AUDITED CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2016

 Crossword Cybersecurity Plc (NEX: CCS), the technology commercialisation
company focusing exclusively on the cyber security sector, today
announces its Final Results for the year ended 31 December 2016. 

 Highlights
 

 — Generated GBP345k of revenue in 2016 vs GBP21k in 2015 as we transition
from pure R&D to commercial activity, whilst continuing to invest
significantly in generating IP and building the business 

 — Created CyberOwl Limited, an early warning and threat intelligence spin
out from Coventry University attracting over GBP650k of seed funding led
by Mercia Fund Management. CyberOwl was selected to join GCHQ’s new Cyber
Accelerator programme 

 — Won a Ministry of Defence contract for a proof of concept for blockchain
enabled smart documents, in partnership with the University of Warwick.
Crossword owns the resulting IP and will look to exploit it commercially 

 — Secured IOMart, a leading Cloud provider, to co-operate on taking Nixer,
the machine learning DDoS platform to market, following its launch to
design partners in June 

 — Launched Crossword Consulting, led by a former KPMG executive and staffed
by ex-defence, national security and cyber industry professionals,
working with key universities 

 — Led a delegation of leading UK cyber security professors and researchers
to meet their peers in the USA at Harvard, MIT, Stanford and Berkeley,
sponsored by the UK Government’s Department for Culture, Media and Sport
(DCMS) 

 — Appointed Sir Richard Dearlove KCMG OBE, former Chief of MI6, as
non-executive Chairman 

 — Appointed Hybridan LLP as Corporate Broker and in November raised GBP1.4
m in a successful placing and subscription

 

 Commenting on the final results, Tom Ilube, CEO of Crossword
Cybersecurity PLC, said “We are delighted to report great results
showing evidence of the transition from the pure R&D phase to the start
of revenue generation, as we take our university-driven cyber security
products and services to market. We have established a range of
commercial partnerships for our first product, Rizikon, and our new
consultancy team is rapidly building up momentum. Our second product,
Nixer is in live trials with our key design partner and we are looking
forward to marketing Nixer actively in 2017.” 

 – Ends – 

 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)207 251 3762

 

 NEX Corporate Broker 

 Claire Louise Noyce – CEO, Hybridan LLP 

 Tel: +44 (0)203 764 2341 

 Email: claire.noyce@hybridan.com 

 About Crossword Cybersecurity 

 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. 

 BUSINESS REVIEW 

 I am pleased to report another strong year of great progress in 2016, as
we scale up Crossword Cybersecurity PLC’s technology commercialisation
business, focused exclusively on the cyber security sector. 

 There was no let up in 2016 to the challenge that cyber security issues
pose to companies, governments and individuals. HM Government’s Cyber
Security Breaches Survey 2016, launched in May, revealed that 65% of
large businesses experienced a cyber breach or attack in the past year.
Tesco Bank was the victim of a cyberattack with thousands of customers
losing money from their accounts, leaving the bank at risk of a
substantial fine from the Financial Conduct Authority (FCA). One of the
largest denial of service attacks in the USA, the so called Dyn Denial
of Service (DDoS) attack using Internet of things devices, disrupted
many of the world’s largest websites. Yahoo revealed that it had been a
victim with over 1 billion accounts compromised in the biggest data
breach in history. 

 Crossword works with universities to commercialise technology based on
their extensive cyber research and in 2016 we made great strides in
building those relationships and bringing our products and services to
market. 

 Crossword established a relationship with the University of Surrey to
explore commercialising their cyber security research, including patent
pending research into multifactor passwords. We also established a new
relationship with the University of South Wales, a leader in cyber
forensics with a state of the art forensics lab. This brings the number
of relationships with leading cyber security research universities to
six; Bristol, Warwick, Coventry, Surrey, South Wales and City,
University of London. 

 Crossword announced the creation of CyberOwl Limited, a spin out from
Coventry University with Mercia Fund Management providing the seed
funding. CyberOwl is commercialising Coventry’s patent pending research
into early warning of cyber attacks in extremely large scale
environments. CyberOwl subsequently raised a further GBP510,000 and
after a rigorous process was one of just seven cyber security companies
UK wide selected to join GCHQ’s new Cyber Accelerator. 

 In partnership with the University of Warwick, Crossword won a Ministry
of Defence contract for a proof of concept for blockchain enabled smart
documents. The project is extremely interesting and we are exploring
next steps to commercialise the output. 

 The UK Government’s Department for Culture Media & Sport (DCMS)
commissioned Crossword to lead a delegation of leading UK cyber security
professors to meet counterparts in the USA, at Harvard, MIT, Stanford
and UC Berkeley. Crossword published a report on this major cyber
commercialisation mission and distributed it to over 250 recipients
across the university and cyber security sector. 

 Our cyber risk product, Rizikon, based on City University of London
research, is making good progress as we take it to market, with several
professional firms signed up as partners and revenue starting to come
through. The introduction of the General Data Protection Regulation with
its stiff penalties for breaches is driving Board level interest in
cyber risk assessment. 

 Crossword’s second product, Nixer is a next generation Denial of Service
(DDoS) platform using machine learning (ML) techniques emerging from
university research. We have established a relationship with IOMart, the
cloud provider, to co-operate on developing this machine learning based
platform which will be launched soon. We launched Crossword Consulting,
led by a former KPMG executive and staffed by ex-national security,
military and cyber industry professionals in partnership with
cybersecurity university experts. It is revenue generating and getting
good traction with a range of clients. 

 On the corporate front, we were delighted to announce former Government
Chief Scientific Adviser for National Security, Professor Nick Jennings
CB FREng, as a senior adviser. We also appointed Hybridan LLP as our
Corporate Broker and raised GBP1.4m in a placing and subscription. 

 On 1st September Crossword appointed Sir Richard Dearlove KCMG OBE as
non-executive Chairman. He succeeded Tom Ilube, who continues in his
role as CEO. Sir Richard was Chief of the Secret Intelligence Service
(MI6). He retired from the Service in 2004. He is currently Chair of
Trustees of the University of London and was previously Master of
Pembroke College, Cambridge. Sir Richard is Chairman of Ascot
Underwriting at Lloyd’s of London and a Director of New York Stock
Exchange listed Kosmos Energy. 

 PRINCIPAL RISKS AND UNCERTAINTIES 

 The key risks to the Group are as follows:
 

 — failure to develop an appropriate commercial application for its
developing products; 

 — failure to establish commercialisation partnerships with leading research
universities; 

 — competition from existing IP transfer businesses seeking to engage in
cyber security commercialisation activity; and 

 — inability to attract and retain experienced cyber security experts in a
highly competitive market.
 

 At present the directors are pleased with progress in these areas and
consider these risks are sufficiently mitigated. 

 FINANCIAL AND NON FINANCIAL KEY PERFORMANCE INDICATORS 

 The directors consider the key financial performance indicator to be
cash ‘burn rate’. At present they consider that this is within
reasonable parameters and will continue to monitor this is the future. 

 At this stage in its development, the directors do not consider that
there are any relevant non-financial key performance indicators. 

 T Ilube 

 Director 

 Consolidated Statement of Comprehensive Income for the year ended 31 December 2016

Year Ended 31 December 2016 Year Ended 31 December 2015
GBP GBP
REVENUE 344,736 20,613
Cost of sales (788,666) (247,630)
GROSS LOSS (443,930) (227,017)
Other operating income – research and development
tax credits 78,354
Administrative expenses (585,329) (530,414)
Finance income – bank interest receivable 1,354 2,181
NET LOSS BEFORE TAXATION (949,624) (755,250)
Tax expense (3,267)
LOSS FOR THE YEAR (952,891) (755,250)
OTHER COMPREHENSIVE INCOME,
Items that will not be classified to profit or,loss:
Foreign Exchange Translation Gain (Loss) 6,205 (1,659)
TOTAL COMPREHENSIVE LOSS (946,686) (756,909)
EARNINGS PER SHARE (GBP0.39) (GBP0.38)

 Consolidated Statement of Financial position at 31 December 2016

Group
GBP
Group
GBP
2016 2015
ASSETS
NON-CURRENT ASSETS
Property, plant and equipment 2,280 3,635
Intangible assets 583 816
Investments in other unlisted investment and subsidiary 31
Total non-current assets 2,894 4,451
CURRENT ASSETS
Trade and other receivables 178,154 43,464
Cash and cash equivalents 1,548,906 1,227,481
Total current assets 1,727,060 1,270,945
TOTAL ASSETS 1,729,954 1,275,396
EQUITY
Attributable to the owners of the company
Share capital 156,015 119,173
Share premium account 3,413,416 2,080,827
Retained earnings (1,946,821) (993,930)
Translation of foreign operations 3,264 (2,941)
Total equity 1,625,874 1,203,129
LIABILITIES
CURRENT LIABILITIES
Trade and other payables 104,080 72,267
Total current liabilities 104,080 72,267
TOTAL LIABILITIES 104,080 72,267
TOTAL EQUITY AND LIABILITIES 1,729,954 1,275,396

 Consolidated Cash Flow Statement for the year ended 31 December 2016

2016 2015
GBP GBP
CASH FLOWS FROM OPERATING ACTIVITIES
Cash generated from operations (1,053,300) (715,170)
NET CASH OUTFLOW FROM OPERATING ACTIVITIES (1,053,300) (715,170)
CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of property, plant and equipment (880) (853)
Purchase of shares in other unlisted investment (31)
NET CASH OUTFLOW FROM INVESTING ACTIVITIES (911) (853)
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from issue of shares 1,369,431 1,500,000
NET CASH INFLOW FROM INVESTING ACTIVITIES 1,369,431 1,500,000
NET INCREASE IN CASH AND CASH EQUIVALENTS 315,220 783,977
FOREIGN CURRENCY TRANSLATION DIFFERENCE 6,205 (1,659)
CASH AND CASH EQUIVALENTS AT THE BEGINNING OF THE
PERIOD 1,227,481 445,163
CASH AND CASH EQUIVALENTS AT THE END OF THE PERIOD 1,548,906 1,227,481

 NOTES TO PRELIMINARY RESULTS FOR THE PERIOD ENDED 30 APRIL 2015 

 1. The financial information set out above does not constitute
statutory accounts for the purpose of Section 434 of the Companies Act
2006. The financial information has been extracted from the statutory
accounts of Crossword Cybersecurity Plc and is presented using the same
accounting policies, which have not yet been filed with the Registrar of
companies, but on which the auditors gave an unqualified report on
27(th) April 2017. 

 The preliminary announcement of the results for the year ended 31
December 2016 was approved by the board of directors on 26th April 2017. 

 This announcement is distributed by Nasdaq Corporate Solutions on behalf
of Nasdaq Corporate Solutions clients. 

 The issuer of this announcement warrants that they are solely
responsible for the content, accuracy and originality of the information
contained therein. 

 Source: Crossword Cybersecurity Plc via Globenewswire
 

https://www.crosswordcybersecurity.com/