BrandShield : Financial Statements 2021 signed PKF

Company Number: 02956279

ANNUAL REPORT AND

FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2021

FOR

BRANDSHIELD SYSTEMS PLC

BRANDSHIELD SYSTEMS PLC

CONTENTS OF THE ANNUAL REPORT AND FINANCIAL STATEMENTS

FOR THE YEAR ENDED 31 DECEMBER 2021

	Page
Company Information	1
Chairman's Statement	2
CEO review	4
Board of Directors	7
Strategic Report and Corporate Governance Report	9
Report of the Directors	23
Statement of Directors' Responsibilities	28
Report of the Independent Auditor	29
Consolidated Statement of Comprehensive Income	35
Consolidated Statement of Financial Position	36
Company Statement of Financial Position	37
Consolidated Statement of Changes in Equity	38
Company Statement of Changes in Equity	39
Consolidated Statement of Cash Flows	40
Company Statement of Cash Flows	41
Notes to the Financial Statements	42

BRANDSHIELD SYSTEMS PLC

COMPANY INFORMATION

FOR THE YEAR ENDED 31 DECEMBER 2021

DIRECTORS:	A Moscovici (Non-Executive Chairman)
	Y Keren (Chief Executive Officer)
	Y Zantkeren (Chief Technical Officer)
	R Freedman (Chief Financial Officer)
	H Kodesh (Non-Executive Director)
	J Taylor (Non-Executive Director)
COMPANY SECRETARY:	Ben Harber on behalf of Shakespeare Martineau LLP
	60 Gracechurch Street, London, EC3V 0HR
REGISTERED OFFICE:	60 Gracechurch Street, London, EC3V 0HR
REGISTERED NUMBER:	02956279 (England and Wales)
INDEPENDENT AUDITOR:	PKF Littlejohn LLP
	Statutory Auditor
	15 Westferry Circus
	Canary Wharf
	London E14 4HD
BANKER:	Barclays Bank Plc
	1 Churchill Place
	London E14 5HP
NOMINATED ADVISER:	Spark Advisory Partners Limited
	5 St John's Lane
	London EC1M 4BH
REGISTRAR:	Link Asset Services
	Northern House, Woodsome Park
	Fenay Bridge, Huddersfield
	West Yorkshire HD8 0LA
JOINT BROKERS:	Shore Capital Stockbrokers Limited
	Cassini House, 57 St. James's Street
	London SW1A 1LD
	Tennyson Securities
	65 Petty France
	London SW1H 9EU

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BRANDSHIELD SYSTEMS PLC

CHAIR STATEMENT

FOR THE YEAR ENDED 31 DECEMBER 2021

Introduction

BrandShield Systems Plc. ("BrandShield", "The Company") is one of the leading cyber security companies that provides brand oriented digital risk protection. The Company specialises in the monitoring, detection and removal of online threats such as phishing attempts, scams, impersonation, fraud, counterfeit products and trademark infringements. The business was established to revolutionise the way companies can protect their digital assets outside their security perimeter. Ever since launch, BrandShield has introduced ground-breaking innovative technologies for online brand protection powered by artificial intelligence ("AI"), machine learning and big data analysis to provide the most automated and relevant solutions for the 21st century.

During the period, the Group delivered revenues of USD $4.13m, up 59% from USD $2.6m in 2020, driven by strong customer traction across a number of key industries. The business generated an expected loss of USD $5.28, (2020: USD $2.84m), which reflects the growth phase the Company is currently undergoing.

Our focus has been entirely centred on the expansion of BrandShield's underlying client base and the growth of the Annual Recurring Revenue ("ARR") from those clients, a key performance indicator. This has been achieved primarily through the application of funds into the sales and marketing functions within the Company. We have also hired 20 additional employees, including sales directors in the US and UK, to accelerate client growth in those regions. The Company has also hired a sales director with the primary responsibility of developing partnership distribution channels to scale the client base.

The ARR as at year end stood at $5.22m, a 59% increase from 2020 ($3.28m) and continues the very strong growth trend. That strong growth trend has continued into 2022 with the May ARR figure standing at $6.3m (unaudited), a 66.7% increase in the ARR relative to May 2021. I am pleased to report that the client numbers increased significantly in 2021 from 77 to 130, fuelled by additional investment in the sales and marketing functions. Given a very strong Life Time Value to Customer Acquisition Cost ("LTV to CAC") ratio, the Board has been clear in its desire for the Company to continue to focus on aggressive growth rather than profitability at this stage. BrandShield offers a superior product in a largely unserved market and, therefore, the priority must be on marketplace consolidation and achieving a leading position in the online brand protection competitive environment.

In addition, BrandShield has minority interests in other assets, inherited as a result of the Reverse Takeover ("RTO") transaction conducted with Two Shields Investments Plc in December 2020. These include holdings in WeShop Ltd (now renamed to Community Social Investment Ltd) and legacy mining assets, namely Kalahari Key Mineral Exploitation Company (Pty) Ltd, Leopard Lithium Pty Ltd and International Geosciences Limited ("IGS"). Each of these assets are considered non- core and we remain focused on the orderly disposal of these legacy investments where value can be realised for our shareholders.

BrandShield

BrandShield is a fast-growing provider of cyber solutions, delivering an end-to-end brand oriented digital risk protection solution to its global customer base. Its software protects customers from the financial costs and reputational damage caused by an increasing number of online threats including phishing, social phishing, impersonation, and sale of counterfeit goods. Unlike traditional solutions, BrandShield's Software as a Service ("SaaS") delivered software operates outside of an organisation's perimeter and therefore requires no integration. BrandShield's highly developed software works by detecting potential threats, analysing them, prioritising them and then taking them down. BrandShield has developed a suite of proprietary AI-powered software that largely automates the analysis and prioritisation of online fraud cases. The technology uses big data and algorithms to find networks of fraudulent online activity and clusters of counterfeiters.

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BrandShield's software monitors millions of datapoints across many types of online platforms including websites, marketplaces, social media, mobile apps and Pay Per Click ads. The AI and machine learning nature of the software means that it is continually improving as it adds new datapoints and identifies new types of threats. In response to customer demand, BrandShield established its own in-house online hunting and enforcement team consisting mostly of qualified lawyers, with particular experience in IP law. The service is customised to the requirements of BrandShield's customers and experiences high success rates.

Strategy

The Board's strategic priority, as outlined in our previous annual report published in June 2021, was to drive the continued and rapid expansion of BrandShield's offering globally. Furthermore, this was to be achieved through the acquisition of clients from a variety of sectors through innovative marketing activities. As highlighted above, the number of clients increased from 77 at end December 2020 to 130 at end December 2021, representing a significant period of growth. The associated ARR figure increased from $3.28m for 2020 to $5.22m, a 59% increase year on year. New clients have been gained from a variety of sectors including pharmaceutical, financial, crypto, e-commerce, fashion and celebrity brand merchandising. That growth trend has continued through the start of 2022 with the May 2022 ARR standing at $6.3m.

The Company remained well positioned to react to the unique challenges posed by the Covid-19 pandemic and its aftermath. It had already invested in its online marketing processes which assisted in the strong growth of our client base. Sales cycles became shorter, particularly from small and medium sized clients, some of which signed annually recurring subscription contracts within a matter of days from the initial contact.

The successes of 2021 have validated the existing strategy and the focus remains very much on expanding our client base and growing our associated ARR through 2022. The additional funding secured in 2022 will assist in this endeavour.

In line with our stated strategy, the Board also remains focused on the orderly disposal of legacy assets held. There have been significant developments in some of these holdings which we believe brings the realisation of the value contained closer to fruition.

Outlook

The Group is looking forward to the continuing rapid expansion of BrandShield as a leading brand orientated digital risk protection company that is deployed globally. The increasing awareness of cyber related crimes and other threats to brands is leading to an acceptance that external threat prevention and eradication is an essential capability that every company must have, in the same way that protecting internal systems is viewed.

In January 2022, the Company completed a £1,500,000 raise of gross investment funds to continue to execute the strategy of aggressively targeting client and ARR growth. In May, the Company raised an additional £1,000,000 from William Currie Investments and Sir Terry Leahy.

This investment will allow BrandShield to expand its marketing and sales efforts and to continue to drive ARR forwards. The platform is built to scale and, therefore, a focus on the top line and customer conversion continues to be the over-riding priority for 2022.

Azriel Moscovici - Chairman

30 June 2022

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