SFOR conversation with the company CEO on 4/8/2026
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4/8/16 From the Wall Street Transcript
TWST: Please update us on any changes and recent developments at StrikeForce that are helping to grow the company.
Mr. Kay: Actually, there are a lot of changes and recent developments. As many people do know, we’ve done very well with our patents. We won our first out-of-band patent lawsuit. We have a major retail business going on now. Today, we are selling in Target, in the stores, as well as online at Target and Amazon. Starting in April or so, we’ll be selling in Staples and many others through a central distributor. So we’re definitely making some great progress in that space.
We also have retail boxes of our products — GuardedID and MobileTrust — and they will be in the stores starting this April or so. Our new websites are out there for MobileTrust and GuardedID. So now, you can buy MobileTrust online, and we’re very excited about that as well.
We see many major new sales going on that are being discussed right now with many high-level companies. We have Cybersecurity now onboard. Remember, they did an 8-K where they bought the GuardedID patents and the GuardedID and MobileTrust products for $9 million, and they guarantee us the money within the next three and a half years. So there’s a lot going on, and we’re definitely growing the company at this point.
TWST: Give us a closer look at how a product like MobileTrust works, and tell us how its changed and evolved over time.
Mr. Kay: MobileTrust is a great product that works on all iPhone and Android devices. Now that we won our out-of-band lawsuit and we received money for MobileTrust, we have money in the bank, and we’re keeping it there. We can stay strong, and we can actually close deals with our distributors.
So MobileTrust is available on our own website, and you could also buy it through the Target online system today and other distributor sites. It really allows you to use the trusted keyboard feature. We offer a special keyboard that works on all iPhone and Android devices, and that special keyboard is encrypting the keystrokes. It’s the only encrypted-keystroke keyboard available on all of those devices. It encrypts the keystrokes. It doesn’t go through their own queues, so you can’t be keylogged, and if you are, it doesn’t get the keys anyway since they are encrypted.
And it could be used for any application that wants to buy it. The MobileTrust SDK is really just selling the keyboard to OEMs, whereas MobileTrust uses the keyboard also in its own application. So it’s an excellent tool. And then, of course, MobileTrust offers many other features that are widely used and very fairly priced as well.
TWST: So your endpoint consumer is typically a mobile application user, a consumer, not enterprise?
Mr. Kay: Correct. MobileTrust is a mobile application that any consumer could buy and use now. To sell MobileTrust to the enterprises — SDK — it is sold directly through StrikeForce, where it is typically sold for that purpose. GuardedID, of course, is also a consumer- and enterprise-based product. When we sell it to the enterprises, our distributors put the order into StrikeForce, so we sell it directly. For the consumer, it is sold in the stores and online in real time.
TWST: Do you have any new innovations in the pipeline?
Mr. Kay: Yes. We’re working on a couple new products that work on the mobile side. Obviously, mobile is the biggest thing out there, and we are working on its further usage. MobileTrust, I think, will definitely be very strong, and we are working on a few newer products along with MobileTrust enhancements, but we’ll also see what the market wants and needs as well.
TWST: Tell us about your executive team and who is responsible for some of your innovations.
Mr. Kay: Our CTO and Inventor, Ram Pemmaraju, really is a research guy and invents new things and comes up with something new almost every single day. And some of these ideas have led to some of our products, and he’s been with us from the very beginning. George Waller has also been with us from the very beginning, and he’s our EVP; he also does all sales. And most of our sales, again, if not all of them, are done through the resellers and distributors now. So that’s a huge opportunity, especially with our distributor Cybersecurity, which does enterprise sales.
TWST: Tell us about the resolution of your patent infringement lawsuit, which happily was ruled in your favor. What does this positive ruling mean to StrikeForce and especially to your bottom line?
Mr. Kay: Well, that’s a great question. And it is the reason why we’re actually doing very well now. And I really can’t talk about it because it’s part of our agreement; however, we did close this in January and now are financially strong. We are now working with our same lawyers, and they’re looking at some other companies for potential infringement violations. So we’re thinking we’ll have definitely something else going on.
The good news is the lawsuits are not primary to us but definitely in the background, for which we will be doing a lot of work. Keep in mind, GuardedID also has many opportunities and patents. Again, we have three patents on GuardedID, but Cybersecurity bought the patent and mobile products, for which they owe us the $9 million for it within three and a half years. They also will have the rights to go after anybody who violates it, which they may or may not. And again, it isn’t critical to our business, but we will protect our patents until then.
TWST: Now that your cash situation has improved significantly, has your position regarding prospective M&A changed? Last time we spoke, you were quite hopeful about M&A.
Mr. Kay: We just sold GuardedID and MobileTrust to one of our companies. And within the next three years, they’ll be out there talking to many major enterprises showing great interest in licensing it. So we no longer own those products, even though we have a perpetual right to sell them. Then, there is the ProtectID — our authentication product — side of it, where we’re now starting to sell it to more major companies as well. I think we’ll have a major M&A opportunity once we have ProtectID as our concentration. Now that we have money in the bank, we can actually address these things more easily, and companies should be more interested in us since we’re increasing sales and definitely have money in the bank.
TWST: Where will your focus be for the second half of 2016? What is at the top of your strategic agenda now?
Mr. Kay: M&A is always one of our main focuses but not the main focus, which right now is to really get these distributors operating successfully. Cybersecurity is key in selling to the enterprise. So we’re going with them every single day to different meetings with major companies that they’re very friendly and connected with. And every one of them is interested in our products, GuardedID and MobileTrust. I think this will be an incredible year for these guys and StrikeForce as well, since StrikeForce does get a percentage of every sale they get done. So we will still make a lot of money from those sales that they’re working on, and we feel very good about what they’re getting done.
TWST: Can you discuss some of the possible tailwinds that would support your sales efforts going forward? And what are the challenges that you’re preparing to meet? What worries you?
Mr. Kay: Well, some of the challenges for us, there are not as many as there used to be. Money was one of them, and that’s no longer a challenge. As a matter of fact, it’s phenomenal hanging up politely on financiers and hanging up on everyone that wants to lend us money by just saying, “No, we’re not interested.” So that feels good, especially with money in the bank.
We still have the challenge of paying off overall debt, which we still have to do. We’ve been paying off a number of debt instruments, and we still have our regular debt and regular notes that we plan to pay off. We should be able to pay off the debt we owe with the $9 million due us on the option we have on the GuardedID patents and MobileTrust and GuardedID products, and possibly sooner through revenues or other potential patent wins.
Sales this year could be huge. I mean, if any one of these sales gets done with Cybersecurity, they could be large, and of course, we’re hoping for that, but we can’t count on it. We’re just working it and see that the deals are progressing very well. So we could be done with all of those notes in a couple of years, and then, we can hopefully get the stock increased for shareholders.
TWST: Now, how impactful are secular trends like the Internet of Things or the proliferation of mobile devices on the company?
Mr. Kay: Well, they’re extremely impactful, and we actually always follow them. So you probably aren’t going to have laptops in the future, and you won’t even call a mobile device by that name because that’s all you will have, and so we’re building features for those types of Internet of Things that will be all around you.
When we talk about the security-related issues, I find it funny that people develop software for all of these devices that vendors make only to let you know what just happened versus trying to prevent it from occurring. When you go to the RSA show in San Francisco, you see these companies detecting problems, detecting viruses, detecting malware, but not preventing the hack. That is about 90% of the vendors.
The good news is that we prevent, not detect what happened, and that’s critical and unique. We don’t just find out that you were hacked, but we don’t let it happen in the first place. And that’s the research Ram Pemmaraju, our designer and board member, does to prevent further malware from being successful based on the new things that are going on in the marketplace today. So we feel very strongly about that, and we are working toward building those kinds of new features in the future.
TWST: How have regulatory issues related to cyber terrorism impacted the development and demand for your products?
Mr. Kay: Well, what’s huge is, you look at all the numbers, and we used to talk billions, now they’re talking trillions of people affected by viruses and malware attacks. Clearly, malware is the biggest issue out there today, as everybody knows. Well, six years ago, malware was so small that nobody knew it would be the biggest problem in the future — 78% of all hacking is malware, and 98% of all malware is keyloggers. And now everyone knows what a keylogger is, and 98% of malware is the huge number in many of the reports, such as the Verizon 2014 Data Breach Investigations Report.
This huge banking problem that we had about two years ago in February was the largest banking attack in the world to date. When the major banks got hit, it was on the front page in The New York Times, and it talked about how keyloggers were the initial way they got the information, which was their name, usernames and passwords. So keyloggers is where it all began, and keylogging is now starting to grow. It’s just now starting to get big and important.
Our products that are out there, available in everybody’s arena, are becoming better understood, and consumers are realizing that they need to have that in order to protect themselves, not just to find out that they technically got hit by one but to prevent it from stealing from them. Nothing is perfect, but it’s at least 95% successful and an excellent prevention versus the antivirus programs, which are only a maximum of 6% preventative. So we’re definitely a better fit than any antivirus program available, even though you still need them for certain things. These facts are starting to hit real hard, and we are looking real good.
TWST: Can you share with us your plans for deploying the cash now in your coffer?
Mr. Kay: Well, first of all, we’re not deploying the cash. I mean, what we have we are keeping. What we don’t know for sure is how much money we’re going to make, so we’re holding on to that cash. We’ve spent the money we’re going to spend for the most part paying off certain toxic debt. We spent money on buying out much of the toxic debt. We did not spend money on buying out the notes because we don’t have enough for that. But we know the $9 million will easily take care of that for us along with revenues. So what we have, we’re keeping and using on a regular daily operational basis, which we think will hold us very well.
TWST: Are there any topics we’ve missed that you’d like prospective investors or potential M&A suitors to know about?
Mr. Kay: Well, the only other thing I’d like to let people know is that we have no plans to do any reverse splits. We’re trying to eliminate the toxic convertible debt so that then our stock could increase while we get more products to the marketplace. And that’s a very, very strong statement. I can’t guarantee anything to the public, but again, we definitely are trying not to do any reverse split.
TWST: Thank you. (VSB)
Mark L. Kay
CEO & Chairman
StrikeForce Technologies, Inc.
1090 King George’s Post Road
Edison, NJ 08837
(732) 661-9641
(866) 787-4542 — TOLL FREE
www.strikeforcetech.com
e-mail: info@sftnj.com
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