To: Jacques Tenzel who wrote (25665 ) 11/14/2002 12:21:37 AM From: P. Ramamoorthy Read Replies (4) | Respond to November 13, September Qtr Earnings Call This time, Kevin unusually spent more time going over certain issues that have been bothering shareholders. Made me feel more confident about this management team. )(a) N-Charge sales - This morning one of the "Tier 1" customers gave VLNC the greenlight.it has begun shipment of Saphion Lithium-ion batteries to Wistron Corporation, one of the largest global ODM/OEM suppliers for the PC industry. The tablet PC developed and manufactured by Wistron is the first mobile computing device to feature Saphion(TM) Lithium-ion technology batteries and is expected to ship by the end of the year. This product resulted from both companies' efforts under the Memorandum of Understanding signed in February."(b) Large format battery - VLNC is quickly exploiting the great potential. They are taking two major steps. (1) Work with a major Telecom OEM, a telecom industry leader that specializes in design and development of turn-key power systems. For competitive reasons, Stephan would not reveal the name of this OEM. This OEM's interest is due to the cost, safety, and flexibility of VLNC battery. Valence Technology Receives Purchase Order From USABC to Participate in Advanced High Performance Battery Technology Assessment Program - Friday October 11, 2:47 pm ET very important, these days ) He was encouraged to see how well VLNC battery was accepted. This morning, he received the PO form Wistron. Cylindrical cells - went through several iterations with various chemistries to suit this application. Hopes to finalize the chemistry for the cylindrical cell application and its specifications for the market they want to target, by the end of next calendar year 2003.Joint Ventures - Mainly in Asia for low cost reasons and markets. After approval by the Chinese Govt., probably by the end of first qtr of 2004, the jv will begin operation in China. VLNC contributes to capital equipment sales to jv and FengFan pays for the manufacturing costs, the land and the facility. Nov 4, Reorganization - Contract manufacturing team has been set up. Their job is to directly report on competitive manufacturing options. (.... missed due to a problem with the connection....)Question 1 Financing with Berg credit line and dilution: Question 2 At what point VLNC would consider a reverse split like Lucent did Question 3 Two questions - concerned about the Berg's waiver for the credit line, namely that Stephan remains the CEO Stephan - Berg was concerned about the transition period of 1 to 2 quarters as Lev left and Stephan assumed the responsibility. Stephan has no plans to quit.Question 4 Stock trading below $1, Did you get a notice for delisting? Yes, VLNC did receive the notice, but it takes an average price over 180 days. Stephan is confident that the recent price changes and further changes in price responding to PO's and revenues, will meet or exceed the requirement of the 180-day average price of $1. Question 5 At what price they are selling to OEM's, What price point will make VLNC manufacturing cost efficient? OEM's buy N-Charge battery at $299. They were also interested in paying $349 for the same when it was introduced. Until a "Tier 1" customer comes up with a PO, VLNC would not know the price elasticity for the N-Charge battery. All OEM's are happy with the product. It is too early to tell whether the price elasticity will even be an issue. Question 6 October 15, 2002 Intel held a forum on their low power chip for a notebook PC with Acer and Wistron, Did VLNC participate in this forum? Question 7 Berg's waiver of conditions or milestones namely improve battery 265whr/liter and produce 30 R&D cylindrical cell samples to draw from the credit line Carl waived all those conditions.Question 8 What you mean by 'technical greenlight" given to you by Wistron? Engineers that tested VLNC battery were satisfied and gave their approval to their marketing & sales group. As soon as their sales and marketing group completes their commercial study, VLNC expects to get a PO. "Tier 1" customers appreciated VLNC's forthright handling of the technical issue with the N-Charge battery. It actually helped build their confidence in VLNC.Question 8 Potential financing for jv's by FengFan? Alleviates the capital expenditures and working capital costs for VLNC. VLNC will sell capital equipment and materials for Saphion battery manufacture. FengFan will pay for the cost of manufacturing, assembling, and shipping the finished batteries to VLNC. Stephan talked about cash conversion cycles and emphasized that his management team adopt shorter cycles. Question 9 Cylindrical cells? Anticipates in fourth qtr of calendar 2003. Second generation of cylindrical cells was done and the chemistry tested. Too early to predict potential "Tier 1" customers and revenue from cylindrical cells. VLNC will try to find the OEM's as soon as they finalize the chemistry for the cylindrical cells.Question 10 How many N-Charge units had to be replaced due to the August technical problem? Two units had a problem. There was no need to replace.Question 11 What really took place in terms of fixing the N-Charge system? For competitive reasons and for shareholders' benefit, Stephan would not reveal the details.Question 11 What happened to Hanil JV? Are you pursing a parallel arrangement with FengFan? Stephan came on board as the Hanil deal was closing. He did not offer details to compare. He felt that more countries will be interested as VLNC moves forward with commercialization of their large format battery.caution: The above are my notes, subject to errors or omissions. If you are a serious investor, please refer your questions to the original archived call, SEC filings, investor relations or the management. Ram
