Raisebook

Market Cap at IPO is approx. $24.5M with $9M in Cash, giving an EV of $15.5M
ArchTIS
ArchTIS
ASX:AR9

archTIS Limited is an Australian, award winning, information security company that has been successfully providing services to Australian and overseas governments for 12 years.

The Company was incorporated in December 2006 by Mr Bruce Talbot to design and build an information sharing platform for the Australian Department of Defence to host US and Australian TOP SECRET classified information.

This platform was one of the first secure content and collaboration software solutions accredited to TOP SECRET by the United States and Australian Departments of Defence.

Raise Amount
$8,000,000
Offer Price
$0.2000
Closes
Aug 17, 2018

It enables the secure sharing of sensitive information and allows for multiple recipients to automatically access different versions of a document in line with their respective security clearances.

Historically, the Company has generated income from providing consulting and system integration services to meet the special security needs of government clients.

To date, the delivery of its projects has seen the Company generate revenues of approximately $13 million over the last six years.

The company is currently undertaking an IPO of a minimum of 40 million shares at an issue price of $0.20 per share to raise a minimum of $8 million.

Following the listing on the ASX, in addition to these services, the Company will seek to generate additional revenues from the commercial sales, licensing and delivery of Kojensi and DataKloak, the Company’s software products that enable secure information sharing in the cloud and within organisations.

Each day, the need and desire for organisations to share information and to secure information increases.

It is this ability, to achieve sharing as well as security, that archTIS is looking to commercialise through its Kojensi product and is looking to offer to any organisation wanting to protect and share its sensitive information.

archTIS has established relationships a successful record with industry partners to win and to execute sales opportunities. These partnerships include KBR, HP, Deloitte, Citadel Group.

The company’s Board features Stephen Smith and Leanne Graham.

Non-Executive Chairman Stephen Smith is a former Australian politician who was a member of the House of Representatives from 1993 to 2013. He served as a minister in the Rudd and Gillard Governments, including as Minister for Foreign Affairs (2007-2010), Minister for Trade (2010), and Minister for Defence (2010-2013).

Non-Executive Director Leanne Graham has over 30 years of executive sales and technology experience. Leanne served as the former New Zealand General Manager of ASX listed company, Xero (ASX: XRO).

archTIS’ market capitalisation at IPO is approx. $24.5M with approx. $9M in cash, giving the Company an Enterprise Value of circa $15.5M.

What are the key advantages of an investment in the Company?

archTIS Directors are of the view that the advantages of an investment in the Company include:

  • archTIS’s significant competitive advantage, due to its 12-year experience in implementing secure information sharing for government.
  • archTIS is one of the few companies to have built a solution accredited to hold TOP SECRET data that is shared between the US and Australian Governments.
  • archTIS personnel hold appropriate security clearances – a major barrier to entry to work within the defence, government, and intelligence communities.
  • Kojensi products are being built on the basic architecture that underpins the Defence solution that has been operational for 12 years.
  • Established reputation and solid strategic relationships built over a 12-year period with customers and industry partners locally and internationally.
  • Strong position from which to exploit the rapidly growing market for secure collaboration and sharing of sensitive information.

Please note, the company is exposed to various risk factors that have the potential to influence the operating and financial performance of the company. These risks can impact the value of an investment in the Shares of the Company. These risks are summarised in detail in Section 6 of the Disclosure Document.

The Offer

CPS Capital is Lead Manager to the IPO of archTIS Limited (ACN 123 098 671).

The offer is for 40,000,000 Shares at an issue price of $0.20 per Share to raise a minimum of $8,000,000.

In addition, the Company may accept oversubscriptions for up to a further 10,000,000 Shares at $0.20 to raise up to a further $2,000,000.

We understand from the Lead Manager CPS Capital, that a significant amount of the AUD$8,000,000 to be raised has already been committed by Institutions and High Net Worth investors.

The offer of the securities are made in, or accompanied by, a copy of the disclosure document which can be obtained by clicking on the "ACCESS DISCLOSURE DOCUMENT" button on this page.

Anyone who wants to acquire the securities will need to complete the application form that will be in or will accompany the Disclosure Document.

Before making an investment decision, potential investors should read the Disclosure Document entirely, and seek professional financial advice.

Technology markets, by their very nature, are a continually evolving marketplace. To succeed, the Company will need to research, develop, design, manufacture, assemble and bring to market new enhancements to its existing products as well as new products that are suitable for existing markets and new markets that might not yet exist.

Capital Structure

The capital structure of the Company following completion of the Offer (assuming full subscription) is summarised below:

Shares

Shares Number (min subscription) Number (over subscription)
Shares currently on issue as at the date of the Prospectus 83,096,982 83,096,982
Shares issued pursuant to the Offer 40,000,000 50,000,000
Total Shares on issue after completion of the Offer 123,096,982 133,096,982

Options

Options Number (same for min and over subscription)
Options on issue as at the date of the Prospectus:
Options exercisable at $0.10 on or before 10 October 2022 4,289,880
Options exercisable at $0.12 on or before 1 February 2021 7,500,000
Options exercisable at $0.20 on or before 1 July 2023 1,200,000
Options to be issued under the Offer Nil
Options to be issued to the Lead Manager under the Lead Manager Mandate 5,000,000
Options proposed to be issued to employees under the Performance Rights and Options Plan 1,600,000
Total Options on issue after completion of the Offer 19,589,880

Note: Please see the Disclosure Document for further detailed information relating to capital structure.

Indicative Timetable

Closing Date of the Offer 17 August 2018
Issue of Shares under the Offer 23 August 2018
Despatch of Holding Statements 23 August 2018
Expected Date for Quotation on ASX 27 August 2018

What makes up the market?

The size of the global content management and collaboration market is increasing. The global enterprise content collaboration market was valued at US$4.8 billion in 2017 and is expected to reach US$7.5 billion by the end of 2023, growing at a compound annual growth rate (CAGR) of 7.88% between 2017 and 2023.

The market is large and growing and archTIS has developed experience and is commercialising products to take advantage of this.

Within Australia, the 2017 Report on the ICT Procurement Taskforce to the Australian Government found that in 2015-16, Australian Government agencies reported that they spent $6.2 billion on information communication and technology (ICT) goods and services. In that same year, agencies estimated that they would procure $9.0 billion of ICT goods and services into future years across 17,000 contracts.

Cloud growth is set to continue, especially in the government sector.

Governments in the United Kingdom, United States, Australia and Europe have already adopted cloud first policies for ICT procurement where possible.

For example, in Australia the cloud computing policy requires agencies to use cloud services, provided they are deemed fit for purpose and represent value for money, for any new services or replacements of existing services.

How the Company Generates Revenue

In the last 6 years, the Company has generated approximately $13 million in consulting and systems integration services revenue focussed on its core intellectual property of secure information sharing.

archTIS's consulting business to government has provided cash flow, extensive market knowledge and credibility, relationships and a trusted platform from which to develop and launch new products.

To date, the company has completed the successful delivery of engineering and consulting services to client projects including:

  • the Australian Department of Defence's Identity Management Procurement Project;
  • the security architecture for all Australian Defence ICT - the Defence Single Information Environment Security Architecture (SIESA) - for which it received the Defence Excellence in Security Award
  • an architecture review of the network gateways between Australia and its security partners; and
  • the Landing Helicopter Dock Data Management System which integrates many of the logistics systems supporting the Australian Navy's newest supply and landing ships.

The success of archTIS's consulting business identified the opportunity to develop its intellectual property into software products to meet the growing market need to share classified and sensitive information within all levels of government as well as within the commercial sector.

Project-based income will be supplemented by growing revenue from its SaaS-based Kojensi product offerings as it expands its customer base outside of its traditional government client base.

After the successful completion of the Company’s pre-IPO fund raising activities, the Company has already achieved a number of milestones including:

  • the initial alpha release of the Company’s secure information sharing capability hosted in the Amazon cloud (AWS);
  • expansion of the Company’s development and sales capability;
  • establishment of a software development capability in Prague;
  • signing of contracts for the maintenance of a capability in the Australian Defence Department as well as support to the Government of Papua New Guinea; and
  • establishment of relationships with global partners who want to introduce the Company to their strategic clients, as well as to trial our Kojensi cloud product themselves.

Key Objectives on Completion of the Offer

archTIS’s objectives on completion of the Offer are to:

  • complete commercialisation of the secure information sharing platform to be released and sold as Kojensi Gov - a secure cloud service for government agencies;
  • successfully commercialise a new secure cloud service – Kojensi Cloud - for non- government markets that need to securely share sensitive information; and
  • commence sales and ongoing development of the Company’s services and products, as well as continue to source new developments to add value to Shareholders.

Upon completion of the Offer, the Company believes it will have sufficient funds to meet these objectives.

This deal closed on August 17, 2018