November 12th E-mail from Patrick Cox Explains how APDN was able to get “PumpStopper” to go on the Run

 

Check out the below email from Patrick Cox written on November 12th. After you read this, you will understand how APDN was able to get the PumpStopper to go on the run by shutting down his website and his Twitter. Soon we may see the SA hit piece removed as well.

* the source for the below email is a copy and paste from a subscriber of Patrick Cox’s onto the SeekingAlpha comments section of the short attack piece. Wanted to save it here before SeekingAlpha deletes the whole article along with the associated comments.
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“Last week, the analyst team sent you a special issue about the short attack on Applied DNA Sciences (APDN) (*see disclosure below). I want to expand on their thoughts because the event perfectly reveals how effective even transparently false claims by short attackers can panic traders in the fetid environment of many financial websites.

This sort of event is routine in the world of small caps and can even have an upside for transformational channel traders. Many of my readers have done extremely well by taking advantage of the short term downturns caused by shorters to add to their holdings at bargain prices. Many of our stocks have, in fact, gone through multiple cycles in which their price is pushed down only to return—presenting an opportunity to profit from the opposite side of a short attack. That doesn’t mean that I approve of the people who perpetrate stock manipulations.

Ironically, the companies that have the most committed and knowledgeable investors may be most vulnerable to short attacks. Many don’t have much trading volume because their investors are in it for the long term. As a result, the portion of these companies’ shares that trades on a daily basis, the float, can be quite small. As a result, trading prices for these companies can be more easily manipulated than stocks that lack committed and institutional investors.

No company that I’ve recommended has yet been destroyed by shorters, but other companies with promising technologies have been driven out of business. Some have important technologies, including life-saving biotechnologies that will subsequently not get to market as quickly as they should.

I wonder, however, if the people who run these unscrupulous programs haven’t made a mistake going after Applied DNA Sciences.

After exhaustive testing of the technology, Applied DNA is now a mandated part of the Pentagon’s cybersecurity program. It’s not only mandated, the cost of DNA authentication is subsidized so that it costs nothing for those in important military supply lines. This company is the only example of a true subsidized monopoly that I’ve ever encountered. Rather than being obsolete, as the anonymous short attacker claims, the company controls the IP for the use of DNA for authentication of physical objects, ranging from computer chips, pharmaceuticals, and uniforms to jewels, aircraft components, and metals.

 There is simply no comparable way to verify the provenance of a physical thing. There may never be. Even if a marginally better authentication technology is developed, Applied DNA’s tech is already the widely deployed standard. I’ve said it before, but it bears repeating: the ability to physically authenticate physical things is a totally transformational development that will change commerce globally and permanently. Applied DNA is at the heart of this transformation.

I think it’s critical that you understand that the Pentagon is not solely concerned with military supply lines. Our military and intelligence agencies are charged with protecting American businesses and infrastructure from cyberattacks. This isn’t speculation. The Pentagon has created a cybersecurity exchange program to coordinate defenses against the constant attacks on American and other Western systems in this new cold war, as this article in Bloomberg Business reports.

It’s not only the US that has suffered cyberattacks, however. In Great Britain, where Applied DNA authentication has won royal accolades for cutting crime rates, experts warn that the country’s primary security risks are from cyberattacks, as this article in The Express indicates.

Already, the mandated use of DNA encryption has spread to secondary suppliers of materials used in Pentagon supply lines. This is good for Applied DNA for several reasons. One is that companies that don’t think of themselves as defense contractors are being exposed to the significant benefits of uncrackable physical authentication.

The reason that DNA encoded markers used by Applied DNA cannot be cracked or decrypted is the same reason that one-time pads cannot be decrypted: they aren’t encrypted. Encryption is a process involving complex mathematical functions, which are therefore vulnerable to decryption.

The one-time pad approach to secrecy, which is inherent in DNA authentication, is the random selection of values that follow no mathematical patterns. As a result, they are invulnerable to brute force attacks—even by future quantum computers.

For an interesting overview of one-time pads, you could watch this short Khan Academy video. Others have called this form of hiding information “perfect encryption” though it is not technically encryption. The Khan Academy video refers to it more accurately as “perfect secrecy in action.”

One-time pads are, however, vulnerable. If someone were to penetrate Applied DNA’s organization and steal information about the company’s authentication markers, it could be possible (if you had the resources of a major nation) to replicate those markers. Hackers call this kind of attack “social engineering.” The military call it espionage. Most great intelligence breakdowns, from Mata Hari to Edward Snowden, have been perpetrated in just this manner.

Those in the US intelligence community who rely on Applied DNA’s technology to protect the nation’s critical defenses and infrastructure from espionage and sabotage are well aware that right now, frustrated foreign intelligence networks are asking themselves how to circumvent uncrackable DNA authentication. For that reason, we can safely assume that our side is keeping a very close watch over Applied DNA.

If you don’t think that Applied DNA facilities and the personnel who have access to the company’s secrets are not under intense observation, to prevent physical intrusion or blackmail, you’re insufficiently paranoid. I know better than to ask executives of the company direct questions about military and intelligence involvement in their operations, but they have told me things that I believe inadvertently confirm that it is the case. For all these and other reasons, I have complete confidence that the company’s finances are scrutinized to a far greater extent than any other company in the portfolio. The shorters’ suggestions that the company is engaged in anything but forthright business practices are ludicrous.

If the company was not closely monitored, the consequences for the company and the intelligence agencies relying on DNA authentication, as well as America, could be more than enormous. Whether you know it or not, we are at war, and some people understand this. The components being validated by this technology are used in the most sensitive military and intelligence electronics at the highest level. Lives are at stake. I put my trust in the people who run all the companies in the portfolio, but Applied DNA deserves a unique level of confidence due to its importance to America’s national security.

Keeping all this in mind, I have to wonder what’s going on behind the scenes at the corporate headquarters and laboratories in Stony Brook, New York.

If I were an executive at Applied DNA and working closely with some of the most powerful military and intelligence groups in the world, I would be talking to them about the short attack on the company… and consequently America’s cyberdefense network. This is based entirely on my suppositions, but I wouldn’t want to be the individuals or the owners of the websites who perpetrated the malicious and misleading attack on Applied DNA Sciences.”

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Patrick, it appears APDN has done just that. Looking forward to a closing of the investigations by all law firms and a retraction of the short attack piece by SeekingAlpha.

Ben Rabizadeh

About Ben Rabizadeh

I devised the Story Trading method to earn 5-100% returns from intraday to multi-month periods. I'm best at anticipating the next story & reading market emotions. Up 100% in 2013 & 200% in 2014.

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