Strikeforce Technologies Inc (OTCMKTS:SFOR) is one of the most compelling companies trading on the OTC Markets. Matter of fact, it's the only one that has a former JPMorgan Chase & Co (NYSE:JPM) executive as CEO and successfully sued Microsoft Corp (NASDAQ:MSFT) and won. It also doesn't hurt that the company is also a leader in preventing cyber theft online, which is one of the fastest-growing sectors in the tech space. The only question we have is why is the stock still trading under a penny?First up, for those not familiar with the company, Strikeforce is a software outfit that designs, develops and sells desktop and mobile device security programs. It’s headed up by two key guys – the first, CEO Mark Kay, and the second, CTO Ram Pemmaraju. Kay is an JPMorgan Chase exec, and Pemmaraju is the guy who built the technology that now underpins the company’s software offerings. The three primary products are ProtectID, designed as an out of band authentication toll; GuardedID, which protects against keylogging on desktops; and MobileTrust, which is essentially the same as GuardedID but for mobile devices.In June, SFOR partnered with Target Corp (NYSE:TGT) to offer its patented keystroke encryption software to consumers. StrikeForce is now selling its GuardedID® anti-keylogging software for desktops and laptops in select Target stores and at www.Target.com. MobileTrust®, the company’s security bundle for mobile devices, is also available online at www.Target.com.
GuardedID®, developed for Windows- and Apple-based computers, provides military-grade encryption protection for keystrokes when the user banks, shops, emails or fills out forms online, or browse the internet. MobileTrust®, a security bundle for Apple and Android mobile devices and tablets, provides the same patented keyboard encryption for all mobile apps that allow third party keyboards. It also includes a password vault, a strong password creator and a two-factor authentication token. CEO Mark Kay said:
“We’re very excited to have our products on shelves and online at Target. Keylogging hackers are a serious threat to consumers — and most people don’t even know they are exposed. This type of spyware can avoid detection by anti-virus programs and steal every keystroke you type into your computer or mobile device. We’re partnering with Target to offer an affordable way for the everyday consumer to proactively protect their personal and financial information from prying eyes.”
The reviews on the company's products have been great, but sales have so far been slow before the Target deal was struck. StrikeForce’s revenues for the six months ended June 30, 2016 was $209,599 compared to $144,737 for the six months ended June 30, 2015, an increase of $50,814 or 66.8%, primarily due to the increase in GuardedID® keystroke encryption and MobileTrust® sales.
The real driver behind SFOR is its Out-of-Band Patent litigation against three companies. We anticipate news from the litigation any day now. SFOR sued Microsoft in June 2015 for patent infringement. However, Microsoft was not served with the lawsuit until October. After Microsoft was served, it took the tech giant only three months to capitulate and settle with Strikeforce for $9 million. The speed of this resolution in a David vs Goliath situation is almost unheard of. Typically, a company like Microsoft would use an army of lawyers to delay, delay. However, Microsoft settled because it knew Strikeforce had them. It would much rather settle for $9 million rather than get hit with a $90 million or $900 million verdict.
For Strikeforce, this was a win because it gave the company much needed cash to pursue its claims against THREE other companies. The money it left on the table by settling with Microsoft, it can possibly get back with the other defendants. The settlement with Microsoft also looks favorable for the company's claims in the eyes of any Judge or jury.
One of Strikeforce’s core strategies going forward is to try and bring more litigation income based on the patent that underpins its ProtectID software, and this settlement validates the strength of this patent. Chances are, therefore, we’ll see some more income of this nature going forward. There’s also another patent related income slated for the next few years, as the company sold its GuardedID patent to a distributor for $9 million, with payment guaranteed before 2020.
Currently trading with a market cap of $17 million, SFOR is a lotto ticket trading on the OTC Markets, albeit with a much higher probability of hitting all lucky numbers. The company has proven that Microsoft violated its patents and we believe the company will be successful with its other claims. Considering the potential with Target and other retail channels along with Plaintiff windfalls, we believe that SFOR has multi-bagger written all over it. We will be updating our subscribers as soon as we know more. For the latest updates on SFOR, sign up below!
Disclosure: We have no position in SFOR and have not been compensated for this article.
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