Thursday, September 28th 2023


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FLX 400-200

Falanx Group (aim:flx) £14m @ 5.25p with 259,678,964 shares in issue.

Falanx Group provides global cybersecurity and intelligence services working with blue chip and government clients. It operates the disruptive MidGARD cyber monitoring platform which ensures protection against cyber risks and threats.

The company is embarking on a buy and build strategy to consolidate a fragmented market, in order to gain market share and cross-sell new services to existing clients. Falanx provides intelligence through Assynt, environmental testing (penetration testing and shoring up cyber defense), consulting services for governance, risk, and compliance, and incident response.

Business Divisions

Assynt uses a team of in-house multilingual consultants to publish geopolitical analysis and security risk covering 35 countries as of the last interim results in 2017. This analysis is continuously updated as a client needs to be constantly aware of any changes in financial markets, political environments, legal frameworks et cetera in order to be able to make a sound judgement based on the current situation. The pricing range is varied as assignments can cost £1,000 but a bespoke report can cost anything from £30,000 to £50,000. This is repeat and recurring revenue which typically carries around a 30% margin. Assynt grew 9% organically in the reported six months and with the arrival of a new MD and an enhanced senior team, the capacity to drive higher revenues is highly boosted.

The environmental testing part of the business covers penetration testing, application testing, vulnerability, threat, and gap assessments, as well as Social Engineering (both physical and phishing). It is fully CREST accredited with all staff having to gain annual cyber accreditation. Falanx also has UK Govt CHECK Accreditation from the government which approves it to provide IT Health Checks on UK government organisations. This is repeat revenue and also carries approximately 30% margins.

The consulting part of the business is, project revenue and helps companies achieve ISO accreditation and GDPR support. The Global Data Protection Requirement is EU legislation coming into legality in May 2018 and is a serious deal. GDPR will impose fines of €20m or 5% of global revenues on companies that suffer a data breach and are found to have taken insufficient measures to protect their data. This means that a single data breach could wipe off huge percentages of a company’s market value in one go due to the potential size of the fines, and so unsurprisingly companies are now taking cyber risk incredibly seriously. The consulting part of the business educates clients on GDPR and other regulations as well as providing a virtual CISO and also has 30% margins.


The MidGARD platform is a potential gamechanger for the company. MidGARD is not a product and in this way, it is unique on the market. It is a service, 24 hours a day, 7 days a week, which monitors everything coming in, tagging it, and then writing it to an index. The platform acts almost like a botnet as each new client connects to existing clients on the platform and so individual clients can leverage this earning from each other. For example, if a threat is identified from one client, MidGARD learns and assimilates this across the entire MidGARD system which immediately protects the other clients. This is all happening in near real time, literally seconds, and there has not been a single reported breach since the platform was launched. This is incredibly important as this will ensure low customer churn rate – there is only a reason to switch cybersecurity providers if the provider is not capable of doing its job or if customer service breaks down. Given that there are only a handful of companies globally who can monitor constantly at both the device and the network level this makes for tough competition. Costs of entry to any competitors are high as they would need to invest significant sums in order to create the ability to protect their future clients. MidGARD has been four years in the making and it is disruptive – it changes the cyber world as for the first time enterprise solutions are available to both small and medium-sized businesses.

Board Of Directors

The market was a bit shaken when Stuart Blaydon left as CEO and some assumed he was forced out. I have spoken to Stuart and he is a supportive shareholder still, with Mike still on very good terms with him, so much so that if he needed his help he could call Stuart up and rely on him. Stuart left for personal reasons and not because of any operational reason.

Mike Read, acting CEO, and Chairman, has been successful in two previous buy and build strategies in fragmented markets. He did it with ISPs in the 1990s rolling up companies into one single company which was sold for $300m, and he did the same in the 2000s with broadband and hosting. He’s here to complete the treble with Falanx, with value accretive acquisitions to consolidate what is a fragmented market. He has invested £300,000 of his own money into Falanx, along with CFO Ian Selby buying £30,000.

Richard Morrell is an industry veteran known as “Mr. Smoothwall”. He has been around open source technology for twenty years and the technology he invented and wrote protects every school in the UK, all local authorities in the UK, Halfords, Ford, including over 290m devices on the planet. BT HomeHub and NetGear use the technology that he invented.

He started his own company, AuditSec, which provides consultancy services to GCHQ and intelligence agencies in the US and across Europe, which was acquired by Falanx where he is now CTO. He was previously CTO of Gartner Global Security and Risk Practice, and CISO of the Cloud Security Alliance. He is a Keynote speaker at global events and after dinner talks, who has a podcast with over 3m listens. Richard is a well-known cybersecurity figure who elected to join Falanx due to sharing the enthusiasm and excitement for the companies disruptive technology.


The company raised gross proceeds of £4.6m in an accelerated bookbuild with £1.5m of that going to a new cornerstone investor Unicorn Asset Management. The board participated heavily in the placing and with a market cap of £14m @ 5.25p, this means around a third of the business is covered by its cash.


Falanx is a high risk/ high reward investment opportunity and as the company is not yet profitable it must be currently considered speculative. With heavy board alignment, it offers exposure to a booming industry with a regulatory catalyst.

The author recommends this article is that of personal opinion readers do their own full research as the nature of speculative shares can be volatile. Shares can go down as well as up, and should you wish to sell in a hurry then due to the normal market size you may not receive the spot price quoted online, credit to village idiot for his contribution.