Market Overview

Data Projects the U.S. Defense Budget to Continue its Growth

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NEW YORK, November 27, 2018 /PRNewswire/ --

According to data compiled by Strategic Defence Intelligence, the U.S. spent over USD 639 Billion in 2018 for its defense budget. By 2023, the U.S. defense expenditure is expected to grow to approximately USD 742 Billion while growing at a CAGR of 1.98% during the forecast period. As a percentage of GDP, the U.S.'s defense expenditure is expected to be approximately 3.1% during the same period. The country will look to spend most of its budget in efforts to retain its military supremacy and replace outdated and worn-out weapons used in the Iraq and Afghanistan wars. U.S. expenditures could also increase due to the ongoing political tensions in the Middle East. While the United States holds the largest budget for defense technology, it is also the largest exporter of defense equipment in the world. The U.S. are also expected to continue to remain the largest importers due to increased defense budgets in allied countries such as Saudi Arabia, UAE, Turkey, India, South Korea, Singapore, the UK and Japan. Patriot One Technologies Inc. (OTC:PTOTF), Rockwell Collins, Inc. (NYSE:COL), United Technologies Corp. (NYSE:UTX), Raytheon Company (NYSE:RTN), Harris Corporation (NYSE:HRS)

According to Credit Suisse, the aerospace and defense sector is poised for stronger revenues as revenue trends outweigh cost headwinds. Margins are projected to expand for the first time since 2015, driven by robust demand and sales. The larger-than-expected revenue is attributable to U.S. President, Donald Trump's stance on increasing military defense spending. Trump's position led the Department of Defense spending to grow by 9% in 2018 from the year prior, Blackrock said in a blog post. "The 2019 National Defense Authorization Act was passed at its swiftest pace in 20 years, up to USD 717 Billion (a 12% increase from 2017). Even after the 13% quarter-to-date decline in the Dow Jones U.S. Aerospace & Defense Index (as of October 29th), the industry group is still up 46% since 2016 Election Day and remains the purest way to play any change in defense spending outlook," Blackrock said.

Patriot One Technologies Inc. (OTCQX:PTOTF) is also listed on the TSX Venture Exchange under the ticker symbol (TSXV:PAT). Just earlier today the company announced breaking news that the, "execution of a definitive acquisition agreement with EhEye Inc. ("EhEye") of New Brunswick, Canada (the "Transaction").

Identified earlier this year as a prime candidate for integration into the PATSCAN product line-up, EhEye's video threat recognition software recently met with overwhelming security reseller and end-client interest during a number of recent invitation-only industry events held at Patriot One's development center in Las Vegas.

The terms of the Transaction provide for the acquisition of a 100% equity interest in EhEye by Patriot One in consideration of the issuance of 1,636,363 common shares of Patriot One to the existing shareholders of EhEye. Patriot also proposes to grant up to 277,775 replacement incentive stock options to employee, director and officer option holders of EhEye in consideration of the cancellation of those outstanding EhEye options.

"We are extremely excited to join the Patriot One team. Their mission to become the foremost proponent and provider of innovative threat detection and counter-terrorism solutions and services for general public safety fully aligns with our own mission," stated James Stewart, EhEye's CEO and President. "Further to that end, we expect their advancements in machine learning for weapon recognition through their proprietary PATSCAN software, as well as their key strategic partnerships, to propel our video recognition solution's commercialization. This will ensure significantly enhanced detection capability whenever weapons are handled inside or outside of facilities like event venues, schools or virtually any public building."

This truly unique system automates the detection of weapons, disturbances and suspicious behaviours through existing camera infrastructure. Using computer vision techniques coupled with machine learning for artifact recognition, the solution employs deep learning architecture to alert security teams to anomalies that a standard video system cannot identify.  

EhEye is in the process of piloting the solution with an international airport and a correctional facility through the Build in Canada Innovation Program. In addition, the developers also received the support of the National Research Council of Canada. In 2017, they received three (3) awards - two (2) KIRA awards for Most Innovative Startup and Most Innovative Technology and one (1) of StartupFest's Choice Awards.  

"We are very pleased to welcome the EhEye team into the Patriot One family. Their award-winning threat recognition software will integrate into our client's existing video camera networks offering a first line of defense to detect active shooters or terrorists approaching a venue with weapons drawn," explained Martin Cronin, CEO and President of Patriot One. "It will also offer an additional layer of detection inside buildings to track threats and even identify irregular disturbances or physical altercations between individuals."

This novel video recognition software joins Patriot One's family of threat detection solutions under the brand name PATSCAN VRS, denoting video recognition sensors for threat detection. Sales of the PATSCAN VRS solution will be based on a SaaS pricing model on a per camera-use basis per location. The solution is currently in late stage pilot testing, as the platform is an AI based system designed to improve weapon detection, disturbance recognition and ongoing accuracy once deployed. It will continually learn through shared network updates as part of its monthly recurring subscription service, similar to the revenue model for the Company's flagship PATSCAN CRM covert weapon detection solution.

Additional technology candidates for potential inclusion into the PATSCAN product line-up are currently undergoing technical assessment, focus group and marketing evaluation. Subject to the conclusion of a rigorous period of due diligence, Patriot One aims to extend its brand offering through the inclusion of select technology partner agreements.

In October, Cisco Systems invited Patriot One, as one of its innovation partners, to showcase to its largest clients and partners our PATSCAN family of threat detection solutions, including PATSCAN VRS, during their annual Cisco Connect event at the Toronto Congress Centre. Further to this end, Patriot One expects to begin commercial deployment of the PATSCAN VRS solution to select customer sites followed by distribution to its security system integrator network in Q1 of 2019.

The Transaction is subject to a number of standard closing conditions, including any required approvals of the TSX Venture Exchange."

Rockwell Collins, Inc. (NYSE:COL) is a leader in aviation and high-integrity solutions for commercial and military customers around the world. Rockwell Collins recently launched Griffin™-2, the next-generation of the company's industry-leading 360-degree visual system for military fast-jet simulated training. Its announcement took place at the Interservice/Industry Training, Simulation and Education Conference (I/ITSEC). Featuring a non-faceted, completely smooth-surfaced visual dome, the Griffin-2 is built on an open architecture that allows the use of multiple projector types. This means that ultra high definition (UHD) commercial off-the-shelf (COTS) technology can now be utilized for optimal fidelity, resolution, and a lower acquisition and life-cycle cost compared to other systems. "The Griffin-2 provides a dramatic leap forward in pilot training value through significantly improved scene realism, allowing for better recognition of targets and detail, which ultimately leads to more effective training," said Nick Gibbs, Vice President and General Manager, Simulation and Training Solutions for Rockwell Collins. "With decades of success in the fast-jet training market, Rockwell Collins is continuing to lead the way with the Griffin-2, which will provide fourth and fifth-generation fighter pilots the most realistic and immersive training experience available."

United Technologies Corp. (NYSE:UTX), based in Farmington, Connecticut, provides high-technology systems and services to the building and aerospace industries. United Technologies Corp. recently announced that it has acquired Predikto, Inc., an Atlanta-based predictive analytics software company. Predikto is known for its proven cloud-based predictive health maintenance solution, which enables customers to forecast and improve asset reliability with greater certainty. The acquisition reinforces United Technologies' global digital strategy to make strategic business investments that enhance the company's ability to deliver new forms of value for our customers, employees and shareholders. The unique differentiator with Predikto is the technology platform - it is able to take hundreds of disparate industrial asset data-sets and automate up to 80% of the analytics process to quickly deliver actionable insights for taking pre-emptive steps to avoid issues, thereby increasing asset uptime. "Data is the lifeblood of any digital strategy and actionable data is the way forward as we deliver real customer value," said Vince Campisi, Chief Digital Officer, United Technologies. "We are incredibly excited about this announcement and the future ahead together. By harnessing the best of our combined predictive analytics skillsets, we can better connect all critical assets, understand the reliability and health of our products and ultimately deliver an improved customer experience. Predikto's capabilities will help us scale these efforts across United Technologies' businesses with speed."

Raytheon Company (NYSE:RTN), with 2017 sales of USD 25 Billion and 64,000 employees, is a technology and innovation leader specializing in defense, civil, government and cybersecurity solutions. Raytheon recently announced that it has won two prime Indefinite Delivery/Indefinite Quantity contracts from the National Geospatial-Intelligence Agency to develop advanced data automation, analytics and artificial intelligence capabilities. The contracts have a potential combined total value of up to USD 600 Million. Raytheon Intelligence, Information and Services will lead the Elevation Content and Precise Imagery programs, which are part of NGA's Janus initiative to build systems that give agency partners access to NGA content services. To align with NGA's "AAA" strategy -- Automation, Augmentation and Artificial Intelligence -- Raytheon will apply more than 30 years of advanced photogrammetric algorithm development experience to automate NGA data production capabilities while streamlining processes and workflows. "Our advanced analytics, automation and AI will keep NGA capabilities on the cutting edge," said Dave Wajsgras, President, Raytheon IIS. "The solutions provided by NGA to the broader user community will offer higher quality and faster delivery of mission-critical information."

Harris Corporation (NYSE:HRS) is a leading technology innovator, solving customers' toughest mission-critical challenges by providing solutions that connect, inform and protect. Harris Corporation recently received National Security Agency (NSA) Type-1 certification for its AN/PRC-163 multi-channel handheld networking radio - bringing groundbreaking capabilities to the warfighter, with the ability for future expansion. The Harris AN/PRC-163 combines communications and intelligence, surveillance and reconnaissance (ISR) capabilities to address the users' unique mission needs in a small, portable form factor. This certification allows the radio to transmit secure voice and data communications up to Top Secret level on both channels for VHF/UHF line of sight, SATCOM and Mobile Ad-Hoc Networking applications. "This important NSA Type-1 certification is a key milestone in delivering revolutionary capability in a handheld radio to our warfighters," said Dana Mehnert, President, Harris Communication Systems. "The ability to securely transmit information using VHF/UHF line-of-sight, SATCOM, and Mobile Ad-Hoc Networking, as well as future applications in increasingly challenging communications environments, is critical to the warfighter. This radio delivers that capability now while providing room for future growth."

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