I’m recovering from illness, but have crawled back into the office to get a quick teaser solution out for you today… who loves you, dear readers? (And you’ll thank your lucky stars that the pipes of the interwebs don’t transmit viruses of the human variety, that was an ugly one.)
But you don’t care about that, naturally — you don’t have to go to school with my kids, and you don’t have to tolerate my pathetic whimpering in the face of agony. You just want to know what the latest get-rich-quick pitch is all about, right? So let’s get to it…
The pitch, which comes across as admittedly a bit opportunistic in the wake of another school shooting this week (though those hardly even make headlines anymore), is all about security and weapons scanning — I first saw this ad not long after the Las Vegas shooting, though I didn’t write about it at the time, and the ad seems unchanged since then. It’s a spiel in service of Alex Koyfman’s New Century Report ($79/yr) over at Angel Publishing.
Which is, to pre-warn you a bit, a little bit of an orange flag, if not a red one. A newsletter under $100 a year from one of the larger publishers, like Angel, is likely to have at least tens of thousands of subscribers if it’s at all successful… and a penny stock being pitched to that many people means that a large portion of the shareholder base is likely being driven by the buy and sell notifications of that newsletter. Which can bring a heckuva lot of volatility if that newsletter does anything other than “buy and hold.”
This isn’t news to you, I expect, but it’s worth remembering — often publishers keep the “penny stock” and “less liquid” recommendations in their higher-priced letters, partly to keep the audience down and decrease the impact they have on the share price of any recommended stock, and partly to save the “sexy stuff” for the folks who pay the most (and who can presumably afford the huge losses that speculative penny stocks often bring), but that doesn’t appear to be the case here — Koyfman’s going for more of a “mass market” penny stock letter here, it appears, in contrast to his $1,000 Penny Stock Millionaire service.
But on to the stock — what is it? Here’s how he gets the pitch going:
“Urgent: Approved for Immediate Use by the U.S. Government…
“This Little Black Box Could End Mass Shootings Forever
“A revolutionary anti-weapons technology approved in October 2017 by the U.S. government could…
- Stop every mass shooting before a single shot is fired
- Be installed in every single school, church, sports stadium, concert venue, office and government building, bank, shopping mall, train station, and airport worldwide
- Dominate a global market worth over $1 trillion
- And send the $1.20 NATO-backed stock that owns exclusive rights to this technology to over $32 a share in the next 12 months… and over $152 a share in the next three years as the rollout accelerates!
“Every major casino in Las Vegas could install as many as 50 of these devices in each of their hotels starting this year”
Which sums it up pretty well… are there any other specific clues in the spiel to help us make sure the Thinkolator can ID the right company?
Let’s see… more from the ad:
“Metal detection has been around for decades, but this device is completely revolutionary in that it takes traditional metal detection and combines it with cutting-edge artificial intelligence….
“It can tell the difference between an innocuous hunk of metal, such as a coin or a piece of jewelry, and something that can cause damage, like a knife, a gun, or a bomb….
“…a device that could be embedded in walls, floors, ceilings… anywhere that’s convenient and out of sight, allowing for discreet scanning.
“This technology has been under development for years now at a small firm headquartered in Vancouver, British Columbia. This year, however, the company made its biggest leap forward yet, as its products were finally cleared for commercial distribution in both Canada and the United States.”
The ad goes on to theorize that had these kinds of scanners been installed at the hotel in Las Vegas, the shooter wouldn’t have been able to smuggle his arsenal into the hotel tower.
And the company is, we’re told, still quite small — with a market cap of “less than $150 million.”
So what’s the stock that Koyfman is pitching for, in his words, “at least a 30x profit opportunity here in just the next 12 months… and over 100x that in the next three years?”
Thinkolator sez: this is Patriot One Technologies (PAT.V in Canada, PTOTF OTC in the US)
And yes, it is a roughly C$150 million company at C$1.78 (US$1.44), and it does have a scanning technology that they’re trying to sell to institutions, including Las Vegas casinos — one casino has confirmed testing an installation on their employee entrance last month. That’s the same casino, incidentally but not coincidentally, where Patriot One co-hosted a security forum a few weeks ago, presenting to security officials from (mostly) other Las Vegas resorts and casinos.
Las Vegas is perhaps more incentivized than most other places to want this kind of security screening and scanning to be secret and unobtrusive, since no one wants real life intruding on their time in Vegas, but it’s presumably going to be a slow process of testing this system in this first hotel (the Westgate) and then seeing how it works and whether it justifies the cost or comes with any blowback from customers (it’s supposed to be unobtrusive, but things like false positives can quickly get the attention of guests).
I am certainly not an expert on the security needs of hotels (or of anywhere else), but I think the real meaningful revenue-generating part of this business is likely to be a ways into the future — the CEO’s latest letter to investors noted their need to accelerate deployment to new sites of different kinds across North America “in order to advance our machine learning processes across multiple live interactive customer locations” … this is not a cookie cutter service that’s ready for use in every single facility today, apparently, and it presumably needs customized implementation and installation and, I would suspect, tight cooperation from initial customers that would likely come with a significantly discounted price.
That’s all guesswork, though, and this is a security-related penny stock, so pretty much anything could happen. They are in relatively decent shape on the balance sheet, mostly because they’ve raised about $15 million by selling shares since last Summer — that would keep them going at their current cash burn rate for a long time, but if they’re trying to really roll out installations the cash burn will presumably accelerate rapidly from here. The installation of their initial system was done after the end of the last quarter, so it did not hit the income statement — if it does hit the income statement in this quarter, we might then have a better idea about the cost of the installation (for that single entrance), but it wouldn’t be surprising if the installation was not actually a “sale” to the hotel and doesn’t generate any revenue, at least at first.
This is also a system that would presumably have to be tightly integrated into a facility’s overall security system, so casinos are a logical entry point: Lots of money, usually advanced security, and a lot of focus on security. Whether that means schools and courthouses are a meaningful opportunity is a consideration that I would presume is many years down the road — casinos are big, wealthy operations who prize unobtrusive security, image, privacy and convenience, that’s not always true of public buildings and institutions.
So the idea of the product is appealing — a scanning system that can work unobtrusively using radar and artificial intelligence to identify likely weapons or similar items passing through some sort of checkpoint. The implementation is too early to know much about, though that’s not surprising — it is a tiny little company without any real customers yet, so it will probably trade based on the story and the press coverage of any actual installations or orders… or perhaps, on the bad side, of any potential failures of the system (or health concerns, or whatever). And they can afford to keep doing what they’re doing for at least a couple quarters as the story develops and they try to bring on new customers — without, probably, much focus on the financials for a while unless they have to raise money again… with new technology companies, the lack of earnings is often A-OK as long as there are orders and order growth and good press.
I haven’t dug around to see if there are any stock promotion skeletons behind this one (always a risk in Vancouver), or any meaningful competitors who are developing similar products, but that’s your quick answer and a little head start… and no, unfortunately, I don’t think it’s all that likely to “end mass shootings forever” or to make you 30X your money this year, but those are just hyperbolic promises to get your attention — clear your mind of the crazy promises, and decide what you think. Is Alex Kofyman on to something here? Think it’s too risky? Want to dig in and share your research on the company? Just jump right in with a comment below.
P.S. My records on this are not particularly definitive, but it looks like Koyfman’s first hinting about this stock was linked to ads for his more expensive Penny Stock Millionaire, back in March and October of last year, and this most recent one, which I started seeing in early January, is for his cheaper New Century Report.