For personal use only. Appendix 4C Quarterly Report for the Quarter Ended 30 September 2018

Transcription

1 2018 Quarterly Reprt fr the Quarter Ended 30 September 2018

2 APPENDIX 4C fr the quarter ended 30 September 2018 WHITEHAWK LIMITED WHITEHAWK LIMITED (ASX: WHK OR THE COMPANY ), THE FIRST GLOBAL ONLINE CYBER SECURITY EXCHANGE ENABLING SMALL AND MIDSIZE BUSINESSES TO TAKE SMART ACTION TO ADDRESS CYBER RISK, IS PLEASED TO PROVIDE AN UPDATE ON ITS PROGRESS FOR THE THIRD QUARTER HIGHLIGHTS Annunced 360 Cyber Risk Framewrk cntract pipeline fr real-time Vendr Cyber Risk Management Strng pipeline f cntract pprtunities in the United States including US Federal Gvernment, Defense Industrial base, Utilities, Manufacturing and Financial sectr Launch f tailred versins f 360 Cyber Risk Framewrk fr prime custmer supply chain cyber risk management with BitSight cyber risk ratings; cntinuus mnitring, cyber risk alerts, and WhiteHawk risk mitigatin analytics, Artificial Intelligence (AI) risk prfile and matching t vendr ptins in real-time t custmers Third quarter cash cllected f US$191K is a substantial increase ver the previus quarter f US$59K. Year-t- date ttal cash cllected is US$263K as cntracts have started t cmmence. WhiteHawk has partnered with the US Cybercrime Supprt Netwrk, as a primary respnse arm fr small and midsize entities which have suffered a cybercrime r breach The Cybercrime Supprt Netwrk (CSN) website is due t launch 15 Nvember. When businesses which are the subject f a cybercrime r fraud event cme t the CSN website t reprt a cybercrime r fraud event, they will be cnnected with respnse and mitigatin services Cyber Risk Framewrk prf f value cntract with a US Natinal Health Care nt fr prfit rganizatin fr up t 40 Vendr Cmpanies (phase 1 nging) annunced pst quarter end Cyber Risk Framewrk prf f value cntract with a US Eastern Seabard Utility Sectr Cmpany fr up t 40 Vendr Cmpanies (phase 1 nging) annunced pst quarter end New AI Driven Custmer Accunt Maturity Envirnment Release 3.0 f Advanced Risk Prfile and Prduct Matching Integratin f external Risk Rating and Industry Standard Cyber Maturity prviding a seamless custmer experience and view f their cyber jurney Best f Breed Cyber Risk Rating n Demand Custmer view f desired maturity state and timeline Easy t understand custmized cyber risk actin plan 2

3 APPENDIX 4C fr the quarter ended 30 September 2018 WHITEHAWK LIMITED Release 3.0 f Website with updated design and ease f navigatin f WhiteHawk Services Cyber Prfile Fitness Scale based n the WhiteHawk CyberPath, demnstrating custmers cyber risks based n industry trends Risk Rating summarizing cyber strengths and weaknesses Maturity framewrk shwing cre areas t be addressed Custmized actin plan t increase cyber maturity Custmer Impact/Autmatin Scales custmer nline autmated WhiteHawk Jurney Prduces actinable insights & maturity actin plans, empwering custmers Over 600 Vendr Prducts and Services have been n barded that are impactful and affrdable fr small and midsized entities t purchase either via a WhiteHawk Cyber Analyst r the pen nline marketplace Jint Venture with Salmn Ventures, gaining deep insight int Utility Sectr Cyber Risk cncerns and current appraches, starting a dialgue with ver 50 Utility Cmpany, Assciatin, and Regulatry Executives in the Private and Public Sectrs and are nw develping tailred slutins fr additinal utilities New sales ffering t large financial institutins prviding cyber risk ratings, risk prfiles, actin plans, and mitigatin services fr their small and midsize entity custmers, thereby reducing revenue lss and lan defaults, as a result f a cybercrime r fraud attack. Currently in prduct discussins with a large scale US financial Institutin Currently the nly cybersecurity platfrm that can effectively service small and midsize entities at scale acrss the US. A glbal rll-ut is expected in the future THIRD QUARTER REVENUE Third quarter cash cllected f US$191K is a substantial increase ver the previus quarter f US$59K. Year-t- date ttal cash cllected is US$263K. In the third quarter Cyber Risk Framewrk cash cllectins were US$92K, with the remaining US$99K frm advisry cnsulting wrk. WhiteHawk has imprved grss margin f 360 Cyber Risk Framewrks, by develping the Cyber Risk Screcard which prvides an actin plan t address risks identified by the risk ratings with in huse Cyber Analysts instead f utsurcing and is implementing this ffering in all prpsals ging frward. This additinal service f WhiteHawk Cyber Risk Screcards has been well received by custmers and is nw being asked fr as an additinal ptin fr all 360 Cyber Risk Framewrks. Accunts receivable f US$175K as f 30 September are expected t be cllected in the furth quarter. WhiteHawk expects revenues frm the first 50 supply chain cmpanies referred t the WhiteHawk platfrm frm a tp 10 US Financial Institutin which undertk the 360 Framewrk. These 50 cmpanies will need t mitigate identified cyber risks in the 360 analysis. This Financial Institutin 3

4 APPENDIX 4C fr the quarter ended 30 September 2018 WHITEHAWK LIMITED has an additinal 200 t 500+ cmpanies in its supply chain which can ptentially be reviewed fr inclusin in the framewrk in Sales Channels WhiteHawk cntinues t execute three sales channels, designed t drive small and midsize entities t the WhiteHawk nline platfrm t receive Cyber Risk Prfiles and purchase Cyber Risk Ratings, Risk Screcards, and cyber security prducts and services. 1. The 360 Cyber Risk Framewrk fr majr manufacturing, defense industrial base, financial institutins, and utilities. The Framewrk is designed t identify and mitigate the cyber risks f a large business supply chain and vendr cmpanies. There is an upfrnt sale f a tailred versin f the Framewrk and then the risk mitigatin services fr each vendr as needed. 2. The recently released 3.0 WhiteHawk Jurney fr small and midsize entities via the nline platfrm, maps a cmpany s cyber risk while prviding best practice and prduct ptins fr mitigatin. The nline jurney begins with the CyberPath Questinnaire, fllwed by risk scring thrugh a WhiteHawk partner and ends with a custm Cyber Risk Prfile frm WhiteHawk including custmized prduct ptins and recmmendatins via a WhiteHawk virtual cyber analyst. 3. WhiteHawk has partnered with the US Cybercrime Supprt Netwrk, as a primary respnse arm fr small and midsize entities which have suffered a cybercrime r breach. The CSN website is due t launch 15 Nvember, when businesses which are the subject f a cybercrime r fraud event will be cnnected with WhiteHawk respnse and mitigatin services as an nline ptin available t them. Revenue Streams WhiteHawk has three current revenue streams Sales f cyber prducts and services via the nline Exchange Sales f 360 Cyber Risk Framewrks and Risk Screcards t large crpratins Executive Cyber Risk Cnsulting Services t large gvernment and industry enterprises Whitehawk has tw nline revenue mdels which are being activated Sales f virtual Advisry Bundle Services (4 th qtr. 2018) Business Intelligence Subscriptins (2019) The Cmpany cntinues t fcus n rganic web search results fr cyber risk and cyber security which drives small and midsize entities t the Cmpany's website. The Cmpany's digital team cntinues t design and implement website ptimizatin, site strategy and future audit, brand building, cntent generatin, and sales and marketing campaigns t drive site visits. In additin, the Cmpany's new in-huse technical team are making next generatin AI imprvements t the 4

5 APPENDIX 4C fr the quarter ended 30 September 2018 WHITEHAWK LIMITED CyberPath Decisin Engine, which simplifies a custmer s nline cyber risk prfile and purchasing prcess. Current Cntracts WhiteHawk current cntracts include: 360 Cyber Risk Framewrk in supprt f tp 10 Financial Institutin Vendr Risk Management fr the first 50 cmpanies (phase , phase being scped) Executive Cyber Risk Management cnsulting services fr Department f Hmeland Security (phase with BAE Systems, phase 2 in 2019 being scped) Cyber Risk Framewrk prf f value cntract with a US Natinal Health Care nt fr prfit rganizatin fr up t 40 Vendr Cmpanies (phase 1 nging) Cyber Risk Framewrk prf f value cntract with a US eastern Seabard Utility Sectr Cmpany fr up t 40 Vendr Cmpanies (phase 1 nging) Onging nline cyber risk services t small and midsized entities via nline platfrm TECHNOLOGY UPDATE The next phase f the WhiteHawk nline platfrm architecture has been cmpleted, in rder t cnslidate and ptimize the WhiteHawk peratinal platfrm, nw lcated in tw clud envirnments. With the cntinued grwth f the Vendr Marketplace, next phase bjective is t utilize a single AWS clud envirnment; thereby simplifying the cnfiguratin and technical release management while reducing IT peratinal security risks. All data science, architecture, and prduct develpment are nw led and executed by the WhiteHawk Team, vice being utsurced. RESEARCH & DEVELOPMENT Release 3.0 CyberPath Decisin Engine Release 3.0 is the direct result f the WhiteHawk develpment and data science team and their ability t transitin WhiteHawk s CIO s visin f an easy t understand Custmer Jurney, prviding an enabling, intuitive, and impactful nline experience fr all the Cmpany s business custmers. With Release 3.0, WhiteHawk s nline technlgy has advanced frm a vertical implementatin f cre cyber risk framewrk capabilities (risk rating, marketplace) t an integrated, hrizntal, and hlistic apprach t aligning slutins and services based n industry best practices fr cyber maturity, t individualized needs f a cmpany/custmer. The WhiteHawk platfrm nw sets the path fr actinable Cyber Risk decisin making and resurcing by the custmer in a manner that is easy t demnstrate t their Executive teams and bards with real insight. In this way, WhiteHawk has a custmized partnership with each custmer t guide them n their path t cyber maturity and resiliency t cybercrime and fraud. 5

6 APPENDIX 4C fr the quarter ended 30 September 2018 WHITEHAWK LIMITED In additin t the WhiteHawk AI Questinnaire, WhiteHawk integrates cyber risk ratings frm strategic partners t further identify key cyber weaknesses and vulnerabilities in which the custmer can capture and plan actins t mitigate knwn weaknesses while at the same time increase cyber awareness and maturity. Furthermre, WhiteHawk s CyberPath Decisin engine cntinues t mature in the cllectin and cntinuus learning f infrmatin gathered acrss pen and industry surces, thereby increasing the autmatin and matching f cyber slutins and services tailred t the custmer. In additin, WhiteHawk cntinues t autmate and integrate with external services and strategic partners fr custmer management t prvide an end-t-end apprach t mitigating cyber risks and vulnerabilities. R&D Expenses R&D expenses fr the third quarter fcused n the Release 3.0 future imprvements t the nline platfrm, Marketplace, and CyberPath Questinnaire. This fcused investment in R&D has resulted in an advanced analytics apprach t assess custmer cyber risks by industry, scale, and need, thereby advancing frm best practice apprach t prviding tailred slutin bundle ptins fr the custmer fr immediate purchase nline r via a Cyber Analyst. R&D cst reductins were achieved in the third quarter frm cmpletin f Release 3.0 and the transitin t in huse talent instead f subcntractrs resulting in cntinued prjected cst reductins ging frward. WhiteHawk has been successful in btaining talent that will allw R&D direct labur csts t be efficiently managed. MARKETING WhiteHawk cntinues t cntract best f breed cyber security prducts, slutin industry leaders and strategic partnerships with innvative cmpanies such as CrwdStrike, Pal Alt Netwrks, Cludflare and BitSight. This has established a trusted natinal identity. With the partnership with the Cybercrime Supprt Netwrk, WhiteHawk has expanded its prtfli f respnse and remediatin prducts and services. OUTLOOK With a strng pipeline f ver 50 custmers which are in mature stages f business develpment acrss the Defense Industrial Base, Utility Sectr, Manufacturing Sectr, and Financial Sectr, the Cmpany expects three additinal sales f the 360 Cyber Risk Framewrk in 2018 and tw further sales in early The resulting scrutiny f the hundreds f suppliers in a client s supply chain creates a multiplier effect n prducts in the WhiteHawk Exchange, as cmpanies in the supply chain act t mitigate cyber risks. Supply chain size can range frm 50 t 4,500 cmpanies per prime custmer, depending n the sectr and size. The Cybercrime Supprt Netwrk website, which ffers a new autmated apprach fr reprting crime and fraud, is due t launch 15 Nvember. This has the ptential t deliver immediate 6

7 APPENDIX 4C fr the quarter ended 30 September 2018 WHITEHAWK LIMITED revenues frm cmpanies reprting a cybercrime r breach that are in need f immediate impactful and affrdable cyber respnse services. After tw years f research and utreach, the Cmpany is putting in place the ability t scale referrals fr affrdable nline sales f cyber security liability insurance fr small and midsized entities with an internatinal and reputable Insurance Sectr prvider and underwriter. In the third quarter WhiteHawk cntinued t implement cst reductins t ptimize cash runway. These cst reductins remain in place int the furth quarter, cash utflws include prduct manufacturing csts which are directly prprtinal t revenue with a psitive grss margin. WhiteHawk will cntinue t streamline peratins while driving a rbust pipeline f 2018 and 2019 cntract prpsals. Third quarter cash inflws f US$298K were expected. As at quarter end US$191K in accunts receivable were cllected. An additinal US$73K was cllected in Octber t date with the remaining US$34K t be cllected in the furth quarter. Subsequent t the quarter end and in rder t effectively deliver a number f ptential majr sales engagements, WhiteHawk undertk an Entitlements Issue n a 1 fr 2 basis at 4.5c per share with a free attaching 2 year 10c ptin t raise $1.6m befre csts. T date, WhiteHawk has received AUD$805K with Viaticus Capital mandated t place the balance shrtfall f AUD$800K at any time up t 17 th January In additin, further t the disclsure f an ffer in the last quarter, frm a UK Institutinal Investr, fr a $1M cnvertible nte, Viaticus Capital has arranged fr the ffer t be revised t an equity ffer t subscribe fr AUD$1.2M in rdinary shares in the cmpany at the recent Entitlements Issue price f 4.5c, which subscriptin may cmprise part f the shrtfall frm the Entitlements Issue. This subscriptin ffer is likely t be cmbined with an equity swap which wuld ptentially enable the Cmpany t participate in any share price rise ver the next 12 mnths. The term sheet is in the prcess f being finalized and the transactin is subject t cntract. As f September 30, 2018, WhiteHawk has a cash balance f US$517K, with the prceeds f the Entitlements Issue as f Octber 31, WhiteHawk s cash balance is US$928K (AUD$1.3M) DISCLOSURE STATEMENT The Additinal Infrmatin t quarterly reprt ("the Additinal Infrmatin") is given in summary frm and des nt purprt t be cmplete. The Additinal Infrmatin including financial infrmatin, shuld nt be cnsidered as a financial prjectin, advice r a recmmendatin t any particular r ptential investrs in relatin t subscribing fr securities in WhiteHawk. Befre acting n any infrmatin readers shuld cnsider the apprpriateness f the infrmatin having regard t these matters, any relevant ffer dcument and in particular, readers shuld seek independent financial advice. All securities invlve risks, which include (amng thers) the risk f adverse r unanticipated market, financial r plitical develpments and, in internatinal transactins, currency risk. The Additinal Infrmatin may include statements regarding the Cmpany's intent, belief r current expectatins with respect t ur businesses and peratins, market cnditins, revenues, market penetratin, and results f peratins. Readers are cautined nt t place undue reliance n these statements. WhiteHawk des nt undertake any bligatin t publicly release the result f any revisins t these statements t reflect events r circumstances after the date heref t reflect the ccurrence f unanticipated events. While due care has been used in the preparatin f the Additinal Infrmatin, actual results may vary in a materially psitive r negative manner and are subject t uncertainty and cntingencies utside WhiteHawk's cntrl. 7

8 Quarterly reprt fr entities subject t Listing Rule 4.7B +Rule 4.7B Quarterly reprt fr entities subject t Listing Rule 4.7B Intrduced 31/03/00 Amended 30/09/01, 24/10/05, 17/12/10, 01/09/16 Name f entity WhiteHawk Limited ABN Quarter ended ( current quarter ) September 2018 Cnslidated statement f cash flws 1. Cash flws frm perating activities 1.1 Receipts frm custmers 1.2 Payments fr (a) research and develpment (b) prduct manufacturing and perating csts Current quarter Year t date (9 mnths) (274) (1,030) (192) (283) (c) advertising and marketing (14) (192) (d) leased assets - - (e) staff csts (248) (701) (f) administratin and crprate csts (227) (782) 1.3 Dividends received (see nte 3) Interest received Interest and ther csts f finance paid Incme taxes paid Gvernment grants and tax incentives Other (GST) Net cash frm / (used in) perating activities (752) (2,668) 2. Cash flws frm investing activities 2.1 Payments t acquire: (a) prperty, plant and equipment - - (b) businesses (see item 10) - - (c) investments See chapter 19 fr defined terms 1 September 2016 Page 1

9 Quarterly reprt fr entities subject t Listing Rule 4.7B Cnslidated statement f cash flws Current quarter Year t date (9 mnths) (d) intellectual prperty - - (e) ther nn-current assets (Bnds paid) 2.2 Prceeds frm dispsal f: (a) prperty, plant and equipment - - (b) businesses (see item 10) - - (c) investments - - (d) intellectual prperty - - (e) ther nn-current assets - (1) 2.3 Cash flws frm lans t ther entities Dividends received (see nte 3) Other (prvide details if material) Net cash frm / (used in) investing activities - (1) 3. Cash flws frm financing activities 3.1 Prceeds frm issues f shares Prceeds frm issue f cnvertible ntes Prceeds frm exercise f share ptins Transactin csts related t issues f shares, cnvertible ntes r ptins (4) (469) 3.5 Prceeds frm brrwings Repayment f brrwings Transactin csts related t lans and brrwings Dividends paid Other (prvide details if material) Net cash frm / (used in) financing activities (4) (469) 4. Net increase / (decrease) in cash and cash equivalents fr the perid 4.1 Cash and cash equivalents at beginning f quarter/year t date 4.2 Net cash frm / (used in) perating activities (item 1.9 abve) 4.3 Net cash frm / (used in) investing activities (item 2.6 abve) 4.4 Net cash frm / (used in) financing activities (item 3.10 abve) 1,276 3,682 (752) (2,668) - (1) (4) (469) + See chapter 19 fr defined terms 1 September 2016 Page 2

10 Quarterly reprt fr entities subject t Listing Rule 4.7B Cnslidated statement f cash flws 4.5 Effect f mvement in exchange rates n cash held 4.6 Cash and cash equivalents at end f quarter** Current quarter Year t date (9 mnths) (3) (27) ** As f September 30, 2018, WhiteHawk has a cash balance f US$517K, with the prceeds f the Entitlements Issue and Shrtfall Offer t date, WhiteHawk s cash balance as f Octber 31, 2018 is US$928K (AUD$1.3M) 5. Recnciliatin f cash and cash equivalents at the end f the quarter (as shwn in the cnslidated statement f cash flws) t the related items in the accunts Current quarter Previus quarter 5.1 Bank balances Call depsits 454 1, Bank verdrafts Other (prvide details) Cash and cash equivalents at end f quarter (shuld equal item 4.6 abve) 517 1, Payments t directrs f the entity and their assciates Current quarter $US' Aggregate amunt f payments t these parties included in item Aggregate amunt f cash flw frm lans t these parties included in item Include belw any explanatin necessary t understand the transactins included in items 6.1 and N/A 7. Payments t related entities f the entity and their assciates Current quarter $US' Aggregate amunt f payments t these parties included in item Aggregate amunt f cash flw frm lans t these parties included in item Include belw any explanatin necessary t understand the transactins included in items 7.1 and N/A + See chapter 19 fr defined terms 1 September 2016 Page 3

11 Quarterly reprt fr entities subject t Listing Rule 4.7B 8. Financing facilities available Add ntes as necessary fr an understanding f the psitin Ttal facility amunt at quarter end Amunt drawn at quarter end 8.1 Lan facilities Credit standby arrangements Other (please specify) Include belw a descriptin f each facility abve, including the lender, interest rate and whether it is secured r unsecured. If any additinal facilities have been entered int r are prpsed t be entered int after quarter end, include details f thse facilities as well. Further t the disclsure f an ffer in the last quarter, frm a UK Institutinal Investr, fr a $1M cnvertible nte, Viaticus Capital has arranged fr the ffer t be revised t an equity ffer t subscribe fr AUD$1.2M in rdinary shares in the cmpany at the recent Entitlements Issue price f 4.5c, which subscriptin may cmprise part f the shrtfall frm the Entitlements Issue. This subscriptin ffer is likely t be cmbined with an equity swap which wuld ptentially enable the Cmpany t participate in any share price rise ver the next 12 mnths. The term sheet is in the prcess f being finalized and the transactin is subject t cntract. 9. Estimated cash utflws fr next quarter 9.1 Research and develpment Prduct manufacturing and perating csts Advertising and marketing Leased assets Staff csts Administratin and crprate csts Other (prvide details if material) Ttal estimated cash utflws Acquisitins and dispsals f business entities (items 2.1(b) and 2.2(b) abve) Acquisitins Dispsals 10.1 Name f entity Place f incrpratin r registratin 10.3 Cnsideratin fr acquisitin r dispsal Ttal net assets Nature f business See chapter 19 fr defined terms 1 September 2016 Page 4

12 Quarterly reprt fr entities subject t Listing Rule 4.7B Cmpliance statement 1 This statement has been prepared in accrdance with accunting standards and plicies which cmply with Listing Rule 19.11A. 2 This statement gives a true and fair view f the matters disclsed. Sign here: OCTOBER 2018 Date:... (Directr/Cmpany secretary) KEVIN KYE Print name:... Ntes 1. The quarterly reprt prvides a basis fr infrming the market hw the entity s activities have been financed fr the past quarter and the effect n its cash psitin. An entity that wishes t disclse additinal infrmatin is encuraged t d s, in a nte r ntes included in r attached t this reprt. 2. If this quarterly reprt has been prepared in accrdance with Australian Accunting Standards, the definitins in, and prvisins f, AASB 107: Statement f Cash Flws apply t this reprt. If this quarterly reprt has been prepared in accrdance with ther accunting standards agreed by ASX pursuant t Listing Rule 19.11A, the crrespnding equivalent standard applies t this reprt. 3. Dividends received may be classified either as cash flws frm perating activities r cash flws frm investing activities, depending n the accunting plicy f the entity. + See chapter 19 fr defined terms 1 September 2016 Page 5