22 November 2019 – London, UK – Further to its announcement of 21 November 2019, Crossword Cybersecurity Plc (AIM:CCS, “Crossword”, the “Company” or the “Group”), the technology commercialisation company focused solely on cyber security and risk, has today published a circular convening a general meeting to take place on 10 December 2019 (the “Circular”) at which a special resolution will be proposed in connection with a proposed technical adjustment to the borrowing limits in the Company’s articles of association (the “Articles”) to the greater of £1,500,000 and an amount equal to 20% of the Adjusted Capital and Reserves (as defined by the Articles). Amending the borrowing powers in the Articles will enable the Company to enter into three year convertible loan agreements to the value of £1,275,000, as previously disclosed.
The general meeting will be held at the offices of Shakespeare Martineau LLP at 60 Gracechurch Street, London EC3V, United Kingdom at 3:00 p.m. on 10 December 2019. A copy of the Circular will be available on the Company’s website, https://www.crosswordcybersecurity.com/.
Tom Ilube, Chief Executive Officer, commented:
“We are grateful to our investors for their support, and are confident this will help us in achieving our growth objectives.”
An extract from the Circular is set out below.
The information contained within this announcement is deemed to constitute inside information as stipulated under the Market Abuse Regulations (EU) No. 596/2014. 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, Finance Director
Grant Thornton (Nominated Adviser) – Tel: +44 (0) 20 7383 5100
Colin Aaronson / Jamie Barklem / Niall McDonald
Hybridan LLP (Broker) – Tel: +44 (0)203 764 2341
Claire Louise Noyce
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.
For media enquiries contact:
Lorena Duke, GingerPR
lorena@gingerpr.co.uk, 01932 485 300
LETTER FROM THE CHAIRMAN OF CROSSWORD CYBERSECURITY PLC
Dear Shareholder,
Proposed issue of debt securities Proposed amendment to the Company’s Articles of Association
and
Notice of General Meeting
1 INTRODUCTION
As noted in the Company’s Trading Update and Financing announcement on 24th October 2019, Crossword is moving forward with entering into loan agreements, having had £1m committed from third parties and current shareholders and Directors, at the time of that announcement. Since then, Crossword has signed non-binding term sheets of £1,275,000 to date.
I am therefore writing to provide you with details of the proposed £1,2750,000 loans and to give you notice of the General Meeting at which the resolutions to approve an amendment to the Company’s Articles of Association to increase the cap set on the Company’ borrowing authorities. The General Meeting is to be held at the offices of Shakespeare Martineau LLP, 6th Floor, 60 Gracechurch Street, London EC3V 0HR at 3.00 p.m. on 10th December 2019. The formal notice of General Meeting is set out at the end of this document.
2 INFORMATION ON CROSSWORD CYBERSECURITY PLC
Crossword Cybersecurity plc focuses on the development and commercialisation of university research-based cyber security 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 the cyber maturity and GDPR readiness of their suppliers and to assess compliance with their requirements across a range of criteria. The Group’s second principal product, Nixer CyberML was launched on 14th November 2019. Nixer CyberML 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.
3 BACKGROUND TO, AND REASONS FOR, THE LOANS
Crossword was admitted to AIM in December 2018 in order, inter alia, to access a wider range of investors and to give the Group the flexibility to raise capital to fund its growth strategy. The Group’s objective is to be the European leader in commercialising cyber security research originating from universities. It aims to achieve this by building up a portfolio of revenue generating cyber security products and becoming a leading supplier of cyber security-focussed risk and compliance products and services in what the Directors believe to be a rapidly growing and increasingly complex market environment. They believe that organisations will need to put in place software, systems, procedures and practices that will enable them to demonstrate that they meet the necessary standards and continuously to test their compliance with those standards.
Since admission to AIM, Rizikon Assurance has gained traction with some notable client wins and a large increase in its pipeline. Rizikon Assurance 2.0 was launched in Sept 2019, incorporating a Third-party Assurance Framework Dashboard.
To continue with growth plans, Crossword requires additional funding. With the current market turmoil due to economic uncertainty exacerbated by Brexit and international trade wars, the Board concluded that a convertible loan would be the most appropriate means of attracting investors and of satisfying the Group’s near to mid-term working capital needs and to fund its growth plans. The interest payments will be serviced from current cashflows.
The Loans, for which the Company has received commitments of £1,275,000, have the following terms:
TermThree years from the date of the loan agreementInterest rate12 per cent., payable quarterly in arrearsEarly repaymentAt the Company’s sole option, subject to a minimum repayment amount of £10,000Form of repaymentIn cash, save that each lender may opt to convert part or all of their loan into Ordinary Shares at a price the closing mid-price per Ordinary Share on the last practicable date before the date of the Loan AgreementWarrantsOn repayment of the Loans in cash, each lender will be issued warrants valid for three months to subscribe for Ordinary Shares representing 10 per cent. of the value of the Loan at the Conversion Price
The terms of the loans will allow lenders who have accepted repayment of the loans in cash (rather than elected for conversion before repayment) to be issued warrants at the same price per share as the conversion price within three months after repayment.
4 USE OF PROCEEDS
The proceeds of the loans will be used for near to mid-term working capital requirements and to fund the Group’s growth plans including continued sales of products and further product development.
5 RELATED PARTY TRANSACTION
Included among the commitments is one from Tom Ilube, CEO, for an amount of £250,000. Tom Ilube has agreed to make a loan to the Company on the same terms as the other Lenders as described above. By virtue of its size, Mr Ilube’s loan constitutes a related party transaction under Rule 13 of the AIM Rules for Companies. The Independent Directors, being the Directors other than Tom Ilube consider, having consulted with the Company’s Nominated adviser, that the terms of Mr Ilube’s Loan are fair and reasonable insofar as the Company’s Shareholders are concerned.
6 GENERAL MEETING
Set out at the end of this document is a notice convening the General Meeting to be held at the offices of Shakespeare Martineau LLP, 6th Floor, 60 Gracechurch Street, London EC3V 0HR at 3.00 p.m. on 10th December 2019, at which the following Resolution will be proposed for the purposes of amending the existing articles of association of the Company to remove the current article 113.2 in its entirety and replacing it with the following article 113.2 which increases the existing cap on the Company’s borrowing powers:-
THAT the Articles be amended by deleting the current Article 113.2 in its entirety and replacing it with the following Article 113.2:
“The Board shall restrict the borrowings of the Company and exercise all voting and other rights and powers of control exercisable by the Company in respect of its subsidiary undertakings so as to procure (as regards its subsidiary undertakings in so far as it can procure by such exercise) that the aggregate principal amount at any one time outstanding in respect of monies borrowed by the Group (exclusive of monies borrowed by one Group company from another and after deducting cash deposited) shall not at any time, without the previous sanction of an ordinary resolution of the Company, exceed the greater of £1,500,000 and an amount equal to 20% of the Adjusted Capital and Reserves.”
7 ACTION TO BE TAKEN
A Form of Proxy for use at the General Meeting accompanies this document. Whether or not you intend to be present at the General Meeting, you are asked to complete the Form of Proxy and return it to the Company’s registrars, Share Registrars Limited at The Courtyard, 17 West Street, Farnham, Surrey, GU9 7DR so as to be received not less than 48 hours (excluding any part of a day that is not a Business Day) before the time and date fixed for the holding of the meeting or any adjournment thereof (as the case may be). For the avoidance of doubt, the last possible date for the submission of forms of proxy will be 3.00 p.m. on 6th December 2019 (or in the case of an adjournment of the General Meeting, not later than 48 hours before the time fixed for the holding of the adjourned meeting (excluding any part of a day that is not a Business Day)).
If you hold your Ordinary Shares in uncertificated form in CREST, you may vote using the CREST Proxy Voting Service in accordance with the procedures set out in the CREST Manual. Further details are also set out in the notes accompanying the Notice of General Meeting at the end of this document. Proxies submitted via CREST must be received by the Company’s agent (ID 7RA36) by no later than 3.00 p.m. on 6th December 2019 (or if the General Meeting is adjourned, 48 hours (excluding any part of a day that is not a Business Day) before the time fixed for the adjourned meeting).
The completion and return of a Form of Proxy will not preclude Shareholders from attending the General Meeting and voting in person should they so wish.
8 RECOMMENDATION
The Directors unanimously consider that the Placing is in the best interests of the Company and its Shareholders as a whole. Accordingly, the Directors unanimously recommend that Shareholders vote in favour of the Resolution.
Yours faithfully
Sir Richard Dearlove
Chairman
DEFINITIONS
The following definitions apply throughout this document, unless the context requires otherwise:
AIM the market of that name operated by the London Stock Exchange.
AIM Rules for Companies the AIM Rules for Companies published by the London Stock
Exchange for the time being.
Board the board of directors of the Company for the time being.
Business Day any day on which banks are open for business in London other than a Saturday, Sunday or statutory holiday.
CA 2006 the Companies Act 2006, as amended.
Company or Crossword Crossword Cybersecurity plc, a public limited liability company incorporated and registered in England and Wales (with registration number 08927013) whose registered office is at 6th Floor 60 Gracechurch Street, London, United Kingdom, EC3V 0HR.
Conversion Price the closing mid-price per Ordinary Share on the last practicable date before the date of the Loan Agreement
CREST the computerised settlement system (as defined in the CREST Regulations) operated by Euroclear which facilitates the holding and transfer of title to shares in uncertificated form.
CREST Regulations the Uncertificated Securities Regulations 2001 (SI 2001 No.
3755) as amended.
Directors the directors of the Company as at the date of this document whose names are listed on page 3 of this document.
Form of Proxy the form of proxy for use at the General Meeting.
General Meeting the general meeting of the Company convened pursuant to the Notice and to be held at the offices of Shakespeare Martineau LLP, 6th Floor, 60 Gracechurch Street, London EC3V 0HR 2EW at 3.00 p.m. on 10th December 2019.
Group the Company and its subsidiary undertakings from time to time
Lender Provider of loan
Loan/Loan Agreement Contract under which funds are provided
London Stock Exchange London Stock Exchange plc.
Notice the notice of General Meeting which is set out at the end of this document.
Ordinary Shares ordinary shares of £0.05 each in the capital of the Company
Resolutions the resolutions set out in the Notice which are to be proposed at the General Meeting.
Shareholders the registered holders of Ordinary Shares.
UK or United Kingdom the United Kingdom of Great Britain and Northern Ireland.
uncertificated recorded on the relevant register of the share or security concerned as being held in uncertificated form in CREST and title to which, by virtue of the CREST Regulations may be transferred by means of CREST.
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