Replies to post #10052 on QS Energy Inc (QSEP)

[moorea9]

The reasoning based on the additional profit made by the pipeline (4$ x number of additional gallons) is I think understating the fact that the oil producer is also gaining thanks to the AOT (100$ x number of additional gallons) that would not be pumped out of the ground if it could not be transported.

But if we stay with the conservative reasoning (only considering the pipeline economics), it is true that the leasing formula has many advantages one of them allowing an easy calculation of the pps.

Using the figures of AISI :
42 skids x 12 months x 60,000 $/month = 30 million $/year of revenue for STWA. Profit of 70% = 20 million $/year
Price/earning ratio of 20 means pps of 2.3 $.
This is only for one pipeline, so for 10 pipelines, you have pps of 23$.

NOTE : the 30 millions $/year above can seem a bit high compared to the pipeline revenue of 73 millions $/year , but this is where I would factor in the contribution of the producer for this additional volume, which could be for example translated to a 6$ price/gallon for the additional volume, a small premium ("royalty") compared to the 100$/gallon of increased revenue.

[As I See It]

Flubug,

If STWA technology works as well as we are being led to believe, there will be a tectonic shift in the balance of power between the pipeline companies and STWA. If our product achieves industry acceptance, we will move from low man on the totem pole status in negotiations, to being in control. If not having AOT technology puts you at a disadvantage to your competitors, then by golly you will put AOT technology on your line. The same will apply to the shareholders. The weak kneed investor will become a true believer.

It never ends with those that are trying to talk down STWA. Now they are trying to convince you that even if STWA succeeds, that some company will just swoop in and take your shares for a song. Ask them just how that is going to happen. Potential acquirers make offers to target companies, that are rejected by a majority of the shareholders all the time. Acquirers can only get our shares cheaply, if we as a group undervalue them and sell willingly. If an acquirer sees great value in us, I hope that we too will see that value. Besides, if someone tries to make a low ball offer, other competitors will join the fray and bid the price up. Even then, we as a group control our own fate. Management can't sell the company. Only a majority of the shareholders can sell the company. Alternatively, do you think someone could quietly buy up 100,000,000 shares or so without pushing the price through the roof? If TransCanada were to place a $200 million AOT buy order tomorrow, how many people do you think will offer their shares for sale @ $.70 or even $2 or $5. To buy you must find a willing seller. The stock would gap open from the previous close to a price that reflects the new information. Anyone that thought they would be clever by waiting for the news, could be left far behind in the rear view mirror.

The method of sale of AOTs to potential clients, will be determined by a robust competitive market place, where I believe STWA will hold the best cards. STWA has discussed different strategies for different types of clients. Outright sales bring in lots of cash immediately, while leasing and sharing of the revenue models bring in more money over time. A buyer in Africa will be looked at differently than one in N. America. Upstream may model differently than Midstream. Wall Street usually assigns the highest multiples to companies with the most predictable earnings that can maintain high growth rates.

I disagree with your assertion that the first contract will set a precedent. The tectonic shift will occur after that first contract. Every potential customer will be unique. Their needs and the benefits we can deliver will dictate how things will be priced.

That is how (As) I See It.