Defense Technologies International Corp. (OTCQB-DTII) is a developer of security technologies. DTII is a holding company that includes Passive Security Scan, Inc. a wholly owned subsidiary. Passive Security Scan, Inc. is the manufacturer of The Offender Alert Passive Scan™, a non- X-ray scanner for use at schools, universities, stadiums, hospitals, and other commercial buildings.
In the recent past, DTII successfully demonstrated and tested its new Offender Alert Passive scan product. Offender Alert Passive scans is a next generation walk-through detector-scanning unit. DTII has patented and trademarked its technology for detecting and identifying concealed threats.
According to a research, defense industry size is likely to grow at a CAGR of over 6.1% through 2023. The growth is primarily led by innovations and advancements made in defense technology. Countries such as USA, China, Israel and Russia see significant spending hikes on defense markets. As of last year, U.S spends above 50% of its fiscal budget for military utilities and accounted for 37% of the overall industry share. It spends as much as USD 600 billion and ranks first in case of defense expenditure across the globe.
Furthermore, Trump administration is focusing on further improvement in defense, while cutting spending for other agendas. This proposed spending boost could significantly increase activities in the defense industry & raise capacity utilization rates through paving the path for new investment.
These positives are also aided by the expected abolishment of the budget control act by the new government. Without the imposed caps, the defense department would have more resource to spend on defense systems & equipment’s. Therefore, defense related stocks, such as DTII, are presently in a sweet spot and are likely to remain ahead of the pack. With increasing unstable geopolitical situation, innovative defense stocks will directly benefit from increased security related spending and achieve an early-mover advantage.
Despite expected benefits, present business profile of DTII reflects its very nascent stage of operations, with no revenue, which have led to a constrained financial position and tight liquidity for the company. Though these weaknesses are partially mitigated by the favorable growth prospects of the industry.
Previously, DTII filed a notification with FINRA for a proposed reverse stock split of the company’s issued and outstanding common stock. Due to certain circumstances related to the filing and the inability to secure final approval of the action, the company later decided not to pursue effectiveness of the stock split.
About the industry:
Defense Technologies International Corp. (OTCQB-DTII) (The Company) is a developer of security technologies. It is a holding company that includes Passive Security Scan, Inc. a wholly owned subsidiary. Passive Security Scan, Inc. is the manufacturer of The Offender Alert Passive Scan™, a non- X-ray scanner for use at schools, universities, stadiums, hospitals, and other commercial buildings.
About The Offender Alert Passive Scan™
The Company’s ‘Offender Alert Passive Scan™’ is a “next generation” walk-through detector-scanning unit. This patented and trademarked passive scanning system allows for detecting and identifying concealed threats such as guns, knives, etc. Unlike other scanners the public is more familiar with, Passive Security Scan does NOT use X-rays to detect threats. Serious health concerns have been raised over the repeated exposure to X-rays from other scanning machines currently in use. The Offender Alert Passive Scan™ scanner technology is based on the ‘Earth Magnetic Fields’ has no emission whatsoever and is therefore extremely safe and harmless to the person passing through our portal.
As per management, Scanner Portal will soon be ready for installation in real world venues, with primary concentration on schools in the United States and other countries around the world as well as other venues of public assembly.
Pictorial presentation of ‘Offender Alert Passive Scan™’
Robust outlook due to expected surge on defense & security spending by new government:
Defense & security related spending in the US is expected to grow after multi-year muted defense budgets. This future growth is triggered by the new US administration’s increased focus on strengthening the US military.
The first budget of new government is likely to call for around $54 billion increase in defense spending and a corresponding cut in lower priority programs. The U.S. spends the most money on defense of any country in the world by far with an annual defense budget of nearly $600 billion.
Key Risk Factors
Notwithstanding the recent positive developments, DTII has generated no revenues through October 31, 2016. Moreover, it has accumulated losses of $4,285,598 and a working capital deficit of $2,226,322 and expects to incur further losses in the development of its business, all of this cast substantial doubt about the Company’s ability to continue as a going concern.
Also, there is no assurance that incremental funding will be available in a timely manner to continue the Company’s business operations.
Key Stock Influences
Some key influences that might govern future stock price performance include:
The company is in project stage with no revenue & therefore carries implementation risk. Company’s ability to meet the expected milestone in a time bound manner would remain a key stock sensitivity factor.
DTII is expected to benefit from the favorable prospects of the industry, over the medium term. The stock could experience a significant surge if substantial improvement in liquidity and financial flexibility occur, leading to timely commercialization of operations.
On the flip side, sentiments could turn ‘Negative’, if continued cash crunch leads to delay in funding of company’s operations, dilution due to issuance of larger than expected equity stock and or further weakening of its financial risk profile. Also, promoter’s/related parties support in terms of timely fund infusion and funding cost overruns is critical for DTII.
Earnings Review
DTII currently have no sources of operating revenues. Accordingly, no revenues were recorded for the three and six months ended October 31, 2016 and 2015.
Operating Metrics & profitability:
DTII recognized a net loss of $410,047 and $87,276 in the three months ended October 31, 2016 and 2015, respectively, and a net loss of $200,438 in the six months ended October 31, 2015.
Cash Flow & Balance Sheet:
At October 31, 2016, we had total current assets of $4,042, including cash of $42 and prepaid expenses of $4,000, and total current liabilities of $2,230,364, resulting in a working capital deficit of $2,226,322.
Management believes that related party and other lenders would provide need based funds to carry on general operations over the near term and fund DTC’s production and sales. Also, they expect to raise additional funds from the sale of securities, stockholder loans and convertible debt. However, these plans are at a very nascent stage & DTII may not be successful in its efforts to obtain financing to carry out business plan.
As of October 31, 2016, it did not have sufficient cash to fund our operations for the next twelve months.
Stock Performance:
On Friday, March 17th, 17, DTII shares surged by +65.56% to $0.0298 on an average volume of 5.12M shares exchanging hands. Market capitalization is $911.17K. The current RSI is 36.46
In the past 52 weeks, shares of DTII have traded as low as $0.00 and as high as $0.46
At $0.0298, shares of DTII are trading just below its 50-day moving average (MA) at $0.03 and 200-day MA at $0.03.
The present support and resistance levels for the stock are at $0.0199 & $0.0397 respectively.
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