To Our Shareholders: August 2000
The past 18 months was filled with significant accomplishments
for your company. Substantial progress was made on developing
the Company's core technologies, including a U.S. patent for its
power battery structure and elucidation of the mechanism for
generating power by the water sensing alloy. The company also
substantially improved its financial position and flexibility with
its $35 million equity line of credit and also added to its
management resources.
Products and Technology
The Company's development program for its battery technology
made great progress during the past year. Power Technology
received U.S. patent # 6,060,198 on its electrochemical battery
structure and method, which was issued on May 9, 2000. The
patent gives your company an exclusive right to manufacture,
market, and sell its unique battery structure for 20 years. The
plate structure applies to many types of battery chemistries,
including the common lead-acid and our future nickel-iron
chemistries.
The Company is in the process of developing and marketing its
proprietary battery structure to several major battery
manufacturers in North America and overseas, with the goal of
generating near term revenues and cash flows to fund further
research and development. Already, Power Technology has
secured a manufacturer of reticulated lead alloy plates from a
company in Germany and recently our research laboratory in Las
Vegas took delivery of several hundred reticulated foam plates.
Now that reticulated foam lead plates are available in large
quantities, the company has emerged from the simulation phase
and is rapidly entering into a battery development and testing
phase. The plates are now analyzed by several research
laboratories retained by the company, including BC Research and
Bi-Polar International, Inc. The latter company also has a
uniquely powerful paste that is being combined with the lead
foam plates, which could create truly a super battery. These
developments have not gone unnoticed by the battery industry,
where several top tier manufacturers are currently engaged with
the company in negotiating licensing, development, and
manufacturing deals.
Good progress has also been made in developing and evaluating
the water sensing alloy. The alloy and a suitable counter electrode
generate electric power, when placed in water. The power source
has been evaluated by BC Research, who found that the alloy has
an extremely long life, albeit with low power. There are
numerous applications of the power source, including leak
detection for industrial rooftops, water depth measurements for
dams, sleeper circuits for computers, automobiles, and many
other low power applications. BC Research undertakes
independent technology evaluations in the areas of surface
analysis, chemical processes, and structures, and has been
retained by the Company for a 6 month contract to evaluate its
battery and water sensing technologies. Confirming data on the
uniqueness of our alloy material has also been obtained from the
U.S. Navy Laboratories at Crane, Indiana. There appears to be
military as well as commercial applications for our material.
The magnetic pulse forming technology for cold joining pipes
has also attracted attention. The Company has the patent for
joining large diameter pipes, with the benefits of rapid joining,
permanent welds stronger than the parent materials, and minimal
heat affected zones. The technology is ideal for laying long
pipelines, particularly in "cold" environments, such as underwater
and in space. Several potential domestic and international
customers, including a large U.S. energy company, are currently
evaluating the technology for possible applications within the oil
and gas industries and the boiler and steam engine manufacturing
markets. Power Technology is also exploring potential
partnerships with manufacturers of magnetic pulse forming
equipment for small diameter pipes, which would complement
our technology for joining large diameter pipes.
Capital and People Resources
Power Technology received a subscription agreement for a $35
million purchase of common stock under a private equity line
contract with Swartz Private Equity LLC, an institutional private
equity fund based in Atlanta, Ga. (http://www.swartzllc.com).
Under the terms of agreement, Swartz will provide Power
Technology with a line of financing that can be drawn down, as
Power Technology needs capital. This arrangement allows our
company to develop and launch its new power battery as well as
consider potential acquisitions for smaller battery R&D
companies with synergistic technologies. The credit line also
gives us the flexibility to obtain and set up smaller battery
manufacturing facilities, should the opportunity present itself in a
low cost producing country.
To take advantage of these new opportunities, the Company has
hired Dr. Ulf Lindqwister as Vice President of Business
Development. Dr. Lindqwister has been engaged for several years
in the valuation services division of Arthur Andersen LLP and
prior to that managed NASA's global GPS network for 12 years.
Dr. Lindqwister has an MBA from the Anderson School of
Business at UCLA and a Ph.D. in Physics from Princeton
University.
Strategic Focus
The company has undergone a significant transition from a
company with several key patents to a firm with technologies
under development and testing. The company's new vision of
rapidly marketing and launching of its proprietary battery
structure to the lead-acid industry is expected to generate near
term revenues and cash flows, which will enable Power
Technology to develop its ultimate battery: a powerful, yet
environmentally friendly nickel-iron battery for the automotive
and electric vehicle industries.
We thank all of our shareholders for their participation. We
anticipate earning your ongoing support.
Very Truly Yours,
Power Technology, Inc.
Lee Balak, President |
