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Technology Stocks : TAVA Technologies (TAVA-NASDAQ) -- Ignore unavailable to you. Want to Upgrade?

To: Jack Zahran who wrote (11999)	2/27/1998 11:32:00 AM
From: Gerald Underwood	Read Replies (2) \| Respond to of 31646

For any who are interested in TAVA potential, the below is one possible scenario of earnings capability. At this point in time, with no immediate deadlines in evidence, I doubt seriously that companies will pay overtime for assessment or remediation. This would indicate that an average of 40 hours per week would be more viable fo computational purposes. However, I believe at the Emerald conference, a model was proposed that included tools along with 100 hours of training and consultation at a cost to the client of around $42-44,000. Considering manpower restrictions that TAVA has placed on their projected growth, this may well prove to be the average model for TAVA's work and this is the model that I choose to use. Using the projected headcount proposed in the CC, TAVA would have roughly 456 people at the end of June 1998. It is unknown at this time if this number represents the maximum that are intended but using this figure I will proceed. Since 90 of the total were listed as non technical, that leaves 366 technical or assumed to be billable. 366 x 50 wks x 40 hrs = ttl 732,000 billable hours 732,000 / 100 hours per client = 7,320 clients serviced @ $42,000 per client = $307,440,000.00 per year. However this is if all available engineers were employed in y2k which may well turn out to be the case as deadlines approach. A possibility of this has been hinted at because the demand for y2k readiness will at some point in time assume a priority over core work, even though it may be expected that core work will be resumed when this period of demand slackens. So to be conservative, we can use 1/2 only of available manpower to service y2k. Using $153,990,000.00 at 85% gross margin = $130,891,000.00 The other half billed 366,000 hours @ $90 x 54% gross margin for core work = $17,787,600.00 TTL $148,678,600.00 NOTE: ABOVE DOES NOT ASSUME ANY PROFIT FOR MATERIALS AS THIS IS UNKNOWN QUANTITY, BUT MAY BE SUBSTANTIAL Assuming roughly double last quarters cost for SG&A(37%) but radically reduced percentage(due to volume efficiencies )of approx $8,000,000.00 x 4 quarters or roughly 22% compared to 37% last quarter ,we have about $116,000,000.00 net @ tax of 40% = $69,600,000.00 net profit or approximately $2.78 per share based on fully diluted 25 Mil shares. This is work that TAVA is capable of with their own engineers only. Note: TAVA reported working with 15 service providers at the CC. Percentage of profit from this association or how it will magnify TAVA's in house potential is at present unknown. However one might assume that TAVA would most likely retain the lions share for use of CD and database. Considering in the US alone, the potential client base is assumed to be in the neighborhood of a minimum of 70,000 for factory floor and around 100,000 for utilities, one can perceive an enormous amount of work that needs to be done. Disclaimer: The above is only my opinion(an amateur) and may or may not constitute the ability of TAVA to perform. It is only one projected scenario among many possible. Do not rely upon this research to make any investment decision. Please do your own DD and make your own investment decisions. Gerry