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  • Radically Innovative Approach to Cybersecurity
  • Implementation of Software – Quick and Scalable
  • Multiple Exclusive Contracts in Process
  • Bidding War to Follow Proof of Concept Trials

Validian Corp. (OTCQB: VLDI) announced today an update on its strategic partnerships.  This update comes on the cusp of some major cyber attacks targeting Equifax, Deloitte and HBO.  The question on investors’ minds is why an update now besides the obvious fact that the stock is undervalued.  VLDI is only sporting a market capitalization of $3.5 million despite investing approximately $50 million into the technology over the course of the past 10 years.  Since no one is panicking in the streets about Equifax (EFX) should consumers feel safe that the hackers broke through multiple walls of security outlined in the press release?  EFX is a company that holds a consumer’s entire credit history but there is no social outrage.  This announcement today talks about what is going on behind the scenes at the highest levels of cyber security.  It’s not hard to speculate that the social media giants realize that this attack was just a stepping stone and they are next.  Imagine what the reaction would be if one of the social networks like Facebook (FB) , Snapchat (SNAP), or Instagram were targeted as Twitter (TWTR) was hacked to penetrate HBO to steal the unreleased programs of Game of Thrones.

Why VLDI “Radically Innovative”

At the core of the Validian Protect solution is one central premise.  Every network has been compromised.  Right now solutions are designed to detect a breach as quick as possible to prevent the spread of it.  When the plague was sweeping across Europe in the 1700’s they did the same thing: detect it, quarantine it, and try to save whomever they can.  This analogy should show the medieval approach that has been taken toward cyber security.  The reason VLDI is different is due to its cyber immunity. Using the plague example, VLDI could walk into a plague infested city freely using modern 21st century technology of the “internet within the internet.”  VLDI creates its own realm and protects the applications and the complete life cycle of data seamlessly within a virtual closed system regardless whether the data is being transferred or stored or in use.  Users can manipulate the data, use it, share it, and do whatever they want in this environment regardless of how compromised the host device, operating system, network, servers or databases may be.  The malware won’t be able to infect, access or steal the data because there are no communication protocols allowing access into this realm.

The most valuable asset that a company possesses is its data.  Think about a company that doesn’t have access to it financials to fine tune production efficiencies.  What would happen if companies no longer had access to their customer sales pipelines?  Where would retailers be if they didn’t have the buying habits of each customer?  This meta data is at the heart of what cybersecurity companies are trying to protect yet failing miserably in their execution.  According to Identity Theft Resource Center (ITRC) data breaches have jumped 29% over 2016 in the first half of 2017.  Validian “protects the complete life cycle of data seamlessly during transport, storage and usage against all forms of intrusion, impersonation and interception.”  A major issue that cybersecurity firms haven’t solved is protecting data when it is being used.  Data can be protected via end-to-end encryption for the transport of data over the internet and via separate encryption for storage, but not when the data is being created, read, edited or manipulated on a compromised device or network.  Then it is vulnerable to the laundry list of attacks like “impersonation, spoofing, phishing, man-in-the-middle, man-in-the-browser, ransomware, zero-day vulnerabilities, malware and viruses.”  Validian Protect preserves the complete life cycle of data thereby protecting what people value most.

Identity Theft Resources Center


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Validian Protect works with the existing cyber security infrastructure.  It is software designed to complement and work with existing cyber security, firewalls, and intrusion detection and prevention systems yet because it is software and modular in it nature, it is very easy and rapid to implement, configure and use.  The barrier to adoption is getting senior IT officers to give Validian Protect a spin.  Based on past implementations, a full proof of concept could be done within 2 weeks.  If VLDI is able to announce any proof of concepts this stock could be off to the races as a major deal could follow in short order.

Target Markets and Vulnerabilities

  • mobile messaging and social media
  • automotive connectivity
  • e-commerce
  • electronic payments
  • ride sharing
  • the Internet of Things

Mobile Messaging and Social Media – Top mobile messaging apps like WhatsApp, Facebook Messenger, WeChat, and Snap Chat are not secure.  Most of us walk around in oblivion unaware that these apps have exploitable vulnerabilities and can’t imagine that the companies coming out with these apps are not able to prevent them from being hacked or to prevent the personal data in these apps from being improperly accessed or stolen, particularly when the data is being used.  Furthermore, these apps can be hacked on a mobile phone and used as a means to penetrate a company’s data. As an example, it was the Twitter app that was hacked to penetrate HBO to steal the Game of Thrones unreleased programs, making HBO subject to ransom. So these vulnerabilities are a reality, and according to CNN nearly one million android phones are currently infected by hackers.  However, as noted in the chart below which lists billions of end users for only 11 of these Mobile Messaging Apps, one million is a fraction of the number of mobile devices that could be hacked in future attacks. These are the brutal realities that the security experts are weighing.


Automotive Connectivity – With all the talk about driverless cars and the successful hacking attacks on cars, manufacturers need to close this gaping vulnerability.  The 2014 Jeep Cherokee has a software vulnerability that allowed access to the vehicle control system while driving.  One such reporter showed how the car could be shut down while driving.  Manufacturers are putting more and more electronics in the cars, so much so they are considering lithium ion batteries to support the increased load.  Immunity from attacks is an absolute must and luckily VLDI has a ready solution, which can be implemented quickly, and that just needs the right decision maker to approve.

e-Commerce, electronic payments – The only thing worse than losing data is losing money.  The payment portals are continually under attack by spoofing, phishing, and man-in-the browser hacks.

Ride Sharing – Ride sharing has exploded and reinvented how we travel.  Imagine how hackers could exploit using all your data of where you went and what you did.

Internet of Things (IoT) – IoT is basically communication between “things” (=machines) that are used in everyday life like the smart phone, the thermostat, lights, locks, and even a coffee maker to name a few.  Rob Lloyd, president of sales and development at Cisco (CSCO), believes “as many as 50 Billion devices will be connected to the internet by 2020, creating a $14.4 trillion business opportunity.” These chips are in many medical devices and surgical robots.  Securing these devices has literally become a matter of life and death.  All it takes is for one prominent figure to die from a hacked pacemaker for people to ask why the device maker didn’t secure it when a plug and play protocol like Validian Protect exists.  Readers shouldn’t rush to the doctors office and have these devices removed for fear of being hacked.  It take a tremendous amount of computing power and close proximity but this example illustrates how vulnerable these instruments are to attack.  Yet this opportunity for Validian may come to fruition because other cyber security approaches like PKI are too large for the IoT.

Deal Structure – Exclusivity vs Buyout

There seems to be a very thoughtful logic for the formatting of the press release into focus areas.  It is broken down into sector subsets to potentially allow for exclusivity agreements in these sectors.  Investors also need to see how they are arranged in order of importance. In the latest press release Benn commented “we are pleased with the progress of discussions and the level of interest of each large corporation in arranging a strategic partnership with us. These discussions and negotiations are continuing into November, with the structure of a strategic partnership now ranging from licensing to exclusive rights in a particular market sector to acquisition.”  If you read into this comment, it seems like perhaps the top category is in the most advanced stage of negotiations.  There was one very noticeable hold out from the list that was mentioned before in prior releases and that is the government and securing the infrastructure.  In that market you cannot have an exclusive but you can have a license so it makes sense why it wasn’t on the list.  Something profound seems to be happening behind the scenes and this technology now seems to be gaining traction.  The public knows that VLDI has channel partners that have been working at this for a year but sometimes technology just needs a spark.  It appears the company is moving toward seeking exclusivities in market segments but investors cannot rule out an outright acquisition by one of the largest players.

Investment Thesis

The timing of a significant deal seems to be during this year.  Investors should keep in mind that rollout could be very swift given the highly scalable nature of the product.  VLDI has had over a year to think about various licensing agreement structures.  The talk about potential exclusivity raises the bar of speculation on this stock to a new level.  The targeted hack of Equifax resulting in the theft of critical personal information of more than 145 million people has stoked the fears of large corporations throughout the world that they may be next. The tone of this press release indicates the floodgates may open and the fact that no one is chattering about it means a lot is happening behind the scenes because companies don’t telegraph what they are doing in cyber security.  The mysterious omission of government business might lead to an announcement in short order.  The company already has revenue and is on the cusp of signing some sort of exclusive contract in a particular sector.  This type of deal would involve a significant upfront fee and back end royalties. It’s conceivable that the annual payments to Validian under an exclusive contract would be more than the current market capitalization of $3.25 million.  Multiple market players in each sector ensure a bidding war for use of the software.  VLDI is undervalued by orders of magnitude of its current market capitalization given the solutions that it represents.

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