The Internet has replaced the phone book, it has replaced the good ole newspaper on your doorstep, replaced the shopping mall and even replaced your weekly trip to see your banker. However all this convenience has come at a price - for some higher than others. For all the ways that the Internet has made our lives easier, it brings with it a slew of potential breaches.

Enter - Enigma Software Group's (OTCBB: ENGM), highly successful product Spyhunter. With the Internet posing new possible threats on a seemingly daily basis, the market for a product like Spyhunter has never been stronger. And as a result, it looks like ENGM is poised for yet another consecutive quarter of record revenue growth and impressive gross margins.

Announcing earlier this week that both initial and renewal subscriptions for the company's anti-spyware solutions are up 412% and 67% respectively during the first 9 months of 2007 over 2006; Enigma should be tallying its 5th straight quarter of record sales and 100% gross margins during the third quarter of fiscal 2007.

New York Times a Big Fan

For us here at MSP, this does not come as much of a shock. With nearly 80% of all PCs infected with some type of spyware and Enigma offering one of the most innovative and effective solutions available on the market today, it is only a matter of time before this stock reflects the inner success of this company. Selling an average of $90,000 worth of product each week ( +/- 3,000 units @ $29.95) ENGM is on the launching pad and ready for take off. And it is not just us investors that are taking notice of the success of the Spyhunter product. The New York Times - a market mover in itself - has also caught wind of the product and specifically and solely mentioned the Enigma product it in a recent write up.

For those of you that missed it, the company's products received a ringing endorsement from the New York Times on September 13th in an article entitled Cleaning Out the 'Cleaners'. One of Enigma Software's anti-spyware websites, www.spywareremove.com, is the first one mentioned and the only linked product in the article. How about that for an endorsement?

Tackling Spyware Head On

As spyware programs become increasingly sophisticated in a very dynamic manner, Enigma's approach to tackling the issue is proving to be a winner. By employing a multi-faceted strategy that encompasses both responding to customer queries regarding new potential breaches and making a concerted effort to identify and eliminate all new possible spyware threats, ENGM has been able to grow its customer base like gangbusters over the past nine months.
As of the their Q2 2007 filing, ENGM lists a mere 4.6 million shares outstanding, with 1st half revenues coming in at $1,370,000. Annualizing revenues, and assuming zero growth for the remainder of '07, Enigma brings in an impressive $0.60 per share in revenues.

Are Current Sales Just the Tip of the Iceberg?

With research conducted by McAfee and the National Cyber Security Alliance (NCSA) indicating that US consumers have their heads in the sand when it comes to computer security, the market for Enigma's products may still be in its nascent stage, although it certainly appears otherwise with all of the hoopla today surrounding the topic in the news.

The study finds that although nearly three quarters of US consumers think that they have optimally installed anti-spyware software, just over one-half actually had it running. To make the study even more interesting, only 22% were found to have had installed a full package of a running firewall, anti-spyware and reasonably up-to-date anti-virus software.

As more and more consumers wake up and realize the potential damage to be done by spyware, whether it is in the realm of identity theft or a computer malfunction, demand for a solution that interfaces directly with the user to find and eliminate their specific problem will surely rise. Who needs a solution in a box when you have a human operator to assist you in your moment of computer security need?

We see ENGM reaching the $0.50 range in the near term and $1.00 for those with longer positions

Labels: Engima Software Group Inc., ENGM, Spyhunter

There are nearly one billion PC's in the world today, or about one for every seven people. (Considering the fact that a quarter of the world does not have electricity, this statistic becomes that much more powerful.) The computer - with the help of a little thing called the Internet - has shed light on a whole new dawn of crime.

Spyware Infects 80% of PC's

A recent Microsoft study found that 50% of all computer crashes are due to Spyware, while Dell has reported that 20% of all tech-support calls involve the pesky nuisance. To throw some more gas on the fire, research also indicates that as high as 80% of all personal computers are infected by some type of spyware.

This has no doubt sparked a massive increase in demand for capable solutions, but they remain hard to come by judging by the sheer number of PC's that continue to fall victim to malicious attacks.

Growing revenues in each of the past 4 quarters, Enigma Software Group Inc. (OTCBB: ENGM) has established itself as a winner in the anti-spyware market through the success of their SpyHunter product. Spyhunter which sells for about $30, will force Boris and Natasha to find a craftier way to crack into our computers.

Enigma is one step ahead

On a serious note though - the real value here, and what has driven significant subscriber growth for the product since its inception, lies within the program's database. Enigma's tech staff is responsible for analyzing security threats and quickly finding solutions. This is critical as spyware becomes both more prominent and increasingly sophisticated, seemingly by the day. More importantly, just as spam evolved from a techie term to a daily nuisance, Spyware is becoming a similarly infamous household name. The fact is, the problem long proceeded consumer awareness of it.

By taking a two-pronged approach and responding to customer queries regarding new potential breaches and making a concerted effort to identify and eliminate all new possible spyware threats, ENGM has been able to consistently increase substantial share in its core market (approximately 2500-3500 units per week).

Numbers Don't Lie

For those of you unfamiliar with the term, Spyware, as defined by our good friends at Wikipedia, is "computer software that is installed surreptitiously on a personal computer to intercept or take partial control over the user's interaction with the computer, without the user's informed consent."

That sounds bad, right? But what's worse is that Spyware is often a culprit in such rosy occurrences as online identity theft (U.S. consumers lost $56.6B in '06 to identity fraud) and hard drive infection.

Suavely designed programs hi-jack our user names, passwords, personal information, and online browsing logs. Believe it! Damage is being done right now. The threat is clear and imminent; with Gartner projecting that "financially motivated targeted attacks using undetectable professional-grade malware are projected to have infested 75% of enterprises by the end of 2007". If that's not bad enough, Consumer Reports State of the Net 2007 piece reveals that spyware infections forced 850,000 U.S. households to replace their PC's, resulting in damages totaling $1.7 billion.

So, in theory, there's a $30 billion market for Spyhunter today. A number some expect to double by 2015. With malicious technology development advancing rapidly, the need for real-time tech-support and progressive spyware solutions such as those offered by Enigma Software has never been greater.

With shares trading at the lower end of their 52-Week range ($.13 - $.65), even after a nearly 80% run on Wednesday; investors are anxiously awaiting additonal communication from management other than subscriber growth updates and SEC filings.

Judging by the trading activity of ENGM, investor interest continues to remain high despite a lack of major news. One major announcement could be all it takes to launch ENGM into the range a frontier internet security company of this caliber belongs in. And when it does, $.23 or so is a decent entry point.

Labels: Engima Software Group Inc., ENGM, Enigma

Labels: Engima Software Group Inc., ENGM, Enigma

Enigma Software Group, Inc. (the "Company") (OTCBB: ENGM - News), announced a total of 3,651 new, renewal and third-party subscriptions for the week ending June 17th.

This represents an increase of 15.6% from the total of the prior week's subscriptions.

Talk about a chart that speaks for itself.

Labels: Engima Software Group Inc., ENGM, Enigma

The chart doesn't lie folks. To the left we have included a graphical depiction of Enigma Software Group Inc.'s (OTCBB: ENGM) weekly subscriber growth. As you can see, business is booming.

Reporting a 30.9% increase in new, renewal and third-party subscriptions - totalling 3,157 for the week ending June 10Th - ENGM is building quite a following.

From our perspective, the company's ability to build such a solid and rapidly expanding customer base could make it a prime acquisition target for another security software company and could also snowball into much larger subscriber growth once word of mouth really begins to spread. Just a thought.

Labels: (OTCBB:ENGM), Engima Software Group Inc., ENGM, Enigma Software

So there you are, it's 5 minutes before the market opens. You're about to fire up the ole computer and more importantly your trusty trading program to cash in on the hot stock just featured on CNBC. But, all of the sudden something is wrong, very, very, wrong. Not only can you not log on to E-Trade, if you do get the machine going at all after a number of re-starts, the damn thing won't run without the presence of million and one pop up windows portraying images that can't even be mentioned in this periodical.

Labels: Engima Software Group Inc., ENGM, Enigma Software