Cipherpoint Limited (ASX:CPT) entered into a binding term sheet to acquire Brace168 Pty Limited for AUD 5.1 million on January 21, 2021. Cipherpoint Limited (ASX:CPT) entered into a sale and purchase agreement to acquire Brace168 Pty Limited on March 16, 2021. Under the terms of transaction, shareholders of Brace168 will receive mix of cash and CPT securities, being AUD 3 million cash, 21.75 million shares and 5.4375 million options.

The cash payment will be split over two payments, with AUD 2 million payable on completion and AUD 1 million twelve months post completion. An additional 14.2 million shares are to be issued on achieving FY21 and FY22 financial milestones. The upfront consideration shares and options shall be voluntarily escrowed until September 30, 2021.

Brace168's FY20 revenues were AUD 1.2 million. CPT also intends to issue Brace168 employees share based incentives under its existing employee security ownership plans. The transaction is subject to customary closing conditions, including necessary shareholder approval, other regulatory approval, execution of formal documentation, confirmatory due diligence, CPT raising further capital of not less than AUD 2 million pursuant to the Placement and rights issue.

The deal is subject to signing of definitive agreement. Shareholder approval will be sought for the issue of the consideration and earn-out shares as a condition to the proposed acquisition. As per announcement made on February 18, 2021, Cipherpoint Limited intends to hold a shareholder call on February 25, 2021, to provide shareholders with an update on progress of this acquisition.

It is anticipated the transaction will complete by early March 2021 or shortly thereafter. As per announcement made on March 1, 2021, Cipherpoint Limited intends to hold a virtual meeting on March 31, 2021, to provide shareholders with an update on progress of this acquisition. As of March 16, 2021, Cipherpoint Limited satisfactory completion the due diligence.

As of March 18, 2021, the directors of Cipherpoint have confirmed their participated in the company's rights issue and will subscribe for their full entitlements with funds to support the acquisition of Brace168 Pty Ltd. Ted Pretty, Chief executive officer and managing director; Steven Bliim, executive director and joint company secretary and non-executive director Graham Mirabito will participate in the rights issue to raise up to $3.9 million at an issue price of 4.7 cents per share. The closing date to raise the funding has been extended to 22 March 2021. VCF Capital Partners acted as financial advisor for Cipherpoint Limited.