The United States is facing its biggest showdown yet between coal advocates and environmentalists against the backdrop of a plan by the Environmental Protection Agency and Obama administration to slash standards for emission levels for coal-fired power plants across
the next 15 years. Many advocates of the cheap, yet dirty, fuel source call it a "war on coal" by the government that will destroy the industry, while supporters of the modifications contest the changes are necessary for the health of people and Mother Earth.
It’s easy to understand why coal producers and coal-fired power plant operators could take a hit by the new EPA standards, but the ripple effects touch ancillary companies as well. Companies like Active Control Technology Inc. (TSX-Venture:ACT), a developer, manufacturer and marketer of network and wireless solutions for demanding environments, such as coal mines.
Amongst its portfolio, the Mississauga, Ontario, Canada-based company makes and sells ActiveSecure, a group of products for extending networks for security and monitoring system applications; PowerCart, a series of roll-around carts with onboard battery power and wireless capabilities used in the retail, warehousing, courier and mining industries; ActiveMesh, a wireless mesh network; and ActiveMine, a solution serving as the cornerstone for implementation of a wired or wireless data network in a mine.
Sales were on the upswing, according to the latest report file with Sedar, for the three and nine months ended April 23. During the last quarter, sales increased to $1.24 million from $1.12 million in the year prior quarter. Operating expenses also increased, though, sending Active Control to a net loss of $19,830 during the quarter, versus a mild profit of $9,559 in the year earlier period.
For the nine months to April 23, sales increased to $3.58 million from $2.93 million. For this time frame, net loss was trimmed from $311,457 a year earlier to $278,047.
As the current quarter winds to a close, Active Controls issued a bit of a warning on Wednesday, saying that several clients - those that produce coal for internal power generation operations – have divested those mining operations in the past week. According to Active Controls, these "several clients”"represent the bulk of their sales of their ActiveMine product.
"The impact of the United States of America's legislative transition away from coal in American power plants is having an immediate negative impact on coal mining operations and coal prices and is expected to have a negative impact on the business of the Company," Active Control said in a brief statement today.
The financial impact of these transactions will be determined over the next three to six months, according to the release.
Shareholders of the public entity may not see impact as they typically would. Late in May, a management group comprised of Jonathan Emanuel, Graham Warren and Esther Schwartz, all c-level executives of Active Controls and holders of about 24% of 17.5 million ACT shares outstanding, made an offer to buy the remainder of the company for three cents per share. A special meeting of shareholders is scheduled for this coming Monday, July 21, where stakeholders will vote on the proposal.
Wonder if the warning of clients’ divestitures is conveniently timed just ahead of the meeting?
Shares, which held at 5.5 cents on low or no volume through May and June, are flat at three cents in Wednesday trading.
