The Equity Podcast team recorded this podcast with Mr. Martin Cronin, the CEO of Patriot One Technologies on December 12, 2019.
Below is the transcript. Read, or listen to the podcast and enjoy !!
Introduction and Elevator Pitch of Patriot One Technologies.
Hello and welcome to another episode of The Equity Podcast dot com and we have a very special guest among us on this podcast. He is a well-known face and a respected voice in the security industry. Let’s welcome Mr. Martin Cronin, the CEO of Patriot One Technologies. Martin, welcome to the equity podcast.
Thanks very much. It’s a pleasure to be on.
Before we dig in deeper, Could you please give us the elevator pitch of the company?
Sure. So Patriot one is in the business of public safety through threat detection. We’re bringing forward innovations in sensors and software to protect the public by identifying threats. Whether its concealed guns, knives, bombs and we do this by applying artificial intelligence to interpret the data from innovative sensors. And what we’re doing essentially is fundamentally changing the whole nature of screening for public safety.
We are getting away from large fixed visible security screening infrastructure where you pass people through metal detectors Wong’s, bag searches and getting into distributed low cost embedded network smart sensors powered by A.I. to allow people to go about their business unimpeded but to be made a whole lot safer.
Patriot One Technologies Flagship Product – PATSCAN CMR.
Let’s talk a bit more about the flagship product, the product that brought Patriot One Technologies in the mainstream media. What is the current status of PATSCAN CMR?
Yes, you’re right. That’s the flagship product and that was the whole genesis of the company. We were set up to commercialize cognitive microwave radar to take a proof of concept from McMaster University and create a commercial product. So we took that, we shrunk down equipment that was the size of the small room into a small commercial package and got it certified so that we could take it out into the real world and do testing and development against real world conditions because that’s absolutely critical.
What we found is that we could get fabulous results in some areas, less good results in other areas. Because once you’re into the real world you’re dealing with all of the multiplicity of the environments, all the variability of objects and people in the field, all the electrical interference.
And we very quickly realized alongside refining and refining that product to improve performance and or environments we decided we would need to bring in other sensors as well. It was apparent to us that one single technology on its own wouldn’t be able to meet all the requirements of clients around the world.
So we’ve been on a process over the last year and a half of pulling in other innovative sensor packages and creating what we call a multi sensor threat detection platform, where cognitive microwave radar is one key technology within it. We have targeted magnetic resonance, we have video object recognition and we have chemical sensing and it’s those things pulled together that really are the power of the PATSCAN platform. So cognitive microwave radar remains a fundamentally important part and as some of your listeners will be aware this is not a static development.
We’re innovating all the time. We’re going back to the FCC seeking permission to try new power levels, different bandwidths et cetera. And what we’re doing in the short term is integrating our cognitive microwave radar into the common platform with all of the other sensors so that we have this effectively what we call the gold standard of detection.
Vitals of Patriot One Technologies.
Could you please tell us a bit more about the vitals of the company and how much cash does the company have?
So we’re close to 40 million dollars and at our current burn rate that gives us well over two years of sustainability. So you know, unlike some of the small new entrants in the field we’re very well-funded. We are funded to execute, funded to get us into cash flow positive position. So we do not have to focus heavily on going out and raising money and that’s really important. It means we can focus on executing on the business. So you know the Canadian capital markets have been very good to us. We have very widely distributed large retail shareholder base who have been very loyal big supporters of what we’re doing because I think everybody sees the huge opportunity in the space.
And so what we’re focused on now is less about going out and trying to fund the operation and instead we’re focused on using that capital to execute, to build the capacity to do this and scale. You know we’ve been focused on all of the mechanics of commercialization and operations from all our heart and all of our I.T. infrastructure, putting in the people who managed the software license keys, supply chain management, building all of the relationships with key distribution channel partners.
So you know happily we’re in a solid financial position and that allows us to focus on growing the business.
|SHARES OUTSTANDING||149 Mil|
|FULLY DILUTED SHARES||193.1 Mil|
|WORKING CAPITAL||$40+ Mil CAD|
Patriot One Technologies Partnerships and Achievements.
From the official documentation, the company has partnerships with CISCO, IBM, Raytheon and Johnson Control. These are really big industry names and they usually don’t partner with early stage companies unless and until they see something really standing out. Tell us more about this. How each of these partners fits into PATSCAN system?
Thank you I will.
I think they have a common view of what it is we’re doing. They are all very excited by our approach to public safety and security. You know they recognize that it is fundamentally different. You know there are there are many very well established companies in the fixed visible security infrastructure space and you only have to go to any modern airport to see them all in action and you know they do a tremendous job. You know in X-ray, metal detectors et cetera of screening people you know at these fixed infrastructure screening points.
As I mentioned earlier what we’re focused on is not that piece of the market. We’re focused on pushing out security perimeters and doing the detection at the earliest possible point and detection before people are aware that they’ve been scanned and the threats identified. And this requires real innovation. It requires low cost embedded smart network sensors driven by the power of A.I. and what I think these larger companies well-established companies have seen is that this is revolutionary and very highly additive to areas that they are engaged in.
And as you say in a conventional world you know they might they might not engage with such an early research company and I think it’s a testament to two things. The quality of our leadership team, the access that they have to key decision makers and the credibility they have and also the credibility of the technology. The only reason these players are engaged with us is because they’ve come and lifted the hood and had a real look at what we do and looked at the technology and realized that is something they really want to get behind.
And for our part we recognize that you know this is a global product, global application. The need to scale is immense and we simply can’t do this all by ourselves. You know if we were to simply go out with a technology and start trying to install it across you know even just North America you know we’d do a couple of dozen installations in a year and lose money on all of them. I mean you have to partner with the people who have presence out in the market, have installation networks et cetera. But it does go beyond that.
I mean Cisco has been a hugely important partner to us in development. They’ve given us huge server capacity to speed up our algorithm development that they’re helping us on all the network architecture. IBM was engaged on some of our cloud based A.I tools. Raytheon of course are all about radar and they love what we do have been putting non-dilutive financial support behind us. And then Johnson Controls of course are huge in the installation and client facing part of the business. So I do believe that we’ve assembled really an absolutely first rate set of partnerships that will allow us to execute on a global scale.
This is really interesting Martin. A company (Patriot One Technologies) with 40 plus million dollar cash, no debt, one of the best advisory group on board, partnerships with giant corporations and a company widely followed across the globe. How did this young and early stage company achieve so much in less than two years?
Well I think in part it’s the fact that we’ve captured people’s imagination with what we’re doing. You know major players have identified it as being you know truly revolutionary that it’s got a huge application and therefore huge revenue opportunities, huge implications for society in terms of public safety. And so in part it’s what we’re doing and that has pulled them towards us and certainly being public and having presence in the capital markets has helped.
But also I think you know whilst the company is young, sadly a number of us within it are not and we’ve you know we bring a long long experience in the security sector and many of our senior people come out of very senior roles in Government, Military, Intelligence, policing et cetera.
And so we brought with us a very big network of contacts. And so what that’s allowed us to do is to go through all of those people all that network and say What are your challenges, how do we need to approach this problem and to be able to speak a common language with them and to understand their points of pain, understand what it is they need to achieve in safety and security so that we go back to our engineering teams and we say this is what we need.
So rather than inventing things and seeing if anybody wants them we start from understanding the security environment and the challenges and then we go back and we invent or license or acquire or partner in order to meet the challenge.
And so I think it’s you know it’s something that comes from both ends of the equation but we have some very deep experience in the company in the security sector to supplement the deep expertise in technology.
Patriot One Technologies “PATSCAN” – Competition and Regulatory affairs.
Is there any product in the market, anywhere in the world, that can do what PATSCAN suite of systems, once commercialized is capable of doing?
I don’t believe so – NO. There are many good companies in security screening and we’re not in the business of running anybody down whether they might be a competitor or not. We wish anybody well in the business of protecting the public. You know many of us you know as I say come from the background we take security too seriously to treat it just as a competitive game. That said, we through our approach of bringing together multiple sets of technologies and then critically having them live under an artificial intelligence driven platform, that I think is a unique proposition.
And in the end over time this really is about data science and algorithms. Our mission is to have the best algorithms and the best data holdings which are just millions of data files to allow us to have the best understanding of the threat environment and the data that can be collected and interpreted to generate alerts. And I think that is a huge competitive advantage.
In the end you know the hardware is a means to an end. We build hardware and we develop event hardware because it’s we have to because it’s innovation and there aren’t other people building the types of hardware that we need.
But over time I would very much welcome a world where other people build sensors and so comes to us and say hey we have a sensor of whether it’s radar, magnetic or chemical whatever it might be and say to us hey look we have a sensor that we think gives good data, could it live on your platform.
Because in the end that’s going to be our huge revenue generating engine and our competitive advantage on having the best data science and the best algorithms for public safety threat detection.
Since the PATSCAN suite of products will be scanning humans, Is FDA or any other healthcare governing body or a regulatory body involved in any of the products?
But there are regulatory regimes so in the US its FCC. In Canada it’s governed by Industry Canada and are similar regimes in most other developed markets around the world. So they look at two things. They look at human health and they look at interference with other systems particularly critical systems. And so absolutely it is a highly regulated space. What we have within our suite of technologies, we have some things that are called passive systems where they’re not emitting any sort of electromagnetic radiation. And then we have active systems like cognitive microwave radar that are active systems, are operating at such low power levels that you know there is that well below the threshold set by these regulatory regimes for human health.
And in fact the power levels they are operating at are far less than a cell phone at a vast distance away from the body. So they are they’re entirely safe in terms of human health. The issue that the regulatory regimes are more focused on is interference with other systems and so that’s where you have to make sure you’re deep conflicted around that. You know the wavelength you use you know how that power level decays over a distance et cetera. But yeah. So short answer is yes there are regulatory regimes and you know we are very cognizant of those and operate within all of those regimes.
Challenges in Moving from a Prototype to Commercialization.
I think you are the best person to answer this Martin. There are many new companies that are entering the threat detection sector. How hard is it to develop a prototype, test it and get it through all the regulatory approvals and get it commercialized?
Well frankly it’s certainly not an easy journey and you know we have had to work long and hard over the past three years to get to where we are.
You know there are many many hurdles. Its capital intensive, it’s highly knowledge intensive. If it was easy from a scientific engineering you know mathematical basis that there would be many more competitors in the space. It’s not easy and in part because as I mentioned the infinite variability of the real world makes it very hard to take it as something that you could develop in a in a university lab and make it work out in the real world.
Then of course as you’ve mentioned you have all the regulatory landscape. And then thirdly as I mentioned it’s very very difficult to have one single type of technology actually meet all the client requirements and so it’s you know to assemble a portfolio of technologies that requires capital. We’ve been successful in raising that. This allowed us to execute on a comprehensive strategy. You know that none of that’s an easy journey. You need to have capital markets expertise, you need technical expertise, you need subject matter expertise and access to the market and that you know frankly assembling all of those things is not an easy task.
Patriot One Technologies Lead List, Inquiries and Geographical Interests.
While you were talking Martin, something piqued my interest here. It’s on page number three, Volume 14 of the e-newsletter. “9000+ lead list and additional lead quantity which is confidential”. I am not asking for any numbers beyond those reported 9000+ but could you please give us a hint on which sector of the society is showing more interest in PATSCAN products and getting maximum inquiries?
Yeah, that’s a good question.
We have our own sort of very proactive business developments and we go off to certain sectors where we believe there is low hanging fruit in terms of the large security budgets, a level of securities sophistication and appetite for solutions.
And then of course by virtue of our profile we get a huge volume of inbound traffic inquiries coming from all over the world.
The sectors that come from, depends a little bit on the market. In North America, the majority of our inquiries of course come out of the US as opposed to Canada just because of market size. And within the US the two sectors that give us the largest volume of inbound inquiries are education and healthcare. Obviously there is a something of a crisis in the US around school safety. People are desperate for solutions to keep our children safe in school. The health care sector in the US also has considerable issues around weapons being brought into facilities and they are equally desperate for solutions.
In other parts of the world, you know it often comes from Police, Government or Military bodies. You know it’s all sort of market specific and the nature of the primary threats that they face. So for example in the UK they’re less worried about guns. It’s not a lot of gun crime in the UK. There primary concern there is around knives. And so you know the one really sort of widespread low cost distributed knife detection. Whereas here in the US of course you know the thing that’s top of mind is keeping assault rifles out of schools so each market is somewhat different.
But in terms of the inbound traffic education and healthcare and I would say just behind them are the tourism hospitality sector: Resorts and Casinos and Sports stadiums and Event centers.
Are you getting interest from other large countries or countries with huge population like Russia, China and India?
We do absolutely. I mean we get inquiries from all over the world and we have been appointing distributors in a number of other countries.
And you know they announce that we’re working with them to work out the market size they’re looking to address, who is a client list who would qualify them as distributors and getting the forecast for getting there you know that their pre-orders that we can get a sense of what more commitments we need to fulfill over the course of the coming months.
The UK is a key market for us outside of North America because it’s a fairly large market for security spends and we also have very deep connections there.
The Middle East and North Africa, we get a lot of inquiries and the other parts of Europe. It’s an early stage for Asia. India will of course be absolutely a key market for us. We need to make sure that we are in a position to support the market.
And so part of that is identifying the right local partners who have field service engineering you know who have the client base and happy to support that client base. So yeah we are getting inquiries more across the world and we’re looking at how we can do this on a global scale in a robust way so that we don’t fall down.
Patriot One Technologies “PATSCAN” Limitations and The Future Innovations.
Are there any limitations of the PATSCAN systems, the Places where PATSCAN systems can’t be used?
Yeah it’s an excellent question because certainly you know many parts of the world I mean especially North America and Europe are very focused on the protection of civil liberties and privacy and so we are very cognizant. We engage in a lot of conversations with lawmakers to make them aware of our approach to public safety.
The key advantage we have is unlike some other screening systems we’re not capturing personal data, we’re not generating images of a naked body. We’re not capturing storing or transmitting personal data because we’re looking for inanimate objects.
You know threats. That makes it a whole lot easier when it comes to that question of personal privacy and data protection. Nobody wants to live in a mass surveillance society. We are very conscious of that. So our approach to technology is to always be respectful of that. This is about making the public safer without imposing a whole lot of restrictions on the fundamental way of life that we all enjoy. You know that said every country is different in terms of regulatory environments.
What we would expect in certain environments is that they would want to see signage where PATSCAN screening is used to notify people that you know in that vicinity there are non-physical screening measures in place. Now that of course is a perfectly reasonable attitude. We have not yet come across an environment where we have been told you wouldn’t be able to use that here. It’s more about whether you know whether and how the public are informed about the use of nonphysical security screening.
As a Public, do we see a personal wearable or a homeowner version of PATSCAN, like something at the door bell, coming out in a few years?
That is entirely possible. I mean obviously you know we have to have a very carefully thought out roll out strategy and for obvious reasons we are focused right now on the commercial and government markets. However the principles of technology would be the same for a homeowner application or perhaps in a condo or apartment buildings et cetera. So there’s no technical reason why that will not come. From a business development perspective, it will come after some of the other things that we’re focused on but there’s no good reason why we will not get to that in relatively short order.
What I might also mention is that we are working on mobile applications technology. When we were with our partners at Cisco demonstrating our technology at Cisco Live in San Diego in July we were approached by a very large U.S. police department from the highway patrol to ask if we could whether it might be possible to deploy some of our solutions onto police vehicles to protect officers from ambush or from being struck by other vehicles while stationary. That pose challenges in terms of shrinking down hardware, dealing with issues connectivity to go on a mobile platform but together with our partners at Cisco and some excellent hardware from , with whom we are working closely we were able to come to IACP in Chicago, that’s the International Association of Chiefs of Police.
They have their annual show it was in Chicago just in October and we brought in a police vehicle fully equipped with the live demonstration of exactly what the police department would be looking for and it generated huge interest. So it shows how quickly we can come up with new iterations and new developments to meet requirements. And that I think is a testament to both the skill of the engineering team that we have and the quality of our partnership with Cisco.
What if Patriot One Technologies is presented with a Buyout Offer in Future?
So Martin it is a well-known saying that “if you can’t beat them you buy them”. What if Patriot one technologies is presented with a buyout offer in the next few years?
Well what I would say is of course that’s an entirely possible scenario and you know generally speaking IF companies demonstrate that they’ve got global application and Multi Sectoral application here that they’re not a niche product either by sector or geography and that the revenue potential is huge. Then of course they become a very attractive acquisition target. And so of course that wouldn’t be a surprising development. We’re not building for acquisition so we’re not we don’t have a strategy to position ourselves to be acquired and we’ll keep on doing what we’re doing to build a huge global business.
As in when any acquisition potential should come up you know it’ll be a matter for shareholders.
We have a very large and very distributed shareholder base and so will we’ll just have to see how shareholders would feel about an acquisition at the time. So you know yes it’s an entirely possible scenario. But right now we’re focused on building a global business.
What can we expect from Patriot One Technologies in the next 12 to 24 months?
If I’m a shareholder or a potential shareholder what would be your message for 2020 and beyond? What can we expect in the next 12 to 24 months?
Well, I think 2020 is going to be a really exciting year for Patriot One Technologies. I mean some of the news has been coming out recently on some of the clients we’re working with. We are going to see a whole lot more of that.
We are working with major brands, very high and very high name reputational clients. As you’ve mentioned we’re working with our partners with some of the biggest corporate players in the world. 2020 is where it all really starts to happen. Where our shareholders will start to see the potential realized around this company and the quality of the clients that we’ll be deploying our systems. So you know we’ve got a lot of work ahead of us. You know our engineers, our Business development teams, our operation team are working flat out. Our guys are they just don’t rest. We have a fabulous team supplementing it with you know some great additional hires that are all about execution and further business acumen.
You would have seen that we just announced that Bill Maginas, the outgoing presidents of Johnson Controls Canada is joining our Board. That I think is a testament to the excitement around where we’re at now and in getting these products out to the market. So 2020 I think is going to be a very exciting year. And if I if I wasn’t tired by now going into Christmas I guess I’ll just be even more tired as we get through 2020.
End of Podcast. Thank You!
With that said we come to the closing of this podcast. Martin, It was a pleasure talking to you and we hope to touch base again in the New Year. Thanks a lot.
Martin Cronin, CEO of Patriot One Technologies:
Thank you. I look forward to that. That’s great.
P.S: Please inform us of correction(s), if any. Send an email to [email protected]
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