It is unfortunate that Lynn Duke, staff writer for Stock Detective, failed to investigate his story very closely
because most of his conclusions were wrong. Some clarification of all of the items in the article will be
addressed to help clarify the misunderstanding caused by this article.
First mis-statement is that somehow we have captured the wallets and imagination of major industrial
companies. We have not obtained funding from Daimler Benz, Volkswagen or Lockheed Martin for our
development activities and have never claimed that this was the case. We do have relationships with these
companies. With Daimler Benz and Volkswagen we do have a license agreement with DAUG, which is a
joint venture between Daimler Benz and Volkswagen. BAT's subsidiary, Ultra-Force Battery Company
paid DAUG for license rights to manufacture nickel electrode batteries for all markets (except space)
worldwide. Our detective mentions there was a joint venture that was dissolved several years ago, and
therefore this license does not exist. While DAUG did have a joint venture with Hoppecke, another nickel
electrode battery manufacturer that was dissolved several years ago, the joint venture was called DAHO.
This is not who we have a license with. DAUG retained all intellectual property and license rights for
technology it has developed and has entered into numerous license agreements with battery manufacturers,
including Ultra-Force Battery Co. (UFBC). UFBC is entering into manufacturing of nickel metal hydride
and nickel cadmium batteries through a joint venture with the largest specialized battery manufacturer in
India, HBL Limited. We will have battery packs for evaluation by the electric vehicle industry for electric
and hybrid electric vehicle applications this fall. The same manufacturing plant will be producing batteries
for industrial and telecommunication markets. UFBC has filed patents on a proprietary technology, called
SEALER, that allows UFBC to produce a sealed fiber nickel cadmium or nickel metal hydride battery that
is sealed for life, requires no maintenance, has high energy density (75-85 Wh/kg) and can be produced at a
low cost ($350/kWh). (We have received a patent confirmation from the U.S. patent office). When
combined with DAUG nickel electrode plate technology, it results in a battery with very low cost on a life
cycle cost basis.
Relationships with Lockheed Martin involve their role as a "matchmaker" in technology transfer and
business development activities in connection with their Industrial Cooperation Agreements for "offset
credits" in foreign countries. We hardly "wrangled" an introduction out of Lockheed Martin. Lockheed
Martin invited us to the Czech Republic along with other companies such as Solectria and we provided
detailed information to SKODA ELCAR about our technology that led to a letter of intent agreement. We
formed this relationship with SKODA ELCAR because of the competitive position of our technology and
the mutual economic benefits from joint development of advanced transportation vehicles. What concerned
Lockheed Martin was only that it not be mis-construed by the press that Lockheed Martin was a partner
with BAT or SKODA ELCAR. Lockheed Martin has no financial involvement with BAT and was simply a
matchmaker between the two companies. Unfortunately, the press tends to misconstrue relationships in
their zeal to jump to conclusions, so we can understand Lockheed Martin's concerns. Lockheed Martin has
had a long relationship with BAT in connection with the "offset programs" including prior agreements in
Taiwan. Other pending activities in Hungary, Portugal and other countries may lead to similar agreements
with other companies. We highly value our relationship with Lockheed Martin in their role as a matchmaker
because we have had an opportunity to discuss our technology with numerous potential industrial partners
worldwide. However, we do not have any direct tie with Lockheed Martin in connection with any project.
We simply offer advanced technologies to foreign companies in these countries that could led to "offset
credits" for Lockheed Martin in the event the companies export technology or investment occurs in the
country. There is mutual benefit for BAT and Lockheed Martin from this relationship, and we are not the
only company involved in these "matchmaking" activities.
Another little oversight of the stock detective is that he does not appear to know the difference between a
super-efficient engine technology and a hybrid electric vehicle. While BAT is developing both
super-efficient engines, hybrid-electric vehicle drives, and there is some crossover applications for engine
technologies in hybrid electric vehicles, we were NOT testing a hybrid electric vehicle at the test track. The
Geo Metro that achieved 91-95 miles per gallon used a traditional diesel engine to reach this high efficiency
level. That is why it is a very significant accomplishment. While GM, Toyota and other major auto
companies all have hybrid electric prototype development programs, and Toyota is actually in the market
with a hybrid electric vehicle, price is a very important concern. Hybrid electric vehicles require both an
electric drive system and a gasoline or diesel engine to operate and it is difficult to get the costs down to
competitive levels. While Toyota is selling the Prius hybrid vehicle in Japan and is considering similar
marketing efforts in the U.S. at a price of $17,000, unit manufacturing cost is closer to $40,000 and
production is justified through significant subsidies from Toyota and the Japanese government.
The significance of BAT's technology is the ability to achieve very high fuel efficiency without adding to
engine cost using traditional gasoline and diesel fuels. This means market acceptance of super-efficient
vehicles can occur quickly, since it will not add significantly to vehicle cost and fuel efficiency is very
valuable in European, Asian and other markets. This is possible because there are only four components
changed as a result of Pulse Charge technology, and tooling requirements and impacts on cost are minimal
in connection with high volume production of engines. We do not claim to have any magic formulas to
reduce hybrid electric vehicle costs, and out stock detective ought to learn to differentiate between two very
different technologies before making derogatory and untrue statements.
In addition, we have never claimed to be the "darlings" of the big three. In many instances, we are at odds
with the big three in hearings and other forums. At the same time, the auto industry involves lots of
companies all over the world and many are hungry for new technology to improve their competitive position.
We have had meetings with numerous auto companies in Europe and Asia and will provide details about
these meetings when there are specific agreements such as the SKODA ELCAR letter of intent to discuss.
Until then, we can only say meetings are and have occurred.
With regards to patents on Dolphin Pulse Charge technology, we have filed the patent information with a
registered patent attorney in San Francisco, which is similar from a legal standpoint to a provisional patent
filing and an important step in gaining patent protection before a filing. We did not want to file the
provisional patent until all improvements had been incorporated in the patent and we were in a position to
move quickly to commercialization. It is very dangerous to file patents prior to commercialization because it
is easy in any technology to "work around a patent" and steal the technology. If you have deep pockets, you
can sue, but this does not overcome the cost of the fight and problems with bringing products to market.
Patent offices can often disclose confidential information through leaks. We recognize the need to file
patents to protect the technology and have filed other patents in connection with other BAT technologies
such as batteries at the appropriate time. At the same time, we would like to avoid patent infringement or
copying through any public disclosure aspects of the patent process. A provisional patent will be filed with
the patent office in the next several weeks now that we have incorporated final changes to the technology.
This dance with filing a patent is not unique with BAT and is a common intellectual property problem with
any technology development effort. Within a year, we intend to patent this technology world wide to
improve protection in foreign countries and in the U.S. We are well aware of the "public disclosure" aspects
of patent law have a patent consultant on staff with over a decade of experience in patent law. We have
been very careful not to disclose anything but very general information about specific aspects of the
technology outside of the principals involved in technology development within Dolphin. This has aggravated
some auto companies and bureaucrats wanting more detailed information but is a necessary precaution. We
will disclose the details of how the technology works only with companies willing to sign very strong
non-disclosure, non-circumvention agreements. This is a normal part of the technology disclosure process in
connection with licensing of any proprietary intellectual property. It is also important to emphasize that this
patent will cover both application and concept patents and includes a whole "umbrella" of technology
applications.
It is unfortunate that our stock detective implies from these misconstrued statements that there is no
technology and no basis for our activities, even though the company has gone to great lengths to certify fuel
efficiency results and has undertaken a significant technology development effort that is providing some
important technology tools to the auto industry. Hundreds of millions of dollars have been spent by the
U.S.Government that was funneled to major auto companies to produce a super-efficient 80 mpg vehicle.
But when asked in numerous government hearings when the technology would be ready for
commercialization or cost effective, the answer has always been in the distant future and not without great
expense. We think that is not a correct answer and that serious technology development initiatives are
needed to address climate change and pollution problems. Auto companies in Europe claim it is impossible
to meet voluntary goals established by the European Community to improve efficiency without adding to
cost dramatically. We think there are alternatives that should be explored before jumping to that conclusion.
While there is a significant process involved in testing and evaluating Dolphin technology before it is fully
certified and licensed to major auto companies, the potential income is significant and is why there is so
much interest in the stock. In addition, because Dolphin technology can be incorporated in rebuilding of an
engine, there is substantial income potential from "shared savings" contracts with bus and truck fleets using
older engines. This can occur independent of any licensing agreements with major auto companies and has
significant income potential. BAT is working on several agreements that will be announced in the future that
involves heavy-duty engine activities and address a commercialization pathway in truck and bus markets. In
addition, there are other activities that BAT is involved in including battery manufacturing and electric and
hybrid electric vehicle development that justify interest in the stock. We do not know if we are the answer
to the world's energy problems, but we certainly offer some potential solutions. To dismiss those solutions as
all "hype" without really investigating the details indicates how effectively the stock detective has been
brainwashed into thinking that only the major auto companies can provide solutions to our energy and
environmental problems from vehicles.
For Immediate Release: Contact: February 12, 1998 Joe LaStella Ph) (818) 565-5555 Fax)(818) 565-5559 |
