Crossword Cybersecurity plc

September 30, 2015 03:00 ET

Admission to ISDX Growth Market

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 GBP0.05 each


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] 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 GBP27 billion a year. The cost to a large organisation of a security breach in UK can be in the range
    GBP450,000 to GBP850,000. 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 GBP210 million to be invested in the National Cyber Security Programme.

*   Pentagon  spending on cyber security operations could jump to USD4.7 billion in fiscal  2014  from
    USD3.9 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
    USD1.77 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


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 USD2.7 billion in 2013.  In 2012 Dell spent a reported
    USD1.25 billion on SonicWall and Intel bought McAfee for USD7.7 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 USD25.5 million from
    Google Venture, KPCB and Jafco; Shape Security raised USD40 million from Norwest and Sierra Ventures; and
    Cylance raised USD20 million from Blackstone, Khosla and Fairhaven Capital.


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.


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


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 GBP150m 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.

The directors of the Company are as follows

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:

 Name                                                Number of Issued       Percentage of Issued
                                                      Ordinary Shares            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%

*  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.

 Shareholder                                       Number of Ordinary        Percentage of Issued
                                                               Shares             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%

 In addition, the Directors hold the following shares under option:

 Name                    Date of        Number of    Exercise             Vesting      Expiry Date
                           grant         Ordinary       Price          Conditions
                                     Shares under

 Thomas Ilube                N/a              N/a         N/a                 N/a              N/a

 Dr David Secher    18 July 2014           15,000     GBP0.54    Option Shares to     17 July 2024
                                                                    vest in three
                                                                equal tranches on
                                                                the first, second
                                                                        and third
                                                                   anniversary of
                                                                the date of grant

 Professor David    18 July 2014           35,000     GBP0.54    Option Shares to     17 July 2024
 Stupples                                                           vest in three
                                                                equal tranches on
                                                                the first, second
                                                                        and third
                                                                   anniversary of
                                                                the date of grant

 Gordon Matthew     20 July 2015            5,000     GBP1.90    Option Shares to     19 July 2025
                                                                    vest in three
                                                                equal tranches on
                                                                the first, second
                                                                        and third
                                                                   anniversary of
                                                                the date of grant

 Andrew Gueritz              N/a              N/a         N/a                 N/a              N/a

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

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.


Tom Ilube - CEO, Crossword Cybersecurity Plc
Tel: +44 (0)208 973 2350
Twitter: @crosswordcyber

Corporate Advisor
Nick Michaels and Jon Isaacs
Alfred Henry Corporate Finance Limited
Tel: +44 (0)207 251 3762

30 September 2015

-  ENDS  -

Contact Information

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