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Coverage Initiated on Company 'Combining Active 3D Data/Imaging and AI to Avert Security Threats'

Streetwise Reports
0 Comments|September 12, 2019

The highlights of the U.S. firm and its product are presented in a Laurentian Bank Securities report.


In a Sept. 10 research note, analyst Nick Agostino reported that Laurentian Bank Securities initiated coverage on Liberty Defense Holdings Ltd. (SCAN:TSX.V; LDDFF:OTCQB; LD2:FSE) with a Speculative Buy rating and a CA$1.40 per share target price. The company's share price now is around CA$0.70.

Commercial launch of Liberty Defense's concealed weapons detection solution HEXWAVE is expected by H2/20. "If successful, there could be further upside to our valuation," Agostino added.

The analyst reviewed the compelling parts of the story.

1. Liberty Defense's product HEXWAVE features cutting edge technology, detecting threats and providing real-time alerts to avert attacks. The company, "layering onto exclusively licensed MIT LL technology, has the potential to lead the next generation of advanced screening solutions," Agostino commented.

2. HEXWAVE differs from other similar systems. It detects metal and nonmetal threats, can be applied openly or covertly and works both indoors and outdoors.

Also, HEXWAVE employs active 3D radar imaging technology and has a non-interfering operating frequency design. This differs from other solutions that tend to use millimeter or microwave radar technology that can be affected by the environment. HEXWAVE uses artificial intelligence for the real-time detection. Additionally, the solution features "superior throughput performance and a flexible smart system design," noted Agostino.

3. The potential market for HEXWAVE is "very large," Agostino indicated, as the security solution is optimal for high-traffic, fast-paced public and private locales, like shopping centers, office buildings, sports venues, government offices and transportation hubs potentially at risk for a large-scale attack. "We estimate this target market could be greater than $3.5 billion, with upside from international expansion, expanded market applications and better unit sale economics," he added.

4. Liberty Defense has a scalable, three-pronged, recurring revenue model. At scale, the model can yield greater than 45% gross margins with 20–25% EBITDA margins based on the company's proprietary technology platform, Agostino estimated.

5. The company is led by CEO Bill Riker, who has more than 35 years' experience in the industry, and has a robust advisory committee comprised of diverse business professionals. Insiders own about 37% of the company's shares.

6. To date, Liberty Defense has signed six memoranda of understanding (MOU) with various, diverse, high-profile organizations to beta test HEXWAVE.

Agostino pointed out that near-term catalysts for the Atlanta, Georgia-based firm include the signing of additional MOUs as opportunities arise, completion of alpha testing, followed by a demonstration in Q4/19 of HEXWAVE's subsystems and subsequently, beta testing of the product by various partners.

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