Cerberus Sentinel Looks To Uplist To NASDAQ…
30 NOV 2020
Cerberus Cyber Sentinel [OTC:CISO], a cybersecurity consulting and managed services company, is in “final negotiations” to mandate an advisor to assist it in uplisting to the Nasdaq, said founder and CEO David Jemmett.
The Scottsdale, Arizona-based company, which started trading over the counter in June 2020, wants to uplist to the Nasdaq rather than the NYSE because it is more noted for technology and high-growth companies, Jemmett said, declining to provide a timeline. It expects the raise to likely be between USD 10m-USD 20m because its business model is focused on acquiring talent and making them shareholders, he said.
Cerberus Sentinel has signed “quite a few” letters of intent and hopes to close multiple acquisitions before year-end, Jemmett said. It most recently acquired Atlanta-based cybersecurity assessment firm Clear Skies Security in September for an undisclosed price.
The company sees its acquisition strategy as a consolidation of talent, and is not specifically acquiring for revenue, according to the CEO. It is looking for cyber training experts at companies that do penetration (PEN) testing, focus on compliance, or have a strong Security Operations Center (SOC), he added.
Pen testing is a simulated cyberattack against the customer’s computer system to check for exploitable vulnerabilities. Cerberus Sentinel provides continuous and periodic scans based on the customer’s regulatory requirements. An SOC monitors a customer’s network and server infrastructure to track potential threats and protect against them.
Cerberus Sentinel, which has closed seven acquisitions to date, typically targets companies with between USD 3m-USD 25m in revenue, Jemmett said. It expects to increase that target to between USD 35m-USD 65m in revenue in 3Q21, he said.
The company does expect to use a buyside advisor when it targets larger deals, but it has already been approached by advisors looking to represent it at that time, Jemmett added.
To date, Cerberus Sentinel has primarily funded operations and acquisitions through revenue and the sale of equity in private placements, according to its latest quarterly filing. During the nine months ended 30 September, it received USD 790,000 from private placements of its common stock to accredited investors.
It posted USD 2m in revenue in the third quarter, up from USD 1.6m in the second quarter and USD 281,000 in the prior-year period, according to filings. Founded in 2019, Cerberus Sentinel is not yet profitable. It received about USD 710,000 in a forgivable loan through the government’s Paycheck Protection Program, as reported.
COVID-19 “rocketed us five years” ahead of where we would’ve been, Jemmett said. With employees working remotely, there has been more than a 300% increase of cyber incidents amid the pandemic, and cybersecurity has become a “central focal point” for businesses to secure themselves, he added.
“Instead of us going out to find clients, the clients are finding us,” the CEO said. Almost 99% of Cerberus Sentinel’s increased growth is through company referrals, and the demand is 10-fold what it was last year, he said.
Companies in the financial and healthcare industries have the most cybersecurity exposure through their handling of personally identifiable information and personal healthcare information, respectively, Jemmett said. Cerberus Sentinel also has government contracts and customers in oil and energy, he added.
It occasionally competes against companies such as KPMG, Aon [NYSE:AON] subsidiary Stroz Friedberg, Deloitte and Booz Allen Hamilton [NYSE:BAH], but Jemmett calls them “frenemies” because there is so much demand for all of these cybersecurity firms to target. “We’re all trying to do our best to keep up with the demand,” he said.
Cerberus Sentinel has 71 employees in offices in Scottsdale; Arlington, Virginia; Austin, Texas; Nashville, Tennessee; Atlanta; Chicago; Denver; Las Vegas; Phoenix; and San Diego.
by Rachel Stone in Charlottesville, Virginia