Pending Canada-Listed Cybersecurity Stock is Set to Own a Cash-Flow Positive Business

Project One Resources Inc. (CSE:PJO) announced a non-binding LOI to acquire Olympus Greece and Olympus Turkey

SmallCapPower | September 21, 2020: Shareholders of Project One Resources Inc. (CSE:PJO) are poised to become investors in two fast-growing cybersecurity businesses based out of Europe. On August 12, 2020, Project One announced a non-binding letter of intent to acquire Olympus Greece and Olympus Turkey, which are set to be sold by a listed Italian cybersecurity business. If successful¸ Project One will rename and change its business to that of Digital Security International.

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These two cybersecurity companies of interest have been in business for eight years and reported positive cash flow in each of those years, with 2019 revenue of 30 million Euros (C$45.3 million) along with 1.6 million Euros in EBITDA. Olympus Greece and Olympus Turkey are established brands with more than 1,000 clients.

Project One, which will be rebranded as Digital Security International (DSI), will pay approximately C$17 million for the businesses, which will be financed by way of a C$21.7 million raise, split half debt and half equity, with $4 million plus in working capital remaining. Project One is paying an estimated 0.3x 2021 sales as well as an estimated 4.9x EBITDA.

In an interview with SmallCapPower, DSI CEO Ron Shenton said he is hoping to have all required documentation into the CSE in late September 2020, depending on how quickly the funds can be raised. Albany Investment, one of the UK’s leading cyber advisory firms, will be doing due diligence on the deal and is taking lead on fund raising.

Olympus Greece and Olympus Turkey is a business-to-business operation that is a recurring revenue company with an enviable 80% client retention rate. DSI expects to add higher profit margin products to the mix as well as change the banking relationship, which is expected to improve profitability. The new company anticipates benefiting from economies of scale, taking advantage of synergies across territories and improving upon existing vendor relationships.

“This Company is growing organically, about 8% to 10% per year, and we are looking at a series of other acquisitions almost immediately once this (deal) is done. The concept is a roll-up strategy – different countries, a similar base, better profit margins, and we have bigger buying power,” he said.

Digital Security International plans to have its headquarters in the UK.

DSI expects to capitalize on growing global spending on cybersecurity. Forrester Research estimates that enterprises will spend US$12.6 billion on cloud security tools by 2023, up from $5.6 billion in 2018.

And during the first six months of 2020, many enterprises have accelerated their digital transformation plans and adopted new cybersecurity practices to accommodate employees working from home as a result of the COVID-19 pandemic.

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