All right, Exiger CEO Brandon Daniels. I really want to talk to you about the business. We're at the Defense and Innovation Summit here in Pennsylvania, which Senator McCormack is putting on. The president will be here tomorrow, but I really want to get to the Iran war with you. I think you get a lot of insight in that and the costs and what the potential solutions are. But overall, I want to start with your business. Can you tell us about what you guys do because you guys are, I think, at the forefront of trying to streamline using AI a lot of supply chain issues we have in the country which are threats, major threats if we don't sort the stuff out. But tell me a little bit about what you guys work on.
Yeah. So at our heart, Exiger is an advanced AI development company. But what we do with that artificial intelligence is we apply it to the supply chain and procurement areas of business, military acquisition, and contested logistics. What we do is we make sure that you first of all know your entire supply chain. Most companies are not responsible for the vast majority of their production. I mean, if you think about it, even me, right, I run a software company. We host our software on AWS compute, right? We're in the cloud. We're using multiple software vendors to help us support our software development life cycle. So even software companies that can localize most of what they do, we've got extended supply chains. So the first thing that we do is we help to x-ray a supply chain. We tell our customers whether it's a big defense company like a Lockheed or a Raytheon or it's a customer like Coherent, which is one of the most advanced AI chip and optical transceiver companies in the world. We tell them where all their parts, all their pieces, all their components come from. So we break down a system whether it's a Chinook or it's a Lululemon pair of sweatpants. We break them down into their constituent parts and we tell you where all of that's being sourced. Now, why do companies want to know that? They want to know that because depending on where those materials come from, they could have parts or components that are routing through the Strait of Hormuz right now. They could have parts and pieces that are subject to disruption because of shortages because of the LNG and crude that's being kept or held in the Middle East right now. They also are able to identify opportunities. So in many cases, for instance, our military customers look at their parts and they say, 'Oh, we have parts and components that are going to go onto a major weapon system and there are only two or three or four companies in the world that can make those parts.' Let's say one of those companies goes out of business. Like last year, a company called Chicago Magnesium had all their facilities burned down. And one of the largest of only three major magnesium casting companies that build parts for our major subs, for our major military equipment like tanks, for our large hull battleships. Those magnesium castings, because that one company had a fire, the entire market for them reduced by 50% overnight. Right. And so knowing that you have those dependencies and then knowing how to manufacture with alternative manufacturing, with additive manufacturing, with new capabilities across the industrial base, it allows you to have flexibility. So we help them to identify ways in which they can contract with new providers to reduce cost or to increase the resilience of the supply chain.
Well, the resilience is so interesting because if you think about how vulnerable we proved we were during COVID where all these things where we couldn't get basic stuff because of lockdowns around the world, is that if we have a really sophisticated piece of defense tech but it's relying on one part from somewhere that's only made halfway around the world. If you're trying to target America, you could just target that part of the world and try to make it so that we can't get whatever it is from across the world. It just seems like a real vulnerability that you could help identify.
It's an incredible vulnerability and the nature of war has changed. I believe that supply chain is a new domain of warfare and you don't have to look any further than the most recent Iran conflict to see it. So Iran, traditionally in warfare, if you go back and you watch World War II documentaries or you read about what happened in World War II, Germany was bombing major industrial sites that supported the war effort and the allies were doing it in return. We were bombing ball bearings facilities across Germany, right? Today, if you look at the attacks that have happened in Iran, what they've done is they've bombed facilities that have nothing to do with the war effort, but what they are is they know that they are single source central dependencies and choke points for the world and create economic chaos. So they bombed the Ross Leafon facility because they knew or attacked the Ross Leafon facility because they knew it would create shortages in helium and impact our global healthcare facilities because helium is needed for MRI machines or it would impact our ability to build ships because you need it for sealant or it would impact semiconductors because you need that to seal the test facilities or the production facilities. So they're doing these things to not necessarily hurt the war effort, but to actually create political and economic pressure against enemies. And when you have a global supply chain like we have or even a US supply chain that has dwindled over the last 30 years because of a lack of investment, you end up with a lot of choke points that become really hazardous in a conflict.
Really important. So what do you do? Explaining how your tech uses AI to do this and it can just be if you don't want to give away any secrets you could use a Lululemon example, you could use it doesn't have to be a war example. This is so important to keep an eye on this stuff.
So the first thing is we have gone about buying major data companies that have been building these treasure troves of data for 5, 10, 15, 20 years right. These companies essentially manufacture all of the data that says okay these are all the parts that DLA has purchased over the last 20 years or these are all the parts that GSA has purchased or they collect what are called technical data packages which essentially say what a part is made of. It's the technical engineering plan for everything from an airframe to you know little hexagonal self-locking...
And this is Milton Friedman's pencil. It's all from all over every continent that's involved in the pencil.
Exactly. So we've been buying these data companies and we've been training our AI on who makes what. And as we train our AI, basically you can drop any product description, any product MPN or manufacturer's part number or part number or what's called an NSN, which is essentially the military's part number equivalent. You can drop any of those into the software and it'll create what's called a bill of materials. So it says here are the things that it's made of, here are the special processes that are necessary in order for it to be made and to meet milspec. And then what we do is we take all of that customs data, all of that purchasing data, all of that proprietary data that we've purchased from these companies over the last 7 years and we use that to then combine the bill of material with the suppliers that can make those parts. Basically what it does is it recreates a digital twin of a supply chain for everything from a pencil to a Chinook helicopter.
But that's brilliant because then if you're talking about a Chinook helicopter we're talking about tens of thousands of different parts that might go into it and you can have those single points of failure. It's probably even hard to realize where you would even find backups if we can't make this component. How do we go about doing that if something happens? You're answering those questions, it's very important and it's something that the government. Do you work with the government at all on this or is it just the contractors?
We work with both the contractors and the government because the government is ultimately responsible for making sure that that weapon system gets to a warfighter. And so with the contractors, we're utilizing it for all of the benefits, right? They aggregate all of the metals that they're utilizing across all their weapons systems, across all their semiconductors and create what are called bulk buy agreements with the underlying mills that actually make those materials. And then also with the US federal government, we're helping them to identify where, for instance, and what Senator McCormack is doing by bringing together all the defense industrial base leaders where we can actually make targeted investments and increase capacity at the choke points. And there are a lot of choke points, and 'choke points' is a pejorative word. It's a negative word. It's not choke points, it's single source dependencies, right? It's people that have actually learned to specialize in a certain process or a certain part or a certain component. And some of these things are like real handcrafted, maybe decades of experience creating a certain alloy. What we did with Senator McCormack is we identified all of the industries that have those bottlenecks right here in Pennsylvania.
Okay. So I want to talk about Pennsylvania. I want to talk about you have a big report out on Pennsylvania and the defense sector here. It's a very unique part of the world because you've got manufacturing here and you've got a real industrial base of workers, people who want to work and you also have a lot of innovation with the university. So I want to get to that, but before we do, I got to ask through your research, have you seen any new vulnerabilities in our supply chain that maybe have been infiltrated or very weak or things that I'm concerned that could you have identified? Because if I'm watching this and I'm a foreign government adversary of America, I'm thinking this is how I'm going to get them. I'm going to disrupt the supply chain and that seems so much easier than bombing LA. This is an easier way to do more damage to us in a way. So are we safe? Are we protected on this front or is it just something we're thinking about recently?
We're still very vulnerable. There's a lot of fragility in our supply chain and especially on critical minerals, raw materials. We are particularly vulnerable. Now, one of the things that we do have is we do have economic levers and materials and components and technology that we make that for instance China needs. And if they don't play ball, we won't play ball and their economy halts to a stop as well. But that list of things on both sides is dwindling. And what you're left with are things that we need to invest in and we need to create US capacity in order to be independent or create allied capacity. The deputy Secretary Fineberg has started the Edu and Bond initiatives, you know, Deal Team 6 to actually create those contracts that allow us to get access to these parts of the industrial base that we need. But what the report that we did with Senator McCormack shows is it's not actually just the raw materials and the primes that play a part in this. It's that really thick critical middle of machining shops and forging shops and local manufacturers in the defense industrial base here in Pennsylvania that actually play a critical role in sustaining our weapon systems. And that's where significant investment needs to come in in order for us to reduce the fragility and vulnerabilities that we have on our supply chain because there are a lot of them.
Right? So Pennsylvania, the whole centerpiece of the conference is fundamental to our national defense. You've done some reporting on this through your company. Describe how essential Pennsylvania is and what's the path forward to more business coming here to develop here.
Yeah, so Pennsylvania is an interesting corridor for many reasons. First of all, we've got one of the largest electronics depots, Tobyhanna, right here in Pennsylvania. And that's producing what we call the organic industrial base capabilities. So that's the Army making stuff for the Army. We also have one of the largest steel manufacturing powdered metals capability in the country. In fact, 52% of US powdered metals capabilities emanates right here in Pennsylvania. Also the unlock for some of the things that China has been doing. So China in August 2024 actually put export controls on antimony, gallium, and germanium. You know where we can get gallium, antimony, and germanium?
I would have looked it up before.
