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root9B Technologies Inc (OTCMKTS:RTNB) Looking To Breakout

root9B Technologies Inc (OTCMKTS:RTNB) Looking To Breakout
Written by
Alex Carlson
Published on
January 21, 2016
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root9B Technologies Inc (OTCMKTS:RTNB) is an exciting story in small caps. Based in Colorado Springs, CO, root9B is a leading provider of advanced cybersecurity services and training for commercial and government clients. Combining cutting-edge technology, tactics development, specialty tools, and deep mission experience, root9B personnel leverage their extensive backgrounds in the U.S. Intelligence Community to conduct advanced vulnerability analysis, penetration testing, digital forensics, incident response, industrial control system (ICS) security, and active adversary pursuit (HUNT) engagements on networks worldwide.root9B just recently moved to the Number One position on the Cybersecurity 500 ranking of the world's hottest and most innovative cybersecurity companies for 2016. The Cybersecurity 500 is a global compilation of leading companies who provide cybersecurity solutions and services. Steve Morgan, Founder and CEO at Cybersecurity Ventures and Editor-In-Chief of the Cybersecurity 500 said:

"In 2016, we are placing a greater emphasis on 'pure play' cybersecurity firms that focus mainly on advisory, consulting, specialized staffing, and support services. root9B brings a rare combination of extensive real-world cyber defense experience, senior level cyber experts with backgrounds protecting U.S. federal agencies and commercial enterprises, deep subject matter expertise in the most important cybersecurity disciplines, a local presence in key U.S. regions with plans and the financial ability to expand into other regions, international exposure, and their own state-of-the-art adversary pursuit center. They have a very well thought out model for proactively hunting down and stopping network intruders for their clients."

This is an impressive move by root9B considering that the company made its Cybersecurity 500 debut at #216 in April of 2015. Since that time, the company has come a long way. root9B is now working with the Department of Homeland Security, has initiated cybersecurity operations at its state-of-the-art Adversary Pursuit Center (APC), and was awarded a three-year contract with the University of Washington to provide a wide range of cybersecurity services; including UW Medicine, UW Bothell and UW Tacoma. In addition, root9B has extensive experience in supporting government agencies, universities and publicly-traded and private companies in the financial services, retail, health care and energy industries.

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The biggest deal for RTNB is its Collaborative Research and Development Agreement (CRADA) with the Department of Homeland Security (DHS). Under this agreement, root9B will work with DHS to improve the nation's overall computer network defense posture. root9B's commitment to the Nation's security is exhibited by its regular training and certification of U.S. Military units, research and development contracts with the Defense Advanced Research Projects Agency (DARPA), and its extensive workforce experience across the Federal Government and U.S. Military. The CRADA will assist root9B in the identification and mitigation of cyber intrusions and help DHS identify and solve complex cyber issues. According to the terms of the agreement, DHS and root9B will engage in data flow and analytical collaboration associated with cybersecurity, communications reliability, and issues across the spectrum of security coordination, including detection, prevention and mitigation. root9B Eric Hipkins said:

"We are very excited about the opportunity to collaborate with the Department of Homeland Security. This agreement – focused on sharing technology and analytical findings – enhances root9B's ability to deliver cyber threat solutions, and offer advanced threat training that represents our commitment to protecting the Nation's critical infrastructure."

We Have A Monster Pick Coming Soon!

In the third quarter, RTNB reported Revenues of $6.64 million, Net Earnings of $-4.03 million, and Earnings per Share (EPS) of $-0.05. Gross margins narrowed from 18.99% to 14.88% compared to the same period last year, operating (EBITDA) margins now -47.19% from -34.51%.

Currently trading at a market cap of $107 million, RTNB is one of the few penny stock names with meaningful revenues. Shares have been volatile as RTNB has been the subject of a number of hit pieces on Seeking Alpha by short sellers. If the company can reduce its losses and turn profitable, the stock could be a winner on the back of its DHS contract and Cybersecurity presence. For the better half of last year, the stock traded between $1 and $1.50 per share. If we can breakout above $1.50, the stock has runner in its blood and has taken off in the past. RTNB is a fast-moving story in small caps. Sign up to Insider Financial to get the latest updates on RTNB.

Disclosure: We have no position in RTNB either long or short. We have not been compensated for this article.

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