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Technology Stocks : VALENCE TECHNOLOGY (VLNC) -- Ignore unavailable to you. Want to Upgrade?

To: P. Ramamoorthy who wrote (22293)	11/12/2000 11:45:20 PM
From: P. Ramamoorthy	Read Replies (1) \| Respond to of 27311

Part I of the Earnings call - This part contains clues to VLNC future and the upcoming announcements. I expect three PO's soon plus one or two licensing deals after it closes. Time frame - 2-3 months(?) (1) PDA PO (2) Laptop PC PO (3) Automative battery shipment Dale from CIBC Biz model over 4 qtr, 2 qtrs focused on licensing rather than production and sales of batteries. Lev: It is mostly in our marketing approach. Gradually coming underway in the last qtr, we had a pretty good idea we were going to close this deal. We had a pretty good idea we were going to sign this agreement. We've been negotiating the details over the last several months. The plan is to show that the battery is suitable for a myriad of applications. We really want a broad thrust. I really do not want an order, as I've said before, that can just completely eat up all of all our (NI plant) production. If I can demo that we were good for cell phone manufacturing, I don't want the cell phone manufacturers such as Nokia or something like that taking everything we can build for a while. That really does not help us to prove that the technology is broad. We have gone out and booked batteries for submarines - 8 inch square batteries, I don't know how long, I am not allowed to say them., but, after we shipped the cells… they go down 1000 feet (under sea water). We shipped batteries for micro satellite use, we got batteries into portable handheld cell phones, satellite phones, 100,000's of them, We got batteries shipped, ..eh, getting ready to ship batteries for automotive use where temperatures are extreme. A lot of different markets we are addressing. That is what we want to continue. We want to book some PDA orders. We are getting close to doing that. We want to book some portable PC orders. We want to demonstrate the technology in a wide variety of applications, This leads us into taking a lot of different battery sizes, not trying to run the factory as efficiently as we possibly could if we took one order for the same size, but to demo to the world that this has got some big advantages. Having done so, we expect to bring our licensees along into this market, we literally inviting licensees to bid with us on orders because we want to surely demonstrate to our potential customers that there truly are second sources. Now, having said all that, we have not established our relationships with our licensees yet. They were notified yesterday at the same time everybody else was that this deal was going down. We intend to visit them and check on their progress. We know…we have been told that substantial investment (to automate equipment) has been made by some of our licensees(?). We hope and expect to be able to help them use some of our technology to ramp up their production because our business model now includes selling film (we have vast capability to sell film built on really highly regarded automated equipment in Ireland.) Ramping up the production of powders from our two powder suppliers, the cathode material (spinel or proprietary spinel) and allowing them to sell under royalty to licensees so that they can lower the cost of their batteries by about 30%, then to allow to ramp up production ourselves the PO4 compounds, which we are in the process of doing and selling those to both our customers and licensing those materials out and providing them with films. We have licensees, about 15, that are building on semi-automatic equipment or even manual equipment for building batteries. Some these licensees are buying films, or trying to buy films. We are going to provide them with the film. Some licensees are happy with them. That is fine. In that case, we'll give them the ability to buy our powders from our licensees. Our model going forward is to use our manufacturing capability on batteries and demonstrate the feasibility of our technology as much as QCOM made phones to demonstrate their technology. Most of our profit from royalty, medium and long term, from the sale of materials, licensing of materials, and collection of royalties because the market is vast because everything is portable, everything is getting more portable, and batteries are going to be needed. Follow up Q- Any input from licensees? Lev: Not yet. We are getting on the phones today. We are going to talk to several of them. I am going to start traveling quite a bit. Next Q - Number of licensees... also a number of people are making Li polymer batteries outside of Telcordia patents. What is your position on this? Lev: We intend to enforce our patents. We have been holding back from being aggressive with our patent portfolio. We'd rather approach these people, especially in Asia, very positively. We'd rather go to someone who is violating one of our patents and say "Take a licensee from VLNC, they would not have the basic license from Telcordia. (to be continued.) Ram