REG - Narf Industries PLC - Operational Update

Narf IndustriesAnnouncement

29/09/2022 07:00

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RNS Number : 0823B  Narf Industries PLC  29 September 2022

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29 September 2022

 

NARF INDUSTRIES PLC

 

OPERATIONAL UPDATE

 

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, is pleased to provide an inaugural
trading update, with an introduction and overview of operations, and a summary
of the expectations on the near to medium term including forecasted revenues.

 

HIGHLIGHTS

●     Completed the reverse takeover of Cyba plc in H1 2022

●     Changed name from Cyba plc to Narf Industries plc in August 2022

●     Signed agreement with partner SRI International ("SRI"), with SRI
becoming significant shareholder

●     Secured maiden contract for flagship TIGR product in July 2022 and
commenced integration phase for large Oil & Gas ("O&G") commercial
customer in August 2022 - expect roll-out by Q2 2023

●     Advanced discussions with other potential TIGR customers,
including Electric Grid customers

●   Department of Energy ("DoE") recently launched $45m fund to support
development of next-generation cyber tools to protect the power grid which is
ideal for TIGR commercialisation efforts

 

CEO, Steve Bassi, said: "With our portfolio of specialist cybersecurity
technology, a continually evolving pipeline of new products, a strong in-house
R&D team, and an enviable customer base, Narf will become a market-leading
supplier of cybersecurity software products.

Most notably, our flagship product, TIGR, is poised to address a vital market
need - namely protecting critical infrastructure against cyberattack ensuring
the lights stay on and natural gas keeps flowing even after the utility
suffers ransomware attempts and cyberattacks. The need for a product of this
kind is clear; nation state and extortionate cyberattacks are constantly on
the rise, in frequency and cost, becoming more dangerous to victims."

 

DETAILS

What Narf Does

Narf is a creator of Cybersecurity Products. It works with US government
departments, Research  powerhouses and large public utilities, focusing on
software solutions to safeguard critical infrastructures from targeted
cyberattacks.

Narf has a successful history of tendering for, and winning, Research and
Development ("R&D") contracts for potentially ground-breaking
technologies, predominantly from the US Department of Defense ("DoD") and
large R&D centres, like SRI International ("SRI").

R&D contracts tend to be for an initial period of between 12 and 24 months
and will be extended by the client once a path to Productization is clear. Our
government clients retain government purpose rights ("GPR") which allows Narf
to remain the sole IP expert and supplier back into the government. Narf
retains all intellectual property created as well as sole commercialization
rights.

Narf will ordinarily go from the Research Phase to the Development Phase
towards the second half of these initial contracts. Productization then kicks
in after both the Research and the Development Phase as the team turns the
R&D work into a commercially viable product. By the end of the R&D
contract the team will have identified commercial partners/distribution
channels, and first target Anchor customers as the Project moves from
Productization into Commercialization Phase.

Commercialization is expected to take several months before the Roll-Out Phase
where typically all anchor customers have signed and are fully utilising the
product, providing both a reference point and platform to ramp up
distribution.

At present, given the size of the team, consisting of less than 15 people,
only those projects with a large commercial potential are being pursued
through the Commercialization Phase. The Group plans to build its team over
the next three years by hiring both through the current team's extended
network and through further acquisitions.

Narf is now at an exciting inflection point in its business development and
has made excellent progress in recent months including:

●     Onboarded the Project Lead from SRI for TIGR last year, Dr.
Michael Locasto, now our Chief Technology Officer;

●     Increased contract wins for additional products helped by the
team's past successful projects within DoD;

●     Secured commercial rights and IP for TIGR following the contract
with SRI, with a large addressable market;

●     Commenced integration phase ahead of schedule last month with
first O&G customer;

●     Advancing four additional projects:

○     Ramping up the Commercialization of long established Software as a
Service ("SaaS") Product in 2023

○     Safedocs product to move to Commercialization stage shortly

○     Our AI Social Cyber product to move to Productization Phase

○     Earlier stage product in R&D;

●     Narf has identified and is in discussions with six key individuals
that will accelerate the various stages of each Project and further establish
our reputation within this industry for creating ground-breaking products; and

●     Narf continues to pitch for these types of Projects feeding our
Revenue Pipeline by a growing team with a well established relationship within
the DoD, SRI and other large R&D houses.

 

See the RTO Prospectus from 17 February (Pages 44 to 46) for more detail of
the Group's operations and products (see
https://narfgroup.com/investor-relations/corporate-documents
(https://narfgroup.com/investor-relations/corporate-documents) )

 

Our Key Products

Our three key products are at various stages:

●     TIGR - Commercialization

●     RANGER (Social Cyber) - End of R&D Phase

●     SAFEDOCS - Moving from Productization to Commercialization

 

TIGR - Threat Intelligence for Grid Recovery or "TIGR"

TIGR, the Group's flagship product, is a Hardware and Software Product
developed to apply continual integrity monitoring and detect even stealthy
cyberattacks deep inside Critical Infrastructure Industrial Control System
("ICS") devices.

In conjunction with a team of expert organisations including SRI
International, Dartmouth College and NYU, Narf has developed a product that
can be used by utilities and cyber first responders to both detect
cyberattacks and enable rapid vetting and restoration of power grids, post
attack. It is also applicable across different ICS devices in other utilities
such as Oil and Gas ("O&G") and Water Networks.

TIGR consists of two main components:

1.    hardware appliance that is installed in electric grid substations and
gas pipeline compressor stations.

2.    software subscription service allowing TIGR to continually identify
and stop emerging

and advanced cyberattacks.

Narf is spearheading TIGR's transition to the commercial market. TIGR has
taken four years to reach Commercialization coming out of the RADICS R&D
Programme (Rapid Attack Detection, Isolation and Characterization Systems).
The RADICS programme was funded by the US Government Department of Defense
R&D agency known as DARPA (Defense Advanced Research Projects Agency) with
a budget of over $200 million.

In May 2021, following the ransomware attack on the Colonial pipeline,
President Joe Biden signed an executive order requiring federal agencies to
improve cyber security for operational technology, and this was followed by
the Biden administration announcing in the full year 2023 budget US$11billion
towards civilian cyber security spending of which US$2.5billion going to the
Cybersecurity Infrastructure Security Agency - both events providing a helpful
background for the launch of TIGR.

In March 2022 the Group signed an agreement with SRI regarding SRI's
intellectual property rights and patents related to TIGR with SRI becoming a
significant shareholder in Narf and enabling us to act as the commercialising
partner.

 

TIGR Operations Update:

●     Narf signed its first customer just 3 months after completing the
RTO (4 months ahead of schedule);

●     Furthermore, it was a customer from Oil & Gas, expanding
Narf's potential market opportunity;

●     With the TIGR product Narf has a head start on the competition as
this is the only product on the market that is custom-made to address this
particular issue within Infrastructure protection;

●     Given Narf's limited resources in terms of headcount Narf is
focussed on the successful integration of its initial TIGR customer and
anticipates engaging more fully with its electricity clients in Q4 2022 and Q1
2023;

●     The regulator, the Department of Energy ("DoE"), recently
announced their cybersecurity fund. The Board expect to provide news on Narf's
involvement on this very shortly. The involvement will relate to DoE and
academic partners looking at the commercial applications around TIGR (see
https://www.energy.gov/articles/doe-announces-45-million-next-generation-cyber-tools-protect-power-grid
(https://www.energy.gov/articles/doe-announces-45-million-next-generation-cyber-tools-protect-power-grid)
).

●     TAM on the Electric Grid is over US$8 billion and Oil & Gas
Cyber Security spend is expected to rise to US$10 billion by 2025.

 

RANGER

Ranger relates to the Social Cyber R&D project for hybrid artificial
intelligence ("AI") to protect the integrity of cloud based open-source code.

On June 4th 2021 Narf was awarded a contract for DARPA's hybrid AI to protect
the integrity of open-source code. Narf successfully completed the initial
R&D Phase for the project ahead of schedule and is expected to shortly be
entering the Productization Phase to develop product(s) that detect supply
chain vulnerabilities and attacks in open-source code, like the SolarWinds
cyber attack in 2020 and the Kaseya VSA ransomware attack in 2021. Narf has
developed several proprietary AI methods for recognising, alerting and
remediating both intentional and unintentional security vulnerability
introductions into open-source code bases (e.g. the Linux kernel) that power
today's rapidly growing technology companies. Narf's new defensive technology
product is called Ranger and is an Open Source Software ("OSS") solution.

 

Ranger Operation Update:

●     Ahead of schedule with SocialCyber, moving into the Productization
stage with Ranger just 12 months after starting the original R&D work for
the DoD;

●     Productization is expected to start in Q4 2022, on which the Board
will be updating the market shortly;

●     Productization will last until Q4 2023, when Narf will begin the
Commercialization of the Ranger product;

●   Team believes that given the widespread usage of OSS by governments,
cloud operators and large software companies and its inherent vulnerability to
cyberattacks there is a considerable market opportunity for Ranger;

●    With Ranger Narf will have several proprietary AI methods for
recognising, alerting, and remediating both intentional and unintentional
security vulnerability introductions into open source-code bases;

●     Cloud based OSS cybersecurity market is expected to reach US$28
billion by 2024 (see
https://www.morganstanley.com/ideas/cloud-cybersecurity-convergence
(https://www.morganstanley.com/ideas/cloud-cybersecurity-convergence) )

 

SAFEDOCS

The SafeDocs DARPA programme is investigating technology that strengthens the
ability to parse complex document formats - safely. Document and file parsing
(e.g. MS Word documents) is where the majority of security vulnerabilities
leveraged by attackers are typically found. The R&D project was done in
conjunction with Narf's partner SRI and is currently in the Productization
Phase with initial customers, who process vast volumes of sensitive documents,
already identified.

The product will verify, protect and harden document and file parsers against
behaving unsafely, which will allow organisations to continue to interact with
customer provided documents - with far less risk of compromise of their agents
and privileged insiders.

 

SafeDocs Operation Update:

●     Following a successful four year Research Phase SafeDocs is now
moving into the Commercialization Phase;

●     The Product's technology will be applied within customers
respective Data environments on contracts amounting to between US$500,000 and
US$1 million per customer; and

●     Already commenced contract discussions with three potential
customers and expect to update the market in due course.

 

OUTLOOK

The last reported annual revenue for Narf was US$2.7 million. Narf is
expecting to grow to $4.4 million for this year ended 31 December 2022 ("Year
1"). By year ended 31 December 2023 ("Year 2") with the impact of TIGR and the
new DoD contracts we are expecting to generate revenues of approximately US$9
million of which we have around 80% visibility. We plan to increase headcount,
in particular within the TIGR integration team, which will help drive us to
our goal to reach revenues of over US$20 million by year ended 31 December
2024 ("Year 3").

 

ENDS

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

 Robert Mitchell                                   NARF                 Tel: +44 (0) 20 3468 2212
 Catherine Leftley/Charlotte Page/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 a DARPA-backed product (an
agency within the US Department of Defence) 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
Australia, the Republic of South Africa, Japan or any jurisdiction where to do
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Prohibited Jurisdiction). This announcement and the information contained
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