Falanx expands further with acquisition of Secure Storm

Cyber security and intelligence provider Falanx Group announced the acquisition of Secure Storm on Tuesday, which it said was in line with its strategy of increasing value in the high-growth cybersecurity market.

The AIM-traded firm described Securestorm as a privately-held company, which was incorporated in 2017 following a restructuring of a predecessor business owned by the vendors.

It said it provides professional services and consultancy regarding cyber and cloud security, along with the associated regulatory requirements such as GDPR.

Corporate customers reportedly included Fortune 100 companies, with Secure Storm holding large managed service contracts with several UK government organisations.

The consideration of £0.1m was to be satisfied by the issue of 2,222,222 Falanx new ordinary shares, with the vendors subject to certain lock in arrangements.

For the year ended 30 June 2017, Secure Storm had revenues of around £0.7m, operating profits of £0.03m and net assets of £0.02m at year-end.

In the latter part of 2017, Falanx said an investment in delivery capability was made ahead of a planned increase of revenues.

Unaudited management accounts for the 11 months to 31 May this year showed revenues of £0.5m, and an operating loss of £0.15m.

Net liabilities were around £0.13m at 31 May, which were mainly due to HMRC, the board said, where a deferred payment scheme had been agreed and was in place.

Falanx said the majority of Secure Storm’s losses were incurred before December last year.

They had apparently since been eliminated by customer contract wins and cost reductions.

In recent months, Secure Storm had been at break even, with a reportedly strengthening pipeline of business.

“The acquisition of Secure Storm provides Falanx with a number of exciting opportunities, to both support our growing UK government business and expand our footprint in these marquee organisations,” said Falanx chairman and chief executive officer Mike Read.

“The unique relationship with Amazon Web Services and the introduction of our MidGARD service to a global marketplace 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.”