Friday, December 02, 2016
Patriot One: New Doorman in the House
Metal detectors have built up quite a track record. We find them all sorts of places. Hobbyists use metal detectors to find hidden treasures. The promise of finding fortunes in the ground put metal detectors in the hand of prospectors. Technically they do not ‘detect’ metal at all. The devices we see being used on the beach to find loose change actually signal the presence of metal through the completion of an electrical circuit only made possible in the presence of metal.
The devices also guard the doors of public buildings and arm security officers in airports around the world, becoming the de facto weapon detection system worldwide. The political and social environment around the world today leaves us highly dependent upon these devices.
Yet metal detection technology has changed little over the decades. The first metal detector was invented in 1881 by Alexander Graham Bell. The president of the United States, James Garfield, had been shot and the bullet could not be located. The crude metal detection device was an attempt to find the elusive bullet. Bell’s invention was unsuccessful and Garfield died of blood poisoning and infection eleven weeks after being shot of blood. That set back did not stop the military from using similar devices to find bullets in the wounded during World War I and later for mine detection during World War II.
Military use eventually led widespread adoption for commercial security systems. Metal detectors are about to get the first big challenge in decades.
Patriot One Technologies (PAT: TSX.V or PTOTF: OTC/QB) has an entirely new approach to weapons detection. The company's engineers have joined radar technology with machine learning to configure a device that works much like the virus detection applications that protect computers. Patriot’s nforce CMR 1000 is described as ‘cognitive microwave radar’ that automatically screens individuals passing within six feet for the presence of concealed weapons such as guns, knives or grenades. A database of shapes and form factors are fed to the device, providing the basis for automatic ‘recognition’ of weapons as individuals move through doors or hallways equipped with the device.
The company cites numerous advantages over the performance of metal detectors for giving advanced warning of weapons. A wide six foot range makes it possible to deploy the system covertly in entryways and doorways. Full automation means security personnel are not bogged down watching a screen. Early experience suggests there are few to no false positives or false negatives, providing dramatically improved experience for both the public and building managers.
Patriot One engineers have spent half a decade developing the device, adapting the ‘radar on a chip’ technology to weapons detection and accumulating a rich data base of weapons shapes for the device’s reference library. The next step is to receive approval by the Federal Communications Commission, which should open up the first commercial sales by the middle of 2017. Senior executives are involved in sales to high profile customers which have been chosen for initial deployments of the nforce CMR 1000. Longer term the company will be marketing its weapons detection system through established distributors who are already experienced in the security products sector.
Management has high hopes for its technology. Initial discussions suggest there is considerable interest in the system for building security. Hotels lead a long list of potential applications such as schools, federal buildings, airports and shopping malls. However, there are other potential applications as well. Deployment in transportation portals such as subway entrances could provide detectives with critical information on the movement of suspects carrying weapons. Police officers equipped with the devices could move through crowds more safely and with greater knowledge of threats.
The company is still in developmental stage with no revenue to date. At the end of August 2016, Patriot One held CDN$187,189 in cash on its balance sheet. This is a small sum, especially in light of the cash usage in the most recently reported quarter over a half million in Canadian dollars. The company has been relying on the issuance of common stock for new capital to support its product development work. With heightened awareness of security threats such as the Paris terror attacks and other incidents involving concealed weapons, there appears to be a keenly interested audience among investors.
A stake in Patriot One brings with it all the usual risks of a developmental stage company. The technology has been proven and has been secured with patents. However, marketability is still based on interviews and preliminary conversations. Furthermore, management has predicted rapid adoption rates that might end up developing at a much slower rate. Nonetheless, it is worthwhile putting Patriot One on a watch list. Successful commercialization of this new take on weapons detection could be rewarding for an early supporter,
Neither the author of the Small Cap Strategist web log, Crystal Equity Research nor its affiliates have a beneficial interest in the companies mentioned herein.