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

To: Jay Lowe who wrote (2935)	5/20/1998 1:23:00 PM
From: Jay Lowe	Read Replies (1) \| Respond to of 27311

CC call notes. Q: Have customers seen the Henderson line? A: Previously shipped batteries to 2 major potential customers (10's of units) A: found satisfactory, incomplete tests A: latest batteries better in several ways A: new batteries to be shipped to number (~12) additional potential customers Q: When pilot production? A: focus now on getting customers POs A: NI production expected to meet demand, Henderson has same equipment as NI A: don't expect major problems moving production to NI A: some problems and glitches are expected but expected they can be solved A: capability to make batteries in three weeks in three weeks A: volume production in NI ... couple of months A: sufficient capacity to produce test batteries in Henderson A: critical path is marketing: interest, test, build in A: get purchase orders (again) A: no great demand for batteries for several months A: key problem in past was attempt to develop without producing large quantities A: Lev directed the company to start making batteries ... lots of batteries A: now producing "a lot of batteries" Q: Korea? A: As of yesterday ... on plan, factory bldg completed late june, production 5 months Q: Projection volume? A: determined by customer pull ... company had lots of production capacity A: large and small batteries volume next year ... assembly machine may cause problems Q: OEM Feedback on volume estimate? A: no real volume estimates Q: Royalties: any from Delphi? A: 3% up to $30M ... receiving $2.5M from Delphi next 90 days Q: current cash position, how finance? A: sufficient cash for 2 months (?), looking for debt financing A: $17M last number the company revealed Q: What is your current cash position? (question repeated) A: $17M is the last number revealed Observation: [analysts seem favorable in general] Q: compare to competition e.g. ULBI A: Lev: don't know ULBI product. Know our product. Q: Acer has invested in LI development, how affect Acer as customer A: Lev: don't know, never named Acer as potential customer Q: how long customer to test, orders, ... what sales cycle? 2mo, 6mo, year? A: some months, some customers closer than others Q: computer batt, or phone? A: initial 4x4x4mm 4x5x4mm computer batteries A: costs inherently lower, electronics more efficiency, energy density higher A: comm market ... no overwhelming advantages A: target large batteries first, small second A: confident machinery will work A: 500 batteries/day in henderson A: critical path is customer adoption ... mfg can fulfill demand Q: names of customers? A: Lev: decline to name A: no names until large PO with scheduled delivery Q: payback from NI A: when company ships $4M ... worth about $7.5M from NI Q: burnrate A: burnrate is up from $1M due to production costs Q: accounting issues? how write off previous R&D capital cost A: reserves set up ... still exist on books about $18M Q: end of Delphi contract? what affect on cost? A: yes. contract complete. cash payment. $2.5M to be paid A: on annual basis Delphi paid $2.5M in past A: $2.5M to be paid = about one year of previous Delphi participation Q: Delphi still enthused? A: Delphi announcement of intentions stands Q: indication of improvements in battery? A: have been significant ... virtually every area Q: What size batts are you going to make? A: going to make 4 sizes of batteries, tooled for 4 sizes A: 8x10xwhatever ... experience in making large batteries viz Delphi A: small cellular batteries Q: How many OEMs have sampled? A: 2 OEMs ... total number of manufacturers sampled? total OEMs? A: around a dozen