Note: I’ve updated the valuation chart at the bottom of the post with results from the quarter year ending April 2023. Since this original post, Nubeva has announced some significant developments that I comment on on a more recent post, located here: https://dtm5.com/2023/07/20/another-credibility-milestone-for-nbva-achieved/

Back on November 19, 2021 I blogged about an interesting little company, Nubeva Technologies.

Nubeva and the DTM5 Equation

Well, here we are, approx 18 months later. During this time, I’ve been building a chunky position and occasionally taking some profits during periods of high volatility. NBVA represents a meaningful % of my DTM5 venture strategy, and I’m still very bullish on the company’s prospects.

As things move forward, I’m using the concept of ‘situational awareness’ to keep an eye on this important investment. What is ‘Situational Awareness’? As i stated in my blogpost from October 16, 2022, situational awareness is defined as:

“Developing and maintaining a dynamic awareness of the situation and the risks present in an activity, based on gathering information from multiple sources from the task environment, understanding what the information means and using it to think ahead about what may happen next.“

Here some some of my thoughts on Nubeva’s ‘situation’

Sales Revenue Promising. Recent financials reported modest but growing revenue. There is now a regular stream of decent sized (seven figure) contracts being announced, as well as continued growth in the number of business partners. If I don’t sound excited about this, it is because the market cap is already over 100 million dollars, but last quarter’s revenue was just over a million dollars. That’s a disconnect. But, there is enough news emerging now that it is becoming possible to assemble an idea of what might be happening from a sales revenue perspective. And that is where things get interesting.

Strategic Developments Nubeva has announced an impressive list of recent developments, including

• Cash flow positivity in 2023
• A ‘Strategic’ relationship Kroll
• A partnership with Megazone Cloud in South Korea

The partnerships appear to open some significant doors to customer acquisition – this bodes well for business growth. Being cash flow positive, thus removing the need to dilute, is very impressive for any company at this stage, and speaks to the business model that Nubeva has embraced. Impressive Stuff.

Risks Of course there are. This is a nanocap, venture exchange traded company trying to commercialize a novel software solution. I’m not a computer scientist, and even if I was, I probably wouldn’t fully understand Nubeva’s technology. I do understand there are patent protections in place. I also know senior management is experienced and competent. I believe the software they developed has merit and can help manage a huge, massive, expensive global threat. But I do not know if it can be disrupted, surpassed or at some point in time rendered obsolete. This is a true ‘sidecar’ investment where I am participating with a degree of faith in the expertise and competence of NBVA’s leadership.

I don’t consider share price volatility a risk, unless I’m looking to divest. As a Venture listed, unprofitable nanocap, NBVA’s shares have been caught up in the to-be-expected issues of illiquidity and volatility. It is par for the venture course.

That being said, there is risk to share price at current levels, and that risk is the revenue growth rate. The market cap, at 100 million, already is reflective of a company a further down the revenue curve. If revenue comes too slowly, I suspect the share price will suffer, perhaps meaningfully.

Valuation This is where things get interesting. There has been a lack of clarity around what revenue / margins / earnings may end up looking like. And that is understandable, as it is early days for the company and I think they have been figuring it out as well. But as I stated, there is enough information now available that developing a model is becoming possible…..And below is my attempt to do so. Keep in mind that there are so many unknowns at this point that my numbers are more of a guess than prediction.

I created this ‘back of the napkin’ table to make some sense about what may be possible. I think my assumptions are reasonable, if not conservative. If you want to discuss, or have other ideas, please reach out. I’d be happy to connect and share ideas.

Key Assumptions

• Quarterly growth rate is assumptive, starting from the actual quarter ending April 2023
• 83,000,000 shares outstanding fully diluted
• Enterprise value assumes no debt / cash on balance sheet – Effectively Market Cap
• Valuation multiple of 7.5x EV / REV
• All table figures in Canadian dollars

Quarter	% Growth Rate	Revenue (CAD)	ARR	MC @ 7.5x Revenue	SP @ 7.5x EV/REV
Apr 2023	Actual	1,262,200.05	5,048,800.20	37,866,001.50	0.46
July 2023	50%	1,893,300.08	7,573,200.30	56,799,002.25	0.68
Oct 2023	50%	2,839,950.11	11,359,800.45	85,198,503.38	1.03
Jan 2024	50%	4,259,925.17	17,039,700.68	127,797,755.06	1.54
Apr 2024	40%	5,963,895.24	23,855,580.95	178,916,857.09	2.16
July 2024	40%	8,349,453.33	33,397,813.32	250,483,599.92	3.02
Oct 2024	40%	11,689,234.66	46,756,938.65	350,677,039.89	4.23
Jan 2025	30%	15,196,005.06	60,784,020.25	455,880,151.86	5.49
Apr 2025	30%	19,754,806.58	79,019,226.32	592,644,197.42	7.14
Apr 2025	30%	25,681,248.55	102,724,994.22	770,437,456.64	9.28

As things evolve, the numbers should become clearer, and the road ahead from a valuation perspective more predictable. From what I see, there is real opportunity. There is risk. But Nubeva clearly has a patented, unique, effective and broadly deployable solution to ransomware, and they are executing their plan. If revenue starts to ramp, I think I’m going to be a very happy investor.

GLTA!