Ecrypt Technologies, Inc. (ECRY): An Important Product Under Development

Data breaches are among the most common and costly security failures in any organization. The U.S. is home to the second most costly data breaches, and average per capita cost amounted to $188 in 2012. This record itself signifies the increased demand for data security solutions in the U.S. Looking at the increased demand of data security, the U.S. government had passed certain data confidentiality laws, which make data security compulsory to prevent such thefts in future. For example, HIPAA provides federal protection for individual identifiable health information. This law was amended last year, with Business Associates (BA) vendors, contractors, or consultants also falling under HIPAA.

This amendment has created a new tailwind opportunity for major security solution providers in the encryption business like Zix Corporation (ZIXI) and Proofpoint (PFPT). Zix Corporation is the market leader in email encryption services, and bagged several healthcare contracts last year. This resulted in the company deriving 50% of total revenue from this sector for the first nine months of fiscal-year 2013. Proofpoint, a major competitor of Zix Corporation, also benefited from HIPAA data compliance regulations. The company provides “Healthcare Privacy Solutions” to companies for maintaining the privacy and security of health information of patients. More than 10% of U.S. hospitals are covered by Proofpoint, and three of the top six healthcare systems use Proofpoint, which signifies the company’s strong presence in healthcare.

Both these players are well established in the market, while another emerging player, Ecrypt Technologies (ECRY), is a security solutions company looking forward to monetize HIPAA opportunity. The company is focused on commercializing its enterprise-level information security solution, Ecrypt One, which will use a subscription-based revenue model.

Why “Ecrypt One” will be a game changer for Ecrypt

Ecrypt is developing a military strength email and encryption system that effectively safeguards the exchange, storage, and audits integrity of email and attachments. Branded as Ecrypt One, this software is an email server designed to protect email and attachments in transit and at rest. This technique was designed to assist organizations and governments to meet and maintain compliance with information security regulations such as HIPAA.

Ecrypt filed for patent in April last year, and it is finalizing its product sandbox, which is a precursor to commercializing. A sandbox is a testing environment that allows interested parties to test this technology without the costs and effort of installing it in their infrastructure. This testing environment will increase awareness of the product before it is finalized. Initial testing results have been positive, and the company will look to simulate these positive results in other remaining tests of the software as well.

Another important advantage of this software is that unlike conventional information security solutions Ecrypt One mitigates the risk of human error. About 74% of data breaches are by human error, thus eliminating human vulnerabilities will reduce the risk of potential data theft. After discontinuation of sales of Ecrypt’s One on One and Ecrypt Me last year, the company is solely focusing on commercialization of Ecrypt One. Once this software is commercialized, it will be a game changer for the company’s beleaguered financial situation, and will provide the necessary push towards higher revenue.

Ecrypt’s holistic approach

Other than HIPAA compliance, Ecrypt One will also target other regulatory compliances under the Federal Information Security Management Act (FISMA) and Gramm-Leach-Bliley Act (GLBA). These compliances will help Ecrypt in targeting government and military, as well as financial services organizations. Furthermore, Ecrypt One will also address issues in legal services and law enforcement. Ecrypt One provides holistic exposure in targeting the overall market demand for security solution. The company is aiming for strategic alliances with data centers, service providers, and software vendors. These parties will play an important role in establishing Ecrypt One in these target markets.

For more information on how Ecrypt Technologies is changing the world of data security, please visit: www.ecryptinc.com

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