To: Tickertype who wrote (25860 ) 2/13/2003 1:54:30 AM From: P. Ramamoorthy Read Replies (5) | Respond to Feb 12, 2003, VLNC 3Q conference call Net loss of $8.6MM on revenue of $638M for the third quarter FY2003 vs. net loss of $9.6MM on revenue of $260M in the second quarter FY2003(1) N-Charge Sale has been increasing, from both direct (OEM) and indirect sales channels. Recent announcements on MCE and CDW Computer are some examples. N-Charge sales validate the Saphion technology and its credibility with customers. It is taking longer for OEM's to issue orders than he expected. Technical greenlight has been given by two OEM's. (Recall Wistron announcement. I assume the second OEM refers to Acer.) In discussion with Tier 1 companies.(2) large format - Several steps have been taken. Examples:(3) Partnerships, Contract manufacturing, etc. Questions: 1. Fraction of the total revenues $638MM from on-line sales vs. OEM sales 2. Ability to produce batteries internally vs. externally? Is the Second generation Saphion product a cylindrical type? VLNC is making the second generation Saphion battery in several constructions for various markets.Should VLNC receive a large PO and ramp up production, is Berg willing to finance the increased working capital needs, in addition to the $30MM credit line already provided? YES! Berg has agreed to support the added production costs.3. Pricing sensitivity? Low and high end N-Charge prices? Right now, the pricing point is quite adequate. Most customers are happy with the product and its performance. Some sales channels would like to sell at higher prices and some want lower prices. As an ex-Dell person you may have a good idea on the number of laptop computers sold by Dell. How many people are buying N-Charge as a secondary battery for these laptop PC's? The economic slowdown held you up for at least six months. Do you see any improvement in the business conditions with OEM's? Have not seen any relaxation of tough economic measures with the OEM's.4. On Cylindrical cells, where are you now, and where will you be in 6 months? 5. Primarily we are seeing the end of this year for licensing cylindrical cells? Yes. Any comment on Electrical Vehicles Inc. Purchase order and USABC work in progress? 6. Competitive advantage of VLNC's Saphion technology? Two ways to look at this. SAFETY. 7. In spite of the tight stock market, VLNC stock price is reflecting the progress you have made so far. Do you see any technological problem in incorporating the Saphion battery into laptop PC's? You did not see the need for a reverse split. But the stock is being diluted with equity financing. Nobody wants the dilution. Let us see what happens in the second half of this year.8. Understand you will not give details about the large power utility company that you are working with, on the backup power system. Could you tell us more? VLNC has entered into an agreement with the power company on testing the backup power system. Demo 2003 organizers do not allow me to give out details about the product prior to the show. The show is next week. VLNC battery applications in this sector will be tested in two areas to begin with: (a) backup power and (b) load leveling and peak shaving. This agreement gives VLNC a chance to get into the door. When the word about VLNC battery spreads to other divisions, people may want to test the large format battery for other applications.The above is my summary, subject to errors or omissions. Check the company source for the correct information.
