- Patriot One Technologies, a whale in the making?
FTMIG Exclusive
Writer: Brent Mac
We have all seen the active shooters and terrorist events occurring worldwide, to the point it is nearly a daily occurrence. Patriot One technologies aims to stop armed persons from entering office buildings, hotels, schools, airports, and other locations. Will it stop these events from occurring completely? No. Is there a business to be made from selling product to companies wanting to protect their physical property and the people within? Yes. The product has undergone substantial testing at the West Gate Hotel in Las Vegas, University of North Dakota, a regional police service and schools in Florida. Everything appears to be coming to fruition and with preliminary sales starting Q4 and full commercial launch Q1 2019, it may not be ground floor but its pretty damn close.
In case you're wondering... I am no writer and my purpose for doing this is I believe in what those at FTMIG are creating. I believe a community is built on the contributions of those within that community, and we all succeed if it succeeds.
Patriot One Technologies is a, yet to make a sale, weapons detection company. Their flagship product and foundation is PATSCAN, which is a covert weapons detection system and I know what you're thinking. WTF is a covert weapons detector? Imagine if you will a hidden metal detector that can tell if you have a firearm or knife without you emptying your pockets. If it sounds like something written by Gene Roddenberry and it's probably too good to be true, is what I initially thought. I first started trading it 10 months ago, as I thought it could be a good hype play. Since then my opinion has changed and I believe this could be a good one and I've taken up a long-term position.
My change in outlook for PAT.V can be summed up in one word, VALIDATION. New technology companies are my favorite investment especially those in a unique market. Before I invest long term it must check three primary boxes. The first is patents, to give them that all-important moat. The second is sales as this validates a market exists and that the product works. The third is strong management, we've all seen a great idea fail due to poor execution. I have more boxes but unless the company can demonstrate these three, I am extremely hesitant.
Patriot One does not own a patent, it owns the worldwide distribution rights to the patent held by McMaster University. In my books, this is just as good if not better than a patent developed by a company independently. The technology was developed in a collaboration between several universities with funding from NATO. My need for patents in order to protect the company from competition was duly satisfied in the case of Patriot One.
Sales... this is where Patriot One fell through for me when it first hit my radar. There are countless stories that involve technology that will change the world, and all too often they are just that, good stories. In PAT's defense, it has always stated sales will start in Q4 2018 and full commercial launch in Q1 2019. So what provided validation for me? A little company called Cisco Systems, and PAT's news release this week concerning a new partnership between the two companies. In August 2018, PAT also announced a conditional agreement with an unnamed International Defence Contractor for non-dilutive financing. I take this update with a grain of salt, as conditional indicates exactly that. It's a nice to have but lends little in the way of validation.
Management consists of what I believe to be an impressive list, I won't go into exhaustive detail into the experience and depth these people bring to the table. Take a look at the website and read their profiles and then research everything you can on these individuals. Analyze any interviews you can find on them and form your own opinions. I will say they have a world-class group of security professionals and other people with experience in building companies. Names such as Tom Ridge, Michael Rozin, Martin Cronin, and Dinesh Kandanchatha should be enough to start your due diligence.
With the three main criteria met one must dig a little deeper into what they are doing and the economics. I'll keep this brief and give you an overview, I want to spark your interest to dig yourself. PATSCAN unit price is $10,000, with an ongoing subscription of $300 a month per unit. The system is driven by AI, and when someone carrying a weapon in range of the sensor the AI recognizes the "signature" of that weapon and alerts security. I have seen unreliable sources on what the cost to manufacture for the unit is, however, I don't put much weight into that information. The margins should be adequate as the product consists of a transmitter, sensor, processor and software. The company has approval from the FCC as PATSCAN does emit radar, and they are waiting on additional certifications.
Cash burn has been reported by management to be 1 million a month and with sales starting Q1 2019, they are well funded to get them to that point. Should the non-dilutive finance contact be finalized it should have the capital to fund the growth. Outstanding shares are roughly 115 million and current market cap of 315 million. An interview was done with Martin Cronin, CEO at a Las Vegas Security Conference, and at that point, he indicated they would have no problem justifying the 180 million market cap.
Three warrant dates to keep in mind;
PAT.WT exercise price 1.25 Expiry July 2020
PAT.WT.A exercise price 1.70 Expiry October 2020
PAT.WT.B exercise price 2.40 Expiry February 2021
Although the company has had a substantial run in share price since July, I believe there is still an opportunity here otherwise I wouldn't be sharing this with FTMIG. The reason for this is that Google Trends and the Facebook Group show primary interest from the Scandinavian Countries and Canada. This indicates that Patriot One is largely off the radar, and the United States is arguably one of the largest markets for this technology and the largest market of investors. The question as to why Scandinavian Countries has been asked in the Facebook Group, with the most consistent and believable answer being a couple of investor groups based in Sweden getting word out early.
It is difficult to predict the size of this market, as it doesn't really exist. The closest comparison is metal detectors from what I have found is believed to be 900 million to 1.6 billion by 2025. This technology is not meant to replace metal detectors though it is to supplement existing physical security measures, in a whole new and innovative way. To date office buildings, schools, hotels don't have metal detectors in any significant numbers and that is the market Patriot One is targeting. There is competition so understand what those are and how this differs, I believe PAT has the superior technology.
PLEASE BE CAUTIOUS and do your own Due Diligence. Do not take this as financial advice, it is not a recommendation to buy, sell or hold this security. It is only an article to bring a company to your attention. I am in no way affiliated to the company and I have not been paid by anyone to write this article. I do so because I enjoy investing, writing and seeing others do well. I have a position in Patriot One, I began buying for a long-term hold in July. I realize I should have done more to share my thoughts then but it wasn't checking all of my boxes. With the validation of Cisco Systems, I feel more confident in what this company could become.
