Cybersecurity Stardom Leveraged By HUB For a NASDAQ Unicorn Listing

Hub Security benefits from a recurring revenue model

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Hub Security agreed to a Nasdaq Spac merger. Founded in 2017 by Israeli military veterans who served some of the most elite signal intelligence (SIGINT) units employed by The State of Israel.

Handout

This company utilizes highly advanced Confidential Computing cryptographic tech to help organizations and governments adhere to the highest cybersecurity protocols and protect digital footprint end-to-end.

A unique Confidential Computing hardware solution positions HUB at the front of cyber-defense tech by protecting data while in-use by the CPU and memory, thus plugging what used to be, and still is, the largest hole in computing defense

NASDAQ highlight KPIs

Hub Security benefits from a recurring revenue model comprised of both a 20% CAGR professional services business and a 95% CAGR growth engine of unique Confidential Computing hardware solutions enabling the company to potentially capture cybersecurity value chain across a market conservatively valued at $54bn.

First mover advantage and strength of human capital facilitates a unique opportunity for Hub Security to capture, long-term, 5-10% of a >$54bn market.

Compelling case for triple-digit growth in profits and high valuation. Ability to retain clients and establish economies of scale could enable the company to generate >50% operating margins in a 20% margin industry.

Estimated value based on long-run prospects: USD $5-10bn realized by 2023-2026. Sufficient basis to assign an initial estimate of $2bn based on existing sales, 80% annual pre-booking, strong pipeline, projections, and risk profile.

Investment Thesis

Hub Security offers an attractive investment in future cybersecurity verticals at the forefront of Confidential Computing and quantum defense. Cash flows presently valued at significant discount rates to account for risk in establishing a consistent customer base that produces the necessary economies of scale to profit on a long-run basis. Further diligence recommended as the company operates in a nascent and complex market with advanced technologies understood by few. Fierce competition and a shift of priorities ought to be weighed against an increase in risk management and cybersecurity awareness.

First mover advantage and a portfolio of intellectual property presently deployed and sold via a suite of solutions mitigates short and medium-term risk. Further financing suggested via IPO to inject the necessary capital and running room to catalyze triple digit growth over a sustained time frame (5-10 years). An investment in Hub Security offers an attractive play on cybersecurity in a world that enters a digital age in full force. Given a proven market and need arising from costly cyberattacks and high-profile ransomware events, an investment in the company depends strongly on the execution and the knowledge of those involved. The founders of Hub Security and the individuals it employs form the basis of the most significant competitive advantages the company wields. Recreating the know-how and expertise brought by the human capital the business utilizes simply cannot be recreated and must not be underestimated.

Market Opportunity

Consider cyber protection by three phases:

● Protection-at-rest

● Protection-in-transit

● Protection-in-use

The first two phases comprise prevalent commercialized cyber security offerings in the market (e.g. antivirus, firewalls), while the latter phase represents a so-far minimally untapped niche known as "confidential computing' at the frontier of cyber protection. Malicious actors gain privileged access once they go beyond the first two phases of protections ("wrappers'), a critical point where an unauthorized party breaches confidential in-use computing. Compromising unencrypted data while in use in the RAM or processor units of any hardware unit gives the offending party quiet backdoor access which is incredibly challenging to protect against based on existing idiosyncrasies, let alone unravel. Hub Security offers a nearly-unhackable Trusted Execution Environment (TEE) that safeguards data while in use. Practitioners and experts refer to the first two phases as traditional legacy methods; confidential computing, the cream of the company's market opportunities, lies beyond the frontier of legacy methods and relies on a holistic cyber defense approach to supplant the first two phases intrinsically. The endpoint, once commercialized, gives the holder of the technology unparalleled commercialization opportunities in already and newly discovered along with yet unearthed applications.

Hub Security, a frontrunner in the field of confidential computer hardware solutions, leverages existing technology to service a $54bn market with unmet and evolving cybersecurity needs. Daily and alarming reports of ransomware attacks targeting individuals, organizations and governments behoove significant public and private investment. Current technology rendered useless to prevent $6 trillion in annual damages stemming from malicious cyber actors. These ill-willed actors exploit existing design flaws to compromise data while it is in use. Cybersecurity for CFOs and fiduciaries at organizations and governments should recognize capital investments in the best cybersecurity will transition from a voluntary affair to compulsory one.

Hub Security expects to capture ~150bps (1.50%) of the total addressable market ($54bn) in 2026 and foresees producing operating margins >25%. The company forecasts a compound annual sales growth rate (CAGR) of ~50% from 2020 to 2026 and expects to ramp up EBITDA margins from ~4 cents to ~25 cents on every dollar of sales during the same period. Hub Security services >1,500 global clients ranging the gamut of industries and segments and of all sizes.

Overview

Hub Security and its subsidiaries employ ~600 employees with a physical presence in both Israel and the United States and operations across 30+ countries worldwide. The company sells confidential computer server solutions on the cloud and/or at client premises across two divisions: technology and professional services. Hub Security fills a key unmet need by providing hardware-level cyber defense covering the computing core (e.g. CPU, memory), where data is fully exposed based on standards employed today. Malicious actors exploit vulnerabilities arising from subpar protection of data-in-use.

Veterans of Israeli Defense Force (IDF) elite signal intelligence (SIGNIT) units founded Hub Security in 2017. The founders wield premier SIGINT capacities and knowledge in related verticals via their participation in the most upper echelon SIGINT cohorts serving The State of Israel. The company – leveraging advanced encrypting solutions – helps its clients protect against hostile intrusions and theft by preventing the compromising of sensitive commercial information while in use. Hub Security offers solutions which draw theory and practical application from disciplines like artificial intelligence (AI), data, fintech and infrastructure, to mention a few. Organizations utilizing the company's solutions benefit from military-grade cyber protections that insulate users against nascent and ever-present cybersecurity risks in today's digital age. Along with IBM, Hub Security solely stands ready with commercialized products prepared to help organizations and governments protect data-in-use from the growing threats arising from recent developments in quantum computing, a very powerful new technology that will up the ante of cyberthreats and malicious attacks.

Products and Solutions

Hub Security espouses a vision of precipitating a paradigm shift in the secured computing arena. Significant ransomware and other malicious cyber-attacks befell and continue to befall the largest and smallest enterprises and governments worldwide. A lack of purpose towards cyber defense by original equipment manufacturers (OEMs) plagues hardware design and production to-date. Malicious actors compromise, expose and/or hold ransom petabytes of data on a daily basis. No current solution on the market transcends a temporary fix. Hub Security offers the first ever hardware solution for entrenched hardware-level protection that goes beyond traditional "wrapper' security. The company develops solutions to protect data-in-use at the hardware level and, at some level of production, reduces cyber protection costs on aggregate. The company provides unique, military-grade dedicated solutions for cyber defense, enabling it to be ready for quantum computing threats; a distinction only shared by Hub Security and International Business Machines (NYSE: IBM).

The company develops complex integrated hardware products and offers comprehensive digital security solutions to help organizations meet the highest international cybersecurity standards. Core solutions include:

● HUB Enterprise

○ Cloud and on-site confidential computing solutions; premier cyber defense for enterprise and government

● HUB Silicon

○ Internet-of-Things (IoT) cyber defense on-chip solution (CDOC) for home security cameras, connected mobility phones, credit cards, etc.

The company presently offers HUB Enterprise solutions and expects to commercialize HUB Silicon in 2023. Service offerings in core business verticals include, but are not limited to:

● End-to-end managed services

● Execution of HUB technology projects

● Integration and migration services prime contracting (will be required and standard operating procedure for almost all federal, municipal and local governments and large organizations due to severity of ransomware attacks)

● Offensive security (DDOS, Phishing, Pen Tests)

● Threat modeling and security assessment

● Safety and reliability management

● Cyber governance compliance

Hub Security services the banking and finance industry, focusing on supporting digital payments, high-value transactions, and tokenization, to name a few related verticals. Across telecommunications, blockchain and digital assets, critical infrastructure, and healthcare, the company similarly services cybersecurity needs for varying organizations across diverse industries and segments, consistently adhering to the highest standards and employing the most cutting-edge technology. Hub Security considers its front runner advantage to give it a clear competitive edge ranging from 18-25 months in a market undergoing sustainable medium-term hyper-growth.

Valuation

Use of a discounted cash flow approach based on recurring Software-as-a-Service (SaaS) business model. SaaS comprises charging clients – organizations – a fixed (or sometimes variable) price for access to a specific tool or set of technologies hosted on the cloud or delivered locally via specific hardware installed at a client's place of business. Hub Security charges clients a monthly fixed price based on four different gradually priced tiers. Difference in tiers across two categories of users based on system architecture needs: Core Central Processing Unit (CPU) users and Core Graphics Processing Unit (GPU) users. The company targets cloud computing and IoT recurring SaaS revenues based on client profile and needs.

Hub Security encounters deployment and other ancillary costs of revenue, including expenses associated with procuring hardware necessary to deliver recurring SaaS offerings. Generating sales requires, at a minimum, installing hardware and ancillary equipment both onsite at Hub Security and at client locations, respectively. Additionally, the company must continuously plow in resources towards research and development (R&D) to maintain and improve relative competitive positioning. Traditional sales, marketing, management, and general expenditures also factor in the company's normal operations. Combined, top-line charges comprise anywhere between 70-85% of total revenues. The company and its subsidiaries expect an aggregate operating margin of ~15-30% for every dollar of sales generated. Frontloaded investment in equipment, a significant requirement for operations, generates shareholder value through time-value for investors due to deferred tax liabilities associated with depreciation of fixed assets in most jurisdictions.

Having recently agreed to a Nasdaq Spac merger, it is clear that the company is already receiving substantial financial backing. Based on the most recently available information along with performance metrics from the most recent fiscal year, the company is expected to reach approximately USD $2.25 Bn in fair market value within 12-18 months. This figure, while contingent on pro forma sales of ~USD $150m (of which over 80% are already pre-booked in fiscal year entry) and a forward price-to-sales ratio of ~15.0x. On a vis-à-vis basis, underlying growth in the industry and the first-mover advantage Hub Security benefits from justify triple-digit growth rates along with significantly high forward equity multiples.