NORTH AMERICAN BUSINESS: Bill, can you tell us more about Liberty Defense and how the company has evolved over the recent years to meet changing users’ needs?
Bill Frain: Liberty Defense (TSXV: SCAN) is a publicly-traded company that provides a range of technologies for concealed weapons detection, with a focus on high-volume foot traffic areas and other locations that require enhanced security such as airports, stadiums, government buildings, schools, correctional facilities, and more.
We have several products in our portfolio, with our flagship product being HEXWAVE, for which the company secured an exclusive license from the Massachusetts Institute of Technology (MIT). HEXWAVE is a walkthrough security portal that uses proven millimeter wave technology and real time 3D video-rate imaging and artificial intelligence (AI) to detect dangerous or prohibited items.
Since August ‘22 we completed several successful trials of the HEXWAVE including, at a major Hindu Temple, Oriole Park at Camden Yards, home of the Baltimore Orioles Major League Baseball team, Toronto Pearson International Airport, a major U.S. airline, and a major U.S. international airport for employee screening. We are now in commercialization of the HEXWAVE and recently announced our first system sale to Linev, US, plus two Letters of Intent to acquire the technology from major organizations. First delivery of the HEXWAVE to customer sites is expected by July ‘23.
In October ‘22, we announced a contract award from TSA for the development of an upgrade kit to the existing body scanners used at checkpoint screening in US airports. This technology was originally developed by researchers at the Pacific Northwest National Laboratory (PNNL) and funded by the U.S. Department of Homeland Security Science and Technology Directorate (DHS-S&T) and Liberty acquired the exclusive rights to the technology. We are now continuing to develop the technology in-house with our experienced team of engineers.
HD-AIT body scanners are used in airports to detect dangerous items hidden on a person. Our upgrade kit will enhance detection, reduce false alarms and help improve the passenger experience and move people through the checkpoint more seamlessly. TSA plans to upgrade 1,000 body scanners installed at US airports over the next several years.
Further expanding our portfolio, we also have the exclusive license from PNNL to develop a shoe scanner using millimeter wave and advanced imaging to detect concealed objects that may be hidden in footwear without the wearer having to remove their shoes. This has significant potential to reduce screening time at the airport and improve the overall experience for passengers.
NORTH AMERICAN BUSINESS: What are some of the biggest challenges you see in public security? How does Liberty add value for the clients and what are your competitive advantages in terms of technology, reliability or service?
Bill Frain: Unfortunately we continue to see acts of mass violence in the US at everyday places that people gather, increasing the need for screening systems that go beyond the capabilities of metal detectors. HEXWAVE can detect a far broader range of threats including both metal and non-metal items such as powders, pipe bombs, and plastic 3D-printed firearms or explosives.
The enhanced detection capability of HEXWAVE also means that individuals moving through the screening system do not need to remove jackets and coats or empty their pockets of things like keys or cell phones, which also can considerably speed up the screening process and improve the experience of security teams as well as the individuals being screened.
NORTH AMERICAN BUSINESS: Liberty recently commercialized its HEXWAVE system, tell us more about some of your first deals and some features of HEXWAVE.
Bill Frain: HEXWAVE uses radio frequency and millimeter-wave sensing, instead of the measurement of magnetic fields, which enables it to use its AI system to identify both metal and non-metal items. This means that the system can also identify plastic 3D-printed guns, powders, or pipe bombs. As individuals pass through the panels, the technology captures real-time 3D images of what is stored on a person’s body as well as where it is hidden and uses AI to detect dangerous or prohibited items.
We are now in the commercialization stage with HEXWAVE and have sold our first units. LINEV Systems US, Inc. purchased our first commercial unit. Linev is a well-established leader in contraband detection within the corrections industry as well as other high-security markets. LINEV plans to use its HEXWAVE unit for client demonstrations and act as a reseller with a focus on the corrections and education verticals.
We have also recently received a letter of intent from the Greater Toronto Airports Authority (GTAA) to purchase a HEXWAVE unit for use at Toronto Pearson International Airport, subject to further evaluation. Pearson is Canada’s largest airport and the sixth-most-connected airport in the world.
Airports are continuously looking for innovative ways to enhance security, and HEXWAVE has particular appeal for its flexibility and ability to be moved around and deployed in areas both inside and outside of the airport.
NORTH AMERICAN BUSINESS: There is no doubt that the security detection market is expanding, tell us how big will the market be in the next five years, ten years? In which markets do you see the greatest potential for Liberty? Do you have any plan or strategy for international market expansion in the post-COVID era?
Bill Frain: It is projected that the physical security market is expected to increase to $140 billion by 2026, with a compound annual growth rate of 6.4% between 2023 to 2026.
There have been rising instances of terrorist activities and security breaches to physical systems which are part of what is driving this change, as well as the evolving nature of threats such as the proliferation of plastic, 3D-printed guns.
The United States is the leading market in this sector. We have established significant traction in multiple market verticals here in the U.S. and are also working internationally.
Trials are scheduled for a European airport in Amsterdam, and market interest remains high from airports, government facilities, distribution centers, corporate facilities, banking, sports stadiums, and more.
NORTH AMERICAN BUSINESS: Can you please tell us about your previous work experience? What are some of the important lessons learned for you? As the CEO, do you have a target in mind this year?
Bill Frain: I have been in the security and detection space for the past 30 years. I’m currently serving as CEO of Liberty Defense, and prior to joining the team I served as Senior Vice President for L-3 Security and Detection Systems Inc. (NYSE: LHX), the world’s leading supplier of security inspection systems. In this role, I led global sales and business development and managed key accounts. Prior to this, I was the CFO for Vivid Technologies before its acquisition by PerkinElmer which led to the eventual sale of the security and detection systems division to L-3 Technologies. Several key members of the Liberty Defense team, including our President/CTO Michael Lanzaro, have previously been involved in the development and mass deployment of key screening technologies that are commonly found today at airports and checkpoints around the world.
We have moved into production and are on target for delivery to the market in Q2/Q3 of this year with a contract manufacturer on board. We have $30M invested to date to de-risk the technology and prove-out market applications.
The initial focus will be on the U.S. and Canadian markets but there is both interest and need from the international market as well. We will sell directly to our end customers but we are also working with channel partners where appropriate.
