Cybersecurity a Focal Point in US Defense Policy Bill

The bill was first introduced in the House of Representatives on April 13 and will now be passed over to Chambers for approval. From there it will then be forwarded to President Trump for signature upon which it will become law.

The US is one step closer to adopting its National Defense Authorization Act (NDAA) for fiscal year 2019 that puts more emphasis on cybersecurity ahead of the 2018 midterm elections.

A conference report filed on Monday (July 23) in the House of Representatives detailed more on the bill which now includes a cyber policy and notably has a provision for United States to respond to malicious cyber activities targeting the country.

The bill was first introduced in the House of Representatives on April 13 and was passed on May 24 with a vote of 351 – 66. On June 18, it passed the Senate with 85 in favor versus 10 against.

“It shall be the policy of the United States, with respect to matters pertaining to cyberspace that the United States should employ all instruments of national power, including the use of offensive cyber capabilities, to deter if possible and respond to when necessary,” said the report.

According to the report, the policy would be applied if a foreign power caused casualties, significantly disrupted the country’s democracy, or took control of the country’s armed forces.

The development comes on the heels of US President Donald Trump tweeting his concerns over the Russia potentially meddling the 2018 midterm elections.

“I’m very concerned that Russia will be fighting very hard to have an impact on the upcoming Election. Based on the fact that no President has been tougher on Russia than me, they will be pushing very hard for the Democrats. They definitely don’t want Trump!,” he tweeted.

The next step for legislation is to head to chambers for approval, which will then be forwarded to President Trump for signature upon which it will become law.

However, it might not be a smooth sailing for the act to become official, On June 5, Congress said in its report that the country should first encourage the government to take an action upon a cyber attack before responding unilaterally.

Three weeks later, the White House issued a follow-up statement on administration policy and strongly objected to Congress’ request.

“The Administration strongly objects, however, to section 1621(f), 7 which would damage the national security interests of the United States by endorsing certain foreign policy and military determinations that are traditionally within the President’s discretion, informed by the facts and circumstances prevailing at the time,” said the statement from White House.

Meanwhile the National Defense Authorization Act –if approved–also paves the way for strengthening the US on the cybersecurity front as there is a proposal to set up a Cyberspace Solarium Commission to formulate a cyber defense strategy. According to the conference report, the commission would consist of top security officials, lawmakers and other experts in the field.

The House of Representatives’ summary cautioned the Department of Defense to step up in the field of cyber and electronic warfare strategy and capabilities.

“Two warfare areas in which our peer competitors are beginning to outpace U.S. capabilities, and for which the Department of Defense has struggled for years across the Services to implement capabilities coherently,” read the summary of the House.

Investor Takeaway

Cybersecurity is not just a focus of the US government. In fact, companies and consumers alike are also investing heavily in the space as highlighted by Cybersecurity Ventures in its report. The firm said that the cybersecurity damages will cost the world US$6 trillion by 2021, up from US$3 trillion in 2015.

Meanwhile, Statista said that the global cybersecurity market will reach US$231.94 billion by 2022, up from US$137.85 billion by 2017. Indeed, this makes the sector an exciting space for investors to watch out for–now and in the future.

Don’t forget to follow us @INN_Technology for real-time news updates!

Securities Disclosure: I, Bala Yogesh, hold no direct investment interest in any company mentioned in this article.

Featured

Worldwide increases in violence and civil unrest demonstrate the need for less-lethal security solutions and governing safety measures that are not isolated to one part of the world or one nation.

2020 saw an unprecedented level of civil unrest and mass demonstrations in the name of social justice and political corruption. Despite some attributing this year of tumultuous public protest to the increased stress and uncertainty brought on by the COVID-19 pandemic, a spike in violent demonstrations around the world is not a random occurrence.

According to the Global Peace Index, peacefulness has declined by 2.5 percent since 2008, with 81 GPI countries recording a deterioration. Likewise, while 43 countries reported lower levels of terrorism in 2020, a staggering 97 countries stated an increase. In an attempt to tackle growing violence and the need for crowd control, government bodies, military organizations and public institutions are calling for non-lethal security solutions for public safety.

This increase in violence worldwide means that security solutions for public safety are a growing market that continues to attract increasing amounts of investment in less-lethal security. With the global less-lethal weapons market expected to reach US11.9 billion by 2027, investing in this line of security and public safety suggests significant upside potential for investors.

Defining less-lethal devices

Less-lethal devices or security solutions refer to technology devices that are designed to be less likely to cause death when deployed against people. These less-lethal alternatives to more conventional weapons like firearms have two primary applications: crowd control and one-on-one-suspect apprehension.

For each of these situations, technology subcategories exist based on the technology modalities, such as chemical, kinetic and conducted energy. Again, these technologies can be separated into two dominant types, direct contact weapons, like batons or chemical agents and directed energy weapons like handheld Tasers or weaponized sound waves.

These technologies are designed to have impacts that are generally temporary in nature or reversible effects. When law enforcement or military forces need to quickly disperse large crowds or disable precision targets, less-lethal weaponry is often effectively deployed.

Tactical defense and security companies like Axon Enterprise (NASDAQ:AXON), KWESST Micro Systems (TSXV:KWE,OTCQB:KWEMF) and Byrna Technologies (NASDAQ:BYRN) demonstrate versatility in less-lethal weaponry and technology devices. The KWESST Micro System is bringing to market the world’s first cartridge-based non-lethal firing system (named the Low Energy Cartridge “LEC” system ) with universal application across four market segments that currently use a variety of dated “less-lethal” solutions. Meanwhile, Wrap Technologies (NASDAQ:WRAP), created the less-lethal BolaWrap, an innovative new form of remote handcuffs that allow police officers to restrain individuals from a distance.

For police and military applications, employing these tools not only have real-life micro implications on the ground but more macroeconomic relevance as well.

Worldwide investment in less-lethal weapons is growing

Violence continues to have a significant impact on economic performance around the globe. Rises in civil unrest and organizational infighting pose significant risks to political stability and industries at every level. Investing in the technologies to combat this violence is no longer investing in a small niche market.

Market research for the U.S. estimates the nation’s less-lethal weapons market was over US$2.2 billion in 2020 alone. After years of highly publicized police shootings lining popular news headlines domestically and internationally, the political powerhouse continues to see rising levels in explosions of intense protest.

The high-profile deaths of George Floyd and Breonna Taylor in 2020 sparked unprecedented global strife and angry outcries for justice and police reform. Violent clashes between law enforcement and protesters for months demonstrated that despite significant investment into military spending, these less-lethal weapon projections come at no surprise.

Governments want to avoid unnecessary deaths. Public entities and activist organizations are pushing for less lethal tactics with the additional mounting pressure from onlookers from those in the international community.

These political protests have not been isolated to the U.S. Police shootings have become catalysts for heated demonstrations and escalated public violence worldwide. News media have depicted how violence at these levels can devastate entire cities and economic infrastructures. Applying less-lethal alternatives can be effective crowd control when force is necessary.

Following the U.S., China is forecasted to reach an estimated less-lethal weapon market size of US$2.1 billion in the year 2027, trailing a CAGR of 6.4 percent through 2027. Likewise, market research expects European markets, excluding Germany, will reach US$2.1 billion in the same time frame.

Shifts in less-lethal technology adoption

Independent task forces and legislative initiatives are making significant strides in legitimizing the use of less-lethal weapons and technology devices. Recommendations to administration according to the Council on Foreign Relations outline research and development on clear guidelines for weapon employment and leadership and coordination of this process among military services.

In violent situations, providing law enforcement and military personnel with the tools to protect not only the public but themselves is vital for any governing body. Competitors in the less-lethal weapons and defense space like AMTEC Less-Lethal Systems Inc. and KWESST Micro Systems Inc. are innovating new devices and effective security solutions for proactive public safety efforts.

The market for less-lethal products is a recurring multi-billion-dollar opportunity. Customers continue to seek better solutions as many legacy systems can be lethal, and frequently are unreliable. Thousands of fatalities have been recorded from existing cartridge-bases systems, including conducted energy devices such as Taser. Other legacy products that are “less” lethal typically fire from air guns, which are inherently unreliable as they are affected by ambient temperature and involve high-maintenance including as a result of air seals and “O” rings drying out and bursting, causing catastrophic failures. Air-based systems also entail a long logistics tail of compressors, air tanks and spare parts.

KWESST’s LEC system solves these problems with the proven reliability of a cartridge-based system in a low-cost firing platform that fires only LEC cartridges. The firing platforms are offered in various patterns that replicate the look of a real firearm, or avoid the appearance of a firearm altogether, at the user’s choice. The proprietary LEC cartridge automatically stabilizes the projectile for accuracy and distance, with an energetic actuator that controls velocity and muzzle energy well below lethal levels, and with no need for gunpowder or conventional propellant. The system’s soft frangible projectiles come with various payloads, including coloured marking agent, inert powder or a safe but powerful irritant powder that temporarily incapacitates subjects.

These less-lethal security solutions bring law enforcement into the modern age. With a growing militarization of police forces, investing in these high-tech devices and tools can present a notable economic advantage and serve a great purpose for preventing and organizing the de-escalation of violence.

Takeaway

2020 has shown that there is a rising demand for crowd control and other security solutions to ensure public safety. Worldwide increases in violence and civil unrest demonstrate this need for less-lethal weaponry and governing safety measures is not isolated to one part of the world or one nation. The growing less-lethal tactical weapons market presents investors with significant exposure to this expanding market and presents an upside potential that stands unprecedented in the coming years.

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Cybersecurity threats are on the rise and getting more sophisticated. Here’s a look at the top NASDAQ security stocks so far this year.

The NASDAQ CTA Cybersecurity Index (INDEXNASDAQ:NQCYBR) is down 77.45 percent year-to-date, but a number of NASDAQ security stocks have outperformed it in 2021.

For example, one of the top NASDAQ security stocks has seen a rise of over 100 percent.

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In connection with its previously announced public offering of common shares in the United States and Canada Absolute Software Corporation a leader in Endpoint Resilience™ solutions, today announced that it has entered into an underwriting agreement with a syndicate of underwriters, comprising Needham & Company and Canaccord Genuity as joint book-running managers and Raymond James as passive book-running manager . ...

In connection with its previously announced public offering of common shares in the United States and Canada (the "Offering"), Absolute Software Corporation ("Absolute"), a leader in Endpoint Resilience™ solutions, today announced that it has entered into an underwriting agreement with a syndicate of underwriters, comprising Needham & Company and Canaccord Genuity as joint book-running managers and Raymond James as passive book-running manager (collectively, the "Underwriters"). The Underwriters have agreed to purchase 5,454,546 common shares of Absolute ("Common Shares") at a price of US$11.00 per Common Share (C$14.48 per Common Share) for aggregate gross proceeds to Absolute of approximately US$60 million. Closing of the Offering is expected to occur on October 30, 2020, subject to the satisfaction of customary closing conditions. In addition, the Underwriters have been granted a 30-day over-allotment option to purchase up to an additional 818,181 Common Shares from Absolute.

The Offering is being made in Canada pursuant to a prospectus supplement (the "Supplement") to Absolute's short form base shelf prospectus dated August 27, 2020 (the "Base Prospectus") and in the United States pursuant to a registration statement on Form F-10, as it may be amended from time to time, containing the Supplement and Base Prospectus filed with the U.S. Securities and Exchange Commission (the "SEC") in accordance with the Multijurisdictional Disclosure System established between Canada and the United States.

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