Small cap data protection company archTIS (ASX: AR9) to raise capital

  • November 11, 2020 01:57 PM AEDT
  • Team Kalkine
Small cap data protection company archTIS (ASX: AR9) to raise capital

Summary

  • archTIS Limited (ASX:AR9) under trading halt either till 12th November or when the details regarding capital raising are put out, whichever is earlier.
  • Recently, the company also acquired Massachusetts, USA based Nucleus Cyber, which provides data protection solutions.
  • Co-sell agreement between Nucleus Cyber and Microsoft will open new channels for sales and distribution with new revenue flows for archTIS
  • Nucleus Cyber will be paid A$6.25 million of initial consideration and A$3.5 million deferred consideration in exchange of 100% stake.
  • The archTIS share price has given a massive YTD return of 200%; however, it is moving in a range of A$0.6 – A$0.355 since mid-August 2020
Gold MTF non-AMP

archTIS Limited (ASX: AR9) is a global technology firm with a niche specialisation in protecting sensitive and classified information. The company has developed some world-class information security platforms which help to share and collaborate sensitive information.

archTIS Limited enters a trading halt ahead of capital raising

Yesterday on 10th November 2020, archTIS requested the Australian securities exchange (ASX) to put a halt on the trading of its shares. The request had been made ahead of a critical pending announcement regarding the capital raising by the company.

The trading halt has been imposed till 12th November or when the company is out with its details regarding the announcement, whichever is earlier.

Nucleus Cyber, a global information protection business, to be acquired by archTIS

Recently on 29th October, the company released a statement regarding a new acquisition, Nucleus Cyber. Headquartered in Boston, Massachusetts, USA, it is in the business of providing solutions to safeguard the users’ data and prevent data loss. The solutions work seamlessly with the Microsoft’s software suite for home and enterprise, enabling the company to tap one of the most extensive user bases.

The company’s NC Protect solution delivers a faster and cost-effective solution to tailor information protection for various activities like file sharing, messaging, and chat across collaboration tools.

To expand further into the collaborative efforts with Microsoft, Nucleus Cyber has recently entered into a co-sell agreement, under which Microsoft will be actively pushing the company’s solutions through its own channel resellers. archTIS expects significant growth in the revenue for the remaining 2021 as a result of this agreement.

Nucleus Cyber annual subscription model generates high margin on its revenue for these data protection solutions. The customer retention is also not questionable with high-quality clients from sectors like pharmaceuticals, financial services, healthcare etc.

Details of the acquisition

archTIS is to acquire 100% of Nucleus Cyber under a binding agreement. Consideration for the acquisition includes: an exchange for A$6.25 million of initial payment in archTIS shares which is subject to standard closing adjustments.

Another A$3.5 million deferred consideration is also payable through archTIS shares after fulfilling some corporate milestones and a defined revenue.

This acquisition will give archTIS instant access in the key North American market and the user base of Microsoft business product suite. However, the completion of the transaction is subject to standard documentation and is expected to close within this calendar year.

Stock Performance

With the current share price of A$0.39, the stock is under trading halt, and no trading activity is allowed on the exchange. The stock is moving in a narrow range of A$0.6 – A$0.355 since mid-August 2020. However, after the acquisition details came out, the stock bounced by almost 9.72% the next day, from its lower end of the range.

Due to a sharp rally from mid-June to mid-August, The YTD return stands at ~200%.  

 

 


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