ARCHTIS LIMITED — Capital/Financing Update 2020

Nov 11, 2020

12 November 2020

ASX Announcement: AR9

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archTIS successfully raises $8.4 million to accelerate growth

Highlights

• Very strong demand resulting in commitments received from new and existing institutional and sophisticated shareholders which resulted in an $8.4 million Placement at $0.33 per share

• Funds will be used to to accelerate sales & marketing and build & execute the strong pipeline across the newly combined Kojensi and Nucleus Cyber businesses

• archTIS is well funded following this capital raising, with $13.5 million cash at bank

• The Company is continuing to show good progress with existing and new archTIS customer contracts

Placement

archTIS Limited (archTIS or the Company ) (ASX: AR9) is pleased to announce that binding commitments have been received from investors with respect to a Placement ( Placement ) to raise gross proceeds of approximately $8.4 million. amicaa and MST Financial acted as Joint Lead Managers to the placement. Their fee was 5% of gross proceeds.

The Placement comprises 25,454,545 million archTIS shares (Shares) to be issued at $0.33 per share. The Placement will be completed using archTIS’ existing placement capacity under ASX Listing Rule 7.1.

The issue price of $0.33 per Share represents a 15.0% and 13.7% discount to the volume weighted average price over the last five and ten trading days respectively prior to 10 November 2020.

Funds raised will be used to:

• Accelerate sales & marketing across the combined archTIS and Nucleus Cyber businesses, including cross-selling Attribute Based Access Control into the global Microsoft channel opportunity;

• Leverage the USA Nucleus Cyber team to market Kojensi into the North American market;

• Further execute the technology roadmap for Kojensi and NC Protect relative to customer requirements;

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• Commercialise new products, including DataKloak, to protect Big Data from unauthorised access; and,

• Invest in Nucleus Cyber.

Nucleus Cyber Acquisition

As announced on 29 October 2020, archTIS has agreed to acquire global information protection business Nucleus Cyber ( Nucleus ) for a total potential consideration of up to A$9.75m in archTIS shares.

This is a transformational acquisition that leverages our core capabilities, expands our offering into the Microsoft product suite and creates new sales and distribution channels globally.

The newly expanded product offering creates increased revenue diversity, scale, and a platform for accelerated growth that is expected to generate cross-selling opportunities between the client bases.

Nucleus Cyber recorded A$819,000 annual recurring revenue in FY20 at over 130% year on year growth from its high-margin, annual subscription-based software platform across a wide range of sectors including government and defence, financial services, healthcare, pharmaceuticals, energy and manufacturing.[ 1]

The recent co-sell agreement with Microsoft provides a gateway for easy integration into the world’s largest provider of digital collaboration business products, Microsoft. Microsoft will actively promote and sell Nucleus Cyber Protect product throughout the Microsoft field sales and channel resellers.

The acquisition of Nucleus Cyber offers unique opportunities for growth across Microsoft’s Teams, Office 365, SharePoint and Exchange products globally both on premise and in the cloud. The funding raised will help accelerate these opportunities.

Completion of the transaction remains subject to finalisation of standard documentation and shareholder approval and is expected before the end of calendar year 2020.

Operational Update

As announced in our September 2020 Quarterly Report, archTIS secured over A$5m of contracts and renewals during the quarter ending 30 September 2020 including:

• The landmark $4.2m contract with Department of Defence. Of which, $1.5m has been received in October and November 2020 to date;

• Renewal of two software maintenance and services contracts with Government agencies to the value of $400,000;

• Renewal and upgrade of the Kojensi contract with the Attorney General’s Department for a further 20 licences;

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1 Conversion USD1 : AUD0.70

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• Information Security Services contract with KPMG for an Australian Commonwealth National Security Agency to the value of $400,000;

• First Nucleus Cyber licence sale to 12[th] Level, who specialise in big data, analytics and artificial intelligence (AI) to solve complex data integration for organisations including the Australian Department of Defence; and,

• Bailey Abbott signed as a Kojensi Reseller for South Australia with a focus on the Space and Defence Industry, as well as Government more broadly.

Daniel Lai, archTIS CEO, said: “archTIS appreciates the continued support from shareholders. We were very pleased to see such strong demand from new investors and long-term holders, and are delighted to welcome additional quality institutional investors to the register. This capital will further strengthen the archTIS balance sheet and provides the company with the runway it requires to fully leverage the transformative acquisition of Nucleus Cyber.”

Authorised for issue by order of the Board of directors

ENDS

For further enquiries please contact:

Investors Daniel Lai Chris Shopov Managing Director archTIS E: investors@archTIS.com E: investors@archTIS.com

Media Daniel Paperny Mojo Media E: daniel.paperny@mojomedia.com.au

About archTIS Limited

archTIS Limited (ASX:AR9) is an award winning, global technology company focused on protecting sensitive information. Leveraging its strong pedigree with Government and Defence, the company has developed industry-leading information security platforms for sharing and collaborating on sensitive or classified information.

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