A planned token offering by Nubeva (TSXV:NBVA) is a non-dilutive financing plan that should be met with optimism from investors, Echelon Wealth Partners analyst Ralph Garcea says.
On Tuesday, Nubeva said that, through an unnamed Singapore entity, it planned to proceed with a token offering that will raise approximately (U.S.) $3.0-million
“We are extremely excited to be at the forefront of this technology,” CEO Randy Chou said. “If successful, the establishment of the token network will enable us to expand our base technology to deliver best-of-breed cloud-based security for a wider customer set, which is something we have always intended to do. We believe the launch of the tokens has the potential to open up a significant market for Nubeva and accelerate our growth outside North America.”
Garcea gives a thumbs up to this development.
“The Token Issuer plans to complete an Initial Pre-Sale of rights to receive future tokens (of ~$3.0M),” the analyst notes. “The proceeds of this Initial Pre-Sale will be used to fund costs associated with the Token Offering and to enable the Token Issuer to purchase from Nubeva a limited purpose open source license for its Blockchain Routing IP software in connection with the development of the Token Network. NBVA also contemplates that a second pre-sale of future token interests will be completed to raise funds to provide for development of the Token Network. All development of the Token Network will be completed under service agreements under which Nubeva would be paid fees in exchange for the completion of the development work. A good example of the Token Network would be developing cybersecurity for consumer facing crypto-exchanges to protect against stolen coins/wallets and increases in ransomware cases.”
In a research update to clients today, Garcea maintained his “Speculative Buy” rating and one-year price target of $4.00 on Nubeva, implying a return of 142 per cent at the time of publication.
Garcea thinks Nubeva will generate Adjusted EBITDA of negative $1.2-million on revenue of $700,000 in fiscal 2018. In fiscal 2019, he thinks the company’s EBITDA will come in at negative $1.4-million on a topline of $4.4-million.