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BlackRidge Technology (BRTI)
June 2019 Investor Presentation
www.blackridge.us
Safe Harbor
THIS DOCUMENT WAS PREPARED BY BLACKRIDGE TECHNOLOGY, AND MAY CONTAINFORWARD-LOOKING STATEMENTS, WHICH INVOLVE KNOWN AND UNKNOWN RISKS,UNCERTAINTIES, AND OTHER FACTORS, WHICH MAY CAUSE BLACKRIDGE’S ACTUALRESULTS, PERFORMANCE, OR ACHIEVEMENTS TO BE MATERIALLY DIFFERENT FROMFUTURE RESULTS EXPRESSED OR IMPLIED BY THE FORWARD LOOKING STATEMENTSCONTAINED HEREIN. SOME OF THE RISKS WHICH MAY CAUSE BLACKRIDGE’SPERFORMANCE TO DIFFER FROM THE FORECASTED RESULTS INCLUDE, BUT ARE NOTLIMITED TO, DELAYS IN TECHNOLOGY DEVELOPMENT, DELAYS OR CANCELLATIONS OFPENDING PURCHASE ORDERS OR OTHER REVENUE, HIGHER THAN EXPECTED COSTS,ACTIONS TAKEN BY CREDITORS OR VENDORS OF THE COMPANY [INCLUDINGLITIGATION] WHICH ARE NOT EXPECTED AND CHANGES IN THE OVERALL MARKET FORCYBERSECURITY SOFTWARE PRODUCTS. THE COMPANY MAY FACE ADDITIONAL RISKSTHAT WE HAVE NOT LISTED. WE UNDERTAKE NO OBLIGATION TO UPDATE ANYFORWARD-LOOKING STATEMENTS AFTER THE DATE OF SUCH STATEMENTS.
2
Investment Overview Agenda
• Company Origin
• Problems and Solutions
• Market Segments
• Key Technology Components
• Products and Configurations
• Business Strategy
• Market Validation
• Business Model
• Opportunity Summary
3
SYMBOL
BRTI
PRICE
$0.20
GROSSMARGINS
~90-92%
MONTHLY CASH BURN
$1.3MM
THE BLACKRIDGE SOLUTION:
Authenticate identity and enforce policy on the first packet, BEFORE a
network session is established.
Zero Trust Model
Overview
44
$93B2018 WORLDWIDE SPENDING
Source: Gartner
TAMCybersecurity Spending
MARKET CAP
$19MM
NETWORK SECURITY’S DESIGN FLAW:
Current security products protect only AFTER network
sessions are established.
Implicit Trust Model
✓ Delivers unparalleled trust in business services
✓ Lowers business risk and strengthens compliance
✓ Reduces security and network management costs
Company Origin
Technology originated from a United States Department of Defense contract to cloak Internet Protocol (IP) connected devices in the Afghanistan war.
The average US soldier carries greater than six vulnerable points of network connectivity.
5
6
The Security Inflection Point
Chief Information Security Officers need more adaptive security capabilities to support business dynamics
1. Growing demand for better identity-based network trust models to support cloudenvironments with software defined perimeters, microsegmentation for boundaries,segregation of IT and OT systems, and end-to-end security policy enforcement
2. Rapid growth in the Internet of Things (IoT) and Industrial IoT connectivity continuesto increase the threat landscape across operational environments.
3. Immediate need for new identity-based security architecture to support changingbusiness needs and increasing cyber threats.
7
Business Use Cases
Cloaking/HidingNetwork Connected Assets
Identity-BasedPolicy, Access &
Compliance
Network SegmentationMicro-segmentation
Threat Visibility& Attribution
Enterprise Networks, Clouds, ICS and IIoT
Addressable Global Business Segments
8
Defense/GovernmentArmy, Marines, Agencies
Civilian Government Health, Energy
HealthcareHospitals, Insurance
Medical Groups
Service ProvidersData Centers, Clouds,
Managed Service Providers
IIoTUtilities, Supervisory Control and
Data Acquisition (SCADA)
EnterpriseBanking, Finance
IoT/ManufacturingPharma
Automotive
Key Technology Components
9
First Packet Authentication™• Stops network attacks at the
earliest possible time• Connect and protect anything,
anywhere, in any network
Identity-Based Trust Model• User or device identity used to enforce
access policy, end-to-end• Provides granular network visibility and
access control based on identity
Visibility and Management• Out of box integration with many
third party tools• Identity for compliance audit trail
Adaptive Trust and Policy• Topology independent policy
enforcement• Extends zero trust model to an
adaptive trust model
10
Products and ConfigurationsSoftware-Based Components
Software delivered on network gateways
Virtual and cloud gateways
Software delivered on IoT & desktop gateways
Enterprise ManagementSystems and SCADA/IoT
z/VM Software and IoT endpoints
11
Business StrategyVertical segment adoption and solutions
Market Approach
1. Early direct targeted customer sales • Validate solution and used case• Move from direct to partner model:
Channel and OEM license and sales
2. Focus on markets and partners that are seeking customer-driven solutions
3. Long term, limited direct sales only to strategic accounts
OEM / Partner/ Channels
1. Products augment and support existing solutions
2. Unique, protected Intellectual Property supports OEMs’ and Partners’ product portfolio
3. Easy to embed or use API integration
4. Licensing and royalty deals
5. Sales advisory role with partners on delivery
12
Near Term Sales Focus
Channel Partners, System Integrators, Government Accounts Set Stage for Scale
• Focused on several accounts with specific business problems
• Software Defined Networks
• Network / Micro-Segmentation
• Cloaking / Hiding of Network Assets
• Managed Services, Cloud Services
• IIoT and Industrial Controls
• Channel Model
• 6+ Cisco resellers signed to date
• Designed to facilitate partner adoption
• Major OEMs, Service Providers, and Integrators
• Targeted accounts to facilitate the process
• Defense Information Systems Agency (DISA)
• National Geospatial-Intelligence Agency (NGA)
• I-NET and NTT (Japan)
• Army Cyber Operations
• Partners and first customers
• Ciena, Cisco - DISA
• Amazon Web Services - NGA
• PTC and Network Instruments – Manufacturers
• Resellers – Tabaco Tech, Ranger Global
• International - Global System Integrators in India and
Japan
13
First Adoption: Government Leveraging to CommercialEarly Adopter and Thought Leaders Provide Validation and Pedigree
Army: Cloaking Battlefield Assets DISA: Network Segmentation
DoD Special Project: Critical InfrastructureNGA: Classified Imagery Cloud Storage
BlackRidge integrates with Cisco DNA to extend Cisco security
controls to additional and new environments including multi-
cloud, SD-WAN, and IoT.
14
BlackRidge Partnership with CiscoEnterprise Plus Security for Cisco Environments
Intent-based network infrastructure
Cisco DNA Center™
AnalyticsPolicy Automation
Switching Routers Wireless Security
Market Expansion Opportunity
GOVERNMENT COMMERCIAL
PARTNERSIIoT and ICS
15
Industrial IoT - Explosive Growth and Alignment
16
Focusing on specific verticals within theIndustrial IoT Market will ensure higherprofitability, longer product and revenue lifecycle and significant amounts of AuthenticatedIdentity volumes due to the number ofcurrently installed endpoints coupled with theadditional growth of new endpoints growingat 22-32% CAGR.
BlackRidge solves the most critical IIoT problem … “How to secure the legacy capital equipment we have, while enablingnew technologies in the future” … Mr. James McCarthy, Director, National Cybersecurity Center of Excellence (NCCoE) at theNational Institute of Standards and Technology (NIST).
BlackRidge TAC products enables micro-segmentation, segregation and the enforcement of policy and rules to establish,enable and improve agility in trust pedigree for legacy and new systems.
Announced Strategic Partnership with PTC for IoT
BlackRidge has signed an agreement withPTC, the leader in IoT software platforms toprovide Authenticated Identity to theircustomer base and internally to PTCKepWare architectures.
PTC Delivering On Its IoT Promises:Partnerships with Microsoft, Rockwell and Ansyshave commenced. The first two couldsignificantly accelerate the adoption and grow ofPTC's ThingWorx IIoT platform.
PTC beats GE, ABB and Siemens for Top Spot inABI Research’s Smart Manufacturing PlatformCompetitive Assessment.
https://www.ptc.com/en/resources/iot/report/
17
18
Global Reach with Early BlackRidge EngagementsConsider U.S. Cyber Security as Gold Standard
France
North America
India
Japan
• BlackRidge TAC-ID named as “One of the Top 10 Standouts at the 2019 Consumer Electronics Show (CES)
• Device Functionality
• Inserts identity to allow a downstream BlackRidge gateway to authenticate connections from the device
• Plugs in-line in front of an IoT / OT device
• Adds identity and security to existing environments without IoT / OT device integration required
• Managed by the BlackRidge Enterprise Manager
• Roadmap for more secure and hardened versions
• Device Specifications
• Runs embedded BlackRidge TAC software
• 2 - 1GbE ports, 1 USB 2.0, 1 micro USB (power)
• 90 Mbps transmission rate
• Power consumption <1.5W
• Commercial or industrial temperature (-40°C to 85°C) versions
BlackRidge TAC Identity Device (TAC-ID) Released to Market – Lowest Cost Identity Solution!
19
Recurring Revenue Business Model
20
Enterprise Gateway
1. Capex Model• Priced per gateway • Scales based on network
speed and on number of identities
• Annual support at 18/22%
2. Subscription Model• Annual license fees
including support
Cloud and Virtual Gateway Identities and Endpoints
1. Capex Model• Priced per gateway • Scales based on number
of identities• Annual support at 18/22%
2. Subscription Model• Annual license fees
including support
1. Capex (Government)• Identities capacity packs
that scale with implementation
• Endpoints are included (to encourage proliferation)
• Annual support at 18/22%
2. Subscription (Commercial)• Annual license fees including
support
Opportunity Summary
21
• Experienced Management Team
• Patented technology, new product strategy and strong roadmap• End-to-end software solution, network (topology) independent• Enables use of core technology across all market segments / verticals• Enables integration by OEMs and Service Providers
• Early adoption by the United States Government, Department of Defense and partnerships with Cisco and PTC provide market validation and pedigree
• BlackRidge’s products are uniquely positioned to address emerging demands• Addresses the enterprise (IT) and operational technology (OT) infrastructures• Demand will grow between 24-40% CAGR over the next 5 years
• Investment partner needed to support transition and growth strategy• Eliminate current operational constraints and build-out• Expand engineering team and support functions to accelerate revenue and scale
BALANCE SHEET: March 31, 2019
C&CE $673,880
PREPAID EXPENSES $154,038
INTANGIBLE $9,422,070
TOTAL ASSETS $10,688,776
AP $2,183903
ACCRUED INTEREST $1,128,077
LONG-TERM DEBT $55,137
SHORT-TERM DEBT $5,654,053
TOTAL LIABILITIES $11,668,758
CAPITALIZATION TABLE:
COMMON SHARE EQUIVALENTS:
COMMON STOCK 96,872,725
SERIES A DILUTIVE 3,577,370
OUTSTANDING WARRANTS AND
OPTIONS 130,323,593
TOTAL 230,773,688
2222
Balance Sheet & Capitalization Table
• Blackridge plans to apply to uplist to NASDAQ in 2019
BlackRidge’s adaptive cyber defense solutions are designed to stop determined, sophisticated attackers.
Network Topology Independent, Identity-Based Zero Trust Security Model
Summary
23
Chris Tyson – MZ Group North America
chris.tyson@mzgroup.us
949-491-8235
Please contact us with any questions or for more information
CONTACT
DISRUPTIVE, PATENT PROTECTED TECHNOLOGY
John Bluher
jbluher@blackridge.us
310-560-4484
Corporate Contact Investor Relations Contact
Experienced Management Team
CEO ISC8, COO QualMetrix; Exec at Akamai, Nortel, On2
Co-Founder Alteon; TAC Inventor, 8 patents
John Hayes
Public Company experience, Lehman brothers. SEC
John Bluher
Bill Joll
CTO/Founder CFO
Head World Wide Sales
CEO or Senior Executive at DEC, Adaptec, Sun
Bob Graham
CEO/Founder
Operations Exec with PLOS, XSIGO and Oblix
Bruce Fingles
SVP Operations
CMO SevOne, VP CorpDev VERITAS; R&D HP, Bell Labs
Mike Miracle
SVP Marketing & Strategy
GM Analog Devices, TDK Industrial Motion, Araflex
Michael Murray
SVP & GM Cyber Physical
VP ADI Security Group; Presidentat 2 Public Cos; 14 patents,
John Walsh
Chief Strategy & Tech Officer
BlackRidge Technology Confidential 25
APPENDIX
26
COMPARISON OF NETWORK SECURITY CAPABILITIES
Featureor Capability
Transport AccessControl
Segmentation Firewalls
Next Generation Firewalls
NAC / 802.1x
VPNs
First Packet Authentication(pre-connection setup)
Yes No No No No
End-to-End Identity and Attribution Yes No No Same LAN segment only
No
Identity-based Policy Yes No Limited Yes Yes
Multiple Enforcement Points Yes Yes Yes No No
Requires Hardware Acceleration No No Yes No Yes
Source NAT Tolerant Yes Yes Yes N/A Limited
DoS Attack Protection Yes No Limited No No
Supports In System Middle Boxes Yes Yes Yes No No
Encrypted Data Payload Tolerant Yes Yes Limited N/A N/A
Resource Application Identity Yes No No No No
Trusted Resource Host Yes No Limited Limited No
Topology Learning Yes No No No No
End-to-End Trust Yes No No Limited No
27
Network Security Comps
COMPARISON OF PUBLICLY TRADED COMPARABLE COMPANIES1,2
TICKER: ENTERPRISE: 52WK RETURN: MARKET CAP: EV: SALES Y/Y: GROSS MARGIN:EBITDA
MARGIN:SALES: EBITDA:
PANWPalo Alto Networks
Inc (5.0%) 11,955 11,102 23.0% 76.0% 23.1% 1,891 438
NTCTNetscout Systems
Inc 13.5% 2,928 2,818 0.6% 73.8% 25.3% 1,136 287
FEYE Fireeye, Inc. (5.9%) 2,547 2,436 3.9% 68.7% 10.0% 742 74
CYBRCyberark Software
Ltd. (26.4%) 1,400 1,117 17.6% 84.8% 21.5% 255 55
KTOS
Kratos Defense & Security Solutions,
Inc. 83.9% 1,069 1,392 10.2% 26.5% 7.0% 737 52
SCWX Secureworks Corp (26.5%) 840 748 9.9% 54.0% (5.2%) 463 (24)
RPD Rapid7, Inc. (3.6%) 719 635 25.0% 73.2% (10.5%) 197 (21)
KEYW Keyw Holding Corp (25.7%) 379 633 60.2% 29.2% 10.2% 462 47
GUIDGuidance Software,
Inc. 19.0% 236 223 (1.4%) 72.8% 11.5% 109 13
AVERAGE:2.6% 2,453 2,345 16.5% 62.1% 10.3% 666 102
28
1 Data are as of 8/22/20172 All data are analyst estimates via I/B/E/S or standardized data. Standardized data are via I/B/E/S, Fundamentals, as well as publicresearch reports. Standardized data has relatively fewer adjustments than GAAP/IFRS. Standardized data generally has adjustmentsfor extraordinary and unusual expenses. Normalizing for such one-off events makes the data more comparable when comparing onecompany to another. Whenever reported numbers are restated, the restated numbers will be shown.
Public Company Comps
28
29
TICKER: ENTERPRISE: MARKET CAP: EV: P/EPS: 2018 P/EPS: EV/EBITDA:2018
EV/EBITDA:EV/SALES: 2018 EV/SALES:
PANWPalo Alto Networks
Inc 11,955 11,102 119.02x 35.91x 25.56x 19.60x 5.91x 4.83x
NTCTNetscout Systems
Inc 2,928 2,818 33.74x 13.89x 10.26x 8.13x 2.59x 2.28x
FEYE Fireeye, Inc. 2,547 2,436 (14.56x) (499.29x) 32.74x 31.87x 3.29x 3.04x
CYBRCyberark Software
Ltd. 1,400 1,117 46.81x 30.76x 20.39x 15.89x 4.39x 3.68x
KTOS
Kratos Defense & Security Solutions,
Inc. 1,069 1,392 (164.38x) 37.23x 26.95x 19.38x 1.89x 1.78x
SCWX Secureworks Corp 840 748 (24.73x) (62.66x) (31.26x) (511.98x) 1.61x 1.47x
RPD Rapid7, Inc. 719 635 (19.05x) (34.76x) (30.69x) (41.00x) 3.23x 2.67x
KEYW Keyw Holding Corp 379 633 (28.55x) 24.66x 13.43x 10.29x 1.37x 1.16x
GUIDGuidance Software,
Inc. 236 223 84.81x 18.36x 17.76x 13.80x 2.04x 1.86x
AVERAGE:2,453 2,345 3.68x (48.43x) 9.46x (48.22x) 2.92x 2.53x
29
COMPARISON OF PUBLICLY TRADED COMPARABLE COMPANIES1,2
Public Company Comps
1 Data are as of 8/22/20172 All data are analyst estimates via I/B/E/S or standardized data. Standardized data are via I/B/E/S, Fundamentals, as well as publicresearch reports. Standardized data has relatively fewer adjustments than GAAP/IFRS. Standardized data generally has adjustmentsfor extraordinary and unusual expenses. Normalizing for such one-off events makes the data more comparable when comparing onecompany to another. Whenever reported numbers are restated, the restated numbers will be shown.
BUYING ENTERPRISE: TICKER: SELLING ENTERPRISE: TICKER: EXCHANGE: CONSIDERATION: PREMIUM TO MARKET CAP: P/S:
SYMANTEC SYMCBLUE COAT
[BAIN CAPITAL] N/A N/A $4.7B N/A 7.9X
SYMANTEC SYMC LIFELOCK, INC. LOCK NYSE $2.4B 33% 3.6X
CISCO CSCO APPDYNAMICS [APPD]1 N/A $3.7B N/A 18.9X
INTEL INTC MOBILEYE MBLY NYSE $15.3B 40% 41.9X
AVAST SOFTWARE [AVST]1 AVG TECHNOLOGIES AVG NYSE $1.4B 25% 3.4X
FIREEYE FEYE ISIGHT PARTNERS N/A N/A $275M N/A 6.9X
30
1 Not yet public2 Data as of 8/22/20173 All data are analyst estimates via I/B/E/S or standardized data. Standardized data are via I/B/E/S, Fundamentals, as well as public research reports. Standardized data has relatively fewer adjustments than GAAP/IFRS. Standardized data generally has adjustments for extraordinary and unusual expenses. Normalizing for such one-off events makes the data more comparable when comparing one company to another. Whenever reported numbers are restated, the restated numbers will be shown.
COMPARISON OF PUBLIC M&A TRANSACTIONS2,3
30
M&A Comps
CONCEALING A NETWORK CONNECTED DEVICE US Patent number 6,973,496, Patent Application U.S. Ser. No. 10/094,425. Filed 5 March 2002, Granted 6 December 2005, 1 Claim
METHOD FOR DIGITAL IDENTITY AUTHENTICATION US Patent number 8,281,127, PatentApplication U.S. Ser. No. 12/658,113. Filed 1 February 2010, Granted 2 October 2012, 20 Claims
METHOD FOR FIRST PACKET AUTHENTICATION US Patent number 8,346,951, Patent Application U.S. Ser. No. 11/242,637. Filed 30 Sept 2005, Granted 1 January 2013, 25 Claims
METHOD FOR STATISTICAL OBJECT IDENTIFICATION US Patent number 8,572,697, Patent Application U.S. Ser. No. 13/373,586. Filed 18 November 2011, Granted 29 October 2013, 43 Claims
METHOD FOR DIGITAL IDENTITY AUTHENTICATION US Patent number 8,635,445, PatentApplication U.S. Ser. No. 13/573,077. Filed 16 August 2012, Granted 21 January 2014, 23 Claims
METHOD FOR DIRECTING REQUESTS TO TRUSTED RESOURCES US Patent number 9,118,644, PatentApplication U.S. Ser. No. 13/573,238. Filed 30 August 2012, Granted 25 August 2015, 27 Claims
METHOD FOR STATISTICAL OBJECT IDENTIFICATION US Patent number 9,973,499, PatentApplication U.S. Ser. No. 14/998,645, filed 16 January 2016, continuation-in-part of Patent 8,572,697, Granted 15 May 2018, 14 Claims
METHOD FOR USING AUTHENTICATD REQUESTS TO SELECT NETWORK ROUTES US Patent number 10,187,299, Patent Application U.S. Ser. No. 14/999,317, Filed 22 April 2016, Granted 22 January 2019, 6 Claims
40 31
Eight Granted PatentsDisruptive, Patent Protected Technology
32
$93B2018 WORLDWIDE SPENDING
The latest forecast from Gartner, Inc. predicts
worldwide information security spending will
grow ~7% to reach $86B in 2017 and will climb to
$93B in 20181
$1T5Y CUME SPENDING 2017-2021
Global cybersecurity spending is predicted to
exceed $1T cumulatively over the next five
years, from 2017 to 20212
$6TANNUAL CYBER CRIME LOSS
The world will suffer $6T in annual cyber crime
damages by 2021; up from $3T in 20152
QUARTERLY FINANCING TRENDS
100+ On a quarterly basis, deals to cybersecurity startups nearly tied the record
last quarter, with 145 disclosed equity funding rounds in Q2’17. Deals have
exceeded 100+ each quarter since Q4’15 3,4
TAMCybersecurity Spending
3
3
IN MILLIONS
32
1 Gartner, Inc.2 Cybersecurity Ventures3 EX. Q4/20164 CB Insights5 Through 6/30/2017; NOT annualized
Dollars invested in these companies in Q2’17 were the highest of any quarter
over the time period tracked. Clocking in at $1.6B, Q2’17 is the fifth quarter
in which funding to private cybersecurity companies crossed the $1B mark. 4
33
1389M 2018 M&A TRANSACTIONS4
Cybersecurity deals hit an all-time quarterly
high of 146 deals in Q1’17, up 26% from the
previous quarterly high. The trend held through
Q2’17, which saw just one fewer deal [145 total]
compared to Q1’17.1
$1.5BQ2/2017 EQUITY FUNDING
The amount of disclosed equity funding to
cybersecurity companies has also recently
broken records, reaching an all-time quarterly
high of $1.6B in Q2’17. 1
6+$100MM FUNDING ROUNDS
Six companies obtained funding rounds of $100M+
in Q2’17. No other quarter on record has seen over
four mega-rounds in cybersecurity. 1
Note that the current and projected funding totals for 2017 include only non-exited
companies and therefore exclude deals such as the recent $2.29B Private Equity round
raised by McAfee from the firm Thoma Bravo in April. 1 2
ANNUAL FINANCING TRENDS
428 Deal activity has increased steadily since 2012, with 2016 seeing a high of 428 deals, despite
a small 6% drop in funding [down from a record $3.8B in 2015]. At the current run rate, both
deals and dollars for 2017 are on track to rise to an all-time high. 1
MARKET INVESTMENT
1 CB Insights2 McAfee was acquired by Intel in 2010 and Intel retains 49% ownership of the company3 Through 6/30/2017; NOT annualized4 New Century Capital Partners Research 2018
3
3
IN MILLIONS
33
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