Patriot One Technologies Inc. (PAT:TSX.V; PTOTF:OTCQX), developer of the PATSCAN software and sensor solutions for the covert detection of weapons threats, has spent the last year turning its proof of concept prototypes for threat detection into a commercially viable product.
The technology is now ready for prime time, and the company has been running nonstop. In the last few months alone, Patriot One has forged a partnership with Cisco; acquired a company for its complementary video analytics suite; formed a joint venture to commercialize a technology for the stand-off detection of explosives, chemical and biological agents and illicit drugs; and run paid pilots of the PATSCAN technology.
"Patriot One has the potential to be a very big player in threat detection." - Daniel Carlson, Tailwinds Research
Martin Cronin, president and CEO of Patriot One, told Streetwise Reports, "We've been through lots of iterations of the PATSCAN hardware, having had the advantage of working out in the real world in a couple of locations, particularly in Las Vegas at the Westgate Resort. We are now having paid pilots, where clients buy equipment to install in their environments, and we work closely with them."
On the paid pilots, Cronin noted, "Our engineers have a full slate of activity doing field deployments and installations. We are being fairly judicious in where we go so that we can blend some high profile organizations across different sectors together with a number of our key distributors."
The University of North Dakota has been deploying Patriot One's technology in facilities across campus. Because the university is a microcosm of many communities, with its own police department, health center, stadium, event centers, the company notes that this is providing a real-life test of PATSCAN's capabilities.
Patriot One is also stepping up distribution relationships. "We are working with distribution partners so they can start to understand the equipment, showcase it to their clients, and go through a process of training so that we are ready for a broader commercial ramp up as we emerge from the first quarter of 2019," Cronin stated.
In addition, the company has been actively increasing its offerings. "There is no single solution for every problem," Cronin told Streetwise Reports. "We've been evaluating a number of complementary technologies that can live on the common PATSCAN platform and have completed the acquisition of a New Brunswick company, EhEye Inc., that developed a video recognition software. If you have camera systems running and a weapon appears in open view, the algorithms identify that and generate an alarm. You can detect weapons in open view at much greater range. We've been integrating that and showcasing it to our clients. We believe it's a tremendous acquisition that has real value to our clients."
"We are also evaluating a number of other technologies, some with magnetic resonance, some explosive detection, so over time you will see a much more diverse portfolio as we move from being a technology to being a solutions provider," Cronin stated.
In October, Patriot One announced that it had been invited to collaborate with Cisco Systems on its global innovation program. "We are what is called a partner in innovation and we're going through a process now of working out how to put our products into Cisco's product lineup, so that all of Cisco's partners worldwide would be able to access our equipment," Cronin explained.
"Cisco has been putting us in front of some of their key clients to talk about how together we can enhance safety in their client environments. It's a very import relationship for us. Cisco has made a really big commitment to support us. It may manifest itself in more ways as we go forward," Cronin stated. Together with Cisco, Patriot One launched a PATSCAN showcase at IBM's Innovation Centre in Montreal.
Cisco is also very interested in EhEye's video recognition software. "Partners at Cisco have been hugely supportive of this particular technology and are adding a lot of support to the refinement and development in that area. They are assisting with some of the processing power that is required to run the algorithms, and how to drive down the cost of the GPUs that are required to do that processing," explained Cronin.
Patriot One is adding another dimension of threat detection to its portfolio with the announcement at the end of January that it is forming a joint venture with Nano-Bio Detection Systems to commercialize a technology licensed from the University of Texas "for the stand-off detection of explosives and other threats such as chemical and biological agents as well as illicit narcotics, which has been branded as PATSCAN STS multi-chemical threat detection sensor, powered by Scotch Secure."
The technology detects airborne molecules, and the JV, called Sotech Secure LLC, will hold a license to develop the technology for "applications relating to defense, security, prohibited substance detection and law enforcement." Craig Micklich, founding CEO of Nano-Bio, will serve as CEO of the JV.
"This joint venture is an exciting undertaking," Cronin stated. "Our company has been searching for and evaluating innovations in threat detection for inclusion in our multi-sensor PATSCAN platform and this chemical threat detection technology is truly game-changing. I have no doubt that it will save lives both on the battlefield and in our cities."
Patriot One will pay Nano-Bio up to $3 million in three tranches.
Analyst Doug Taylor of Canaccord Genuity, in a January 30 company update, stated that the deal is "on point with Patriot's strategy to become a platform offering multiple threat detection sensor technologies." Taylor noted that the company has several upcoming milestones, "which should confirm Patriot's transition from concept to commercialization."
Canaccord has a Speculative Buy rating and CA$3.25 target price on Patriot One.
Daniel Carlson of Tailwinds Research wrote on February 5, "Patriot One has the potential to be a very big player in threat detection. As well, they have admittedly been late in achieving milestones. Now they are on the precipice of hitting many of these targets. As a result, this should be an exciting quarter for Patriot One and its investors."
In October, Patriot One announced the closing of a CA$46 million bought-deal financing led by Canaccord Genuity, that included GMP Securities.
"Our very strong treasury," Cronin stated, "will allow us both to ramp up as we start to execute on commercialization and not have to worry about going back to the market for funding. We have got several years of sustainability. That treasury puts us in a very strong position for becoming a total solutions provider rather than a single technology."
Patriot One shares are currently trading at around CA$2.30 on the TSX Venture Exchange. The company plans to uplist to the TSX by the end of this quarter. The company was named to the 2019 OTCQX® Best 50, a ranking of top performing companies traded on the OTCQX Best Market last year.
Editor's Note: the name of PATSCAN MCS has changed to PATSCAN STS multi-chemical threat detection sensor, powered by Scotch Secure.
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Disclosures from Canaccord Genuity, Patriot One Technologies Inc., January 30, 2019
Analyst CertificationEach authoring analyst of Canaccord Genuity whose name appears on the front page of this research hereby certifies that (i) the recommendations and opinions expressed in this research accurately reflect the authoring analyst's personal, independent and objective views about any and all of the designated investments or relevant issuers discussed herein that are within such authoring analyst's coverage universe and (ii) no part of the authoring analyst's compensation was, is, or will be, directly or indirectly, related to the specific recommendations or views expressed by the authoring analyst in the research.
Patriot One Technologies, Inc. currently is, or in the past 12 months was, a client of Canaccord Genuity or its affiliated companies. During this period, Canaccord Genuity or its affiliated companies provided investment banking services to Patriot One Technologies, Inc.
In the past 12 months, Canaccord Genuity or its affiliated companies have received compensation for Investment Banking services from Patriot One Technologies, Inc.
In the past 12 months, Canaccord Genuity or any of its affiliated companies have been lead manager, co-lead manager or co-manager of a public offering of securities of Patriot One Technologies, Inc. or any publicly disclosed offer of securities of Patriot One Technologies, Inc. or in any related derivatives.
Canaccord Genuity or one or more of its affiliated companies intend to seek or expect to receive compensation for Investment Banking services from Patriot One Technologies, Inc. in the next three months.
An analyst has visited the material operations of Patriot One Technologies, Inc.. No payment was received for the related travel costs.
Disclosures are available here.
Daniel Carlson disclosures:
Tailwinds is engaged by Patriot One and owns stock in the company. For a complete list of disclosures, please click here.
