TIDMFLX
RNS Number : 8092U
Falanx Group Limited
17 July 2018
Falanx Group Limited
("Falanx" or "the Company")
ACQUISITION OF SECURESTORM LIMITED
Falanx Group Ltd ("Falanx", AIM:FLX), the global cyber security
and intelligence provider, in line with its strategy of increasing
value in the high growth Cyber Security market, is pleased to
announce the acquisition of Secure Storm Limited
("SecureStorm")
SecureStorm Ltd - Cyber Security Consultancy
Securestorm(R) is a privately held company and was incorporated
in 2017 following a restructuring of predecessor business owned by
the vendors. It provides professional services and consultancy
regarding cyber and cloud security, and the associated regulatory
requirements such as GDPR. Corporate customers include Fortune 100
companies and holds large managed service contracts with several UK
government organisations.
www.securestorm.com
Securestorm(R) is a National Cyber Security Centre (NCSC)
certified cyber security consultancy, holding a number of
attractive attributes which will contribute significantly to the
speed of growth in Falanx professional Cyber services. This is
particularly relevant in supporting the adoption of our MidGARD
service in UK Government departments and the rapidly expanding
Cloud and Tech markets. These include;
-- Crown Commercial Supplier status, on multiple government
procurement frameworks, including: G-Cloud 10, Digital Outcomes and
Services (DOS3) and Cyber Security Services 2
-- Longstanding UK Government contracts for managed cyber security services and consultancy
-- Extensive partnerships and contracts with both start-ups and
international cloud and tech companies
-- An extensive portfolio of proprietary compliance and security process intellectual property
-- Exclusive partnership and licence of Edgescan's full-stack
vulnerability assessment services for use in UK Government
-- Partner of CybSafe, the GCHQ accredited cyber security awareness and GDPR training solution
-- Member of the Amazon Web Services Partner Network and trusted vendor on the AWS Marketplace
-- Valued accreditations such as, NCSC Certified Professional,
Certified Cloud Security Professional, Certified Information
Privacy Professional and Certified Information Systems Security
Professional
-- Greater delivery capacity into our growing Data Privacy and GDPR consultancy practice
Revenue and Consideration
The consideration of GBP100,000 is satisfied by the issue of
2,222,222 Falanx new ordinary shares. The vendors will be subject
to certain lock in arrangements.
For the year ended 30 June 2017, Securestorm had revenues of
approximately GBP700,000, operating profits of GBP30,000 and net
assets were approximately GBP20,000 at 30 June 2017. In the latter
part of 2017 an investment in delivery capability was made ahead of
a planned increase of revenues. Unaudited management accounts for
the 11 months to 31 May 2018 show revenues of GBP500,000 and an
operating loss of GBP150,000. Net liabilities were approximately
GBP130,000 at 31 May 2018. These are mainly due to HMRC where a
deferred payment scheme has been agreed and is in place.
The majority of losses were incurred before December 2017. These
have since been eliminated by customer contract wins and cost
reductions. In recent months Securestorm has been at break even
with a strengthening pipeline of business.
Integration and Synergies
Securestorm(R) will be immediately integrated into Falanx's
Cyber division, its professional staff including its founder Tony
Richards will be transferred over and will utilise existing Falanx
infrastructure. This is expected to drive synergies around cost
sharing, revenue enhancement and utilisation improvement.
Grant of Options
Falanx has a share option scheme to align the interests of staff
with those of shareholders. Under this the Company is today making
a grant of 4.25m options as follows
-- 2.0m options at a strike price of 5 pence each (0.76% issued
share capital) to Tony Richards, the founder of Securestorm,
-- 2.25m options at a strike price of 5 pence each to certain
staff including those in First Base as referenced in our
announcement of 16 March 2018
All of the above options vest in three tranches: the first
tranche when the share price reaches 7.5p (25%), the second tranche
when the share price reaches 10p (25%) and the third tranche when
the share price reaches 12.5p (50%). The Options only vest if the
average share price has reached the relevant threshold level for a
period of three months, save for the event of a change of control
in the Company, in which case they will vest in full.
Mike Read, Chairman and Chief Executive Officer of Falanx,
commented:
"The acquisition of SecureStorm provides Falanx with a number of
exciting opportunities, to both support our growing UK Govt
business and expand our footprint in these marquee organisations.
The unique relationship with Amazon Web Services and the
introduction of our MidGARD service to a global market place is
also very promising. We also welcome Tony Richards to the team, a
highly respected and recognised cyber security thought leader who
will head our consultancy arm and take up the position of Falanx
Group Chief Information Security Officer"
Tony Richards, Founder of SecureStorm Ltd, commented:
"The combination of Securestorm with Falanx is a perfect match,
enabling the integration of Falanx's MidGARD and security testing
services with Securestorm's managed security and consultancy
services to deliver a stronger portfolio to our customers. I look
forward to working with Mike Read and the rest of the team, to
expand Falanx's market share and increase overall growth, utilizing
our partnership with AWS, relationships across the public and tech
sectors, and placement on various government procurement
frameworks. "
Admission of the new Ordinary Shares to trading on AIM and Total
Voting Rights
Application will be made for admission of the 2,222,222 new
Ordinary Shares to be issued to trading on the AIM Market of the
London Stock Exchange, which is expected to take place at 8.00 a.m.
on or around 23 July 2018 ("Admission").
The new Ordinary Shares will, when issued, be credited as fully
paid and will rank equally in all respects with the existing
Ordinary Shares, including the right to receive any dividend or
other distribution declared, made or paid after Admission.
For the purposes of the Financial Conduct Authority's Disclosure
and Transparency Rules ("DTRs"), the issued ordinary share capital
of the Company following Admission will consist of 261,901,186
Ordinary Shares of nil ordinary value with voting rights attached
(one vote per Ordinary Share). There are no Ordinary Shares held in
treasury. This total voting rights figure may be used by
shareholders as the denominator for the calculations by which they
will determine whether they are required to notify their interests
in, or a change to their interest in, the Company under the
DTRs.
Enquiries:
Falanx Group Limited www.falanx.com
Mike Read, Chief Executive Officer
SPARK Advisory Partners Limited
Nominated Adviser
Matt Davis / James Keeshan +44 (0) 203 368 3551
Turner Pope Investments (TPI)
Ltd
Broker
Ben Turner / James Pope
IFC Advisory Ltd +44 (0) 203 621 4120
Financial PR & IR
Graham Herring
Miles Nolan
Zach Cohen +44 (0) 203 934 6630
About Falanx
Falanx Group Limited, is a global intelligence and cyber defence
provider working with blue chip and government clients. It operates
the MidGARD cyber monitoring platform for corporate and
governmental customers which utilises a combination of proprietary
and third party processes and technologies. For more information:
http://www.falanx.com/
This information is provided by RNS, the news service of the
London Stock Exchange. RNS is approved by the Financial Conduct
Authority to act as a Primary Information Provider in the United
Kingdom. Terms and conditions relating to the use and distribution
of this information may apply. For further information, please
contact rns@lseg.com or visit www.rns.com.
END
ACQLLFSADDIRLIT
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