Looking forwards at CSX's prospects you have to be confident that guidelines will change to drive sales. I really think this is the only thing that matters.

I can now routinely get comfortable high quality masks that really are not that bad to wear. I say this because during the previous sales surge N95's especially the particular brand you may need were in a serious shortage. Often the masks you could get were uncomfortable and not fit tested. Often would only be availible to you in certain clinical settings.

If the protection is enough from mask to stop you from getting sick you really dont need the increased protection of the PAPR.

Things to watch out for are HCW's getting sick using N95's, new government recommendations, vaccine resistant strains of COVID. Without these things I think even with CSX's formidible warchest of 35+ mil they may find it hard to drive sales in healthcare.

I think it provides in your portfolio a potentially inversely correlated position as some of these things would be bearish to the economy but bullish for CSX. 

I wont be adding unless I see these catalysts or the company surprises with a great sales strategy anyway.

Thought I'd outline the various opportunities for the Halo and why I think it has a long growth runway with great opportunity for recurring revenue.

Ambulance

Undifferentiated patient may have fever, high risk contacts or respiratory symptoms prompting paramedics to employ PPE.

Emergency

Immediate care will require PPE until patient cleared. From here several things may happen

-       If patient is low probability COVID rapid PCR test usually employed (~90mins to clear patient)

-       If high risk then multiple formal PCR test usually required to clear patient (6-24 hours)

-       High risk procedure such as intubation possible (Highest level protection warranted)

-       May need urgent operation (cannot wait for PCR) this will involve an intubation for anaesthetic with PPE required intra-operatively (This step is the level of current penetration)

Ward

-       As discussed earlier 6-24 hours to clear (PPE required)

-       If positive then Ongoing PPE requirement

-       COVID wards generally require PPE to be worn when in environment

ICU

-       Similar to above with 6-24 hours to clear (PPE required)

-       If positive then Ongoing PPE requirement

-       Unwell patients with 1:1 nursing

-       Nurse will be wearing PPE constantly without removing for minimum 4hour blocks

COVID is now endemic (not yet in Australia but in the world) given the potentially serious long term effects of infection and the lack of 100% efficacious vaccines the above process will occur on an indefinite basis whether or not the staff are vaccinated (this is a permanent change at least for the next 3-5 years I'd guess maybe forever). N95 masks provide inferior protection, are more uncomfortable and do not provide a verifiable record of compliance.

As you can see there is room for significant expansion from the prehospital setting through to ongoing care of patients who are COVID positive. Even if COVID is not an issue at a societal level it will remain a concern within healthcare. I really cannot see how this doesn’t permeate all of these environments over time.

Some significant pedigree with notable inclusions being:

Chairman:

Dr Ronald Weinberger is the former Executive Director and Chief Executive Officer of Nanosonics (ASX:NAN). He therefore understands the razor/razorblade business model and the ongoing opportunity that CSX has to become the standard of care.

Executive director

Mr Dan Kao, is a former senior designer for ResMed. He founded the business of CleanSpace in 2009 and has been a director of CleanSpace since April 2011. Mr Kao worked in the medical and healthcare industry for over 20 years, and has extensive experience in manufacturing, supply chain optimisation, quality management systems and in securing patents for innovative technologies in healthcare.

CTO

Alex Virr

Another former Resmed engineer working at Cleanspace since 2010.

For me it’s too early to say regarding CEO Alex Birrell and CFO Elizabeth Harvey but both have long careers have been at the company for some time (2010 & 2017) and a cursory search does not raise any red flags.

Management do have a decent chunk of the company currently sitting just under 10% of issued capital.

It is my opinion that CSX is one of the best opportunities I have seen in my short investing career.

A high margin manufacturer of powered air purifying respirators. Razor blade business model with ~40% of revenue from high margin consumables.

They are a busted IPO who raised a ton of cash during 2020 due to their unique position as a PPE solution during COVID. I suspect a bunch of short term money piled in due to the narrative and one off profit growth which then quickly dropped off secondary to a shift to vaccine focus. The market is now pricing the company to return to pre-COVID levels of sales and I strongly believe this is wrong.

This view is formed by

-       My personal experience using the product

-       Witnessing the land and expand strategy of the company

-       Attending a research presentation highlighting the satisfaction that the users experienced over masks. (Done independently).

-       Having been quantitatively fit tested for N-95 masks twice there is one on the market that fits me which retails for ~$7 ea. Generally is kept locked in a cupboard which I have to ask to access.

-       Having viewed small audits of the most popular available masks in Australian hospitals the most available has ~45% pass rate the best is only around 80%.

-       Most Australian healthcare staff have still not been quantitatively fit tested and are unaware that they are unprotected by the standard equipment.

-       My understanding of how we treat and will treat patients moving forwards who are suspected or confirmed COVID even with vaccinated staff (ongoing requirements for isolation and respiratory protective equipment)

Balance sheet strength to quickly drive sales up. $42 million in cash no debt (~1/3 of market cap).

Currently there is not a legitimate competing product (have a look at what other PAPR systems look like.)

Short term shareholder base negative trend leading into tax season will lead to further tax loss selling in my opinion.

With so much cash on the balance sheet I suggest this is a heads I win tails I don’t lose much situation and the upside is truly asymmetrical.