It’s probably not a surprise to hear that stovetop cooking is the #1 cause of household fires in the world, and so these numbers probably wouldn’t surprise you either. In the US, there are 172,000 cooking fires reported to the fire departments every year, over $1.1 billion in direct costs and over $7 billion in indirect costs due to these types of common fires. An additional 4.7 million fires go unreported every year and the worst part is an average of 7 people die every day from home fires. A fire in the home is the second leading reason why seniors are transitioned off to institutions. 48% of fires are from cooking.
What is surprising is that even though there are many groups out there banging the drum about ways to reduce these fires, legislation to incorporate improved technology in the kitchen is not set in place yet. But it’s coming. Pioneering, as its name suggests, was just that – a pioneer proving that a solution to this major problem exists. They created an entirely new category in cooking fire prevention technology with their innovative products. Pioneering’s technology has 100% efficacy; they have never had a cooking fire where their products were installed. It can no longer be said that a solution is not available to lower the chances of a home cooking fire and, as such, in the next couple of years, there will be a change to the safety standards for appliances, making it a mandatory requirement for fire prevention technology in coil stoves.
Enter Pioneering Technology Corporation (TSXV: PTE) (OTC: PTEFF). They just announced on July 6, 2016 that $630,000 worth of product just flew out the door and into 8 distribution centres. The deal was etched with an unnamed Market Leader in Multi-Residential and Institutional supply in North America. This org has over $2 billion in sales, and is owned by one of the “world’s largest retailers”. It serves 175,000 customer locations. When the names are left off releases like this, you know it’s a goodie.
Let’s go back some to the origin of the story. Where did Pioneering come from? Over a decade ago, a man by the name of Dr. Reza Shah, former NASA engineer, teamed up with market savvy, commercialization expert Mr. Kevin Callahan. Dr. Shah was known to be a genius inventor. He was involved in very high profile tech projects like the first digital multi-meter produced in Canada, the guidance system of Apollo 11, nautical communication systems, direct current motor control, robotics, night vision systems and high voltage systems. He worked for various tech companies throughout a 20 year span and generously put 7 kids (not his own) through university. He came in to solve a problem, he would solve it, get bored and move onto the next company. One thing is often missing from the Creative side, and that’s the ability to keep a business focused, capitalized and marketing/sales optimized. Thankfully, CEO Kevin and his team complement the product development that Dr. Shah started before passing away a few years back.
Here are some of Pioneering’s partners:
The Safe T Element, SmartBurner, Safe-T Sensor, & RangeMinder are a suite of products that are energy-smart, cooking fire prevention technologies. Put more simply, plugs, sensors, elements, dials. The simplicity of the products, the safety track record, plus the ongoing support from major organizations in the field of fire fighting, kinda make you burn at the thought of it taking so long for manufacturers to adopt these innovative measures that have been around a while. The International Association of Fire Chiefs, the Canadian Association of Fire Chiefs, and a host of others have all tipped their hat to what PTE is doing.
“Pioneering’s temperature limiting control (TLC) technology is now installed in well over 140,000 multi-residential housing units across North America without a single cooking fire being reported and delivering a return on investment for its customers. Pioneering has proprietary cooking fire prevention solutions, including its trademarked Safe-T-element, SmartBurner, RangeMinder & Safe-T-sensor, for the majority of the more than 140 million stoves/ranges and over 140 million microwave ovens throughout North America.”
For one of the products, we are talking about a simple plug and cook option that does not require an electrician to hard wire it in. Or, for the micro, a plug that has a smoke detector attached to sit above the exhaust of your microwave that trips the current at the first sign of smoke. These are logical, disruptive solutions to a real problem that everyone understands.
Electric coil stoves have not really evolved over the years. They heat up to 900℃, even though water boils at 100℃. PTE’s Smart Burner is a state‐of‐the art consumer version of the highly praised, commercial product Safe-T-element, and retails at $199. The element cycles up to 350℃, cools to 320℃ and then back up again. This threshold of heat is not high enough to light a newspaper on fire. The RangeMinder product retails at $149, installs quickly, and solves the problem of people forgetting their stoves are on.
Builders get tax incentives, insurance companies promote PTE’s products, and let’s get into cost savings. Out of Ohio, there were 400 false alarms one year, 70% were from microwaves- it costs the fire department $2000 to send a crew out. In a study of 5000, the Safe T Sensor reduced false alarms by 92%. The support is there, so for a topic on nearly every household’s mind, this should read like clear blue sky to microcap investors.
This company with only 40 million shares out (52 fully diluted), has for the most part self funded over the last decade. To note, there is an opportunity and this is one of the reasons we are covering this stock today. July 15 there are 6.7 million $0.125 shares free trading and following this July 22, 5.32 million $0.125 shares free trading. Hmmmm, will we see profit taking at the upper $0.20? We hear from the grapevine there is a hunger from about 90% of the current shareholders for more PTE. We are watching this closely.
There is a huge market opportunity here that will open up from:
- Legislation mandating fire prevention technology – we are certain OEM’s are scrambling now, today, to settle into reliable, tested solutions for what we predict are forthcoming regulation changes.
- Quarterly orders pouring in as B2B continues to kill it- with the new distribution deal, their sales force went from 4 sales people working internally, to the equivalent of 400 sales people selling their products.
- Their financials are glowing pretty hot and heavy right now- market cap of $11 million, and they are boasting their 4th consecutive quarter of profitability and their 6th positive quarter for positive adjusted EBITDA.
Pioneering is forecasting a 50% growth yoy for 2016/2017, and this does not take into account any change in legislation. That’s the type of growth they will confidently forecast as expected on the books, unless the world falls apart. Take a moment on these financial highlights taken from their quarter ended May 31, 2016:
- Revenues of $1,256,656 for the 2nd quarter (up 55% versus Q2 2015).
- Gross margin of $822,896 (65%).
- Net income of $85,061 (up 254% versus Q2 2015).
- Completed private placement of $1.5 million in capital to repay indebtedness (eliminating existing high interest financing) and to help fund inventory and growth.
They have to continue to deliver, and if they are right, that they are the only public company in this space, then we sense forces colliding for the benefit of investors. Potential licensing deals, distribution expansion, rapid consumer adoption, and possible exit through takeover. We love it when a plan comes together.
Check out their website and make sure to do your own due diligence!