Torotrak is the quintessential high-risk technology firm. It has developed an innovative product and is talking to a raft of blue-chip clients in the hope that at least one will deploy its technology. If this happens it will undoubtedly make a lot of money. Until then, however, it is stuck with a business that has low-level revenues and a cash pile that is diminishing. Torotrak's product is a unique Infinitely Variable Transmission (IVT) that 'delivers unprecedented improvements in fuel economy and emissions reductions' in cars, trucks, busses and off-highway vehicles (diggers, JCBs, tractors). According to chief executive Dick Elsy (the ex-Jaguar executive who has transformed the group over the past two years) Torotrak's IVT delivers energy savings of around 20%. The long-term plan is to generate royalty income from selling licences to high-volume manufacture of vehicles to deploy Torotrak's IVT. At present the group has signed a deal with 'a major supplier of transmission and axle systems to the off-highway market' to exploit the IVT technology. Another confirmed customer helping with the development of the product is an off-highway vehicle manufacturer. On the car front, there are many development plans on the go, the latest of which was the installation of the latest prototype IVT product in a target customers vehicle. While all of these are promising, the actual high-volume manufacture of vehicles with Torotrak technology is still a few years off. The last financials from the group showed revenues growing to £0.5m (its expertise in this area is generating ever-increasing consultancy fees which Elsy is keen to increase) and a loss before tax of £5.9 million. Around £7.3m in cash sat on the books at the year end, which, with costs reducing and consultancy fees increasing, should be enough for the forseeable future. High risk, but intriguing.

Torotrak	LSE	£26.29m	18.00p	0.00p
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