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

To: Pronichev who wrote (6288)	12/26/1998 9:41:00 AM
From: Zeev Hed	Respond to of 27311

Mike, from my experience with mass production problems with other types of electrolytic cells, safety testing involve a large number of parameters, including, making sure that over time the chemistry of the cell does not go out of "kelt". Any battery, and Li based batteries in particular, can be overdriven (over charged and over discharged) and in Li batteries this can cause the formation of virgin metallic lithium, an explosive situation, and in some cases evolution of hydrogen. Therefore tests must be carried out that assures the chips included (I believe that VLNC, as others do, includes charging and discharging control chips on the battery) do their job right even under extreme conditions. Life tests are also time consuming (while these are "accelerated", a life of let say 5 years still can take three months to simulate). These tests must be carried out under any conceivable "misuse conditions" you can think of, quite a large matrix. Furthermore, refining of the existing process may require a new battery (no pun intended) of safety tests. Finally, the OEM themselves have each their own series of tests that they would carry in house, and if VLNC wants to make sure they understand the conditions of these tests and customers' specific requirements, they would probably (if they are smart) simultaneously carry on the set of such new tests in house to have a base line to compare OEM's tests to. Finally, when new equipment is brought in, even the machinery needs to be tested for safety. You are dealing with active chemicals laid out in thin sheets, probably working around the clock. These chemicals may (and probably do) undergo chemical reactions when in the process of manufacturing, you must make sure that no nasty things happen as a result of these reactions over time. I presume that the process itself is at least partially "sealed" from the environment, yet control of moisture is probably a great concern (and much more difficult in NI then in usually dry Nevada), and moisture deviations from norms will pose possible hazards (both to the quality of the resulting batteries, and possibly to the equipment itself). So yes, safety testing of any new equipment and the environment in which it operates is critical and time consuming. Be careful about classifying any CYA statement as "lawyer speak", sometimes it represents a real problem. Why do you think we have the current delays if not due to Mr Murphy's ever present curse. Zeev

To: Pronichev who wrote (6288)	12/26/1998 1:45:00 PM
From: mooter775	Read Replies (1) \| Respond to of 27311

I think you will find that "safety qualified" means final UL approval of the cells/batteries. And I think we will find out that while this may well come in Q1, it need not come prior to a contract announcement. FWIW - and certainly not by reviewing the press releases, talking with FRB, or reviewing the S-3s, 10ks, etc, - I expect we will see at least one major contract in Q1 and a second major contract before the end of Q2. (By major I expect these will aggregate > $ 200 mm.) I for one do not expect an earlier announcement regarding whether or not the company has shipped batteries to potential OEMs or not. So to those cautious folks out there, stay out of the stock, don't try to trade it, and wait for any contract announcements.