Excite Technology Services Quarterly Report and Strategic Acquisition - 31 July 2024

Quarterly Financial Highlights

The results for the Excite group include revenues and cashflows from its Brace168, ExciteIT, and VIT Cyber Security services divisions. The key financial highlights for the quarter were:

• Continued growth in partnership channels, driven by key partners Trend Micro and Schneider Electric, and project-based work with extensions via existing customers along with new customers.
• Customer receipts were $1.58M, lower than the prior comparable quarter of $2.58M, due to the shift away from one-off project receipts to a higher proportion of recurring receipts.
• One-off termination costs drove salaries and wages to $1.4M, up by $200K from the previous quarter, expected to result in an annualized cost reduction of $930K.
• Higher costs in the quarter, with $260K in one-off costs split across direct costs and general & admin.
• The Group held $302K in cash as of 30 June 2024, bolstered by credit facilities made available via Amex and a related party.
• Execution of a $1 million convertible note investment with Belgravia Group announced shortly after the end of the quarter.

Strategic Acquisition of CDFS

On 28 June 2024, Excite announced a binding term sheet to acquire all issued capital of CBIT Pty Limited (CDFS) and its subsidiaries, subject to successful due diligence and approvals. CDFS specializes in digital forensic investigations, serving major Australian Government Departments and large industry customers.

This acquisition will position Excite as a leading authority in Incident Response and Digital Forensics, expanding capabilities and market presence in managed cyber security, deep digital forensics, accredited training, and IT services sectors.

As part of the acquisition, Excite will lease Australia's first cyber and digital forensics tactical training facility in Jerrabomberra, NSW. The facility will feature a 360-degree simulated crime scene environment, ISO-certified digital forensics labs, a cyber-warfare range, and more.

The material terms of the transaction include:

• Completion Consideration: $750,000 cash and 100,000,000 fully paid ordinary shares in Excite.
• Deferred Consideration: $750,000 cash by 1 July 2025, provided the vendors remain with the Excite Group.
• Performance Consideration: Up to $2.4 million based on CDFS achieving $1.8 million EBITDA for the 12 months ending 30 June 2025.
• Outperformance Consideration: Up to $800,000 if EBITDA exceeds $1.8 million.

Sales and Marketing Success

Excite achieved notable success in the first quarter of the new financial year, securing $989K in new annual contract value. The company expanded service provision with existing customers and won new business across various sectors, including construction, engineering, banking, financial services, and insurance.

Excite Cyber continued to invest in channel enablement, participating in customer roundtables, training, and joint selling, with a focus on ensuring strong customer outcomes.