Excite expands cyber security with CBIT Digital Forensic acquisition

Excite Technology Services Limited has announced the signing of a binding term sheet to acquire 100% of the issued capital of CBIT Pty Limited and related entities, collectively known as CBIT Digital Forensic Services (CDFS). The acquisition remains subject to successful due diligence, as well as approvals from the ASX and Excite's shareholders.

This acquisition is poised to strengthen Excite's position in the Incident Response and Digital Forensics sectors. It is intended to broaden the company's capabilities and expand its presence in managed cyber security, deep digital forensics, accredited training, and IT services.

According to the data provided, CDFS has recorded unaudited revenues of AUD $14 million for the fiscal year ending 30 June 2024, with a normalised EBITDA of approximately AUD $954,000 after adjustments for related party expenses and one-time payments. It is expected that the transaction will be immediately accretive to Excite's financial performance.

The transaction details indicate an initial settlement payment comprising AUD $750,000 in cash and the issuance of 100,000,000 fully paid ordinary shares in Excite. An additional deferred payment of AUD $750,000 will be made by 1 July 2025, provided the vendors have not resigned from their positions within the group.

Furthermore, a performance-based consideration of up to AUD $2.4 million is also part of the agreement. This consideration hinges on CDFS achieving an audited EBITDA of AUD $1.8 million for the 12-month period ending 30 June 2025. If the EBITDA is less but not below AUD $1 million, a pro-rata payment will be made. Additionally, an outperformance consideration of up to AUD $800,000 is payable if EBITDA surpasses AUD $1.8 million, calculated on a dollar-for-dollar basis, and payable 50% in shares and 50% in cash. The base price for these shares will be the higher of AUD $0.015 per share or the 5-day Volume Weighted Average Price (VWAP) as of 30 June 2025.

Excite will also enter into a ten-year commercial lease agreement for a state-of-the-art digital forensics lab and training facility with a related party of the CDFS vendors. The facility, which includes vested interest from the Australian government, is part of CDFS's growth strategy and will enhance collaboration with Australian Intelligence and Law Enforcement agencies. This lease is valued at AUD $578,000 per year, and construction is expected to be completed by July 2025.

As part of the transaction, Excite will formalise employment agreements with the vendors of CDFS, including market-based salaries, short-term incentives, and performance rights. The due diligence process will commence immediately and is expected to take four weeks, followed by resolutions to be proposed at Excite's Annual General Meeting. The transaction is anticipated to close shortly after this meeting, likely in early August 2024.

Zoran Iliev, CEO of CDFS, expressed optimism about the acquisition. "We look forward to joining forces with Excite. This acquisition will significantly augment our capabilities, enabling us to deploy the results of our R&D efforts and provide AI-driven advanced cyber security defence strategies and incident response. The acquisition will unlock the value of providing our clients and partners with a more comprehensive and robust support framework. By deploying a rigorous digital forensic scientific approach, we will continue to ensure their digital assets and infrastructures are secure and resilient against emerging threats," he said.

Echoing this sentiment, Excite's CEO Bryan Saba commented, "We are thrilled to welcome CDFS into the Excite Group. This acquisition will enhance our service offerings and position the Company as a leader in incident response, with a capability that has uniquely been a feature of government agencies. I look forward to working with Zoran and CDFS to better serve our clients and drive growth. We look forward to working with the talented team at CBIT to achieve our shared goals."

The acquisition, once completed, is expected to drive revenue growth and deepen Excite's relationship with key Australian government and law enforcement agencies, securing its position within the digital forensics and cyber security sectors.