Technipower Systems, Inc.(fka TECZ)

[Ben-Jonson]

Calculation of the implications of a SOLM win.

I'v been running over in my mind the likely scale of a SOLM win against Toyota. According to Wikipedia, Toyota has sold over a million hybrid cars worldwide since 1997; of these, over 500,000 were Prius sold in the US.

http://en.wikipedia.org/wiki/Toyota_Prius#Sales


I'm not sure what the SOLM lawsuit covers, but we may safely assumes that it covers at least those 500,000 US sold Prius vehicles.

SOLM is sueing for $10,000 in damages for each of those vehicles. If it won damages on that scale, it would immediately accrue a $5 billion windfall, which is equal to $25/share, with 200 million outstanding shares.

This, to my way of thinking, represents the upper end of what SOLM might win in a successful outcome from the suit.

A more likely range, to me, for an actual settlement, would be $1-2000 per vehicle (this dosn't mean I don't think SOLM is right to sue for a lot more, merely that I think it unlikely in the final analysis that a jury would award that much). Even this quite realistic lower end would still mean windfall profits in the range of $500 million- one billion, or $2-5 dollars per share!

Of course one must add to this the enforcement of a licensing agreement that should accrue to SOLM $200-1000/unit on sales that will be in the range of 250,000/yr. Taking a modest median figure of only $500/unit, that equals annual revenues in the range of $100 million/yr, or .50/share.


Since a win would also likely mean a landslide of other contracts for SOLM (Toy, it is relevant, has brazenly licensed SOLM's technology to GM among other US automakers), it is safe to project that SOLM's annual revenues, in the event of success against Toyota, will more likely reach $200 mill/year in short order.

From these calculations, I would conclude that SOLM's actual value, in the event of a win against TOY, would be on the order of $10-20/share within less than two years.

I agree with other comments that even if SOLM does not prevail against TOY, it is a company with bright prospects. Although there is real risk as a result of SOLM's debt, the fact that SOLMs technology is being used in a range of applications, and small contracts continue at a steady rate, I think the company will succeed and return a handsome reward to investors even without a TOY win. However, a win will catapult us into the stratosphere and reward longs many hundreds of times over in very short order.

Happy Holidays to all!

-Ben