IN-DEPTH INVESTMENT ANALYSIS - SPECULATIVE BUYOUT OPPORTUNITY
Cybeats Technologies Corp - $CYBCF | | | This communication is not an offer to buy or sell securities nor is it to be construed as personal investment advice. Nothing contained in this communication should be relied upon as a promise or representation as to future performance. | | Hello Traders,
Instead of the typical Sunday Spartan Trading "Weekly Picks" Newsletter, this week I want to share a Speculative Buyout Opportunity with you in a sector that I have been watching for the past little while.
As traders, we are always on the lookout for investment opportunities in rapidly growing sectors. As these sectors evolve and mature there are typically acquisitions that start to occur as larger companies are always searching for undervalued companies that have great assets, solid contracted relationships, and strong leadership teams that they can vend in.
One of these rapidly growing sectors is Cybersecurity.
The proliferation of software across all aspects of modern life has created a significant challenge for governments and businesses alike. With software impacting critical infrastructure and everyday devices, ensuring its safety has become paramount.
Governments are now recognizing the necessity of regulating software to protect citizens and vital systems. The escalating threat of international cyber warfare highlights the critical importance of cybersecurity for organizations and nations alike. Malicious actors, including state-sponsored entities, pose significant risks to sensitive data, infrastructure, and national security.
In this investment thesis I will be covering a rapidly expanding cybersecurity company, one that I feel, after countless hours of research, is significantly undervalued yet is at the forefront of this movement, including directly influencing U.S. Cybersecurity Policy at the White House Level.
Positioned as the 'seatbelt' for software security, not only does this company offer innovative solutions to assess and certify software safety, they have already secured contracts with 8 of the worlds top 10 medical device and industrial controls companies —a testament to its industry reputation and growth trajectory.
The company? Cybeats Technologies Corp (OTCQB: CYBCF; CSE: CYBT)
Cybeats Technologies Corp (Cybeats) is one of the few publicly traded entities in this space and provides Software as a Service (SaaS) security solutions to major U.S. infrastructure companies and Fortune 500 giants like Schneider Electric, a $100 billion market cap infrastructure giant.
I had the pleasure of sitting down with the Cybeats executive team to learn more about their business and the vital role that companies like Cybeats play in safeguarding against emerging global threats.
With a strategic focus on SBOM Management and emerging threats like AI-enabled cyber warfare, $CYBCF is poised for continued growth and leadership in safeguarding digital infrastructure worldwide.
Based on my discussions and comparative research, I believe that they represent an enticing buyout speculation opportunity due to its undervalued status, overlooked position in a high-growth sector, and potential attractiveness to larger players seeking to bolster their presence in the cybersecurity market.
| | - Idea: Long Speculation $CYBCF $0.12 - $0.20 (Starter Position)
- 1st Target Area: $0.39 - $0.51
- 2nd Target Area: $0.60 - $0.78
- Stops: $0.07
- Float: 41M
- Shares Outstanding: ~117.5M
- Insider Ownership: 56.58%
- Strategic Investors & Management Ownership: 20M
- Free Trading: ~22.4M (less strategic investors & management)
- Market Cap: 16.13M (USD) 18.73M (CAD)
- Warrants: First Level at $0.40 (6M)
Note: There are half warrants at $0.20 from last financing but are subject to a lock up period. Majority of all other outstanding warrants are sitting at $0.60. Parent company Scryb Inc. holds 60M shares, of which 51.3M are held in escrow / lock-up. | | $CYBCF Long Speculation
Beaten down name with a tight float. Key reclaim will be the short term level of $0.39. I will be looking for a quick move towards the $0.60 - $0.78 level and then a grind higher after some consolidation there.
As requested by the Spartan Community, here is also the Canadian Chart and my Technical Analysis on the Canadian Ticker of Cybeats.
| | $CYBT.CN Long Speculation
Idea: $0.16 - $0.25 (Starter Position)
1st Target Area: $0.42 - $0.54
2nd Target Area: $0.69 - $0.80
Stops: $0.10 | |
Spartan's Investment Thesis Highlights
- Over 50% of $CYBCF shares locked up in escrow – tight stock, limited public float.
- Government-mandated SBOMs have started, and market is set to soar.
- Cybeats team has over 100 years of combined cybersecurity experience and expertise in multiple domains, including three members of the US Government framing group that created the SBOM standard.
- Client base has a collective market cap exceeding $1 trillion and a 100% client retention rate.
- Monthly recurring revenue growth of 237% with an average enterprise contract size of $700,000+
- $CYBCF has secured contracts with 8 of the world's top 10 medical device and industrial controls companies (four in medical devices & four in the industrial controls) including names like Schneider Electric and Becton Dickinson.
- Comparable companies to $CYBCF have been acquired for $350M (Crowstrike bought Bionic) to $600M (Palo Alto bought Talon Ventures) – IMO Cybeats is a desirable acquisition target.
| | Detailed Investment Thesis Company Overview $CYBCF operates in a critical niche of the cybersecurity market, providing solutions for managing growing regulatory oversight related to software, particularly in industries prone to cyber threats.
Led by a seasoned management team with deep industry connections and a history of successful contracts, Cybeats has secured partnerships with Fortune 500 companies, top-tier medical device providers, and key players in industrial automation, positioning itself as a trusted solution provider in the cybersecurity landscape. Core Product Offering - SBOM Studio Open-source software makes up over 80% of the software use in modern applications. Cybeats' flagship product - SBOM Studio - is an enterprise class solution that helps organizations understand the security risks stemming from their software, including the third party and open-source components. SBOM studio documents what the organization has in order to plan for maintenance that will prevent security posture degradation over the life of the software. | | Following a pivot in 2020, Cybeats SBOM Studio was first launched in Q2' 2022 and has shown impressive market traction with 12 large enterprises currently using this flagship product.
How SBOM Studio Works: - Automatically scans software showing all vulnerabilities and threats.
- Allows for sharing of SBOM with government agencies, such as the FDA for regulatory compliance.
- Offers organizations one, centralized tool for efficiently managing SBOMs and cyber risk
- Enables massive cost reductions for software security teams, who can react faster to cyber threats.
On the Brink of Explosive Growth The SBOM market is on the brink of explosive growth. Cyber threats linked to software vulnerabilities have surged by 742% annually, prompting governments worldwide to take action. Software regulation is now a reality, with SBOMs becoming mandatory to combat these risks, transforming a once niche security measure into a global imperative.
Currently, only 5% of organizations utilize SBOMs. By 2025, this adoption rate is expected to skyrocket to 88%. With the global market projected to exceed $100 billion, $CYBCF is the leading solution for software safety and compliance, strategically positioned to capitalize on the imminent surge in demand. | | From a global market perspective, the global cyber security market size was estimated at $222.66B in 2022 and is projected to grow at a compound annual growth rate (CAGR) of 12.3% from 2023 to 2023.1 Team & Advisors - Depth of Operational Experience Comprised of several ranking individuals within the Department of Homeland Security, White House and Canadian Department of Defense, the depth of the Cybeats team is unmatched in the sector. | | With over 100 years of combined cybersecurity experience and expertise in multiple domains, the $CYBCF team has led multiple standardization efforts across the industry including the framing group that created the SBOM standard. Having close ties to the White House cyber policy team showcases Cybeats deep understanding of software transparency and security regulations.
Which is exactly the type of team that larger companies look for when selecting organizations as target acquisitions. Valuation & Financial Highlights
Despite its robust revenue growth, a year-over-year increase of 322% and a net revenue retention rate of 142%, Cybeats remains significantly undervalued. With a market cap of $16.13M and substantial room for expansion, especially considering recent acquisitions in the cybersecurity space, Cybeats presents an attractive opportunity for both investors as well as organizations looking for target acquisitions. | | Fiscal 2023 Financial Highlights: - Cash on Hand: $1.05M
- New Burn: $330K
- Annual Recurring Revenue (ARR): $2M
- Year-over-Year (YOY) Growth: 322%
- Net Revenue Retention (NRR): 142% (demonstrating organic contract usage / growth & 100% client retention).
Share Structure: - Float: 41M
- Shares Outstanding: ~117.5M
- Insider Ownership: 56.58%
- Strategic Investors & Management Ownership: 20M
- Free Trading: ~22.4M (less strategic investors & management)
- Market Cap: 16.13M (USD) 18.73M (CAD)
- Warrants: First Level at $0.40 (6M)
Note: There are half warrants at $0.20 from last financing but are subject to a lock up period. Majority of all other outstanding warrants are sitting at $0.60. Parent company Scryb Inc. holds 60M shares, of which 51.3M are held in escrow / lock-up. The company had previously completed two equity financings, one priced at $0.50 (with large insider participation) and the other at $1.00. Their most recent financing was for an oversubscribed placement with gross proceeds exceeding $2.4M, placing Cybeats in a strong cash position to continue operations for the foreseeable future.
With over 50% of Cybeats shares locked up in escrow, $CYBCF represents a very tight stock with a limited public float, in a balanced cash position.
Competitive Landscape - Ripe for Acquisition
Cybeats faces competition from players like Cybellum, MedCrypt, and Manifest Cyber, some of whom have already been acquired by larger entities.
Recent acquisitions in the cybersecurity sector highlight the appetite for consolidation in the market. For instance, Cybellum, a direct competitor, was acquired by LG for $240M USD.
Cybeats' subsector of cyber is arguably the hottest sector worldwide right now for M&A. The tech giants are on a buying spree.
Below are 7 of these transactions in the last few months: - Crowdstrike acquires Bionic for $350M USD
- LG acquires Cybellum for $240M USD (Direct Competitor)
- Palo Alto networks acquires Talon ventures for $625M USD
- Cisco acquires Splunk security for $28B USD
- SAP acquires application security company, LeanIX for ~$1B USD
- Crowdstrike buys Flow Security for $200M USD
- Wiz acquires Gem security for $350M USD
- Zscaler acquires Avalor for $350M USD
These acquisitions highlight the appetite for consolidation in the market, with companies seeking to strengthen their portfolios through strategic acquisitions.
Pipeline & Partnerships
$CYBCF robust pipeline, encompassing partnerships with industry leaders, expansion into new sectors such as automotive, telecom, and financial services, and its innovative product development initiatives, underscore its potential for rapid growth and market dominance.
Regulatory changes, such as Executive Order 14028 and the European Union's Cyber Resilience Act, further bolster Cybeats' value proposition as a critical player in compliance management.
In addition, the rapid advancement of artificial intelligence (AI) introduces new complexities and challenges to cybersecurity. AI can be leveraged by both defenders and attackers, with the potential to automate sophisticated attacks or enhance defense mechanisms. $CYBCF is well-positioned to harness AI technology for proactive threat detection and response, bolstering its capabilities in an evolving cybersecurity landscape and providing it with a virtually limitless future pipeline.
Future Projections
Currently, over 80% of Cybeats customers are Fortune 500 Companies, including top tier brands such as Schneider Electric and Becton Dickinson.
Due to the confidential and secure nature of their work, $CYBCF cannot publicly name all of their clients but they also include 4 of the top 5 industrial automation companies in the world as well as one of the largest Crypto Exchanges in the world.
Conclusion - A Speculative Buyout Opportunity
Housing a client base with a collective market cap exceeding $1 trillion, $CYBCF presents a compelling investment opportunity within the cybersecurity sector, uniquely positioned to capitalize on the increasing demand for secure software solutions.
Given Cybeats' impressive client roster, revenue growth, strategic partnerships, and the burgeoning demand for cybersecurity solutions globally, it is also primed for acquisition. With competitors being snapped up by larger entities, $CYBCF comparatively low valuation presents an attractive proposition for potential acquirers seeking to capitalize on the booming cybersecurity market.
In conclusion, Cybeats' combination of strong fundamentals, strategic positioning, and potential for exponential growth make it a compelling buyout speculation target. As the cybersecurity landscape continues to evolve and consolidate, $CYBCF stands out as a prime candidate for acquisition, offering substantial upside potential for investors. | | - Idea: Long Speculation $CYBCF $0.12 - $0.20 (Starter Position)
- 1st Target Area: $0.39 - $0.51
- 2nd Target Area: $0.60 - $0.78
- Stops: $0.07
| | Current Idea is a Long Speculation on $CYBCF. More information on Cybeats Technologies Corp, including their most recent press releases can be found here.
Best Regards,
Spartan (aka 'Chris')
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