash bonus of $60.

It is intended that Mr. Rozzi will enter into an employment agreement with INX Services, Inc. six months following the date the registration statement in connection with an initial public offering of INX Tokens is declared effective by the SEC. Pursuant to this agreement, Mr. Rozzi will receive a monthly salary in the amount of $25 and benefits appropriate to an executive level employee. Mr. Rozzi shall also receive additional bonus payments of up to $90 upon to the achievement of certain performance targets and objectives as determined by the board of directors of the Company. Six months following the date the registration statement in connection with an initial public offering of INX Token is declared effective by the SEC, Mr. Rozzi will receive an option to purchase 350,000 INX Tokens at a price per Token of $0.01.

In addition, upon and subject to the adoption of a Share Ownership and Option Plan by the Company, the Company will grant Mr. Rozzi an options to purchase 48,122 shares constituting 0.5% of the share capital of the Company as of April 23, 2018 (on a fully diluted basis and subject to future dilution) with an exercise price per share equal to the fair value of the Company’s share at the grant date, which will be the date of the adoption of a Share Ownership and Option Plan. 25% of the options will vest upon on each anniversary of Mr. Rozzi’s employment with INX Services. See Note 7b for further details.

On March 21, 2018, as amended on June 25, 2018, the Company appointed Mr. David Weild as a member of the board of directors of the Company, effective as of April 15, 2018. Mr. Weild will receive a monthly fee of $1.5. Six months following the date the registration statement in connection with an initial public offering of INX Tokens is declared effective by the SEC, Mr. Weild shall receive an option to purchase 350,000 INX Tokens at a price of $0.01 per Token and shall be entitled to purchase 3,500 INX Tokens at a price of $0.01 per Token on a monthly basis during his tenure as director.

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

Until and including ____, 2018 (40 days after the date of this prospectus), all dealers that buy, sell or trade our INX Tokens, whether or not participating in this offering, may be required to deliver a prospectus. This is in addition to the dealers’ obligation to deliver a prospectus when acting as underwriters and with respect to their unsold allotments or subscriptions.

The following is a summary of transactions during the three years preceding this offering, involving offers and sales of our securities which were not registered under the Securities Act.

As of June 30, 2018 we have issued 9,044,276 ordinary shares of the Company, par value of GBP 0.001 (each, an “Ordinary Share”).

On December 29, 2017, 1,120,000 ordinary shares were issued to A-Labs Finance and Advisory Ltd.

On December 29, 282,833 shares were issued to INX Systems Ltd., as Trustee for INX Limited.

Under a Share Purchase Agreement dated September 27, 2017 between the Company and Benjamin Engel, the Company issued to Mr. Engel 31,500 of our Ordinary Shares, par value GBP 0.001 each, in consideration for GBP 31.50.

Under a Share Purchase Agreement dated September 27, 2017 between the Company and Mark Finelli, the Company issued to Mr. Finelli 31,500 of our Ordinary Shares, par value GBP 0.001 each, in consideration for GBP 31.50.

Under a Share Purchase Agreement dated January 11, 2018 (as amended on June 12, 2018) between the Company and Yitshak Rafaeli, the Company issued to Mr. Rafaeli 747,632 of our Ordinary Shares, par value GBP 0.001 each, in consideration for $293,000.

Under a Share Purchase Agreement dated January 11, 2018 (as amended on June 12, 2018) between the Company and Meni Benish, the Company issued to Mr. Benish 446,538 of our Ordinary Shares, par value GBP 0.001 each, in consideration for $175,000.

Under a Share Purchase Agreement dated January 24, 2018 between the Company and Etty Trister, the Company issued to Ms. Trister 63,791 f our Ordinary Shares, par value GBP 0.001 each, in consideration for $25,000.

Under a Share Purchase Agreement dated February 5, 2018 (as amended on June 12, 2018) between the Company and Our Platform LLC a Company wholly owned by Eli Alelov, the Company issued to Our Platform LLC 510,329 of our Ordinary Shares, par value GBP 0.001 each, in consideration for $200,000.

On May 22, 2018, the Board of Directors of the Company approved the issuance of an aggregate number of 2,358,820 Ordinary Shares par value GBP 0.001 each, in consideration for an aggregate amount of $2,462,610, which was invested by the following investors in accordance with the allocation set forth below:

Under a Share Purchase Agreement dated September 27, 2018 between the Company and SPiCE Venture Capital Pte. Ltd a limited Company incorporated in Singapore, the Company issued to SPiCE 478,927 of our Ordinary Shares, par value GBP 0.001 each, in consideration for $500,000 and an option to purchase additional 622,605 Ordinary Shares at an identical price per share to be paid in US$ or SPiCE Tokens, under such terms as further described in the Share Purchase Agreement between the Company and SPiCE.

Under a Share Purchase Agreement dated September 27, 2018 between the Company and Ayal Rosner Investment Company Ltd. a Company wholly owned by Eyal Rosner, the Company issued to Rosner 95,785 of our Ordinary Shares, par value GBP 0.001 each, in consideration for $100,000.

Under a Warrant Certificate dated January 11, 2018 between the Company and Yitshak Rafaeli, Mr. Rafaeli is entitled to purchase up to 1,090,254 of our Ordinary Shares at an exercise price of $0.13465 per share. The warrants will expire upon the earlier of a merger or acquisition of the Company, or nine months from the date of the Warrant Certificate.

Under a Warrant Certificate dated January 11, 2018 between the Company and Meni Benish, Mr. Benish is entitled to purchase up to 557,010 of our Ordinary Shares at an exercise price of $0.13465 per share. The warrants will expire upon the earlier of a merger or acquisition of the Company, or nine months from the date of the Warrant Certificate.

Under a Loan Agreement, dated November 27, 2017, between the Company and Ms. Naor, our VP Product, is entitled, at any time and at her sole discretion, to convert outstanding principal and interest amounts of the loan agreement into 333,333 Ordinary Shares.

Under a Loan Agreement dated November 27, 2017 between the Company and Ms. Ayelet Horn, Ms. Horn is entitled, at any time and at her sole discretion, to convert the amount of outstanding principal and interest into 311,500 ordinary shares of the Company.

Under a Loan Agreement dated November 27, 2017 between the Company and Mr. Yaniv Segev, Mr. Segev is entitled, at any time and at his sole discretion, to convert the amount of outstanding principal and interest into 311,500 ordinary shares of the Company.

Under the Software Services Agreement dated October 1, 2017, as amended on May 9, 2018 and June 27, 2018 (the “Committed Agreement”) between the Company and Committed, the Company granted Committed an option to purchase 1.5% of the Company’s share capital, on an issued basis as of October 31, 2017 at an exercise price of $0.01 per share, subject to the adoption of an option plan by the Company and the approval of the Company’s Board of Directors in consideration of services related to the design, development, implementation, modification and customization of exchange software required for our INX Trading platform. See “Material Agreements”.

Under an Executive Employment Agreement dated March 7, 2018, as amended on June 25, 2018, between INX Services, Inc. and Alan Silbert, Mr. Silbert shall receive an option to purchase Ordinary Shares of the Company constituting 3% of the share capital of the Company on a fully diluted basis, at a price per share equal to the fair market value per share upon and subject to the adoption of a Share Ownership and Option Plan by the Company. 25% of the option shares will vest upon each anniversary of Mr. Silbert’s employment with INX Services, such that the options will be fully vested and exercisable upon the 4^th anniversary of such employment. Unvested options shall be subject to accelerated vesting upon change of control of the Company.

Under the Services Agreement with Fidelis LLC, dated April 1, 2018, as amended on June 25, 2018, in connection with the operation and compliance consulting services of Mr. Matt Rozzi, Mr. Rozzi shall receive an option to purchase Ordinary Shares of the Company constituting 0.5% of the share capital of the Company on a fully diluted basis as of April 1, 2018, at a price per share equal to the fair market value per share upon and subject to the adoption of a Share Ownership and Option Plan by the Company. 25% of the option shares will vest upon each anniversary of Mr. Rozzi’s engagement with the Company, such that the options will be fully vested and exercisable upon the 4^th anniversary of such engagement. See “Material Agreements.”

Under the Consulting Agreement with Shay Laboratory Ltd., dated October 1, 2017, in connection with the services of Mr. Or Kaplinsky, Shay Laboratory Ltd. shall receive an option to purchase 28,010 Ordinary Shares of the Company, at a price per share equal to the par value per share upon and subject to the adoption of a Share Ownership and Option Plan by the Company. Such option is contingent upon raise of $3,000,000 in a public offering of INX Tokens. See “Material Agreements”.

Under the Amended and Restated Software Services Agreement with Committed, dated May 9, 2018, Committed shall receive a warrant to purchase 68,173 Ordinary Shares of the Company, at a price per share equal to the par value per share. See “Material Agreements”.

Under a Subscription Agreement dated September 27, 2018 between the Company and SPiCE Venture Capital Pte. Ltd, a private limited liability company incorporated in Singapore, SPiCE shall receive a warrant to purchase 622,605 Ordinary Shares of the Company, at a price of US$ 1.044 per share to be paid in US$ or SPiCE Tokens, under such terms as further described in the Subscription Agreement between SPiCE and the Company.

Under the Share Purchase Agreement dated September 26, 2017 between the Company and Triple-V, the Company sold to Triple-V 9,435,939 INX Tokens at a price of $0.01 per Token.

Under the A-Labs Agreement between the Company and A-Labs, a limited liability company registered under the laws of the state of Israel, the Company granted 4,550,000 INX Tokens in consideration of services provided and to be provided by A-Labs. The grant of INX Tokens is subject to a repurchase option by the Company, under which the Company is entitled to repurchase INX Tokens for $0.01 per Token. Subsequent to entry into the A-Labs Engagement Agreement, the Company unilaterally waived its rights to exercise the repurchase option in the applicable restricted period pursuant to Regulation M. See “Material Agreements”.

Under the Convertible Loan Agreement dated November 27, 2017 between the Company and Ms. Maia Naor, the Company sold 937,499 INX Tokens to Ms. Naor at a price of $0.01 per Token, for an aggregate purchase price of $9,375.

Under the Convertible Loan Agreement dated November 27, 2017 between the Company and Ms. Ayelet Horn, the Company sold 876,562 INX Tokens to Ms. Horn at a price of $0.01 per Token, for an aggregate purchase price of $8,766.

Under the Convertible Loan Agreement dated November 27, 2017 between the Company and Mr. Yaniv Segev, the Company sold 876,562 INX Tokens to Mr. Segev at a price of $0.01 per Token, for an aggregate purchase price of $8,766.

Under the Share Purchase Agreement dated September 27, 2017 between the Company and Mr. Jonathan Azeroual, the Company sold 750,000 INX Tokens to Mr. Azeroual at a price of $0.01 per Token, for an aggregate purchase price of $7,500.

Under the Share Purchase Agreement dated September 27, 2017 between the Company and Benjamin Engel, the Company sold 100,000 INX Tokens to Mr. Engel at a price of $0.01 per Token, for an aggregate purchase price of $1,000.

Under the Share Purchase Agreement dated September 27, 2017 between the Company and Mark Finelli, the Company sold 100,000 INX Tokens to Mr. Finelli at a price of $0.01 per Token, for an aggregate purchase price of $1,000.

Under the Share Purchase Agreement dated January 11, 2018, as amended on June 12, 2018, between the Company and Yitshak Rafaeli, the Company sold to Mr. Rafaeli: (i) 293,000 INX Tokens; plus (ii) a number of INX Tokens to be determined by the price per Token in this Offering, but will not exceed 2% of the total number of INX Tokens issued at the time of this Offering.

Under the Share Purchase Agreement dated January 11, 2018, as amended on June 12, 2018, between the Company and Meni Benish, the Company sold to Mr. Benish: (i) 175,000 INX Tokens; plus (ii) a number of INX Tokens to be determined by the price per Token in this Offering, but will not exceed 2% of the total number of INX Tokens issued at the time of this Offering.

Under the Share Purchase Agreement dated January 24, 2018 between the Company and Etty Trister, the Company issued to Ms. Trister a number of INX Tokens to be determined by the price per Token in this Offering, but will not exceed 2% of the total number of INX Tokens issued at the time of this Offering.

Under the Share Purchase Agreement dated February 5, 2018, as amended on June 12, 2018, between the Company and Our Platform LLC a Company wholly owned by Eli Alelov, the Company sold to Our Platform: (i) 600,000 INX Tokens; plus (ii) a number of INX Tokens to be determined by the price per Token in this Offering, but will not exceed 2% of the total number of INX Tokens issued at the time of this Offering.

Under a Services Agreement dated March 8, 2018 between the Company and Bentley Limited, the Company has granted Bentley an option to purchase 10,000 INX Tokens per month at the price of $0.01 per Token, subject to a maximum of 60,000 INX Tokens. Such option to purchase INX Tokens shall lapse on the first of the month during which the Company raises $10,000,000 in a public offering of INX Tokens.

Under the Consulting Agreement with Shay Laboratory Ltd., dated October 1, 2017, in connection with the services of Mr. Or Kaplinsky, the Company has granted Shay Laboratory Ltd. an option to purchase INX Tokens equaling in the aggregate 0.1% of the registered INX Tokens which were not sold at the ICO or otherwise were distributed by the Company to any third party, at the price of $0.01 per Token. Provided that, such number of INX Tokens shall not exceed 100,000 and shall not be less than 15,000. Such option is contingent upon raise of $3,000,000 in a public offering of INX Tokens. See “Material Agreements”.

Under the Services Agreement with Fidelis LLC, dated April 1, 2018, in connection with the services of Mr. Matt Rozzi, the Company has granted Mr. Rozzi an option to purchase 350,000 INX Tokens, at the price of $0.01 per Token. Such option shall enter into effect following and subject to lapse of six months following the effective date of the registration statement in connection with this Offering. See “Material Agreements”.

Under the Invitation to serve as a Member of the Board of Directors of INX Ltd., dated March 28, 2018, in connection with the services of Directorship services of Mr. David Weild, the Company has granted Mr. Weild an option to purchase 350,000 INX Tokens, at the price of $0.01 per Token and a monthly Token fee of 3,500 Tokens per month. Such option and monthly Token fee shall enter into effect following and subject to lapse of six months following the effective date of the registration statement in connection with this Offering. See “Material Agreements”.

Under the Invitations to Serve as Members of the Advisory Board of INX Limited which was entered by the Company during March and April 2018, the Company has granted to the following members of the Advisory Board options to purchase an aggregate number of 1,600,000 INX Tokens, at the price of $0.01 per Token, in accordance with the allocation set forth below:

Such options are contingent upon the lapse of 6 months as of the effective date of the offering. See “Material Agreements”.

(1) To file, during any period in which offers or sales are being made, a post-effective amendment to this registration statement:

i. To include any prospectus required by section 10(a)(3) of the Securities Act of 1933;

ii. To reflect in the prospectus any facts or events arising after the effective date of the registration statement (or the most recent posteffective amendment thereof) which, individually or in the aggregate, represent a fundamental change in the information set forth in the registration statement. Notwithstanding the foregoing, any increase or decrease in volume of securities offered (if the total dollar value of securities offered would not exceed that which was registered) and any deviation from the low or high end of the estimated maximum offering range may be reflected in the form of prospectus filed with the Commission pursuant to Rule 424(b) if, in the aggregate, the changes in volume and price represent no more than 20% change in the maximum aggregate offering price set forth in the “Calculation of Registration Fee” table in the effective registration statement;

iii. To include any material information with respect to the plan of distribution not previously disclosed in the registration statement or any material change to such information in the registration statement.

(2) That, for the purpose of determining any liability under the Securities Act of 1933, each such posteffective amendment shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof.

(3) To remove from registration by means of a posteffective amendment any of the securities being registered which remain unsold at the termination of the offering.

(4) To file a post-effective amendment to the registration statement to include any financial statements required by Item 8.A. of Form 20-F at the start of any delayed offering or throughout a continuous offering. Financial statements and information otherwise required by Section 10(a)(3) of the Act need not be furnished, provided that the registrant includes in the prospectus, by means of a post-effective amendment, financial statements required pursuant to this paragraph (a)(4) and other information necessary to ensure that all other information in the prospectus is at least as current as the date of those financial statements. Notwithstanding the foregoing, with respect to registration statements on Form F-3, a post-effective amendment need not be filed to include financial statements and information required by Section 10(a)(3) of the Act or Rule 3-19 of this chapter if such financial statements and information are contained in periodic reports filed with or furnished to the Commission by the registrant pursuant to section 13 or section 15(d) of the Securities Exchange Act of 1934 that are incorporated by reference in the Form F-3.

(5) That, for the purpose of determining liability under the Securities Act of 1933 to any purchaser:

A. Each prospectus filed by the registrant pursuant to Rule 424(b)(3) shall be deemed to be part of the registration statement as of the date the filed prospectus was deemed part of and included in the registration statement; and

B. Each prospectus required to be filed pursuant to Rule 424(b)(2), (b)(5), or (b)(7) as part of a registration statement in reliance on Rule 430B relating to an offering made pursuant to Rule 415(a)(1) (i), (vii), or (x) for the purpose of providing the information required by section 10(a) of the Securities Act of 1933 shall be deemed to be part of and included in the registration statement as of the earlier of the date such form of prospectus is first used after effectiveness of the date of the first contract or sale of securities in the offering described in the prospectus. As provided in Rule 430B, for liability purposes of the issuer and any person that is at that date an underwriter, such date shall be deemed to be a new effective date of the registration statement relating to the securities in the registration statement to which that prospectus relates, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof. Provided, however, that no statement made in a registration statement or prospectus that is part of the registration statement or made in a document incorporated or deemed incorporated by reference into the registration statement or prospectus that is part of the registration statement will, as to a purchaser with a time of contract sale prior to such effective date, supersede or modify any statement that was made in the registration statement or prospectus that was part of the registration statement or made in any such document immediately prior to such effective date; or

ii. If the registrant is subject to Rule 430C, each prospectus filed pursuant to Rule 424(b) as part of a registration statement relating to an offering, other than registration statements relying on Rule 430B or other prospectuses filed in reliance on Rule 430A, shall be deemed to be part of and included in the registration statement as of the date it is first used after effectiveness. Provided, however, that no statement made in a registration statement or prospectus that is part of the registration statement or made in a document incorporated or deemed incorporated by reference into the registration statement or prospectus that is part of the registration statement will, as to a purchaser with a time of contract of sale prior to such first use, supersede or modify any statement that was made in the registration statement or prospectus that was part of the registration statement or made in any such document immediately prior to such date of first use.

(6) That, for the purpose of determining liability of the registrant under the Securities Act of 1933 to any purchaser in the initial distribution of the securities, the undersigned registrant undertakes that in a primary offering of securities of the undersigned registrant pursuant to this registration statement, regardless of the underwriting method used to sell the securities to the purchaser, if the securities are offered or sold to such purchaser by means of any of the following communications, the undersigned registrant will be a seller to the purchaser and will be considered to offer or sell securities to such purchaser:

i. Any preliminary prospectus or prospectus of the undersigned registrant relating to the offering required to be filed pursuant to Rule 424;

ii. Any free writing prospectus relating to the offering prepared by or on behalf of the undersigned registrant or used or referred to by the undersigned registrant;

iii. The portion of any other free writing prospectus relating to the offering containing material information about the undersigned registrant or its securities provided by or on behalf of the undersigned registrant; and;

iv. Any other communication that is an offer in the offering made by the undersigned registrant to the purchaser;

(1) For purposes of determining any liability under the Securities Act of 1933, the information omitted from the form of prospectus filed as part of this registration statement in reliance upon Rule 430A and contained in a form of prospectus filed by the registrant pursuant to Rule 424(b) (1) or (4) or 497(h) under the Securities Act shall be deemed to be part of this registration statement as of the time it was declared effective.

(2) For the purpose of determining any liability under the Securities Act of 1933, each post-effective amendment that contains a form of prospectus shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof.

Pursuant to the requirements of the Securities Act of 1933, the registrant certifies that it has reasonable grounds to believe that it meets all of the requirements for filing on Form F-1 and has duly caused this registration statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of , State of , on , 2018.

The undersigned officers and directors of INX Limited hereby constitute and appoint Shy Datika and Oran Mordechai, and each of them singly, with full power of substitution, our true and lawful attorneys-in-fact and agents to take any actions to enable the Company to comply with the Securities Act, and any rules, regulations, and requirements of the SEC, in connection with this registration statement on Form F-1, including the power and authority to sign for us in our names in the capacities indicated below any and all further amendments to this registration statement and any other registration statement filed pursuant to the provisions of Rule 462 under the Securities Act.

Pursuant to the requirements of the Securities Act of 1933, this registration statement has been signed by the following persons in the capacities and on the dates indicated.

Pursuant to the Securities Act of 1933, as amended, the undersigned, the duly authorized representative in the United States of INX Limited, has signed this registration statement on __, 2018.

Gibraltar	6200	Not Applicable
(State or other jurisdiction of	(Primary Standard Industrial	(I.R.S. Employer
incorporation or organization)	Classification Code Number)	Identification No.)

Title of each class of securities to be registered		Amount to be registered				Proposed maximum offering price per Token(2)				Proposed maximum aggregate offering price(2)				Amount of registration fee(3)
INX Token (1)			130,000,000			$				$				$

	Per Token		Total Minimum		Total Maximum
Initial public offering price	$		$	5,000,000	$
Underwriter’s discounts and commissions⁽¹⁾⁽²⁾	$	-	$	500,000	$	-
Net Proceeds to us (before expenses)	$		$	4,500,000	$

Use	$5 Million		%		$9 Million		%		$18 Million		%
Research & Development	$	1,650,000		33.0	$	2,200,000		24.4	$	10,000,000		55.6
Sales & Marketing	$	1,100,000		22.0	$	3,300,000		36.7	$	4,000,000		22.2
Regulatory & Legal	$	1,250,000		25.0	$	1,750,000		19.4	$	2,250,000		12.5
Admin & Payroll	$	750,000		15.0	$	1,500,000		16.7	$	1,500,000		8.3
Minimum Net Capital Requirement of Broker-Dealer	$	250,000		5.0	$	250,000		2.8	$	250,000		1.4
TOTAL	$	5,000,000			$	9,000,000			$	18,000,000

(U.S, Dollars in thousands except share and per share data)	June 30, 2018 (unaudited)			As Adjusted for the Offering (minimum)	As adjusted for the Offering (maximum)
Total liabilities		1,121
Equity:
Ordinary shares of GBP 0.001 par value - Authorized: 100,000,000 shares; Issued: 5,199,999 and 9,044,276 as of December 31, 2017 and June 30, 2018 (unaudited), respectively; Outstanding: 4,917,166 and 9,044,276 as of December 31, 2017 and June 30, 2018 (unaudited), respectively		13
Share premium		4,015
Receivable on account of shares		(78	)
Conversion option of convertible loan		46
Accumulated deficit		(2,849	)
Total equity		1,147
Total liabilities and equity	$	2,268

PROSPECTUS SUMMARY		1
RISK FACTORS		12
CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS		32
USE OF PROCEEDS		33
CAPITALIZATION		34
DILUTION		35
SELECTED FINANCIAL DATA		36
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS		37
BUSINESS		41
MANAGEMENT		62
CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS		73
PRINCIPAL SHAREHOLDERS		76
DESCRIPTION OF OUR MEMORANDUM AND ARTICLES OF ASSOCIATION		79
DESCRIPTION OF INX TOKENS		83
TOKENS ELIGIBLE FOR FUTURE SALE		88
CERTAIN UNITED STATES FEDERAL INCOME TAX CONSEQUENCES		90
PLAN OF DISTRIBUTION		92
EXPENSES RELATED TO THIS OFFERING		99
LEGAL MATTERS		99
ENFORCEABILITY OF CIVIL LIABILITIES		99
EXPERTS		100
WHERE YOU CAN FIND MORE INFORMATION		100
GLOSSARY OF DEFINED TERMS		101
INDEX TO FINANCIAL STATEMENTS		F-1

	●	Global blockchain asset supply;

	●	Global blockchain asset demand, which can be influenced by the growth of retail merchants’ and commercial businesses’ acceptance of blockchain assets like virtual currencies as payment for goods and services, the security of online blockchain asset trading platforms and digital wallets that hold blockchain assets, the perception that the use and holding of blockchain assets is safe and secure, and the regulatory restrictions on their use;

	●	Changes in the software, software requirements or hardware requirements underlying the blockchain networks;

	●	Changes in the rights, obligations, incentives, or rewards for the various participants in blockchain networks;

	●	The cost of trading and transacting in blockchain assets, and whether such costs may become fixed or standardized;

	●	Investors’ expectations with respect to the rate of inflation;

	●	Interest rates;

	●	Currency exchange rates, including the rates at which blockchain assets may be exchanged for fiat currencies;

	●	Fiat currency withdrawal and deposit policies of blockchain asset trading platforms and liquidity on such platforms;

	●	Interruptions in service or other failures of major blockchain asset trading platforms;

	●	Investment and trading activities of large investors, including private and registered funds, that may directly or indirectly invest in blockchain networks or blockchain assets;

	●	Monetary policies of governments, trade restrictions, currency devaluations and revaluations;

	●	Regulatory measures, if any, that affect the use of blockchain assets;

	●	The maintenance and development of the open-source software utilized in blockchain networks;

	●	Global or regional political, economic or financial events and situations; or

	●	Expectations among blockchain network participants that the value of such blockchain assets will soon change.

	●	our ability to develop the INX Trading platform as contemplated, or at all;

	●	the slowing or stopping of the development or acceptance of blockchain assets;

	●	the limitations of blockchain technology, which remains largely novel and untested;

	●	the legal framework of regulations applicable to blockchain technologies, virtual currencies, tokens and token offerings;

	●	changes in how we are taxed;

	●	the lack of any existing marketplace for blockchain assets;

	●	our lack of an operating history;

	●	the impact of competition and new technologies;

	●	our ability to obtain government regulations and approvals;

	●	industry developments affecting our business, financial condition and results of operations;

	Offering minimum	Offering maximum

Offering price per Token	$	$
Net tangible book value per Token before the offering
Equity:
Increase per Token attributable to payments by new investors
Pro forma net tangible book value per Token after the offering
Dilution per Token to new investors

	INX Tokens Purchased					Total Consideration				Average Price
	Number		Percent			Amount		Percent		Per INX Token
Original INX Token holders		18,694,562			%	US$			%	US$
Commitments to issue INX Tokens		[ ]			%
New investors		130,000,000			%	US$	130,000,000		%	US$
Total		153,519,562		100.00	%	US$			%

	INX Tokens Purchased					Total Consideration				Average Price
	Number		Percent			Amount		Percent		Per INX Token
Original INX Token holders		18,694,562			%	US$			%	US$
Commitments to issue INX Tokens		[ ]			%
New investors		5,000,000			%	US$	5,000,000		%	US$
Total		28,519,562		100.00	%	US$			%

	Six months ended June 30, 2018			From September 1, (date of inception) through December 31,
	(unaudited)			2017
Operating expenses:
Research and development		204			56
General and administrative		1,699			530
Loss from operations		1,903			586

Fair value adjustment of INX Token and derivative liabilities		301			50
Finance expenses		8			1

Net loss and total comprehensive loss		2,212			637

Net loss per share, basic and diluted		(0.32	)		(0.13	)

Weighted average number of shares outstanding, basic and diluted		7,011,176			4,917,166

	June 30,
	2018		December 31,
	unaudited		2017
Total Assets		2,268		517
Working Capital		1,147		62
Total Liabilities		1,121		455
Total Equity		1,147		62

	●	staffing for financial, accounting and external reporting areas, including segregation of duties;

	●	reconciliation of accounts;

	●	proper recording of expenses and liabilities in the period to which they relate;

	●	evidence of internal review and approval of accounting transactions;

	●	documentation of processes, assumptions and conclusions underlying significant estimates; and

	●	documentation of accounting policies and procedures.

	Payments due by period
	Less than 1 year		Total
Accounts Payable		641		641
INX Token Liability		380		380
Convertible Loans		100		100
Total		1,121		1,121

	●	Lack of Regulatory Compliance. Many blockchain asset trading platforms are not prepared to comply (or are not willing to comply) with regulatory requirements imposed by U.S. federal and state securities law. Blockchain asset trading platforms assume less responsibility for what takes place on their platforms as compared to regulated exchanges. For example, blockchain asset trading platforms are generally unable to verify the legitimate origin of funds in a trade and therefore cannot confirm that the trades are not in violation of anti-money laundering laws. In addition, current blockchain asset trading platforms do not provide traditional trading protections, such as trading collateral capital and liquidity reserves, making professional traders unable or reluctant to conduct derivative trading on these exchanges. The lack of compliant exchanges for the trading of blockchain assets leads to low customer and public confidence in both the exchanges and the blockchain assets traded.

	●	No Physical Delivery for Short Trades. Physical delivery of underlying assets between parties to a short transaction helps ensure the completion of the transaction, regardless of other activities that are being conducted on the same exchange for other clients. Current blockchain asset marketplaces allow clients to leverage their trades without possessing the assets being traded, known as a “naked” short sale, resulting in potential disruption of trading activity on the exchange or the weakening of the exchange’s financial stability due to the costs incurred by the exchange to cover naked short sales.

	●	Lack of Technological Capability. Blockchain asset trading platforms generally do not have the technological capability to handle the large trading volumes or capture trades for multiple simultaneous trading requests without disruption or significant errors. The technology of many blockchain asset trading platforms was not developed to handle the dramatic growth in demand to engage in blockchain trades and the market has witnessed exchange outages, sometimes for many hours, pricing errors, lack of user access to their funds, and other service related complaints.

	●	Lack of Fee Transparency. There is currently no clear market standard for fees for trading blockchain assets. This is particularly true in the retail market, where many trading platforms do not separately state the transaction fee but instead include any fees as part of the price of the blockchain asset. In this way, many unregulated exchanges do not disclose their fees, creating uncertainty regarding the cost of trading.

	●	Poor Price Discovery. Blockchain asset trading platforms experience inefficiencies in the form of significant arbitrage due to recurrent operational issues including temporary service outages and other temporary restrictions on access to the trading platform, the ability to withdraw or deposit fiat currencies and cryptocurrencies, or otherwise perform a trade on the platform. This creates significant exposure to arbitrage trading between exchanges. Further, the operator of a blockchain asset trading platform may trade on its own behalf on the trading platform. Doing so provides liquidity to platform participants. However, it also presents potential conflicts of interest, such as front-running customer order flow and engaging in price manipulation. By acting as a trading participant on one’s own platform, trading platforms may artificially inflate or deflate prices, which impairs market pricing discovery.

	●	Active expansion of institutional blockchain asset trading and large-scale block transactions. The Company plans to promote the INX Trading platform with institutional and other accredited investors such as family offices, hedge funds and others who require a platform that allows blockchain asset derivative trading and large-scale block transactions.

	●	Fully monetize market data and connectivity. We plan to serve as a hub for blockchain asset traders, institutional investors, commercial banks and individuals trading blockchain asset derivatives. As we attract more clients, we expect that we will accumulate non-proprietary big-data relating to trading behavior and related market statistics. We plan to use this data for internal use and as a product to be sold to institutional investors and trade analysts.

	●	Strategic opportunities. Upon completion of development phases, we plan to pursue strategic alliances with commercial banks and other licensed and regulated blockchain asset trading platforms for the expansion of our business. In addition, we believe that a part of our future growth strategy will include the acquisitions and integration of other blockchain service providers under the INX Trading platform’s regulated processes.

(1)	“Spot exchange” means the ability to buy and sell blockchain assets.

(2)	“Wire deposit” means the ability to credit account via wire deposit.

(3)	“Credit card deposit” means the ability to establish a credit account via a credit card deposit.

(4)	“Physical Short” means the ability to borrow blockchain assets for purposes of short sales through the platform’s peer-to-peer financing functionality. For example, in a ’short sale’ of bitcoin, the seller enters into a regular spot sale of bitcoin, except that the transaction is settled by delivering bitcoin that the seller has borrowed.

(5)	“Collateral risk management” means in principle, that if the value of collateral in a short position drops below a certain level, the relevant platform at all times reserves the right to force-liquidate the blockchain assets in the trader’s account. Where this occurs, blockchain assets will be seized by the relevant platform and used to repay any outstanding amounts due to the financing providers.

(6)	“Capital reserve fund” means money set for future projects, major purchases or unanticipated expenses

(7)	“Futures” means the platform offers futures contracts, i.e. contracts obligating the buyer to purchase a blockchain asset or the seller to sell a blockchain asset, at a predetermined future date and price.

(8)	“Options” means the platform offers futures contracts, i.e. contracts that grant the right, but not the obligation to buy or sell blockchain assets at a set price on or before a certain date.

(9)	“Mobile app” means the platform offers an iOS/ android mobile application.

(10)	“Coins tradable” means the number of different blockchain assets currently trading on the platform.

Company⁽¹⁾	Location	Management			Financing		Development			Administration and Other Positions			Total

INX Ltd. (Gib.)	Israel		4	⁽³⁾		1		3	⁽⁴⁾		2	⁽²⁾		10

INX Services, Inc. (US)	United States		2			-		-			-			2

Total			6			1		3			2			12

Name	Age	Position
Shy Datika	50	President
Oran Mordechai	42	Chief Financial Officer
Maia Naor	34	Vice President, Product
Jonathan Azeroual	31	Vice President, Blockchain Asset Strategy
Alan Silbert	46	Director of INX Limited; Executive Managing Director of INX Services, Inc.
Matt Rozzi	47	Chief Compliance Officer & Chief Operating Officer of INX Services, Inc.

	●	Any person, not being the company, indemnifying any director, manager or officer of the company against any such liability as referred to in subsection (1);

	●	A company from purchasing and maintaining for any director manager or officer of the company, or any person (whether an officer of the company or not) employed by the company as auditor, insurance against any such liability referred to in subsection (1);

	●	any breach of the director’s duty of loyalty to the corporation or its stockholders;

	●	acts or omissions not in good faith or that involve intentional misconduct or a knowing violation of law;

	●	intentional or negligent payment of unlawful dividends or stock purchases or redemptions; or

	●	any transaction from which the director derives an improper personal benefit.

	●	to act in good faith and in the best interest of the company;

	●	to not allow their interests to conflict with those of the company; and

	●	to act with due care and skill.

	●	considering and making recommendations to our Board on our financial statements, reviewing and discussing the financial statements and presenting its recommendations with respect to the financial statements to the Board prior to the approval of the financial statements by our Board;

	●	oversight of our independent registered public accounting firm and recommending the engagement, compensation or termination of engagement of our independent registered public accounting firm to the Board in accordance with Gibraltar law;

	●	the office holder acts in good faith and the act or its approval does not cause harm to the company; and

	●	the office holder disclosed the nature of his or her interest in the transaction (including any significant fact or document) to the company at a reasonable time before the company’s approval of such matter.

	●	each of our executive officers and directors;

	●	each person or entity known by us to beneficially own more than 5% of our outstanding shares; and

	●	all of our senior management and directors as a group.

	Ordinary Shares Beneficially Owned		Percentage of Ordinary Shares Beneficially Owned

5% Shareholders
Yitshak Rafaeli (1)		1,837,886		16.73	%
Doron Cohen (2)		1,120,000		10.16	%
SPiCE Venture Capital Pte. Ltd (3)		1,101,532		9.49	%
Riccardo Spagni (4)		885,057		8.05	%
Meni Benish (5)		725,043		6.60	%

Senior Management and Directors (6)
Shy Datika (7)		3,356,666		30.55	%
Oran Mordechai		0		*
Maia Naor (8)		333,333		2.94	%
Jonathan Azeroual		377,500		3.44	%
Matt Rozzi (9)		0		*
James Crossley		0		*
Alan Silbert (10)		0		*
David Weild		0		*
Nicholas Thadaney		0		*
Haim Ashar		0		*
Thomas Lewis		0		*
Rafael Rafaeli		0		*
All of the senior management and directors as a group (12 persons)		4,067,499		35.93	%

(2)	Mr. Cohen holds 1,120,000 ordinary shares of the Company through A-Labs Finance and Advisory Ltd., a private company incorporated under the laws of Israel, of which Mr. Cohen is the controlling shareholder. The address of A-Labs Finance and Advisory Ltd. is 4 Weinberg St., Kfar-Saba, Israel.

(3)	SPiCE Venture Capital Pte. Ltd (“SPiCE”), a private limited liability company incorporated in Singapore, wholly owned by Tal Elyashiv, Amihay Ben David and Carlos Domingo, holds 478,927 ordinary shares and an option to purchase additional 622,605 ordinary shares of the Company in accordance with the terms and conditions of the Subscription Agreement dated September 27, 2018. The address of SPiCE is 50 Collyer Quay, #09-01 OUE Bayfront, Singapore, 049321, Singapore.

(4)	Mr. Spagni holds 885,057 ordinary shares of the Company in accordance with the terms and conditions of the Subscription Agreement dated April 30, 2018. The address of Mr. Spagni is c/o MBE_YSI, v. Badazzole 24, Montichiari, Italy.

	INX Tokens Beneficially Owned		Percentage of INX Tokens Beneficially Owned

5% Shareholders
Yitshak Rafaeli (1)		293,000		1.57	%
Doron Cohen (2)		4,550,000		24.34	%
SPiCE Venture Capital Pte. Ltd (3)		0		*
Riccardo Spagni		0		*
Meni Benish (4)		175,000		0.94	%

Senior Management and Directors
Shy Datika (5)		9,435,939		50.47	%
Oran Mordechai		0		*
Maia Naor		937,499		5.01	%
Jonathan Azeroual		750,000		4.01	%
Matt Rozzi		0		*
James Crossley (6)		100,000		0.53	%
Alan Silbert (7)		0		*
David Weild (8)		0		*
Nicholas Thadaney (9)		0		*
Haim Ashar (10)		0		*
Thomas Lewis (11)		0		*
Rafael Rafaeli		0		*
All of the senior management and directors as a group (12 persons)		11,223,438		59.72	%

(2)	Mr. Cohen holds 4,550,000 INX Tokens through A-Labs Finance and Advisory Ltd., a private company incorporated under the laws of Israel, of which Mr. Cohen is the controlling shareholder.

(3)	SPiCE Venture Capital Pte. Ltd, a private limited liability company incorporated in Singapore, was granted a warrant to purchase 325,000 INX Tokens at a price per INX Token equal to seventy percent (70%) of the price of the INX Tokens determined at the Offering hereunder pursuant to the terms of SPiCE’s Subscription Agreement with the Company dated September 27, 2018.

(4)	Mr. Benish holds 175,000 INX Tokens and is entitled to an amount of INX Tokens to be determined as a function of the purchase price of this offering or the average price of the Company’s unregistered sales of INX Tokens, however in no event shall the number of Tokens be greater than 2% of the INX Tokens sold in this offering.

(5)	Mr. Datika, one of our founders, our controlling shareholder and President, holds 9,435,939 INX Tokens through Triple V (1999) Ltd., a private company incorporated under the laws of Israel, of which Mr. Datika is the sole shareholder.

(6)	Mr. Crossley, a director of the Company, is entitled to an option to purchase 10,000 INX Tokens per month from the effective date of the services agreement between Bentley Limited and the Company, until the commencement of the Offering, subject to a maximum of 100,000 INX Tokens.

(7)	Six months following the effectiveness of the registration statement in connection with this offering, Mr. Silbert shall be granted an option to purchase 500,000 INX Tokens at a price of $0.01 per Token.
(8)	Six months following the date the registration statement in connection with this offering is declared effective by the SEC, Mr. Weild shall be granted an option to purchase 350,000 INX Tokens at a price of $0.01 per Token.

(9)	Six months following the date the registration statement in connection with this offering is declared effective by the SEC, Mr. Thadaney shall be granted: an option to purchase 350,000 INX Tokens at a price of $0.01 per Token and a monthly Token fee of 3,500 Tokens per month of services to the Company.

(10)	Six months following the date the registration statement in connection with this offering is declared effective by the SEC, Mr. Ashar shall be granted an option to purchase 350,000 INX Tokens at a price of $0.01 per Token and a monthly Token fee of 3,500 Tokens per month of services to the Company.
(11)	Six months following the date the registration statement in connection with this offering is declared effective by the SEC, Mr. Lewis shall be granted an option to purchase 350,000 INX Tokens at a price of $0.01 per Token and a monthly Token fee of 3,500 Tokens per month of services to the Company.