Airtrax Inc. (fka AITX)

[levelnever]

DD on AITX:

**I am writing this post to help serve as a centralized hub for all things AITX, to collect all the DD people have done and hopefully serve as a launching board for investors to start their own DD. I will do my best to provide links so you can follow where the research is coming from and I have also tried to provide some screenshots for additional information as well. As the AITX story unfolds I will continue to update this post. Please let me know either if you see any mistakes or you believe I've left anything important off. As always this is not meant to supplant your own DD, only complement it. Be aware that mixed in with facts here there is speculation. And I do keep a long position in all the stocks I DD. Do your own research to either back up or refute mine, the more we know the better. Below, I do my best to spell out the AITX story as I currently understand it.




IS AIRTRAX ALIVE OR FULL OF HOT AIR?

Perhaps you caught glimpses of it last summer while watching Star Trek or when watching the tech-sleuths on Mythbusters. A vehicle that can move in any direction and a technology that redefines the wheel? When you look at Airtrax products you truly can see the future or at least the future portrayed in movies like I, Robot and Minority Report. At first glance, it all seems too ambitious. And in fact, for Airtrax it was. At last report this company announced that it was shutting down its operations and laying off its employees. It burned too much cash in the race to bring its patented technology to market. With that, one would assume case closed. Rather than producing great products of the future, Airtrax would simply fall into the trash bin of great ideas. But recent activity and events tell me something different. That the company is indeed alive despite being priced as if it's dead. With a last reported O/S ~58 million and a pps at .0049 the market cap is only being priced at $282,179.

What first made me take notice and do some DD was the largest volume spike in over a year and a half here:





SO WHAT MADE INVESTORS INITIALLY FLOCK TO THIS STOCK?

Simply put, watch this video from Discovery Channel's Prototype This. Trust me, if you haven't seen it, you'll like it. It helps explain why investors initially came to the stock a few years back. Rarely one to be short on words, this video speaks volumes more than I ever could. If this technology got it's act together I'm sure you could only imagine the potential.

http://dsc.discovery.com/videos/prototype-this-forklift-ballet.html





ABOUT THE TECHNOLOGY:

While the technology Airtrax is utilizing has been around for quite a while and first utilitized by the US military, Airtrax was the first to commercialize it.

From wikipedia on mecanum wheel technology:

http://en.wikipedia.org/wiki/Mecanum_wheel

The US Navy bought the patent from Ilon and put researchers to work on it in the 1980s in Panama City. The Navy has used it for transporting items around ships. In 1997 Airtrax Inc. and several other companies each paid the Navy $2,500 for rights to the technology, including old drawings of how the motors and controllers worked, to build an omni-directional forklift truck that could maneuver in tight spaces such as the deck of an aircraft carrier. These vehicles are now in production.

And this article from forbes.com helps spell out the buzz around the product:

http://www.forbes.com/forbes/2006/0605/060.html



A BRIEF HISTORY OF AIRTRAX:

Perhaps the best overview of Airtrax can be found in the following book excerpts taken from conversations with Frank Amico, the founder of Airtrax.





Unfortunately, Frank Amico never got to realize that dream as he passed away rather suddenly. But the products he worked on have lived on. The question is will the company he started, Airtrax, survive.

http://philadelphia.bizjournals.com/philadelphia/stories/2006/08/28/daily10.html


WHY THE SUDDEN INVESTOR EXIT IN 2008?

It was this announcement in an 8-k filing that led most investors to jump ship.

http://sec.gov/Archives/edgar/data/1081372/000101376208000605/0001013762-08-000605-index.htm

On March 21, 2008, the Board of Directors of Airtrax elected to suspend all operations of Airtrax’s business, due to Airtrax's inability to secure the financing required to continue operations. In connection with Airtrax’s suspension of operations, Airtrax has suspended the employment of all employees. As instructed by the Board, Airtrax’s Acting Chief Executive Officer, on a part-time consulting basis, intends to continue to pursue financing.

Shutting down operations is usually a pretty compelling reason to jump ship, but then there were two things that happened soon afterward that I think many investors overlooked.

First this on May 20, 2008:

Despite shutting down operations two months earlier, they received additional financing. This doesn't strike me as the move of a company that has ceased to exist.

And then this article appeared on MAY 21, 2008:

http://www.vertikal.net/en/news/story/5931/

A couple excerpts:




This makes it pretty clear they weren't entirely closed for business, but were going to restructure the business to stop the bleeding and focus on the less cash intensive approach of technology licensing. Recently there have been tell-tale signs that this changed focus they made may soon pay some dividends. But before we get to that, what is Airtrax's patent and product portfolio and the potential on technology licensing.


AIRTRAX PATENT AND PRODUCT PORTFOLIO:

Patents:

4/06/06 - VEHICLES AND CONTROL SYSTEMS THEREOF WITH ADJUSTABLE STEERING AXES
http://www.wipo.int/pctdb/ja/wo.jsp?WO=2006037104&IA=US2005035032&DISPLAY=DESC

6/15/06 - OMNIDIRECTIONAL WHEEL MODULES AND VEHICLES AND METHODS EMPLOYING SAME
http://www.wipo.int/pctdb/en/wo.jsp?WO=2006062905

7/6/06 - LOAD CARRYING VEHICLE AND EJECTION MECHANISM AND METHODS RELATED THERETO
http://www.sumobrain.com/patents/wipo/Load-carrying-vehicle-ejection-mechanism/WO2006071461.html


Products:

General Intro

Airtrax Cobra:

Sidewinder Forklift:

Phoenix:

A PRIMER ON PATENT ROYALTIES AND ROYALTY RATES

While I plan on researching this further here are some basics from wikipedia on patent royalties and the associated royalty rates:

A patent [9][10] gives the owner an exclusive right to prevent others from practicing the patented technology in the country issuing the patent for the term of the patent. The right may be enforced in a lawsuit for monetary damages or to prohibit use of the patent and/or imprisonment. In a patent license, royalties are paid to the patent owner in exchange for a license to practice one or more of the four basic patent rights: to manufacture, use, sale, or advertise for sale, a patented technology.

Royalty rates may also be affected by whether a patent is strong (i.e. broadly written, seemingly valid) or weak; whether it is a fundamental patent or merely a slight improvement on a known technology; whether substitute technologies are available or an ability to work around the patent; the extent of the contribution of the patented technology to the value of the final product and whether there are other patents that must also be licensed (in which case there is a practical limit on how much royalty can be paid to license each).

With regards to the actual rates of royalty payments in the industry, the Licensing Economics Review [20],[21], reported in 2002 that in a review of 458 license agreements, over a 16-year period, it found that an average royalty rate of 7.0%.

WHY THEN THE SUDDEN RENEWED INTEREST?

Since shutting down its manufacturing operations, Airtrax has never really gone away. They have continued to gain considerable attention for their one-of-a-kind products. In fact in the year following the shut down and up until now they have they appeared on:


MYTHBUSTERS - The Discovery Channel (2009)







STAR TREK - Movie (2009)


http://www.forkliftaction.com/news/forklifts_news_international/Airtrax_Inc_7200.aspx






PROTOTYPE THIS - The Discovery Channel (2008)


In addition to the video from above, there are also these other clips from the show and behind the scenes utilizing Airtrax technology.

http://news.thomasnet.com/companystory/524878


THE DAILY PLANET - The Discovery Channel (2009)


No video available

http://www2.prnewswire.com/cgi-bin/stories.pl?ACCT=109&STORY=/www/story/01-29-2008/0004745076&EDATE=


And in late 2009 and early 2010 there has been renewed blog coverage.

December 18, 2009 - http://www.redferret.net/?p=17721
December 21, 2009 - http://www.automotto.org/entry/airtrax-wheels-go-in-any-direction
December 24, 2009 - http://www.ubergizmo.com/15/archives/2009/12/airtrax_omnidirectional_wheels.html
March 22, 2010 -http://craneinstitute.com/wordpress/?p=52


WHERE THINGS GET INTERESTING

But where things get really interesting for investors and shareholders is with this recent addition to the Airtrax website:

"2009 - Granted exclusive license for use of Omni-Directional Technology to Vetex"

http://www.airtrax.com/company/index.html




And then this big announcement from Vetex this past month:

"VETEX NOW MANUFACTURING AIRTRAX SIDEWINDER LIFT TRUCK"

http://www.forkliftaction.com/news/newsdisplay.aspx?nwid=8313

Vetex is a group of ex-Airtrax employees who came together after the company shut down it's manufacturing operations. They recently announced significant growth as well: http://www.industrialliftandhoist.com/?id=4288

Now in their third year, they are on track to report a second annual 1000-percent increase in sales

While an announcement of licensing and renewed manufacturing should be enough to make investors take notice, the following two pieces also provide additional clues and add to the story as well:

It looks like a former director of the company is now the CEO:
http://www.lead411.com/company2.taf?_function=detail&Company_uid1=66106




And Stock_Momo just reported this in the past week:
http://investorshub.advfn.com/boards/read_msg.aspx?message_id=48495171


Whether Airtrax is readying itself for a brighter future and new contracts for its products remains to be seen. To be sure long term there are many questions on its balance sheet and whether its products can be cost effective in the post-recession environment. But, on the other hand, with a current market cap of $282,179, investors are pricing this stock as if it is dead. All indications say this is not the case. And I can only imagine if this one-of-a-kind technology gains a foothold, Airtrax's patent and product portfolio and potential royalty stream is worth much, much more than that.


ADDITIONAL INFORMATION ON AITX:

Share Structure:

Outstanding Shares:
57,587,524 as of May 28, 2008

Authorized Shares:
100,000,000 as of May 28, 2008


Incorporation Documentation:

New Jersey SOS: No Full Access




Homepage Screenshot:




Additional Videos:

CONCERNS & WHAT WE DON'T KNOW

(1) I received a response from a person who believes stock is a P&D Scam. While they may have hired stock promoters in the past, I still can't overlook the fact that the media coverage seems legit and comes from respected sources. I have no doubt that this product is real unlike many in the penny market. However, as with any stocks in this range there can be no guarantees that people won't try and pump it.

(2) The companies troubles left a bad taste in the mouth of some investors. After what seemed like a quick ramp up and continued positive news, the announcement that were shutting operations made many investors feel like the rug had been pulled from underneath them. The long and tortuous decline this lead to has led to some resentful shareholders. This in itself could depress the stock price.

(3) The balance sheet. This is of course a concern. After years of operating losses, the company still has a long way to go, to recoup the losses. While the patent and product portfolio itself looks like it could be quite profitable, how profitable is yet to be seen.