Crossword Cybersecurity Plc (NEX:CCS, “Crossword” or the “Company”), the technology commercialisation company focusing exclusively on the cyber security sector, announces that 6,666 options, under the Company’s Enterprise Management Incentive Scheme, have been exercised.
The options were exercisable at £1.90 per share and therefore consideration of £12,665.40 has been received and 6,666 Ordinary Shares of 5 pence each have been issued.
Following this issue of shares, the Company’s enlarged issued share capital will comprise 3,990,074 Ordinary Shares of 5 pence each with voting rights in the Company. This figure 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 in the interest in, the share capital of the Company under the FCA’s Disclosure and Transparency Rules.
About Crossword Crossword is a technology transfer company specialising in cyber security. Crossword works with universities who undertake advanced cyber security research in order to take their research through productisation to market.
Further information, please contact:
Tom Ilube CEO, Crossword Cybersecurity Tel: +44 (0) 20 8973 2350 Email: info@crosswordcybersecurity.com
NEX Corporate Advisor Nick Michaels and Jon Isaacs, Alfred Henry Corporate Finance Limited www.alfredhenry.com Tel: +44 (0)203 772 0021
NEX Corporate Broker Claire Louise Noyce – CEO, Hybridan LLP Tel: +44 (0)203 764 2341 Email: claire.noyce@hybridan.com
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BUSINESS REVIEW
2017 was the year when Crossword transitioned from an R&D focused company to unleashing our sales and marketing capability. We generated more revenue in the first half of 2017 than we did in the whole of 2016, and this momentum continued through the year. As reported in our trading update in February 2018, we ended the year having grown revenue by over 113%.
As we continue to develop Crossword’s technology commercialisation business focused exclusively on cybersecurity, there is no let-up in global cyber security incidents. 2017 saw several of the biggest and most alarming cyber security challenges to date. Equifax, the global credit reference agency, reported a data breach affecting over 145m consumers. Hackers accessed Uber’s servers containing the personal details of 57 million customers. Wannacry was described as the worst cyber-attack ever. This global cyber event impacted hundreds of thousands of computers worldwide, including crippling NHS hospitals on a large scale, once again thrusting cyber security into the national headlines. It was quickly followed by the Petya ransomware virus that leveraged some of the same techniques.
Crossword works with universities to commercialise technology based on their extensive cyber research. In 2017 we extended the group of universities that we are working with to include Imperial College, Edinburgh University, EPFL in Switzerland and MIT in the USA. This brings to a total of ten the number of universities that we are involved with: Bristol, Warwick, Coventry, Surrey, South Wales, City, Imperial, Edinburgh, EPFL and MIT.
In the middle of 2017, Crossword launched a major initiative, CyberAI, applying leading edge Artificial Intelligence and Machine Learning techniques to real world cyber security challenges. CyberAI brought together world leading academic researchers from MIT, Imperial College and Edinburgh University with four major companies: a global investment bank, a FTSE 100 retail bank, a multinational insurance company and a big four professional services firm. Led by Crossword, this powerful group has identified a specific AI-based, cybersecurity concept aimed at very large scale corporate customers. The next stage is to deliver a proof of concept and ultimately a commercial product.
CyberOwl, the spin out from Coventry University funded by Mercia Fund Management that Crossword created, is making strong progress, having been selected for and participated successfully in GCHQ’s new Cyber Accelerator. Mercia and Coventry University invested a further £750k into CyberOwl, bringing the total they have invested so far to £1.4m. CyberOwl has also secured over £100k in government grants and expects to launch its early warning cybersecurity product in early 2018.
In partnership with the University of Warwick, Crossword completed a Ministry of Defence funded proof of concept for blockchain-enabled smart documents. Based on the positive results of this proof of concept work, we engaged with the world renown blockchain team at EPFL, the federal university in Switzerland, to leverage their expertise. We then created a spin out company called ByzGen, and helped it raise £500k of funding from RFS Ltd.
With the imminent introduction of GDPR (General Data Protection Regulation) in 2018, our cyber risk product Rizikon Assurance, based on City, University of London research, is attracting considerable interest. Rizikon Assurance, a Software-as-a-Service (SaaS) solution based on a recurring revenue model, is designed to enable medium and large companies to assess and monitor the cyber security risks of their large supplier base.
We estimate that the UK market alone for Rizikon Assurance is worth £300m per annum.
Our specialist cyber security consulting subsidiary, Crossword Consulting Ltd, goes from strength to strength, building on its experienced team of ex-military, intelligence, and corporate cybersecurity professionals.
On the corporate front, Rob Johnson joined Crossword as Chief Operating Officer from Mercia Technologies, the AIM listed tech transfer business, where he managed the software and internet investments. Prior to his role with Mercia, Rob was a successful entrepreneur and has led five technology companies through successful exits. General Nick Houghton, Baron Houghton of Richmond, former Chief of Defence Staff of the British Armed Forces joined Crossword as a senior adviser bringing his considerable knowledge of global security issues to the company as we start to consider international expansion.
RESULTS AND FINANCIAL POSITION
Crossword generated revenue of £736,546 during the year ended 31 December 2017 (2016 – £344,736).
At the period end, Crossword had £490,090 in cash and cash equivalents, as part of total equity of £586,266.
While the group results show an increased loss of £1.24m against £953k in the prior year, this is as budgeted as the group is seeking to expand its presence in the market particularly with investment in staff capability in the areas discussed in the review of the year.
In May 2017, Crossword raised £145k in a placing and subscription at £2.30/share, a 20% premium to the then prevailing share price. Following the year end, in March 2018, Crossword further strengthened its balance sheet by raising £2.16m from existing and new shareholders at £2.70/share. This will strengthen the balance sheet position in order to provide sufficient cash flow for the business to develop in line with its objectives.
No dividends were paid or recommended to be paid during the year.
KEY PERFORMANCE INDICATORS
The Board monitors the activities and performance of the Group on a regular basis. The indicators set out below were used during 2017 and will continue to be used by the Board to assess performance over the coming year.
UNIVERSITY RELATIONSHIPS
The number of active university relationships is a key performance indicator as it represents the pipeline of potential opportunities that may turn into commercial products in due course. We regularly review these relationships and the actions being taken to enhance existing relationships and establish new ones.
TECHNICAL DEVELOPMENT
We monitor progress demonstrated in the development of our cybersecurity products that are in the development phase.
BUSINESS DEVELOPMENT
We monitor relationships with existing customers the pipeline of potential new clients, pipeline conversion and the rate of acquisition of new customers, for our products that have completed development and are in the commercial phase.
HUMAN RESOURCES
We monitor and review the development of a well-balanced management team and the recruitment, performance, and retention of suitably skills personnel.
FINANCIAL INDICATORS
The Board use financial indicators based on budget verses actual to assess the performance of the Group. The key aspects monitored is the Group’s working capital requirements, its current cash balance, monthly expenditure against forecast expenditure and quarterly revenue growth. These are as follows:
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