Salamon Group/Sunlogics investor musings..

Ok people…I read enough on the investor boards, yet will keep my public comments here for anyone to reply or ask questions, if they so desire.

In the void of information, chaos ensues, and that is what is happening here.

SLMU’s ability to make a return on the solar canopies depends on the following:

1. Annual lease payments or annual PPA payments for electricity (depends on situation)

Either an automotive dealer, institutional location, government entity or marketing partner will have to pay somehow for the annual maintenance and recovery of investment.

2. ITC’s from fed which stand at 30% today

Today they are cash, as of December 2011, we’ll see. Either way, this method of subsidizing renewable energy projects is well known and always used to reduce the cost of projects.

3. Ability to sell the accelerated depreciation of the renewable energy device to a C-corp or wealthy individual with excess passive income against which they are happy to “buy” the depreciation at a small discount, to be able to reduce immediate taxes paid out.

Figure they can get 80% of the value (a 20% discount) in a sale of depreciation. If they are making lots of money, they’ll want to keep these for themselves as well.

4. Other revenue sources.

Marketing, marketing, marketing. I can’t say it enough. A solar charging station is as much a billboard as a renewable energy producing device. No shortage of corporations or government entities with green platforms that will come to the table to support such projects. No shortage of ideas on how to extract more money by any locational partner with multimedia “show cases” as part of their “re-marketing” tools.

5. End of lease residual value.

At the end of a solar canopy lease, there is residual value in the electricity which continues to be generated, although that must be balanced against on-going maintenance and admistrative costs.

6. Upgrades

A solar charging station technology will not likely stay stable for 10 years. The charge rate speed will significantly change. Charging technologies may be totally wireless in 10 years. Nobody knows. Yet what I can fairly predict is that upgrades will be necessary and those should be done at a profit.

What I have listed above is not rocket science, and very well known to anyone versed in the sector. I will not divulge the rates of each revenue/cost modelling that I was privy to learn during my stay at Sunlogics Inc or when I did work for Salamon Group, because that is confidential information. Yet I hope the above helps all see that there is definitely a model that works, its just a matter of a proper execution of the model to allow fair returns to be extracted.

Much speculation will lead nowhere. The reality is that every investor in SLMU has done so by their own choice, and whether or not they feel “led on”, they made their choice to invest. It doesn’t relieve management from being truthful. It doesn’t mean that I admonish the manner in which people tasked with answering investor emails prefer to sit on their toilets than to answer inquiries. It doesn’t relieve management of either company from written statements they have made in the past that don’t come true. It simply means that if you are too nervous to wait to see how the management of SLMU rolls in the canopies that are built, and how they manage the funds to earn a true return, then sell your shares, take your loss and learn your lesson. Investing in companies like these is probably not for you.

Hope this helps,
Sass