Weapon Detection Technology. 2 Penny stocks on watch.

Weapon Detection and Penny Stocks to Watch at Theequitypodcast.com

Two Weapon Detection Technology Companies discussed in this blog post:

  1. Patriot One Technologies, listed in TSX as PAT (PAT.TO) and in OTCQX as PTOTF
  2. Plymouth Rock Technologies, listed in CSE as PRT as well as OTCQB as PLRTF

Every other day, we hear of gun violence. And every few weeks we hear of another deadly mass shooting somewhere in the world. This is becoming the biggest and most pressing issue around the Globe. It appears that no one is safe no matter which part of the world you live in. Despite all the police force, their bravery and quick actions, these weapons continue to slip in and reach prohibited areas to do the damage. Clearly, this world needs new revolutionary Weapon Detection Technology. The technology, that detect these hidden weapons and alert the officials in the timely manner to stop further damage. The good news is that there are many companies that are working hard to bring in the next revolutionary technology in the market. This is a big market and huge opportunity for the early mover companies.

According to Zion market research, “Global threat detection systems market is expected to reach USD 163.4 billion 1 by 2025, at a CAGR of around 12.8% between 2019 and 2025.

We have scrolled through many junior companies and there are two in particular that stands out and have the most exciting Weapon Detection Technology systems with them. Let’s go through them one by one and understand where they stand today and why they could be the next big thing in security industry.

Patriot One Technologies.

Patriot One Technologies is a Canadian company listed in Toronto Stock Exchange as PAT and PTOTF in OTCQX. Without any doubt, Patriot One Technologies is miles ahead and is getting the most attention. They created shockwaves in TSX Venture in October 2017 and the stock went from below 70 cents to close to $2 in less than a month. At that time, the company announced that they have received FCC approvals for their flagship PATSCAN CMR weapon detection technology.

PATSCAN CMR was the only flagship product of the company until 2018 but In the last year and a half the company has moved out from one technology (Radar – PATSCAN CMR) to multitude of technologies. The company has scaled out to four different verticals:

PRODUCT NAME TECHNOLOGY
PATSCAN CMR™ Radar
PATSCAN VRS™ Video
PATSCAN TMS™ Magnetic
PATSCAN STS™ Chemical

It is clear from the above that Patriot One Technologies has done a great job and scaled out perfectly. They did some great investments and acquisitions in the last year and a half and moved forward with their pipeline of products to get them ready for commercialization.

Stock chart: Performance.

By looking at the below stock chart, it is clear that the stock went through some selling this year. As a matter of fact the stock hit yearly low in October but gained since than. It’s typical trading for pre-revenue companies.

PAT stock chart.

Which of PAT’s Weapon Detection Technology is the most exciting?

Short answer is – All of the above. In today’s world, you can’t rely on one dimensional safety measures. The attack could be from anywhere and Patriot One Technologies seem to have sensed that and have made appropriate acquisitions to cover all the bases. Multiple sensors are brought in together to secure a building.

What is special about Patriot One Technologies?

Without any doubt, PAT is getting first mover advantage in covert Weapon Detection Technology systems. They are successful in gaining Industry attention in the last year and half and are able to spread the story successfully.

They have FCC certification for PATSCAN CMR and as per SEDAR documents, the company has filed several additional applications with FCC to ensure that the relevant versions of CMR continue to follow all rules and regulations as stipulated by the FCC, and other regulatory regimes, and meet the needs of the test, pilot-program and commercial deployment scenarios of the company

PAT has huge cash position and as they say there is nothing boring about cash. As per the latest records, they have around 43 Million in cash. They don’t have any long term debt. There are around 35 million outstanding warrants and those warrants can add a lot more cash to the treasury if and when they are exercised. Majority of them are for 2020.

PAT has assembled a great team and that includes many of the industry’s big names including Governor Tom Ridge, Rt. Vice Admiral Bob Harward , Michael Rozin and many other well-known experts. 

PAT has partnered with some big industry names in the last year and a half. This includes Johnson Control, Raytheon, IBM and Cisco. 

Last but not the least, PAT’s social media posts are well received by the followers. Good number of Likes and shares prove this.  One example below:

Share structure of PAT.

Fully diluted share count at 193.1 million at the date of this blog post i.e December 2019 and that also includes 35.93 million warrants. These warrants can add lot of cash to the treasury if and when they are exercised. Checked from the official source, the presentation 2 working capital is 43 Million.

SHARE STRUCTURE
SHARES OUTSTANDING149 Mil
WARRANTS35.93 Mil
OPTIONS7.75 Mil
FULLY DILUTED SHARES193.1 Mil
WORKING CAPITAL$43 Mil CAD
52 WEEKS HIGH$2.86 CAD
52 WEEKS LOW$1.26 CAD

Where is the company spending money?

Let’s head to SEDAR to check the official information from October 28, 2019 documentation. We picked the selected financial data – Summary shown at page 8 of the latest MD&A.

EXPENSES 2019AMOUNT
Research and Development $2,772,645
Advertising and Marketing$5,247,680
Personnel$2,838,672
General and Administration$3,152,623
Other non-cash costs$4,282,360
  • Overall cash costs for the year were $14,011,620, compared with $10,733,806, an increase of $3,277,814 or 31% over the prior year.
  • Gross research and development expenditures for the year were $3,912,645, and net cost recoveries in research and development expenditures were $1,140,000, amounting to a net total cost of $2,772,645 for 2019 compared with $4,750,193 in 2018, a decrease of $837,548 or 18% over 2018.
  • Business development, advertising and marketing costs for the year were $5,247,680 compared with $2,607,183 in 2018, an increase of $2,640,497 or 101% compared with 2018.
  • Personnel costs, excluding those costs associated with research and development, for the year were $2,838,672 compared with $1,940,015 for the prior year, an increase of $898,657 or 46%.
  • General and administration costs for the year were $3,152,623 as compared with $1,436,415 in 2018, an increase $1,716,208 or 119%.

From the above, It’s clear that Research and development, Business development, Personal and G&A have increased in 2019. BUT we should keep in mind that the company is in early stages and has spent money in acquisitions and R&D to further develop all products and move them towards commercialization.

Final thoughts on Patriot One Technology

The company is in early stage and understandably has to spend money to develop their product pipeline towards commercialization. The stock chart may not show the clear picture but we believe PAT is on the right path. The company seem to have built the base and is able to spread the story and now it all boils down to the Commercialization and the Sales. The company is widely followed and is one of the most talked about on Social media channels. One big contract can change the picture overnight. We will keep a watch on this company for sure and come back in a month or so.

Next……….

Let’s move to the next exciting company. There is a reason why we put this company as second in the list. They have unique pipeline of products and not in any direct competition with Patriot One technologies. We do believe that both the companies cater to different customers but under the same big umbrella of Weapon Detection Technology systems. Having said that, let’s dive in…….

Plymouth Rock Technologies

Plymouth Rock Technologies is second in our list. It is no less exciting company though. This company was founded by highly experienced team of Engineers and Scientists. Some of them were in the early team of Radio Physics in UK. They have exciting range of products in the pipeline and the management believes that multiple products are expected to reach the markets in 2020. Plymouth Rock Technologies is listed in CSE as PRT and in OTCQB as PLRTF

Weapon Detection Technology pipeline of Plymouth Rock Technologies.

Plymouth Rock Technologies has three distinct products. All three look really interesting. Let’s go through the easy part first.

PRODUCT NAMEPRIMARY USE
MiRIADDrone mounted
SHOE SCANNERScan shoes for threats
Wi -TiSpot Wireless Threat
MiRIAD Weapon Detection Technology

It is drone mounted and AI powered. It can fly larger distance. Can be over the Sea or Land and this technology, once commercial, could have greater use at the borders or at any other place where it is not easy to go otherwise. Do you see why PRT is in different segment than PAT and why we chose them as second in the list? Let’s move to their next product…..

Shoe Scanner Weapon Detection Technology

This is self-explanatory and most of us have went through that stinky feeling at the Airports when we were asked to take off our shoes and get them scanned. Shoe Scanner is supposed to do the exact same, but we won’t have to take off our shoes once technologies like these are commercial and are at the Airports, Jails and other places that require full checks including the shoes. As per SEDAR, the company is aiming for a screening time of 30 PPM (Persons/Minute).

Wi -Ti Weapon Detection Technology

This seems to be a new concept. This captures the signals reflected off walls and people in the Wi-Fi areas. As per company’s presentation this technology is for unstructured crowds at public places. Wi-Ti being a passive technology does not require regulatory approvals. ( Source : Official Presentation ) 3

All three of the above Weapon Detection Technology platforms are exciting, although in early stage but each one of the above technologies has huge market segment.

Stock chart: Performance.

It is clear that the stock underwent selling in the summer but since then has recovered a bit. Although the stock is still below the yearly highs from the beginning of the year.

PRT stock chart

What is special about Plymouth Rock Technology?

This Junior Company seems to have many great things that we can talk about.

First and foremost, this company is based in America with their main office in Plymouth, Massachusetts, USA. Being an American company, they might get an edge once they are at the commercial stage. Have you heard about MAGA? Make America Great Again. How? By using American made products i.e Made in America. You believe it or not but this already sets PRT apart from others.

The U.S. is expected to be the most lucrative country of this regional market, owing to the rising government investments in threat detection systems. Main office in U.S might help this company once they are market ready.

This company catch attention with the Interesting pipeline of products they have, backed by decades of experience of the management. They are Innovators, Engineers and Scientists with few members including the CEO coming from the early days of Radio Physics.

This company is running very thin and keeping the burn ratio to bare minimum and yet advancing all three of their products towards commercialization. Isn’t it interesting to see them swim through the whole year without raising any money?

We will go over it in just a moment but this company has very tight share structure. Until now it looks like it is mostly big investors and insiders owning this company and retail has not yet started talking about this. This has minimal Social Media presence when we compare this with other companies.

The stock has minimal Social media presence until this time (November 2019). Unlike PAT Social media posts, PRT is not getting same level of user engagement. This provides opportunity to the shareholders who like to buy before others.

How tight is the share structure?

It’s very tight and fully diluted share count is just over 36 Million. This is information at the time of this blog post – December 2019.

Basic Shares32,671,600
Warrants 1,107,775
Options2,500,000
Fully Diluted36,279,375
52 Weeks High74 Cents
52 Weeks Low35 Cents

Where is the company spending money?

Only Official documentation at SEDAR can provide us that information. Let’s head over there. Below are the expenses until August 31, 2019 as compared to nine months until August 31, 2018.

  • Accounting fees of $34,151 (2018 – $29,298),
  • Amortization of $1,289 (2018 – $Nil)
  • Business development of $447,536 (2018 – $7,346),
  • Consulting fees of $181,064 (2018 – $131,896),
  • General office expenses of $36,979 (2018 – $20,495)
  • Insurance fees of $2,671 (2018 – $Nil),
  • Legal fees of $67,038 (2018 – $117,167),
  • Management fees of $93,800 (2018 – $50,224),
  • Rent of $57,597 (2018 – $22,500),
  • Stock-based compensation of $516,018 (2018 – $Nil),
  • Transfer agent and filing fees of $84,518 (2018 – $47,173)
  • Wages, salaries and benefits of $409,815 (2018 – $Nil).

Company has some sales figures. Although negligible, but worth mentioning for this early mover. Sales were $20,106 and cost of sales were $4,102.

From the above, it is clear that the company expenses has increased in 2019 (as compared to 2018). Two of the bigger expenses are the Salaries and Business development apart from the stock based compensation. Still the company did great by not diluting their shareholders. The company is in the early stage with little revenue so far. We will keep an eye on this company and may write back in a month or two.

Final thoughts on Plymouth Rock Technologies.

Given the diversity of the products, we believe Plymouth Rock Technology is the one to watch for. This company may not be popular among retail investors at the moment but this can change rather quickly as we move in to 2020 as the company has already signalled 2020 is the year to watch for.

Disclaimer:

Information for this blog post was taken from various sources including sedar and Company’s website. The author has no securities or affiliations related to these organization. Always do additional research and consult a professional before purchasing a security. Theequitypodcast.com is only a publisher of content and not a registered financial adviser and do not hold any license. Always consult a duly accredited investment professional in your jurisdiction prior to making any investment decision. None of the information contained in this website should constitute a BUY or SELL recommendation. Please read Disclaimer and Terms and Conditions.

Referenced Sources
  1. https://www.zionmarketresearch.com/report/threat-detection-systems-market
  2. https://mk0patriot1techaqf19.kinstacdn.com/wp-content/uploads/2019/11/Patriot-One-Corporate-Presentation.pdf
  3. https://www.plyrotech.com/images/CorpPresentation/PRT_Corp_Presentation.pdf
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Amit is the founder of Theequitypodcast.com. A happy person, a web enthusiast and currently focussed on everything associated with running a Website, Blog and a Podcast. Also contributing to other online Blogs with articles and guest postings.

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