$0.008
Opened: 27-May-2026
Shares Held at Open: 61,250,000
What does NS1 do?
Nodestream (ASX:NS1) has developed technology that allows for video, audio, and data to remain connected in HD over weak or unreliable networks with ~90% less data usage. Think connectivity between control centres and remotely operated and unmanned drones, robots, boats, submarines and vehicles onto the battlefield - where conventional networks don't work.
What is the macro theme?
Global defence budgets are at their highest levels since the Cold War.
AUKUS, the war in Ukraine, tension in the Indo-Pacific, NATO members lifting spending to 3%+ of GDP - governments are pouring money into modernising their militaries.
Modern warfare is being fought through drones, autonomous systems, ISR (intelligence, surveillance, reconnaissance) and command networks... all of which need ONE thing to work:
Secure, reliable communications that don't fall over when the enemy jams the signal or the bandwidth drops to almost nothing.
That's the problem NS1's tech is built to solve.
Our Big Bet for NS1
"NS1 re-rates to a $200M+ market cap by embedding Nodestream into one or more major Western defence programs, attracting strategic interest from a defence contractor or satellite operator"
NOTE: our "Big Bet" is what we HOPE the ultimate success scenario looks like for this particular Investment over the long term (3+ years). There is no guarantee that our Big Bet will ever come true. There is a lot of work to be done, many risks involved, including technology adoption risk, defence procurement timing risk, dilution risk, and competition risk - just some of which we list in our NS1 Investment Memo.
Success will require a significant amount of luck. Past performance is not an indicator of future performance.
Why did we invest in NS1?
NS1's tech enables remotely operated and unmanned drones, robots, boats, submarines and vehicles
NS1's tech connects video and audio streams across remotely operated and unmanned drones, robots, boats, submarines, vehicles and infantry - anything that needs stable comms to be effective in contested and degraded communication channels.
(basically a way of bulletproofing network connectivity)
NS1's tech can also be applied to other remote locations like offshore oil rigs, facilities in the middle of deserts and in parts of the world where connectivity is limited.
We are backing the defence focused team
NS1's Executive Chairman is Jeff Sengelman - a retired 2-star major general who ran Australian Special Forces operations for years.
We think that Jeff's networks in the highest levels of the AUKUS, Five Eyes and the NATO communications procurement stack can help generate new sales momentum in the defence industry.
We also think NS1's recent strategic advisor appointment, Veronica Bainton, has the right set of expertise - Ex-Optus Satellite & Space Systems and Raytheon Australia (big US defence contractor).
Tired, stale shareholder base means opportunity for new Investors like us
Some of our best tech Investments have been companies with existing shareholders that are stale and tired given the years of delays landing the transformational "mega deal" that has been around the corner for years:
We Invested in Oneview Healthcare (ASX: ONE) in March 2021 at 6c per share - at its highest point ONE was up ~858%.
We Invested in AML3D (ASX: AL3) in June 2024 at 6.4c per share - at its highest point AL3 was up ~431%.
We Invested in Rocketboots (ASX: ROC) in March 2025 at 8c, at its highest point ROC was up ~513%.
The past performance of ONE, AL3 and ROC is not an indicator of the future performance of NS1.
We think NS1 is in a similar position to where those companies were when we first Invested - where there is fatigue in the current shareholder register and the market is pricing the company for the big mega deal never landing.
NS1's tech has >500,000 operational hours and is TRL 9 certified
NS1 has logged >500,000 operational hours in commercial sectors already - shipping, oil and gas and even part of a NATO trial.
NS1's tech has been used by companies the size of US$642BN Exxon Mobil. (source)
"Technology Readiness Level 9" (TRL 9) certified is the highest possible US Department of Defence technology readiness level.
It means NS1's tech is actually deployed and proven in operations rather than "tested in a lab".
NS1's tech has also been independently verified for defence-grade deployment with NATO-linked field testing and US contractor integration underway.
Full focus moving to defence
On the 2nd of April 2026 NS1 released the outcome of an independent "Defence Strategy Review". (source)
Straight after, NS1 also commissioned an independent third-party technical validation of its technology with a "respected defence and aerospace advisory group" active across US and allied defence ecosystems.
Then on the 14th of April 2026, NS1 announced the "Independent Assessment Supports US Defence Opportunity". (source)
We think this marks NS1's full pivot to focusing its business on defence.
NS1 already has defence market traction
NS1 has already secured multiple orders from a significant Five Eyes defence customer (The Five Eyes is a premier intelligence alliance comprising Australia, Canada, New Zealand, the United Kingdom, and the United States) for intelligence, surveillance and reconnaissance applications, including the deployment of 60 units to military robotics company Guerrilla Technologies. (source)(source)(source)
NS1 has also supplied telemedicine remote kits to the European Union Defence Force (EUDF) for naval fleet use, secured orders from a major NATO contractor following successful field trials, has a US defence contractor testing NS1's technology within its drone product development program, and trialled its tech with drones in the Japanese Self-Defence Force. (source)(source)(source)(source)
NS1 is currently going for Brave1 accreditation, which is Ukraine's Government-backed defence-tech cluster (testing foreign vendors in real battlefield conditions) - think of it like Amazon for deliveries but it delivers pre-approved battle tech to locations in a battlefield. (source)
ASX listed peer has gone from 30c to $7 per share on defence pivot
A similar story to NS1 that's done very well recently is Elsight Limited (ASX: ELS).
Elsight plays in a similar (but slightly different) field to NS1 - it owns a drone connectivity platform that lets unmanned aircraft stay connected across LTE, 5G and satellite networks simultaneously.
Over the last 12 months Elsight's business has transformed from a pivot to defence - integrating its tech with Lockheed Martin, Northrop Grumman, The US Department of War's Drone Dominance Program and winning orders from inside Europe.
Now, Elsight's market cap is ~$1.3BN and its share price at its peak was up almost 20x (from ~30c to a high of $7 off the back of its defence pivot).
We think NS1 has similar potential if it can execute a successful defence pivot too.
The past performance of Elsight is not an indicator of the future performance of NS1.
Small $18M market cap - leveraged to a re-rate
NS1 is capped at ~$18M, just raised $6.5M and has ~$13M in convertible notes outstanding.
So its enterprise value is ~$24M.
We think NS1's share price would have been multiples of where it is today IF the capital structure didn't have a convertible note overhang.
We see those notes as one of the reasons NS1 is investable at this market cap.
Strip them away, and then we think underlying business should be worth multiples of where it trades today (no guarantees of course).
We think that IF NS1 lands a defence contract big enough to get the share price moving, then the note overhang becomes less of a problem and the company's share price is allowed to move higher on good news.
What do we expect NS1 to deliver?
Objective #1: Land a major US or NATO defence contract
We want NS1 to convert one of its current pilot/trials into a signed contract. Alternatively, we want to see NS1 win new contracts outside of these trials.
Milestones
CEO + CFO hires
Convert the existing NATO defence force trial into a paid contract
Sign a follow-on order with the existing Five-Eyes defence customer at a materially larger contract size
Contract with US defence contractors
Contract with EU defence contractors
Objective #2: Validate via Brave1 & Ukraine live deployment
NS1 is going for Brave1 accreditation, which is Ukraine's Government-backed defence-tech cluster (testing foreign vendors in real battlefield conditions) - we want to see that convert into orders for NS1.
Milestones
Secure Brave1 accreditation
Deploy NS1's tech into a live Ukrainian defence-tech use case
Publish independent benchmarking results from Brave1 testing
Objective #3: Build out the company's revenue base
We want NS1 to turn contracts into revenues and for the business model to show up as cash on the balance sheet.
Milestones
>$5M revenues in any FY
>$10M revenues in any FY
>$20M revenues in any FY
Reach positive EBITDA
Objective #4: (BONUS): Restructure/extinguish convertible notes
We want to see NS1 clean up its balance sheet. Once that's out of the way, we think the company's share price will have more breathing room.
This one could happen at any moment and is highly dependent on where the company's share price is, so we haven't really put milestones around it.
What could go wrong?
Capital structure risk
The single biggest risk for NS1 is its balance sheet and capital structure.
NS1 has ~$12.8M in convertible notes outstanding with 239M options on issue (with a weighted average share price of ~2.86c per share.
IF NS1's market cap doesn't re-rate to a level high enough to absorb/pay off its debts, existing shareholders could be seriously diluted.
On the other hand the 239M options mean there is also a weight on NS1's share price when those options get in the money - so there will be a period of churn around ~3c per share.
IF the balance sheet/capital structure isn't cleaned up through execution + cashflows then it could be a drag on NS1's share price.
Defence procurement timing risk
Even when the defence customer is willing to buy, defence procurement cycles are notoriously slow.
NDAA compliance, Defence Federal Acquisition Regulation Supplement (DFARS), security clearances - any of these can add 6-18 months.
NS1's path to revenue depends on procurement clocks that NS1 does not control.
Technology adoption risk
NS1's tech, no matter how good can still face adoption risk.
Defence customers especially are conservative, even with TRL 9 certification, an embedded comms protocol gets rolled into a platform only after years of integration testing.
NS1 could win the technical evaluation and still be 24+ months from material revenue.
Competition risk
The defence comms space has well-resourced incumbents: L3Harris, Viasat, Iridium, Speedcast (NS1's former reseller partner), General Atomics.
Most of them have orders of magnitude more salesforce and customer relationships than NS1. NS1 has to compete on the protocol layer's actual technical edge - if a competitor matches the bandwidth profile, the moat narrows quickly.
Other risks
Like any small-cap defence technology company, NS1 carries significant risk, here we aim to identify a few more risks.
The company is undergoing a major management overhaul and is still finalising its new, defence-focused leadership team.
If NS1 struggles to successfully onboard these specialists or relies too heavily on the personal network of its Executive Chairman, execution of the new strategy could stall.
Transitioning from technical validation and small-scale pilot programs into full battlefield deployment introduces severe integration and supply chain risks.
Any software bugs or hardware manufacturing delays during this scale-up phase could permanently damage relationships with highly sensitive defence buyers.
Investors should consider these risks carefully and seek professional advice tailored to their personal circumstances before investing.
What is our investment plan?
Our plan is to hold the majority of our position in NS1 for 3 to 5 years which we hope is enough time to see NS1 deliver on its defence pivot (see "Our Big Bet" above).
After 12 months, we will apply our standard de-risking strategy.
We may also look to sell up to 20% of our holding if the company delivers on one or more of our Investment Memo objectives and/or the share price materially re-rates.
Any sell downs will be in accordance with our trading and hold policy disclosure.
Disclosure: Disclosure: S3 Consortium Pty Ltd (the Company) and Associated Entities own 61,250,000 NS1 Shares at the time of publishing this Investment Memo. Some Shares are subject to shareholder approval. The Company has been engaged by NS1 to share our commentary on the progress of our Investment in NS1 over time. This information is general in nature about a speculative investment and does not constitute personal advice. It does not consider your objectives, financial situation, or needs. Any forward-looking statements are uncertain and not a guaranteed outcome.
