Dow Jones 13950.98 +43.73 1:08 pm PDT, July 16, 2007 NASDAQ 2697.21 -9.79 For info, visit access.smallcapnetwork.com S & P 500 1549.52 -2.98 Change your subscription status here Russell 2000 848.34 -7.43 VOLUME 07 : ISSUE 69 Smart Energy's Dealer Model - A Wider Pipeline  Sometimes fate ends up making things easy for me to do. Take today for instance. There are a couple of lingering details I've been wanting to discuss regarding the Smart Energy Solutions (OTCBB: SMGY) opportunity, and today's news is the perfect reason to dive into at least one of them. I think you're going to like some of the numbers I managed to dig up.  The 'news' is pretty straight-forward. A Kia dealer in Macon, Georgia has decided to make Smart Energy's Reserve Power Module (or RPM) a standard feature on all of new vehicles.  Great, but what's an RPM? The RPM is comparable to the company's Battery Brain device, which prevents batteries from dying unexpectedly, and doesn't allow a car's electronics to drain the battery's charge so low that the car won't even start. In most regards, it's just a higher-end Battery Brain device, tailor-made for dealers.  If you're thinking the addition of one dealer to the number of dealers offering RPM's isn't a huge deal, I'm somewhat inclined to agree with you. On the other hand, there's a 'rest of the story'. While one dealer may not mean a windfall is in order, would a hundred dealers? How about a thousand dealers all putting the RPM on their new cars? Now I'm getting interested.    Little Details, Not So Little Opportunities  The press release didn't have all this information in it, but the news really got me thinking about the new-dealer model, and what kind of opportunity there is here for Smart Energy. So, I managed to find some surprising data that really sets a little perspective about where things could be headed for this company.  Do you know how many new car dealers there are in the United States? I was surprised to hear it was 21,761. There are about 3,400 in Canada, and an estimated 1000 more in Mexico. Totaled up, that means abut 26,000 new car dealer in North America. Last year, 16.51 million new cars were sold in the United States, while 1.66 million new cars were sold in Canada. That's an average of about 722 new cars per dealer, so I'm assuming there were a few hundred thousand new cars also sold in Mexico. Let's say the grand total for the continent was sales of about 18.5 million new cars in 2006.  OK - keep those numbers in your back pocket for a second.  Now, care to guess how many dealers are currently offering the RPM or the Battery Brain as an add-on/upgrade? Try 15.....15 of the 26,000 or so in North America alone. That leaves about 99.9% of the market currently untapped. Ladies and gents, that's an awfully big pond for one fish. But, considering they own the patent on the device, Smart Energy is poised to be that sole fish for a while. Two word comes to mind - GROWTH OPPORTUNITY.  And the buzz is that dealers love these things. It's one of those new car add-ons that can be marked up to improve the dealer's margins, or, if offered as a standard dealer upgrade, it makes the automobile a much more attractive purchase. Either way, if it helps the dealer sell more cars or make more money, we suspect there will be a lot more than 15 of them using the RPM as an aftermarket upgrade by this time next year.    Dollars & Sense  What's potentially 'in it' for Smart Energy by going through dealers? Like I said above, the RPM is slightly different than the Battery Brain, so I'm a little hesitant to draw any concrete numerical comparisons between the two products. However, given that the RPM is a higher-end version, I don't mind walking you through my conservative thought process here.....  Let's just say Smart Energy can bulk-sell RPM's to dealers for $25 a piece (a low guesstimate using the Battery Brain's cost structure as a general basis). With each dealer selling - on average - 722 new cars each year, 15 dealers would be able to sell about 10,000 units per year. That translates into about $250,000 or so in sales.  So what would be a reasonable penetration into the new dealer market? Though we're just playing with some hypotheticals here, let's say a modest 5% of North America's dealers start to offer RPM's as a standard feature or upgrade on new cars. That's 1300 dealers. Now let's reel in the average 722 new cars each dealer sells each to year to only 500 news cars with the RPM device installed. That would still work out to be about 650,000 RPM units sold each year. At $25 a pop, that ends up being about $16.2 million in sales for Smart Energy. Again - and I can't stress this enough - those numbers are just my own thumbnail sketch of what today's news could ultimately mean down the road. Hopefully though, it provides you with a frame of reference for why this is a big deal. Even if not exact, I think they at least define the scope of the new dealer market.  The next logical question - the numbers sound great, but why would a dealer be interested now if they weren't on board before? The answer is simple (and highlights the timeliness of the SMGY opportunity)....there was no product until a couple of years ago. And really, the product's mass introduction was only kicked off in the earlier part of 2006. So, this opportunity for Smart Energy (and by extension, its investors) is still new for most intents and purposes.    SMGY's Chart - Still Hanging On  We've been watching SMGY since May 30th. The stock was then trading at 58 cents, versus the current level of 56 cents. However, it was just over the weekend I've really come to think this recent flat period is a symptom of January's surge more than anything else. The stock moved from December's lows of 30 cents to a peak of 67 cents in early February, and some traders may still be migrating out of their positions to lock in gains. We may have to burn through the rest of any would-be sellers before we can really get some upward movement here (though I can't imagine there are too many left).  On the other hand, I do like the way the chart is hanging in there. To me, it looks like there's a support level around 52 cents, which also happens to be a 38.2% Fibonacci retracement level. Though we traded under that line on June 25th with a deep low of 46 cents (roughly a 61.8% retracement), you can also see we've not closed under 54 cents since January. So, there appears to be at least a modest active buying interest out there.  To that end, check out the accumulation/distribution line as well as the more responsive on-balance-volume (OBV) line. There's general accumulation here, and has been for a while. The OBV line recently curled upward as well. So, we're seeing some good signs of life.  In a perfect world, we'd see SMGY blow past the 50-day moving average line (blue) as well as the 100-day line (black) instead of hitting resistance there. On the flipside though, a move above those key moving average lines may have also meant we'd all be chasing it now. From that perspective, maybe the short-term ceiling is a lucky break....if you wanted to jump in now. (Isn't perspective everything?)  Anyway, the press release is below.    SMART ENERGY SOLUTIONS RESERVE POWER MODULE STANDARD ON ALL RIVERSIDE KIA OF MACON, GA NEW VEHICLES  POMPTON PLAINS, N.J., July 16, 2007 - Smart Energy Solutions, inventor and manufacturer of the innovative Battery Brain(tm) vehicle aftermarket device, today announced Riverside KIA of Macon, Ga., has placed an order to install its Reserve Power Module on all new vehicles to protect customers from the hassle of a dead battery. Riverside KIA is a member of the Riverside Automotive Group and have been in business for over thirty-seven years.  "The RPM system is a complete package for auto/truck dealerships as well as a profit center. This advanced technology has a dual benefit. It protects customers from the worry of a dead battery while eliminating wasted time at dealerships charging dead batteries," according to Jason Blalock, Director of Sales and Marketing, North American Auto Dealers of Smart Energy Solutions. "In addition to the inconvenience to an individual, our data indicates dead batteries are a major problem for all auto/truck dealerships."  Blalock said Smart Energy Solutions is receiving inquiries from other dealer organizations and that he is confident the RPM solution will become a standard feature in many new cars, light duty trucks and SUVs in the next few model years.  "Our sales people love demonstrating the RPM system and it is definitely a key closer for a new vehicle buyer when they make their final purchase decision," Brian Tiller owner of KIA of Riverside said. "The RPM system can be installed quickly and is maintenance free."  The Reserve Power Module is the latest technology innovation from Smart Energy. Smart Energy initially developed Battery Brain which currently is used to constantly monitors electrical discharge of the battery for nearly all kinds of vehicles including autos, SUVs/trucks, medium and heavy duty trucks, military, buses, RV's, boats, commercial vehicles and personal watercraft. Should Battery Brain detect that the battery is losing sufficient charge to start the vehicle's engine; the device automatically disconnects the battery to preserve its starting power. In addition, Battery Brain offers a built-in anti-theft feature.  About Smart Energy Solutions  Smart Energy Solutions, Inc. (OTC Bulletin Board: SMGY; Berlin: UBM.BE; Frankfurt: UBM.F) is the sole owner of the Battery Brain line of vehicle accessory products. The company is headquartered in Pompton Plains, N.J., with operations in Zhuhai, China, Milan, Italy, Petach Tikva, Israel and Clifton, NJ. Visit www.smgy.net.  Press Contact:  Bruce G. MacDonald, Liebler!MacDonald - 248-233-8062, bmacd@liemac.com  Investor Contact:  Ed Braniff, CFO, Smart Energy Solutions, Inc. - 973 340 6000, ebraniff@optonline.net    We Value Your Feedback   Got comments, questions or suggestions? Send 'em on over: Email the Editor If you wish to send a written request or inquiry, please send it to our physical address: TGR Group, LLC 4653 Carmel Mtn Rd Suite 308 #402 San Diego, CA 92130 Subscribe Information is power and timely information is profitable. Become informed and profit from Small Cap Network Profiles and Trading Alerts by becoming a Preferred Member today. There is no cost associated with your email subscription. Add your email address below and make sure to check your email inbox and confirm your opt-in request to start receiving the Small Cap Network Email Newsletter on a regular basis. To ensure newsletter delivery, you can add any additional email addresses you may have to the Small Cap Network Member List. 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