Active Control Technology Inc. (ACT.v)

Profile/Technology sector
From 'fixer-upper' to rising star of mining industry


Active Control Technology aims to revolutionize safety with wireless system that works deep under ground




MATT HARTLEY

From Thursday's Globe and Mail

June 18, 2008 at 3:26 PM EDT


Believe it or not, the next evolution in mine safety technology has a lot to do with remote-control garage door openers.

Steve Barrett is president and chief executive officer of Active Control Technology Inc. (ACT), a company that until recently specialized in high-tech remote control garage door openers, but is now on the verge of rewriting the rulebook on mining safety.

If Mr. Barrett has his way, ACT's ActiveMine systems will help mining companies prevent tragedies such as the Sago Mine disaster that killed 12 miners in West Virginia in January, 2006.

Today the Burlington, Ont., company — which took the lead spot in the technology sector of the 2008 TSX Venture 50 ranking — is on its way to becoming one of Canada's rising technology stars by specializing in wireless mesh communications networks that work in the deep, dark recesses of coal mines.
Enlarge Image

Steve Barrett, president of Active Control Technology, which will open its first international office in Beijing later this year. (ASHLEY HUTCHESON FOR THE GLOBE AND MAIL)



Think of it as creating a WiFi cloud that stretches many kilometres underground.

"Building a network underground is really something we've been able to master," says Mr. Barrett, 53.

"We build a WiFi cloud that becomes a wireless backbone and network for many types of WiFi appliances."

It was January 2006, and he and his partner, ACT chairman Richard Hazell, were investigating a new business opportunity for their company, which they had bought a few years earlier as a "fixer-upper." The market for garage door openers had become overly commoditized and the pair were considering expanding their footprint in the burgeoning market for networks that ran on WiFi technology.

A few days after the Sago Mine incident, one of Mr. Barrett's financial advisers called to ask if his company was capable of building a technology that could track miners underground. Mr. Barrett had never been to a coal mine and knew almost nothing about the mining business. "But sometimes that can be a good thing."

After the Sago Mine disaster, the U.S. government passed the Mine Improvement and New Emergency Response (MINER) Act, which called for major safety changes within the mining industry.

Two important communication upgrades mandated by the act called for all coal and non-coal mines to be outfitted with both a wireless two-way communication for miners as well as a tracking system to help locate trapped workers in the event of a collapse.

"When the MINER act was promulgated in June 2006, it was written in such a way that a 100 per cent wireless system is required," Mr. Barrett says. "But the legislators at the time thought that technology was very far off in the future and didn't think anyone would come up with this invention."

Six weeks later, ACT held its first demonstration of ActiveMine, a wireless communication network that allows miners to use phones, laptop computers and other devices underground while tracking their every move through RFID (radio-frequency identification) tags on their belts.

"We just didn't know any better — we didn't know we weren't supposed to do this so quickly," he laughingly recalls.

ACT's technology is in use by four U.S. mining firms in a total of eight coal mines and Mr. Barrett is currently in negotiations to bring the technology to Canadian mining companies. Later this year, ACT expects to open its first international office in Beijing.

Depending on the mine, ActiveMine installations cost anywhere from $200,000 to more than $1,000,000.

Although ACT still makes garage door openers as well as wireless access networks for buildings and parking lots, it is the ActiveMine technology that is creating all the company buzz, helping to push its stock on the Venture Exchange from 12 cents in December 2006 to 57 cents a year later.

Last quarter, ACT generated revenue of almost $300,000, and that is expected to grow as more U.S. mining companies change their communication systems. Although ACT is still operating at a loss, Mr. Barrett says it is virtually debt free.

The technology that helps miners communicate with workers on the surface miles above their heads is similar in principle to conventional WiFi hot spots. ActiveMine operates on public band wireless spectrum to create a mesh-style WiFi network. This involves placing a series of nodes, or routers — which are encased in 18-inch square boxes about the size of a computer printer — at regular intervals throughout the tunnels.

Each node can both send and receive radio signals, and in the event that one node stops working, the system simply finds an alternate path in the mesh by rerouting to the next available access point.

Coal mines are often built using a "room and pillar" structure, where seven to 11 tunnel entries are carved into the side of the mountain, and every 15-to-30 metres cross tunnels are carved between the pillars, creating a street-grid layout underground.

Before ACT developed its technology, the only way to get phones and other communication tools into a mine was to run a hard line along the wall, which could be easily damaged or severed in the event of an accident. Now, ACT can hang nodes at tunnel cross cuts to easily transmit signals and maintain a link to the outside world without the need for wires.

ACT's networks are built to be spark free (an essential feature when working around explosive methane gas and ignitable coal dust) and also feature what is known as a "starfish" system. In the event of a collapse, if a series of nodes become isolated from the larger network, that small cluster will continue to function independently with one of the access points taking over as a hub; this allows trapped miners to communicate and regroup, similar to the way the severed limb of a starfish can regenerate into a full organism.

"One of the key self-rescue responses is to muster all the workers in one spot," Mr. Barrett says. "If they are working across a pretty big section of the mine, you want to collect them and create a plan."

Active Control Technology Inc. SPECULATIVE BUY

(ACT-TSX.V, $0.39) 12-Month Target Price: $1.10


Please refer to the final page(s) of this report for required disclosures.

June 5, 2008 Steven Gold CFA (416) 343-2782

Aman Atwal MBA, Associate (416) 343-4207

Mine Communication Growth at an Inflection Point

Highlights

• High-profile mine disasters in the United

States and China have led to the creation of

legislation (MINER Act in the U.S. - 2006) as

well as new funding that will force miners to

implement new safety precautions in

underground mines.


• Rapid industry adoption of new

communication systems is imminent so as to

meet legislated deadlines in the United

States (safety plan must be in place by June,

2009) and to address public perception and

safety in China.


• Regulation combined with high commodity

prices and cash-rich operators have created

a massive revenue opportunity of at least

$8.5 billion for Active Control’s ActiveMine

communications solution.


• Upon granting of Mine Safety & Health

Administration (MSHA) certification (by

CYQ3/0, the Company should initially see

increased order flow from the U.S. coal

market, contributing to revenue growth

from $764k in FY08e (ends July 31) to

almost $60 million in FY10e. EPS should

breakeven in mid-FY09e and grow to $0.10

in FY10e.


• Longer-term revenue potential of $200

million and EPS of ~$0.30 is achievable at a

total U.S./Chinese coal market penetration

rate of just 5%.


Conclusion and Recommendation

We are initiating coverage with a SPECULATIVE BUY recommendation and a 12-

month target price of $1.10 per share using a DCF valuation and effective P/E of 10.5x our

Active Control announces second commercial installation of ActiveMine at a Magnum coal mine

TORONTO, May 22, 2008 (Canada NewsWire via COMTEX News Network) --
Installation at West Virginia underground coal mine marks first
deployment of ActiveMine's full wireless communications and tracking
capabilities
TSX-V: ACT
TORONTO, May 22 /CNW/ - Active Control Technology Inc. (TSX-V:ACT) announced today the second commercial installation of ActiveMine(TM), the premier wireless communications and locating system for mines, at an underground coal mine in West Virginia.
The installation, at Magnum Coal Company's IO Coal Mine, began earlier this month. The deployment is part of a five-mine purchase order by Magnum announced last November.
"This is another major milestone for Active Control and for mining companies seeking a better communications and tracking solution," said Steve Barrett, President and CEO, Active Control.
ActiveMine provides excellent flexibility and value over the life of any mine. The system can be expanded and enhanced with additional features to meet changing demands as mine operations grow, while providing a profitable ongoing revenue stream for Active Control.
The IO Coal Mine installation follows an earlier ActiveMine deployment at Magnum's Winchester mine in West Virginia, under a separate purchase order.
"We are delivering on our promise to customers to install ActiveMine successfully and on-time," Barrett said. "At the same time, we are advancing discussions with many operators to secure additional purchase orders."
The IO and Winchester installations both include ActiveMine's new "Starfish(TM)" feature, which for the first time makes it possible for miners who become isolated due to an accident, explosion or other event to stay linked, even when they are distant from one another and cut off from the outside world.
About Starfish
Starfish operates on top of ActiveMine's 100 percent wireless Wi-Fi MESH network. The strategic placement of nodes creates multiple wireless paths, making it possible to maintain communication links in the event any node fails or is damaged.
With Starfish, even if a node or series of nodes becomes isolated from the main network, voice communications will automatically be re-established within an isolated area. The analogy in nature is that of a starfish: If a starfish's arm is severed, a complete new starfish is naturally regenerated by the severed section.
This capability is currently not possible with analog walkie-talkie radios used in leaky feeder systems.
About ActiveMine
ActiveMine's communications, data and tracking system enables monitoring of production, personnel and equipment in all types of surface and underground mining environments, including coal and base metal mines. The system is designed to:
<<
- Operate on a 100 percent wireless Wi-Fi network backbone.
- Be less susceptible to water and mechanical damage of all sorts,
including rock fall.
- Use open-standards technology.
- Meet federal MINER Act requirements for wireless systems as
established in MSHA policies.
- Provide four-day intrinsically safe battery back-up and power supply.
- Provide a wireless communications and data network above-ground,
linked seamlessly to underground networks.
>>


About Active Control Technology
ACT designs and markets wireless network control and communication systems for buildings and extreme environments. Located in Burlington, Ontario, Canada, the company trades publicly on the TSX Venture Exchange under the symbol ACT. For more information, visit the company's website at www.activecontrol.com.
About Magnum Coal
Magnum Coal Company, based in Charleston, West Virginia, is one of the largest producers of coal in the U.S. Central Appalachian coal mining region. The company controls over 629 million tons of high Btu, low sulfur coal and operates 17 mines and seven preparation plants, all located in West Virginia. The company's strategy is focused on maintaining its leading cost position in the region and exploiting internal and external growth opportunities afforded by its considerable reserve base and market position.
<< We make wireless work.(TM) >>
The TSX Venture Exchange has not reviewed and does not accept
responsibility for the adequacy or accuracy of this release.
Cautionary Note Regarding Forward-Looking Statements: This press release contains forward-looking statements that involve risks and uncertainties, which may cause actual results to differ materially from the statements made. When used in this document, the words "may", "would", "could", "will", "intend", "plan", "anticipate", "believe", "estimate", "expect" and similar expressions are intended to identify forward-looking statements. Such statements reflect our current views with respect to future events and are subject to such risks and uncertainties. Many factors could cause our actual results to differ materially from the statements made, including those factors discussed in filings made by us with the Canadian securities regulatory authorities. Should one or more of these risks and uncertainties, such as changes in demand for and prices for the products of the Company or the materials required to produce those products, labour relations problems, currency and interest rate fluctuations, increased competition and general economic and market factors, occur or should assumptions underlying the forward looking statements prove incorrect, actual results may vary materially from those described herein as intended, planned, anticipated, or expected. We do not intend and do not assume any obligation to update these forward-looking statements. The reader is cautioned not to put undue reliance on such forward-looking statements.
%SEDAR: 00007946E
SOURCE: Active Control Technology Inc.
Steve Barrett, President & C.E.O., Active Control Technology Inc., Tel.: (905) 670-5500 ext. 202, Fax: (905) 592-9691, Email: sbarrett@activecontrol.com, Website: www.activecontrol.com; Don Hogarth, Hogarth Communications Inc., Tel.: (416) 565-8920, Email: don@hogarthpr.com Copyright (C) 2008 CNW Group. All rights reserved.

Hi Butterfly,

Thanks for brining this one to the board. I have been doing some DD on it when I can and I came across a rumour of a China deal in the works which does not abide by MSHA. Something could be up as half a million shares traded in the first 30 minutes, which is about the daily avg.

This one could be very good

cheers,

cvac01

We are currently waiting for MSHA APPROVALS

ACTIVE CONTROL

To improve mine safety, compliance, and productivityActiveMine™ is a two-way wireless voice communications, tracking and data system for mines. The system is designed to improve mine safety, comply with new regulations, and through high-speed data communications, to enhance productivity.
ActiveMine is the only mine communications and tracking system that operates on a Third Generation 100% wireless Wi-Fi network backbone – the most advanced technology of its kind available today. The system’s unique “mesh” architecture enables wireless, real-time electronic tracking of personnel, production and equipment and clear, digital two-way voice communications with each miner. The Third Generation wireless Wi-Fi network backbone gives ActiveMine the unique ability to transport streaming data such as voice and video over multiple wireless hops. This enables efficiency gains provided by data and mine production applications, and live video.

Tuesday, March 18, 2008
Active Control Signs $1.6 Million Exclusive Supply Agreement With MeshDynamics Inc.
Proprietary Rights of ActiveMine™ Technology Are Secured
As Intrinsically Safe Certification Anticipated

Toronto,

TORONTO, March 18, 2008 - Active Control Technology Inc. (TSX-V:ACT) today announced that it has entered into a reseller agreement with MeshDynamics Inc., the developers and suppliers of ActiveMine's third generation mesh network nodes. The agreement includes a prepayment of USD $1.6 million in exchange for certain exclusive rights to mesh network nodes that incorporate MeshDynamics' proprietary patented and patent-pending Wi-Fi technology. The rights include the right to exclusively sell the nodes to certain specified companies, including coal mines, non-coal mines and coal suppliers that are potential customers for the ActiveMine system and further guarantee ACT a supply of a minimum of 1,000 nodes. ACT has the option to acquire up to 2,000 additional nodes upon further payments. ACT will outsource the manufacturing of the nodes directly using the MeshDynamics technology. The agreement with MeshDynamics will result in a savings to ACT on a per node basis and will secure ACT’s access to MeshDynamics' proprietary Wi-Fi technology during the two year term of the reseller agreement.
Management estimates that 40 nodes are required on average per underground coal mine in the U.S. The outsourced California-based contract manufacturer of the mesh nodes has the capacity to produce up to 3,000 nodes per month.
“We are very pleased with our partnership with MeshDynamics and we are grateful for all of their support,” said Steve Barrett, President and CEO, Active Control. “We also anticipate that ActiveMine’s superior tracking, voice, video and data transmission capabilities will continue to garner sales in the USA and internationally. Solidifying our relationship with MeshDynamics will ensure continuity of supply for this key component of the ActiveMine system.”
Concurrently, ACT is moving to convert its international patent application covering aspects of the ActiveMine system into national patent applications in Australia, China, Canada and South Africa. ACT already has such a patent application before the US patent office and ACT may elect to pursue other national patent applications at a later date. The national patent applications will make reference to certain preliminary findings in a written opinion by the international patent office that were favorable towards ACT’s prospects of securing a patent over various aspects of the ActiveMine system.
ActiveMine’s communications, data and tracking system enables monitoring of production, personnel and equipment in all types of surface and underground mining environments, including coal and base metal mines. The system is designed to:

• Operate on a 100 percent wireless Wi-Fi network backbone.
  
• Be less susceptible to water and mechanical damage of all sorts, including rock fall.
  
• Use open-standards technology.
  
• Comply with relevant U.S. state and federal regulations, including MINER Act requirements for wireless systems as established in MSHA policies.
  
• Provide four-day intrinsically safe battery back-up and power supply.
  
• Provide a wireless communications and data network above-ground to extend underground networks.
  

Thursday, March 6, 2008
Active Control Establishes Beach-Head In China
MOU with leading Chinese coal group provides entry to China’s coal mine communications and tracking equipment market
Toronto,