Crossword Cybersecurity Plc

£5.0m Fundraising & Acquisition of Threat Intelligence Company

28 July 2021 - London, UK -Crossword Cybersecurity Plc (AIM:CCS, "Crossword", the "Company" or the "Group"), the technology commercialisation company focused  on cyber security and risk management, is pleased to announce that it has undertaken an oversubscribed fundraising by Hybridan LLP of approximately £5.0 million through a placing and  subscription of Crossword  ordinary shares of 0.5p each ("Ordinary Shares") at a price of 30 pence per share.

Following the placing of 16,083,331 Ordinary Shares and subscription of 583,333 Ordinary Shares from new and existing institutional shareholders, the Company intends to complete an acquisition of a threat intelligence and monitoring services company.  Additionally, the Company intends to apply the proceeds of the fundraising to increase sales and marketing resource, for product development and support and for general working capital purposes. The placing price represents a 23% discount to the closing mid-price on 27 July 2021.

Crossword has agreed, subject to contract and the placing being complete with the admission of the placing shares to AIM by 3 August 2021, to pay a total consideration of up to £1.8m for the threat intelligence and monitoring company, of which £1.35m is unconditional and £0.45m conditional on performance.  The payments are a mixture of cash and shares, some upfront and some deferred. This unconditional price represents a revenue multiplier of 2.25.  The acquisition brings the additional capability of threat intelligence and monitoring services, using its sophisticated in-house platform.  It will bring circa 30 new clients to Crossword, primarily financial sector organisations, taking the total number of fee-paying consulting clients to over 100.  The target company is currently breakeven, with 75% recurring revenue.  Cross sell opportunities are being explored with the acquisition, alongside operating synergies. A further announcement will be released once the acquisition agreement has been signed.

This pending acquisition will be Crossword's second acquisition in 2021.  Verifiable Credentials Limited was acquired in May 2021 and its product, Identiproof, increased Crossword's software product portfolio to three.  Crossword is now actively taking Identiproof to market, as well as continuing product development. Several public sector tenders directly and with partners are being worked on.  Crossword is in discussions with several commercial businesses on how they might use the identiproof platform to issue verifiable digital certificates, as there is a shift from physical certificates to digital credentials across sectors ranging from digital ticket sales (festivals, concerts, exhibitions), insurance, compliance certificates (standards, accreditations), education and many more. 

The successful rollout of Rizikon to membership bodies, including to members of the Chartered Institute of Information Security, has resulted in more than 300 users of Rizikon assessing over 3,750 suppliers.  With membership body agreements recently signed, including with the ICAEW and others imminent, Crossword is targeting over 1,000 users of Rizikon by end 2022.  Further details on the membership bodies the Group is in discussions with and opportunities are contained within the Company's updated presentation referred to below.

The second half of 2021 will see Crossword establishing its subsidiary in Oman as its Gulf region headquarters.  This follows the signing of Heads of Terms with a prominent Omani family, Al-Rawahy Holdings.  Crossword will roll out all its products and services in Oman.  A MoU has been signed with a major Omani managed service provider to agree to roll out Rizikon in Oman in the second half of 2021.

A copy of the Company's current investor presentation is available on its website, www.crosswordcybersecurity.com

Settlement and dealings

Application has been made for the admission of the 16,666,664 Ordinary Shares, which rank pari passu with the Company's existing issued Ordinary Shares, to be admitted to trading on AIM. Dealings on AIM are expected to commence at 8:00am on or around 3 August 2021 ("Admission").

Total Voting Rights

For the purposes of the Financial Conduct Authority's Disclosure Guidance and Transparency Rules ("DTRs"), following Admission, Crossword will have 74,709,294 Ordinary Shares in issue with voting rights attached. Crossword holds no shares in treasury. This figure of 74,709,294 may be used by shareholders in the Company as the denominator for the calculations by which they will determine if they are required to notify their interest in, or a change to their interest in the Company, under the DTRs.

Tom Ilube, CEO of Crossword, commented:

"I am delighted with the continued support we have received from our shareholders, and to welcome new shareholders including Gresham House Asset Management in this latest fundraising.  In 2021, we remain confident in growing our revenues by more than 50% to £2.6m. Looking ahead and with this latest round of funding and the visibility on our commercial discussions, the Board is confident of delivering 60% YOY revenue growth in FY 2022 taking revenues to over £4m.  This latest funding round gives us a path to profitability."

The information contained within this announcement is deemed to constitute inside information as stipulated under the Market Abuse Regulation (EU) No. 596/2014 which is part of UK law by virtue of the European Union (withdrawal) Act 2018. Upon the publication of this announcement, this inside information is now considered to be in the public domain.

Contacts

Crossword Cybersecurity plc - Tel: +44 (0) 20 3953 8460

Email: info@crosswordcybersecurity.com

Tom Ilube, Chief Executive Officer

Mary Dowd, Chief Financial Officer

Grant Thornton (Nominated Adviser) - Tel: +44 (0) 20 7383 5100

Colin Aaronson / Lukas Girzadas

Hybridan LLP (Broker) - Tel: +44 (0)203 764 2341

Claire Louise Noyce

For media enquiries contact:

Duncan Gurney, GingerPR

duncan@gingerpr.co.uk - Tel: +44 (0)1932 485 300

About Crossword Cybersecurity plc

Crossword Cybersecurity plc focuses on the development and commercialisation of university research-based cyber security and risk management related software and cyber security consulting.  The Group's specialist cyber security product development and software engineering teams work with its university partners to develop the research concept into a fully-fledged commercial product that it will then take to market. The Group's aim is to build up a portfolio of revenue generating, intellectual property based, cyber security products. Rizikon Assurance, Crossword's leading product, is a SaaS platform that enables medium to large companies to assess and manage all risks from their suppliers.  Nixer CyberML, Crossword's most recently launched product, is a new tool for businesses that want to solve advanced security and cybercrime problems, such as detecting and dealing with compromised accounts, fraud, and in-application denial of service attacks.  Crossword's team of expert cyber security consultants leverages years of experience in national security, defence and commercial cyber intelligence and operations to provide bespoke advice tailored to its clients' business needs.