With the NASDAQ hitting new highs and the markets continuing to boom through the Greece and China debacles, it almost seems like the “data glitch” the NYSE experienced less than 2 weeks ago, a breach which many immediately assumed was a cyber-attack, never even happened. This is usually the case since the majority of the public ranks cyber security along the same lines as a Dentist, a much needed service that you really don’t need to rely on unless there’s an emergency situation or annual check-up scheduled.
Knowing, however, the threat of a data breach of any kind is not something to be taken lightly, companies, like root9B Technologies Company (OTCQB: RTNB), that are the best at sending their specialized cyber operators into your network to hunt for and stop the intruders should be on the top of every long investors’ list of stocks to watch. When you consider that the shares of RTNB stock have declined -61% over the course of the last 2 months, all while insiders have been buying shares on a regular basis, one needs to really have a closer look at just how high revenues (and net income) are growing.
First and foremost, root9B is a Colorado based provider of advanced cybersecurity services and training for commercial and government clients with a total of 72,454,936 shares of RTNB stock outstanding as of May 5, 2015. During the three month period ended March 31, 2015, the Company reported $9,534,247 total revenue for the quarter ended compared to $4,819,522 for the same period the year prior; a net increase of $4,714,725, or 97.8%.
In actuality, the segmented revenues for root9B were all much less than the comparative period, the year prior, yet $5.86 million of the cash flow stemmed from their February 9 acquisition of privately-held IPSA International, Inc., a global business focused on anti-money laundering solutions, investigative due diligence, litigation support and anti-bribery/corruption training and investigative services. That deal alone, not only changed the top-line dynamics for the Company, but it allowed them to land a hefty $7.3 million investment with a leading financial institution through the sale of approximately 6.6 million shares of RTNB stock at $1.10 per share.
It was clearly evident that investors loved this new arrangement as shares of RTNB rose on the inclusion of the new revenue stream, gaining close to $1 before topping out at $2.51. Since that time, as Chairman and CEO, Joseph J Grano Jr., took the chance to tackle head on with their shareholder letter this week, RTNB shares have been negatively affected, to a point where new YTD lows had been recorded, due to “an anonymous blogger—actively engaged in shorting” and “recently published a severely negative analysis of our company, along with the recommendation that everyone should short root9B Technologies’ securities.”
Whether RTNB shares were shorted or not, insiders have been scooping up the chance to add to their positions with a slew of Form 4 filings over the past few months. Although it’s unlikely that a sudden rush back up above the $2 level will come over the course of a single trading session, the Q2 numbers will be out next month which should show significant improvements and even greater net income numbers.
Shortly after the closing bell yesterday, root9B reported that that it was granted a subcontract from prime contractor Silverback 7, Inc. which will support activities within the Combating Terrorism Technical Support Office (CTTSO) for special warfare technical support. The deal awarded to Silverback 7, Inc. has a period of performance of 5 years and a ceiling value of $48 million for all awardees.
So basically, with RTNB shares being at the $1 level and less, you can either get on board with questioning the existence, validity and efficacy of root9B’s cybersecurity platform, and deride their recent acquisition of IPSA or not. Knowing the “playing field” that the Company works on, you’d probably be very lucky if you were throwing stones in a glass house and were able to really remain “anonymous.”
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