It is common knowledge that COVID-19 cases are soaring in both Canada and the U.S. It comes as little surprise, as I have been commenting numerous times that we would see a dramatic increase when flu season arrives. Why is this so? COVID-19, like influenza, is transmitted through the air, but it seems to be even more contagious than influenza. It is called flu season because these types of viruses can live longer on colder surfaces (probably why the outbreaks in meat processing plants in the spring). People are indoors much more in the fall and winter seasons, in smaller, confined spaces where the virus will more easily be transmitted through the air one breathes.
"Evidence now confirms that this virus can remain airborne for longer times and further distances than originally thought. In addition to close contact with infected people and contaminated surfaces, spread of COVID-19 may also occur via airborne particles in indoor environments, in some circumstances beyond the 2 m (about 6 ft) range encouraged by some social distancing recommendations." U.S. Environmental Protection Agency
We can't stop breathing, so the best solution is better air circulation and that is where this little and unknown technology company can make a big difference and get a lot of traction in this environment.
The most effective way to measure indoor air quality and circulation is with CO2 sensors, as people exhale CO2. Most modern buildings have these measurement and control systems wired in, but older buildings, comprising 90% or more, do not. It is quite expensive to wire old buildings with CO2 sensors. ATI AirTest Technologies Inc. (AAT:TSX.V; AATGF:OTC) has solved this with their new wireless solution.
ATI AirTest Technologies
Recent price: $0.07 per share
Shares outstanding: 75 million approx.
From the company: "AirTest's leading edge, proprietary sensor technologies improve the energy performance, environmental impact and return on investment for the millions of buildings we all work, shop and play in. AirTest works with existing building contractors, building owners, property management companies, energy management companies and large equipment and controls manufacturers.
"Drawing on innovations originating from the medical, electronics, telecommunications and automotive field, AirTest offers a growing portfolio of sensor products that meet the unique needs of the buildings industry, along with application tools and cutting-edge communication technologies that will ensure the easy and cost-effective migration of these technologies to all buildings."
Iota are experts in providing businesses with new technologies to improve efficiency and their description and chart is very good:
"Building ventilation regulations exist to ensure adequate air quality for occupants. Carbon dioxide (CO2) may not be the most pernicious factor impacting indoor air quality, but it is often used as a surrogate for air quality and building occupancy level. The more occupants there are in a room or building, the more CO2 is released into the air. To prevent CO2 levels from rising too high—which can have a negative impact on occupants—outside air must be deliberately brought into the building through a ventilation system.
"How much outside air does a building need? The American Society of Heating, Refrigerating, and Air-Conditioning Engineers (ASHRAE) recommends 15 to 20 cubic feet per minute (CFM) of outdoor air per person. To adhere to this standard, most buildings are designed to ventilate at a fixed minimum rate per person based on the building's occupancy rate.
"The problem with this approach is that buildings aren't usually fully occupied. And some spaces are vacant while others are not. As a result, the ventilation systems often bring in more outside air than necessary, which then has to be conditioned (heated or cooled) before being introduced into the environment. That means your air handling units—the motors and fans—are working harder than they need to in an effort to bring the outside air temperature down (especially if it's warm and humid) or up."
"In the above chart, ASHRAE calculates that 20 CFM of outdoor air per person corresponds to CO2 levels of over 900 parts per million (PPM). The outside air being brought into Room B keeps CO2 levels in the 400 range, which means the ventilation system is being overworked all day long. Room A's ventilation system keeps CO2 levels well under 900 PPM without overworking the system."
It is important to realize that AirTest provides two big solutions, like a double-edged sword: air quality control to help reduce COVID-19 spread and cost reductions by avoiding unnecessary ventilation. With COVID-19 and work-at-home solutions, many office buildings are near empty and ventilating air when not needed. There are also reduced hours at many businesses, and fewer people with either social distancing measures or reluctance to go to busy indoor locations.
This next chart is from an article at Facilityexecutive and is very important.
In the above table, the DCV option (#11) has the best savings-to-investment ratio of 5.22 and yields more than $31 million ($31M) in net present value (NPV) over a 10-year term. Also note that other than interior lighting upgrades, DCV is most expensive. This article is from 2017 and with AirTest wireless CO2 sensors, this cost can be significantly reduced.
AirTest's wireless CO2 sensor has been getting a lot of interest lately. This news release from Sept. 29 highlights the growing interest:
"ATI AirTest Technologies Inc. has received new orders from existing original equipment manufacturers (OEM). The company has also had requests for proposals (RFP) from a number of OEM customers for carbon dioxide (CO2) sensors in school classrooms to verify ventilation requirements of COVID-19 protocols.
George Graham, president of the company, commented: "We have had RFPs for a large number of CO2 sensors to provide measurement in school classrooms. AirTest has successfully installed CO2 sensors over the last number of years in hundreds of school systems in North America, including Belleview and Seattle, Wash., Coquitlam and Burnaby, B.C., as well as Garland and Dallas, Texas. The application of CO2 sensors in classrooms allows the facilities managers in school systems to monitor CO2 levels in real time and the system provides the tools to properly monitor and manage the ventilation systems, ensuring adequate ventilation at all times. When COVID-19 concerns have passed, the CO2 sensors can be used to save energy by modulating outside air ventilation based on actual occupancy in the space. This will ensure that target code required ventilation rates for good air quality are maintained.' Mr. Graham added: 'The company has also seen new orders come from other OEM customers as businesses start to reopen. After the anticipated lull in sales activity during the second quarter, sales have picked up briskly in the third quarter."
On November 17, Airtest announced the first 18 installations by a $3 billion annual revenue REIT company that has over 270 locations.
AirTest makes wireless, battery-powered and ambient light-powered CO2 sensors that can quickly and easily be retrofitted into buildings and be immediately integrated into existing control systems. The system can also provide cloud-based monitoring interfaces reporting on a number of indoor air parameters with e-mail and text alerts available.
This is a sample of one product from their website:
Amazon could not be mentioned in the Oct. 19 press release, but some digging beneath the surface, that is who AirTest is talking about:
"AirTest announced that their energy-saving parking garage control systems has been specified to be installed in seven large garage projects across America for a major Internet retailer. These systems are being installed in distribution centres and the garages used for delivery vehicles. The retailer has now standardized on ATI AirTest for all future projects.
"ATI AirTest's garage ventilation control system includes a carbon monoxide and nitrogen dioxide sensor placed every 5,000 square feet in enclosed spaces where vehicles are operated. These sensors detect the vehicle activity while an ATI AirTest control system modulates ventilation fans based on a proprietary control strategy. President George Graham said: 'AirTest has installed thousands of these systems throughout North America. In a number of installations, utilities offering energy-saving rebates have done pre- and post-energy analysis of our systems and have found we can achieve as much as a 95% reduction in energy use and a 95% reduction in peak demand compared to running fans continuously. Our control system is designed to maintaining excellent indoor air quality while minimizing fan energy costs.'"
AirTest has what they call the PM2200, a personal CO2 (carbon dioxide) monitor "that can easily be used to monitor CO2 levels in indoor spaces," according to a company press release.
"This product has been introduced due to the recent increased interest in identifying indoor air quality conditions and, specifically, CO2 levels. The PPM2200 is powered from a wall socket and can be placed on any level surface like a desktop or counter top. The device provides a large display to show CO2 (parts per million), temperature and humidity. Designed for everyday use in homes, offices, schools and other indoor spaces, the device is available from ATI AirTest for $99 (U.S.) or $130, providing a cost-effective way for anybody to monitor fresh air ventilation in any space."
This could be an ideal purchase, especially if you live in an apartment or condo and do not readily control ventilation.It might also make an ideal Christmas gift this year.
I have only touched on some of AirTest's products, more can be found on their website.
Revenues for 2019 were CA$3.48 million. At first glance, the level of debt, about $5.6 million looks high, but less than $1 million of this is current payables, etc. The two significant amounts of debts are to management/insiders, which is being managed, and a $2 million-plus debt listed to Omni Marketing Group, but it has been replaced by a royalty arrangement. AirTest's auditors have kept it on the books as a liability until recent arrears have been paid. I am told there is little left and it will come off with the current equity raise. This royalty agreement is capped at no more than $30,000/month of the company's revenue.
The other loans have been rescheduled, with a standstill agreement at 0% interest and only payable after the company demonstrates a $500,000 net profit in three consecutive quarters. The outstanding payables in past wages to George Graham (CEO) and Mike Schell (CTO) are about $700,000. These can ultimately be converted to shares at a time that makes sense to the shareholders.
AirTest has announced closing of a CA$500,000 private placement for Dec. 10. The units are priced at $0.05 and each unit also includes one non-transferable purchase warrant. Each warrant will entitle the holder to purchase one additional share in the capital of the company for a period of two years from the closing date at an exercise price of $0.08. The warrants are subject to an acceleration provision, such that in the event that the shares have a closing price on the TSX Venture Exchange of greater than $0.12 per share for a period of 10 non-consecutive trading days.
AirTest has specialized expertise and many years of experience with building temperature, air control, energy usage and building operating efficiency. Their product portfolio includes over 300 sensor products that can be configured to work with any building control system. These include humidity and moisture control, parking ventilation and gas leak detection, as well air ventilation.
AirTest got a huge shot in the arm with COVID-19. The awareness on air quality control has come to the forefront, and [there is] the need for cost savings as many building managers struggle to operate on reduced traffic in their places of business.
There is a big focus on schools, among other places, and AirTest already has strong inroads there. The installation in Amazon distribution centers is a big vote of confidence. Although AirTest may not be able to mention the name publicly I am sure potential customers will know about it.
The new wireless version of their CO2 measurement and ventilation monitoring system looks to be the best in its industry. AirTest is strongest regionally in the northwest U.S. The company claims to win about 85% of new contracts for its DCV systems there. The plan is to expand in other regions and repeat this success.
The company revenues did slow in Q2 of this year as everything kind of came to a standstill for several months. However, the focus has now shifted from lockdowns to learning how to cope and operate under COVID-19 protocols. I believe AirTest can really shine under these conditions and I expect a big uptick in revenues in the coming 12 months.
This is a low-priced penny stock and has higher risk as such, but one way to mitigate that risk is to buy early, before the story is well known and the valuation is still low. Considering 10 million shares in the current financing, for a total of 85 million at $0.07, the market cap is just under $6 million, which is far less than two times 2019 revenues. There is lots of room for appreciation as the company and its products become better known.
The stock chart reveals two important aspects. The 200-day moving average has turned up, often a sign of a new uptrend. The stock recently pulled back from the 7.5 cent area for the third time in three years. A close above 8 cents would be a clear signal of a technical break out. We just got that break out on the chart last week.
You can follow and keep up with new developments for AirTest at the Playstocks forum on the company.
Ron Struthers founded Struthers' Resource Stock Report 23 years ago. The report covers senior and junior companies with ample trading liquidity. He started his Millennium Index of dividend stocks in 2003 - $1,000 invested then was worth over $4,000 end of 2014 and the index returned 26.8% in 2016. He retired from IBM after 30 years in customer service, systems and business analyst, also developing his own charting software. He has expertise in junior start-ups and was a co-founder of Paramount Gold and Silver.[NLINSERT]
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