REG - Narf Industries PLC - LIFTING OF SUSPENSION

Narf IndustriesAnnouncement

14/07/2023 14:30

For best results when printing this announcement, please click on link below:
http://newsfile.refinitiv.com/getnewsfile/v1/story?guid=urn:newsml:reuters.com:20230714:nRSN1179Ga&default-theme=true

RNS Number : 1179G  Narf Industries PLC  14 July 2023

THIS ANNOUNCEMENT CONTAINS INSIDE INFORMATION AS STIPULATED UNDER THE UK
VERSION OF THE MARKET ABUSE REGULATION NO 596/2014 WHICH IS PART OF ENGLISH
LAW BY VIRTUE OF THE EUROPEAN UNION (WITHDRAWAL) ACT 2018, AS AMENDED.  ON
PUBLICATION OF THIS ANNOUNCEMENT VIA A REGULATORY INFORMATION SERVICE, THIS
INFORMATION IS CONSIDERED TO BE IN THE PUBLIC DOMAIN.

 

14 July 2023

 

NARF INDUSTRIES PLC

 

LIFTING OF SUSPENSION OF SHARE TRADING

Narf Industries plc ("Narf", the "Company", or the "Group"), (LSE:
'NARF')(OTCQB: NFIN.F), the cybersecurity group specialising in high-end
threat intelligence and critical infrastructure security, today announces
that, following publication of the audited financial statements for the year
ended 31 December 2022 ("FY2022"), suspension will be lifted and trading in
the Ordinary shares of the Company on the Official List will commence later
today.

Below is the Chairman's statement extracted from the recently published
Audited Financial Statements:

 

Dear Shareholder,

As the recently appointed Executive Chairman, this statement offers me the
opportunity to share your Company's accomplishments while acknowledging the
challenges transitioning from a private and entrepreneurial led venture to the
main operating business of an LSE listed company.

 

Accomplishment and Goals

It has been a year of significant growth and development within the Group. Our
committed team of 15 research and software developers led by our CEO, Steve
Bassi, delivered record breaking year-end contracted backlog of $10.4 million.
It speaks to the trust and confidence government entities place in our highly
specialized team and underscores its strong reputation as an innovative and
reliable partner.

The backlog is 4x our 2022 revenue of $2.5 million.  The increase in
government contract backlog translates into a sustainable revenue stream for
our Group. These contracts provide a stable and predictable source of income,
enabling us to plan and execute business strategies with confidence.

From this backlog alone, the Group forecast $5.9m revenue in 2023, delivering
130% year on year ("YOY") growth (up from 30% growth in 2022).  A significant
decrease in expenses is also targeted this year.  As we transition from an
acquisition vehicle to focus on our core operations, we are expecting
operating expenses to drop by over 40% ($1.4 million) in 2023.

This combination of growing revenues and operational efficiencies help
position the Company to achieve break-even EBITDA for 2023. This compares to a
$2.6m operating loss in 2022. The plan looks to accomplish this performance
financed by internal cash generation and current credit line facilities.

In summary, our team in 2023 looks to execute an invaluable, high growth,
fiscally responsible Company that protects and builds shareholder value and
confidence.  From this foundation, we plan to aggressively grow our
government revenue, a market we are well positioned to scale and expand.  The
attractive net margins, along with our innovative government funded R&D
work, can fuel our intellectual property (IP) commercialisation targeted to
multi-billion dollar cybersecurity market segments.

I'd like to express my appreciation to the team for their work ethic that
delivered this outstanding business performance to date.  I'd like to thank
our customers that acknowledge our worth through repetitive contract awards.

 

Fiscal Year 2022 Audit

This is the first financial reporting period for which consolidated financial
statements, incorporating the businesses acquired in March 2022 (see Note 8 to
the Financial Statements), are subject to International Finance Reporting
Standards (IFRS).

This administrative burden introduced by IFRS presented a significant hurdle
for a small team of 15 research and software developers busy meeting contract
deadlines, generating revenue and cash flow.  Previously, the private
businesses produced records and internal documents only needed for servicing
its contracts and primarily for tax purposes. This lack of infrastructure and
resources caused the Company to miss its 30 April 2023 deadline and led to
suspension of trading in its shares.

Today we've announced the completion of the audit expect the trading
suspension will be lifted within a matter of days.  However, not without
accepting and acknowledging significant auditor disclaimers.

I've taken this decision to accept the auditor's disclaimers now.  It's
become evident that resolution will require more time and extending the
trading suspension of our shares would unfairly impact our shareholders,
limiting their ability to engage with the market and potentially eroding
investor confidence.

I want to assure you that this disclaimer of opinion does not diminish the
value of the team's achievement or the underlying strength of our business.
We are committed to resolving these issues and bringing the Company's
consolidated financial reporting practices up to standards.

There are several matters linked to the disclaimer that need resolution, but
it's our inability to date to provide auditors access to a sensitive contract
(and all materials associated with that contract), and our estimated timeline
for resolution, that's most influenced my decision.

This contract accounts for about 50% of our reported 2022 revenue with terms
that state disclosing the name of the customer, their address, or the nature
of the work to restricted parties, is a basis for termination.  We are
navigating this situation carefully and executing a plan to resolve this
matter over the course of the next quarter in the interest of all parties.

As you read this annual report and the Company's accounts, please be aware any
financial figures presented are subject to adjustment for overstatement or
understatement as we work with auditors to confirm the appropriate accounting
treatment.   The Company believes it has taken a conservative approach in
its presentation of the accounts, for example applying a revenue recognition
that errs on the side of understatement.

 

Period of Transition

This year's audit circumstance speaks to the challenges we face managing
record revenue growth while building the infrastructure required of a publicly
reporting entity.  While growth is a positive indicator, it requires us to
remain agile and adapt our administrative systems to meet the evolving needs
of our expanding organisation.

While establishing the necessary administrative and financial infrastructure
during this transitional phase is important, it's equally vital to instill a
shared understanding among our team that effective governance and responsible
management extend beyond mere structures and processes.   For these reasons,
your CEO strengthened the Board and executive team in late April 2023, with my
appointment as Executive Chairman and appointment of our CFO.

Although posing short-term challenges, we recognise the long-term benefit of
investing now to improve the quality of our executive leadership, financial
reporting, and business execution to instill confidence in our stakeholders
and facilitating better analysis and decision-making.

In respect to our most pressing challenge, our team, now resourced with a new
CFO, will continue to work diligently, and resolve all matters.

 

Looking Forward

I am privileged to lead the Board, and as Executive Chairman, join the CEO and
his team to actively develop, lead, and execute strategies to grow the
business.  I would like to express my gratitude to our shareholders for their
understanding during this initial, difficult past few months.

Here's what to expect in the next 6 months:

·      Scale and expand our government business.  We have the potential
to turbo-charge our growth, in a market we already know, with a proven
competitive position.  Our team is already fast at work in driving success
and identifying 18, 36, and 54 month strategic growth goals.

·      Unlock the value of our IP with innovative and efficient go to
market strategies.

·      Build an experienced and capable Board.  We look to align
strategic objectives with specific areas of expertise, source qualified
candidates, and appoint new members over the course of the year.

·      Strengthen our internal and external financial reporting. A solid
foundation to support our decision-making processes, protect the interests of
our shareholders, and maintain the trust of our stakeholders is paramount.
Included is a resolution of our auditor's disclaimers and opinion.

·      Maximize shareholder value.  We are committed to engaging with
the investment community to ensure our accomplishments and strategies are
reflected in the valuation of our Company.

Thank you all.

John Herring

Executive Chairman

 

 

 

ENDS

For further information on the Group please visit www.narfgroup.com
(http://www.narfgroup.com) or contact:

 John Herring                                   NARF                 Tel: +44 (0) 20 3468 2212
 Catherine Leftley/Paul Dulieu/Isabel de Salis  St Brides Partners   narf@stbridespartners.co.uk
 Peter Krens                                    Tennyson Securities  Tel: +44 (0)207 186 9030

 

 

About NARF Industries plc

Narf Industries (LSE: NARF)(OTCQB: NFIN.F) is a US based cyber security group
specialising in high-end threat intelligence with a focus on critical
infrastructure. The Group leads commissioned cyber security R&D and is
commercialising a portfolio of products including TIGR that can be used by
utilities and cyber first responders to restore power to electric grids and
protecting other key infrastructure that have suffered a cyber-attack. The
Group aims to further strengthen its portfolio organically and via
acquisition; its team of highly qualified cyber security experts is well
placed to identify opportunities.

 

 

Important notice

The content of this announcement has not been approved by an authorised person
within the meaning of the Financial Services and Markets Act 2000 (FSMA). This
announcement has been issued by and is the sole responsibility of the Company.
The information in this announcement is subject to change. This announcement
is not an offer of securities for sale into the United States. The securities
referred to herein have not been and will not be registered under the U.S.
Securities Act of 1933, as amended (the Securities Act), and may not be
offered or sold, directly or indirectly, in or into the United States, except
pursuant to an applicable exemption from registration. No public offering of
securities is being made in the United States. This announcement is not for
release, publication or distribution, directly or indirectly, in or into the
United States, Australia, Canada, the Republic of South Africa, Japan or any
jurisdiction where to do so might constitute a violation of local securities
laws or regulations (a Prohibited Jurisdiction). This announcement and the
information contained herein are not for release, publication or distribution,
directly or indirectly, to persons in a Prohibited Jurisdiction unless
permitted pursuant to an exemption under the relevant local law or regulation
in any such jurisdiction.

 

 

This information is provided by RNS, the news service of the London Stock Exchange. RNS is approved by the Financial Conduct Authority to act as a Primary Information Provider in the United Kingdom. Terms and conditions relating to the use and distribution of this information may apply. For further information, please contact
rns@lseg.com (mailto:rns@lseg.com)
 or visit
www.rns.com (http://www.rns.com/)
.

RNS may use your IP address to confirm compliance with the terms and conditions, to analyse how you engage with the information contained in this communication, and to share such analysis on an anonymised basis with others as part of our commercial services. For further information about how RNS and the London Stock Exchange use the personal data you provide us, please see our
Privacy Policy (https://www.lseg.com/privacy-and-cookie-policy)
.   END  SRSRIMJTMTTBBMJ