Crossword Cybersecurity PLC ("Crossword" or the "Company")
Admission to ISDX Growth Market
Crossword Cybersecurity plc is a cyber security focused technology transfer business established by the Directors to build a new European, publicly quoted, research driven cyber security company by commercialising IP relating to cyber security emerging from European universities and research establishments. The Directors of the Company are delighted to announce that its Ordinary Share Capital has today been admitted to trading on the ISDX Growth Market under the ticker symbol CCS. The Company has admitted 2,383,408 Ordinary Shares of £0.05 each
PRINCIPAL ACTIVITIES
Cyber security is the body of technologies, processes and practices designed to protect networks, computers, programs and data from attack, damage or unauthorised access.
The cyber security challenge is growing rapidly and spend on cyber security is increasing.
• Carphone Warehouse was the victim of a cyber attack affecting 2.4m customers. Personal details including names, addresses, dates of birth information, bank details and credit card data may have been accessed. (FT, 14 August 2015)
• Ashley Madison, the adult dating site, was the victim of a hacking attack resulting in the theft and subsequent exposure of the details of 37 million people worldwide. (FT 20 July 2015 & 19 August 2015)
• In 2014, hackers compromised eBay’s database containing encrypted passwords and non-financial data. eBay has 128 million active users. This has been described as “what is probably one of the biggest data breaches in the history of the internet…there is no longer any excuse for bosses who mishandle this area of their business. Companies must become far more serious about both preventing and tackling these risks.” (FT, 23 May 2014)
• “…[Heartbleed]…a major security flaw at the heart of the internet may have been exposing users' personal information and passwords to hackers for the past [two] years…one of the biggest security issues to have faced the internet to date.” (BBC News, 10 April 2014)
• Security experts estimated in 2014 that information security breaches are costing the UK economy up to £27 billion a year. The cost to a large organisation of a security breach in UK can be in the range £450,000 to £850,000. 93% of large organisations in the UK had a security breach last year.
• Number of companies reporting cyber security concerns to US regulators has more than doubled in the two years prior to 2014. In 2014, Chrysler reported cyber-attacks of “increasing… sophistication and frequency”. (FT, 21 May 2014)
• UK cyber security spend is to be ring-fenced in 2013, George Osborne announced…describing it as “the new frontier of defence”, with £210 million to be invested in the National Cyber Security Programme.
• Pentagon spending on cyber security operations could jump to $4.7 billion in fiscal 2014 from $3.9 billion the prior year, US Defence Comptroller Robert Hale told reporters. In 2014, the US indicted five Chinese military officers for alleged theft of trade secrets.
• Cyber security is a hot investment area for venture capital firms. In 2014, VCs invested a record $1.77 billion in privately held cyber security companies, triple the amount invested five years earlier. (WSJ 19 April 2015)
Cyber security covers the following areas • Threat assessment
• Vulnerabilities identification • Asset protection
• Impact assessment
THE BUSINESS Group Structure
The Company established a wholly owned software engineering subsidiary in Poland, Crossword Cybersecurity Sp. Zo.o, in October 2014. This subsidiary is based in Krakow and provides specialist cyber security software development capabilities to build the Company’s products, which is based on research partnerships with a range of European universities.
Strategy and market opportunities
The Directors are of the opinion that Europe’s cyber security industry is highly fragmented and led primarily by technical experts.
The Company’s model is to establish long term relationships with leading European University cyber security centres of expertise. It is the Directors’ intentions that the Company’s specialist cyber security development team will build solutions based on emerging IP and the Company’s commercial team will take these solutions to market through partnerships and direct to end user companies.
The Company is in active discussions with a number of leading cyber security research universities and has to date, entered into a memorandum of understanding and two agreements, with three separate universities to further develop its business and a partnership to build and launch a comprehensive online database of cyber security projects taking place across UK universities, described in more detail below.
An analysis of exhibitors at InfoSec in April 2014, the industry trade show, revealed a cottage industry. There were approximately 296 companies exhibiting in total, of which 129 were pure software companies, generally small companies with a single product line, 30 were consultancy companies, offering advice and training and a number provide a combination of consultancy and product. The Directors believe this analysis would not have changed significantly since 2014.
The big players in this market tend to be US companies and there is an increase in deal-making by mainstream technology companies:
• Palo Alto Networks, Fireye/Mandiant, both with multibillion Dollar market caps, are major pure-play cyber security companies.
• Cisco acquired Sourcefire for a reported $2.7 billion in 2013. In 2012 Dell spent a reported $1.25 billion on SonicWall and Intel bought McAfee for $7.7 billion in 2010.
The Directors believe both the pure-plays and the mainstream technology companies are keen to acquire if they see high quality cyber security assets with strong IP.
US venture capital firms are increasingly active in cyber security:
• Top five investors in 2014: Fairhaven Capital, Andressen Horowitz, Bessemer Venture Partners, Paladin Capital Group Partners and Khosla.
• Google Venture is very active as is KPCB. For example, Ionic Security raised $25.5 million from Google Venture, KPCB and Jafco; Shape Security raised $40 million from Norwest and Sierra Ventures; and Cylance raised $20 million from Blackstone, Khosla and Fairhaven Capital.
Competition
The Directors believe that there are very few high quality, IP driven, growth stage European cyber security companies that investors can use to gain exposure to this rapidly growing market.
The Company’s model is similar to IP Group PLC, Imperial Innovations Group PLC and Allied Minds PLC, but with a focus on cyber security and a delivery and execution capability.
Research and Development
The Company has had no specific research and development policies in place in respect of the last financial year in addition to those adopted by the various number of leading cyber security research universities that the Company has either been in active discussions with or has entered into
agreements with. Trends
Save as set out in the Company’s Admission Document in the section entitled “Risk Factors”, the Directors do not believe that there are any known trends, uncertainties, demands, commitments or events that are reasonably likely to have a material effect on the Company’s prospects for at least the current financial year.
HISTORIC ACTIVITIES, CURENT TRADING AND FUTURE PROSPECTS
The Company was incorporated in March 2014 and commenced trading shortly thereafter.
Currently the Directors are building the relationships and structure to support the proposed activities and in the relatively short time since incorporation, the Company has managed to enter into a memorandum of understanding and two agreements with three different leading cyber security research universities.
On 5 January 2015, the Company entered into a memorandum of understanding with Bristol University Cryptography and Information Security Group to explore commercialisation opportunities. Bristol University Cryptography and Information Security Group, led by Professor Nigel Smart, has an international reputation for its cryptography. Multi-Party Computation is a sub-field of cryptography and Professor Smart’s team has created leading edge intellectual property in this highly specialised domain. The Company is working exclusively with the group to explore ways that it can be deployed in the high value arena of financial and non-financial trading.
Furthermore, in January 2015, the Company informally partnered with the Partnership for Conflict, Crime & Security (“PaCCS”), a Research Council UK initiative, to build and launch a comprehensive online database of cyber security projects taking place across UK universities. CLUE, the cyber security research database, covers over 300 cyber security research projects from over 50 UK universities, representing over £150m of research grant investment since 2007. It provides the industry with a searchable view of the UK’s cyber security academic research landscape to enable organisations to collaborate with academia more effectively. As a result of this partnership, the Company and PaCCS are making CLUE freely available to all organisations to encourage and facilitate technology transfer and commercialisation of research in the cyber security sector.
In January 2015, the Company entered into an agreement with The Cyber Security Centre at WMG, University of Warwick to embark on a series of workshops to explore commercial opportunities leveraging cryptocurrency and blockchain technologies that could be jointly developed. Professor Tim Watson, Director of the Cyber Security Centre at WMG, University of Warwick and his team have been investigating how distributed blockchain protocols underpinning many of the 530 or more cryptocurrencies in existence can be leveraged in other ways such as enabling smart contracts. The Company and the Cyber Security Centre have embarked on a series of workshops and research to identify commercial opportunities that could be jointly developed.
On 24 April 2015, the Company entered into a license agreement with City University London to develop and market a cyber-risk assessment product, based on research led by Professor David Stupples of City University London. Professor Stupples is a Non-executive Director of the Company. The Directors are of the opinion that a key challenge facing Chief Information Security Officers is how to evaluate a company’s overall risk of being a victim of cyber-attack and where to focus their investment in cyber defences.
The Directors believe that the prospects of the Company are good and will be in line with management forecasts. The Company is a relatively early stage start up and this should be considered by potential investors along with the other Risk Factors set out in Part II of the Admission Document.
The Company’s shares will trade under the ticker 'ISDX: CCS' and the Company's ISIN code is GB00BPFJXS57. The sector classification is Software and Computer Services.
Thomas Segun Ilube – Chief Executive
Dr David Stanley Secher– Non-Executive Director
Professor David William Stupples – Non-Executive Director Gordon John Matthew – Non-Executive Director
Andrew William John Gueritz – Independent Non-Executive Director
The interests of the Directors and, their immediate families, civil partners (as defined in the Civil Partnership Act 2004) and persons connected with them (within the meaning of sections 252 to 254 of the Act), all of which, unless otherwise stated, are beneficial as at the date of this announcement and as expected to be immediately following Admission, are as follows:
* Thomas Ilube’s shareholding is made up of 1,097,342 shares held by him personally and 155,444 held by Beaufort Nominees Limited on his behalf.
In addition to the above, at the date of this announcement, the Directors are aware that the following Shareholders will be interested, directly or indirectly, in 3 per cent or more of the votes able to be cast at general meetings of the Company.
In addition, the Directors hold the following shares under option:
Name Number of Issued
Ordinary Shares Percentage of Issued Ordinary Shares
Thomas Ilube* 1,252,786 52.56%
Dr David Secher 21,102 0.89%
Professor David Stupples 5,263 0.22%
Gordon Matthew 0 0%
Andrew Gueritz 0 0%
Shareholder Number of Ordinary
Shares Percentage of Issued Ordinary Shares Moulton Goodies Ltd 236,842 9.94% Steven Gee 152,341 6.39% Maurice Zimmerman 152,341 6.39% Matthew O’Sullivan 105,263 4.42% Tariq Hussain 77,290 3.24% Name Date of
grant Number of Ordinary Shares under option
Exercise
Price Conditions Vesting Expiry Date
Thomas Ilube N/a N/a N/a N/a N/a
Dr David Secher 18 July 2014 15,000 £0.54 Option Shares to vest in three equal tranches on the first, second and third anniversary of the date of grant
It is anticipated there will be 562,733 shares in public hands on admission representing 23.61% of the entire share capital.
The registered office of the Company is One America Square, Crosswall, London, EC3N 2SG. The telephone number of the Company is 0207 264 4366. The principal place of business of the Company is 2 Sheen Road, Richmond, Surrey, TW9 1AE, England. The Company’s corporate website, at which the information about the Company’s business, its directors, financial reports, latest announcements are published and other investor related information as recommended by Rule 75 of the ISDX Growth Market Rules can be found, is www.crosswordcybersecurity.com.
Further details are contained in the Company’s admission document on the ISDX website.
The directors of Crossword Cybersecurity Plc accept responsibility for this announcement.
FOR FURTHER INFORMATION PLEASE CONTACT: Tom Ilube – CEO, Crossword Cybersecurity Plc www.crosswordcybersecurity.com
Tel: +44 (0)208 973 2350
Email: info@crosswordcybersecurity.com Twitter: @crosswordcyber
Corporate Advisor
Nick Michaels and Jon Isaacs
Alfred Henry Corporate Finance Limited www.alfredhenry.com Tel: +44 207 251 3762 30 September 2015 ENDS -Professor David Stupples
18 July 2014 35,000 £0.54 Option Shares to vest in three equal tranches on the first, second and third anniversary of the date of grant
17 July 2024
Gordon Matthew 20 July 2015 5,000 £1.90 Option Shares to vest in three equal tranches on the first, second and third anniversary of the date of grant
19 July 2025
