Defense Technologies International Corp (OTCMKTS:DTII) Reduces Its Financial Risk

Shares of Defense Technologies International Corp (OTCMKTS:DTII) were pushed up recently, as the market reacted to a debt conversion announced on June 22, 2017. More than 60 million shares were exchanged in some days after the announcement, which is an astonishing amount given that the company does not have a large market cap. We believe that market participants may be interested in DTII, thus we decided to assess the company.SourceDefense Technologies International Corp - Its license agreementThe company was founded on May 27, 1998 in Delaware. Its most relevant product is the Offender Alert Passive Scan, which is a "portable scanning security device that uses the Earth’s magnetic fields to detect potential security threats". The patent is registered with the number US7408461 in America. Have a look at it in the following video:https://youtu.be/nypDRF2xhlA

Source

As it could be seen, the product is a "walk-through detector scanning unit," which can identify guns, knives, and other threats. The competitive advantage is that the scanner does not use X-rays to detect threats. As the concerns have been raised over the use of X-rays, thus this new technology may have a lot of demand. According to the company communications, the piece is based on the fact that "the 'Earth Magnetic Fields' has no emission whatsoever and is therefore extremely safe and harmless to the person passing through our portal."On January 12, 2017, the company founded Passive Security Scan, Inc. (PSSI), which is incorporated in the state of Utah. It transferred to this entity a license to commercialize its Offender Alert Passive Scan. Later on, the company sold 34.62% of PSSI to several investors with DTII still owning the remaining 65.38% of PSSI. We were interested in how much this license is valued in the balance sheet of the DTII. We found this information in the last quarterly release, where the license was still in the financial accounts; $378,600.

Cash

$

136

$

23

Prepaid expenses

1,000

18,169

Total current assets

1,136

18,192

License agreement

378,600

-

Total assets

$

379,736

$

18,192

10-Q (January 31, 2017)Recent Developments - Debt PaymentOn June 22, 2017, the company announced that it had reduced its corporate debt by $175,182. Additionally, the CEO, Merrill Moses, put out the following information about its new product ‘Non-X-ray Scanner’, wherein a reference to a Swiss Corporation that may provide financing is noted:

"Defense Technologies remains committed to starting production of its Non-X-ray Scanner in the very near future. We have initiated negotiations with a Swiss Corporation, a former Lender and Shareholder, to secure future necessary production funding. We appreciate and thank all our shareholders for their support" Source

Additionally, in the same communication, it was remarked that "certain related parties have agreed to retire their outstanding claims against the Company in exchange for newly issued Preferred Shares." On March 27, 2017, the company announced another debt reduction; $500,000. Three creditors received preferred shares and accepted to retire the debt. The CEO explained once again, and provided some information about the company's strategy:

"The Company's current goal is to raise capital in order to start the production and marketing of its 'Passive Security Scan Portal' for use at schools, universities, and commercial buildings," Source

Market Reaction

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The debt reduction announced on June 22, 2017 did have a significant impact on the share price of DTII. More than 60 million shares were exchanged, when the market received the news.Conclusion The "Offender Alert Passive Scan" developed by DTII seems interesting, but the story is not about the product here. The company has already announced two debt reductions that the market celebrated by pushing up the share price. The company is trying to ameliorate its financial risk by reducing debt. It needs to do so in order to obtain equity financing from other partners, like the mentioned Swiss corporation. To sum up, stay alert on this name, it may surprise soon again.We will be updating our subscribers as soon as we know more. For the latest updates on DTII, sign up below!

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Disclosure: We have no position in DTII and have not been compensated for this article.